Exhibit 10.9
AMENDED AND RESTATED
MASTER CREDIT FACILITY AGREEMENT
BY AND BETWEEN
SUN SECURED FINANCING LLC, a Michigan limited liability company,
ASPEN-FT. COLLINS LIMITED PARTNERSHIP, a Michigan limited partnership,
SUN SECURED FINANCING HOUSTON LIMITED PARTNERSHIP,
a Michigan limited partnership,
SUN COMMUNITIES FINANCE, LLC, a Michigan limited liability company,
SUN HOLLY FOREST LLC, a Michigan limited liability company,
SUN SADDLE OAK LLC, a Michigan limited liability company
AND
ARCS COMMERCIAL MORTGAGE CO., L.P.
dated as of
April 28, 2004
TABLE OF CONTENTS
Page
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ARTICLE 1 THE COMMITMENT..................................................................................... 2
SECTION 1.01. The Commitment........................................................................... 2
SECTION 1.02. Requests for Advances.................................................................... 3
SECTION 1.03. Maturity Date of Advances................................................................ 3
SECTION 1.04. Interest on Advances..................................................................... 4
SECTION 1.05. Coupon Rates for Advances................................................................ 5
SECTION 1.06. Notes.................................................................................... 5
SECTION 1.07. Extension of Original Variable Facility Termination Date and Variable Facility
Termination Date.......................................................................................... 6
SECTION 1.08. Conversion from Variable Facility Commitment to Fixed Facility Commitment................ 7
SECTION 1.09. Limitations on Right to Convert.......................................................... 7
SECTION 1.10. Conditions to Conversion................................................................. 8
ARTICLE 2 THE ADVANCES....................................................................................... 8
SECTION 2.01. Rate Setting for an Advance.............................................................. 8
SECTION 2.02. Advance Confirmation Instrument for Variable Advances.................................... 9
SECTION 2.03. Breakage and other Costs................................................................. 9
SECTION 2.04. Advances................................................................................. 9
SECTION 2.05. Determination of Allocable Facility Amount and Valuations................................ 10
SECTION 2.06. Right to Advances Based on Increased Collateral Value.................................... 10
ARTICLE 3 COLLATERAL CHANGES................................................................................. 11
SECTION 3.01. Right to Add Collateral.................................................................. 11
SECTION 3.02. Procedure for Adding Collateral.......................................................... 11
SECTION 3.03. Right to Obtain Releases of Collateral................................................... 12
SECTION 3.04. Procedure for Obtaining Releases of Collateral........................................... 12
SECTION 3.05. Right to Substitute Collateral........................................................... 16
SECTION 3.06. Procedure for Substituting Collateral.................................................... 16
ARTICLE 4 EXPANSION OF CREDIT FACILITY....................................................................... 18
SECTION 4.01. Right to Increase Commitment............................................................. 18
SECTION 4.02. Procedure for Obtaining Increases in Commitment.......................................... 18
ARTICLE 5 TERMINATION OF FACILITIES.......................................................................... 19
SECTION 5.01. Right to Complete or Partial Termination of Facilities................................... 19
SECTION 5.02. Procedure for Complete or Partial Termination of Facilities.............................. 19
SECTION 5.03. Right to Terminate Credit Facility....................................................... 20
SECTION 5.04. Procedure for Terminating Credit Facility................................................ 20
ARTICLE 6 CONDITIONS PRECEDENT TO ALL REQUESTS............................................................... 20
SECTION 6.01. Conditions Applicable to All Requests.................................................... 20
SECTION 6.02. Conditions Precedent to Initial Advance.................................................. 22
SECTION 6.03. Conditions Precedent to Future Advances.................................................. 23
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SECTION 6.04. Conditions Precedent to Addition of an Additional Mortgaged Property to the
Collateral Pool........................................................................................... 24
SECTION 6.05. Conditions Precedent to Release of Property from the Collateral Pool..................... 24
SECTION 6.06. Conditions Precedent to Substitution of a Substitute Mortgaged Property into the
Collateral Pool........................................................................................... 26
SECTION 6.07. Conditions Precedent to Increase in Commitment........................................... 27
SECTION 6.08. Conditions Precedent to Conversion....................................................... 27
SECTION 6.09. Conditions Precedent to Complete or Partial Termination of Facilities.................... 27
SECTION 6.10. Conditions Precedent to Termination of Credit Facility................................... 28
SECTION 6.11. Delivery of Closing Documents Relating to Advance Request, Addition Request or
Expansion Request......................................................................................... 28
SECTION 6.12. Delivery of Property-Related Documents................................................... 28
ARTICLE 7 REPRESENTATIONS AND WARRANTIES..................................................................... 29
SECTION 7.01. Representations and Warranties of Borrower............................................... 29
SECTION 7.02. Representations and Warranties of Lender................................................. 29
ARTICLE 8 AFFIRMATIVE COVENANTS OF BORROWER.................................................................. 30
SECTION 8.01. Compliance with Agreements............................................................... 30
SECTION 8.02. Maintenance of Existence................................................................. 30
SECTION 8.03. Financial Statements; Accountants' Reports; Other Information............................ 30
SECTION 8.04. Access to Records; Discussions With Officers and Accountants............................. 32
SECTION 8.05. Certificate of Compliance................................................................ 33
SECTION 8.06. Maintain Licenses........................................................................ 33
SECTION 8.07. Inform Lender of Material Events......................................................... 33
SECTION 8.08. Compliance with Applicable Laws.......................................................... 34
SECTION 8.09. Alterations to the Mortgaged Properties.................................................. 34
SECTION 8.10. Loan Document Taxes...................................................................... 35
SECTION 8.11. Further Assurances....................................................................... 35
SECTION 8.12. Transfer of Ownership Interest of Borrower and Sun ...................................... 35
SECTION 8.13. Transfer of Ownership of Mortgaged Property.............................................. 37
SECTION 8.14. Change in Senior Management.............................................................. 38
SECTION 8.15. Intentionally Omitted.................................................................... 38
SECTION 8.16. Ownership of Mortgaged Properties........................................................ 38
SECTION 8.17. Compliance with Net Worth Test........................................................... 38
SECTION 8.18. Compliance with Liquidity Test........................................................... 38
SECTION 8.19. Compliance with Borrower's Consolidated EBITDA to Interest Ratio......................... 38
SECTION 8.20. Special Covenants Regarding King's Court................................................. 39
ARTICLE 9 NEGATIVE COVENANTS OF BORROWER..................................................................... 39
SECTION 9.01. Other Activities......................................................................... 39
SECTION 9.02. Liens.................................................................................... 39
SECTION 9.03. Indebtedness............................................................................. 40
SECTION 9.04. Principal Place of Business.............................................................. 40
SECTION 9.05. Condominiums............................................................................. 40
SECTION 9.06. Restrictions on Distributions............................................................ 40
ARTICLE 10 FEES.............................................................................................. 40
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SECTION 10.01. Standby Fee.............................................................................. 40
SECTION 10.02. Origination Fee.......................................................................... 40
SECTION 10.03. Due Diligence Fees....................................................................... 41
SECTION 10.04. Legal Fees and Expenses.................................................................. 41
SECTION 10.05. Failure to Close any Request............................................................. 42
SECTION 10.06. Rate Preservation Fee.................................................................... 42
ARTICLE 11 EVENTS OF DEFAULT................................................................................. 42
SECTION 11.01. Events of Default........................................................................ 42
ARTICLE 12 REMEDIES.......................................................................................... 45
SECTION 12.01. Remedies; Waivers........................................................................ 45
SECTION 12.02. Waivers; Rescission of Declaration....................................................... 45
SECTION 12.03. Lender's Right to Protect Collateral and Perform Covenants and Other Obligations......... 45
SECTION 12.04. No Remedy Exclusive...................................................................... 46
SECTION 12.05. No Waiver................................................................................ 46
SECTION 12.06. No Notice................................................................................ 46
ARTICLE 13 RIGHTS OF FANNIE MAE.............................................................................. 46
SECTION 13.01. Special Pool Purchase Contract........................................................... 46
SECTION 13.02. Assignment of Rights..................................................................... 46
SECTION 13.03. Release of Collateral.................................................................... 47
SECTION 13.04. Replacement of Lender.................................................................... 47
SECTION 13.05. Fannie Mae and Lender Fees and Expenses.................................................. 47
SECTION 13.06. Third-Party Beneficiary.................................................................. 47
ARTICLE 14 INSURANCE, REAL ESTATE TAXES AND REPLACEMENT RESERVES............................................. 48
SECTION 14.01. Insurance and Real Estate Taxes.......................................................... 48
SECTION 14.02. Replacement Reserves..................................................................... 48
ARTICLE 15 PERSONAL LIABILITY OF THE BORROWER................................................................ 48
SECTION 15.01. Personal Liability of Borrower........................................................... 48
ARTICLE 16 INTEREST RATE PROTECTION.......................................................................... 49
SECTION 16.01. Interest Rate Protection................................................................. 49
SECTION 16.02. Cap Terms................................................................................ 50
SECTION 16.03. Cap Security Agreement; Delivery of Cap Payments......................................... 50
SECTION 16.04. Termination.............................................................................. 51
SECTION 16.05. Performance Under Cap Documents.......................................................... 51
SECTION 16.06. Escrow Provisions........................................................................ 51
SECTION 16.07. Cap Escrow Fund.......................................................................... 52
ARTICLE 17 MISCELLANEOUS PROVISIONS.......................................................................... 52
SECTION 17.01. Counterparts............................................................................. 52
SECTION 17.02. Amendments, Changes and Modifications.................................................... 52
SECTION 17.03. Payment of Costs, Fees and Expenses...................................................... 52
SECTION 17.04. Payment Procedure........................................................................ 53
SECTION 17.05. Payments on Business Days................................................................ 53
SECTION 17.06. Choice of Law; Consent to Jurisdiction; Waiver of Jury Trial............................. 54
SECTION 17.07. Severability............................................................................. 55
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SECTION 17.08. Notices.................................................................................. 55
SECTION 17.09. Further Assurances and Corrective Instruments............................................ 57
SECTION 17.10. Term of this Agreement................................................................... 57
SECTION 17.11. Assignments; Third-Party Rights.......................................................... 57
SECTION 17.12. Headings................................................................................. 58
SECTION 17.13. General Interpretive Principles.......................................................... 58
SECTION 17.14. Interpretation........................................................................... 58
SECTION 17.15. Standards for Decisions, Etc............................................................. 58
SECTION 17.16. Decisions in Writing..................................................................... 58
SECTION 17.17. Requests................................................................................. 59
SECTION 17.18. Tax Service Contracts.................................................................... 59
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EXHIBITS
EXHIBIT A Schedule of Initial Mortgaged Properties and Initial Valuations
EXHIBIT B-1 Fixed Facility Note (5, 7, 10, 12 and 15-year term)
EXHIBIT B-2 Fixed Facility Note (9+1 term)
EXHIBIT C Variable Facility Note
EXHIBIT D Certificate of Borrower
EXHIBIT E Guaranty
EXHIBIT F Compliance Certificate
EXHIBIT G-1 Organizational Certificate (Sun Secured Financing LLC, Sun
Communities, LLC, Sun Holly Forest LLC, and Sun Saddle Oak LLC)
EXHIBIT G-2 Organizational Certificate (Aspen-Ft. Collins Limited Partnership)
EXHIBIT G-3 Organizational Certificate (Sun Secured Financing Houston Limited Partnership)
EXHIBIT G-4 Organizational Certificate (Guarantor-Sun)
EXHIBIT H Conversion Request
EXHIBIT I Master Credit Facility Agreement Conversion Amendment
EXHIBIT J Rate Form
EXHIBIT K Advance Confirmation Instrument
EXHIBIT L Advance Request
EXHIBIT M Request
EXHIBIT N Confirmation of Obligations
EXHIBIT O Expansion Request
EXHIBIT P Facility Termination Request
EXHIBIT Q Amendment to Master Credit Facility Agreement
EXHIBIT R Credit Facility Termination Request
EXHIBIT S Interest Rate Cap Security, Pledge and Assignment Agreement
APPENDIX I Definitions
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AMENDED AND RESTATED MASTER CREDIT FACILITY AGREEMENT
THIS AMENDED AND RESTATED MASTER CREDIT FACILITY AGREEMENT is made as of
the 28th day of April, 2004 by and among (a) (i) SUN SECURED FINANCING LLC, a
Michigan limited liability company ("SSF"), (ii) ASPEN-FT. COLLINS LIMITED
PARTNERSHIP, a Michigan limited partnership ("Aspen"), (iii) SUN SECURED
FINANCING HOUSTON LIMITED PARTNERSHIP, a Michigan limited partnership
("Houston"; individually and collectively, SSF, Aspen and Houston, the "Original
Borrower"), (iv) SUN COMMUNITIES FINANCE, LLC, a Michigan limited liability
company ("SCF"), (v) SUN HOLLY FOREST LLC, a Michigan limited liability company
("Forest"), and (iv) SUN SADDLE OAK LLC, a Michigan limited liability company
("Saddle Oak") (individually and collectively, SSF, Aspen, Houston, SCF, Forest
and Saddle Oak, "Borrower"), and (b) ARCS COMMERCIAL MORTGAGE CO., L.P., a
California limited partnership ("Lender").
RECITALS
A. Original Borrower and Lender entered into that certain Master Credit
Facility Agreement dated as of May 29, 2002, as amended by that certain First
Amendment to Master Credit Facility Agreement dated as of August 29, 2002, as
further amended by that certain Second Amendment to Master Credit Facility dated
as of November 26, 2002, and as further amended by that certain Third Amendment
to Master Credit Facility Agreement dated as of April 5, 2004 (as amended, the
"Original Agreement") pursuant to which Lender agreed to make credit available
to Original Borrower under the terms and conditions set forth in the Original
Agreement.
B. Pursuant to the Original Agreement, among other things, various
Mortgaged Properties (each capitalized term used but not defined has the
definition ascribed to it in Article I of this Agreement) were added to the
Collateral Pool.
C. Pursuant to the Original Agreement, Lender established a
$152,362,500 Commitment in favor of Original Borrower, comprised of a
$75,000,000 Variable Facility and a $77,362,500 Fixed Facility.
D. Original Borrower has requested that various terms and conditions of
the Original Agreement be modified. Borrower and Lender now wish to amend and
restate the Original Agreement in its entirety.
E. Borrower and Lender desire to, among other things, provide for the
increase in the Commitment to $390,000,000, modify the amount by which the
Commitment may be expanded, and modify certain other terms of the Original
Agreement as set forth hereinafter.
F. Borrower owns one or more Manufactured Housing Communities as more
particularly described in Exhibit A to this Agreement.
G. To secure the obligations of Borrower under this Agreement and the
other Loan Documents issued in connection with the Credit Facility, Borrower
shall create a Collateral Pool
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in favor of Lender. The Collateral Pool shall be comprised of (i) Security
Instruments on the Manufactured Housing Communities listed on Exhibit A and (ii)
any other Security Documents executed by Borrower pursuant to this Agreement or
any other Loan Documents.
H. Each Security Document shall be cross-defaulted (i.e., a default
under any Security Document, or under this Agreement, shall constitute a default
under each Security Document, and this Agreement) and cross-collateralized
(i.e., each Security Instrument shall secure all of Borrower's obligations under
this Agreement and the other Loan Documents) and it is the intent of the parties
to this Agreement that Lender may accelerate any Note without needing to
accelerate any other Note and that in the exercise of its rights and remedies
under the Loan Documents, Lender may, except as provided in this Agreement,
exercise and perfect any and all of its rights in and under the Loan Documents
with regard to any Mortgaged Property without needing to exercise and perfect
its rights and remedies with respect to any other Mortgaged Property and that
any such exercise shall be without regard to the Allocable Facility Amount
assigned to such Mortgaged Property and that Lender may recover an amount equal
to the full amount outstanding in respect of any of the Notes in connection with
such exercise and any such amount shall be applied as determined by Lender in
its sole and absolute discretion.
I. Subject to the terms, conditions and limitations of this Agreement,
Lender has agreed to modify and increase the Credit Facility.
NOW, THEREFORE, Borrower and Lender, in consideration of the mutual
promises and agreements contained in this Agreement, hereby agree to amend and
restate, in its entirety, the Original Agreement as follows:
ARTICLE 1
THE COMMITMENT
SECTION 1.01. The Commitment.
Subject to the terms, conditions and limitations of this Agreement:
(a) Variable Facility Commitment. Lender agrees to make Variable
Advances to Borrower from time to time during the Variable Facility Availability
Period. The aggregate principal balance of the Variable Advances Outstanding at
any time shall not exceed the Variable Facility Commitment. Except as provided
in Section 2.06 of this Agreement, no Variable Advance shall be made as a result
of increases in the Valuation of any Mortgaged Property; provided, however,
Borrower shall not be precluded from obtaining a release of a Mortgaged Property
as otherwise provided herein. Borrower may re-borrow any part of the Variable
Advances which it has previously borrowed and repaid.
(b) Fixed Facility Commitment. Lender agrees to make Fixed
Advances to Borrower from time to time during the Fixed Facility Availability
Period. The aggregate original principal of the Fixed Advances shall not exceed
the Fixed Facility Commitment. Except as provided in Section 2.06 of this
Agreement, no Fixed Advance shall be made as a result of
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increases in the Valuation of any Mortgaged Property; provided, however,
Borrower shall not be precluded from obtaining a release of a Mortgaged Property
as otherwise provided herein. The borrowing of a Fixed Advance shall permanently
reduce the Fixed Facility Commitment by the original principal amount of such
Fixed Advance. Borrower may re-borrow as a Variable Advance (but not as a Fixed
Advance) any part of the Fixed Advance which it has previously borrowed and
repaid.
SECTION 1.02. Requests for Advances.
Borrower shall request an Advance by giving Lender an Advance Request in
accordance with Section 2.04. The Advance Request shall indicate whether the
Request is for a Fixed Advance, a Variable Advance or both.
SECTION 1.03. Maturity Date of Advances.
(a) Variable Advances. The MBS Issue Date shall be the first day
of a month and the maturity date of the MBS funding each Variable Advance shall
be specified by Borrower in its Advance Request, which date shall be:
(i) no earlier than the date which completes three full months
after the MBS Issue Date; and
(ii) no later than the date which completes nine full months after
the MBS Issue Date.
For these purposes, a year shall be deemed to consist of 12 30-day months.
For example, the date which completes three full months after September 1 shall
be December 1; and the date which completes three full months after January 1
shall be April 1.
No principal payments in respect of any Variable Advance shall be due
prior to the maturity date of such Variable Advance. Any prepayment of Variable
Advances shall apply to the Variable Advance designated by Borrower.
(b) Fixed Advances. The maturity date of each Fixed Advance shall
be specified by Borrower, provided that such maturity date shall be the 5th,
7th, 10th, 12th or 15th anniversary of the making of such Fixed Advance,
provided that in no event shall the maturity date of any Fixed Advance be later
than the 15th anniversary of the Initial Closing Date. In the event the Borrower
elects a maturity of a Fixed Advance of the 10 years from the making of such
Fixed Advance, the Borrower may elect a "9+1" maturity, which Fixed Advance
shall be evidenced by a promissory note in substantially the form of Exhibit B-2
to this Agreement. All Fixed Advances having a maturity other than a "9+1"
maturity shall be evidenced by a promissory note in substantially the form of
Exhibit B-1 to this Agreement.
The principal of each Fixed Advance shall be amortized on a 30-year
schedule, provided that Lender may, in its sole discretion (consistent with
Lender's criteria for the analysis of repayment plans for similar loans secured
by similar properties), based on an analysis of Borrower's plan to repay the
relevant Fixed Advance, permit payments of principal to begin (i)
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in the case of a Fixed Advance having a maturity date seven (7) years from the
date of such Fixed Advance, the date one (1) year after the date of the Fixed
Advance, (ii) in the case of a Fixed Advance having a maturity date ten (10)
years from the date of such Fixed Advance, the date two (2) years after the date
of the Fixed Advance, and (iii) in the case of a Fixed Advance having a maturity
date more than ten (10) years from the date of such Fixed Advance, such date as
Lender may elect in its sole discretion.
If a 100% participation in a Fixed Advance is purchased by Fannie Mae in
return for MBS, Borrower may, at its option, elect to have such Fixed Advance
evidenced by a series of Fixed Facility Notes, each having an original principal
amount selected by Borrower (totaling, in the aggregate, the original principal
amount of such Fixed Advance); provided no such Fixed Facility Note may have an
original principal amount of less than $5,000,000.
(c) Prepayment. Fixed Advances are not prepayable at any time,
provided that, notwithstanding the foregoing, if Borrower has elected yield
maintenance with respect to any Fixed Advance, Borrower (i) may prepay not less
than all of such Fixed Advance during the last six months of the term of such
Fixed Advance, and (ii) (A) if a 100% participation interest in the Fixed
Advance has been purchased by Fannie Mae in return for MBS, may prepay not less
than all of such Fixed Advance or (B) if a 100% participation interest in the
Fixed Advance has been purchased by Fannie Mae for cash, may prepay all or any
portion of such Fixed Advaance pursuant to the yield maintenance provisions of
the Fixed Facility Note.
SECTION 1.04. Interest on Advances.
(a) Partial Month Interest. Notwithstanding anything to the
contrary in this Section, if an Advance is not made on the first day of a
calendar month, Borrower shall pay interest on the original stated principal
amount of the Advance for the partial month period commencing on the Closing
Date for the Advance and ending on the last day of the calendar month in which
the Closing Date occurs, (i) for a Variable Advance at a rate per annum equal to
the greater of (1) the Coupon Rate as determined in accordance with Section
1.05(a) and (2) a rate determined by Lender, based on Lender's cost of funds and
approved in advance, by Borrower, pursuant to the procedures mutually agreed
upon by Borrower and Lender, and (ii) for a Fixed Advance at a rate, per annum
equal to the greater of (1) the interest rate for the described in subsection
(c)(i) of this Section and (2) a rate determined by Lender, based on Lender's
cost of funds, and approved in advance, by Borrower, pursuant to procedures
mutually agreed upon by Borrower and Lender.
(b) Variable Advances.
(i) Discount. Each Variable Advance shall be a discount
loan. The original stated principal amount of a Variable Advance shall be
the sum of the Price and the Discount. The Price and Discount of each
Variable Advance shall be determined in accordance with the procedures set
out in Section 2.01. The proceeds of the Variable Advance made available
by Lender to Borrower will equal the original stated principal amount of
the Variable Advance. Borrower shall pay to Lender, in advance of Lender
making a Variable Advance requested by Borrower, the entire Discount for
the Variable
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Advance. On the maturity of each Variable Advance, the Borrower shall pay
the Lender an amount equal to the original stated principal amount of such
Variable Advance.
(ii) Variable Facility Fee. In addition to paying the
Discount and the partial month interest, if any, Borrower shall pay
monthly installments of the Variable Facility Fee to Lender for each
Variable Advance from the applicable MBS Issue Date to its maturity date.
The Variable Facility Fee shall be payable in advance, in accordance with
the terms of the Variable Facility Note. The first installment shall be
payable on or prior to the Closing Date for the Variable Advance and shall
apply to the first full calendar month of such MBS. Subsequent
installments shall be payable on the first day of each calendar month,
commencing on the first day of the second full calendar month of such MBS,
to its maturity date. Each installment of the Variable Facility Fee shall
be in an amount equal to the product of (1) the Variable Facility Fee, (2)
the original stated principal amount of the Variable Advance, and (3)
1/12.
(c) Fixed Advances.
(i) Annual Interest Rate. Each Fixed Advance shall bear
interest at a rate, per annum, equal to the sum of (1) the Pass-Through
Rate for such Fixed Advance and (2) the Fixed Facility Fee (to the extent
not included in the Pass-Through Rate).
(ii) Fixed Facility Fee. In addition to paying the partial
month interest, if any, Borrower shall pay monthly installments of the
Pass-Through Rate and the Fixed Facility Fee to Lender for each Fixed
Advance in accordance with the terms of the Fixed Facility Note. The
Pass-Through Rate and the Fixed Facility Fee shall be payable in arrears,
in accordance with the terms of the Fixed Facility Note. The first
installment shall be payable on the first day of each calendar month,
commencing on the first day of the second full calendar month following
the making of a Fixed Advance, to its maturity date. Each installment of
the Fixed Facility Fee shall be in an amount equal to the product of (1)
the Fixed Facility Fee, (2) the Outstanding principal balance of the Fixed
Advance, and (3) 1/12. The interest rate stated in each Fixed Facility
Note includes both the Pass-Through Rate and the Fixed Facility Fee.
SECTION 1.05. Coupon Rates for Advances.
(a) Variable Advances. The Coupon Rate shall equal the sum of (1)
an interest rate as determined by Lender (rounded to three places) payable for
the MBS pursuant to the MBS Commitment ("MBS Imputed Interest Rate") and (2) the
Variable Facility Fee.
(b) Fixed Advances. The Coupon Rate shall be the rate of interest
applicable to such Fixed Advance pursuant to Section 1.04(c)(i).
SECTION 1.06. Notes.
(a) Variable Advances. The obligation of Borrower to repay shall
be evidenced by the Variable Facility Note. The Variable Facility Note shall be
payable to the order of Lender and shall be made in the amount of the Variable
Facility Commitment.
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(b) Fixed Advances. The obligation of Borrower to repay shall be
evidenced by the Fixed Facility Notes. The Fixed Facility Notes shall be payable
to the order of Lender and shall be made in the original principal amount of
each Fixed Advance.
SECTION 1.07. Extension of Original Variable Facility Termination Date and
Variable Facility Termination Date.
Borrower shall have the right to extend (i) the Original Variable Facility
Termination Date for (a) one (1) period, which period shall end on the date five
(5) years after the Initial Closing Date, (b) if the Borrower has extended the
Original Variable Facility Termination Date pursuant to (a) above, one (1)
additional period, which period shall end on the date ten (10) years after the
Initial Closing Date, and (ii) the Variable Facility Termination Date for one
(1) five (5) year period, which period shall end on the date ten (10) years
after the Initial Closing Date (in each case, an "Extension"), in each case upon
satisfaction of each of the following conditions:
(a) Borrower provides written notice requesting the Extension
("Extension Notice") to Lender not less than 90 nor more than 360 days prior to
the then effective Original Variable Facility Termination Date or Variable
Facility Termination Date, as applicable.
(b) No Event of Default or Potential Event of Default exists on
either the date the Extension Notice is given or on the then effective Variable
Facility Termination Date.
(c) All of the representations and warranties of Borrower
contained in Article 7 of this Agreement and the other Loan Documents are true
and correct in all material respects on the date the Extension Notice is given
and on the then effective Original Variable Facility Termination Date, or
Variable Facility Termination Date, as applicable, or any such changes to the
truth and accuracy of such representations and warranties shall not have had a
Material Adverse Effect on the Borrower or any of the Mortgaged Properties.
(d) Borrower is in compliance with all of the covenants contained
in Articles 8 and 9 on the date the Extension Notice is given and on the then
effective Variable Facility Termination Date.
Upon receipt of the Extension Notice with respect to the Original Variable
Termination Date extension referred to in Section 1.07(a)(i), and upon
compliance with the conditions set forth above, the Original Variable Facility
Termination Date shall be extended until the date five (5) years after the
Initial Closing Date on the terms and conditions contained in this Agreement and
the other Loan Documents. Upon receipt of the Extension Notice with respect to
the Original Variable Facility Date extension referred to in Section
1.07(a)(ii), and upon compliance with the conditions set forth above, the
Original Variable Facility Termination Date shall be extended until the date ten
(10) years after the Initial Closing Date on the terms and conditions contained
in this Agreement and the other Loan Documents. Upon receipt of the Extension
Notice with respect to the Variable Termination Date and upon compliance with
the conditions set forth above, the Variable Facility Termination Date shall be
extended until the date ten (10) years after the Initial Closing Date on the
terms and conditions contained in this Agreement and the other Loan Documents.
The Variable Facility Fee, the Rate Preservation Fee and the
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Standby Fee applicable to the Variable Facility during the Extension shall be as
determined by Lender, pursuant to the terms of this Agreement.
SECTION 1.08. Conversion from Variable Facility Commitment to Fixed
Facility Commitment.
Except as provided in Section 1.09, Borrower shall have the right, from
time to time during the Fixed Facility Availability Period, to convert all or
any portion of the Variable Facility Commitment to the Fixed Facility
Commitment. The Variable Facility Commitment shall be reduced by, and the Fixed
Facility Commitment shall be increased by, the amount of each conversion.
(a) Request. To convert all or a portion of the Variable Facility
Commitment to the Fixed Facility Commitment, Borrower shall deliver a Conversion
Request to Lender. Each Conversion Request shall designate (1) the amount of the
conversion and (2) any Variable Advances Outstanding which will be prepaid on or
before the Closing Date for the conversion as required by Section 1.09(c). If,
after Lender determines the interest rate to be applicable to the Fixed Loan
after conversion, Borrower elects not to proceed with the conversion, it shall
so notify Lender in writing. If Borrower revokes any Conversion Request pursuant
to the preceding sentence, it shall be responsible for the reasonable costs and
expenses incurred by Lender in connection with such Conversion Request.
(b) Determination of Interest Rate for Conversion. The
determination of the interest rate applicable for any Fixed Advance relating to
the conversion of any or all of the Variable Facility Commitment to the Fixed
Facility Commitment shall be made not later than the Business Day following the
date on which Borrower requests such determination be made, provided that (i)
the Future Advance Request for such Fixed Advance has been approved by Lender
and (ii) Borrower requests that the interest rate determination be made not
later than 10:00 a.m. Eastern time on the Business Day prior to the day on which
Borrower desires the interest rate determination to be made.
(c) Closing. Subject to Section 1.09 and provided that all
conditions contained in Section 1.10 are satisfied, Lender shall permit the
requested conversion to close at offices designated by Lender on a Closing Date
selected by Lender, and occurring within 30 Business Days after Lender's receipt
of the Conversion Request (or on such other date as Borrower and Lender may
agree). At the closing, Lender and Borrower shall execute and deliver, at the
sole cost and expense of Borrower, in form and substance satisfactory to Lender,
the Conversion Documents.
SECTION 1.09. Limitations on Right to Convert.
Borrower's right to convert all or any portion of the Variable Facility
Commitment to the Fixed Facility Commitment is subject to the following
limitations:
(a) Closing Date. The Closing Date shall occur during the Fixed
Facility Availability Period.
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(b) Minimum Request. Each Conversion Request shall be in the
minimum amount of $5,000,000.
(c) Obligation to Prepay Variable Advances. Borrower shall prepay
any difference by which, after the conversion, the aggregate unpaid principal
balance of all Variable Advances Outstanding will exceed the Variable Facility
Commitment. No Facility Termination Fee shall be due in connection with any
Conversion.
(d) Conversion in Connection with Advance. The amount of the
Variable Facility Commitment converted to a Fixed Facility Commitment shall be
equal to the amount of a Fixed Advance made simultaneously with such conversion.
SECTION 1.10. Conditions to Conversion.
The conversion of all or any portion of the Variable Facility Commitment
to the Fixed Facility Commitment is subject to the satisfaction, on or before
the Closing Date, of (a) the conditions precedent contained in Section 6.08 and
(b) all applicable General Conditions contained in Section 6.01.
ARTICLE 2
THE ADVANCES
SECTION 2.01. Rate Setting for an Advance.
Rates for an Advance shall be set in accordance with the following
procedures:
(a) Preliminary, Nonbinding Quote. At Borrower's request Lender
shall quote an estimate of the Pass-Through Rate (for a proposed Fixed Advance),
which Pass-Through Rate shall not include the Fixed Facility Fee or MBS Imputed
Interest Rate (for a proposed Variable Advance), which MBS Imputed Interest Rate
shall not include the Variable Facility Fee. Lender's quote shall be based on
(1) a solicitation of bids from institutional investors selected by Lender and
(2) the proposed terms and amount of the Advance selected by Borrower. The quote
shall not be binding upon Lender.
(b) Rate Setting. If Borrower satisfies all of the conditions to
Lender's obligation to make the Advance, then Borrower may submit to Lender, by
facsimile transmission before 1:00 p.m. Washington, D.C. time on any Business
Day ("Rate Setting Date"), a completed and executed Rate Form. The Rate Form
shall specify the amount, term, MBS Issue Date (if applicable), Facility Fee,
the proposed maximum Coupon Rate ("Maximum Annual Coupon Rate") and Closing Date
for the Advance.
(c) Rate Confirmation. Within one Business Day after receipt of
the Rate Form, Lender shall solicit bids from institutional investors selected
by Lender based on the information in the Rate Form and, provided the actual
Coupon Rate (if the low bid were accepted) would be at or below the Maximum
Annual Coupon Rate, shall obtain a commitment ("MBS Commitment") for the
purchase of an MBS having the bid terms described in the related
8
Rate Form or, in the case of the purchase of a 100% participation in any Fixed
Advance by Fannie Mae for cash, a commitment from Fannie Mae ("Fannie Mae
Commitment") for the purchase of such participation having the bid terms
described in the related Rate Form. Lender shall then complete and countersign
the Rate Form thereby confirming the amount, term, MBS Issue Date (if
applicable), MBS Delivery Date (if applicable), MBS Imputed Interest Rate or
Pass-Through Rate, Facility Fee, Coupon Rate, Discount, Price, and Closing Date
for the Advance and shall immediately deliver by facsimile transmission the Rate
Form to Borrower.
SECTION 2.02. Advance Confirmation Instrument for Variable Advances.
On or before the Closing Date for a Variable Advance, Borrower shall
execute and deliver to Lender a fully executed Advance Confirmation Instrument,
confirming the amount, term, MBS Issue Date, MBS Delivery Date, MBS Imputed
Interest Rate, Variable Facility Fee, Coupon Rate, Discount, Price and Closing
Date for the Advance, and Borrower's obligation to repay the Variable Advance in
accordance with the terms of the Variable Facility Note and this Agreement. Upon
the funding of the Variable Advance, Lender shall insert the date of funding on
the Advance Confirmation Instrument and deliver a copy of the completed Advance
Confirmation Instrument to Borrower to evidence the date of funding and to
confirm that the Advance Confirmation Instrument is not effective until the date
of funding. Lender's failure to do so shall not invalidate the Advance
Confirmation Instrument or otherwise affect in any way any obligation of
Borrower to repay Variable Advances in accordance with the Advance Confirmation
Instrument, the Variable Facility Note or the other Loan Documents.
SECTION 2.03. Breakage and other Costs.
If Lender obtains, and then fails to fulfill, an MBS Commitment or a
Fannie Mae Commitment because the Advance is not made (for a reason other than
Lender's default), Borrower shall pay all reasonable out-of-pocket costs payable
to the potential investor and other reasonable costs, fees and damages incurred
by Lender in connection with its failure to fulfill an MBS Commitment or a
Fannie Mae Commitment.
SECTION 2.04. Advances.
Borrower may deliver an Advance Request to Lender.
(a) If the Advance Request is to obtain the Initial Advance and
all conditions precedent contained in Section 6.02 and the General Conditions
contained in Section 6.01 are satisfied on or before the Closing Date for the
Initial Advance, Lender shall make the Initial Advance on the Initial Closing
Date or on such other date as Borrower and Lender may agree.
(b) If the Advance Request is to obtain a Future Advance, such
Advance Request shall be in the minimum amount of $3,000,000. Borrower may have
one or more Advances of not less than $3,000,000 even though such Advances are
made on the same day and mature on the same date. If all conditions precedent
contained in Section 6.03 and the General Conditions contained in Section 6.01
are satisfied, Lender shall make the requested Future Advance, at a closing to
be held at offices designated by Lender on a Closing Date selected by
9
Lender, which date shall be not more than three (3) Business Days after
Borrower's receipt from Lender of the confirmed Rate Form (or on such other date
as Borrower and Lender may agree).
(c) Upon the making of an Advance, in no event shall the aggregate
of all Advances Outstanding exceed the lesser of (i) the Commitment Amount in
effect at the time the Advance is requested, and (ii) $400,000,000.
SECTION 2.05. Determination of Allocable Facility Amount and
Valuations.
(a) Initial Determinations. On the Initial Closing Date, Lender
shall determine (i) the Allocable Facility Amount and Valuation for each
Mortgaged Property and (ii) the Aggregate Debt Service Coverage Ratio and the
Aggregate Loan to Value Ratio. The determinations of Allocable Facility Amounts
and Valuations made as of the Initial Closing Date shall remain unchanged until
the First Anniversary.
(b) Monitoring Determinations. (i) Once each calendar month or, if
the Commitment consists only of a Fixed Facility Commitment, once each Calendar
Year, within 20 Business Days after Borrower has delivered to Lender the reports
required in Section 8.03, Lender shall determine the Aggregate Debt Service
Coverage Ratio and the Aggregate Loan to Value Ratio, provided that the
Aggregate Debt Service Coverage Ratio and the Aggregate Loan to Value Ratio
determined as of the Initial Closing Date shall be in effect for purposes of
Future Advances until the date 90 days after the Initial Closing Date, and
calculations required in connection with the other covenants set forth in the
Loan Documents, and whether the Borrower is in compliance, (ii) after the First
Anniversary, on an annual basis, and if Lender reasonably decides that changed
market or property conditions warrant, Lender shall determine Allocable Facility
Amounts and Valuations, (iii) Lender shall also redetermine Allocable Facility
Amounts to take account of any addition, release or substitution of Collateral
or other event which invalidates the outstanding determinations. In determining
Valuations, Lender shall use the then current Cap Rates. Until redetermined, the
outstanding Allocable Facility Amounts and Valuations shall remain in effect.
During the first Loan Year a Mortgaged Property is in the Collateral Pool, all
calculations of Aggregate Debt Service Coverage and Aggregate Loan to Value
Ratios including such Mortgaged Property shall be based on actual operations of
such Mortgaged Property during the period the Mortgaged Property was in the
Collateral Pool and underwriting proforma results for the remainder of such Loan
Year.
SECTION 2.06. Right to Advances Based on Increased Collateral Value.
At any time during the Variable Facility Availability Period after the
First Anniversary, the Borrower shall have a one-time right to a Future Advance
based on the increased value of the Mortgaged Properties. Borrower's right to a
Future Advance pursuant to this Section shall be subject to the following
conditions:
(a) Request. The Borrower shall deliver an Advance Request to
Lender. The Advance Request shall include the following:
(i) The amount of the proposed Future Advance; and
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(ii) If applicable, a request that Lender inform the Borrower
of the Variable Facility Fee or Fixed Facility Fee applicable to the
requested Future Advance.
(b) Determination of Amount of Advance. The maximum amount of a
proposed Future Advance requested pursuant to this Section 2.06 shall be the
amount that when added to the then current total of Advances Outstanding equals
the maximum amount of Advances that could be outstanding and the Coverage and
LTV Tests be satisfied. For purposes of calculating compliance with the Coverage
and LTV Tests for purposes of this Section 2.06, Lender shall evaluate the
Collateral Pool in accordance with DUS Guide Underwriting Requirements. In no
event shall the Future Advance requested pursuant to this Section 2.06, together
with the then current Advances Outstanding, exceed the lesser of (i) the
Commitment Amount in effect at the time the Future Advance is requested, and
(ii) $400,000,000.
(c) Variable Facility Fee. The Variable Facility Fee applicable to
any Future Advance made pursuant to this Section 2.06 (regardless of whether
such Advance is drawn from the Reserved Amount) shall be the Variable Facility
Fee determined by Lender at the time of the making of the Future Advance.
(d) Origination Fee. Borrower shall pay, on the Closing Date of
the Future Advance made pursuant to this Section 2.06, the Expansion Origination
Fee to the extent provided in Section 10.02(b).
(e) Closing. If all conditions precedent contained in Section 6.03
of this Agreement and all applicable General Conditions contained in Section
6.01 of this Agreement are satisfied, Lender shall make a Future Advance, at a
closing to be held at offices designated by Lender on a Closing Date selected by
Lender, and occurring within thirty (30) calendar days after Lender's approval
of the Future Advance (or on such other date as Borrower and Lender may agree).
ARTICLE 3
COLLATERAL CHANGES
SECTION 3.01. Right to Add Collateral.
Subject to the terms and conditions of this Article, Borrower shall have
the right, from time to time during the Term of this Agreement, to add
Manufactured Housing Communities to the Collateral Pool.
SECTION 3.02. Procedure for Adding Collateral.
The procedure for adding Collateral contained in this Section 3.02 shall
apply to all additions of Collateral including, but not limited to, additions of
Collateral in connection with substitutions of Collateral and expansion of the
Credit Facility.
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(a) Request. Borrower may deliver to Lender an Addition Request to
add one or more Manufactured Housing Communities to the Collateral Pool. Each
Addition Request shall be accompanied by the following: (i) the information
required by the DUS Guide Underwriting Requirements including any Lender
memoranda relating to Manufactured Housing Communities issued by Fannie Mae from
time to time and any additional information Lender may reasonably request; and
(ii) the payment of all Additional Collateral Due Diligence Fees.
(b) Underwriting. Lender shall evaluate the proposed Additional
Mortgaged Property in accordance with the DUS Guide Underwriting Requirements
including any Lender memoranda relating to Manufactured Housing Communities
issued by Fannie Mae from time to time, and shall make underwriting
determinations as to the Aggregate Debt Service Coverage Ratio and the Aggregate
Loan to Value Ratio applicable to the Collateral Pool on the basis of the lesser
of (1) the acquisition price of the proposed Additional Mortgaged Property if
purchased as a single acquisition or a reasonable allocation of total purchase
price if purchased as part of a portfolio purchase by Borrower within 12 months
of the related Addition Request, and (2) a Valuation made with respect to the
proposed Additional Mortgaged Property. Within 30 Business Days (provided that
Lender shall use reasonable efforts to respond sooner) after receipt of (1) the
Addition Request and (2) all reports, certificates and documents required by the
DUS Guide Underwriting Requirements including any Lender memoranda relating to
Manufactured Housing Communities issued by Fannie Mae from time to time,
including a zoning analysis undertaken in accordance with Section 206 of Part
III of the DUS Guide, Lender shall notify Borrower whether it shall consent to
the Addition Request. If Lender consents it shall set forth the Aggregate Debt
Service Coverage Ratio and the Aggregate Loan to Value Ratio which it estimates
shall result from the addition of the proposed Additional Mortgaged Property.
Within 30 Business Days after receipt of Lender's consent to the Addition
Request, Borrower shall notify Lender whether it elects to add the proposed
Additional Mortgaged Property to the Collateral Pool. If Borrower fails to
respond within the period of 30 Business Days, it shall be conclusively deemed
to have elected not to add the proposed Additional Mortgaged Property to the
Collateral Pool.
(c) Closing. If Lender consents to the Addition Request, Borrower
timely elects to add the proposed Additional Mortgaged Property to the
Collateral Pool and all conditions precedent contained in Section 6.04 and all
General Conditions contained in Section 6.01 are satisfied, Lender shall permit
the addition of the proposed Additional Mortgaged Property to the Collateral
Pool, at a closing to be held at offices designated by Lender on a Closing Date
selected by Lender, occurring within 20 Business Days after Lender's receipt of
Borrower's election (or on such other date as Borrower and Lender may agree).
SECTION 3.03. Right to Obtain Releases of Collateral.
Subject to the terms and conditions of this Article, Borrower shall have
the right to obtain a release of Collateral from the Collateral Pool.
SECTION 3.04. Procedure for Obtaining Releases of Collateral.
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(a) Request. To obtain a release of Collateral from the Collateral
Pool, Borrower may deliver a Release Request to Lender. The Release Request
shall not result in a termination of all or any part of the Credit Facility.
Borrower may terminate all or any part of the Credit Facility only by delivering
a Facility Termination Request or Credit Facility Termination Request pursuant
to Article 5.
(b) Closing. If all conditions precedent contained in Section 6.05
and all General Conditions contained in Section 6.01 are satisfied, Lender shall
cause the Release Property to be released, at a closing to be held at offices
designated by Lender on a Closing Date selected by Lender, and occurring not
less than 15 days after Lender's receipt of the Release Request (or on such
other date as Borrower and Lender may agree), by executing and delivering, and
causing all applicable parties to execute and deliver, all at the sole cost and
expense of Borrower, the Release Documents. Borrower shall prepare the Release
Documents and submit them to Lender for its review.
(c) Release Price. The Release Price for each Mortgaged Property
shall be (A) the greater of (i) 110% of the Allocable Facility Amount for the
Release Property and (ii) the amount of any Advances Outstanding which are
required to be repaid by Borrower to Lender so that, immediately after the
release, the Aggregate Debt Service Coverage Ratio immediately prior to the
release is not reduced and the Aggregate Loan to Value Ratio immediately prior
to the release is not increased, (B) if after the release of the Release
Property (regardless of the Aggregate Loan to Value Ratio or the Aggregate Debt
Service Coverage Ratio prior to the release), the Aggregate Loan to Value Ratio
is 65% or less and the Aggregate Debt Service Coverage is 1.35:1.0 or greater,
then the Release Price shall be the Allocable Facility Amount for the Release
Property, or (C) if after the release of the Release Property (regardless of the
Aggregate Loan to Value Ratio or the Aggregate Debt Service Coverage Ratio prior
to the release), the Aggregate Loan to Value Ratio is 60% or less and the
Aggregate Debt Service Coverage Ratio is 1.55:1.0 or greater, then the Release
Price, if any, shall be the amount of any Advances Outstanding which are
required to be repaid by Borrower to Lender so that, immediately after the
release, the Aggregate Debt Service Coverage Ratio is no less than 1.55:1.0 and
the Aggregate Loan to Value Ratio is no more than 60%. In addition, Borrower
shall pay to Lender all other amounts due under the Notes and any Advance
Confirmation Instruments evidencing the Advances being repaid. Notwithstanding
the provisions of this Section 3.04(c), upon the maturity of any Fixed Advance
and the repayment in full of all amounts owing in connection with such Fixed
Advance, the Release Price for any Mortgaged Property to be released from the
collateral pool in conjunction with such repayment shall be equal to the
Outstanding Allocated Facility Amount for such Released Property.
(d) Application of Release Price. The Release Price shall be
applied first against the Variable Advances Outstanding until there are no
further Variable Advances Outstanding, then against the prepayment of Fixed
Advances Outstanding, so long as the prepayment is permitted under the
applicable Fixed Facility Note. If, on the date Borrower pays the Release Price,
Variable Advances are Outstanding but not then due and payable, Lender shall
hold the Release Price in an interest-bearing account as additional Collateral,
until the next date on which Variable Advances are due and payable, at which
time Lender shall apply the appropriate portion of the Release Price to such
Variable Advances.
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(e) Special Provisions Regarding Expansion Property. The Parties
acknowledge that certain portions of the Mortgaged Properties commonly known as
Eagle Crest, Boulder Ridge, and Windham Hills are currently undeveloped and
vacant (such undeveloped and vacant portions, individually and collectively, the
"EXPANSION PROPERTY"). Notwithstanding any provisions in this Agreement to the
contrary, Borrower shall be permitted to release an Expansion Property from the
Collateral Pool without the payment of a Release Price upon the satisfaction of
each of the following conditions:
(i) Lender shall have approved the legal description of
the relevant Mortgaged Property remaining in the Collateral Pool after the
release of the Expansion Property;
(ii) Borrower shall have transferred the Expansion Property
into a separate tax parcel and the Mortgaged Property remaining in the
Collateral Pool shall have a separate tax identification number;
(iii) If necessary, Borrower shall have subdivided or
replatted the Mortgaged Property, as required by the jurisdiction in which
the Mortgaged Property is located, such that the Mortgaged Property
remaining in the Collateral Pool after the release of the Expansion
Property shall be a separate parcel, on which Lender can exercise all
rights and remedies afforded in this Agreement and the Security
Instrument, including conveying the Mortgaged Property upon foreclosure;
(iv) Borrower shall have recorded any easements, in a form
and substance required by Lender, benefiting the Mortgaged Property after
the release of the Expansion Property including, but not limited to,
easements granting use and/or access to amenities on the Expansion
Property, utility easements for utilities located or to be located on the
Expansion Property benefiting the remaining Mortgaged Property, and
parking or access easements;
(v) The Expansion Property shall be deeded to an entity,
that is not a Borrower under this Agreement, at the time of such release;
(vi) Borrower shall amend the existing Security Instrument
for such Mortgaged Property to reflect the new legal description of the
Mortgaged Property, which legal description shall include any beneficial
easements;
(vii) Borrower shall cause the existing title policy for
such Mortgaged Property to be amended to reflect the new legal description
of the Mortgaged Property, which legal description shall include any
beneficial easements as insured parcels;
(viii) Borrower covenants that the Expansion Property shall
be developed and operated in a manner compatible with the use of the
remaining Mortgaged Property as a manufactured housing community; and
14
(ix) Borrower shall pay all of Lender's reasonable costs
and expenses, including legal fees and expenses, in connection with the
release of any Expansion Property.
(f) Special Provisions Regarding Eagle Crest. The Parties
acknowledge that Borrower intends to dedicate to the Town of Lady Lake, Florida
the water supply system and wastewater treatment plant (the "WATER OAK WATER
TREATMENT FACILITY") located on Parcels A, B and C of that certain Mortgaged
Property commonly known as Water Oak in Lake County, Florida (the "WATER OAK
PROPERTY"). Lender hereby agrees to consent to such dedication and to release
the Water Oak Water Treatment Facility from the Collateral Pool upon the
satisfaction of the following conditions:
(i) Lender shall have reviewed and approved the final form
of the Agreement for Purchase and Sale, the Rate Agreement, the Water and
Wastewater Capacity Reservation Agreement, the Golf Course and Common Area
Utilization Agreement and the Technical Assistance Agreement, each by and
between SCF and the Town of Lady Lake, and any other documents executed in
connection with the dedication of the Water Oak Water Treatment Facility;
(ii) If the legal description of the Water Oak Water
Treatment Facility is not Parcels A, B, and C of the Water Oak Property,
Lender shall have approved the legal description of the Water Oak Water
Treatment Facility to be released from the Collateral Pool;
(iii) If necessary, Borrower shall have transferred the
Water Oak Water Treatment Facility into a separate Tax ID parcel and
remainder of the Water Oak Property shall have a Tax ID separate from the
Water Oak Water Treatment Facility;
(iv) If necessary, Borrower shall have subdivided or
replatted the Water Oak Property, as required by the Lake County, Florida,
such that the Water Oak Property remaining in the Collateral Pool after
the release of the Water Oak Water Treatment Facility shall be a separate
parcel, on which Lender can exercise all rights and remedies afforded in
this Agreement and the Security Instrument including conveying the Water
Oak Property upon foreclosure;
(v) Borrower shall have recorded any easements, in form
and substance required by the Governmental Authority having jurisdiction
over the Water Oak Property in connection with the continued operation of
the Water Oak Property pertaining to the Water Oak Water Treatment
Facility, and if reasonably requested by Lender, any other easements
pertaining to the continued operation of the Water Oak Property;
(vi) The Water Oak Water Treatment Facility shall be deeded
to the Town of Lady Lake, at the time of the release of the Water Oak
Water Treatment Facility;
15
(vii) Borrower shall amend the existing Security Instrument
for the Water Oak Property to remove the Water Oak Water Treatment
Facility from the legal description, which legal description shall include
any beneficial easements;
(viii) Borrower shall cause the existing title policy for
such Mortgaged Property to be amended to remove the Water Oak Water
Treatment Facility from the legal description, which legal description
shall include any beneficial easements as insured parcels; and
(ix) Borrower shall pay all of Lender's reasonable costs
and expenses, including legal fees and expenses, in connection with the
dedication and release of the Water Oak Treatment Facility.
SECTION 3.05. Right to Substitute Collateral.
Subject to the terms, conditions and limitations of this Section 3.05,
Borrower shall have the right to add one or more Manufactured Housing
Communities to the Collateral Pool in substitution of one or more Mortgaged
Properties then in the Collateral Pool ("Substitute Mortgaged Property").
SECTION 3.06. Procedure for Substituting Collateral.
(a) Request. Borrower may deliver to Lender a Substitution Request
to add one or more Manufactured Housing Communities in substitution of one or
more Mortgaged Properties then in the Collateral Pool. Each Substitution Request
shall be accompanied by
(i) the information required by the DUS Guide Underwriting
Requirements including any Lender memoranda relating to Manufactured Housing
Communities issued by Fannie Mae from time to time and any additional
information Lender may reasonably request; and (ii) a statement whether the
addition of the Substitute Mortgaged Property will occur simultaneously with the
release of the Release Property and, if not, the proposed date on which the
Substitute Mortgaged Property will be added to the Collateral Pool which, in no
event, shall be a date which is more than 90 days after the proposed date of the
release of the Release Property.
(b) Underwriting. Lender shall make underwriting determinations as
to the Aggregate Debt Service Coverage Ratio and the Aggregate Loan to Value
Ratio immediately prior to and immediately after giving effect to the proposed
substitution, and the Valuation and the Net Operating Income for both the
Substitute Mortgaged Property and the Release Property. Notwithstanding anything
to the contrary contained herein, underwriting determinations with respect to
the proposed Substitute Mortgaged Property shall be made on the basis of a
Valuation and otherwise in accordance with the DUS Guide Underwriting
Requirements including any Lender memoranda relating to Manufactured Housing
Communities issued by Fannie Mae from time to time. Within 30 days after receipt
of (i) the Substitution Request and (ii) all reports, certificates and documents
required under the DUS Guide including any Lender memoranda relating to
Manufactured Housing Communities issued by Fannie Mae from time to time,
including a zoning analysis undertaken in accordance with Section 206 of Part
III of the DUS
16
Guide, Lender shall notify Borrower whether Lender shall consent to Substitution
Request. If Lender consents, it shall set forth the Aggregate Debt Service
Coverage Ratio and the Aggregate Loan to Value Ratio which it estimates shall
result from the substitution of the Substitute Mortgaged Property into the
Collateral Pool. Within 30 days after receipt of Lender's consent notice,
Borrower shall notify Lender whether it elects to cause such substitution to
occur. If Borrower fails to respond within the period of 30 days, it shall be
conclusively deemed to have elected not to cause the proposed substitution to
occur.
(c) Closing. If Lender consents to the Substitution Request,
Borrower timely elects to cause such substitution to occur and all conditions
precedent contained in Section 6.06 and all General Conditions contained in
Section 6.01 are satisfied, Lender shall permit the Substitute Mortgaged
Property to be substituted into the Collateral Pool in replacement of the
Release Property, at a closing to be held at offices designated by Lender on a
Closing Date selected by Lender and approved by Borrower, and occurring
(i) if the addition of the Substitute Mortgaged Property and
the release of the Release Property are to occur simultaneously, within 30
days after Lender's receipt of Borrower's election (or on such other date
as Borrower and Lender may agree); or
(ii) if the addition of the Substitute Mortgaged Property is
to occur subsequent to the release of the Release Property, within 90 days
after the release of the Release Property.
If, in the case of clause (ii) of this paragraph, the addition of the Substitute
Mortgaged Property to the Collateral Pool does not occur within 90 days or such
longer period as approved by Lender, in its sole discretion, after the release
of the Release Property, then Borrower shall have waived its right to substitute
such Release Property with the Substitute Mortgaged Property, the Release Price
shall be determined pursuant to Section 3.04(c) and Borrower shall comply with
the requirement contained in Section 3.04(d). Such Release Price, or the
applicable portion thereof, shall be immediately due and payable by Borrower to
Lender to reduce the Advances Outstanding as required by, and in the manner
contained in, Section 3.04(d).
(d) Restriction on Borrowings. If the addition of the Substitute
Mortgaged Property and the release of the Release Property does not occur
simultaneously then, until the addition of the Substitute Mortgaged Property,
the aggregate unpaid principal balance of Advances Outstanding shall not exceed
the amount of the then-existing Commitment minus the Allocable Facility Amount
of the Release Property, unless Borrower has delivered additional Collateral
reasonably acceptable to Lender in an amount at least equal to such Allocable
Facility Amount. If the aggregate unpaid principal balance of Advances
Outstanding exceeds such amount (and satisfactory additional Collateral has not
been delivered by Borrower to Lender), Borrower shall pay such excess as a
condition precedent to the addition of a Substitute Mortgaged Property.
Notwithstanding the foregoing, in no event shall the value of the additional
Collateral exceed 15% of the principal balance of the Advances Outstanding. Any
payment received by Lender under this Section shall be applied against Advances
Outstanding in the manner prescribed for Release Prices pursuant to Section
3.04(d). The additional Collateral shall
17
be released to Borrower upon the addition of the applicable Substitute Mortgaged
Property to the Collateral Pool.
ARTICLE 4
EXPANSION OF CREDIT FACILITY
SECTION 4.01. Right to Increase Commitment.
Subject to the terms, conditions and limitations of this Article, Borrower
shall have the right, during the Fixed Facility Availability Period, to increase
the Fixed Facility Commitment and, during the Variable Facility Availability
Period, to increase the Variable Facility Commitment. Borrower's right to
increase the Commitment is subject to the following limitations:
(a) Maximum Amount of Increase in Commitment. As of the Initial
Closing Date, the amount of the Commitment is $390,000,000. The maximum amount
by which the Commitment may be increased is $10,000,000.
(b) Minimum Request. Each Request for an increase in the
Commitment shall be in the minimum amount of $5,000,000.
(c) Terms and Conditions. The terms and conditions of this
Agreement shall apply to any increase in the Commitment closed prior to the
First Anniversary. Thereafter, the Variable Facility Fee, Fixed Facility Fee,
Rate Preservation Fee and Standby Fee applicable to any increase in the
Commitment shall be mutually agreed upon by Lender and Borrower; provided,
however, (i) that if Borrower incurs a Standby Fee, then the Variable Facility
Fee and Fixed Facility Fee shall, subject to the provisions of Section 10.01 of
this Agreement, remain unchanged for so long as the Commitment is outstanding
and the Standby Fee is paid, and (ii) that if Borrower elects to pay the Rate
Preservation Fee, then the Variable Facility Fee and the Fixed Facility Fee
shall, subject to the provisions of Section 10.06 of this Agreement, remain
unchanged for so long as the Rate Preservation Fee is paid.
SECTION 4.02. Procedure for Obtaining Increases in Commitment.
(a) Request. To obtain an increase in the Commitment, Borrower
shall deliver an Expansion Request to Lender. Each Expansion Request shall
include the following:
(i) The total amount of the proposed increase;
(ii) A designation of the increase as being part of the Fixed
Facility Commitment and/or the Variable Facility Commitment;
(iii) A request that Lender inform Borrower of any change in
the Geographical Diversification Requirements; and
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(iv) If the increase in the Commitment is to close after the
date one year after the date hereof, a request that Lender inform Borrower
of the Fixed Facility Fee, the Variable Facility Fee, Rate Preservation
Fee and the Standby Fee to apply to Advances drawn from such increase in
the Commitment.
(b) Closing. If all conditions precedent contained in Section 6.07
and all General Conditions contained in Section 6.01 are satisfied, Lender shall
permit the Expansion Request to occur, at a closing to be held at offices
designated by Lender on a Closing Date selected by Lender and approved by
Borrower, and occurring not less than fifteen (15) Business Days after Lender's
receipt of the Expansion Request (or on such other date as Borrower and Lender
may agree).
ARTICLE 5
TERMINATION OF FACILITIES
SECTION 5.01. Right to Complete or Partial Termination of
Facilities.
Subject to the terms and conditions of this Article, Borrower shall have
the right to permanently reduce the Variable Facility Commitment and/or the
Fixed Facility Commitment.
SECTION 5.02. Procedure for Complete or Partial Termination of
Facilities.
(a) Request. To permanently reduce the Variable Facility
Commitment or the Fixed Facility Commitment, Borrower shall deliver a Facility
Termination Request to Lender. A permanent reduction of the Variable Facility
Commitment to $0 shall be referred to as a "Complete Variable Facility
Termination." A permanent reduction of the Fixed Facility Commitment to $0 shall
be referred to as a "Complete Fixed Facility Termination." The Facility
Termination Request shall include the following:
(i) The proposed amount of the reduction in the Variable
Facility Commitment and/or Fixed Facility Commitment; and
(ii) Unless there is a Complete Variable Facility Termination
or a Complete Fixed Facility Termination, a designation by Borrower of any
Variable Advances which will be prepaid and/or any Fixed Advances which
will be prepaid or defeased.
Any release of Collateral, whether or not made in connection with a Facility
Termination Request, must comply with all conditions to a release which are
contained in Article 6.
(b) Closing. If all conditions precedent contained in Section 6.09
and all General Conditions contained in Section 6.01 are satisfied, Lender shall
reduce the Variable Facility Commitment or Fixed Facility Commitment, as the
case may be, to the amount designated by Borrower, at a closing to be held at
offices designated by Lender on a Closing Date selected by Lender, within thirty
(30) Business Days after Lender's receipt of the Facility Termination Request
(or on such other date as Borrower and Lender may agree), by executing
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and delivering the Facility Termination Document evidencing the reduction in the
Facility Commitment.
SECTION 5.03. Right to Terminate Credit Facility.
Subject to the terms and conditions of this Article, Borrower shall have
the right to terminate this Agreement and the Credit Facility and receive a
release of all of the Collateral.
SECTION 5.04. Procedure for Terminating Credit Facility.
(a) Request. To terminate this Agreement and the Credit Facility,
Borrower shall deliver a Credit Facility Termination Request to Lender.
(b) Closing. If all conditions precedent contained in Section 6.10
are satisfied, this Agreement shall terminate, and Lender shall cause all of the
Collateral to be released, at a closing to be held at offices designated by
Lender on a Closing Date selected by Lender, within 20 Business Days after
Lender's receipt of the Credit Facility Termination Request (or on such other
date as Borrower and Lender may agree), by executing and delivering, and causing
all applicable parties to execute and deliver, all at the sole cost and expense
of Borrower, the Credit Facility Termination Documents.
ARTICLE 6
CONDITIONS PRECEDENT TO ALL REQUESTS
SECTION 6.01. Conditions Applicable to All Requests.
The obligation of Lender to close the transaction requested in a Request
shall be subject to the following general conditions precedent ("General
Conditions") in addition to any other conditions precedent contained in this
Agreement:
(a) Compliance with Debt Service Coverage RatioSECTION 8.16
Compliance with Debt Service Coverage Ratio. Except in connection with a Credit
Facility Termination Request or a Rollover Variable Advance, the Aggregate Debt
Service Coverage Ratio shall be not less than 1.30:1.0.
(b) Compliance with Loan to Value RatioSECTION 8.17 Compliance
with Loan to Value Ratio. Except in connection with a Credit Facility
Termination Request or a Rollover Variable Advance, the Aggregate Loan to Value
Ratio shall not be greater than 75%.
(c) Geographical Diversification; Compliance with Concentration
TestSECTION 8.18 Geographical Diversification. Except in connection with a
Credit Facility Termination Request or a Rollover Variable Advance, the
Mortgaged Properties in the Collateral Pool shall comply with the Geographical
Diversification Requirements.
(d) Payment of Expenses. The payment by Borrower of Lender's and
Fannie Mae's reasonable fees and expenses payable in accordance with this
Agreement, including, but not limited to, the legal fees and expenses contained
in Section 10.04.
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(e) No Material Adverse Change. Except in connection with a Credit
Facility Termination Request or a Rollover Variable Advance, there has been no
material adverse change in the financial condition, business or prospects of
Borrower or Sun or in the physical condition, operating performance or value of
any of the Mortgaged Properties since the date of the most recent Compliance
Certificate (or, with respect to the conditions precedent to the Initial
Advance, from the condition, business or prospects reflected in the financial
statements, reports and other information obtained by Lender during its review
of Borrower and Sun and the Initial Mortgaged Properties).
(f) No Default. Except in connection with a Credit Facility
Termination Request, there shall exist no Event of Default or Potential Event of
Default on the Closing Date for the Request and, after giving effect to the
transaction requested in the Request, no Event of Default or Potential Event of
Default shall have occurred other than an Event of Default or Potential Event of
Default that would be cured as a result of the consummation of such Request.
(g) No Insolvency. Neither the Borrower nor Sun is insolvent
(within the meaning of any applicable federal or state laws relating to
bankruptcy or fraudulent transfers) or will be rendered insolvent by the
transactions contemplated by the Loan Documents, including the making of a
Future Advance, or, after giving effect to such transactions, will be left with
an unreasonably small capital with which to engage in its business or
undertakings, or will have intended to incur, or believe that it has incurred,
debts beyond its ability to pay such debts as they mature or will have intended
to hinder, delay or defraud any existing or future creditor.
(h) No Untrue Statements. The Loan Documents shall not contain any
untrue or misleading statement of a material fact and shall not fail to state a
material fact necessary to make the information contained therein not misleading
if such statement or failure has a Material Adverse Effect.
(i) Representations and Warranties. Except in connection with a
Credit Facility Termination Request or a Rollover Variable Advance, all
representations and warranties made by Borrower and Sun in the Loan Documents
shall be true and correct in all material respects on the Closing Date for the
Request with the same force and effect as if such representations and warranties
had been made on and as of the Closing Date for the Request, other than those
representations and warranties which, if not materially true and correct, do not
have a Material Adverse Effect.
(j) No Condemnation or Casualty. Except in connection with a
Credit Facility Termination Request or a Rollover Variable Advance, there shall
not be pending or threatened any condemnation or other taking, whether direct or
indirect, against any Mortgaged Property (other than a Mortgaged Property
subject to a Release Request) and there shall not have occurred any casualty to
any improvements located on any Mortgaged Property (other than a Mortgaged
Property subject to a Release Request), which condemnation or casualty would
have a Material Adverse Effect.
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(k) Delivery of Closing Documents. Except in connection with a
Rollover Variable Advance, the receipt by Lender of the following, each dated as
of the Closing Date for the Request, in form and substance satisfactory to
Lender in all respects:
(i) The Loan Documents required for consummation of such
Request, if any;
(ii) A Compliance Certificate;
(iii) An Organizational Certificate; and
(iv) Such other documents, instruments, approvals (and, if
requested by Lender, certified duplicates of executed copies thereof) and
opinions as Lender may reasonably request.
(l) Covenants. Except in connection with a Credit Facility
Termination Request or a Rollover Variable Advance, Borrower is in full
compliance with each of the covenants contained in Articles 8 and 9 of this
Agreement, without giving effect to any notice and cure rights of Borrower, to
the extent that any such non-compliance will not have a Material Adverse Effect
on the Borrower.
SECTION 6.02. Conditions Precedent to Initial Advance.
The obligation of Lender to make the Initial Advance is subject to the
following conditions precedent:
(a) Receipt by Lender of the fully executed Advance Request;
(b) Delivery to the Title Company, for filing and/or recording in
all applicable jurisdictions, of all applicable Loan Documents required by
Lender, including a duly executed and delivered original of the Variable
Facility Note, Fixed Facility Notes, the Guaranty, the Initial Security
Instruments covering the Initial Mortgaged Properties and UCC-1 Financing
Statements covering the portion of the Collateral comprised of personal
property, and other appropriate instruments, in form and substance satisfactory
to Lender and in form proper for recordation, as may be necessary in the opinion
of Lender to perfect the Liens created by the applicable Security Instruments
and any other Loan Documents creating a Lien in favor of Lender, and the payment
of all taxes, fees and other charges payable in connection with such execution,
delivery, recording and filing;
(c) If applicable, the receipt by Lender of the first installment
of the Variable Facility Fee and the entire Discount payable by Borrower
pursuant to Section 1.04;
(d) If applicable, the receipt by Lender of the first installment
of the Fixed Facility Fee and any interest payable by the Borrower pursuant to
Section 1.04; and
(e) Receipt by Lender of the Initial Origination Fee to the extent
provided pursuant to Section 10.02(a) and the Initial Due Diligence Fee pursuant
to Section 10.03(a).
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SECTION 6.03. Conditions Precedent to Future Advances.
The obligation of Lender to make a requested Future Advance is subject to
the following conditions precedent:
(a) Except in connection with a Rollover Variable Advance, receipt
by Lender of the fully executed Advance Request;
(b) Except in connection with a Rollover Variable Advance,
delivery by Lender to Borrower of the Rate Form for the Future Advance;
(c) Except in connection with a Rollover Variable Advance, after
giving effect to the requested Future Advance, the Coverage and LTV Tests will
be satisfied;
(d) If the Advance is a Fixed Advance, delivery of a Fixed
Facility Note, duly executed by Borrower, in the amount and reflecting all of
the terms of the Fixed Advance;
(e) If the Advance is a Variable Advance, delivery of the Advance
Confirmation Instrument, duly executed by Borrower;
(f) If the Advance is made in connection with the addition of a
Mortgaged Property to the Collateral Pool, for any Title Insurance Policy not
containing a Revolving Credit Endorsement, the receipt by Lender of an
endorsement to the Title Insurance Policy, amending the effective date of the
Title Insurance Policy to the Closing Date increasing the limits of liability by
the amount of the Future Advance and showing no additional exceptions to
coverage other than the exceptions shown on the Initial Closing Date and other
exceptions approved by Lender;
(g) If the Advance is a Variable Advance, the receipt by Lender of
the first installment of Variable Facility Fee for the Variable Advance and the
entire Discount for the Variable Advance payable by Borrower pursuant to Section
1.04;
(h) Except in connection with a Rollover Variable Advance, no
material adverse change in the financial condition of Borrower or Sun has
occurred between the respective dates of the financial statements which were
most recently furnished to Lender relating to such entities;
(i) Except in connection with a Rollover Variable Advance, no
Governmental Approval not already obtained or made is required for the execution
and delivery of the documents to be delivered in connection with the Future
Advance;
(j) Except in connection with a Rollover Variable Advance,
Borrower is not under any cease or desist order or other orders of a similar
nature, temporary or permanent of any Governmental Authority which would have
the effect of preventing or hindering performance of the terms and provisions of
the Agreement or any other Loan Documents, nor are there any proceedings
presently in progress or, to its knowledge, contemplated which, if successful,
would lead to the issuance of any such order; and
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(k) Receipt by Lender of the Expansion Origination Fee, if
applicable.
SECTION 6.04. Conditions Precedent to Addition of an Additional Mortgaged
Property to the Collateral Pool.
The addition of an Additional Mortgaged Property to the Collateral Pool on
the applicable Closing Date is subject to the satisfaction of the following
conditions precedent:
(a) If the addition of an Additional Mortgaged Property is
completed prior to the First Anniversary, satisfaction of the Coverage and LTV
Tests after giving effect to the addition of the Additional Mortgaged Property;
(b) If the addition of an Additional Mortgaged Property to the
Collateral Pool closes on or after the First Anniversary, (i) the Additional
Mortgaged Property has a Debt Service Coverage Ratio of at least l30% and a
Loan-to-Value Ratio of not more than 75%, in each case based on the underwriting
performed pursuant to Section 3.02(b), and (ii) satisfaction of the Coverage and
LTV Tests after giving effect to the addition of the Additional Mortgaged
Property;
(c) Receipt by the Lender of all legal fees and expenses payable
by the Borrower in connection with the Collateral Additional Request pursuant to
Section 10.03(b);
(d) Delivery to the Title Company, with fully executed
instructions directing the Title Company to file and/or record in all applicable
jurisdictions, all applicable Addition Loan Documents required by Lender,
including duly executed and delivered original copies of any Security
Instruments and UCC-1 Financing Statements covering the portion of the
Additional Mortgaged Property comprised of personal property, and other
appropriate documents, in form and substance reasonably satisfactory to Lender
and in form proper for recordation, as may be necessary in the opinion of Lender
to perfect the Lien created by the applicable additional Security Instrument,
and any other addition Loan Document creating a Lien in favor of Lender, and the
payment of all taxes, fees and other charges payable in connection with such
execution, delivery, recording and filing;
(e) If required by Lender, amendments to the Notes and the
Security Instruments, reflecting the addition of any Additional Borrower and/or
the Additional Mortgaged Property to the Collateral Pool and, as to any Security
Instrument so amended, the receipt by Lender of an endorsement to the Title
Insurance Policy insuring the Security Instrument, amending the effective date
of the Title Insurance Policy to the Closing Date and showing no additional
exceptions to coverage other than the exceptions shown on the Initial Closing
Date and other exceptions approved by Lender; and
(f) If the Title Insurance Policy for the Additional Mortgaged
Property contains a tie-in Endorsement, an endorsement to each other Title
Insurance Policy containing a tie-in Endorsement, adding a reference to the
Additional Mortgaged Property.
SECTION 6.05. Conditions Precedent to Release of Property from the
Collateral Pool.
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The obligation of Lender to release a Property from the Collateral Pool by
executing and delivering the Release Documents on the Closing Date is subject to
the satisfaction of the following conditions precedent on or before the Closing
Date:
(a) Immediately after giving effect to the requested release, the
Coverage and LTV Tests will be satisfied or if the provisions of Section
3.04(c)(B) are applicable, immediately after such release the Aggregate Debt
Service Coverage Ratio is 1.35:1.0 or greater and the Aggregate Loan to Value
Ratio is 65% or less or if the provisions of Section 3.04(c)(C) are applicable,
immediately after such release the Aggregate Debt Service Coverage Ratio is
1.55:1.0 or greater and the Aggregate Loan to Value Ratio is 60% or less;
(b) Receipt by Lender of the Release Price, if due ;
(c) Receipt by Lender on the Closing Date of one or more
counterparts of each Release Document, dated as of the Closing Date, signed by
each of the parties (other than Lender) who is a party to such Release Document;
(d) If required by Lender, amendments to the Notes and the
Security Instruments, reflecting the release of the Release Property from the
Collateral Pool;
(e) If Lender determines the Release Property to be one phase of a
project, and one or more other phases of the project are Mortgaged Properties
which will remain in the Collateral Pool ("Remaining Mortgaged Properties"),
Lender must determine that the Remaining Mortgaged Properties can be operated
separately from the Release Property and any other phases of the project which
are not Mortgaged Properties and whether any cross use agreements or easements
are necessary. In making this determination, Lender shall evaluate whether the
Remaining Mortgaged Properties comply with the terms of Sections 203 and 208 of
Part III of the DUS Guide;
(f) Receipt by Lender of endorsements to the tie-in endorsements
of the Title Insurance Policies, if deemed necessary by Lender, to reflect the
release;
(g) Receipt by Lender on the Closing Date of a Confirmation of
Obligations, dated as of the Closing Date, signed by Borrower and Sun, pursuant
to which Borrower and Sun confirm their obligations under the Loan Documents;
(h) The remaining Mortgaged Properties in the Collateral Pool
shall satisfy the Geographical Diversification Requirements; and
(i) Notwithstanding the other provisions of this Section 6.05, no
release of any of the Mortgaged Properties shall be made unless the Borrower has
provided title insurance, taking into account tie-in endorsements, to Lender in
respect of each of the remaining Mortgaged Properties in the Collateral Pool in
an amount equal to the lesser of (i) 115% of the Initial Value of the highest
valued Mortgaged Property remaining in the Collateral Pool and (ii) the
aggregate amount of Advances Outstanding.
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SECTION 6.06. Conditions Precedent to Substitution of a Substitute
Mortgaged Property into the Collateral Pool.
The substitution of a Substitute Mortgaged Property into the Collateral
Pool is subject to the satisfaction of the following conditions precedent:
(a) (i) The Substituted Mortgaged Property has a Debt Service
Coverage Ratio of at least l.30:1.0 and a Loan-to-Value Ratio of not more than
75%, in each case based on the underwriting performed pursuant to Section
3.02(b), and (ii) the Collateral Pool satisfies the Coverage and LTV Tests after
giving effect to the addition of the Substituted Mortgaged Property;
(b) The Aggregate Loan to Value Ratio of the Collateral Pool,
taking into account the Substituted Mortgaged Property, is equal to or less than
the Aggregate Loan to Value Ratio of the Collateral Pool immediately prior to
the substitution of the Substituted Mortgaged Property;
(c) The Aggregate Debt Service Coverage Ratio of the Collateral
Pool, taking into account the Substituted Mortgaged Property, is equal to or
greater than the Aggregate Debt Service Coverage Ratio of the Collateral Pool
immediately prior to the substitution of the Substituted Mortgaged Property;
(d) Receipt by the Lender of all legal fees and expenses payable
by the Borrower in connection with the Substitution Request pursuant to Section
10.03(b);
(e) Receipt by Lender of the Substitution Fee;
(f) Delivery to the Title Company, with fully executed
instructions directing the Title Company to file and/or record in all applicable
jurisdictions, all applicable Substitution Loan Documents required by Lender,
including duly executed and delivered original copies of any Security
Instruments and UCC-1 Financing Statements covering the portion of the
Substitute Mortgaged Property comprised of personal property, and other
appropriate documents, in form and substance satisfactory to Lender and in form
proper for recordation, as may be necessary in the opinion of Lender to perfect
the Lien created by the applicable additional Security Instrument, and any other
Substitution Loan Document creating a Lien in favor of Lender, and the payment
of all taxes, fees and other charges payable in connection with such execution,
delivery, recording and filing;
(g) If required by Lender, amendments to the Notes and the
Security Instruments, reflecting the addition of the Substitute Mortgaged
Property to the Collateral Pool;
(h) If the Title Insurance Policy for the Substitute Mortgaged
Property contains a tie-in endorsement, and endorsement to each other Title
Insurance Policy containing a tie-in endorsement, adding a reference to the
Substitute Mortgaged Property; and
(i) Delivery to Lender of additional Collateral or the repayment
of Advances Outstanding to the extent required pursuant to Section 3.04(d).
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SECTION 6.07. Conditions Precedent to Increase in Commitment.
The right of Borrower to increase the Commitment is subject to the
satisfaction of the following conditions precedent on or before the Closing
Date:
(a) The Coverage and LTV Tests will be satisfied;
(b) Receipt by Lender of fully executed original copies of all
Expansion Loan Documents, each of which shall be in full force and effect, and
in form and substance satisfactory to Lender in all respects; and
(c) If determined necessary by Lender, Borrower's agreement to
such Geographical Diversification Requirements as Lender may determine.
SECTION 6.08. Conditions Precedent to Conversion.
The conversion of all or a portion of the Variable Facility Commitment to
the Fixed Facility Commitment is subject to the satisfaction of the following
conditions precedent on or before the Closing Date:
(a) After giving effect to the requested conversion, the Coverage
and LTV Tests will be satisfied;
(b) Prepayment by Borrower in full of any Variable Advances
Outstanding which Borrower has designated for payment, together with other
amounts due with respect to the prepayment of such Variable Advances; and
(c) Receipt by Lender of one or more counterparts of each
Conversion Document, dated as of the Closing Date, signed by each of the parties
(other than Lender) to such Conversion Document.
SECTION 6.09. Conditions Precedent to Complete or Partial Termination of
Facilities.
The right of Borrower to terminate the Variable Facility Commitment and/or
the Fixed Facility Commitment and the obligation of Lender to execute the
Facility Termination Document, are subject to the satisfaction of the following
conditions precedent on or before the Closing Date:
(a) Payment by Borrower in full of all of the Variable Advances
Outstanding and Fixed Advances Outstanding, as the case may be, required to
reduce the aggregate unpaid principal balance of all Variable Advances
Outstanding and Fixed Advances Outstanding, as the case may be, to not greater
than the reduced Variable Facility Commitment and Fixed Facility Commitment, as
the case may be, including any associated prepayment premiums or other amounts
due under the Notes (but if Borrower is not required to prepay all of the
Variable Advances or Fixed Advances Outstanding, as the case may be, Borrower
shall have the right to select which of the Variable Advances or Fixed Advances,
as the case may be, shall be repaid);
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(b) Receipt by Lender of the Facility Termination Fee, provided
that no Facility Termination Fee shall be due during the six months prior to the
Variable Facility Termination Date; and
(c) Receipt by Lender on the Closing Date of one or more
counterparts of the Facility Termination Document, dated as of the Closing Date,
signed by each of the parties (other than Lender) who is a party to such
Facility Termination Document.
SECTION 6.10. Conditions Precedent to Termination of Credit Facility.
The right of Borrower to terminate this Agreement and the Credit Facility
and to receive a release of all of the Collateral from the Collateral Pool and
Lender's obligation to execute and deliver the Credit Facility Termination
Documents on the Closing Date are subject to the following conditions precedent:
(a) Payment by Borrower in full of all of the Notes Outstanding on
the Closing Date, including any associated prepayment premiums or other amounts
due under the Notes and all other amounts owing by Borrower to Lender under this
Agreement;
(b) Defeasance by Borrower, if necessary, in accordance with the
provisions of this Agreement, with respect to all Fixed Facility Notes
Outstanding on the Closing Date; and
(c) Receipt by Lender of the Facility Termination Fee, provided
that no Facility Termination Fee shall be due during the six months prior to the
Variable Facility Termination Date or Original Variable Facility Termination
Date, as applicable.
SECTION 6.11. Delivery of Closing Documents Relating to Advance Request,
Addition Request or Expansion Request.
With respect to the closing of an Advance Request (other than a Rollover
Variable Advance), an Addition Request or an Expansion Request, it shall be a
condition precedent that Lender receives each of the following, each dated as of
the Closing Date for the Request, in form and substance satisfactory to Lender
in all respects:
(a) Loan Documents. Fully executed original copies of each Loan
Document required to be executed in connection with the Request, duly executed
and delivered by the parties thereto (other than Lender), each of which shall be
in full force and effect.
(b) Opinion. Favorable opinions of counsel to Borrower and Sun, as
to the due organization and qualification of Borrower and Sun, the due
authorization, execution, delivery and enforceability of each Loan Document
executed in connection with the Request and such other matters as Lender may
reasonably require.
SECTION 6.12. Delivery of Property-Related Documents.
With respect to each of the Initial Mortgaged Properties or an Additional
Mortgaged Property, it shall be a condition precedent that Lender receive each
of the following, each dated
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as of the Closing Date for the Initial Advance or an Additional Mortgaged
Property, as the case may be, in form and substance satisfactory to Lender in
all respects:
(a) A favorable opinion of local counsel to Borrower or Lender as
to the enforceability of the Security Instrument, and any other Loan Documents,
executed in connection with the Request.
(b) A commitment for the Title Insurance Policy applicable to the
Mortgaged Property and a pro forma Title Insurance Policy based on the
Commitment.
(c) The Insurance Policy (or a certified copy of the Insurance
Policy) applicable to the Mortgaged Property.
(d) The Survey applicable to the Mortgaged Property.
(e) Evidence satisfactory to Lender of compliance of the Mortgaged
Property with property laws as required by Sections 205 and 206 of Part III of
the DUS Guide.
(f) An Appraisal of the Mortgaged Property.
(g) A Replacement Reserve Agreement, providing for the
establishment of a replacement reserve account, to be pledged to Lender, in
which the owner shall (unless waived by Lender) periodically deposit amounts for
replacements for improvements at the Mortgaged Property and as additional
security for Borrower's obligations under the Loan Documents.
(h) A Completion/Repair and Security Agreement, together with
required escrows, on the standard form required by the DUS Guide.
(i) An Assignment of Management Agreement, on the standard form
required by the DUS Guide.
(j) An Assignment of Leases and Rents, if Lender determines one to
be necessary or desirable, provided that the provisions of any such assignment
shall be substantively identical to those in the Security Instrument covering
the Collateral, with such modifications as may be necessitated by applicable
state or local law.
ARTICLE 7
REPRESENTATIONS AND WARRANTIES
SECTION 7.01. Representations and Warranties of Borrower.
The representations and warranties of Borrower are contained in the
Certificate of Borrower, the form of which is attached to this Agreement as
Exhibit D.
SECTION 7.02. Representations and Warranties of Lender.
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Lender hereby represents and warrants to Borrower as follows:
(a) Due Organization. Lender is a limited partnership duly
organized, validly existing and in good standing under the laws of California.
(b) Power and Authority. Lender has the requisite power and
authority to execute and deliver this Agreement and to perform its obligations
under this Agreement.
(c) Due Authorization. The execution and delivery by Lender of
this Agreement, and the consummation by it of the transactions contemplated
thereby, and the performance by it of its obligations thereunder, have been duly
and validly authorized by all necessary action and proceedings by it or on its
behalf.
ARTICLE 8
AFFIRMATIVE COVENANTS OF BORROWER
Borrower agrees and covenants with Lender that, at all times during the
Term of this Agreement:
SECTION 8.01. Compliance with Agreements.
Borrower shall comply with all the terms and conditions of each Loan
Document to which it is a party or by which it is bound; provided, however, that
Borrower's failure to comply with such terms and conditions shall not be an
Event of Default until the expiration of the applicable notice and cure periods,
if any, specified in the applicable Loan Document.
SECTION 8.02. Maintenance of Existence.
Borrower shall maintain its existence and continue to be duly organized
under the laws of the state of its organization. Borrower shall continue to be
duly qualified to do business in each jurisdiction in which such qualification
is necessary to the conduct of its business and where the failure to be so
qualified would adversely affect the validity of, the enforceability of, or the
ability to perform, its obligations under this Agreement or any other Loan
Document.
SECTION 8.03. Financial Statements; Accountants' Reports; Other
Information.
Borrower shall keep and maintain at all times complete and accurate books
of accounts and records in sufficient detail to correctly reflect (x) all of
Borrower's financial transactions and assets and (y) the results of the
operation of each Mortgaged Property and copies of all written contracts, Leases
and other instruments which affect each Mortgaged Property (including all bills,
invoices and contracts for electrical service, gas service, water and sewer
service, waste management service, telephone service and management services).
In addition, Borrower shall furnish, or cause to be furnished, to Lender:
(a) Annual Financial Statements. As soon as available, and in any
event within 100 days after the close of its fiscal year during the Term of this
Agreement, the audited
30
balance sheet of Sun as of the end of such fiscal year, the audited statement of
income, equity and retained earnings of Sun for such fiscal year and the audited
statement of cash flows of Sun for such fiscal year, all in a form substantially
similar to the financial statements of Sun delivered to Lender prior to the
Initial Closing Date, prepared in accordance with GAAP, consistently applied,
and accompanied by a certificate of Sun's independent certified public
accountants to the effect that such financial statements have been prepared in
accordance with GAAP, consistently applied, and that such financial statements
fairly present the results of its operations and financial condition for the
periods and dates indicated, with such certification to be free of material
exceptions and qualifications as to the scope of the audit or as to the going
concern nature of the business. As soon as available, and in any event within
100 days after the close of its fiscal year during the Term of this Agreement,
the unaudited (which may be internally prepared by Sun) balance sheet of the
Borrower as of the end of such fiscal year, the unaudited (which may be
internally prepared by Sun) statement of income, equity and retained earnings of
Borrower for such fiscal year and the unaudited (which may be internally
prepared by Sun) statement of cash flows for Borrower for such fiscal year,
accompanied by a certificate of the Chief Financial Officer of Sun stating that
such financial statements have been prepared in accordance with GAAP,
consistently applied, and fairly present, in all material respects, the results
of its operations and financial condition for the periods and dates indicated
subject to year end adjustments in accordance with GAAP.
(b) Quarterly Financial Statements. As soon as available, and in
any event within 55 days after each of the first three fiscal quarters of each
fiscal year during the Term of this Agreement, the unaudited (which may be
internally prepared by Sun) balance sheet of Borrower and Sun as of the end of
such fiscal quarter, the unaudited (which may be internally prepared by Sun)
statement of income and retained earnings of Borrower and Sun and the unaudited
(which may be internally prepared by Sun) statement of cash flows of Borrower
and Sun for the portion of the fiscal year ended with the last day of such
quarter, all in reasonable detail and stating in comparative form the respective
figures for the corresponding date and period in the previous fiscal year,
accompanied by a certificate of the Chief Financial Officer of Sun stating that
such financial statements have been prepared in accordance with GAAP,
consistently applied (subject to customary year-end adjustments), and fairly
present, in all material respects, the results of its operations and financial
condition for the periods and dates indicated subject to year end adjustments in
accordance with GAAP.
(c) Quarterly Property Statements. As soon as available, and in
any event within 55 days after each Calendar Quarter, a statement of income and
expenses of each Mortgaged Property accompanied by a certificate of the Chief
Financial Officer of Sun to the effect that each such statement of income and
expenses fairly, accurately and completely presents, in all material respects,
the operations of each such Mortgaged Property for the period indicated.
(d) Annual Property Statements. On an annual basis within 55 days
after the close of its fiscal year, an annual statement of income and expenses
of each Mortgaged Property accompanied by a certificate of the Chief Financial
Officer of Sun to the effect that each such statement of income and expenses
fairly, accurately and completely presents, in all material respects, the
operations of each such Mortgaged Property for the period indicated.
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(e) Updated Rent Rolls. Upon Lender's request (but not more
frequently than quarterly), a current Rent Roll for each Mortgaged Property,
showing the name of each tenant, and for each tenant, the space occupied, the
lease expiration date, the rent payable, the rent paid and any other information
requested by Lender and accompanied by a certificate of the Chief Financial
Officer of Sun to the effect that each such Rent Roll fairly, accurately and
completely presents, in all material respects, the information required therein.
(f) Security Deposit Information. Upon Lender's request, an
accounting of all security deposits held in connection with any Lease of any
part of any Mortgaged Property, and if segregation of security deposits is
required by Applicable Law or if the Borrower otherwise segregates security
deposits, including the name and identification number of the accounts in which
such security deposits are held, the name and address of the financial
institutions in which such security deposits are held and the name and telephone
number of the person to contact at such financial institution, along with any
authority or release necessary for Lender to access information regarding such
accounts.
(g) Accountants' Reports; Other Reports. Promptly upon receipt
thereof: (i) copies of any reports or management letters submitted to Sun by its
independent certified public accountants in connection with the examination of
its financial statements made by such accountants (except for reports otherwise
provided pursuant to subsection (a) above); provided, however, that Borrower
shall only be required to deliver such reports and management letters to the
extent that they relate to Borrower or any Mortgaged Property; and (ii) all
schedules, financial statements or other similar reports delivered by Borrower
pursuant to the Loan Documents or requested by Lender with respect to Borrower's
business affairs or condition (financial or otherwise) or any of the Mortgaged
Properties.
(h) Annual Budgets. Prior to the start of its fiscal year, an
annual budget for each Mortgaged Property for such fiscal year, setting forth an
estimate of all of the costs and expenses, including capital expenses, of
maintaining and operating each Mortgaged Property.
SECTION 8.04. Access to Records; Discussions With Officers and
Accountants.
To the extent permitted by law and in addition to the applicable
requirements of the Security Instruments, Borrower shall permit Lender to:
(a) inspect, make copies and abstracts of such of Borrower's books
and records as may relate to the Obligations or any Mortgaged Property;
(b) after providing reasonable advance notice to Sun, discuss
Borrower's affairs, finances and accounts with Sun's Senior Management and
senior accounting staff and discuss matters relating to the conditions,
operations or maintenance of the Mortgaged Properties with such personnel and
the Regional manager responsible for such Mortgaged Properties; and
(c) receive any other information that Lender deems reasonably
necessary or relevant in connection with any Advance, any Loan Document or the
Obligations.
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Notwithstanding the foregoing, prior to an Event of Default or Potential Event
of Default and in the absence of an emergency, all inspections shall be
conducted at reasonable times during normal business hours upon reasonable
notice to the Borrower.
SECTION 8.05. Certificate of Compliance.
Borrower shall deliver to Lender concurrently with the delivery of the
financial statements and/or reports required by Section 8.03 (a) and (b) a
certificate signed by, and in his capacity as, the Chief Financial Officer of
Sun (i) setting forth in reasonable detail the calculations required to
establish whether Sun was in compliance with the requirements of Sections 8.17,
8.18 and 8.19 of this Agreement on the date of such financial statements, and
(ii) stating that, to the best knowledge of such individual following reasonable
inquiry, no Event of Default or Potential Event of Default has occurred, or if
an Event of Default or Potential Event of Default has occurred, specifying the
nature thereof in reasonable detail and the action Borrower is taking or
proposes to take. Any certificate required by this Section shall run directly to
and be for the benefit of Lender and Fannie Mae.
SECTION 8.06. Maintain Licenses.
Borrower shall procure and maintain in full force and effect all licenses,
Permits, charters and registrations which are material to the conduct of its
business and shall abide by and satisfy all terms and conditions of all such
licenses, Permits, charters and registrations.
SECTION 8.07. Inform Lender of Material Events.
Borrower shall promptly inform Lender in writing of any of the following
(and shall deliver to Lender copies of any related written communications,
complaints, orders, judgments and other documents relating to the following) of
which Borrower has actual knowledge:
(a) Defaults. The occurrence of any Event of Default or any
Potential Event of Default under this Agreement or any other Loan Document;
(b) Regulatory Proceedings. The commencement of any rulemaking or
disciplinary proceeding or the promulgation of any proposed or final rule which
would have, or may reasonably be expected to have, a Material Adverse Effect on
Sun or the Borrower; the receipt of notice from any Governmental Authority
having jurisdiction over Borrower, Sun or the OP that (A) any license, Permit,
charter, membership or registration material to the conduct of Borrower's ,
Sun's or the OP's business or the Mortgaged Properties has been suspended or
revoked or (B) Borrower, Sun or the OP has been required to cease and desist any
practice, procedure or policy employed by Borrower, Sun or the OP in the conduct
of its business, and such cessation would have, or may reasonably be expected to
have, a Material Adverse Effect;
(c) Bankruptcy Proceedings. The commencement of any proceedings by
or against Borrower, Sun or the OP under any applicable bankruptcy,
reorganization, liquidation, insolvency or other similar law now or hereafter in
effect or of any proceeding in which a receiver, liquidator, trustee or other
similar official is sought to be appointed for it;
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(d) Environmental Claim. The receipt from any Governmental
Authority or other Person of any notice of violation, claim, demand, abatement,
order or other order or direction (conditional or otherwise) for any damage,
including personal injury (including sickness, disease or death), tangible or
intangible property damage, contribution, indemnity, indirect or consequential
damages, damage to the environment, pollution, contamination or other adverse
effects on the environment, removal, cleanup or remedial action or for fines,
penalties or restrictions, resulting from or based upon (i) the existence or
occurrence, or the alleged existence or occurrence, of a Hazardous Substance
Activity or (ii) the violation, or alleged violation, of any Hazardous Materials
Laws in connection with any Mortgaged Property or any of the other assets of
Borrower;
(e) Material Adverse Effects. The occurrence of any act, omission,
change or event (including the commencement or threat of any proceedings by or
against Borrower or Sun in any Federal, state or local court, or before any
Governmental Authority, or before any arbitrator), which has, or would have, a
Material Adverse Effect, subsequent to the date of the most recent audited
financial statements of Sun delivered to Lender pursuant to Section 8.03;
(f) Accounting Changes. Any material change in Borrower's or Sun's
accounting policies or financial reporting practices; and
(g) Legal and Regulatory Status. The occurrence of any act,
omission, change or event, including any Governmental Approval, the result of
which is to change or alter in any way the legal or regulatory status of
Borrower.
SECTION 8.08. Compliance with Applicable Laws.
Borrower shall comply in all material respects with all Applicable Laws
now or hereafter affecting any Mortgaged Property or any part of any Mortgaged
Property or requiring any alterations, repairs or improvements to any Mortgaged
Property. Borrower shall procure and continuously maintain in full force and
effect, and shall abide by and satisfy all material terms and conditions of all
Permits.
SECTION 8.09. Alterations to the Mortgaged Properties.
Except as otherwise provided in the Loan Documents, Borrower shall have
the right to undertake any alteration, improvement, demolition, removal or
construction (collectively, "Alterations") to the Mortgaged Property which it
owns without the prior consent of Lender; provided, however, that in any case,
no such Alteration shall be made to any Mortgaged Property without the prior
written consent of Lender if (i) such Alteration could reasonably be expected to
adversely affect the value of such Mortgaged Property or its operation as a
manufactured housing community in substantially the same manner in which it is
being operated on the date such Mortgaged Property became Collateral, (ii) the
construction of such Alteration could reasonably be expected to result in
material interference to the occupancy of tenants of such Mortgaged Property
such that tenants in occupancy with respect to five percent (5%) or more of the
Leases would be permitted to terminate their Leases or to abate the payment of
all or any portion of their rent due to such Alterations, or (iii) such
Alteration will be completed in more than 12 months
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from the date of commencement. Notwithstanding the foregoing, Borrower must
obtain Lender's prior written consent to construct a single or related series of
Alterations with respect to any Mortgaged Property (i) costing in the aggregate
in excess of $500,000 or (ii) having a material adverse effect on the use or
operation of such Mortgaged Property and the Borrower must give prior notice to
the Lender of its intent to commence the Alterations with respect to such
Mortgaged Property costing in excess of $250,000; provided, however, that the
preceding requirements shall not be applicable to Alterations made, conducted or
undertaken by Borrower as part of Borrower's routine maintenance, repair,
replacement, renovation or restoration of the Mortgaged Properties as required
by the Loan Documents or, if such Alterations are emergency in nature, in which
case the Borrower shall give notice to Lender as promptly as reasonably
practical.
SECTION 8.10. Loan Document Taxes.
If any tax, assessment or Imposition (other than a franchise tax, excise
tax or income tax imposed on or measured by, the net income or capital
(including branch profits tax) of Lender (or any transferee or assignee thereof,
including a participation holder)) ("Loan Document Taxes") is levied, assessed
or charged by the United States, or any State in the United States, or any
political subdivision or taxing authority thereof or therein upon any of the
Loan Documents or the obligations secured thereby, the interest of Lender in the
Mortgaged Properties, or Lender by reason of or as holder of the Loan Documents
arising in connection with the Credit Facility, Borrower shall pay all such Loan
Document Taxes to, for, or on account of Lender (or provide funds to Lender for
such payment, as the case may be) as they become due and payable and shall
promptly furnish proof of such payment to Lender, as applicable. In the event of
passage of any law or regulation permitting, authorizing or requiring such Loan
Document Taxes to be levied, assessed or charged, which law or regulation in the
opinion of counsel to Lender may prohibit Borrower from paying the Loan Document
Taxes to or for Lender, Borrower shall enter into such further instruments as
may be permitted by law to obligate Borrower to pay such Loan Document Taxes to
the extent provided herein.
SECTION 8.11. Further Assurances.
Borrower, at the request of Lender, shall execute and deliver and, if
necessary, file or record such statements, documents, agreements, UCC financing
and continuation statements and such other instruments and take such further
action as Lender from time to time may request as reasonably necessary,
desirable or proper to carry out more effectively the purposes of this Agreement
or any of the other Loan Documents or to subject the Collateral to the lien and
security interests of the Loan Documents or to evidence, perfect or otherwise
implement, to assure the lien and security interests intended by the terms of
the Loan Documents or in order to exercise or enforce its rights under the Loan
Documents, provided the foregoing does not materially increase Borrower's
obligations or materially decrease its rights hereunder.
SECTION 8.12. Transfer of Ownership Interest of Borrower and Sun.
(a) Prohibition on Transfers. Subject to paragraph (b) of this
Section, neither of the Borrower or Sun shall cause or permit a Transfer or a
Change of Control.
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(b) Permitted Transfers. Notwithstanding the provisions of
paragraph (a) of this Section, the following Transfers are permitted without the
consent of Lender:
(i) A Transfer that occurs by inheritance, devise, or
bequest or by operation of law upon the death of a natural person who is
the owner of a direct or indirect ownership interest in Borrower or Sun.
(ii) A Transfer to trusts established for the benefit of
the transferor and/or immediate family members for estate planning
purposes.
(iii) A Transfer of member interests by the members or
limited partners of Borrower or stock of Sun; provided, however, that no
Change in Control occurs as the result of such Transfer.
(iv) The issuance by Borrower or Sun of additional member
interests or stock, as the case may be, and the subsequent Transfer of
such interest; provided, however, that no Change in Control occurs as the
result of such Transfer.
(v) A merger with or acquisition of another entity by
Borrower or Sun, provided that (A) Borrower or Sun, as the case may be, is
the surviving entity after such merger or acquisition, (B) no Change in
Control occurs, and (C) such merger or acquisition does not result in an
Event of Default, as such terms are defined in this Agreement.
(vi) A Transfer of a Mortgaged Property to one or more,
direct or indirect, wholly owned Affiliate of Sun or the OP, so long as
such entity meets the requirements of a "Borrower" under this Agreement,
makes the representations and warranties made by the Borrower under this
Agreement, and executes such documents as Lender may reasonably require to
evidence such entity's obligations under the Loan Documents.
(vii) A Transfer to an Approved Acquiring Person, so long as
Lender receives a fee equal to one percent (1%) of the then Outstanding
principal balance of the Advances then in effect.
(viii) A Transfer of interests in Sun on public stock
exchanges, provided no Change of Control occurs.
(ix) In connection with any permitted Transfer submitted to
Lender for review, Borrower shall reimburse Lender for all of Lender's
reasonable out-of-pocket costs (including reasonable attorneys' fees)
incurred in reviewing and documenting the Transfer request.
(c) Consent to Prohibited Transfers. Lender may, in its sole and
absolute discretion, consent to a Transfer that would otherwise violate this
Section if, prior to the Transfer, Borrower, Sun or the OP, as the case may be,
has satisfied each of the following requirements:
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(i) the submission to Lender of all information required by
Lender to make the determination required by this Section;
(ii) the absence of any Event of Default;
(iii) the transferee meets all of the eligibility, credit,
management and other standards (including any standards with respect to
previous relationships between Lender and the transferee and the
organization of the transferee) customarily applied by Lender at the time
of the proposed Transfer to the approval of Borrower, Sun or the OP, as
the case may be, in connection with the origination or purchase of similar
mortgages, deeds of trust or deeds to secure debt on multifamily
properties;
(iv) in the case of a Transfer of direct or indirect
ownership interests in Borrower, Sun or the OP, as the case may be, if
transferor or any other person has obligations under any Loan Documents,
the execution by the transferee of one or more individuals or entities
acceptable to Lender of an assumption agreement that is acceptable to
Lender and that, among other things, requires the transferee to perform
all obligations of transferor or such person set forth in such Loan
Document, and may require that the transferee comply with any provisions
of this Instrument or any other Loan Document which previously may have
been waived by Lender;
(v) Lender's receipt of all of the following:
(A) a transfer fee equal to 1 percent of the
Outstanding principal balance of the Advances immediately prior to
the transfer.
(B) In addition, Borrower shall be required to
reimburse Lender for all of Lender's reasonable out-of-pocket costs
(including reasonable attorneys' fees) incurred in reviewing and
documenting the Transfer request.
SECTION 8.13. Transfer of Ownership of Mortgaged Property.
(a) Prohibition on Transfers. Subject to paragraph (b) of this
Section, none of the Borrower, Sun or the OP shall cause or permit a Transfer of
a Mortgaged Property.
(b) Permitted Transfers. Notwithstanding provision (a) of this
Section, the following Transfers of a Mortgaged Property by Borrower are
permitted without the consent of Lender:
(i) The grant of a leasehold interest in home sites or
commercial spaces in accordance with the Security Instrument.
(ii) A sale or other disposition of obsolete or worn out
personal property having a value of less than $50,000 in any Calendar Year
per Mortgaged Property or having a value of $50,000 or more if it is
contemporaneously replaced by comparable personal property of equal or
greater value which is free and clear of liens, encumbrances and security
interests other than those created by the Loan Documents.
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(iii) The creation of a mechanic's or materialmen's liens or
judgment liens against a Mortgaged Property for equipment and vehicles in
an aggregate amount not in excess of $100,000, or mechanic's or
materialmen's liens or judgment liens against a Mortgaged Property which
are released of record, bonded to the reasonable satisfaction of Lender,
or otherwise remedied to Lender's satisfaction within 30 days of the date
of creation.
(iv) The grant of an easement, right of way, license or
similar real property interest if, prior to the granting of the easement,
right of way, license or similar real property interest, Borrower causes
to be submitted to Lender all information required by Lender to evaluate
the easement, and if Lender consents to such easement based upon Lender's
determination that the easement will not materially and adversely affect
the operation of the Mortgaged Property or Lender's interest in the
Mortgaged Property and Borrower pays to Lender, within 15 days of demand,
all reasonable costs and expenses incurred by Lender in connection with
reviewing Borrower's request. Lender shall not unreasonably withhold its
consent to or withhold its agreement to subordinate the lien of a Security
Instrument to (A) the grant of a utility easement serving a Mortgaged
Property to a publicly operated utility, (B) the grant of an easement
related to expansion or widening of roadways, or (C) easements for cable
and internet services, and the installation and use of cable and internet
equipment, provided that any such easement is in form and substance
reasonably acceptable to Lender and does not materially and adversely
affect the access, use or marketability of a Mortgaged Property.
SECTION 8.14. Change in Senior Management.
Borrower shall give Lender notice of any change in the identity of any
member of Senior Management.
SECTION 8.15. Intentionally Omitted.
SECTION 8.16. Ownership of Mortgaged Properties.
Borrower shall be the sole owner of each of the Mortgaged Properties free
and clear of any Liens other than Permitted Liens.
SECTION 8.17. Compliance with Net Worth Test.
Sun shall at all times maintain its Net Worth so that it is not less than
$350,000,000.
SECTION 8.18. Compliance with Liquidity Test.
Sun shall not permit at any time its Liquidity to be less than $3,000,000.
SECTION 8.19. Compliance with Borrower's Consolidated EBITDA to Interest
Ratio.
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The Borrower shall not permit the Consolidated EBITDA to Interest Ratio
computed for any fiscal quarter or year to be less than 125%.
SECTION 8.20. Special Covenants Regarding King's Court.
The parties are aware that certain phases of the Additional Mortgaged
Property commonly known as King's Court in Traverse City, Michigan are not
connected to the municipal water system. Borrower hereby covenants that in the
event that the water supplied to these phases is not in compliance with the
requirements of any Governmental Authority having jurisdiction over water, and
such non-compliance is not cured by Borrower within thirty (30) days, Borrower
will at its sole cost and expense hook up and connect all phases to the
municipal water system within ninety (90) days of receiving notice from Lender
of such requirement.
ARTICLE 9
NEGATIVE COVENANTS OF BORROWER
Borrower agrees and covenants with Lender that, at all times during the
Term of this Agreement:
SECTION 9.01. Other Activities.
Borrower shall not:
(a) amend its Organizational Documents in any material respect
without the prior written consent of Lender;
(b) dissolve or liquidate in whole or in part;
(c) except as otherwise provided in this Agreement, without the
prior written consent of Lender, merge or consolidate with any Person; or
(d) use, or permit to be used, any Mortgaged Property for any uses
or purposes other than as a Manufactured Housing Community and ancillary uses
consistent with Manufactured Housing Communities, including providing goods and
services to residents of the Mortgaged Property (other than the sale of or
financing of manufactured homes). Notwithstanding the foregoing, Borrower shall
be permitted to improve any Expansion Property provided that (i) such
development is in a manner consistent with the operation and development of the
existing developed property, and (ii) if the improvement is for any purpose
other than infrastructure, additional home sites and amenities to be used by the
Mortgaged Property, in Lender's sole judgment such other improvement will not
decrease the value of the Mortgaged Property on which the Expansion Property is
located.
SECTION 9.02. Liens.
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Borrower shall not create, incur, assume or suffer to exist any Lien on
any Mortgaged Property or any part of any Mortgaged Property, except the
Permitted Liens.
SECTION 9.03. Indebtedness.
Borrower shall not incur or be obligated at any time with respect to any
Indebtedness in connection with any of the Mortgaged Properties, provided
Borrower may incur or be obligated for Indebtedness in an amount not to exceed
$100,000 with respect to each Mortgaged Property for the purchase or lease of
equipment or vehicles used in connection with the operation or maintenance of
such Mortgaged Property.
SECTION 9.04. Principal Place of Business.
Borrower shall not change its principal place of business or the location
of its books and records, each as set forth in Borrower's Certificate, without
first giving 15 days' prior written notice to Lender.
SECTION 9.05. Condominiums.
Borrower shall not submit any Mortgaged Property to a condominium regime
during the Term of this Agreement.
SECTION 9.06. Restrictions on Distributions.
The Borrower shall not make any distributions of any nature or kind
whatsoever to the owners of its Ownership Interests in respect of such Ownership
Interests as such if, at the time of such distribution, a Potential Event of
Default or an Event of Default has occurred and remains uncured.
ARTICLE 10
FEES
SECTION 10.01. Standby Fee.
Borrower shall pay the Standby Fee to Lender for the period from the date
ninety (90) days after the Initial Closing Date to the end of the Term of this
Agreement. The Standby Fee shall be payable monthly, in arrears, on the first
Business Day following the end of the month, except that the Standby Fee for the
last month during the Term of this Agreement shall be paid on the last day of
the Term of this Agreement. If Borrower pays the Standby Fee, no Commitment
shall be reduced or terminated as a result of Borrower's failure to borrow any
or all of such Commitment and no fee maintenance shall be due in respect of such
Commitment unless Borrower fails to borrow any or all of such Commitment for 24
consecutive months (such that there are no Outstanding Advances), at which time
the unused portion of the Commitment shall be terminated and all fees, including
the Facility Termination Fee, shall be due at such time.
SECTION 10.02. Origination Fee.
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(a) Initial Origination Fee. Borrower shall pay to Lender an
origination fee equal to $712,912.50 (which is equal to the product obtained by
multiplying (i) the Commitment in excess of $152,362,500 as of the date of this
Agreement ($237,637,500) by (ii) .30%). With respect to any Fixed Advance, at
Borrower's option, in lieu of paying the Initial Origination Fee as set forth in
the preceding sentence, Borrower may elect to increase the Fixed Facility Fee as
follows:
5 Year Term: 8.5 basis point increase per annum
7 Year Term 6 basis point increase per annum
10 Years or Greater Term 5 basis point increase per annum
(b) Expansion Origination Fee. Upon the making of any Advance or
portion of any Advance in excess of $390,000,000 for which an origination fee or
an Expansion Origination Fee has not been paid, Borrower shall pay to Lender an
origination fee ("Expansion Origination Fee") equal to the product obtained by
multiplying (i) the amount of such Advance or portion of such Advance by (ii)
..30%.
SECTION 10.03. Due Diligence Fees.
(a) Initial Due Diligence Fees. Borrower shall pay to Lender due
diligence fees ("Initial Due Diligence Fees") with respect to the Initial
Mortgaged Properties (other than those Initial Mortgaged Properties comprising
the Collateral Pool prior to the Initial Closing Date) in an amount equal to
$14,750 for each Mortgaged Property.
Borrower has previously paid to Lender a portion of the Initial Due
Diligence Fees and shall pay the remainder of the Initial Due Diligence Fees to
Lender on the Initial Closing Date. Any portion of the Initial Due Diligence
Fees paid to Lender not actually used by Lender to cover due diligence expenses
shall be promptly refunded to Borrower. If the actual cost of due diligence
expenses exceeds the Initial Due Diligence Fees, the Borrower shall promptly pay
such excess cost. Borrower has also paid to Lender due diligence fees in an
amount equal to $7,750 in respect of each Mortgaged Property comprising the
Collateral Pool pursuant to the Original Agreement.
(b) Additional Due Diligence Fees for Additional Collateral.
Borrower shall pay to Lender additional due diligence fees (the "Additional
Collateral Due Diligence Fees") with respect to each Additional Mortgaged
Property in an amount equal to $14,750. The Additional Collateral Due Diligence
Fees shall be paid together with any Additional Request or Substitution Request.
Any portion of the Additional Collateral Due Diligence Fees paid to Lender but
not actually used by Lender to cover due diligence expenses shall be promptly
refunded to Borrower. If the actual cost of due diligence expenses exceeds the
Additional Collateral Due Diligence Fees, the Borrower shall promptly pay such
excess cost.
SECTION 10.04. Legal Fees and Expenses.
(a) Initial Legal Fees. Borrower shall pay, or reimburse Lender
for, all out-of-pocket legal fees and expenses incurred by Lender and by Fannie
Mae in connection with the
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preparation, review and negotiation of this Agreement and any other Loan
Documents executed on the date of this Agreement in an amount agreed upon by
Borrower and Lender.
(b) Fees and Expenses Associated with Requests. Borrower shall
pay, or reimburse Lender for, all reasonable costs and expenses incurred by
Lender, including the out-of-pocket legal fees and expenses incurred by Lender
in connection with the preparation, review and negotiation of all documents,
instruments and certificates to be executed and delivered in connection with
each Request, the performance by Lender of any of its obligations with respect
to the Request, the satisfaction of all conditions precedent to Borrower's
rights or Lender's obligations with respect to the Request, and all transactions
related to any of the foregoing, including the cost of title insurance premiums
and applicable recordation and transfer taxes and charges and all other
reasonable costs and expenses in connection with a Request. The obligations of
Borrower under this subsection shall be absolute and unconditional, regardless
of whether the transaction requested in the Request actually occurs. Borrower
shall pay such costs and expenses to Lender on the Closing Date for the Request,
or, as the case may be, after demand by Lender when Lender determines that such
Request will not close.
SECTION 10.05. Failure to Close any Request.
If Borrower makes a Request, such Request is approved by Lender and
thereafter Borrower fails to close on the Request for any reason other than the
default by Lender, then Borrower shall pay to Lender and Fannie Mae all actual
damages incurred by Lender and Fannie Mae in connection with the failure to
close.
SECTION 10.06. Rate Preservation Fee.
At Borrower's election, Borrower shall incur the Rate Preservation Fee
commencing on the first day after the First Anniversary. Borrower shall notify
Lender in writing not less than 30 days prior to the First Anniversary if it
elects to pay the Rate Preservation Fee. If Borrower fails to provide written
notice to Lender by the First Anniversary, Borrower shall be deemed to have
elected not to pay the Rate Preservation Fee. If Borrower elects (or is deemed
to have elected) not to pay the Rate Preservation Fee, such election shall be
final. If Borrower elects to pay the Rate Preservation Fee, such election may be
irrevocably terminated by at least 30 days' written notice of such termination
by Borrower to Lender. The Rate Preservation Fee shall be payable monthly, in
arrears, on the first Business Day following the end of the month, except that
the Rate Preservation Fee for the last month during the Term of this Agreement
shall be paid on the last day of the Term of this Agreement.
ARTICLE 11
EVENTS OF DEFAULT
SECTION 11.01. Events of Default.
Each of the following events shall constitute an "Event of Default" under
this Agreement, whatever the reason for such event and whether it shall be
voluntary or involuntary, or within or
42
without the control of Borrower or be effected by operation of law or pursuant
to any judgment or order of any court or any order, rule or regulation of any
Governmental Authority:
(a) the occurrence of a default under any Loan Document beyond the
cure period, if any, set forth therein; or
(b) the failure by Borrower to pay when due any amount payable by
Borrower under any Note, any Mortgage, this Agreement or any other Loan
Document, including any fees, costs or expenses; or
(c) the failure by Borrower to perform or observe any covenant
contained in Sections 8.01 through 8.20 or Sections 9.01 through 9.06 for 30
days after receipt of notice of such failure by Borrower from Lender, provided
that such period shall be extended for up to 30 additional days if Borrower, in
the reasonable discretion of Lender, is diligently pursuing a cure of such
default within 30 days after receipt of notice from Lender; or
(d) any warranty, representation or other written statement made
by or on behalf of Borrower or Sun contained in this Agreement, any other Loan
Document or in any instrument furnished in compliance with or in reference to
any of the foregoing, is false or misleading in any material respect on any date
when made or deemed made; or
(e) (i) Borrower, Sun or the OP shall (A) commence a voluntary
case under the Federal bankruptcy laws (as now or hereafter in effect), (B) file
a petition seeking to take advantage of any other laws, domestic or foreign,
relating to bankruptcy, insolvency, reorganization, debt adjustment, winding up
or composition or adjustment of debts, (C) consent to or fail to contest in a
timely and appropriate manner any petition filed against it in an involuntary
case under such bankruptcy laws or other laws, (D) apply for or consent to, or
fail to contest in a timely and appropriate manner, the appointment of, or the
taking of possession by, a receiver, custodian, trustee or liquidator of itself
or of a substantial part of its property, domestic or foreign, (E) admit in
writing its inability to pay, or generally not be paying, its debts as they
become due, (F) make a general assignment for the benefit of creditors, (G)
assert that Borrower, Sun or the OP has no liability or obligations under this
Agreement or any other Loan Document to which it is a party; or (H) take any
action for the purpose of effecting any of the foregoing; or (ii) a case or
other proceeding shall be commenced against Borrower, Sun or the OP in any court
of competent jurisdiction seeking (A) relief under the Federal bankruptcy laws
(as now or hereafter in effect) or under any other laws, domestic or foreign,
relating to bankruptcy, insolvency, reorganization, winding upon or composition
or adjustment of debts, or (B) the appointment of a trustee, receiver,
custodian, liquidator or the like of Borrower, Sun or the OP , or of all or a
substantial part of the property, domestic or foreign, of Borrower, Sun or the
OP and any such case or proceeding shall continue undismissed or unstayed for a
period of 60 consecutive calendar days, or any order granting the relief
requested in any such case or proceeding against Borrower, Sun or the OP
(including an order for relief under such Federal bankruptcy laws) shall be
entered; or
(f) if any provision of this Agreement or any other Loan Document
or the lien and security interest purported to be created hereunder or under any
Loan Document shall at any
43
time for any reason cease to be valid and binding in accordance with its terms
on Borrower or Sun, or shall be declared to be null and void, or the validity or
enforceability hereof or thereof or the validity or priority of the lien and
security interest created hereunder or under any other Loan Document shall be
contested by Borrower or Sun seeking to establish the invalidity or
unenforceability hereof or thereof, or Borrower or Sun (only with respect to the
Guaranty) shall deny that it has any further liability or obligation hereunder
or thereunder; or
(g) (i) the execution by Borrower of a chattel mortgage or other
security agreement on any materials, fixtures or articles used in the
construction or operation of the improvements located on any Mortgaged Property
or on articles of personal property located therein, provided Borrower shall be
permitted to execute a security agreement in connection with the financing of up
to, in the aggregate, $100,000 in connection with each Mortgaged Property for
the purchase or lease of equipment or vehicles used in connection with the
operation or maintenance of such Mortgaged Property, or (ii) if any such
materials, fixtures or articles are purchased pursuant to any conditional sales
contract or other security agreement or otherwise so that the Ownership thereof
will not vest unconditionally in Borrower free from encumbrances, or (iii) if
Borrower does not furnish to Lender upon request the contracts, bills of sale,
statements, receipted vouchers and agreements, or any of them, under which
Borrower claim title to such materials, fixtures, or articles; or
(h) the failure by Borrower to comply with any requirement of any
Governmental Authority within 30 days after written notice of such requirement
shall have been given to Borrower by such Governmental Authority if such
noncompliance has a Material Effect on Borrower; provided that, if action is
commenced and diligently pursued by Borrower within such 30 days, then Borrower
shall have an additional 30 days or, if longer, the time permitted by the
Governmental Authority to comply with such requirement; or
(i) a dissolution or liquidation for any reason (whether voluntary
or involuntary) of Borrower or Sun; or
(j) any judgment against Borrower or Sun, any attachment or other
levy against any portion of Borrower's or Sun's assets with respect to a claim
or claims in an amount in excess of $500,000 in the aggregate with respect to
Borrower, or $1,000,000 in the aggregate with respect to Sun remains unpaid,
unstayed on appeal undischarged, unbonded, not fully insured or undismissed for
a period of 60 days; or
(k) the failure by Borrower or Sun to perform or observe any
material term, covenant, condition or agreement hereunder, other than as
contained in subsections (a) through (j) above, or in any other Loan Document,
within 30 days after receipt of notice from Lender identifying such failure,
provided such period shall be extended for up to 30 additional days if Borrower,
in the reasonable discretion of Lender, is diligently pursuing a cure of such
default within 30 days after receipt of notice from Lender.
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ARTICLE 12
REMEDIES
SECTION 12.01. Remedies; Waivers.
Upon the occurrence of an Event of Default, Lender may do any one or more
of the following (without presentment, protest or notice of protest, all of
which are expressly waived by Borrower), subject, however, to the limitations
set forth in Article 15 hereof:
(a) by written notice to Borrower, to be effective upon dispatch,
terminate the Commitment and declare the principal of, and interest on, the
Advances and all other sums owing by Borrower to Lender under any of the Loan
Documents forthwith due and payable, whereupon the Commitment will terminate and
the principal of, and interest on, the Advances and all other sums owing by
Borrower to Lender under any of the Loan Documents will become forthwith due and
payable.
(b) Lender shall have the right to pursue any other remedies
available to it under any of the Loan Documents.
(c) Lender shall have the right to pursue all remedies available
to it at law or in equity, including obtaining specific performance and
injunctive relief.
SECTION 12.02. Waivers; Rescission of Declaration.
Lender shall have the right, to be exercised in its complete discretion,
to waive any breach hereunder (including the occurrence of an Event of Default),
by a writing setting forth the terms, conditions, and extent of such waiver
signed by Lender and delivered to Borrower. Unless such writing expressly
provides to the contrary, any waiver so granted shall extend only to the
specific event or occurrence which gave rise to the waiver and not to any other
similar event or occurrence which occurs subsequent to the date of such waiver.
SECTION 12.03. Lender's Right to Protect Collateral and Perform Covenants
and Other Obligations.
If Borrower or Sun fails to perform the covenants and agreements contained
in this Agreement or any of the other Loan Documents, then Lender at Lender's
option may make such appearances, disburse such sums and take such action as
Lender deems reasonably necessary, in its sole discretion, to protect Lender's
interest, including (i) disbursement of reasonable attorneys' fees, (ii) entry
upon the Mortgaged Property to make repairs and replacements, (iii) procurement
of satisfactory insurance as provided in the Security Instrument encumbering the
Mortgaged Property, and (iv) if the Security Instrument is on a leasehold,
exercise of any option to renew or extend the ground lease on behalf of Borrower
and the curing of any default of Borrower in the terms and conditions of the
ground lease. Any amounts disbursed by Lender pursuant to this Section, with
interest thereon, shall become additional indebtedness of Borrower secured by
the Loan Documents. Unless Borrower and Lender agree to other terms of payment,
such amounts shall be immediately due and payable and shall bear interest from
the date of
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disbursement at the weighted average, as determined by Lender, of the interest
rates in effect from time to time for each Advance unless collection from
Borrower of interest at such rate would be contrary to applicable law, in which
event such amounts shall bear interest at the highest rate which may be
collected from Borrower under applicable law. Nothing contained in this Section
shall require Lender to incur any expense or take any action hereunder.
SECTION 12.04. No Remedy Exclusive.
Unless otherwise expressly provided, no remedy herein conferred upon or
reserved is intended to be exclusive of any other available remedy, but each
remedy shall be cumulative and shall be in addition to other remedies given
under the Loan Documents or existing at law or in equity.
SECTION 12.05. No Waiver.
No delay or omission to exercise any right or power accruing under any
Loan Document upon the happening of any Event of Default or Potential Event of
Default shall impair any such right or power or shall be construed to be a
waiver thereof, but any such right and power may be exercised from time to time
and as often as may be deemed expedient.
SECTION 12.06. No Notice.
To entitle Lender to exercise any remedy reserved to Lender in this
Article, it shall not be necessary to give any notice, other than such notice as
may be required under the applicable provisions of this Agreement, any of the
other Loan Documents or Applicable Law.
ARTICLE 13
RIGHTS OF FANNIE MAE
SECTION 13.01. Special Pool Purchase Contract.
Borrower acknowledges that Fannie Mae is entering into an agreement with
Lender ("Special Pool Purchase Contract"), pursuant to which, inter alia, (i)
Lender shall agree to assign all of its rights under this Agreement to Fannie
Mae, (ii) Fannie Mae shall accept the assignment of the rights, (iii) subject to
the terms, limitations and conditions contained in the Special Pool Purchase
Contract, Fannie Mae shall agree to purchase a 100% participation interest in
each Advance issued under this Agreement by (a) issuing to Lender an MBS, in the
amount and for a term equal to the Advance purchased and backed by an interest
in the Fixed Facility Note or the Variable Facility Note, as the case may be,
and the Collateral Pool securing the Notes or (b) paying cash to Lender in the
amount equal to the Advance purchased and backed by any interest in the Fixed
Facility Note and the Collateral Pool securing the Notes, (iv) Lender shall
agree to assign to Fannie Mae all of Lender's interest in the Notes and
Collateral Pool securing the Notes, and (v) Lender shall agree to service the
loans evidenced by the Notes.
SECTION 13.02. Assignment of Rights.
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Borrower acknowledges and consents to the assignment to Fannie Mae of all
of the rights of Lender under this Agreement and all other Loan Documents,
including the right and power to make all decisions on the part of Lender to be
made under this Agreement and the other Loan Documents, but Fannie Mae, by
virtue of this assignment, shall not be obligated to perform the obligations of
Lender under this Agreement or the other Loan Documents.
SECTION 13.03. Release of Collateral.
Borrower hereby acknowledges that, after the assignment of Loan Documents
contemplated in Section 13.02, Lender shall not have the right or power to
effect a release of any Collateral pursuant to Article 6. Borrower acknowledges
that the Security Instruments provide for the release of the Collateral under
Articles 3 and 5. Accordingly, Borrower shall not look to Lender for performance
of any obligations contained in Articles 3 and 5, but shall look solely to the
party secured by the Collateral to be released for such performance. Lender
represents and warrants to Borrower that the party secured by the Collateral
shall be subject to the release provisions contained in Articles 3 and 5 by
virtue of the release provisions in each Security Instrument.
SECTION 13.04. Replacement of Lender.
At the request of Fannie Mae, Borrower and Lender shall agree to the
assumption by another lender designated by Fannie Mae (which lender shall meet
Fannie Mae's then current standards for lenders for credit facilities of the
type and size of the credit facility evidenced by this Agreement), of all of the
obligations of Lender under this Agreement and the other Loan Documents, and/or
any related servicing obligations, and, at Fannie Mae's option, the concurrent
release of Lender from its obligations under this Agreement and the other Loan
Documents, and/or any related servicing obligations, and shall execute all
releases, modifications and other documents which Fannie Mae determines are
necessary or desirable to effect such assumption, all without material cost to
Borrower.
SECTION 13.05. Fannie Mae and Lender Fees and Expenses.
Borrower agree that any provision providing for the payment of fees, costs
or expenses incurred or charged by Lender pursuant to this Agreement shall be
deemed to provide for Borrower's payment of all reasonable fees, costs and
expenses incurred or charged by Lender or Fannie Mae in connection with the
matter for which fees, costs or expenses are payable.
SECTION 13.06. Third-Party Beneficiary.
Borrower hereby acknowledge and agree that Fannie Mae is a third party
beneficiary of all of the representations, warranties and covenants made by
Borrower to, and all rights under this Agreement conferred upon, Lender, and, by
virtue of its status as third-party beneficiary and/or assignee of Lender's
rights under this Agreement, Fannie Mae shall have the right to enforce all of
the provisions of this Agreement against Borrower.
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ARTICLE 14
INSURANCE, REAL ESTATE TAXES AND REPLACEMENT RESERVES
SECTION 14.01. Insurance and Real Estate Taxes.
Borrower shall establish funds for taxes, insurance premiums and certain
other charges for each Mortgaged Property in accordance with Section 7(a) of the
Security Instrument for each Mortgaged Property.
SECTION 14.02. Replacement Reserves.
Borrower shall execute a Replacement Reserve Agreement for the Mortgaged
Property which they own and shall (unless waived by Lender by separate
agreement) make all deposits for replacement reserves in accordance with the
terms of the Replacement Reserve Agreement.
ARTICLE 15
PERSONAL LIABILITY OF THE BORROWER
SECTION 15.01. Personal Liability of Borrower.
(a) Limits on Personal Liability. The Lender's only recourse
for the payment and performance of the Obligations shall be the
Lender's exercise of its rights and remedies with respect to the
Mortgaged Properties and any other Collateral held by the Lender as
security for the Obligations. Notwithstanding the foregoing, no
general partner of Borrower shall have personal liability under this
Section 15.01(a) (unless such general partner is a guarantor under
the Guaranty). This limitation on the Borrower's liability shall not
impair the Lender's enforcement of its rights set forth in the
Guaranty.
(b) Exceptions to Limits on Personal Liability. The Borrower
(but not any general partner of Borrower [unless such general
partner is a guarantor under the Guaranty]) shall be personally
liable to Lender for an amount equal to any loss or damage suffered
by Lender as a result of (1) failure of Borrower to pay to Lender
upon demand after an Event of Default all Rents to which Lender is
entitled under the Security Instrument encumbering the Mortgaged
Property and the amount of all security deposits collected by
Borrower; (2) failure of Borrower to apply all insurance proceeds,
condemnation proceeds or security deposits from tenants as required
by the Security Instrument encumbering the Mortgaged Property; (3)
fraud or written material misrepresentation (at the time made) by
Borrower or any officer, director, partner, member or employee of
Borrower in connection with the application for or creation of the
Obligations or any request for any action or consent by Lender; (4)
failure to apply Rents, first, to the payment of reasonable
operating expenses and then to amounts ("Debt Service Amounts")
payable under the Loan Documents, provided that prior to such
application, Rents may be commingled with other funds of Sun or its
Affiliates
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(except that Borrower will not be personally liable (i) to the
extent that Borrower lacks the legal right to direct the
disbursement of such sums because of a bankruptcy, receivership or
similar judicial proceeding, or (ii) with respect to Rents of a
Mortgaged Property that are distributed in any Calendar Quarter if
Borrower has paid all operating expenses and Debt Service Amounts
for that Calendar Quarter); (5) a Final Loss with respect to the
Obligations upon the filing of a voluntary petition in a Bankruptcy
proceeding by the Borrower, Sun or the OP or the filing of an
involuntary proceeding in Bankruptcy against the Borrower, Sun or
the OP or an Affiliate thereof by Borrower, Sun or the OP or an
Affiliate thereof; (6) Borrower's acquisition of any property or
operation of any business not permitted by Section 33 of any
Security Instrument; (7) a Transfer that is not a Permitted Transfer
of Mortgaged Properties or a Permitted Transfer of Ownership
Interests; or (8) any and all indemnification obligations contained
in Section 18 of any Security Instrument.
(c) Miscellaneous. To the extent that Borrower has personal
liability under this Section, such liability shall be joint and
several with that of Sun under the Guaranty and Lender may exercise
its rights against Borrower or Sun personally without regard to
whether Lender has exercised any rights against the Mortgaged
Property or any other security, or pursued any rights against any
guarantor, or pursued any other rights available to Lender under the
Loan Documents or applicable law.
ARTICLE 16
INTEREST RATE PROTECTION
SECTION 16.01. Interest Rate Protection.
(a) The Initial Cap. To protect against fluctuations in interest
rates, Borrower shall make arrangements for a Cap to be in place and maintained
at all times with respect to the Variable Advances Outstanding. Each initial Cap
relating to a Variable Advance Outstanding shall be in place for a period
beginning on the date such Cap is purchased and ending not earlier than the date
which is three years from the purchase of such Cap (the "Initial Cap Period").
Notwithstanding the foregoing, any Cap in place on the Initial Closing Date
purchased by Borrower pursuant to the Original Agreement shall be deemed to meet
the requirement of an initial Cap otherwise required to be purchased under this
Agreement.
(b) Subsequent Caps. Subject to the other terms of Article 16,
additional Caps (each, a "Subsequent Cap") shall be purchased by Borrower (i)
upon the expiration of the Cap in place for the Initial Cap Period, and (ii) if
elected by the Borrower, at the time any Additional Variable Advance is made.
Any Subsequent Cap purchased pursuant to the preceding sentence shall be in
effect for a period beginning on the date of the expiration of the initial Cap
or Closing Date of the Future Advance Request, as the case may be, and ending on
the Variable Facility Termination Date or, if shorter, three (3) years from the
Closing Date of the Future Advance Request. If the Variable Facility Termination
Date is extended pursuant to Section 1.07 of this
49
Agreement, the Borrower shall obtain Subsequent Caps pursuant to this Article 16
for a period for the shorter of (i) three years and (ii) the period ending on
the Variable Facility Termination Date. It is the intention of the parties, and
a condition of the Variable Facility Commitment, that the Borrower shall obtain,
and shall maintain at all times during the term of this Agreement so long as
there are any Variable Facility Advances Outstanding, a Cap or Caps in an
aggregate notional principal amount equal to the portion of the Variable
Advances Outstanding elected by the Borrower pursuant to this Article 16 and
covering the entire term of the Variable Facility Commitment and meeting the
conditions set forth in Section 16.02. If the Variable Advances Outstanding
decrease, the Borrower may amend the Cap or Caps to provide for a decrease in
the notional amount to an amount equal to the reduced amount of the Variable
Facility Commitment, provided that the Lender gives its prior written approval
to the documents reflecting the amendment (which approval shall not be
unreasonably withheld, delayed or conditioned). If the Aggregate Debt Service
Coverage Ratio increases at the end of the period ending at the end of the
second Loan Year, the Borrower may amend or replace the Cap or Caps to provide
an amended or substitute Cap or Caps that meet the requirements of Section
16.02, provided that the Lender gives its prior written approval to the
documents reflecting the amendment to the Cap or Caps or substitute Cap or Caps,
which approval shall not be unreasonably withheld, delayed or conditioned.
SECTION 16.02. Cap Terms.
Each Cap shall:
(i) together with all other Caps in place, provide for a notional
principal amount equal at all times to the outstanding principal balance
of the Variable Facility Commitment;
(ii) be in effect at the time of its purchase for not less than the
shorter of (a) the entire term of the Variable Facility Commitment and (b)
three (3) years;
(iii) provide for a notional interest rate equal to not less than the
lowest interest rate that would result in an Aggregate Debt Service
Coverage Ratio of not less than 1.0 to 1.0 (the "Cap Interest Rate"), and
require the counterparty to make interest payments on the notional
principal amount at a rate equal to the amount by which Coupon Rate
exceeds the Cap Interest Rate;
(iv) require the counterparty to make such interest payments to an
account pledged to the Lender pursuant to the Cap Security Agreement; and
(v) be evidenced, governed and secured on terms and conditions, and
pursuant to documentation (the "Cap Documents"), in form and content
reasonably acceptable to Fannie Mae, and with a counterparty (a
"Counterparty") reasonably approved by Fannie Mae.
SECTION 16.03. Cap Security Agreement; Delivery of Cap Payments.
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Pursuant to a Cap Security Agreement, the Lender shall be granted an
enforceable, perfected, first priority lien on and security interest in each Cap
and payments due under the Cap (including scheduled and termination payments) in
order to secure the Borrower's obligations to the Lender under this Agreement.
With respect to each Cap, the Cap Security Agreement must be delivered by the
Borrower to the Lender no later than the effective date of the Cap.
SECTION 16.04. Termination.
The Borrower shall not terminate, transfer or consent to any transfer of
any existing Cap without the Lender's prior written consent as long as the
Borrower is required to maintain a Cap pursuant to this Agreement; provided,
however, that if, and at such time as, any Variable Facility Commitment
terminates, the Borrower shall have the right to terminate the existing Cap with
respect to such Variable Facility Commitment.
SECTION 16.05. Performance Under Cap Documents.
The Borrower agrees to comply fully with, and to otherwise perform when
due, its obligations under, all applicable Cap Documents and all other
agreements evidencing, governing and/or securing any Cap arrangement
contemplated under this Article 16. The Borrower shall not exercise, without the
Lender's prior written consent, and upon the occurrence and during the
continuance of an Event of Default, shall exercise, at the Lender's direction,
any rights or remedies under any Cap Document, including without limitation the
right of termination.
SECTION 16.06. Escrow Provisions.
(a) Monthly Cap Escrow Payment. Until the Borrower obtains a Cap or Caps
that have a term through the entire term of the Variable Facility Commitment,
the Borrower shall, on the first Business Day of each month, deposit with the
Lender the Monthly Cap Escrow Payment. The "Monthly Cap Escrow Payment" means,
with respect to the first 36 months after the purchase of a Cap for less than
the entire remaining term of any portion of the Variable Facility Commitment, an
amount equal to one thirty-sixth (1/36) of 125% of the cost, as reasonably
estimated quarterly by the Lender, to obtain any required Subsequent Cap plus
any amount required to increase the Cap Escrow Fund to the amount then required
to be funded in the Cap Escrow Fund based on the then current cost estimate.
In no event shall the Borrower be required to make deposits into the Cap
Escrow Fund if the amount in the Cap Escrow Fund equals or exceeds 125% of the
cost, as then reasonably estimated by the Lender, to obtain any required
Subsequent Cap.
In lieu of the Monthly Cap Escrow Payment, Borrower may, on the date any
Cap is purchased, deliver to Lender a letter of credit issued by a financial
institution reasonably acceptable to Lender and having terms and conditions
reasonably acceptable to Lender having a face amount equal to 125% of the cost,
as reasonably estimated by Lender, to obtain any required Subsequent Caps.
Lender or Borrower may require, not more often than quarterly, an increase or
decrease, as the case may be, in the face amount of the Letter of Credit to
increase or decrease, as the case may be, the face amount of the Letter of
Credit to 125% of the then current estimate of the cost to acquire any required
Subsequent Cap.
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SECTION 16.07. Cap Escrow Fund.
The Lender shall deposit the Monthly Cap Escrow Payments in an
interest-bearing account (the "Cap Escrow Fund") which meets the standards for
custodial accounts as required by Lender from time to time. (The Monthly Cap
Escrow Payment and all other funds in the Cap Escrow Fund are referred to
collectively as the "Cap Escrow Fund"). Lender or a designated representative of
Lender shall have the sole right to make withdrawals from such account. All
interest earned on funds in the Cap Escrow Fund shall be added to and become
part of the Cap Escrow Fund. Lender shall not be responsible for any losses
resulting from the investment of the Cap Escrow Fund or for obtaining any
specific level or percentage of earnings on such investment. If applicable law
requires and provided that no Event of Default or Potential Event of Default
exists under any of the Loan Documents, Lender shall pay to Borrower the
interest earned on the Cap Escrow Fund once each year. Borrower assigns to
Lender the Cap Escrow Fund as additional security for all of the Borrower's
obligations under the Loan Documents; provided, however, Lender shall make
disbursements from the Cap Escrow Fund in accordance with the terms of this
Agreement. Funds in the Cap Escrow Fund shall be used by the Lender to purchase
any required Subsequent Cap. To the extent such Cap Escrow Funds are
insufficient to purchase any required Subsequent Cap, the Borrower shall
promptly remit such funds to the Lender or the provider of the Cap. Any amount
in the Cap Escrow Fund not used to purchase a Subsequent Cap shall be returned
to the Borrower at such time as Lender determines that no additional Subsequent
Caps will be required to be purchased.
ARTICLE 17
MISCELLANEOUS PROVISIONS
SECTION 17.01. Counterparts.
To facilitate execution, this Agreement may be executed in any number of
counterparts. It shall not be necessary that the signatures of, or on behalf of,
each party, or that the signatures of all persons required to bind any party,
appear on each counterpart, but it shall be sufficient that the signature of, or
on behalf of, each party, appear on one or more counterparts. All counterparts
shall collectively constitute a single agreement. It shall not be necessary in
making proof of this Agreement to produce or account for more than the number of
counterparts containing the respective signatures of, or on behalf of, all of
the parties hereto.
SECTION 17.02. Amendments, Changes and Modifications.
This Agreement may be amended, changed, modified, altered or terminated
only by written instrument or written instruments signed by all of the parties
hereto.
SECTION 17.03. Payment of Costs, Fees and Expenses.
Borrower shall pay, on demand, all reasonable fees, costs, charges or
expenses (including the fees and expenses of attorneys, accountants and other
experts) incurred by Lender in connection with:
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(a) Any amendment, consent or waiver to this Agreement or any of
the Loan Documents (whether or not any such amendments, consents or waivers are
entered into).
(b) Defending or participating in any litigation arising from
actions by third parties and brought against or involving Lender with respect to
(i) any Mortgaged Property, (ii) any event, act, condition or circumstance in
connection with any Mortgaged Property or (iii) the relationship between Lender
and Borrower, Sun and the OP in connection with this Agreement or any of the
transactions contemplated by this Agreement unless caused by the gross
negligence or willful misconduct of Lender.
(c) The administration or enforcement of, or preservation of
rights or remedies under, this Agreement or any other Loan Documents or in
connection with the foreclosure upon, sale of or other disposition of any
Collateral granted pursuant to the Loan Documents.
(d) Any disclosure documents, including fees payable to any rating
agencies, including the reasonable fees and expenses of Lender's outside
attorneys and accountants.
Borrower shall also pay, on demand, any transfer taxes, documentary taxes,
assessments or charges made by any governmental authority by reason of the
execution, delivery, filing, recordation, performance or enforcement of any of
the Loan Documents or the Advances. However, Borrower will not be obligated to
pay any franchise, excise, estate, inheritance, income, excess profits or
similar tax on Lender. Any attorneys' fees and expenses payable by Borrower
pursuant to this Section shall be recoverable separately from and in addition to
any other amount included in such judgment, and such obligation is intended to
be severable from the other provisions of this Agreement and to survive and not
be merged into any such judgment. Any amounts payable by Borrower pursuant to
this Section, with interest thereon if not paid when due, shall become
additional indebtedness of Borrower secured by the Loan Documents. Such amounts
shall bear interest from the date such amounts are due until paid in full at the
weighted average, as determined by Lender, of the interest rates in effect from
time to time for each Advance unless collection from Borrower of interest at
such rate would be contrary to applicable law, in which event such amounts shall
bear interest at the highest rate which may be collected from Borrower under
applicable law. The provisions of this Section are cumulative with, and do not
exclude the application and benefit to Lender of, any provision of any other
Loan Document relating to any of the matters covered by this Section.
SECTION 17.04. Payment Procedure.
All payments to be made to Lender pursuant to this Agreement or any of the
Loan Documents shall be made in lawful currency of the United States of America
and in immediately available funds by wire transfer to an account designated by
Lender before 2:00 p.m. (Washington, D.C. time) on the date when due.
SECTION 17.05. Payments on Business Days.
In any case in which the date of payment to Lender or the expiration of
any time period hereunder occurs on a day which is not a Business Day, then such
payment or expiration of such
53
time period need not occur on such date but may be made on the next succeeding
Business Day with the same force and effect as if made on the day of maturity or
expiration of such period, except that interest shall continue to accrue for the
period after such date to the next Business Day.
SECTION 17.06. Choice of Law; Consent to Jurisdiction; Waiver of Jury
Trial.
NOTWITHSTANDING ANYTHING IN THE NOTES, THE SECURITY DOCUMENTS OR ANY OF
THE OTHER LOAN DOCUMENTS TO THE CONTRARY, EACH OF THE TERMS AND PROVISIONS, AND
RIGHTS AND OBLIGATIONS OF THE BORROWER UNDER THE NOTES, AND THE BORROWER AND SUN
UNDER THE OTHER LOAN DOCUMENTS, SHALL BE GOVERNED BY, INTERPRETED, CONSTRUED AND
ENFORCED PURSUANT TO AND IN ACCORDANCE WITH THE LAWS OF THE DISTRICT OF COLUMBIA
(EXCLUDING THE LAW APPLICABLE TO CONFLICTS OR CHOICE OF LAW) EXCEPT TO THE
EXTENT OF PROCEDURAL AND SUBSTANTIVE MATTERS RELATING ONLY TO (1) THE CREATION,
PERFECTION AND FORECLOSURE OF LIENS AND SECURITY INTERESTS, AND ENFORCEMENT OF
THE RIGHTS AND REMEDIES, AGAINST THE MORTGAGED PROPERTIES, WHICH MATTERS SHALL
BE GOVERNED BY THE LAWS OF THE JURISDICTION IN WHICH THE MORTGAGED PROPERTY IS
LOCATED, (2) THE PERFECTION, THE EFFECT OF PERFECTION AND NON-PERFECTION AND
FORECLOSURE OF SECURITY INTERESTS ON PERSONAL PROPERTY (OTHER THAN DEPOSIT
ACCOUNTS), WHICH MATTERS SHALL BE GOVERNED BY THE LAWS OF THE JURISDICTION
DETERMINED BY THE CHOICE OF LAW PROVISIONS OF THE DISTRICT OF COLUMBIA UNIFORM
COMMERCIAL CODE AND (3) THE PERFECTION, THE EFFECT OF PERFECTION AND
NON-PERFECTION AND FORECLOSURE OF DEPOSIT ACCOUNTS, WHICH MATTERS SHALL BE
GOVERNED BY THE LAWS OF THE JURISDICTION IN WHICH THE DEPOSIT ACCOUNT IS
LOCATED. BORROWER AND SUN AGREE THAT ANY CONTROVERSY ARISING UNDER OR IN
RELATION TO THE NOTES, THE SECURITY DOCUMENTS OR ANY OTHER LOAN DOCUMENT SHALL
BE, EXCEPT AS OTHERWISE PROVIDED HEREIN, LITIGATED IN DISTRICT OF COLUMBIA. THE
LOCAL AND FEDERAL COURTS AND AUTHORITIES WITH JURISDICTION IN DISTRICT OF
COLUMBIA SHALL, EXCEPT AS OTHERWISE PROVIDED HEREIN, HAVE JURISDICTION OVER ALL
CONTROVERSIES WHICH MAY ARISE UNDER OR IN RELATION TO THE LOAN DOCUMENTS,
INCLUDING THOSE CONTROVERSIES RELATING TO THE EXECUTION, JURISDICTION, BREACH,
ENFORCEMENT OR COMPLIANCE WITH THE NOTES, THE SECURITY DOCUMENTS OR ANY OTHER
ISSUE ARISING UNDER, RELATING TO, OR IN CONNECTION WITH ANY OF THE LOAN
DOCUMENTS. THE BORROWER AND SUN IRREVOCABLY CONSENT TO SERVICE, JURISDICTION,
AND VENUE OF SUCH COURTS FOR ANY LITIGATION ARISING FROM THE NOTES, THE SECURITY
DOCUMENTS OR ANY OF THE OTHER LOAN DOCUMENTS, AND WAIVE ANY OTHER VENUE TO WHICH
IT MIGHT BE ENTITLED BY VIRTUE OF DOMICILE, HABITUAL RESIDENCE OR OTHERWISE.
NOTHING CONTAINED HEREIN, HOWEVER, SHALL PREVENT LENDER FROM BRINGING ANY SUIT,
ACTION OR PROCEEDING OR EXERCISING ANY RIGHTS AGAINST BORROWER AND SUN AND
AGAINST THE COLLATERAL IN
54
ANY OTHER JURISDICTION. INITIATING SUCH SUIT, ACTION OR PROCEEDING OR TAKING
SUCH ACTION IN ANY OTHER JURISDICTION SHALL IN NO EVENT CONSTITUTE A WAIVER OF
THE AGREEMENT CONTAINED HEREIN THAT THE LAWS OF DISTRICT OF COLUMBIA SHALL
GOVERN THE RIGHTS AND OBLIGATIONS OF BORROWER AND SUN AND LENDER AS PROVIDED
HEREIN OR THE SUBMISSION HEREIN BY BORROWER AND SUN TO PERSONAL JURISDICTION
WITHIN DISTRICT OF COLUMBIA THE BORROWER AND SUN (I) COVENANT AND AGREE NOT TO
ELECT A TRIAL BY JURY WITH RESPECT TO ANY ISSUE ARISING UNDER ANY OF THE LOAN
DOCUMENTS TRIABLE BY A JURY AND (II) WAIVES ANY RIGHT TO TRIAL BY JURY TO THE
EXTENT THAT ANY SUCH RIGHT SHALL NOW OR HEREAFTER EXIST. THIS WAIVER IS INTENDED
TO ENCOMPASS INDIVIDUALLY EACH INSTANCE AND EACH ISSUE AS TO WHICH THE RIGHT TO
A JURY TRIAL WOULD OTHERWISE ACCRUE. FURTHER, THE BORROWER AND SUN HEREBY
CERTIFY THAT NO REPRESENTATIVE OR AGENT OF LENDER (INCLUDING, BUT NOT LIMITED
TO, LENDER'S COUNSEL) HAS REPRESENTED, EXPRESSLY OR OTHERWISE, TO THE BORROWER
AND SUN THAT LENDER WILL NOT SEEK TO ENFORCE THE PROVISIONS OF THIS SECTION. THE
FOREGOING PROVISIONS WERE KNOWINGLY, WILLINGLY AND VOLUNTARILY AGREED TO BY
BORROWER AND SUN UPON CONSULTATION WITH INDEPENDENT LEGAL COUNSEL SELECTED BY
BORROWER'S AND SUN'S FREE WILL.
SECTION 17.07. Severability.
In the event any provision of this Agreement or in any other Loan Document
shall be held invalid, illegal or unenforceable in any jurisdiction, such
provision will be severable from the remainder hereof as to such jurisdiction
and the validity, legality and enforceability of the remaining provisions will
not in any way be affected or impaired in any jurisdiction.
SECTION 17.08. Notices.
(a) Manner of Giving Notice. Each notice, direction, certificate
or other communication hereunder (in this Section referred to collectively as
"notices" and singly as a "notice") which any party is required or permitted to
give to the other party pursuant to this Agreement shall be in writing and shall
be deemed to have been duly and sufficiently given if:
(i) personally delivered with proof of delivery thereof (any
notice so delivered shall be deemed to have been received at the time so
delivered);
(ii) sent by Federal Express (or other similar overnight
courier) designating morning delivery (any notice so delivered shall be
deemed to have been received on the Business Day it is delivered by the
courier);
(iii) sent by telecopier or facsimile machine which
automatically generates a transmission report that states the date and
time of the transmission, the length of the document transmitted, and the
telephone number of the recipient's telecopier or facsimile machine (to be
confirmed with a copy thereof sent in accordance
55
with paragraphs (1) or (2) above within two Business Days) (any notice so
delivered shall be deemed to have been received (i) on the date of
transmission, if so transmitted before 5:00 p.m. (local time of the
recipient) on a Business Day, or (ii) on the next Business Day, if so
transmitted on or after 5:00 p.m. (local time of the recipient) on a
Business Day or if transmitted on a day other than a Business Day);
addressed to the parties as follows:
As to Borrower: Sun Communities, Inc.
27777 Franklin Road
The American Center, Suite 200
Southfield, Michigan 48034
Attention: Gary A. Shiffman
Telecopy No.: (248) 208-2645
with a copy to: Jaffe, Raitt, Heuer & Weiss Professional Corporation
Attention: Richard A. Zussman, Esq.
(prior to September 1, 2004)
One Woodward Avenue
Suite 2400
Detroit, Michigan 48226
Telecopy No.: (313) 961-8358
(on or after September 1, 2004)
The American Center
27777 Franklin Road
Suite 2500
Southfield, Michigan 48034
Telecopy No.: (248) 351-3082
As to Lender: ARCS Commercial Mortgage Co., L.P.
26901 Agoura Road
Suite 200
Calabasas Hills, California 91301-9932
Attention: Loan Administration Department
Telecopy No.: (818) 880-3330
As to Fannie Mae: Fannie Mae
3939 Wisconsin Avenue, N.W.
Washington, D.C. 20016-2899
Attention: Vice President for Multifamily Asset
Management
Telecopy No.: (202) 752-5016
with a copy to: Venable LLP
575 7th Street, N.W.
Suite 1000
56
Washington, D.C. 20004
Attention: Lawrence H. Gesner, Esquire
Telecopy No.: (202) 344-8300
(b) Change of Notice Address. Any party may, by notice given
pursuant to this Section, change the person or persons and/or address or
addresses, or designate an additional person or persons or an additional address
or addresses, for its notices, but notice of a change of address shall only be
effective upon receipt. Each party agrees that it shall not refuse or reject
delivery of any notice given hereunder, that it shall acknowledge, in writing,
receipt of the same upon request by the other party and that any notice rejected
or refused by it shall be deemed for all purposes of this Agreement to have been
received by the rejecting party on the date so refused or rejected, as
conclusively established by the records of the U.S. Postal Service, the courier
service or facsimile.
SECTION 17.09. Further Assurances and Corrective Instruments.
(a) Further Assurances. To the extent permitted by law, the
parties hereto agree that they shall, from time to time, execute, acknowledge
and deliver, or cause to be executed, acknowledged and delivered, such
supplements hereto and such further instruments as Lender or Borrower may
request and as may be required in the opinion of Lender or its counsel to
effectuate the intention of or facilitate the performance of this Agreement or
any Loan Document.
(b) Further Documentation. Without limiting the generality of
subsection (a), in the event any further documentation or information is
required by Lender to correct patent mistakes in the Loan Documents, materials
relating to the Title Insurance Policies or the funding of the Advances,
Borrower shall provide, or cause to be provided to Lender, at their cost and
expense, such documentation or information, so long as the obligations of
Borrower are not materially increased thereby or the rights of Borrower are not
materially decreased thereby. Borrower shall execute and deliver to Lender such
documentation, including any amendments, corrections, deletions or additions to
the Notes, the Security Instruments or the other Loan Documents as is reasonably
required by Lender and at reasonable cost to the Borrower.
(c) Compliance with Investor Requirements. Without limiting the
generality of subsection (a), Borrower shall do anything necessary to comply
with the reasonable requirements of Lender to enable Lender to sell the MBS
backed by an Advance.
SECTION 17.10. Term of this Agreement.
This Agreement shall continue in effect until the Credit Facility
Termination Date.
SECTION 17.11. Assignments; Third-Party Rights.
No Borrower shall assign this Agreement, or delegate any of its
obligations hereunder, without the prior written consent of Lender. Lender may
assign its rights and obligations under this Agreement separately or together,
without Borrower's consent, only to Fannie Mae, but may
57
not delegate its obligations under this Agreement unless required to do so
pursuant to Section 13.04.
SECTION 17.12. Headings.
Article and Section headings used herein are for convenience of reference
only, are not part of this Agreement and are not to affect the construction of,
or to be taken into consideration in interpreting, this Agreement.
SECTION 17.13. General Interpretive Principles.
For purposes of this Agreement, except as otherwise expressly provided or
unless the context otherwise requires, (i) the terms defined in Appendix I and
elsewhere in this Agreement have the meanings assigned to them in this Agreement
and include the plural as well as the singular, and the use of any gender herein
shall be deemed to include the other genders; (ii) accounting terms not
otherwise defined herein have the meanings assigned to them in accordance with
GAAP; (iii) references herein to "Articles," "Sections," "subsections,"
"paragraphs" and other subdivisions without reference to a document are to
designated Articles, Sections, subsections, paragraphs and other subdivisions of
this Agreement; (iv) a reference to a subsection without further reference to a
Section is a reference to such subsection as contained in the same Section in
which the reference appears, and this rule shall also apply to paragraphs and
other subdivisions; (v) a reference to an Exhibit or a Schedule without a
further reference to the document to which the Exhibit or Schedule is attached
is a reference to an Exhibit or Schedule to this Agreement; (vi) the words
"herein," "hereof," "hereunder" and other words of similar import refer to this
Agreement as a whole and not to any particular provision; and (vii) the word
"including" means "including, but not limited to."
SECTION 17.14. Interpretation.
The parties hereto acknowledge that each party and their respective
counsel have participated in the drafting and revision of this Agreement and the
Loan Documents. Accordingly, the parties agree that any rule of construction
which disfavors the drafting party shall not apply in the interpretation of this
Agreement and the Loan Documents or any amendment or supplement or exhibit
hereto or thereto.
SECTION 17.15. Standards for Decisions, Etc.
Unless otherwise provided herein, if Lender's approval is required for any
matter hereunder, such approval may be granted or withheld in Lender's sole and
absolute discretion. Unless otherwise provided herein, if Lender's designation,
determination, selection, estimate, action or decision is required, permitted or
contemplated hereunder, such designation, determination, selection, estimate,
action or decision shall be made in Lender's sole and absolute discretion.
Lender shall not unreasonably withhold, delay or condition any approval or
determination with respect to any matter described in Sections 3.04(e), 3.04(f)
and 17.19.
SECTION 17.16. Decisions in Writing.
58
Any approval, designation, determination, selection, action or decision of
Lender or Borrower must be in writing to be effective.
SECTION 17.17. Requests.
The Borrower may submit up to a total of six Requests (other than Advance
Requests not related to the addition of Mortgaged Property to the Collateral
Pool, which shall not count as Requests for purposes of the limitation in this
Section 17.17) per Calendar Year.
SECTION 17.18. Tax Service Contracts.
The Borrower shall, on the Initial Closing Date, reimburse Lender for the
cost of a tax service contract or contracts. The tax service contract provider
will monitor and confirm the accurate and timely payment of real estate taxes
during the Term of this Agreement.
SECTION 17.19. Special Provisions Regarding Boulder Ridge.
Borrower has advised Lender and Lender has hereby acknowledges that a
portion of Tract II of the Mortgaged Property commonly known as Boulder Ridge
(the "BOULDER RIDGE PROPERTY") comprising the developed portion of Tract II is a
separate parcel from the Expansion Property included within the Boulder Ridge
Property. Borrower has advised Lender that to facilitate future development of
the Expansion Property included within the Boulder Ridge Property, it may seek
to combine the Expansion Property included within the Boulder Ridge Property
with the developed portion of the Boulder Ridge Property resulting in all of
Tract II becoming a single parcel. In such event, Lender shall consent to such
replatting or resubdivision, subordinate to its lien on the Boulder Ridge
Property to any easements and other matters caused by such replatting or
resubdivision and execute and deliver all documents required by the applicable
Governmental Authority in connection therewith, upon the satisfaction of each of
the following conditions:
(i) Lender shall have reviewed and approved the final form of
resubdivision or replatting of the Boulder Ridge Property and all documents it
is required to execute in connection therewith, and Lender shall have determined
that such resubdivision or replatting or the related documents do not materially
interfere with the continuing operation of the Boulder Ridge Property; and
(ii) Borrower shall pay all of Lender's reasonable costs and
expenses, including legal fees and expenses, in connection with the replatting
or resubdivision.
[THE REMAINDER OF THIS PAGE IS LEFT INTENTIONALLY BLANK]
59
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the day and year first above written.
BORROWER:
SUN SECURED FINANCING LLC, a Michigan
limited liability company
By: Sun Communities Operating Limited
Partnership, a Michigan limited
partnership, its sole member
By: Sun Communities, Inc., a Maryland
Corporation, its general partner
By: /s/ Jonathan M. Colman
----------------------
Name: Jonathan M. Colman
Title: Executive Vice President -
Acquisitions
ASPEN - FT. COLLINS LIMITED
PARTNERSHIP, a Michigan limited partnership
By: Sun GP L.L.C., a Michigan limited liability
company, its general partner
By: Sun Communities, Inc., a Maryland
Corporation, its manager
By: /s/ Jonathan M. Colman
----------------------
Name: Jonathan M. Colman
Title: Executive Vice President -
Acquisitions
SUN SECURED FINANCING HOUSTON LIMITED
PARTNERSHIP, a Michigan limited partnership
By: Sun Secured Financing GP, Inc., a Michigan
corporation, its general partner
By: /s/ Jonathan M. Colman
----------------------
Name: Jonathan M. Colman
Title: Executive Vice President -
Acquisitions
60
SUN COMMUNITIES FINANCE, LLC, a Michigan
limited liability company
By: Sun Communities Operating Limited Partnership,
a Michigan limited partnership, its managing
member
By: Sun Communities, Inc., a Maryland
Corporation, its general partner
By: /s/ Jonathan M. Colman
----------------------
Name: Jonathan M. Colman
Title: Executive Vice President -
Acquisitions
SUN HOLLY FOREST LLC, a Michigan limited liability
company
By: Sun Communities Operating Limited Partnership,
a Michigan limited partnership, its managing
member
By: Sun Communities, Inc., a Maryland
Corporation, its general partner
By: /s/ Jonathan M. Colman
----------------------
Name: Jonathan M. Colman
Title: Executive Vice President -
Acquisitions
SUN SADDLE OAK LLC, a Michigan limited liability
company
By: Sun Communities Operating Limited Partnership,
a Michigan limited partnership, its managing
member
By: Sun Communities, Inc., a Maryland
Corporation, its general partner
By: /s/ Jonathan M. Colman
----------------------
Name: Jonathan M. Colman
Title: Executive Vice President -
Acquisitions
61
LENDER
ARCS COMMERCIAL MORTGAGE CO., L.P., a California
limited partnership
By: ACMC Realty, Inc., a California Corporation,
its General Partner
By: /s/ Timothy L. White
--------------------
Timothy L. White
Chief Operating Officer
62