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EXHIBIT 10.10
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AMENDED AND RESTATED LOAN AGREEMENT
between
SUN COMMUNITIES FUNDING LIMITED PARTNERSHIP
and
LEHMAN BROTHERS HOLDINGS INC.
D/B/A LEHMAN CAPITAL, A DIVISION
OF LEHMAN BROTHERS HOLDINGS INC.
Dated as of September 3, 1997
$26,000,000.00
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TABLE OF CONTENTS
SECTION 1. DEFINITIONS............................................................................................2
Section 1.01 Definitions.................................................................................2
SECTION 2. AMOUNT AND TERMS OF LOAN..............................................................................19
Section 2.01 Intentionally Deleted......................................................................19
Section 2.02 Intentionally Deleted......................................................................19
Section 2.03 Intentionally Deleted......................................................................19
Section 2.04 The Note...................................................................................20
Section 2.05 Interest and Principal Payments............................................................20
Section 2.06 Intentionally Deleted......................................................................21
Section 2.07 Intentionally Deleted......................................................................21
Section 2.08 Intentionally Deleted......................................................................21
Section 2.09 Intentionally Deleted......................................................................21
Section 2.10 Intentionally Deleted......................................................................21
Section 2.11 Voluntary Prepayments; Defeasance..........................................................21
Section 2.12 Mandatory Prepayments......................................................................26
Section 2.13 Application of Payments....................................................................26
Section 2.14 Method and Place of Payment................................................................27
Section 2.15 Intentionally Deleted......................................................................27
Section 2.16 Intentionally Deleted......................................................................27
Section 2.17 Intentionally Deleted......................................................................27
Section 2.18 Intentionally Deleted......................................................................28
Section 2.19 Taxes......................................................................................28
Section 2.20 Intentionally Deleted......................................................................28
Section 2.21 Intentionally Deleted......................................................................28
Section 2.22 Intentionally Deleted......................................................................29
Section 2.23 Intentionally Deleted......................................................................29
Section 2.24 Intentionally Deleted......................................................................29
Section 2.25 Intentionally Deleted......................................................................29
Section 2.26 Intentionally Deleted......................................................................29
Section 2.27 Intentionally Deleted......................................................................29
Section 2.28 Intentionally Deleted......................................................................29
SECTION 3. CONDITIONS PRECEDENT..................................................................................29
Section 3.01 Conditions Precedent to the Loan...........................................................29
Section 3.02 Conditions Precedent to the Closing........................................................33
Section 3.03 Acceptance of Loan.........................................................................34
Section 3.04 Sufficient Counterparts....................................................................35
SECTION 4. REPRESENTATIONS AND WARRANTIES........................................................................35
Section 4.01 Corporate/Partnership/Limited Liability Company Status.....................................35
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Section 4.02 Corporate/Partnership/Limited Liability Company Power and Authority........................35
Section 4.03 No Violation...............................................................................35
Section 4.04 Litigation.................................................................................36
Section 4.05 Financial Statements: Financial Condition; etc.............................................36
Section 4.06 Solvency...................................................................................36
Section 4.07 Material Adverse Change....................................................................36
Section 4.08 Use of Proceeds; Margin Regulations........................................................36
Section 4.09 Governmental Approvals.....................................................................37
Section 4.10 Security Interests and Liens...............................................................37
Section 4.11 Tax Returns and Payments...................................................................37
Section 4.12 ERISA......................................................................................37
Section 4.13 Representations and Warranties in Loan Documents...........................................38
Section 4.14 True and Complete Disclosure...............................................................38
Section 4.15 Ownership of Real Property; Existing Security Instruments..................................39
Section 4.16 No Default.................................................................................39
Section 4.17 Licenses, etc..............................................................................39
Section 4.18 Compliance With Law........................................................................39
Section 4.19 Brokers....................................................................................39
Section 4.20 Judgments..................................................................................40
Section 4.21 Property Manager...........................................................................40
Section 4.22 Intentionally Deleted......................................................................40
Section 4.23 Intentionally Deleted......................................................................40
Section 4.24 Trade Names................................................................................40
Section 4.25 Survival...................................................................................40
SECTION 5. AFFIRMATIVE COVENANTS.................................................................................40
Section 5.01 Books and Records..........................................................................40
Section 5.02 Books, Records and Inspections.............................................................42
Section 5.03 Maintenance of Insurance...................................................................43
Section 5.04 Taxes......................................................................................43
Section 5.05 Corporate Franchises; Conduct of Business..................................................43
Section 5.06 Compliance with Law........................................................................43
Section 5.07 Performance of Other Obligations...........................................................44
Section 5.08 Intentionally Deleted......................................................................44
Section 5.09 Intentionally Deleted......................................................................44
Section 5.10 Maintenance of Properties..................................................................44
Section 5.11 Compliance with ERISA......................................................................44
Section 5.12 Settlement/Judgment Notice.................................................................45
Section 5.13 Intentionally Deleted......................................................................45
Section 5.14 Intentionally Deleted......................................................................45
Section 5.15 Intentionally Deleted......................................................................45
Section 5.16 Intentionally Deleted......................................................................45
Section 5.17 Intentionally Deleted......................................................................45
Section 5.18 Intentionally Deleted......................................................................45
Section 5.19 Intentionally Deleted......................................................................45
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Section 5.20 Intentionally Deleted......................................................................45
Section 5.21 Manager....................................................................................45
Section 5.22 Further Assurances.........................................................................46
Section 5.23 Intentionally Deleted......................................................................46
Section 5.24 Security Instrument Covenants..............................................................46
Section 5.25 Intentionally Deleted......................................................................46
SECTION 6. NEGATIVE COVENANTS....................................................................................46
Section 6.01 Liens......................................................................................46
Section 6.02 Restriction on Fundamental Changes.........................................................47
Section 6.03 Transactions with Affiliates...............................................................47
Section 6.04 Plans......................................................................................47
Section 6.05 Intentionally Deleted......................................................................47
Section 6.06 Single Purpose Entity......................................................................47
SECTION 7. EVENTS OF DEFAULT.....................................................................................49
Section 7.01 Events of Default..........................................................................49
Section 7.02 Rights and Remedies........................................................................52
SECTION 8. CASH COLLATERAL ACCOUNT; DEFERRED MAINTENANCE RESERVE ACCOUNT.........................................53
Section 8.1 Establishment of Cash Collateral Account....................................................53
Section 8.2 Pledge and Grant of Security Interest.......................................................53
Section 8.3 Sub-Accounts................................................................................53
Section 8.4 Deposit of Proceeds On Closing Date.........................................................54
Section 8.5 Deposit and Allocation of Funds After the Closing Date......................................54
Section 8.6 Permitted Investments.......................................................................55
Section 8.7 Earnings on Account Collateral; Monthly Statements..........................................56
Section 8.8 Disbursement of Account Collateral..........................................................56
Section 8.9 Capital Event Proceeds......................................................................58
Section 8.10 Remedies Upon Default in Respect of Account Collateral.....................................59
Section 8.11 Establishment of Deferred Maintenance Reserve Account......................................60
Section 8.12 Deposits into and Maintenance of Deferred Maintenance Reserve Account......................60
Section 8.13 Disbursements from Deferred Maintenance Reserve Account....................................60
Section 8.14 Deferred Maintenance Reserve Account Shortfalls............................................61
Section 8.15 Annual Adjustment of Deferred Maintenance Reserve Account Shortfalls.......................61
Section 8.16 Performance................................................................................62
Section 8.17 Determination of Replacement Reserve Monthly Installment...................................62
Section 8.18 Annual Adjustment of Replacement Reserve Monthly Installment...............................63
SECTION 9. MISCELLANEOUS.........................................................................................63
Section 9.01 Payment of Lender's Expenses, Indemnity, etc...............................................63
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Section 9.02 Notices....................................................................................65
Section 9.03 Successors and Assigns.....................................................................66
Section 9.04 Amendments and Waivers.....................................................................66
Section 9.05 No Waiver; Remedies Cumulative.............................................................66
Section 9.06 Governing Law; Submission to Jurisdiction..................................................67
Section 9.07 Confidentiality Disclosure of Information..................................................67
Section 9.08 Non-Recourse Liability.....................................................................68
Section 9.09 Transfer of Loan; Cooperation..............................................................69
Section 9.10 Borrower"s Assignment......................................................................70
Section 9.11 Counterparts...............................................................................70
Section 9.12 Effectiveness..............................................................................70
Section 9.13 Headings Descriptive.......................................................................70
Section 9.14 Marshaling; Recapture......................................................................70
Section 9.15 Severability...............................................................................70
Section 9.16 Survival...................................................................................70
Section 9.17 Intentionally Deleted......................................................................71
Section 9.18 Calculations; Computations.................................................................71
Section 9.19 WAIVER OF TRIAL BY JURY....................................................................71
Section 9.20 No Joint Venture...........................................................................71
Section 9.21 Estoppel Certificates......................................................................71
Section 9.22 No Other Agreements........................................................................71
Section 9.23 Controlling Document.......................................................................72
Section 9.24 No Benefit to Third Parties................................................................72
Section 9.25 Intentionally Deleted......................................................................72
SCHEDULES
Schedule 1 Allocated Loan Amounts
Schedule 2 Deferred Maintenance Items
Schedule 3 List of Real Property Assets
Schedule 4 Litigation
Schedule 5 Employee Benefit Plans
Schedule 6 Trade Names
Schedule 7 Liens
Schedule 8 Initial Deposit to Cash Collateral Account
Schedule 9 Release Prices
Schedule 10 Monthly Payment Schedule
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THIS AMENDED AND RESTATED LOAN AGREEMENT, dated as of September ____, 1997,
is made between SUN COMMUNITIES FUNDING LIMITED PARTNERSHIP, a Michigan limited
partnership ("Borrower") and LEHMAN BROTHERS HOLDINGS INC., D/B/A LEHMAN
CAPITAL, A DIVISION OF LEHMAN BROTHERS HOLDINGS INC., a Delaware corporation
("Lender").
PRELIMINARY STATEMENT
Sun Communities Operating Limited Partnership, a Michigan limited
partnership ("Sun") and Sun Communities, Inc. a Michigan corporation and the
sole general partner of Sun (the "REIT") have heretofore entered into that
certain loan agreement with NBD Bank, N.A. ("NBD") pursuant to which NBD agreed
to make an initial loan (the "Initial Loan") to Sun and the REIT in the original
principal amount of $30,000,000 for the uses and purposes set forth in such
agreement (the "Initial Loan Agreement").
In order to evidence the Initial Loan, Sun heretofore executed that certain
promissory note dated November 30, 1994, in the original principal amount of
$30,000,000 (the "Initial Note").
On May 26, 1995 NBD sold and assigned to Lender all of NBD's right, title
and interest in, to and under the Initial Note.
Pursuant to that certain line of credit agreement dated as of May 26, 1995
between Sun, the REIT and Lender (as amended, supplemented, modified and
restated, the "Sun Loan Agreement"), Sun and the REIT executed and delivered to
Lender (i) that certain Promissory Note "A" ("Note A") in the principal sum of
EIGHTY FIVE MILLION AND 00/100 DOLLARS ($85,000,000.00) and (ii) that certain
Promissory Note "B" ("Note B") in the principal sum of SEVENTEEN MILLION AND
00/100 DOLLARS ($17,000,000.00), which Note A and Note B amended, restated and
superseded the Initial Note.
As of May 1, 1996, the principal balance of Note A was reduced, Note B was
satisfied and released, and simultaneously, Miami Lakes Venture Associates, a
Florida general partnership (the "Partnership") entered into a certain amended
and restated renewal note with Lender dated as of May 1, 1996 in the principal
amount of $14,702,265.60 (the "Renewal Note"), which Renewal Note was guaranteed
by Sun and REIT pursuant to a Guaranty of Payment ("Initial Guaranty"), and
subsequently, as of December 27, 1996, the principal amount of Note A was
increased to $20,297,734.40, causing the aggregate principal amounts of Note A
and the Renewal Note to be $35,000,000 (the "Sun Loan").
As of the date hereof Sun has conveyed the Real Property Assets to Borrower
and Borrower has accepted the conveyance subject to the Sun Loan.
Borrower and Lender desire to modify and restate in its entirety, the Sun
Loan Agreement.
NOW THEREFORE, in consideration of the mutual covenants and agreements
hereinafter set forth and in and for other good and valuable consideration, the
receipt and
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sufficiency of which are hereby acknowledged, Borrower and Lender agree that the
terms, covenants and provisions of the Sun Loan Agreement are hereby modified,
amended and restated so that henceforth the terms, covenants and provisions of
this Loan Agreement shall supersede the terms, covenants and provisions of the
Sun Loan Agreement and shall read as follows:
SECTION 1. DEFINITIONS.
Section 1.01 Definitions. As used herein, the following terms shall
have the meanings herein specified unless the context otherwise requires.
Defined terms in this Agreement shall include in the singular number the plural
and in the plural number the singular.
"Account Collateral" shall mean (A) all of the Gross Income from
Operations for each Real Property Asset, (B) all Loss Proceeds and proceeds from
Capital Events other than Casualty or Condemnation, (C) all of Borrower's
respective right, title and interest in and to the Cash Collateral Account and
the Deferred Maintenance Reserve Account, including any Permitted Investments
therein, and (D) all of Borrower's respective right, title and interest in and
to all deposits of Gross Income from Operations and other deposits made from
time to time in the Cash Collateral Account and the Deferred Maintenance Reserve
Account in accordance with Section 8 hereof, together with all cash and non-cash
proceeds thereof (including, without limitation, Permitted Investments),
inclusive of all earnings and interest thereon.
"Accounts Receivable" shall mean all income and revenues of Borrower
arising from the operation of the Real Property Assets and all payments for
goods or property sold or leased by Borrower or for services rendered by
Borrower, whether or not yet earned by performance, and not evidenced by an
instrument or chattel paper, including, without limiting the generality of the
foregoing, (i) all accounts, contract rights, book debts, and notes arising from
the operation of a mobile home park or a manufactured housing community on the
Real Property Assets or arising from the sale, lease or exchange of goods or
other property and/or the performance of services, (ii) Borrower"s rights to
payment from any consumer credit/charge card organization or entity (such as, or
similar to, the organizations or entities which sponsor and administer the
American Express Card, the Visa Card, the Bankamericard, the Carte Blanche Card,
or the Mastercard), (iii) Borrower's rights in, to and under all purchase orders
for goods, services or other property, (iv) Borrower"s rights to any goods,
services or other property represented by any of the foregoing, (v) monies due
to or to become due to Borrower under all contracts for the sale, lease or
exchange of goods or other property and/or the performance of services including
the right to payment of any interest or finance charges in respect thereto
(whether or not yet earned by performance on the part of Borrower) and (vi) all
collateral security and guaranties of any kind given by any person or entity
with respect to any of the foregoing. Accounts Receivable shall include those
now existing or hereafter created, substitutions therefor, proceeds (whether
cash or non-cash, movable or immovable, tangible or intangible) received upon
the sale, exchange, transfer, collection or other disposition or substitution
thereof and any and all of the foregoing and proceeds therefrom.
"Accrued Interest" shall have the meaning provided in Section 2.05(b).
"Advance" shall mean the advance of the principal balance of the Loan.
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"Affiliate" shall mean, with reference to a specified Person, any
Person that directly or indirectly through one or more intermediaries Controls
or is Controlled by or is under common Control with the specified Person and any
Subsidiaries of such specified Person.
"Agreement" shall mean this Loan Agreement as the same may from time to
time hereafter be modified, supplemented or amended.
"Allocated Loan Amount" shall mean the portions of the Available
Facility Amount allocated to each Real Property Asset as set forth on Schedule
1, as the same may be adjusted in accordance with this Agreement.
"Anticipated Payment Date" shall mean September 10, 2007.
"Applicable Laws" shall mean all existing and future federal, state and
local laws, statutes, orders, ordinances, rules, and regulations or orders,
writs, injunctions or decrees of any court affecting Borrower or any Real
Property Asset, or the use thereof including, but not limited to, all laws
regarding the operation of the Real Property Assets as a manufactured housing
community, all zoning, fire safety and building codes, the Americans with
Disabilities Act, and all Environmental Laws (as defined in the Environmental
Indemnity) and Title VIII of the Civil Rights Act of 1968, as amended by the
Housing and Community Developmental Act of 1974.
"Appraisal" shall mean an appraisal prepared in accordance with the
requirements of FIRREA, prepared by an independent third party appraiser holding
an MAI designation, who is state licensed or state certified if required under
the laws of the state where the applicable Real Property Asset is located, who
meets the requirements of FIRREA and who has at least ten (10) years real estate
experience appraising properties of a similar nature and type as the applicable
Real Property Asset and who is otherwise satisfactory to Lender.
"Approved Annual Budget" shall mean for the partial year period
commencing on the Anticipated Payment Date, and for each fiscal year thereafter,
the annual budget submitted to Lender for Lender"s written approval not later
than thirty (30) days prior to the commencement of such period or fiscal year.
Such annual budget shall be in form and substance reasonably satisfactory to
Lender setting forth in reasonable detail budgeted monthly operating income and
monthly operating capital and monthly operating and other expenses for the Real
Property Assets, including all planned capital expenditures in respect of the
Real Property Assets for such period or fiscal year. Until such time that Lender
approves a proposed annual budget, the most recently Approved Annual Budget
shall apply; provided that, such Approved Annual Budget shall be adjusted to
reflect actual increases in real estate taxes, insurance premiums and utilities
expenses.
"Assignment of Contracts" shall have the meaning provided in Section
3.01(a)(vii).
"Assignment of Leases and Rents" shall have meaning provided in Section
3.01(a)(iv).
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"Available Facility Amount" shall mean, individually U.S.
$45,000,000.00, as the same may be reduced pursuant to the terms of this
Agreement.
"Bank" shall initially mean NBD Bank, N.A., provided that in the event
that the ratings of such institution"s short-term senior unsecured debt
obligations fall below A-1+ by S&P (hereinafter defined), then "Bank" shall mean
any other financial institution subsequently selected by Lender for the transfer
of the Cash Collateral Account or the Deferred Maintenance Reserve Account,
provided that any such subsequent financial institution shall be authorized to
maintain Eligible Accounts. Lender shall give the Borrower notice of any
transfer of the Cash Collateral Account or the Deferred Maintenance Reserve
Account to a successor Bank promptly after such transfer.
"Bankruptcy Code" shall mean Title 11 of the United States Code
entitled "Bankruptcy", as amended from time to time, and any successor statute
or statutes and all rules and regulations from time to time promulgated
thereunder, and any comparable foreign laws relating to bankruptcy, insolvency
or creditors' rights.
"Basic Carrying Costs" shall mean, with respect to a Real Property
Asset, the sum of the following costs associated with such Real Property Asset
for the relevant year or payment period: (i) Taxes and Other Charges imposed by
a governmental authority (each as defined in the related Security Instrument)
and (ii) Insurance Premiums (as defined in the related Security Instrument).
"Basic Carrying Costs Monthly Installment" shall mean, with respect to
a Real Property Asset, one twelfth (1/12th) of the annual amount (or if Basic
Carrying Costs are paid more often than annually, a fraction equal to one
divided by the number of full months in the relevant payment period multiplied
by the amount payable for such payment period) of Basic Carrying Costs as set
forth on the Approved Annual Budget with respect to such Real Property Asset.
Should such Basic Carrying Costs not be ascertainable at the time any monthly
deposit is required to be made, the Basic Carrying Costs Monthly Installment
shall be determined by Lender on the basis of the aggregate Basic Carrying Costs
for the prior year or payment period. As soon as the Basic Carrying Costs are
fixed for the then current year or payment period, the remaining Basic Carrying
Costs Monthly Installments in such year shall be adjusted to reflect any
deficiency or surplus in prior monthly payments pursuant to Section 8.
"Basic Carrying Costs Sub-Account" shall mean a Sub-account for
purposes of holding all year-to-date (or other applicable period-to-date) Basic
Carrying Costs Monthly Installments (less amounts disbursed to or on behalf of
the Borrower during the relevant year or other payment period) plus the amount
of the Basic Carrying Costs Monthly Installment for the next ensuing month (as
adjusted to reflect actual Basic Carrying Costs).
"Borrower" shall have the meaning provided in the first paragraph of
this Agreement and any successor Borrower expressly permitted hereunder.
"Business Day" shall mean (i) for all purposes, any day excluding
Saturday, Sunday and any day which shall be in New York City or Detroit,
Michigan a legal holiday or a
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day on which Lender or banking institutions are authorized or required by law or
other government actions to close.
"Business Interruption Insurance Proceeds" shall have the meaning
provided in Section 8.9(a).
"Business Interruption Insurance Sub-Account" shall mean a Sub-Account
in the Cash Collateral Account for the purpose of holding proceeds of business
interruption insurance policies paid in lump sums in advance.
"Capital Event" shall mean, with respect to a Real Property Asset, (a)
the sale or other disposition (whether voluntary or involuntary) or refinancing
of all or any portion of such Real Property Asset, (b) the occurrence of any
Casualty or Condemnation of all or any portion of such Real Property Asset, or
(c) the receipt of proceeds from any other transaction or by reason of any other
occurrence, which proceeds do not constitute Gross Income from Operations of
such Real Property Asset; provided, however, amounts representing proceeds from
a Capital Event shall be determined net of reasonable and customary
out-of-pocket closing or other settlement expenses and/or collection costs.
"Capital Event Sub-Account" shall mean a Sub-Account in the Cash
Collateral Account for purposes of holding proceeds of Capital Events.
"Capitalized Lease" as to any Person shall mean (i) any lease of
property, real or personal, the obligations under which are capitalized on the
consolidated balance sheet of such Person and its Subsidiaries, and (ii) any
other such lease to the extent that the then present value of the minimum rental
commitment thereunder should, in accordance with GAAP, be capitalized on a
balance sheet of the lessee.
"Capitalized Lease Obligations" as to any Person shall mean all
obligations of such Person and its Subsidiaries under or in respect of
Capitalized Leases.
"Cash Collateral Account" shall have the meaning provided in Section
8.1.
"Casualty" shall mean any damage to or destruction of all or any
material portion of a Real Property Asset.
"Casualty Insurance Proceeds" shall mean any insurance proceeds
received by a Borrower in respect of a Casualty.
"Certificate of Compliance and Indemnification Agreement" shall have
the meaning provided in Section 3.01(a)(vi).
"Change in Law" shall have the meaning provided in Section 2.19(c).
"Closing Date" shall mean the date of this Agreement.
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"Code" shall mean the Internal Revenue Code of 1986, as amended from
time to time, and any successor statute, together with all rules and regulations
from time to time promulgated thereunder.
"Collateral" shall mean all property and interests in property now
owned or hereafter acquired in or upon which a Lien has been or is purported or
intended to have been granted under any of the Security Instruments or any of
the other Loan Documents.
"Condemnation" shall mean any actual or proposed, contemplated or
threatened commencement of any taking, condemnation, eminent domain or other
similar proceeding relating to all or any material portion of a Real Property
Asset.
"Condemnation Proceeds" shall mean any award proceeds or other
compensation payable in respect of a Condemnation.
"Contingent Obligation" as to any Person shall mean any obligation of
such Person guaranteeing or intended to guarantee any Indebtedness, leases
(including Capitalized Leases) dividends or other obligations ("primary
obligations") of any other Person (the "primary obligor") in any manner, whether
directly or indirectly, including, without limitation, any obligation of such
Person, whether or not contingent, (a) to purchase any such primary obligation
or any property constituting direct or indirect security therefor, (b) to
advance or supply funds (i) for the purchase or payment of any such primary
obligation or (ii) to maintain working capital or equity capital of the primary
obligor or otherwise to maintain the net worth, solvency or other financial
condition of the primary obligor, (c) to purchase property, securities or
services primarily for the purpose of assuring the owner of any such primary
obligation of the ability of the primary obligor to make payment of such primary
obligation or (d) otherwise to assure or hold harmless the owner of such primary
obligation against loss in respect thereof: provided, however, that the term
Contingent Obligation shall not include endorsements of instruments for deposit
or collection in the ordinary course of business, or other obligations of such
Persons which would not be required under GAAP to be disclosed as liabilities or
footnoted on such Person's financial statement. The amount of any Contingent
Obligation shall be deemed to be an amount equal to the stated or determinable
amount of the primary obligation in respect of which such Contingent Obligation
is made or, if not stated or determinable, the maximum reasonably anticipated
liability in respect thereof (assuming such Person is required to perform
thereunder) as determined by such Person in good faith.
"Control" shall mean in (a) in the case of a corporation, ownership,
directly or through ownership of other entities, of at least ten percent (10%)
of all the voting stock (exclusive of stock which is voting only as required by
applicable law or in the event of nonpayment of dividends and pays dividends
only on a nonparticipating basis at a fixed or floating rate), and (b) in the
case of any other entity, ownership, directly or through ownership of other
entities, of at least ten percent (10%) of all of the beneficial equity
interests therein (calculated by a method that excludes from equity interests,
ownership interests that are nonvoting (except as required by applicable law or
in the event of nonpayment of dividends or distributions) and pay dividends or
distributions only on a non-participating basis at a fixed or floating rate) or,
in any case, (c) the power directly or indirectly, to direct or control, or
cause the direction of, the
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management policies of another Person, whether through the ownership of voting
securities, general partnership interests, common directors, trustees, officers
by contract or otherwise. The terms "controlled" and "controlling" shall have
meanings correlative to the foregoing definition of "Control."
"Debt Service Coverage Ratio" shall mean for any Real Property Asset,
the ratio for the applicable period in which (a) the numerator is the Net
Operating Income (excluding interest on credit accounts) for such period as set
forth in the statements required hereunder, without deduction for (i) actual
management fees paid in connection with the operation of the Real Property
Asset, or (ii) amounts in the Basic Carrying Costs Sub-Account, the Replacement
Reserve Sub-Account and the Deferred Maintenance Reserve Account, less (A)
management fees equal to the greater of (1) assumed management fees of five
percent (5%) of Gross Income from Operations or (2) the actual management fees,
and (B) assumed Replacement Reserve Monthly Installments equal to $4.17 per pad;
and (b) the denominator is the aggregate amount of principal and interest due
and payable on the Note for such period.
"Debt Service Sub-Account" shall mean a Sub-Account of the Cash
Collateral Account for purposes of segregating amounts required to make all
payments of interest that will be due and payable on the next Payment Date in
respect of the Loan.
"Default" shall mean any event, act or condition which, with the giving
of notice or lapse of time, or both, would constitute an Event of Default.
"Default Rate" shall mean the lesser of (a) the Maximum Legal Rate or
(b) the rate per annum determined by adding 5% to the Regular Interest Rate.
"Deferred Maintenance Reserve Account" shall mean that certain reserve
account established with the Bank in the name of Lender in respect of certain
expenses relating to the deferred maintenance at each of the Real Property
Assets.
"Deferred Maintenance Reserve Account Disbursement Request" shall mean
a certificate of the Borrower requesting disbursement from the Deferred
Maintenance Reserve Account.
"Deferred Maintenance Reserve Account Reallocation Request" shall have
the meaning provided in Section 8.15.
"Deferred Maintenance Reserve Amount" shall mean, with respect to each
Real Property Asset, a funded reserve for completion of deferred maintenance
items at such Real Property Asset in amounts reasonably determined by Lender
based on an Engineering Report for such Real Property Asset, which amounts and
descriptions of such deferred maintenance items are set forth on Schedule 2 as
such schedule may be amended, modified or otherwise supplemented from time to
time.
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"Distribution Account" shall mean that certain trust account to which
the Borrower has, by irrevocable instruction given on the date hereof, directed
the Lender to deposit all funds to which Borrower is entitled hereunder.
"Dollars" and the symbol "$" each mean the lawful money of the United
States of America.
"Edwardsville Property" shall have the meaning provided in Section
2.11.
"Eligible Account" shall mean a trust account held by and at the Bank
or an account that is either: (a) maintained with a depository institution or
trust company the long-term unsecured debt obligations of which (or, in the case
of a depository institution or trust company that is the principal subsidiary of
a holding company, the long-term unsecured debt obligations of such holding
company) have been rated by the Rating Agencies in one of its two highest rating
categories or the short-term commercial paper of which is rated by the Rating
Agencies in its highest rating category at the time of any deposit therein; or
(b) a trust account or accounts maintained with a federal or state chartered
depository institution or trust company with trust powers acting in its
fiduciary capacity.
"Employee Benefit Plan" shall mean an employee benefit plan within the
meaning of Section 3(3) of ERISA.
"Engineering Reports" shall mean engineering reports dated within six
(6) months of delivery and in form and substance satisfactory to Lender with
respect to each of the Real Property Assets; such engineering reports shall be
prepared in accordance with Lender's then current guidelines for property
inspection reports by licensed engineers acceptable to Lender, and such report
should state, among other things, that each Real Property Asset is in good
condition and repair (subject to ordinary wear and tear), free from damage and
waste and is in compliance with the Americans with Disabilities Act.
"Environmental Indemnity" shall have the meaning provided in Section
3.01(a)(v).
"Environmental Reports" shall mean the written environmental site
assessments, prepared by independent qualified environmental professionals
acceptable to Lender, dated within six (6) months of delivery, each of which
shall be in form and substance satisfactory to Lender and shall include, without
limitation, the following: (i) a Phase I environmental site assessment analyzing
the possible presence of environmental contaminants, polychlorinated biphenyls
or storage tanks and other Hazardous Substances at each of the Real Property
Assets, the risk of contamination from off-site Hazardous Substances and
compliance with Environmental Laws, such assessments shall be conducted in
accordance with ASTM Standard E 1527-93, or any successor thereto published by
ASTM, (ii) an asbestos survey of each of the Real Property Assets, which shall
include random sampling of materials and air quality testing, (iii) if any of
the Real Property Assets is used for residential housing, an assessment of the
presence of lead-based paint, lead in water and radon in the improvements, and
(iv) such further site
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14
assessments Lender may require due to the results obtained in (i), (ii) or (iii)
hereof or in its reasonable discretion.
"ERISA" shall mean the Employee Retirement Income Security Act of
1974, as amended from time to time and any successor statute, together with
all rules and regulations promulgated thereunder. Section references to ERISA
are to ERISA, as in effect at the date of this Agreement and any provisions of
ERISA substituted therefor.
"ERISA Controlled Group" means any corporation or entity or trade or
business or person that is a member of any group described in Section 414(b),
(c), (m) or (o) of the Code of which Borrower is a member.
"Event of Default" shall have the meaning provided in Section 7.
"Federal Reserve Board" shall mean the Board of Governors of the
Federal Reserve System as constituted from time to time, or any successor
thereto in function.
"Fees" shall mean all amounts payable pursuant to Section 9.01.
"Financing Statements" shall have the meaning provided in Section
3.01(a)(h).
"FIRREA" means the Financial Institutions Reform, Recovery and
Enforcement Act of 1989, as amended from time to time.
"Florida Note" shall have the meaning provided in Section 2.11(c).
"Florida Property" shall mean that certain real property known as Royal
Country, located in Miami, Florida and which is the "Real Property Asset" as
defined in the Miami Lakes Loan Agreement.
"Furnished Information" shall have the meaning provided in Section
4.14.
"GAAP" shall mean United States generally accepted accounting
principles on the date hereof and as in effect from time to time during the term
of this Agreement, and consistent with those utilized in the preparation of the
financial statements referred to in Section 4.05.
"General Partner" shall mean Sun Communities Funding GP L.L.C., a
Michigan limited liability company, and the general partner of Borrower.
"Gross Income from Operations" shall mean all income, computed in
accordance with GAAP, derived from the ownership and operation of the Real
Property Assets from whatever source, including, but not limited to, Rents,
utility charges, escalations, forfeited security deposits, interest on credit
accounts, service fees or charges, license fees, parking fees, rent concessions
or credits, and other required pass-throughs but excluding sales, use and
occupancy or other taxes on receipts required to be accounted for by Borrower to
any government or governmental agency, refunds and uncollectible accounts, sales
of furniture, fixtures and equipment, proceeds of casualty insurance and
condemnation awards (other than business
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15
interruption or other loss of income insurance), and any disbursements to the
Borrower from the Basic Carrying Costs Sub-Account, the Replacement Reserve
Sub-Account, the Deferred Maintenance Reserve Account or any other Sub-Account
established by the Loan Documents. Gross income shall not be diminished as a
result of the Security Instruments or the creation of any intervening estate or
interest in the Real Property Assets or any part thereof.
"Guaranty" shall mean that certain guaranty of payment dated the date
hereof given by Borrower to Lender pursuant to the Miami Lakes Loan Agreement.
"Indebtedness" of any Person shall mean, without duplication, (i) all
indebtedness of such Person for borrowed money or for the deferred purchase
price of property or services, (ii) all indebtedness of such Person evidenced by
a note, bond, debenture or similar instrument, (iii) the face amount of all
letters of credit issued for the account of such Person and, without
duplication, all unreimbursed amounts drawn thereunder, (iv) all indebtedness of
any other Person secured by any Lien on any property owned by such Person,
whether or not such indebtedness has been assumed, (v) all Contingent
Obligations of such Person, (vi) all Unfunded Benefit Liabilities of such
Person, (vii) all payment obligations of such Person under any interest rate
protection agreement (including, without limitation, any interest rate swaps,
caps, floors, collars and similar agreements) and currency swaps and similar
agreements, (viii) all indebtedness and liabilities secured by any Lien or
mortgage on any property of such Person, whether or not the same would be
classified as a liability on a balance sheet, (ix) the liability of such Person
in respect of banker's acceptances and the estimated liability under any
participating mortgage, convertible mortgage or similar arrangement, (x) the
aggregate amount of rentals or other consideration payable by such Person in
accordance with GAAP over the remaining unexpired term of all Capitalized
Leases, (xi) all judgments or decrees by a court or courts or competent
jurisdiction entered against such Person, (xii) all indebtedness, payment
obligations, contingent obligations, etc. of any partnership in which such
Person holds a general partnership interest, and (xiii) all obligations,
liabilities, reserves and any other items which are listed as a liability on a
balance sheet of such Person determined on a consolidated basis in accordance
with GAAP, but excluding all general contingency reserves, reserves for deferred
income taxes and investment credit, and all prepaid Rents, tenant security
deposits or other customer deposits.
"Indemnified Party" shall have the meaning provided in Section 9.01(c).
"Insurance Proceeds Sub-Account" shall mean a Sub-Account for the
purpose of holding Loss Proceeds that are to be disbursed to the Borrower for
restoration of a Real Property Asset in connection with a Casualty or
Condemnation.
"Lender" shall have the meaning provided in the first paragraph of this
Agreement and any successors or assigns thereof.
"Lien" shall mean any mortgage, deed of trust, pledge, hypothecation,
assignment, deposit arrangement, encumbrance, lien (statutory or other), or
preference, priority or other security agreement of any kind or nature
whatsoever, including, without limitation, any conditional sale or other title
retention agreement, any financing lease having substantially the same
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16
effect as any of the foregoing and the filing of any financing statement or
similar instrument under the Uniform Commercial Code or comparable law of any
jurisdiction, domestic or foreign.
"Loan" shall mean the Advance made to Borrower under this Agreement and
the Note pursuant to the terms hereof, the aggregate principal amount of which
shall not exceed the Maximum Facility Amount.
"Loan Documents" shall mean this Agreement, the Note, the Guaranty, the
Security Instruments, the Environmental Indemnity, the Assignment of Leases and
Rents, the Certificate of Compliance and Indemnification Agreement, the
Assignment of Agreements, Permits and Contracts, each Financing Statement filed
in connection herewith, and any other documents or instruments evidencing,
securing or guaranteeing the Loan or perfecting Lender's Lien in the Collateral.
"Loss Proceeds" shall mean, collectively, all Casualty Insurance
Proceeds and Condemnation Proceeds.
"Managing Member" shall mean SCF Manager, Inc., a Michigan corporation
and the managing member of General Partner.
"Margin Stock" shall have the meaning provided such term in Regulation
U and Regulation G of the Federal Reserve Board.
"Material Adverse Effect" shall mean any condition which causes or
continues the occurrence of an Event of Default or has a material adverse effect
upon (i) the business, operations, properties, assets, prospects or condition
(financial or otherwise) of Borrower, individually or taken as a whole, (ii) the
ability of Borrower to perform, or of Lender to enforce, the Obligations or
(iii) the value of the Collateral taken as a whole.
"Matured Performing Rate" shall mean an interest rate per annum equal
to the greater of (i) the Regular Interest Rate plus two percent (2%) or (ii)
two percent (2%) plus the yield on the U.S. Treasury (primary issue) with a
maturity date closest to September 10, 2027, with such yield being based on the
bid price for such issue as published in the Wall Street Journal on the date
that is 14 days prior to the Anticipated Payment Date (or, if such bid price is
not published on that date, the next preceding date on which such bid price is
so published) and converted to a monthly compounded nominal yield.
"Maturity Date" shall mean September 10, 2027 or such earlier date on
which the principal balance of the Loan and all other sums due in connection
with the Loan shall be due as a result of the acceleration of the Loan.
"Maximum Facility Amount" shall mean $45,000,000.00, as such amount
shall be reduced pursuant to the terms and conditions of this Agreement.
"Maximum Legal Rate" shall mean the maximum nonusurious interest rate,
if any, that at any time or from time to time may be contracted for, taken,
reserved, charged or received
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on the indebtedness evidenced by the Note and as provided for herein or the
Security Instruments or other Loan Documents, under the laws of such state or
states whose laws are held by any court of competent jurisdiction to govern the
interest rate provisions of the Loan.
"Miami Lakes" shall mean Miami Lakes Venture Associates, a Florida
general partnership.
"Miami Lakes Loan Agreement" shall mean that certain Amended and
Restated Loan Agreement dated the date hereof between Miami Lakes, Borrower and
Lender which governs a certain loan in the principal amount of $19,000,000.00
made by Lender to Miami Lakes and guaranteed by Borrower pursuant to the
Guaranty.
"Miami Lakes Property" shall mean the Real Property Asset as defined in
the Miami Lakes Loan Agreement.
"Monetary Default" shall mean any Default which can be cured by the
payment of principal, interest, or any other costs and expenses of Borrower
arising under the Loan Documents, including, without limitation, Transaction
Costs and those cost and expenses arising under Section 2.19.
"Monthly Debt Service Payment Amount" shall have the meaning provided
in Section 2.05(a).
"Multiemployer Plan" shall mean a Plan which is a "multiemployer plan"
as defined in Section 4001(a)(3) of ERISA.
"Net Operating Income" shall mean, with respect to any Real Property
Asset, the amount obtained by subtracting Operating Expenses from Gross Income
from Operations.
"Note" shall have the meaning provided in Section 2.04.
"Obligations" shall mean all payment, performance and other
obligations, liabilities and indebtedness of every nature of Borrower from time
to time owing to Lender under or in connection with this Agreement or any other
Loan Document.
"Operating Expenses" shall mean, with respect to any Real Property
Asset, the total of all expenditures, computed in accordance with GAAP, of
whatever kind relating to the operation, maintenance and management of the Real
Property Asset that are incurred on a regular monthly or other periodic basis,
including without limitation, utilities, ordinary repairs and maintenance,
insurance, license fees, property taxes and assessments, advertising expenses,
management fees, payroll and related taxes, computer processing charges,
operational equipment or other lease payments as approved by Lender, and other
similar costs, but excluding depreciation, Debt Service, capital expenditures,
and contributions to the Replacement Reserve Sub-Account, the Basic Carrying
Costs Sub-Account and any other reserves required under the Loan Documents.
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18
"Payment Date" shall have the meaning provided in Section 2.05(a).
"PBGC" shall mean the Pension Benefit Guaranty Corporation established
under ERISA, or any successor thereto.
"Permitted Investments" shall mean any one or more of the following:
(i) direct obligations of, or obligations fully guaranteed as to
full and timely payment of principal and interest by, (a) the United
States or any agency or instrumentality thereof provided such
obligations are backed by the full faith and credit of the United
States of America, or (b) the Federal Home Loan Mortgage Corporation,
the Federal National Mortgage Association or the Federal Farm Credit
System provided such obligations at the time of purchase or contractual
commitment for purchase are qualified by the Rating Agencies as a
Permitted Investment hereunder as evidenced in writing;
(ii) demand and time deposits in or certificates of deposit of, or
bankers' acceptances issued by, any bank or trust company, savings and
loan association or savings bank, in each case fully insured by the
Federal Deposit Insurance Corporation, provided that such investments
need not be insured if the commercial paper and long-term unsecured
debt obligations of such depository institution or trust company (or in
the case of the principal depository institution in a holding company
system, the commercial paper or long-term unsecured debt obligations of
such holding company) have the highest rating available for such
securities by the Rating Agencies, or such lower rating as will not
result in the lowering or withdrawal of the rating then assigned to the
Securities by the Rating Agencies as evidenced in writing;
(iii) repurchase obligations with respect to any security
described in clause (i) above entered into with a depository
institution or trust company (acting as principal) described in clause
(ii) above;
(iv) general obligations of or obligations guaranteed by any state
of the United States or the District of Columbia receiving the highest
long-term unsecured debt ratings available for such securities by the
Rating Agencies, or such lower rating as will not result in the
lowering or withdrawal of the rating then assigned to the Securities by
the Rating Agencies as evidenced in writing;
(v) securities bearing interest or sold at a discount that are
issued by any corporation incorporated under the laws of the United
States of America or any State thereof or the District of Columbia and
are rated by the Rating Agencies in the highest long-term unsecured
rating categories at the time of such investment or contractual
commitment providing for such investment; provided, however, that
securities issued by any such corporation will not be Permitted
Investments to the extent that investment therein will cause the
then-outstanding principal amount of securities issued by such
corporation and held as part of the Cash
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19
Collateral Account to exceed 20% of the aggregate principal amount of
all Permitted Investments held in the Cash Collateral Account;
(vi) commercial or finance company paper (including both
non-interest-bearing discount obligations and interest-bearing
obligations payable on demand or on a specified date not more than one
year after the date of issuance thereof) that is rated by the Rating
Agencies in its highest short-term unsecured debt rating available at
the time of such investment or contractual commitment providing for
such investment, and is issued by a corporation the outstanding senior
long-term debt obligations of which are then rated by the Rating Agency
in the highest long-term unsecured debt ratings available, or such
lower rating as will not result in the lowering or withdrawal of the
rating then assigned to the Securities by the Rating Agencies as
evidenced in writing;
(vii) guaranteed reinvestment agreements acceptable to the Rating
Agencies issued by any bank, insurance company or other corporation
rated in the highest long-term unsecured rating levels available to
such issuers by the Rating Agency at the time of such investment,
provided that any such agreement must by its terms provide that it is
terminable by the purchaser without penalty in the event any such
rating is at any time lower than such level;
(viii) units of taxable money market funds rated by the Rating
Agency in its highest rating category or which funds have been
designated in writing by the Rating Agency as Permitted Investments
with respect to this definition;
(ix) if previously confirmed in writing to the Lender, any other
demand, money market or time deposit, or any other obligation, security
or investment, that may be acceptable to the Rating Agencies as a
Permitted Investment of funds backing securities having ratings
equivalent to its initial rating of the highest-rated Securities; and
(x) such other obligations as are acceptable as Permitted
Investments to the Rating Agency;
provided, however, that such instrument continues to qualify as a "cash flow
investment" pursuant to Code Section 860G(a)(6) and that no instrument or
security shall be a Permitted Investment if (x) such instrument or security
evidences a right to receive only interest payments, (y) the right to receive
principal and interest payments derived from the underlying investment provide a
yield to maturity in excess of 120% of the yield to maturity at par of such
underlying investment or (z) such instrument or security can be redeemed prior
to its stated maturity date at an amount less than the purchase price paid
therefor.
"Permitted Liens" shall have the meaning provided in Section 6.01.
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20
"Person" shall mean and include any individual, partnership, joint
venture, firm, corporation, association, company, trust or other enterprise or
any government or political subdivision or agency, department or instrumentality
thereof.
"Plan" means any employee benefit plan covered by Title IV of ERISA or
which is subject to Section 412 of the Code or Section 302 of ERISA, for which
Borrower or any member of its ERISA Controlled Group has or may have any
obligation or liability, whether direct or indirect.
"Prepayment Commencement Date" shall have the meaning provided in
Section 2.11.
"Prepayment Consideration" shall mean an amount equal to the present
value of a series of payments each equal to the Prepayment Differential and
payable on each monthly Payment Date through and including the Payment Date
occurring on the Anticipated Payment Date discounted at the Reinvestment Yield
for the number of months remaining from the Prepayment Date to each such monthly
Payment Date through and including the Payment Date occurring on the Anticipated
Payment Date.
"Prepayment Date" shall have the meaning provided in Section 2.11.
"Prepayment Differential" shall mean an amount equal to (a) the Regular
Interest Rate minus the Reinvestment Yield, (b) divided by twelve (12) and (c)
multiplied by the principal sum due on such Prepayment Date.
"Prepayment Notice" shall have the meaning provided in Section 2.11.
"Rating Agencies" shall mean Standard & Poor's Ratings Group, a
Division of the McGraw-Hill Companies ("S&P"), Moody's Investors Service, Inc.,
Duff & Phelps Credit Rating Co. and Fitch Investors Service, Inc. or any other
nationally recognized statistical rating agency which has been approved by
Lender.
"Real Property Assets" shall mean all of the real property described on
Schedule 3. Notwithstanding the foregoing, however, upon the release by Lender
of the Lien against all of the Collateral relating to a Real Property Asset,
such Real Property Asset, as of the effective date of such release, shall no
longer be included within the definition of all of the Real Property Assets.
"Register" shall have the meaning provided in Section 9.09.
"Regular Interest Rate" shall mean an interest rate equal to seven and
one one-hundredth percent (7.01%) per annum.
"Regulation D" shall mean Regulation D of the Federal Reserve Board as
from time to time in effect and any successor to all or any portion thereof.
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21
"Reinvestment Yield" shall mean an amount equal to the sum of 0.25% and
the yield on the U.S. Treasury issue (primary issue) with a maturity date
closest to the Anticipated Payment Date with such yield being based on the bid
price for such issue as published in The Wall Street Journal on the date that is
14 days prior to the Prepayment Date set forth in the Prepayment Notice (or, if
such bid price is not published on that date, the next preceding date on which
such bid price is so published) and converted to a monthly compounded nominal
yield.
"Release Parcel" shall have the meaning provided in Section 2.11.
"Release Price" shall have the meaning provided in Section 2.11.
"Release Property" shall have the meaning provided in Section 2.11.
"REMIC" shall mean a "real estate mortgage investment conduit" within
the meaning of Section 860D of the Code.
"REMIC Trust" shall mean a REMIC which holds the Note.
"Rents" shall mean all cash, securities, if any, or other cash
equivalents, if any, deposited to secure the performance by the lessees of their
obligations under the leases and other agreements effecting the use, occupancy
or enjoyment of the Real Property Assets, together with all income, rents,
additional rents, revenues, issues and profits (including all oil and gas or
other mineral royalties and bonuses and all golfing revenues) and all
pass-throughs and tenant's required contributions for taxes, maintenance and
utility costs, tenant improvements, leasing commissions, capital expenditures
and other items, including, without limitation, all Accounts Receivable, from
the Real Property Assets and all proceeds from the sale, termination or other
disposition of said leases.
"Replacement Reserve" shall mean, with respect to each Real Property
Asset, an annual reserve for such Real Property Asset in an amount equal to
$50.00 per pad.
"Replacement Reserve Monthly Installment" shall mean, with respect to
each Real Property Asset, an amount equal to one-twelfth of the annual
Replacement Reserve required to be maintained hereunder as the same may be
adjusted pursuant to Section 8.18 hereof.
"Replacement Reserve Reallocation Request" shall have the meaning
provided in Section 8.18.
"Replacement Reserve Sub-Account" shall mean a Sub-Account of the Cash
Collateral Account for purposes of holding all year-to-date Replacement Reserve
Monthly Installments (less amounts disbursed to or on behalf of Borrower
during such year pursuant hereto) plus the amount of the Replacement Reserve
Monthly Installment for the next ensuing month.
"Reportable Event" shall have the meaning set forth in Section 4043(b)
of ERISA (other than (a) a Reportable Event as to which the provision of 30
days' notice to the PBGC is
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waived under applicable regulations or (b) a Reportable Event specified in
Section 4043(b)(9), (11) or (12) of ERISA, which is reasonably expected not to
result in any liability to, or a lien upon, Borrower or any member of their
Controlled Group or any of their respective assets).
"Responsible Officer" shall mean a chairman of the board, president or
chief financial officer.
"RV Pads" shall mean Units being leased for use by recreational
vehicles or automobile trailers, except to provide storage for such vehicles
owned by tenants of any of the Units.
"Secondary Market Transaction" shall mean (i) any transaction in which
Lender sells, assigns, syndicates, participates or otherwise transfers and/or
disposes of all or any portion of the Loan, including all servicing rights with
respect thereto, (ii) a Securitization, or (iii) any transaction in which Lender
otherwise sells or transfers the Loan or an interest therein.
"Securities" shall mean any mortgage pass-through certificates or other
securities evidencing a beneficial interest in the assets of a trust created in
connection with a Secondary Market Transaction.
"Securitization" shall mean any transaction in which Lender deposits
the Loan, the Note, the Security Instruments and the other Loan Documents with a
trust, which trust may issue Securities in a rated or unrated public offering or
private placement.
"Security Instruments" shall have the meaning provided in Section
3.01(a)(iii).
"Side Letters" shall mean those certain letters dated as of the date
hereof (i) from Lender to Borrower, Miami Lakes and Sun Communities Operating
Limited Partnership, and (ii) from Borrower, Miami Lakes and Sun Communities
Operating Limited Partnership to Lender, each regarding the securitization of
the Loan.
"Single Purpose Entity" shall mean a Person, other than an individual,
which at all times since its formation: (i) has been a duly formed and existing
limited partnership, limited liability company or corporation, as the case may
be; (ii) has been duly qualified in each jurisdiction in which such
qualification was at such time necessary for the conduct of its business; (iii)
has complied with the provisions of its organizational documents and the laws of
its jurisdiction of formation in all respects; (iv) has observed all customary
formalities regarding its partnership, limited liability company or corporate
existence, as the case may be; (v) has accurately maintained its financial
statements, accounting records and other partnership, limited liability company
or corporate documents separate from those of any other Person; (vi) has not
commingled its assets or funds with those of any other Person; (vii) has
accurately maintained its own bank accounts, payroll and books and accounts
separate from those of any other Person; (viii) has paid its own liabilities
from its own separate assets; (ix) has identified itself in all dealings with
the public, under its own name and as a separate and distinct entity; (x) has
not identified itself as being a division or a part of any other Person; (xi)
has been adequately capitalized in light of its contemplated business
operations; (xii) has not assumed, guaranteed or
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become obligated for the liabilities of any other Person (except in connection
with the endorsement of negotiable instruments in the ordinary course of
business) or held out its credit as being available to satisfy the obligations
of any other Person; (xiii) has not acquired obligations or securities of any
other Person; (xiv) has not made loans or advances to any other Person; (xv) has
not entered into and was not a party to any transaction with any Affiliate of
such Person, except in the ordinary course of business and on terms which are no
less favorable to such Person than would be obtained in a comparable arms length
transaction with an unrelated third party; (xvi) has conducted its own business
in its own name; (xvii) has paid the salaries of its own employees and
maintained a sufficient number of employees in light of its contemplated
business operations; (xviii) has allocated fairly and reasonably any overhead
for shared office space; (xix) has used separate stationery, invoices and
checks; (xx) has not pledged its assets for the benefit of any other entity or
made any loans or advances to any person or entity; (xxi) has not engaged in a
non-exempt prohibited transaction described in Section 406 of ERISA or Section
4975 of the Code; (xxii) has not acquired obligations or securities of its
partners or Affiliates; and (xxiv) has corrected any known misunderstanding
regarding its separate identity.
"Solvent" as to any Person shall mean that (i) the sum of the assets of
such Person, at a fair valuation based upon appraisals or comparable valuation,
will exceed its liabilities, including contingent liabilities, (ii) such Person
will have sufficient capital with which to conduct its business as presently
conducted and as proposed to be conducted and (iii) such Person has not incurred
debts, and does not intend to incur debts, beyond its ability to pay such debts
as they mature. For purposes of this definition, "debt" means any liability on a
claim, and "claim" means (x) a right to payment, whether or not such right is
reduced to judgment, liquidated, unliquidated, fixed, contingent, matured,
unmatured, disputed, undisputed, legal, equitable, secured, or unsecured, or (y)
a right to an equitable remedy for breach of performance if such breach gives
rise to a payment, whether or not such right to an equitable remedy is reduced
to judgment, fixed, contingent, matured, unmatured, disputed, undisputed,
secured, or unsecured. With respect to any such Contingent Liabilities, such
liabilities shall be computed in accordance with GAAP at the amount which, in
light of all the facts and circumstances existing at the time, represents the
amount which can reasonably be expected to become an actual or matured
liability.
"Sub-Accounts" shall mean, collectively, all or some of, the Debt
Service Sub-Account, Basic Carrying Costs Sub-Account, Replacement Reserve
Sub-Account, Capital Event Sub-Account, Insurance Proceeds Sub-Account, Business
Interruption Insurance Sub-Account, and the Temporary Condemnation Proceeds
Sub-Account, as the context requires.
"Subsidiary" of any Person shall mean and include (i) any corporation
Controlled by such Person, directly or indirectly through one or more
intermediaries, and (ii) any partnership, association, joint venture or other
entity Controlled by such Person, directly or indirectly through one or more
intermediaries.
"Taxes" shall have the meaning provided in Section 2.19, except as such
term is used in Section 9.08(c)(v) where it shall have the meaning provided in
the Security Instruments.
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"Temporary Condemnation Proceeds Sub-Account" shall mean a Sub-Account
for the purpose of holding proceeds of any temporary Condemnation paid in lump
sums in advance.
"Termination Event" shall mean (i) a Reportable Event, or (ii) the
initiation of any action by Borrower, any member of Borrower's ERISA Controlled
Group or any other person to terminate a Plan or the treatment of an amendment
to an ERISA Plan as a termination under ERISA, in either case, which would
result in liability to Borrower or any of their ERISA Controlled Group in excess
of $3,000,000, (iii) the institution of proceedings by the PBGC under Section
4042 of ERISA to terminate an ERISA Plan or to appoint a trustee to administer
any ERISA Plan, (iv) any partial or total withdrawal from a Multiemployer Plan
which in either case, which would result in liability to Borrower or any of
their ERISA Controlled Groups in excess of $3,000,000 or (v) the taking of any
action would require security to the Plan under Section 401(a)(29) of the Code.
"Title Policy" shall have the meaning provided in Section 3.01(h).
"Transaction Costs" shall mean all costs and expenses arising from
transactions in connection with the Loan occurring after the Closing Date that
are paid or payable by Borrower relating to the Loan, including, without
limitation, the costs and expenses of Lender, without duplication, in conducting
its due diligence with respect to the Loan, financing fees, commitment fees,
advisory fees, appraisal fees, legal fees, accounting fees, title insurance
premiums, recording charges and taxes, whether directly or as reimbursement to
Lender required under this Agreement or the other Loan Documents.
"Transferee" shall have the meaning provided in Section 9.07.
"UCC Searches" shall have the meaning provided in Section 3.01(f).
"Unfunded Benefit Liabilities" means with respect to any Plan at any
time, the amount (if any) by which (i) the present value of all benefit
liabilities under such Plan as defined in Section 4001(a)(16) of ERISA, exceeds
(ii) the fair market value of all Plan assets allocable to such benefits, all
determined as of the then most recent valuation date for such Plan (on the basis
of assumptions prescribed by the PBGC for the purpose of Section 4044 of ERISA).
SECTION 2. AMOUNT AND TERMS OF LOAN
Section 2.01 Intentionally Deleted
Section 2.02 Intentionally Deleted.
Section 2.03 Intentionally Deleted.
Section 2.04 Borrower's obligation to pay the principal of, and
interest on, the Loan shall be evidenced by the promissory note (as amended,
modified, supplemented, extended or consolidated, the "Note") duly executed and
delivered by Borrower on the date hereof in a principal amount equal to
$26,000,000.00. Lender has no obligation to
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make any further advances under the Loan after the date hereof. The outstanding
principal balance of the Note, together with all interest (including, without
limitation, Accrued Interest following the Anticipated Payment Date) and other
sums due thereunder shall be due and payable on the Maturity Date without
further action on the part of Lender.
Section 2.05. Interest and Principal Payments. (a) Borrower shall pay
all sums due under the Note in installments as follows:
(i) a payment of interest only on the tenth (10th) day of
September, 1997, for interest accruing for the period commencing on and
including the date of the Note and continuing through and including the
ninth day of September, 1997; and
(ii) monthly payments in the amounts set forth on Schedule 10
attached hereto and made a part hereof (each, the "Monthly Debt Service
Payment Amount") on October 10, 1997 and on the tenth day of each
calendar month thereafter up to and including the Maturity Date (each,
a "Payment Date"); each Monthly Debt Service Payment Amount shall be
applied first, to the payment of interest computed at the Regular
Interest Rate, and the balance toward the reduction of the outstanding
principal balance of the Note.
(b) From and after the Anticipated Payment Date, interest shall
accrue on the unpaid principal balance of the Note at the Matured Performing
Rate. Each Monthly Debt Service Payment Amount paid after the Anticipated
Payment Date shall be applied first, to the payment of interest computed at the
Regular Interest Rate and the balance, if any, toward the reduction of the
outstanding principal balance of the Note; interest accrued at the Matured
Performing Rate shall be deferred and added to the Loan and shall earn interest
at the Matured Performing Rate to the extent permitted by applicable law (such
accrued interest is hereinafter defined as "Accrued Interest"). In addition to
such payments of principal and interest, Borrower shall make payments in
reduction of the outstanding principal balance of the Note in monthly
installments beginning on the Anticipated Payment Date and on the tenth day of
each calendar month thereafter up to and including the Maturity Date in
accordance with the terms and provisions of Section 2.13.
(c) Intentionally Deleted.
(d) In the event that, and for so long as, any Event of Default
shall have occurred and be continuing, the outstanding principal amount of the
Loan and, to the extent permitted by law, overdue interest in respect of the
Loan (including, without limitation, Accrued Interest), shall bear interest at
the Default Rate with respect to Monetary Defaults, calculated from the date
such payment was due without regard to any grace or cure periods contained
herein, and with respect to all other Defaults, calculated from the date of the
occurrence of the related Event of Default.
(e) Intentionally Deleted.
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(f) Interest on the outstanding principal balance of the Loan shall be
calculated on the basis of the actual number of days elapsed in a three hundred
sixty (360) day year.
(g) This Agreement and the Note are subject to the express condition
that at no time shall Borrower be obligated or required to pay interest on the
principal balance of the Loan at a rate which could subject Lender to either
civil or criminal liability as a result of being in excess of the Maximum Legal
Rate. If by the terms of this Agreement or the Loan Documents, Borrower is at
any time required or obligated to pay interest on the principal balance due
hereunder at a rate in excess of the Maximum Legal Rate, the interest rate or
the Default Rate, as the case may be, shall be deemed to be immediately reduced
to the Maximum Legal Rate and all previous payments in excess of the Maximum
Legal Rate shall be deemed to have been payments in reduction of principal and
not on account of the interest due hereunder. All sums paid or agreed to be paid
to Lender for the use, forbearance, or detention of the sums due under the Loan,
shall, to the extent permitted by applicable law, be amortized, prorated,
allocated, and spread throughout the full stated term of the Loan until payment
in full so that the rate or amount of interest on account of the Loan does not
exceed the Maximum Legal Rate of interest from time to time in effect and
applicable to the Loan for so long as the Loan is outstanding.
Section 2.06 Intentionally Deleted.
Section 2.07 Intentionally Deleted.
Section 2.08 Intentionally Deleted.
Section 2.09 Intentionally Deleted.
Section 2.10 Intentionally Deleted.
Section 2.11 Voluntary Prepayments; Defeasance. (a) Borrower shall not
have the right to prepay the Loan, in whole or in part, prior to March 10, 2007
(the "Prepayment Commencement Date"). Commencing on the Prepayment Commencement
Date, provided no Event of Default exists, the outstanding principal balance of
the Loan may be prepaid in whole or in part upon (a) not less than fifteen (15)
Business Days' prior written notice (the "Prepayment Notice") by Borrower
specifying the scheduled date (the "Prepayment Date") on which such prepayment
is to be made; (b) payment of the principal amount prepaid together with all
accrued and unpaid interest thereon to and including the Prepayment Date; and
(c) payment of all other sums then due under this Agreement, the Note, the
Security Instruments and the other Loan Documents. Lender shall not be obligated
to accept any prepayment unless it is accompanied by all sums due in connection
therewith. If a Prepayment Notice is given by Lender pursuant to this Section
2.11, the outstanding principal balance of the Loan (or the portion thereof
specified in the Prepayment Notice) and the other sums required under this
Section 2.11 shall be due and payable on the Prepayment Date.
(b) If a Default Prepayment (defined below) occurs, Borrower shall pay
to Lender the entire Loan, including, without limitation, the Prepayment
Consideration. The term
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"Default Prepayment" shall mean a prepayment of the principal amount of the Loan
made after the occurrence of any Event of Default or an acceleration of the
Maturity Date under any circumstances, including, without limitation, a
prepayment occurring in connection with reinstatement of any Security Instrument
provided by statute under foreclosure proceedings or exercise of a power of
sale, any statutory right of redemption exercised by Borrower or any other party
having a statutory right to redeem or prevent foreclosure, any sale in
foreclosure or under exercise of a power of sale or otherwise.
(c) Subject to compliance with and satisfaction of the terms and
conditions of this Section 2.11 and provided no Event of Default has occurred
and is continuing, Borrower may elect on any Payment Date after the earlier of
(x) the third (3rd) anniversary of the date hereof or (y) two (2) years from the
"startup day" within the meaning of Section 860G(a)(9) of the Code of a REMIC
Trust (the "Defeasance Lock-Out Termination Date"), to release a Real Property
Asset from the Lien of the related Security Instrument (a "Release Property") by
delivering to Lender (a "Defeasance"), as security for the payment of all
interest due and to become due throughout the term of the Note and the Florida
Note (defined below) on, and the principal balance of the Note and the Florida
Note equal to, the outstanding principal balance of the Note and the Florida
Note, Defeasance Collateral (defined below) with Collateral Value (defined
below) sufficient, without consideration of any reinvestment of interest
therefrom, to pay (1) all amounts then due relating to the Note, including
accrued interest thereon, (2) an amount equal to the lesser of (A) the amount
set forth on Schedule 9 for each Real Property Asset (the "Release Price") for
the Release Property or the outstanding principal balance of the Note and the
note evidencing the loan made pursuant to the Miami Lakes Loan Agreement (the
"Florida Note") after giving effect to all prior Defeasances (the "Defeasance
Amount"), and (3) the portion of the interest that will become due on the
Defeasance Amount under the Note and the Florida Note on any date prior to and
including the Anticipated Payment Date (all such interest as described in this
clause (3) together with the Defeasance Amount and such amounts described in
clause (1) being hereinafter referred to as the "Defeasance Property").
(d) As a condition to any Defeasance, prior to any Defeasance, Borrower
shall have delivered to Lender:
(i) All necessary documents to amend and restate the Note to reflect
that a portion of the principal balance of the Note and the
Florida Note has been defeased (collectively, the "Defeased
Note"). The Defeased Note (1) shall be in a principal amount equal
to the Defeasance Amount, (2) shall be payable to the order of
Lender, (3) shall be dated as of the date hereof, (4) shall mature
on the Anticipated Payment Date (the "Defeased Maturity Date"),
(5) shall be secured by the Defeasance Collateral delivered in
connection with the Defeasance and shall otherwise contain
substantially the same terms as the Note. The Defeased Note shall
evidence a portion of the existing indebtedness hereunder and
under the Florida Note and not any new or additional indebtedness
of Borrower or Miami Lakes. A Defeased Note cannot be the subject
of any further Defeasance.
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(ii) An opinion of Borrower's counsel in form reasonably satisfactory
to Lender stating (1) that the Defeasance Collateral and the
proceeds thereof have been duly and validly assigned and delivered
to Lender and, subject to the filing of appropriate financing
statements and/or taking and maintaining possession of the
Defeasance Collateral, that Lender has a valid, perfected, first
priority lien and security interest in the Defeasance Collateral
delivered by Borrower and the proceeds thereof and all
obligations, rights and duties under and to the Defeased Note, (2)
that if the holder of the Note shall at the time of the release of
a Release Property be a REMIC, (x) the Defeasance Collateral has
been validly assigned to the REMIC Trust, (y) the Defeasance has
been effected in accordance with the requirements of Treasury
Regulation 1.860(g)-2(a)(8) (as such regulation may be amended or
substituted from time to time) and will not be treated as an
exchange pursuant to Section 1001 of the Code and (z) the tax
qualification and status of the REMIC Trust as a REMIC will not be
adversely affected or impaired as a result of the Defeasance, and
(3) such other matters as Lender or its counsel may reasonably
require.
(iii) Written confirmation from the Rating Agencies that such
Defeasance and release of the Release Property will not result in
a withdrawal, downgrade or qualification of the then current
ratings by the applicable Rating Agencies of the Securities and
otherwise in form and substance reasonably satisfactory to Lender
and its counsel. If required by the Rating Agencies, Borrower
shall, at Borrower's expense (the cost of which shall be subject
to Lender's prior approval, which approval shall not be
unreasonably withheld), also deliver or cause to be delivered a
non-consolidation opinion with respect to the Defeasance Obligor
(defined below) in form and substance satisfactory to Lender and
the Rating Agencies.
(iv) A certificate of Borrower's independent certified public
accountant certifying that the Defeasance Collateral generates
monthly amounts equal to or greater than each monthly installment
of principal and interest required to be paid under the Defeased
Note through and including the Defeased Maturity Date and payments
due thereon.
(v) Evidence satisfactory to Lender that there are no subordinate
Liens, mortgages, deeds of trust or other security instruments, as
the case may be, encumbering the Real Property Assets remaining
encumbered by the Lien of the Security Instruments or the Florida
Property, including without limitation a "bring down" or "date
down" of the title insurance policies insuring the Lien of the
Security Instruments on such remaining Real Property Assets and
the Florida Property.
(vi) Payment of all Lender's costs and expenses, including due
diligence review costs and reasonable counsel fees and
disbursements incurred in connection with the release of the
Release Property and the review and
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approval of the documents and information required to be
delivered in connection therewith ("Release Expenses").
(vii) Evidence satisfactory to Lender that the aggregate Debt Service
Coverage Ratio with respect to the Real Property Assets remaining
encumbered by the Lien of the Security Instruments and the Florida
Property is equal to or greater than the greater of (1) 2.20 to
1.00, and (2) the aggregate Debt Service Coverage Ratio with
respect to all of the Real Property Assets (including the Release
Property) and the Florida Property for the twelve (12) full
calendar months immediately prior to the release of the Release
Property.
(viii) Evidence reasonably satisfactory to Lender that Borrower and
Miami Lakes Venture Associates are Solvent and shall not be
rendered insolvent by the release of the Release Property.
(ix) Borrower shall deliver such other certificates, documents or
instruments as Lender may reasonably request.
(e) In connection with any Defeasance hereunder, Lender shall, at its
option, in each instance at Borrower's expense, establish or designate a
successor entity, which shall be a Single Purpose Entity (the "Defeasance
Obligor") and Borrower and Miami Lakes shall transfer and assign all
obligations, rights and duties under and to the Defeased Note together with
the pledged Defeasance Collateral to such Defeasance Obligor. Such
Defeasance Obligor shall assume the obligations under the Defeased Note and
any security agreement executed in connection with the Defeasance or the
Defeasance Collateral delivered in connection therewith (the "Defeasance
Security Agreement"), and Borrower and Miami Lakes shall be relieved of its
obligations under such documents.
(f) Each of the obligations of the United States of America that is
part of the Defeasance Collateral which are not in bearer form shall be
registered in the name of Lender or be duly endorsed by the holder thereof
as directed by Lender or accompanied by a written instrument of transfer in
form and substance wholly satisfactory to Lender (including, without
limitation, such instruments as may be required by the depository
institution holding such securities or by the issuer thereof, as the case
may be, to effectuate book-entry transfers and pledges through the
book-entry facilities of such institution) in order to perfect upon the
delivery of the Defeasance Collateral the first priority security interest
therein in favor of the Lender in conformity with all applicable state and
federal laws governing the granting of such security interests. Borrower
shall authorize and direct that the payments received from such obligations
shall be made directly to Lender or Lender's designee and applied to satisfy
the obligations of Borrower under the Defeased Note. Borrower shall execute
and deliver a Defeasance Security Agreement in form and substance reasonably
satisfactory to Lender creating a first priority lien on the Defeasance
Collateral delivered in connection with the Defeasance and the Obligations
purchased with the Defeasance Collateral.
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(g) The Defeasance Collateral shall generate payments on or prior to,
but as close as possible to, the Business Day prior to each successive
Payment Date after the Defeasance Date upon which payments are required
under this Agreement, the Miami Lakes Loan Agreement and the Defeased Note,
including the amount of accrued interest together with the outstanding
principal balance of the Defeased Note which would be due on the Defeased
Maturity Date (the "Scheduled Defeasance Payments").
(h) Notwithstanding any release of the Security Instrument granted
pursuant to this Section 2.11 or any Defeasance hereunder, Borrower shall
and hereby agrees to continue to be bound by and obligated under Sections
3.1, 11.2 and Article 13 of the related Security Instrument; provided
however that all references therein to "Property" or "Personal Property"
shall be deemed to refer only to the Defeasance Collateral delivered to
Lender.
(i) All Defeasance Collateral shall be used and applied first to
defease a portion of the Note in the amount of the Allocated Loan Amount
applicable to the Release Property and thereafter to defease pro-rata
portions of the Note applicable to the Real Property Assets remaining
encumbered by the Security Instruments and Loan Documents and, to the extent
not already defeased in whole, the Florida Note, together with such amount
that is necessary for the payment of all interest due and to become due with
respect to such portion of the Note and the Florida Note.
(j) Any revenue, documentary stamp or intangible taxes or any other tax
or charge due in connection with the creation of the Defeased Note, the
modification of the Note, or otherwise required to accomplish the Defeasance
shall be paid by Borrower simultaneously with the occurrence of any
Defeasance.
(k) The term "Defeasance Collateral" as used herein shall mean
non-callable and non-redeemable securities evidencing an obligation to
timely pay principal and interest in a full and timely manner that are
direct obligations of the United States of America for the payment of which
its full faith and credit is pledged.
(l) The term "Collateral Value" as used herein shall mean as of any
date with respect to Defeasance Collateral delivered to Lender, the
aggregate amount of payments of principal of such Defeasance Collateral and
the predetermined and certain income therefrom that will be paid or payable
to Lender on or before the Business Day prior to each day on which payments
are due on the obligations in respect of which such Defeasance Collateral
was delivered, without consideration of any reinvestment of such income, all
as certified in writing by a recognized and reputable independent certified
public accounting firm or investment banking firm selected by Borrower.
Section 2.12 Mandatory Prepayments. On each date after the Closing Date
on which Borrower actually receives a distribution of any Insurance Proceeds or
Condemnation Proceeds in respect of any of the Real Property Assets, and if
Lender does not make such proceeds available to Borrower for the restoration of
any Real Property Asset under the terms of the Security Instruments, Borrower
shall prepay, without any Prepayment Consideration, the
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outstanding principal balance of the Loan in an amount equal to the lesser of
(i) one hundred percent (100%) of such proceeds and the (ii) the Allocated Loan
Amount with respect to such Real Property Asset. All prepayments made pursuant
to this subsection shall be applied in accordance with the provisions of Section
2.13, and the Available Facility Amount shall be reduced by such amount. The
Allocated Loan Amount with respect to such Real Property Asset will be reduced
in an amount equal to such prepayment.
Section 2.13. Application of Payments. Subject to the terms hereof,
provided that no Event of Default has occurred and is continuing, each and every
payment made by Borrower to Lender in accordance with the terms of the Note
and/or the terms of any other Loan Document, all other proceeds received by
Lender with respect to the Loan and all funds on deposit in the Cash Collateral
Account, shall be applied in the following order of priority:
(a) If due prior to the Anticipated Payment Date:
first, to the payment of Basic Carrying Costs in accordance with
the terms and conditions of Section 8 of this Agreement;
second, to the payment of the Monthly Debt Service Payment Amount
for the related Payment Date, applied first to the payment of all
interest accrued and payable under the Note computed at the
Regular Interest Rate and the balance, to the payment of the
outstanding principal balance of the Note;
third, to the payment of any other amounts then due and payable to
the Lender under the Note or under the Loan Documents;
last, to the extent there are funds on deposit in the Cash
Collateral Account, to the Distribution Account, from which
Borrower may withdraw any or all sums on deposit therein.
(b) If due on or after the Anticipated Payment Date:
first, to the payment of Basic Carrying Costs in accordance with
the terms and conditions of Section 8 of this Agreement;
second, to the payment of the Monthly Debt Service Payment Amount
for the related Payment Date, applied first to the payment of all
interest accrued and payable under the Note computed at the
Regular Interest Rate and the balance, to the payment of the
outstanding principal balance of the Note;
third, to the payment of any other amounts then due and payable to
the Lender under the Note or under the Loan Documents;
fourth, and to the extent there are funds on deposit in the Cash
Collateral Account, to the payment of monthly Operating Expenses
incurred in accordance with the related Approved Annual Budget
pursuant to a written request for payment
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submitted by Borrower to Lender specifying the individual
Operating Expenses in a form acceptable to Lender;
fifth, to the payment of the outstanding principal balance of the
Note;
sixth, to the payment of Accrued Interest; and
last, to the extent there are funds on deposit in the Cash
Collateral Account, to the payment of such excess funds to
Borrower.
Section 2.14 Method and Place of Payment. (a) Except as otherwise
specifically provided herein, all payments and prepayments under this Agreement
and the Note shall be made to Lender not later than 1:00 P.M., New York City
time, on the date when due and shall be made in lawful money of the United
States of America in immediately available funds at Lender's Office, and any
funds received by Lender after such time shall, for all purposes hereof, be
deemed to have been paid on the next succeeding Business Day.
(b) Except as expressly provided to the contrary in Section 2.06
hereof, whenever any payment to be made hereunder or under the Note or other
Loan Documents shall be stated to be due on a day which is not an Business Day,
the due date thereof shall be extended to the next succeeding Business Day and,
with respect to payments of principal, interest shall be payable at the
applicable rate during such extension.
(c) All payments made by Borrower hereunder, under the Note and
the other Loan Documents, shall be made irrespective of, and without any
deduction for, any setoff or counterclaims.
Section 2.15 Intentionally Deleted.
Section 2.16 Intentionally Deleted.
Section 2.17 Intentionally Deleted.
Section 2.18 Intentionally Deleted.
Section 2.19 Taxes. (a) All payments made by Borrower under this
Agreement shall be made free and clear of, and without deduction or withholding
for or on account of, any present or future income, stamp or other taxes,
levies, imposts, duties, charges, fees, deductions or withholdings, now or
hereafter imposed, levied, collected, withheld or assessed by any governmental
authority arising solely as a result of this Loan excluding, in the case of
Lender, any taxes imposed on Lender's revenues, net income and franchise taxes
imposed on Lender by the United States of America or any taxing authority
thereof, the jurisdiction under the laws of which Lender is organized or any
political subdivision or taxing authority thereof or therein, or by any
jurisdiction in which Lender is doing business or any political subdivision or
taxing authority thereof or therein (all such non-excluded taxes, levies,
imposts, deductions, charges or withholdings being hereinafter called "Taxes").
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(b) Notwithstanding anything to the contrary herein, if at any time or
from time to time Taxes are required to be deducted or withheld from the
payments required to be made to Lender hereunder solely by reason of a Change in
Law after the date hereof (other than as a result of any transfer or assignment
of any of the obligations of Borrower), all payment required to be made by
Borrower hereunder (including any additional amounts that may be payable
pursuant to this clause (b)) shall be increased to the extent required so that
the net amount received by Lender after the deduction or withholding of Taxes
imposed solely by reason of a Change in Law after the date hereof will be not
less than the full amount that would otherwise have been receivable had no such
deduction or withholding been imposed by reason of such Change in Law. In the
event that this clause (b) shall be operative, Borrower shall promptly provide
to Lender evidence of payment of such Taxes to the appropriate taxing authority
and shall promptly forward to Lender any official tax receipts or other
documentation with respect to the payment of the Taxes as may be issued by the
taxing authority. If Borrower fails to pay any Taxes when due to the appropriate
taxing authority or fails to remit to Lender the required receipts or other
required documentary evidence, Borrower shall indemnify Lender for any
incremental taxes, interest or penalties that may become payable by Lender as a
result of any such failure. The agreements in this Section 2.19 shall survive
the termination of this Agreement and the payment of the Note and all other
Obligations for a period of one (1) year.
(c) For purposes of this Section 2.19 the term "Change in Law" shall
mean the following events: (i) the enactment of any legislation by the United
States, including the enactment, amendment or modification of a treaty; (ii) the
lapse, by its terms, of any law of the United States or any treaty to which the
United States is a party; or (iii) the promulgation of any temporary or final
regulation under the Code.
Section 2.20 Intentionally Deleted
Section 2.21 Intentionally Deleted
Section 2.22 Intentionally Deleted
Section 2.23 Intentionally Deleted.
Section 2.24 Intentionally Deleted
Section 2.25 Intentionally Deleted.
Section 2.26 Intentionally Deleted
Section 2.27 Intentionally Deleted
Section 2.28 Intentionally Deleted
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SECTION 3. CONDITIONS PRECEDENT.
Section 3.01 Conditions Precedent to the Loan. The obligation of Lender
to make the Loan on the Closing Date is subject to the satisfaction by Borrower
on the Closing Date of the following conditions precedent:
(a) Loan Documents.
(i) Loan Agreement. Borrower shall have executed and delivered this
Agreement to Lender.
(ii) The Note. Borrower shall have executed and delivered to Lender
the Note in the amount, maturity and as otherwise provided herein.
(iii) Security Instruments. Borrower shall have executed and
delivered to Lender mortgages, deeds of trust, deeds to secure debt or other
security instruments (as amended, restated, modified or supplemented from
time to time, collectively, the "Security Instruments"), with respect to
each of the Real Property Assets.
(iv) Assignment of Leases and Rents. Borrower shall have executed
and delivered an Assignment of Leases and Rents (as amended, restated,
modified or supplemented from time to time, the "Assignment of Leases and
Rents"), with respect to each of the Real Property Assets.
(v) Environmental Indemnity. Borrower shall have executed and
delivered to Lender an Environmental Indemnity (as amended, restated,
modified or supplemented from time to time the "Environmental Indemnity"),
with respect to each of the Real Property Assets.
(vi) Certificate of Compliance and Indemnification Agreement.
Borrower shall have executed and delivered to Lender a Certificate of
Compliance and Indemnification Agreement (as amended, restated, modified or
supplemented from time to time, the "Certificate of Compliance and
Indemnification Agreement"), with respect to each of the Real Property
Assets.
(vii) Assignment of Contracts. Borrower shall have executed and
delivered to Lender an Assignment of Agreements, Permits and Contracts (as
amended, restated, modified or supplemented from time to time, the
"Assignment of Contracts"), with respect to each of the Real Property
Assets.
(b) Opinions of Counsel.
Lender shall have received legal opinions, dated the Closing Date, from
counsel to Borrower, in form and substance satisfactory to Lender and its
counsel, that, among other things: (i) this Agreement and the Loan Documents
have been duly authorized, executed and delivered by Borrower and are valid and
enforceable in accordance with their terms, subject to bankruptcy
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and equitable principles; (ii) that Borrower is qualified to do business and in
good standing under the laws of the jurisdiction in which it is organized, in
which it is transacting business and where the Real Property Assets are located;
(iii) the encumbrance of the Real Property Assets with the liens of the Loan
Documents shall not cause a breach of, or a default under, any agreement,
document or instrument to which Borrower is a party or to which any of its
properties are bound or affected; (iv) upon recording and filing of the Security
Instruments, Lender will have a valid and perfected Lien in the Collateral; and
(v) the Loan does not violate any usury laws.
(c) Organizational Documents. (i) Lender shall have received (A) with
respect to General Partner, its operating agreement, as amended, modified or
supplemented to the Closing Date, certified to be true, correct and complete by
its manager or member together with the articles of organization, as amended,
modified or supplemented to the Closing Date, certified to be true, correct and
complete by the appropriate Secretary of State as of the date not more than
thirty (30) days prior to the Closing Date, together with a good standing
certificate from such Secretary of State and a good standing certificate from
the Secretaries of State of each other state in which each Real Property Asset
is located, each to be dated a date not more than thirty (30) days prior to the
Closing Date, (B) with respect to Managing Member, the certificate of
incorporation, as amended, modified or supplemented to the Closing Date,
certified to be true, correct and complete by the appropriate Secretary of State
as of a date not more than thirty (30) days prior to the Closing Date, together
with a good standing certificate from such Secretary of State and a good
standing certificate from the Secretaries of State (or the equivalent thereof)
of each other State in which each Real Property Asset is located, each to be
dated a date not more than thirty (30) days prior to the Closing Date, and (C)
with respect to Borrower, its agreement of limited partnership, as amended,
modified or supplemented to the Closing Date, certified to be true, correct and
complete by its general partner, together with a copy of its certificate of
limited partnership, as amended, modified or supplemented to the Closing Date,
certified to be true, correct and complete by the appropriate Secretary of State
as of a date not more than thirty (30) days prior to the Closing Date, together
with a good standing certificate from such Secretary of State and a good
standing certificate from the Secretary of State (or the equivalent thereof) of
each State in which the Real Property Assets are located, each to be dated not
more than thirty (30) days prior to the Closing Date.
(ii) The partnership agreement of Borrower and the operating agreement
of General Partner must (A) provide that the company or partnership will only
dissolve upon the withdrawal, dissolution or bankruptcy of the last remaining
member or general partner, as applicable, but the company or partnership will
not be dissolved if the remaining members or general partners, as applicable,
within ninety (90) days, by unanimous consent elect to continue the (and appoint
a new managing member or general partner in the case of the withdrawal,
dissolution or bankruptcy of the last remaining managing member or general
partner, as applicable), (B) provide that the dissolution and winding up or
insolvency filing of such company or partnership requires the unanimous consent
of all members and general partner, and (C) include provisions substantially
similar to those contained in Section 6.06(a). The articles of incorporation of
Managing Member each Principal must include provisions substantially similar to
those contained in Section 6.06(a).
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(d) Certified Resolutions, etc. Lender shall have received a
certificate of the secretary or assistant secretary of Managing Member for
itself and on behalf of Borrower and its general partner, as the case may be,
and dated the Closing Date, certifying (i) the names and true signatures of the
incumbent officers authorized to sign the applicable Loan Documents, (ii) the
by-laws as in effect on the Closing Date, (iii) the resolutions of the board of
directors approving and authorizing the execution, delivery and performance of
all Loan Documents executed by Managing Member for itself and on behalf of
Borrower and its general partner, as the case may be, and (iv) that there have
been no changes in the certificate of incorporation of such Person since the
date of the most recent certification thereof by the appropriate Secretary of
State.
(e) Insurance. Lender shall have received certificates of insurance
demonstrating insurance coverage in respect of each of the Real Property Assets
of types, in amounts, and with insurers satisfactory to Lender and otherwise in
compliance with the terms, provisions and conditions of the Security Instrument.
(f) Lien Search Reports. Lender shall have received satisfactory (i.e.,
showing no Liens other than Permitted Liens) UCC searches, together with, to the
extent available, tax and judgment searches conducted in the appropriate
jurisdictions by a search firm acceptable to Lender with respect to the Real
Property Assets, Borrower and General Partner (collectively, the "UCC
Searches").
(g) Financing Statements. Lender shall have received UCC-l financing
statements (the "Financing Statements") signed by Borrower, as debtor, naming
Lender, as secured party, and to be filed in the appropriate offices of each
jurisdiction where the Real Property Assets and Borrower are located.
(h) Title Insurance Policies; Surveys. Lender shall have received (i)
with respect to all Real Property Assets, title insurance policies issued by a
title insurance company satisfactory to Lender insuring the lien of the Security
Instruments on such Real Property Assets, in form and substance satisfactory to
Lender insuring that the Security Instruments are a first lien on the good and
marketable fee simple title of Borrower to such Real Property Assets, in an
amount equal to the amount of the Allocated Loan Amount for each such Real
Property Asset, together with a "tie-in" and first loss endorsement satisfactory
to Lender, or, if such endorsement is not available in the state in which such
Real Property Asset is located, in an amount equal to the Release Price for such
Real Property Asset, together with a "last dollar endorsement" (the "Title
Policy"), and (ii) a recent survey with respect to each of the Real Property
Assets certified to Lender, its successors and assigns, dated within 60 days
prior to the Closing Date prepared by a land surveyor licensed in each of the
states where the Real Property Assets are located pursuant to the then current
ALTA/ACSM standards for title surveys and otherwise reasonably satisfactory to
Lender.
(i) Financial Statements. Lender shall have received for each Real
Property Asset, annual operating statements and occupancy statements for
Borrower"s most recent fiscal year together with current year to date operating
statements, current occupancy statements and the approved operating and capital
budget for the current fiscal year. Such financial statements shall be
acceptable to Lender in its sole discretion, and each such statement shall be
certified by
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the general partner of Borrower that, as of the Closing Date, there has been no
material adverse change in the financial condition of any Real Property Assets,
Borrower or General Partner since the date thereof.
(j) Environmental Matters. Lender shall have received the Environmental
Reports.
(k) Fees and Operating Expenses. Lender shall have received, for its
account, all agreed upon fees due and payable hereunder on or before the Closing
Date.
(l) Consents, Licenses, Approvals, etc. Lender shall have received
certified copies of all consents, licenses and approvals, if any, required in
connection with the execution, delivery and performance by Borrower and General
Partner, and the validity and enforceability, of the Loan Documents, or in
connection with the Loan, and such consents, licenses and approvals shall be in
full force and effect.
(m) Appraisals. Lender shall have completed its internal valuation of
the Real Property Assets and the value of the Real Property Assets as determined
pursuant to Lender's internal valuations is satisfactory to Lender.
(n) Engineering Reports. Lender shall have received and approved of, in
its sole discretion, the Engineering Reports for each of the Real Property
Assets.
(o) Zoning Compliance. Lender shall have received evidence reasonably
satisfactory to Lender to the effect that each of the Real Property Assets and
the use thereof are in substantial compliance with the applicable zoning,
subdivision, and all other applicable federal, state or local laws and
ordinances affecting each of the Real Property Assets, and that all building and
operating licenses and permits as well as all other licenses, permits,
certifications, registrations or similar filings necessary for the use and
occupancy of each of the Real Property Assets as manufactured housing
communities including, if applicable, current certificates of occupancy, have
been obtained and are in full force and effect and in good standing.
(p) Leases. Lender shall have received certified copies of the standard
forms of Lease and Registration Agreement which will be used by Borrower in
leasing space in each of the Real Property Assets which shall be reasonably
satisfactory to Lender.
(q) Contracts and Agreements. Lender shall have received certified
copies of all material contracts and agreements relating to the management,
leasing and operation of each of the Real Property Assets, each of which shall
be reasonably satisfactory to Lender.
(r) Intentionally Deleted.
(s) Representations and Warranties. Lender shall have received a
certification by General Partner, for itself and as general partner of Borrower,
certifying that to the best of its knowledge all of the representations and
warranties contained in this Agreement, the Security
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Instruments and the other Loan Documents are true and correct with respect to
each of the Real Property Assets and Borrower, and that there is no Default or
Event of Default hereunder.
(t) Intentionally Deleted.
(u) Certification as to Applicable Laws. Lender shall have received a
certification by General Partner for itself and as general partner of Borrower
certifying that to Borrower's and General Partner's best knowledge, each Real
Property Asset is in compliance with all Applicable Laws relating to such Real
Property Asset as of the Closing Date.
(v) Additional Matters. Lender shall have received such other
certificates, opinions, documents and instruments relating to the Loan as may
have been reasonably requested by Lender, and all corporate and other
proceedings and all other documents (including, without limitation, all
documents referred to herein and not appearing as exhibits hereto) and all legal
matters in connection with the Loan shall be reasonably satisfactory in form and
substance to Lender.
Section 3.02 Condition Precedent to the Closing. The obligation of
Lender to make the Loan is subject to the satisfaction on the Closing Date of
the following conditions precedent:
(a) Representations and Warranties. The representations and warranties
contained herein and in the other Loan Documents (other than representations and
warranties which expressly speak only as of a different date) shall be true and
correct in all material respects on such date both before and after giving
effect to the making of the Loan.
(b) No Monetary Default or Event of Default. No Monetary Default or
Event of Default shall have occurred and be continuing on such date either
before or after giving effect to the making of the Loan.
(c) No Injunction. No law or regulation shall have been adopted, no
order, judgment or decree of any governmental authority shall have been issued,
and no litigation shall be pending or threatened, which in the good faith
judgment of Lender would enjoin, prohibit or restrain, or impose or result in
the imposition of any material adverse condition upon, the making of the Loan or
Borrower's obligation to pay (or Lender's right to receive payment of) the Loan
or the other Obligations or the consummation of the Loan.
(d) No Material Adverse Change. No event, act or condition shall have
occurred after the Closing Date which, in the reasonable judgment of Lender has
had or would have a Material Adverse Effect.
(e) Intentionally Deleted.
(f) No Litigation. Except for matters identified on Schedule 4 (as the
same may be amended or supplemented), no actions, suits or proceedings shall be
pending or threatened with respect to the Loan Documents, Borrower, General
Partner or with respect to the
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Real Property Assets, that could, in the aggregate, result in a Material
Adverse Effect and matters identified on Schedule 4, in the aggregate, do not
result in a Material Adverse Effect.
(g) Intentionally Deleted.
(h) Payment of Taxes. Lender shall have received proof of payment of
any required recording fees, mortgage recording taxes, documentary stamp taxes,
intangibles taxes or other similar costs in connection with the making of the
Loan.
(i) Intentionally Deleted.
(j) Additional Matters. Lender shall have received such other
certificates, opinions, documents and instruments relating to the Loan as may
have been reasonably requested by Lender, and all corporate and other
proceedings and all other documents (including, without limitation, all
documents referred to herein and not appearing as exhibits hereto) and all legal
matters in connection with the Loan shall be satisfactory in form and substance
to Lender.
Section 3.03 Acceptance of Loan. The acceptance by Borrower of the
proceeds of the Loan shall constitute a representation and warranty by Borrower
to Lender that all of the conditions required to be satisfied under this Section
3 in connection with the making of the Loan and all of the terms and provisions
of this Agreement have been satisfied.
Section 3.04 Sufficient Counterparts. All certificates, agreements,
legal opinions and other documents and papers referred to in this Section 3,
unless otherwise specified, shall be delivered to Lender and shall be
satisfactory in form and substance to Lender in its sole discretion (unless the
form thereof is prescribed herein) and Borrower shall deliver sufficient
counterparts of all such materials for distribution to Lender.
SECTION 4. REPRESENTATIONS AND WARRANTIES.
In order to induce Lender to enter into this Agreement and to make the
Loan, Borrower makes the following representations and warranties, which shall
survive the execution and delivery of this Agreement and the Note and the making
of the Loan:
Section 4.01 Corporate/Partnership/Limited Liability Company Status.
Each of Borrower, General Partner and Managing Member (a) is a duly organized
and validly existing corporation, partnership or limited liability company, as
the case may be, in good standing under the laws of the jurisdiction of its
incorporation or formation, (b) has all requisite corporate, partnership or
limited liability company power and authority, as the case may be, to own its
property and assets (including the Real Property Assets) and to transact the
business in which it is engaged or presently proposes to engage (including the
Loan) and (c) has duly qualified and is authorized to do business and is in good
standing as a foreign corporation or foreign partnership or foreign limited
liability company, as the case may be, in every jurisdiction in which it owns or
leases real property (including the Real Property Assets) or in which the nature
of its business requires it to be so qualified.
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Section 4.02 Corporate/Partnership/Limited Liability Company Power and
Authority. Each of Borrower, General Partner and Managing Member has the
corporate, partnership or limited liability company power and authority, as the
case may be, to execute, deliver and carry out the terms and provisions of each
of the Loan Documents to which it is a party and has taken all necessary
corporate, partnership or limited liability company action, as the case may be,
to authorize the execution, delivery and performance by it of such Loan
Documents. Each of Borrower, General Partner and Managing Member has duly
executed and delivered each such Loan Document, and each such Loan Document
constitutes its legal, valid and binding obligation, enforceable in accordance
with its terms, except as enforcement may be limited by applicable insolvency,
bankruptcy or other laws affecting creditors' rights generally, or general
principles of equity whether enforcement is sought in a proceeding in equity or
at law.
Section 4.03 No Violation. To the best of Borrower's or General
Partner's knowledge, neither the execution, delivery or performance by Borrower,
General Partner or Managing Member of the Loan Documents to which it is a party,
nor the compliance by Borrower, General Partner or Managing Member with the
terms and provisions thereof nor the consummation of the Loan, (a) will
contravene any applicable provision of any law, statute, rule, regulation,
order, writ, injunction or decree of any court or governmental instrumentality,
or (b) will conflict with or result in any material breach of, any of the terms,
covenants, conditions or provisions of, or constitute a default under, or result
in the creation or imposition of (or the obligation to create or impose) any
Lien (except pursuant to the Security Instruments and the Loan Documents) upon
any of the property or assets (including the Real Property Assets) of Borrower,
General Partner or Managing Member pursuant to the terms of any indenture,
mortgage, deed of trust, agreement or other instrument to which Borrower,
General Partner or Managing Member is a party or by which it or any of its
property or assets (including the Real Property Assets) is bound or to which it
may be subject, or (c) will, with respect to Borrower, General Partner, violate
any provisions of its partnership or operating agreement, or (d) will, with
respect to Managing Member, violate any provision of its certificate of
incorporation or by-laws.
Section 4.04 Litigation. Except as set forth on Schedule 4, there are
no actions, suits or proceedings pending or, to the best of Borrower's or
General Partner's knowledge, threatened with respect to any of the Loan
Documents, Borrower, General Partner, Managing Member, or with respect to the
Real Property Assets, that could, in the aggregate, result in a Material Adverse
Effect. All matters set forth on Schedule 4 do not, in the aggregate, result in
a Material Adverse Effect.
Section 4.05 Financial Statements: Financial Condition; etc. The
statements and other reports delivered pursuant to Section 3.01(i) were prepared
in accordance with GAAP consistently applied and fairly present the financial
condition and the results of operations of Borrower and the Real Property Assets
covered thereby as of the dates and for the periods covered thereby, except as
disclosed in the notes thereto and, with respect to interim financial statements
and other reports, subject to usual year-end adjustments. Neither Borrower,
General Partner nor Managing Member has any material liability (contingent or
otherwise) not reflected in such financial statements and other reports or in
the notes thereto. There has been no adverse change in any condition, fact,
circumstance or event that would make any such information
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materially inaccurate, incomplete or otherwise misleading or would affect
Borrower's, General Partner's or Managing Member's ability to perform its
obligations under this Agreement.
Section 4.06 Solvency. On the Closing Date and after and giving effect
to the Loan, Borrower, General Partner and Managing Member will be Solvent.
Borrower has received reasonably equivalent value for the granting of the
Security Instruments.
Section 4.07 Material Adverse Change. Since the date of the most recent
audited financial statements delivered pursuant to Section 3.01(i), there has
occurred no event, act or condition, and to the best of Borrower"s knowledge,
there is no prospective event or condition which has had, or could have, a
Material Adverse Effect.
Section 4.08 Use of Proceeds; Margin Regulations. No part of the
proceeds of the Loan will be used by Borrower to purchase or carry any Margin
Stock or to extend credit to others for the purpose of purchasing or carrying
any Margin Stock. Neither the making of the Loan nor the use of the proceeds
thereof will violate or be inconsistent with the provisions of Regulations G, T,
U or X of the Federal Reserve Board.
Section 4.09 Governmental Approvals. To the best of Borrower's
knowledge, no order, consent, approval, license, authorization, or validation
of, or filing, recording or registration with, or exemption by, any governmental
or public body or authority, or any subdivision thereof, is required to
authorize, or is required in connection with (i) the execution, delivery and
performance of any Loan Document or (ii) the legality, validity, binding effect
or enforceability of any Loan Document.
Section 4.10 Security Interests and Liens. The Security Instruments
create, as security for the Obligations, valid and enforceable Liens on all of
the Collateral, in favor of Lender and subject to no other liens (except for
Permitted Liens), except as enforceability may be limited by applicable
insolvency, bankruptcy or other laws affecting creditors rights generally, or
general principles of equity, whether such enforceability is considered in a
proceeding in equity or at law. Upon the satisfaction of the condition precedent
described in Section 3.01(g), such security interests in and Liens on the
Collateral shall be perfected and shall be superior to and prior to the rights
of all third parties in the Collateral (except for Permitted Liens), and, other
than in connection with any future change in Borrower"s or General Partner"s
name or the location of the Collateral, Borrower or General Partner"s principal
place of business, no further recordings or filings are or will be required in
connection with the creation, perfection or enforcement of such security
interests and Liens, other than the filing of continuation statements in
accordance with applicable law.
Section 4.11 Tax Returns and Payments. Borrower and General Partner
have filed all federal, state, county, municipal and city income and other tax
returns required to be filed by them for which the filing date has passed and
not been extended and have paid all taxes and assessments payable by such
Persons which have become due, other than (a) those not yet delinquent or (b)
those that are reserved against in accordance with GAAP which are being
diligently contested in good faith by appropriate proceedings. Neither Borrower
nor General
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Partner knows of any basis for any additional assessment in respect of any such
taxes and related liabilities for prior years which could result in a Material
Adverse Effect.
Section 4.12 ERISA. (a) Neither Borrower nor General Partner has any
Employee Benefit Plans other than those listed on Schedule 5. No accumulated
funding deficiency (as defined in Section 412 of the Code or Section 302 of
ERISA) or Reportable Event has occurred with respect to any Plan. As of the
Closing Date, the Unfunded Benefit Liabilities do not in the aggregate exceed
$500,000. Borrower and each member of its respective ERISA Controlled Group have
complied in all material respects with the requirements of ERISA and the Code
and plan documents for each Employee Benefit Plan and Plans and are not in
default (as defined in Section 4219(c)(5) of ERISA) with respect to payments to
a Multiemployer Plan. Neither Borrower, General Partner nor any member of their
respective ERISA Controlled Groups is subject to any present or potential
liability or withdrawal liability or annual withdrawal liability payments,
which, individually or in the aggregate, could materially adversely affect any
of such Persons. To the best knowledge of Borrower, no Multiemployer Plan is or
is likely to be in reorganization (within the meaning of Section 4241 of ERISA
or Section 418 of the Code) or is insolvent (as defined in Section 4245 of
ERISA). No material liability to the PBGC (other than required premium
payments), the Internal Revenue Service, any Plan or any trust established under
Title IV of ERISA has been, or is expected by Borrower or General Partner, or
any member of their respective ERISA Controlled Group to be incurred by
Borrower, General Partner, or any member of their respective ERISA Controlled
Group. Except as otherwise disclosed on Schedule 5 hereto, none of Borrower,
General Partner, or any member of their respective ERISA Controlled Group has
any contingent liability with respect to any post-retirement benefit under any
"welfare plan" (as defined in Section 3(1) of ERISA), other than liability for
continuation coverage under Part 6 of Title I of ERISA. No lien under Section
412(n) of the Code or 302(f) of ERISA or requirement to provide security under
Section 401(a)(29) of the Code or Section 307 of ERISA has been or is reasonably
expected by Borrower or General Partner to be imposed on the assets of Borrower,
General Partner or any member of their respective ERISA Controlled Group.
Neither Borrower nor General Partner is a party to any collective bargaining
agreement. Neither Borrower, General Partner nor any of their respective ERISA
Controlled Group has engaged in any transaction prohibited by Section 406 of
ERISA or Section 4975 of the Code.
(b) As of the date hereof and throughout the term of this Agreement (i)
neither Borrower nor General Partner is an "employee benefit plan" as defined in
Section 3(3) of ERISA, which is subject to Title I of ERISA, and (ii) the assets
of Borrower and the assets of General Partner do not and will not constitute
"plan assets" of one or more such plans for purposes of Title I of ERISA; and
(c) As of the date hereof and throughout the term of this Agreement (i)
Borrower and General Partner are not and will not be a "governmental plan"
within the meaning of Section 3(3) of ERISA and (ii) transactions by or with
Borrower and General Partner are not and will not be subject to state statutes
applicable to Borrower and General Partner regulating investments of and
fiduciary obligations with respect to governmental plans.
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Section 4.13 Representations and Warranties in Loan Documents. All
representations and warranties made by Borrower in the Loan Documents are true
and correct in all material respects.
Section 4.14 True and Complete Disclosure. To the best of Borrower's
knowledge, all factual information (taken as a whole) furnished by or on behalf
of Borrower, General Partner or the Managing Member in writing to Lender on or
prior to the Closing Date, for purposes of or in connection with this Agreement
or the Loan (the "Furnished Information") is, and all other such factual
information (taken as a whole) hereafter furnished by or on behalf of Borrower,
General Partner or Managing Member in writing to Lender will be, true, accurate
and complete in all material respects and will not omit any material fact
necessary to make such information (taken as a whole) not misleading on the date
as of which such information is dated or furnished. As of the Closing Date,
there are no facts, events or conditions directly and specifically affecting
Borrower, General Partner or Managing Member known to Borrower or General
Partner and not disclosed to Lender, in the Furnished Information, in the
Schedules attached hereto or in the other Loan Documents, which in the
aggregate, have or could be expected to have a Material Adverse Effect.
Section 4.15 Ownership of Real Property; Existing Security Instruments.
Borrower has good and marketable fee simple title in all of the Real Property
Assets and good title to all of their personal property subject to no Lien of
any kind except for Permitted Liens. As of the date of this Agreement, there are
no options or other rights to acquire any of the Real Property Assets that run
in favor of any Person and there are no mortgages, deeds of trust, indentures,
debt instruments or other agreements creating a Lien against any of the Real
Property Assets except the Permitted Liens.
Section 4.16 No Default. No Default or Event of Default exists under or
with respect to any Loan Document. Neither Borrower, General Partner nor
Managing Member is in default in any material respect beyond any applicable
grace period under or with respect to any other material agreement, instrument
or undertaking to which it is a party or by which it or any of its properties or
assets is bound in any respect, the existence of which default could result in a
Material Adverse Effect.
Section 4.17 Licenses, etc. Borrower has obtained and holds in full
force and effect, all material franchises, trademarks, tradenames, copyrights,
licenses, permits, certificates, registrations, authorizations, qualifications,
accreditations, easements, rights of way and other rights, consents and
approvals which are necessary for the operation of the Real Property Assets and
their respective businesses as presently conducted including, without
limitation, the filing of any required prospectus and/or the maintenance of any
licenses or permits, the payment of any fees in connection therewith for the
operation of the Real Property Assets as manufactured housing communities.
Section 4.18 Compliance With Law. To the best knowledge of Borrower,
Borrower and General Partner are in compliance with all Applicable Laws and
other laws, rules, regulations, orders, judgments, writs and decrees,
noncompliance with which could result in a Material Adverse Effect.
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Section 4.19 Brokers. Borrower and Lender hereby represent and warrant
that no brokers or finders were used in connection with procuring the financing
contemplated hereby (and Borrower hereby agrees to indemnify and save Lender
harmless from and against any and all liabilities, losses, costs and expenses
(including attorneys' fees or court costs) suffered or incurred by Lender as a
result of any claim or assertion by any party claiming by, through or under
Borrower), that it is entitled to compensation in connection with the financing
contemplated hereby and Lender hereby agrees to indemnify and save Borrower
harmless from and against any and all liabilities, losses, costs and expenses
(including attorneys' fees or court costs) suffered or incurred by Borrower as a
result of any claim or assertion by any party claiming by, through or under
Lender that it is entitled to compensation in connection with the financing
contemplated hereby.
Section 4.20 Judgments. There are no judgments, decrees, or orders of
any kind against Borrower, General Partner or Managing Member unpaid of record
which would materially or adversely affect the ability of Borrower, General
Partner or Managing Member to comply with its obligations under the Loan or this
Agreement in a timely manner. There are no federal tax claims or liens assessed
or filed against Borrower, General Partner or Managing Member, and to the best
of Borrower's knowledge, there are no material judgments against Borrower,
General Partner or Managing Member unsatisfied of record or docketed in any
court of the States in which the Real Property Assets are located or in any
other court located in the United States. No petition in bankruptcy or similar
insolvency proceeding has ever been filed by or against Borrower, General
Partner or Managing Member, and neither Borrower, General Partner nor Managing
Member has ever made any assignment for the benefit of creditors or taken
advantage of any insolvency act or any act for the benefit of debtors.
Section 4.21 Property Manager. As of the date hereof, the manager of
the Real Property Assets is Sun Communities Operating Limited Partnership.
Section 4.22 Intentionally Deleted.
Section 4.23 Intentionally Deleted.
Section 4.24 Trade Names. Borrower does not conduct any business with
respect to the Real Property Assets under any trade names other than as set
forth on Schedule 6 attached hereto.
Section 4.25 Survival. The foregoing representations and warranties
shall survive the execution and delivery of this Agreement and shall continue in
full force and effect until the indebtedness evidenced by the Note has been
fully paid and satisfied and Lender shall have no further commitment to advance
funds hereunder.
SECTION 5. AFFIRMATIVE COVENANTS.
Borrower covenants and agrees that on and after the Closing Date and
until the Obligations are paid in full:
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Section 5.01 Books and Records. (a) Borrower, General Partner and
Managing Member shall keep adequate books and records of account in accordance
with GAAP, or in accordance with other methods acceptable to Lender in its sole
discretion, consistently applied and furnish to Lender:
(i) quarterly operating statements of each Real Property
Asset, prepared and certified by Borrower in the form required by
Lender, detailing the Rents received, the Operating Expenses incurred
and the Net Operating Income before and after debt service (principal
and interest) and major capital improvements for that quarter and
containing appropriate year to date information, and containing a
comparison for such quarter and year-to-date information with the
annual budget delivered pursuant to Subsection 5.01(a)(vi), within
sixty (60) days after the end of each fiscal quarter;
(ii) quarterly certified rent rolls signed and dated by
Borrower, detailing the names of all tenants of each Real Property
Asset, the portion of each Real Property Asset occupied by each tenant,
the base rent and any other charges payable under each Lease and the
term of each Lease, including the expiration date, and any other
information as is reasonably required by Lender, within sixty (60) days
after the end of each fiscal quarter;
(iii) an annual operating statement of each Real Property
Asset detailing the Rents received, total Operating Expenses incurred,
Net Operating Income, total cost of all capital improvements, total
debt service and total cash flow, and containing a comparison for such
period with the annual budget delivered pursuant to Subsection
5.01(a)(vi), to be prepared and certified by Borrower in the form
required by Lender, within ninety (90) days after the close of each
fiscal year of Borrower;
(iv) quarterly financial statements of Borrower in the form
required by Lender, prepared and certified by Borrower within sixty
(60) days after the end of each fiscal quarter;
(v) an annual balance sheet and profit and loss statement of
Borrower in the form required by Lender, prepared and certified by
Borrower or if required by Lender, audited financial statements
prepared by an independent certified public accountant acceptable to
Lender, within ninety (90) days after the close of each fiscal year of
Borrower as the case may be; and
(vi) an annual operating and capital budget presented on a
monthly basis consistent with the quarterly and annual operating
statements described above for the each Real Property Asset, including
cash flow projections for the upcoming year, and all proposed capital
replacements and improvements at least fifteen (15) days prior to the
start of each calendar year.
(b) Upon request from Lender, Borrower and its Affiliates shall furnish
to Lender:
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(i) a property management report for each Real Property
Asset, showing the number of inquiries made and/or rental applications
received from tenants or prospective tenants and deposits received from
tenants and any other information requested by Lender, in reasonable
detail and certified by Borrower under penalty of perjury to be true
and complete, but no more frequently than quarterly; and
(ii) an accounting of all security deposits and other lease
guaranties held in connection with any Lease of any part of any Real
Property Assets, including, with respect to security deposits, 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 of the person to
contact at such financial institution, along with any authority or
release necessary for Lender to obtain information regarding such
accounts directly from such financial institutions.
(iii) Borrower and its Affiliates shall furnish Lender with
such other additional financial or management information as may, from
time to time, be required by Lender in form and substance satisfactory
to Lender.
(iv) Borrower and its Affiliates shall furnish to Lender and
its agents convenient facilities for the examination, copying and audit
of any such books and records. Within a reasonable time after request
by Lender, Borrower and its Affiliates shall provide any other
information with respect to the Real Property Assets and the financial
condition of Borrower and its Affiliates as Lender may from time to
time request.
(c) Notice of Default or Litigation. Promptly after a Responsible
Officer of Borrower knows or, in the reasonable execution of its duties and
responsibilities as such Responsible Officer, should have known thereof,
Borrower shall give Lender notice of (i) the occurrence of a Default or any
Event of Default, (ii) the occurrence of (x) any event of default, under any
partnership agreement of Borrower, any mortgage, deed of trust, indenture or
other debt or security instrument, covering any of the assets of Borrower or
General Partner, which, if not cured, could result in a Material Adverse Effect,
or (y) any event of default under any other material agreement to which Borrower
or General Partner is a party, which, if not cured, could result in a Material
Adverse Effect, (iii) any litigation or governmental proceeding pending or
threatened (in writing) against Borrower or General Partner which could result
in a Material Adverse Effect and (iv) any other event, act or condition which
could result in a Material Adverse Effect. Each notice delivered pursuant to
this Section 5.01(c) shall be accompanied by a certificate of a Responsible
Officer of Managing Member for itself and on behalf of Borrower and its general
partner setting forth the details of the occurrence referred to therein and
describing the actions Borrower and General Partner propose to take with respect
thereto.
Section 5.02 Books, Records and Inspections. Borrower shall, at
Borrower's principal place of business or at each Real Property Asset, keep
proper books of record and account in which full, true and correct entries shall
be made. Borrower shall permit officers and designated representatives of Lender
to visit and inspect any of the Real Property Assets, and to
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examine and copy the books of record and account of Borrower, General Partner,
Managing Member and the Real Property Assets (including, without limitation,
leases, statements, bills and invoices), discuss the affairs, finances and
accounts of Borrower, General Partner and Managing Member and be advised as to
the same by, its and their officers and independent accountants, all upon
reasonable notice and at such reasonable times as Lender may desire but no more
often than quarterly, provided that an Event of Default has not occurred.
Section 5.03 Maintenance of Insurance. Borrower shall (a) maintain with
financially sound and reputable insurance companies insurance on itself and its
properties in commercially reasonable amounts and with respect to the Real
Property Assets in at least such amounts and against at least such risks as are
required under the Security Instruments, (b) maintain Lender as named additional
insured in respect of any such liability insurance required to be maintained
under the Security Instruments, and (c) furnish to Lender from time to time,
upon written request, certificates of insurance or certified copies or abstracts
of all insurance policies required under this Agreement and the other Loan
Documents and such other information relating to such insurance as Lender may
reasonably request.
Section 5.04 Taxes. Borrower, General Partner and Managing Member shall
pay or cause to be paid, when due (i.e., before any penalty or fine could be
levied or charged), all taxes, charges and assessments and all other lawful
claims required to be paid by Borrower, General Partner or Managing Member,
except as contested in good faith and by appropriate proceedings diligently
conducted, if adequate reserves have been established with respect thereto in
accordance with GAAP. Upon request from Lender, Borrower shall provide evidence
to Lender of payment of such taxes, charges, assessments and other lawful
claims.
Section 5.05 Corporate Franchises; Conduct of Business. (a) Borrower
shall do or cause to be done, all things necessary to preserve and keep in full
force and effect its existence and good standing in the State of its
organization and in each state in which a Real Property Asset is located, and
its respective franchises, licenses, permits, certificates, authorizations,
qualifications, accreditations, easements, rights of way and other rights,
consents and approvals, except where the failure to so preserve any of the
foregoing (other than existence and good standing) could not result in a
Material Adverse Effect.
(b) Borrower, General Partner and Managing Member shall carry on and
conduct its business in substantially the same manner and substantially the same
field of enterprise as it is presently conducted.
Section 5.06 Compliance with Law. Borrower, General Partner
and Managing Member shall comply with all Applicable Laws, rules, statutes,
regulations, decrees and orders of, and all applicable restrictions imposed by,
all governmental bodies, domestic or foreign, in respect of the conduct of their
business and the ownership of their property (including the Real Property
Assets) in all material respects, except for such laws, rules, statutes,
regulations, decrees, orders and restrictions, (a) which Borrower, General
Partner or Managing Member are contesting in good faith and in compliance with
and pursuant to appropriate proceedings diligently prosecuted (provided that
such contest does not and cannot (i) expose any of Lender, Borrower, General
Partner or Managing Member to any criminal liability or penalty, (ii) give rise
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to a Lien against any of the Collateral or any Real Property Asset, or (iii)
otherwise materially adversely affect any of the Collateral or the value
thereof), or (b) the failure to observe which, taken individually or in the
aggregate, could not result in a Material Adverse Effect. Borrower's, General
Partner's and Managing Member's compliance with this Section shall include,
without limitation, the filing of any required prospectus and/or the maintenance
of any licenses or permits, the payment of any fees in connection therewith for
the operation of the Real Property Assets as manufactured housing communities.
Borrower, General Partner and Managing Member shall not lease or permit the
leasing of more than ten percent (10%) of the units as RV Pads or operate any of
the Real Property Assets as a recreational vehicle resort or park.
Section 5.07 Performance of Other Obligations. Borrower shall perform
all of their obligations under the terms of each other mortgage, indenture,
security agreement, debt instrument, lease, undertaking and contract by which it
or any of the properties (including the Real Property Assets) is bound or to
which it is a party (excluding the Loan Documents) so as not to cause a Material
Adverse Effect.
Section 5.08 Intentionally Deleted.
Section 5.09 Intentionally Deleted.
Section 5.10 Maintenance of Properties. Borrower shall ensure that the
Real Property Assets are kept in their current condition and repair, normal wear
and tear and casualty damage in the process of being repaired or restored
excepted.
Section 5.11 Compliance with ERISA. (a) Borrower shall maintain each
Employee Benefit Plan and Plan in compliance with all material applicable
requirements of ERISA and the Code and with all material applicable regulations
promulgated thereunder. Borrower shall provide to Lender, within ten (10) days
of sending or receipt, copies of all filings or correspondence with the Internal
Revenue Service, PBGC, Department of Labor, Plan, Multiemployer Plan or union,
regarding any Plan, or regarding or disclosing any liability or potential
liability or violation of law under any Employee Benefit Plan.
(b) Borrower further covenants and agrees to deliver to Lender such
certifications or other evidence at the Closing and from time to time throughout
the term of this Agreement, as requested by Lender in its sole discretion but no
more frequently than annually, that (i) Borrower is not an "employee benefit
plan" as defined in Section 3(3) of ERISA, which is subject to Title I of ERISA,
or a "governmental plan" within the meaning of Section 3(3) of ERISA; (ii)
Borrower is not subject to state statutes regulating investments and fiduciary
obligations with respect to governmental plans; and (iii) one or more of the
following circumstances is true with respect to Borrower:
(A) Equity interests in Borrower are publicly offered securities,
within the meaning of 29 C.F.R. Section 2510.3-101(b)(2);
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(B) Less than 25 percent of each outstanding class of equity
interests in Borrower are held by "benefit plan investors" within the
meaning of 29 C.F.R. Section 2510.3-101(f)(2); or
(C) Borrower qualifies as an "operating company" or a "real estate
operating company" within the meaning of 29 C.F.R. Section
2510.3-101(c) or (e) or an investment company registered under The
Investment Company Act of 1940.
(c) Borrower further covenants and agrees to notify Lender within ten
(10) days of the date that the certification in this Section 5.11 is no longer
true.
Section 5.12 Settlement/Judgment Notice. Borrower agrees that it shall,
within ten (10) days after a settlement of any obligation in excess of
$1,000,000, provide written notice to Lender of such settlement. Borrower
further agrees that it shall, within ten (10) days after entry of a final
judgment in excess of $1,000,000 or final judgments in excess of $1,000,000 in
the aggregate during the immediately preceding twelve (12) month period, provide
written notice to Lender of such judgment. Borrower further agrees that it will
provide written notice to Lender after entry of any judgment in excess of
$1,000,000.
Section 5.13 Intentionally Deleted.
Section 5.14 Intentionally Deleted.
Section 5.15 Intentionally Deleted.
Section 5.16 Intentionally Deleted.
Section 5.17 Intentionally Deleted.
Section 5.18 Intentionally Deleted.
Section 5.19 Intentionally Deleted.
Section 5.20 Intentionally Deleted.
Section 5.21 Manager. Sun Communities Operating Limited Partnership
shall at all times remain the property manager of all of the Real Property
Assets, subject to the provisions of the Security Instrument.
Section 5.22 Further Assurances. Borrower will at its sole cost and
expense, at any time and from time to time upon request of Lender take or cause
to be taken any action and execute, acknowledge, deliver or record any further
documents, opinions, deeds of trust, deeds to secure debt, mortgages, security
agreements or other instruments which Lender in its reasonable discretion deems
necessary or appropriate to carry out the purposes of this Agreement and the
other Loan Documents including (i) to consummate the transfer or sale of the
Loan or any portion thereof, (ii) to preserve, protect and perfect the security
intended to be created and
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preserved in the Real Property Assets and (iii) to establish, preserve and
protect the security interest of Lender in and to the Accounts Receivable and
any personal property owned by Borrower and installed in, furnished to or used
or intended to be used in connection with any construction in connection with
the Real Property Assets or the operation thereof.
Section 5.23 Intentionally Deleted.
Section 5.24 Security Instrument Covenants. Borrower shall comply with
all of the terms and conditions and covenants in the Security Instruments, the
Environmental Indemnity and the other Loan Documents.
Section 5.25 Intentionally Deleted.
SECTION 6. NEGATIVE COVENANTS.
Borrower covenants and agrees that on and after the Closing Date until
the Obligations are paid in full:
Section 6.01 Liens. Borrower shall not create, incur, assume or suffer
to exist, directly or indirectly, any Lien on any of the Collateral, or any of
the Real Property Assets, other than the following (collectively, the "Permitted
Liens"):
(a) Liens existing on the Closing Date and set forth on Schedule 7
hereto or listed in the Title Policies or Title Searches issued on the
Closing Date;
(b) Liens for taxes not yet due or which are being contested in good
faith by appropriate proceedings diligently conducted and with respect to
which adequate reserves are being maintained in accordance with GAAP;
(c) Statutory Liens of landlords and Liens of mechanics, materialmen
and other Liens imposed by law (other than any Lien imposed by ERISA)
created in the ordinary course of business for amounts not yet due or (i)
which are being contested in good faith by appropriate proceedings
diligently conducted, and with respect to which adequate bonds have been
posted if required to do so by Applicable Law or the terms of the Security
Instrument;
(d) Easements, rights-of-way, zoning and similar restrictions and other
similar charges or encumbrances not interfering with the ordinary conduct of
the business of Borrower and which do not detract materially from the value
of any of the Real Property Assets to which they attach or impair materially
the use thereof by Borrower or materially adversely affect the security
interests of Lender in the Collateral; and
(e) Liens granted to Lender pursuant to the Security Instruments
securing the Obligations.
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Section 6.02 Restriction on Fundamental Changes. (a) Without the prior
written consent of Lender, which consent may be withheld in the sole and
absolute discretion of Lender. Borrower shall not enter into any merger or
consolidation, or sell all or substantially all of their respective assets to
any other Person, provided that Borrower may merge with another Person if, prior
to and after giving effect to such merger, no Default or Event of Default shall
have occurred and be continuing, and Borrower is the surviving entity of such
merger.
(b) Intentionally Deleted.
Section 6.03 Transactions with Affiliates. Borrower shall not enter
into any material transaction or series of related transactions, whether or not
in the ordinary course of business, with an Affiliate of Borrower other than on
terms and conditions substantially as favorable as would be obtainable at the
time in a comparable arms-length transaction with a Person other than an
Affiliate of Borrower.
Section 6.04 Plans. Borrower shall not, nor shall it permit any member
of its respective ERISA Controlled Group to, (i) take any action which would (A)
increase the aggregate present value of the Unfunded Benefit Liabilities under
all Plans to an amount in excess of $1,000,000 or (B) result in liability or
Contingent Obligation for any post-retirement benefit under any "welfare plan"
(as defined in Section 3(1) of ERISA), other than liability for continuation
coverage under Part 6 of Title I of ERISA or (ii) engage in any transaction
prohibited by Section 408 of ERISA or Section 4975 of the Code.
Section 6.05 Intentionally Deleted.
Section 6.06 Single Purpose Entity. Borrower covenants and agrees that
Borrower, General Partner and Managing Member has not and shall not:
(a) (i) with respect to Borrower, engage in any business or activity
other than the ownership, operation, maintenance and management of the Real
Property Assets and the ownership of an interest in Miami Lakes, and activities
incidental thereto, (ii) with respect to General Partner, engage in any business
or activity other than the ownership of interests in Borrower and Miami Lakes,
and activities incidental thereto, and (iii) with respect to Managing Member,
engage in any business or activity other than the ownership of an interest in
General Partner, and activities incidental thereto;
(b) with respect to Borrower, acquire or own any material assets other
than the Real Property Assets and such incidental personal property as may be
necessary for the operation of the Real Property Assets;
(c) merge into or consolidate with any person or entity or dissolve,
terminate or liquidate in whole or in part, transfer or otherwise dispose of all
or substantially all of its assets or change its legal structure, without in
each case Lender's consent;
(d) fail to preserve its existence as an entity duly organized, validly
existing and in good standing (if applicable) under the laws of the jurisdiction
of its organization or
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formation, or without the prior written consent of Lender, amend, modify,
terminate or fail to comply with the provisions of its organizational documents;
(e) except as set forth in Subsection 6.06(a), own any subsidiary or
make any investment in, any person or entity without the consent of Lender;
(f) commingle its assets with the assets of any of its members,
partners, any other Person, Affiliates of its members, partners or of any other
Person;
(g) incur any debt, secured or unsecured, direct or contingent
(including guaranteeing any obligation), other than its obligations under the
Loan Documents, except in the ordinary course of its business of owning and
operating the Real Property Assets, provided that such debt is paid when due;
(h) become insolvent or fail to pay its debts and liabilities from its
assets as the same shall become due;
(i) fail to maintain its records, books of account and bank accounts
separate and apart from those of its members, partners, any Affiliates of its
members, partners or any other Person;
(j) enter into any contract or agreement with any members, partners,
Affiliates of any member, partner or any Affiliate thereof, except upon terms
and conditions that are substantially similar to those that would be available
on an arms-length basis with third parties other than any of its members,
Affiliates of any member or partner or any Affiliate thereof;
(k) seek its dissolution or winding up in whole, or in part;
(l) fail to correct any known misunderstandings regarding the separate
identity of Borrower, General Partner or Managing Member, as the case may be;
(m) hold itself out to be responsible for the debts of another person;
(n) make any loans or advances to any third party, including any of its
members, partners or any Affiliate thereof;
(o) fail to file its own tax returns;
(p) agree to, enter into or consummate any transaction which would
render Borrower unable to furnish the certification or other evidence referred
to in Section 5.11 hereof;
(q) fail either to hold itself out to the public as a legal entity
separate and distinct from any other entity or person or to conduct its business
solely in its own name in order not (i) to mislead others as to the identity
with which such other party is transacting business, or (ii) to suggest that it
is responsible for the debts of any third party (including any member, partner
or any Affiliate thereof);
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(r) fail to maintain adequate capital for the normal obligations
reasonably foreseeable in a business of its size and character and in light of
its contemplated business operations;
(s) file or consent to the filing of any petition, either voluntary or
involuntary, to take advantage of any applicable insolvency, bankruptcy,
liquidation or reorganization statute, or make an assignment for the benefit of
creditors without the unanimous consent of the board of directors of Managing
Member;
(t) with respect to Managing Member, fail at any time to have at least
two independent directors that are not and have not been for at least three (3)
years a director, executive officer, employee, trade creditor or shareholder (or
spouse, parent, sibling or child of the foregoing) of Borrower, General Partner,
Managing Member, any member, partner, principal or Affiliate of Borrower,
General Partner, Managing Member or any Affiliate thereof; provided, however,
such director may also serve as directors of Sun Communities, Inc.
SECTION 7. EVENTS OF DEFAULT
Section 7.01 Events of Default. Each of the following events, acts,
occurrences or conditions shall constitute an Event of Default under this
Agreement, regardless of whether such event, act, occurrence or condition is
voluntary or involuntary or results from the operation of law or pursuant to or
as a result of compliance by any Person with any judgment, decree, order, rule
or regulation of any court or administrative or governmental body:
(a) Failure to Make Payments. Borrower shall (i) default in the payment
when due of any principal of or interest on the Loan or (ii) default in the
payment within five (5) days after the due date of any Fees, Transaction
Costs or any other amounts owing hereunder; provided, however, that any
interest payable with respect to any delinquent payment shall be calculated
at the Default Rate from the date such payment was actually due as if there
were no grace period.
(b) Breach of Representation or Warranty. Any representation or
warranty made by Borrower herein or in any other Loan Document or in any
certificate or statement delivered pursuant hereto or thereto shall prove to
be false or misleading in any material respect on the date as of which made
or deemed made; provided, however, that if such breach is capable of being
cured, then Borrower shall have a period of thirty (30) days after delivery
of notice from Lender to cure any such breach.
(c) Breach of Covenants.
(i) (A) Borrower shall fail to perform or observe any agreement,
covenant or obligation arising under Sections 5.11, 5.12, 6.01 (other than Liens
which are placed on a Real Property Asset without the consent of Borrower), 6.02
or 6.04 or under any of the Side Letters.
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(B) Borrower shall fail to perform or observe any agreement,
covenant or obligation arising under Section 5.01, provided that (1) with
respect to Subsections 5.01(a)(i), (ii) and (iv), such failure shall continue
uncured for five (5) days after delivery of notice thereof, and (2) with respect
to Subsections 5.01(a)(iii) and (v), such failure shall continue uncured for
fifteen (15) days after delivery of notice thereof.
(ii) Borrower shall fail to perform or observe any agreement, covenant
or obligation arising under this Agreement (except those described in
subsections (a), (b) and (c)(i) above), and such failure shall continue uncured
for thirty (30) days after delivery of notice thereof, or such longer period of
time as is reasonably necessary to cure such Default, provided that Borrower has
commenced and is diligently prosecuting the cure of such Default and cures it
within ninety (90) days.
(iii) Borrower, General Partner or Managing Member shall fail to
perform or observe any agreement, covenant or obligation arising under any
provision of the Loan Documents other than this Agreement, which failure shall
continue after the end of any applicable grace period provided therein.
(d) Default Under Other Agreements.
(i) Borrower shall default beyond any applicable grace period in the
payment of any recourse Indebtedness in excess of $2,000,000 or any other event
shall occur or condition exist, if the effect of such default, event or
condition is to accelerate the maturity of any such recourse Indebtedness or any
such recourse Indebtedness shall become or be declared to be due and payable
prior to its stated maturity and the forgoing conditions are not cured within
thirty (30) days after the condition occurs.
(ii) Borrower is in default under any non-recourse Indebtedness of
either party that is equal to or in excess of $2,000,000 in the aggregate, since
the date of this Agreement, which default results in accelerated Indebtedness.
(iii) an Event of Default (as defined therein) occurs under the Miami
Lakes Loan Agreement, or a default occurs under the Guaranty.
(e) Bankruptcy, etc. (i) Borrower, General Partner or Managing
Member shall commence a voluntary case concerning itself under the Bankruptcy
Code; or (ii) an involuntary case is commenced against Borrower, General Partner
or Managing Member and the petition is not controverted within sixty (60) days,
or is not dismissed within ninety (90) days, after commencement of the case or
(iii) a custodian (as defined in the Bankruptcy Code) is appointed for, or takes
charge of, all or substantially all of the property of Borrower, General Partner
or Managing Member, or Borrower, General Partner or Managing Member commences
any other proceedings under any reorganization, arrangement, adjustment of debt,
relief of debtors, dissolution, insolvency or liquidation or similar law of any
jurisdiction whether now or hereafter in effect relating to Borrower, General
Partner or Managing Member, or there is commenced against Borrower, General
Partner or Managing Member any such proceeding which remains undismissed for a
period of ninety (90) days; or (iv) any order of relief or other order approving
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any such case or proceeding is entered; or (v) Borrower, General Partner or
Managing Member is adjudicated insolvent or bankrupt; or (vi) Borrower, General
Partner or Managing Member suffers any appointment of any custodian or the like
for it or any substantial part of its property to continue undischarged or
unstayed for a period of sixty (60) days; or (vii) Borrower, General Partner or
Managing Member makes a general assignment for the benefit of creditors; or
(viii) Borrower, General Partner or Managing Member shall fail to pay, or shall
state that it is unable to pay, or shall be unable to pay, its debts generally
as they become due; or (ix) Borrower, General Partner or Managing Member shall
call a meeting of its creditors with a view to arranging a composition or
adjustment of its debt; or (x) Borrower, General Partner or Managing Member
shall by any act or failure to act consent to, approve of or acquiesce in any of
the foregoing; or (xi) any corporate or partnership action is taken by Borrower,
General Partner or Managing Member for the purpose of effecting any of the
foregoing.
(f) ERISA. (i) Any Termination Event shall occur, or (ii) any Plan
shall incur an accumulated funding deficiency (as defined in Section 412 of the
Code or Section 302 of ERISA), whether or not waived, or fail to make a required
installment payment on or before the due date under Section 412 of the Code or
Section 302 of ERISA, or (iii) Borrower or a member of their respective ERISA
Controlled Group shall have engaged in a transaction which is prohibited under
Section 4975 of the Code or Section 406 of ERISA which could result in the
imposition of liability in excess of $3,000,000 on any of Borrower or any member
of their respective ERISA Controlled Group and an exemption shall not be
applicable or have been obtained under Section 408 of ERISA or Section 4975 of
the Code, or (iv) Borrower or any member of their respective ERISA Controlled
Group shall fail to pay when due an amount which it shall have become liable to
pay to the PBGC, any Plan or a trust established under Title IV of ERISA, or (v)
Borrower shall have received a notice from the PBGC of its intention to
terminate a Plan or to appoint a trustee to administer such Plan, which notice
shall not have been withdrawn within fourteen (14) days after the date thereof,
or (vi) a condition described in Section 4042(a)(1)-(4) of ERISA shall exist
with respect to an ERISA plan, or (vii) Borrower or a member of their respective
ERISA Controlled Group suffers a partial or complete withdrawal resulting in an
assessment of withdrawal liability in excess of $3,000,000 from a Multiemployer
Plan or is in default (as defined in Section 4219(c)(5) of ERISA) with respect
to payments to a Multiemployer Plan, or (viii) a proceeding shall be instituted
against any of Borrower or any member of their respective ERISA Controlled Group
to enforce Section 515 of ERISA, or (ix) any other event or condition shall
occur or exist with respect to any Employee Benefit Plan or Plan which could
subject Borrower or any member of their respective ERISA Controlled Group to any
tax, penalty or other liability in excess of $3,000,000 or the imposition of any
lien or security interest on Borrower or any member of their respective ERISA
Controlled Group, or (ix) with respect to any Multiemployer Plan, the
institution of a proceeding to enforce Section 515 of ERISA, to terminate such
Plan, the receipt of a notice of reorganization or insolvency under Sections
4241 or 4245 of ERISA, in any event which could result in liability in excess of
$3,000,000 to Borrower or any member of any of their ERISA Controlled Group, or
(xi) the assets of Borrower become or are deemed to be assets of an Employee
Benefit Plan.
(g) Judgments. One or more final judgments or decrees (i) in an
aggregate amount of $5,000,000 or more are entered against Borrower, General
Partner or Managing Member in any consecutive twelve (12) month period or (ii)
which, with respect to Borrower,
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General Partner or Managing Member could result in a Material Adverse Effect,
shall be entered by a court or courts of competent jurisdiction against any of
such Persons (other than any judgment as to which, and only to the extent, a
reputable insurance company has acknowledged coverage of such claim in writing)
and (x) any such judgments or decrees shall not be stayed (by appeal or
otherwise), discharged, paid, bonded or vacated within thirty (30) days or (y)
enforcement proceedings shall be commenced by any creditor on any such judgments
or decrees.
(h) First Priority Lien. The Loan Documents after delivery thereof
shall for any reason (other than pursuant to the terms thereof) cease to create
a valid and perfected first priority lien on the Collateral (subject to the
Permitted Liens) purported to be covered, hereby or thereby.
(i) Intentionally Deleted.
Section 7.02 Rights and Remedies. (a) Upon the occurrence of any Event
of Default described in Section 7.01(e), the unpaid principal amount of and any
and all accrued interest on the Loan and any and all accrued Fees and other
Obligations shall automatically become immediately due and payable, with all
additional interest thereon calculated at the Default Rate from the occurrence
of the Default in the case of Monetary Defaults or from the occurrence of the
Event of Default for all other Defaults until the Loan is paid in full and
without presentation, demand, or protest or other requirements of any kind
(including, without limitation, valuation and appraisement, diligence,
presentment, notice of intent to demand or accelerate and notice of
acceleration), all of which are hereby expressly waived by Borrower; and upon
the occurrence and during the continuance of any other Event of Default, Lender
may, by written notice to Borrower, declare the unpaid principal amount of and
any and all accrued and unpaid interest on the Loan and any and all accrued Fees
and other Obligations to be, and the same shall thereupon be, immediately due
and payable with all additional interest thereon calculated at the Default Rate
from the occurrence of the Default in the case of Monetary Defaults or from the
occurrence of the Event of Default for all other Defaults until the Loan is paid
in full and without presentation, demand, or protest or other requirements of
any kind (including, without limitation, valuation and appraisement, diligence,
presentment, notice of intent to demand or accelerate and notice of
acceleration), all of which are hereby expressly waived by Borrower.
(b) Lender may avail itself of any remedies available to it under the
Loan Documents or at law or equity.
SECTION 8. CASH COLLATERAL ACCOUNT; DEFERRED MAINTENANCE RESERVE
ACCOUNT
Section 8.1 Establishment of Cash Collateral Account. Lender has
established with the Bank, in the name of Lender, a trust account for the
benefit of Borrower (the "Cash Collateral Account"), for the purposes specified
herein. The Cash Collateral Account shall be beneficially owned by Borrower.
Only Gross Income from Operations, Loss Proceeds and proceeds from Capital
Events other than Casualty or Condemnation and other amounts permitted or
required to be deposited therein pursuant to this Section 8 shall be deposited
in the Cash Collateral Account, in accordance with the terms of this Agreement.
The Cash Collateral
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Account is and shall at all times remain in the name of Lender and under the
sole dominion and control of Lender, and Lender shall have the sole right to
make withdrawals from the Cash Collateral Account and to exercise all rights
with respect to the Account Collateral on deposit therein from time to time. All
Account Collateral on deposit from time to time in the Cash Collateral Account
(or its constituent Sub-Accounts) shall be held in the Cash Collateral Account
in accordance with the provisions of this Section 8. The Cash Collateral Account
is, and shall at all times be maintained as, an Eligible Account.
Section 8.2 Pledge and Grant of Security Interest. As collateral
security for the Obligations, Borrower hereby (i) grants to Lender the right to
receive, and (ii) pledges and assigns to Lender a continuing possessory lien
upon and grants a security interest in, the Account Collateral (except for
Account Collateral distributed to the Distribution Account in accordance with
the terms hereof) from the date of the establishment of the Cash Collateral
Account until the termination thereof pursuant to the terms hereof.
Section 8.3 Sub-Accounts. The Cash Collateral Account shall consist of
sub-accounts as follows:
(i) the Basic Carrying Costs Sub-Account;
(ii) the Debt Service Sub-Account;
(iii) the Replacement Reserve Sub-Account;
(iv) the Capital Event Sub-Account;
(v) the Business Interruption Insurance Sub-Account;
(vi) the Temporary Condemnation Proceeds Sub-Account; and
(vii) the Insurance Proceeds Sub-Account.
Section 8.4 Deposit of Proceeds On Closing Date. On the date hereof,
the Borrower has deposited into the Cash Collateral Account and Lender has
caused to be allocated among the Sub-Accounts from the proceeds of the Loan
and/or from other sources made available by the Borrower, the amounts specified
on Schedule 8, which amounts shall be allocated as set forth on such Schedule.
Section 8.5 Deposit and Allocation of Funds After the Closing Date. (a)
To the extent funds are available in the Sub-Accounts for reallocation in
accordance with, and after giving effect to, the provisions of this Section 8,
the failure of any such reallocation to be made in accordance with this Section
8 shall not give rise to an Event of Default (unless such failure is due to the
actions or omissions of the Borrower, its affiliates or agents). Notwithstanding
the foregoing or any other provision of this Section 8, the accuracy or
inaccuracy of any statement of account in respect of the Sub-Accounts shall not
affect the obligations of the Borrower to pay all amounts due in respect of the
Obligations on the due dates therefor.
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Borrower shall pay all Gross Income from Operations or any other funds
it elects to deposit directly to the Cash Collateral Account, which amounts
shall be deposited on a daily basis between the first day of each month and the
tenth day of each month and otherwise no less frequently than two times each
week.
To the extent that sufficient funds are available in the Cash
Collateral Account, Lender shall direct the Bank to further allocate the Gross
Income from Operations so deposited as follows:
First, to the Debt Service Sub-Account in an amount sufficient to cause the
balance therein to equal the Monthly Debt Service Payment Amount due in
respect of the Loan on the next scheduled Payment Date;
Second, to the Basic Carrying Costs Sub-Account in amounts sufficient to
cause the balance therein to equal the sum of (i) all year-to-date Basic
Carrying Cost Monthly Installments relating to the relevant year or other
payment period (less amounts actually expended for such year or other
relevant payment period in respect of such Basic Carrying Costs), and (ii)
the projected Basic Carrying Costs Monthly Installments of the Real Property
Assets for the next ensuing month;
Third, to the Replacement Reserve Sub-Account in an amount sufficient to
cause the balance therein to equal the sum of (i) all unexpended Replacement
Reserve Monthly Installments attributable to the Real Property Assets
through the then current month, and (ii) the respective Replacement Reserve
Monthly Installments for the next ensuing month; and
Fourth, the balance of such Gross Income from Operations shall be deposited
in the Distribution Account, subject to the provisions of Section 8.8.
Lender may, in its sole discretion, direct the Bank to reallocate the Account
Collateral from time to time, if Lender shall determine that insufficient funds
are available from Gross Income from Operations during any month to pay the
Monthly Debt Service Payment Amount attributable to and due in respect of such
month, or to fully fund the Basic Carrying Costs Sub-Account and Lender shall
notify Borrower of any such reallocation promptly thereafter.
(b) Monthly Debt Service Payment Amounts and Sub-Account Deposits. No
later than three (3) Business Days prior to each Payment Date, Lender shall
deliver to Borrower a certificate setting forth (i) the amount of the Monthly
Debt Service Payment Amount, the Basic Carrying Costs Monthly Installments and
the Replacement Reserve Monthly Installments, for the relevant month, and (ii)
whether sufficient Gross Income from Operations has been received from the Real
Property Assets in such month to fund such required Monthly Debt Service Payment
Amount, the Basic Carrying Costs Monthly Installments and the Replacement
Reserve Monthly Installments. If such certificate states that the required
amount of funds is not available from Gross Income from Operations collected
from the Real Property Assets in such month, the Borrower shall deposit an
amount equal to such deficiency in the Cash Collateral Account, for
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allocation to the Monthly Debt Service Payment Amount, the Basic Carrying Costs
Monthly Installments and/or the Replacement Reserve Monthly Installments (as the
case may be) not less than one (1) Business Day prior to the relevant Payment
Date. Failure to so deposit the amount of such deficiency shall constitute an
Event of Default. Borrower acknowledges that the failure of Lender to deliver
the certificate within the time frame set forth in this Section 8.5(b) shall not
relieve Borrower of the obligation to deposit the amount of any such deficiency.
Section 8.6 Permitted Investments. Upon the request of the Borrower,
Lender shall direct the Bank to invest and reinvest any balances in the Cash
Collateral Account and the Deferred Maintenance Reserve Account from time to
time in Permitted Investments as instructed by the Borrower, provided that (i)
if the Borrower fails to so instruct Lender, or upon the occurrence and
continuation of an Event of Default, Lender may direct the Bank to invest and
reinvest such balances in Permitted Investments as Lender shall determine in its
sole discretion, (ii) the maturities of the Permitted Investments on deposit in
the Cash Collateral Account and the Deferred Maintenance Reserve Account shall
be selected and coordinated to become due not later than one day before any
disbursements from the Deferred Maintenance Reserve Account or the applicable
Sub-Accounts must be made, (iii) all such Permitted Investments shall be held in
the name of and be under the sole dominion and control of Lender and subject at
all times to the terms hereof, and (iv) no Permitted Investment shall be made
unless Lender shall have and continue to have a perfected first priority Lien in
such Permitted Investment securing the obligations of the Borrower hereunder and
under the other Loan Documents and all filings and other actions necessary to
ensure the validity, perfection, and first priority of such Lien shall have been
taken. It is the intention of the parties hereto that all Account Collateral (or
as much thereof as Lender may reasonably arrange to invest) shall at all times
be invested in Permitted Investments, and that the Cash Collateral Account and
the Deferred Maintenance Reserve Account shall continue to be maintained even if
there is "zero balance" in any such account at any time. All funds in the Cash
Collateral Account and the Deferred Maintenance Reserve Account which are
invested in a Permitted Investment shall be deemed to be held in the Cash
Collateral Account and the Deferred Maintenance Reserve Account, as the case may
be, for all purposes of this Agreement and the other Loan Documents. Lender
shall have no liability for any loss in investments of funds in the Cash
Collateral Account or the Deferred Maintenance Reserve Account that are invested
in Permitted Investments and no such loss shall affect the Borrower's
obligations to fund, or liabilities for funding, the Cash Collateral Account or
the Deferred Maintenance Reserve Account, and any respective Sub-Accounts, as
the case may be. Borrower agrees to include all earnings, if any, on the Cash
Collateral Account and the Deferred Maintenance Reserve Account relating to
amounts on deposit from time to time therein which are derived from the Real
Property Assets as income of the Borrower for federal and applicable state tax
purposes.
Section 8.7 Earnings on Account Collateral; Monthly Statements. The
Cash Collateral Account and the Deferred Maintenance Reserve Account shall be
maintained as Eligible Accounts the balance of which are or shall be invested in
Permitted Investments in accordance herewith. All interest or other earnings
(whether by virtue of Permitted Investments or otherwise) accruing on the
Account Collateral on deposit in the Cash Collateral Account and the Deferred
Maintenance Reserve Account, to the extent that such interest or earnings cause
the balance in such Accounts to exceed the amount required to be maintained
therein pursuant to the
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terms of this Agreement, shall, in each case, be held and disbursed as part of
the Account Collateral. All risk of loss in respect of the Account Collateral on
deposit in the Cash Collateral Account and the Deferred Maintenance Reserve
Account shall be borne by the Borrower. Lender shall direct the Bank to provide
to Lender and Borrower a monthly statement of account showing deposits into and
disbursements (or transfers or reallocations, as the case may be) from each
Sub-Account of the Cash Collateral Account and the Deferred Maintenance Reserve
Account.
Section 8.8 Disbursement of Account Collateral. Subject to the
provisions of this Section 8.8 and Section 8.10, disbursements shall be made (to
the extent available) to or for the benefit of the Borrower in the following
order of priority and manner (provided that nothing herein contained shall be
construed to impose liability upon Lender for any shortfalls in the amounts on
deposit in the Cash Collateral Account or to excuse the Borrower from its
obligation to make all payments required to be made by the Borrower under this
Agreement and the other Loan Documents); provided, however, that following the
occurrence and during the continuation of an Event of Default, after application
of amounts on deposit in the Cash Collateral Account in accordance with this
Section 8.8, Lender shall have no obligation to make any disbursement to or for
the benefit of Borrower hereunder, and all amounts which are retained by Lender
during the continuance of an Event of Default shall be held as collateral for
the satisfaction of the Obligations hereunder and under the other Loan Documents
and shall be held subject to and in accordance with the provisions of this
Agreement and shall be available for reallocation in accordance with this
Section 8:
(a) Lender shall, to the extent available, apply the funds on deposit
in the Basic Carrying Costs Sub-Account to the payment of the Basic Carrying
Costs relating to the Real Property Assets not later than the date following
which such payment would be delinquent.
(b) Lender shall, to the extent available from the Debt Service
Sub-Account, pay the amount of the required Monthly Debt Service Payment
Amount (and, as applicable in accordance with the provisions contained
herein, from the Borrower's other Account Collateral) on the related Payment
Date.
(c) Lender shall, to the extent available from amounts on deposit from
time to time in the Replacement Reserve Sub-Account, provided no Event of
Default has occurred and is continuing, make disbursements to the Borrower
for payment of replacements to Personal Property (as defined in the Security
Instruments) and capital expenditures for the capital items set forth in the
Annual Operating Budget for each of the Real Property Assets, which
disbursements shall be made (i) no more often than once a month, (ii) in a
maximum amount not to exceed the amount of replacements and capital items
set forth in the Annual Operating Budget for each Real Property Asset, and
(iii) within 3 Business Days of Lender's receipt of a Replacement Reserve
Disbursement Request, which Replacement Reserve Disbursement Request shall
list the specific replacements or capital items for which the disbursement
is requested. Each Replacement Reserve Disbursement Request shall be
accompanied by a certificate of the Borrower stating that (A) the
replacements and/or capital items for which disbursement is requested are
included in the Annual Operating Budget (as amended or varied, if
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applicable, in accordance with the terms of this Agreement) and (B) all
replacements and capital items relating to prior disbursements have been
paid for in full and have been made in accordance with all Applicable Laws
and performed in a good and workmanlike manner. Upon request of Lender,
Borrower shall also provide copies of paid invoices for all replacements or
capital items for which prior disbursements were requested. Lender shall not
be obligated to make disbursements from the Replacement Reserve Sub-Account
for the costs of routine maintenance to the Real Property Asset(s) or for
costs which are to be paid from funds on deposit in the Deferred Maintenance
Reserve Account. Borrower shall permit Lender or Lender's representatives
(including an independent person such as an engineer, architect or
consultant) to inspect the related Real Property Asset and the progress of
replacements or capital items prior to disbursing any funds from the
Replacement Reserve Sub-Account.
(d) Lender shall, to the extent available after payment of all amounts
set forth in clauses (a), (b) and (c) above, and provided no Event of
Default has occurred and is continuing hereunder, disburse all remaining
Account Collateral generated by the Real Property Assets to the Distribution
Account. All disbursements to or in respect of the Distribution Account
shall be made in accordance, and in strict compliance, with and as set forth
in irrevocable payment instructions delivered by the Borrower to the Lender
on the date hereof. Borrower may withdraw any or all sums in the
Distribution Account in accordance with the provisions of Section 2.13(a)
hereof.
(e) On each Payment Date Lender shall apply the funds on deposit in the
Capital Event Sub-Account (other than Casualty Insurance Proceeds or
Condemnation Proceeds which shall be applied by Lender in accordance with
the terms of Section 4.2 of the Security Instruments), together with
proceeds of any Capital Events received or to be applied on such Payment
Date, to the prepayment of the Loans, first, to reduce the outstanding
principal balance of the Loan, together with any unpaid Fees, accrued
interest thereon and any other sums due under the Note or the other Loan
Documents, and second, provided no Default or Event of Default has occurred
and is continuing, to the Distribution Account.
Section 8.9 Capital Event Proceeds. (a) In the event of a Casualty with
respect to one or more of the Real Property Assets, unless Lender elects or is
required pursuant to the Security Instruments to make the Casualty Insurance
Proceeds available to the Borrower for Restoration (as defined in the Security
Instruments), Lender and Borrower shall cause such Casualty Insurance Proceeds
(net of customary and reasonable settlement and collection costs) to be paid by
the respective insurers directly to the Capital Event Sub-Account, whereupon
Lender shall apply the same as a prepayment to reduce the Loan on the next
Payment Date in accordance with the terms of the Security Instruments and
Section 2.12 of this Agreement; provided, however, that all Casualty Insurance
Proceeds (net of customary and reasonable settlement and collection costs) in
respect of any insurance policy providing business interruption coverage
("Business Interruption Insurance Proceeds") shall be maintained in the Cash
Collateral Account, to be applied by Lender in the same manner as Gross Income
from Operations received with respect to the operation of the Real Property
Assets; provided further, however, that in the event the proceeds of any such
business interruption insurance policy are paid in a lump sum in
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advance, Lender shall hold such business interruption insurance proceeds in the
Business Interruption Insurance Sub-Account, shall estimate, in Lender's
reasonable discretion, the number of months required for the Borrower to restore
the damage caused by the Casualty to the related Real Property Asset, divide the
aggregate Business Interruption Insurance Proceeds by such number of months, and
disburse from the Business Interruption Insurance Sub-Account into the Cash
Collateral Account each month during the performance of the related Restoration;
such monthly installment of said Business Interruption Insurance Proceeds to be
applied by Lender in the same manner as Gross Income from Operations.
(b) In the event Lender elects or is required to make available
Casualty Insurance Proceeds to the Borrower for Restoration of any Real Property
Asset, Lender and the Borrower shall cause such proceeds to be placed in, and,
provided no Event of Default shall have occurred and be continuing, hold such
proceeds (net of customary and reasonable settlement and collection costs) in,
the Insurance Proceeds Sub-Account, and shall disburse same in accordance with
the provisions of Section 4.2 of the related Security Instrument.
(c) Unless Lender elects or is required pursuant to this Agreement or
the Security Instruments to make Condemnation Proceeds available to the Borrower
for restoration, Lender and such Borrower shall cause such Condemnation Proceeds
(net of customary and reasonable settlement and collection costs) to be paid by
the relevant Governmental Authority directly to the Capital Event Sub-Account,
whereupon Lender shall apply the same as a prepayment to reduce the Loan in
accordance with the terms of the Security Instruments and Section 2.12 of this
Agreement; provided, however, that any such Condemnation Proceeds received in
connection with a temporary Condemnation shall be maintained in the Cash
Collateral Account, to be applied by Lender in the same manner as Gross Income
from Operations; provided further, however, that in the event the proceeds of
any such temporary Condemnation are paid in a lump sum in advance, Lender shall
hold such Condemnation Proceeds in the Temporary Condemnation Proceeds
Sub-Account, shall estimate, in Lender's reasonable discretion, the number of
months required for such temporary Condemnation to cease, shall divide the
aggregate Condemnation Proceeds in connection with such temporary Condemnation
by such number of months, and shall disburse from the Temporary Condemnation
Proceeds Sub-Account into the Cash Collateral Account each month during the
continuance of such temporary Condemnation; such monthly installment of said
Condemnation Proceeds to be applied by Lender in the same manner as Gross Income
from Operations.
(d) In the event that Condemnation Proceeds are to be applied toward
Restoration, Lender and the Borrower shall cause such proceeds to be placed in,
and, provided no Event of Default shall have occurred and be continuing, hold
such proceeds (net of customary and reasonable settlement and collection costs)
in, the Insurance Proceeds Sub-Account, and shall disburse same in accordance
with the provisions of Section 4.2 of the Security Instruments.
(e) If any Loss Proceeds are received by Borrower, such Loss Proceeds
(net of customary and reasonable settlement and collection costs) shall be
received in trust for Lender, shall be segregated from other funds of Borrower,
and shall be forthwith paid into the Capital Event Sub-Account or the Insurance
Proceeds Sub-Account as required hereby and as directed by Lender to be applied
or disbursed in accordance with this Agreement. Any Loss Proceeds made
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available to Borrower for Restoration in accordance herewith, to the extent not
used by Borrower in connection with, or to the extent they exceed the cost of
such Restoration, shall be deposited into the Capital Event Sub-Account,
whereupon Lender shall apply the same as a prepayment to reduce the Loan in
accordance with the terms of Section 8.9(f) of this Agreement.
(f) Borrower shall cause all proceeds (net of customary and reasonable
settlement and collection costs) of any Capital Event other than a Casualty or
Condemnation to be deposited directly into the Capital Event Sub-Account for
application in accordance with the terms of this Agreement.
Section 8.10 Remedies Upon Default in Respect of Account Collateral.
Notwithstanding the foregoing provisions of this Section 8, upon the occurrence
and during the continuance of an Event of Default, Lender shall have no
obligation to make any disbursement of funds from the Cash Collateral Account
and the Deferred Maintenance Reserve Account to or on behalf of Borrower, and
Lender shall have the immediate and continuing right to withdraw funds on
deposit in the Cash Collateral Account and the Deferred Maintenance Reserve
Account and deposit such funds into the Capital Event Sub-Account as Account
Collateral, and to exercise all rights and remedies afforded to Lender under
this Agreement and the other Loan Documents, or otherwise at law or in equity in
respect of the security for the Loan, in respect of the Cash Collateral Account,
the Deferred Maintenance Reserve Account and Account Collateral on deposit
therein, including, without limitation, the right to withdraw and apply all
Account Collateral on deposit in the Sub-Accounts and the Deferred Maintenance
Reserve Account to the Obligations of the Borrower; provided, however, that no
such application shall be deemed to have been made by Lender, by operation of
law or otherwise, unless and until actually made by Lender.
Section 8.11 Establishment of Deferred Maintenance Reserve Account.
Lender shall establish with the Bank, in the name of Lender, the Deferred
Maintenance Reserve Account. Only amounts permitted or required to be deposited
therein pursuant to this Section 8 shall be deposited in the Deferred
Maintenance Reserve Account, in accordance with the terms of this Agreement. The
Deferred Maintenance Reserve Account is and at all times shall remain in the
name of the Lender and shall be under the sole dominion and control of Lender,
and Lender shall have the sole right to make withdrawals from the Deferred
Maintenance Reserve Account and to exercise all rights with respect to the
amounts on deposit therein from time to time. All amounts on deposit from time
to time in the Deferred Maintenance Reserve Account (or any of its constituent
sub-accounts) shall be held therein in accordance with the provisions of this
Section 8. The Deferred Maintenance Reserve Account shall at all times be
maintained as an Eligible Account.
Section 8.12 Deposits into and Maintenance of Deferred Maintenance
Reserve Account. On the date hereof, Borrower has deposited into the Deferred
Maintenance Reserve Account with respect to each Real Property Asset the related
Deferred Maintenance Reserve Amount for such Real Property Asset. Amounts on
deposit in the Deferred Maintenance Reserve Account with respect to the work to
be completed at each of the Real Property Assets shall be maintained by Lender
and disbursed in accordance with Section 8.13. Except as set forth in
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Section 8.14, Borrower shall not be obligated to replenish any amounts properly
drawn from the Deferred Maintenance Reserve Account.
Section 8.13 Disbursements from Deferred Maintenance Reserve Account.
Lender shall, to the extent available from amounts on deposit from time to time
in the Deferred Maintenance Reserve Account, provided no Event of Default has
occurred and is continuing, make disbursements to the Borrower for payment of
the deferred maintenance items set forth on Schedule 2 for each of the Real
Property Assets, which disbursements shall be made (i) no more often than once a
month, (ii) in a maximum amount not to exceed the amounts set forth on Schedule
2 for each such item, and (iii) within 3 Business Days of Lender's receipt of a
Deferred Maintenance Reserve Account Disbursement Request, which Deferred
Maintenance Reserve Account Disbursement Request shall list the specific items
for which the disbursement is requested and set forth the quantity and price of
each item to be purchased, the price of all materials to be used, and the cost
of all contracted labor or other services to be performed in connection with
such replacements or capital items. Each Deferred Maintenance Reserve Account
Disbursement Request shall be accompanied by (A) a certificate of the Borrower
stating that (1) the items for which disbursement is requested are included in
Schedule 2 (as amended, or varied, if applicable, in accordance with the terms
of this Agreement) and (2) all items relating to prior disbursements have been
paid for in full and have been made in accordance with all Applicable Laws and
performed in a good and workmanlike manner, and (B) copies of paid invoices for
all items for which prior disbursements were requested. Lender shall not be
obligated to make disbursements from the Deferred Maintenance Reserve Account
for the costs of routine maintenance to the Real Property Asset(s) or for costs
which are to be paid from funds on deposit in the Replacement Reserve
Sub-Account. Borrower shall permit Lender or Lender's representatives (including
an independent person such as an engineer, architect or consultant) to inspect
the related Real Property Asset and the progress of replacements or capital
items prior to disbursing any funds from the Deferred Maintenance Reserve
Account. Upon completion of all deferred maintenance items set forth on Schedule
2 with respect to a particular Real Property Asset, to the extent any funds
remain on deposit in the Deferred Maintenance Reserve Account which are
allocable to such Real Property Asset, Lender shall disburse such excess funds
to Borrower promptly upon receipt of request by Borrower accompanied by evidence
satisfactory to Lender that all such deferred maintenance items have been
completed and paid for in full.
Section 8.14 Deferred Maintenance Reserve Account Shortfalls. The
Borrower shall deliver to Lender, with respect to each Real Property Asset, a
certified monthly reconciliation of the estimated costs to complete the required
deferred maintenance work described on Schedule 2 to the amounts then on deposit
in the Deferred Maintenance Reserve Account, which reconciliation (i) shall
account for any increased or additional costs projected to be incurred in
connection with the completion of such items set forth on Schedule 2 and (ii)
state whether sufficient funds are on deposit in the Deferred Maintenance
Reserve Account to fund the completion of all of such items. If the funds on
deposit in the Deferred Maintenance Reserve Account are insufficient to fund all
remaining costs required to complete all items listed on Schedule 2 with respect
to the related Real Property Asset, the amounts required to cover any such
shortfall shall be deposited in the Deferred Maintenance Reserve Account by the
Borrower within 5 Business Days after delivery of the reconciliation, and, if
the work relating to the item in
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respect of which a shortfall exists has not been commenced, the Borrower shall
not commence such work until such deposit is made.
Section 8.15 Annual Adjustment of Deferred Maintenance Reserve Account
Shortfalls. With respect to any Real Property Asset, Borrower may prepare and
deliver to Lender (not more often than once during each year) a request (each, a
"Deferred Maintenance Reserve Account Reallocation Request") for reallocation of
Deferred Maintenance Reserve Amounts then on deposit in the Deferred Maintenance
Reserve Account with respect to such Real Property Asset for deferred
maintenance items (i) which have been completed, paid for in full from the
Deferred Maintenance Reserve Account and the cost of which is less than the
amount allocated to such item on Schedule 2 or (ii) the cost of which shall
exceed the amount allocated to such item on Schedule 2. Such request shall
contain a certificate of the Borrower certifying as to (a) the amount budgeted
for the completion of the deferred maintenance items in Schedule 2, (b) in the
case of clause (i) above, the fact that all costs associated with such deferred
maintenance items have been fully paid from the Deferred Maintenance Reserve
Account and the actual costs associated with such item, (c) in the case of
clause (ii) above, the estimated cost of completion of such deferred maintenance
item based on accompanied written proposals of contractors, and (d) that
following any reallocation made pursuant to this Section 8.15, the funds on
deposit in the Deferred Maintenance Reserve Account will be sufficient for the
completion of all deferred maintenance items for such Real Property Asset as
reflected in Schedule 2. Borrower may not request that funds on deposit in the
Deferred Maintenance Reserve Account which are allocable to a Real Property
Asset be reallocated for use with respect to another Real Property Asset. Lender
shall approve or disapprove each Deferred Maintenance Reserve Account
Reallocation Request in writing within fifteen (15) days of receipt thereof
(such approval not to be unreasonably withheld or delayed). If Lender does not
approve or disapprove such Deferred Maintenance Reserve Account Reallocation
Request within such fifteen day period, Borrower may deliver a second notice to
Lender requesting such approval or disapproval at the expiration of such fifteen
day period and, if Lender does not approve or disapprove such Deferred
Maintenance Reserve Account Reallocation Request within fifteen (15) days of
receipt thereof, such Request shall be deemed approved.
Section 8.16 Performance. All work to be performed in connection with
the completion of the items set forth on Schedule 2 shall be commenced promptly
after the date hereof and shall be diligently prosecuted to completion in a good
and workmanlike manner, in accordance with all Applicable Laws and substantially
in accordance with all applicable plans and specifications. Lender and Lender's
agents shall have the right, from time to time, (i) to inspect any work being
done by Borrower in respect of such items and (ii) to request copies of all
information relating to such work, including, without limitation, all relevant
plans and specifications. From time to time upon the request of Lender and in
each case upon completion of any item set forth on Schedule 2, the Borrower
shall deliver to Lender a certificate of a duly licensed, independent architect
or engineer, as the case may be, stating that all of such work (or all such work
completed to date) has been performed in compliance with all Applicable Laws and
substantially in accordance with all applicable plans and specifications, or, if
such work is of a nature not requiring an architect or engineer (i.e., if such
work is non-structural, decorative or is to be performed at an aggregate cost of
no more than $100,000), the Borrower shall deliver a certificate of the Borrower
certifying as to the foregoing.
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Section 8.17 Determination of Replacement Reserve Monthly Installment.
(a) The amount of each Replacement Reserve Monthly Installment with respect to
each Real Property Asset shall equal $4.17 per pad for such Real Property Asset.
The calculation of each Replacement Reserve Monthly Installment shall be made by
Lender based on the information contained in the financial reports submitted by
Borrower pursuant to this Agreement and shall be conclusive absent manifest
error. (b) Notwithstanding anything to the contrary contained herein, for so
long as (i) Borrower owns the Real Property Assets encumbered by the Security
Instruments, (ii) Managing Member remains the managing member of the general
partner of Borrower, (iii) Managing Member remains a wholly owned subsidiary of
Sun Communities, Inc., and (iv) Sun Communities Operating Limited Partnership
retains a senior unsecured debt rating of BBB- or better by S&P and of Baa3 or
better by Moody's, Borrower shall not be required to establish or maintain the
Replacement Reserve Sub-Account.
Section 8.18 Annual Adjustment of Replacement Reserve Monthly
Installment. Borrower may prepare and deliver to Lender (not more often than
once during each year) within sixty (60) Business Days prior to the commencement
of each year, a request (each, a "Replacement Reserve Reallocation Request") for
reallocation of Replacement Reserves then on deposit in the Replacement Reserve
Sub-Account in respect of replacements of Fixtures and Equipment or capital
expenditure projects at the Real Property Assets which (i) were included as a
line item in such year but were not commenced (or, as the case may be, which
were commenced but not completed) during such year, but which Borrower proposes
to include as a line item in the Annual Operating Budget for the ensuing year,
or (ii) have been completed and which have been paid for in full from the
Replacement Reserve Sub-Account. Such request shall contain a certificate of the
Borrower certifying as to (a) the replacements or capital expenditure projects
set forth in the then current Annual Operating Budget with respect to which
Replacement Reserves were required pursuant to this Agreement, (b) the amount
budgeted for the completion of such replacements or capital expenditure project
in the then current Annual Operating Budget, (c) in the case of clause (i)
above, that such replacements or capital expenditure project were not commenced
(or, as the case may be, were commenced but not completed) during such year, or,
in the case of clause (ii) above, the actual cost of completion of such
replacements or capital expenditure projects, (d) in the case of clause (ii)
above, the fact that all costs associated with such replacements or capital
expenditure projects have been fully paid from the Replacement Reserve
Sub-Account and (e) that following any reallocation made pursuant to this
Section 8.18, the funds on deposit in the Replacement Reserve Sub-Account will
be sufficient for the completion of all replacements and capital expenditure
projects reflected in the Annual Operating Budget for the then current year.
Lender shall approve or disapprove each Replacement Reserve Reallocation Request
in writing within fifteen (15) days of receipt thereof (such approval not to be
unreasonably withheld or delayed). If Lender does not approve or disapprove such
Replacement Reserve Reallocation Request within such fifteen day period,
Borrower may deliver a second notice to Lender requesting such approval or
disapproval at the expiration of such fifteen day period and, if Lender does not
approve or disapprove such Replacement Reserve Reallocation Request within
fifteen (15) days of receipt thereof, such Request shall be deemed approved.
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SECTION 9. MISCELLANEOUS.
Section 9.01 Payment of Lender's Expenses, Indemnity, etc.
(a) Borrower shall:
(i) pay, without duplication and subject to any limitations set forth
elsewhere in this Agreement, all reasonable out-of-pocket costs and expenses of
Lender in connection with Lender's due diligence review of the Collateral, the
negotiation, preparation, execution and delivery of the Loan Documents and the
documents and instruments referred to therein, the creation, perfection or
protection of Lender's Liens in the Collateral (including, without limitation,
fees and expenses for title insurance, property inspections, appraisals,
consultants, surveys, lien searches, filing and recording fees, and escrow fees
and expenses), all internal valuations and Appraisals of the Real Property
Assets made by Lender, in connection with the administration of the Loan and any
amendment, waiver or consent relating to any of the Loan Documents including
releases of Release Properties (including, without limitation, as to each of the
foregoing, the reasonable fees and disbursements of any outside or special
counsel to Lender) and of Lender in connection with the preservation of rights
under, any amendment, waiver or consent relating to, and enforcement of, the
Loan Documents and the documents and instruments referred to therein or in
connection with any restructuring or rescheduling of the Obligations (including,
without limitation, the reasonable fees and disbursements of counsel for
Lender);
(ii) pay, and hold Lender harmless from and against, any and all
present and future stamp, excise and other similar taxes with respect to the
foregoing matters and hold Lender harmless from and against any and all
liabilities with respect to or resulting from any delay or omission (other than
to the extent attributable to Lender) to pay such taxes; and
(iii) indemnify Indemnified Party (herein defined) from, and hold each
of them harmless against, any and all losses, liabilities, claims, damages,
expenses, obligations, penalties, actions, judgments, suits, costs or
disbursements of any kind or nature whatsoever (including, without limitation,
the reasonable fees and disbursements of counsel for such Indemnified Party in
connection with any investigative, administrative or judicial proceeding
commenced or threatened, whether or not such Indemnified Party shall be
designated a party thereto) that may at any time (including, without limitation,
at any time following the payment of the Obligations) be imposed on, asserted
against or incurred by any Indemnified Party as a result of (A) the execution,
delivery or performance of any Loan Document and the exercise by Lender of their
rights and remedies (including, without limitation, foreclosure) under the Loan
Documents (B) any accident, injury to or death of persons or loss of or damage
to property occurring in, on or about the Real Property Assets or any part
thereof or on the adjoining sidewalks, curbs, adjacent property or adjacent
parking areas, streets or ways; (C) any use, nonuse or condition in, on or about
the Real Property Assets or any part thereof or on the adjoining sidewalks,
curbs, adjacent property or adjacent parking areas, streets or ways; (D)
performance of any labor or services or the furnishing of any materials or other
property in respect of the Real Property Assets or any part thereof; (E) any and
all claims and demands whatsoever which may be asserted against Lender by reason
of any alleged obligations or undertakings on its part to perform or discharge
any of the terms, covenants, or agreements contained in any Lease; (F) the
payment of any commission,
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charge or brokerage fee to anyone which may be payable in connection with the
funding of the Loan evidenced by the Note and secured by the Security
Instrument; or (G) any misrepresentation made by Borrower in the Security
Instrument or any other Loan Document (but, in each case, excluding, as to any
Indemnified Party, any such losses, liabilities, claims, damages, expenses,
obligations, penalties, actions, judgments, suits, costs or disbursements
incurred solely by reason of the gross negligence or willful misconduct of such
Indemnified Party as finally determined by a court of competent jurisdiction).
Any amounts payable to Lender by reason of the application of this Section 9.01
shall become immediately due and payable and shall bear interest at the Default
Rate from the date loss or damage is sustained by Lender until paid
(collectively, "Indemnified Liabilities"). Borrower further agrees that, without
Lender's prior written consent, it will not enter into any settlement of a
lawsuit, claim or other proceeding arising or relating to any Indemnified
Liability unless such settlement includes an explicit and unconditional release
from the party bringing such lawsuit, claim or other proceeding of each
Indemnified Party. Notwithstanding anything contained herein to the contrary,
Borrower shall not be liable to pay to Lender any amounts with respect to or in
connection with a Real Property Asset for claims, based upon an event occurring
after the consummation of a transfer by or in lieu of foreclosure of such Real
Property Asset to the extent such amounts relate solely to the period after the
date of the consummation of such transfer of Collateral. Borrower's obligations
under this Section shall survive the termination of this Agreement and the
payment of the Obligations.
(b) For purposes of this Section 9.01, the term "Indemnified Party"
means its affiliates, subsidiaries, parties to whom Indemnitee sells interests
in the Loan, the successors and assigns of each and its and their directors,
officers, employees, attorneys and agents.
(c) Borrower shall at its sole cost and expense, protect, defend,
indemnify, release and hold harmless the Indemnified Parties from and against
any and all losses (including, without limitation, attorneys' fees and costs
incurred in the investigation, defense, and settlement of losses incurred in
correcting any prohibited transaction or in the sale of a prohibited loan, and
in obtaining any individual prohibited transaction exemption under ERISA that
may be required, in Lender's sole discretion) that Lender may incur, directly or
indirectly, as a result of a default under Sections 4.12(b) or (c) or 5.11(b).
Section 9.02 Notices. Except as otherwise by expressly provided herein,
all notices, requests and demands to or upon the respective parties hereto to be
effective shall be in writing (including by facsimile, telex, or cable
communication), and shall be deemed to have been duly given or made when
delivered by hand, or five (5) days after being deposited in the United States
mail, certified or registered, postage prepaid, or, in the case of telex notice,
when sent, answerback received, or, in the case of facsimile notice, when sent,
answerback received, or, in the case of a nationally recognized overnight
courier service, one (1) Business Day after delivery to such courier service,
addressed, in the case of Borrower and Lender, at the addresses specified below,
or to such other addresses as may be designated by any party in a written notice
to the other parties hereto, provided that for all notices given in accordance
with Section 2.11 of this Agreement shall not be effective until received by
Lender.
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If to Lender, as follows:
Lehman Brothers Holdings Inc.
d/b/a Lehman Capital, a division of
Lehman Brothers Holdings Inc.
Three World Financial Center
New York, New York 10285
Facsimile Number: (212) 528-6658
Attention: Commercial Mortgage Loan Surveillance
LaSalle National Bank
135 South LaSalle Street, Suite 1740
Chicago, Illinois 60674-4107
Facsimile Number: (312) 904-2084
Attention: Asset-Backed Securities Trust Services Group
GMAC Commercial Mortgage Corporation
650 Dresher Road
Horsham, Pennsylvania 19044
Facsimile Number: (212) 328-3622
Attention: Servicing Manager
With a copy to: GMAC Commercial Mortgage Corporation
650 Dresher Road
Horsham, Pennsylvania 19044
Facsimile Number: (212) 328-3622
Attention: General Counsel
If to Borrower: Sun Communities Funding Limited Partnership
c/o Sun Communities Operating Limited Partnership
31700 Middlebelt Road, Suite 145
Farmington Hills, Michigan 48334
Attention: Jeffrey P. Jorissen
Facsimile Number: (810) 932-3072
With a copy to: Jaffe, Raitt, Heuer & Weiss
One Woodward Avenue, Suite 2400
Detroit, Michigan 48226
Attention: Arthur A. Weiss, Esq.
Facsimile Number: (810) 961-8358
Section 9.03 Successors and Assigns. This Agreement shall be binding
upon and inure to the benefit of Borrower, Lender, all future holders of the
Note and their respective successors and assigns.
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Section 9.04 Amendments and Waivers. (a) Neither this Agreement, the
Note, any other Loan Document to which Borrower or General Partner is a party
nor any terms hereof or thereof may be amended, supplemented, modified or waived
other than in a writing executed by Borrower, General Partner and Lender.
(b) In the case of any waiver, Borrower and Lender shall be restored to
their former position and rights hereunder and under the Note and the other Loan
Documents, and any Default or Event of Default waived shall be deemed to be void
and not continuing; but no such waiver shall extend to any subsequent or other
Default or Event of Default, or impair any right consequent thereon.
Section 9.05 No Waiver; Remedies Cumulative. No failure or delay on the
part of Lender in exercising any right, power or privilege hereunder or under
any other Loan Document and no course of dealing between Borrower and Lender
shall operate as a waiver thereof nor shall any single or partial exercise of
any right, power or privilege hereunder or under any other Loan Document
preclude any other or further exercise thereof or the exercise of any other
right, power or privilege hereunder or thereunder. The rights and remedies
herein expressly provided are cumulative and not exclusive of any rights or
remedies which Lender would otherwise have. No notice to or demand on Borrower
in any case shall entitle Borrower to any other or further notice or demand in
similar or other circumstances or constitute a waiver of the rights of Lender to
any other or further action in any circumstances without notice or demand.
Section 9.06 Governing Law; Submission to Jurisdiction. (a) This
Agreement shall be deemed to be a contract entered into pursuant to the laws of
the State of New York and shall in all respects be governed, construed, applied
and enforced in accordance with the laws of the State of New York, provided
however, that with respect to the creation, perfection, priority and enforcement
of the lien of the Security Instruments, and the determination of deficiency
judgments, the laws of the State where the Real Property Asset is located shall
apply.
(b) Any legal action or proceeding with respect to this Agreement or
any other Loan Document and any action for enforcement of any judgment in
respect thereof may be brought in the courts of the State of New York or of the
United States of America for the Southern District of New York, and, by
execution and delivery of this Agreement, Borrower hereby accepts for itself and
in respect of their property, generally and unconditionally, the non-exclusive
jurisdiction of the aforesaid courts and appellate courts from any thereof.
Borrower, irrevocably consents to the service of process out of any of the
aforementioned courts in any such action or proceeding by the mailing of copies
thereof by registered or certified mail, postage prepaid, to Borrower at its
addresses set forth for the Borrower in Section 9.02 of this Agreement. Borrower
hereby irrevocably waives any objection which it may now or hereafter have to
the laying of venue of any of the aforesaid actions or proceedings arising out
of or in connection with this Agreement or any other Loan Document brought in
the courts referred to above and hereby further irrevocably waives and agrees
not to plead or claim in any such court that any such action or proceeding
brought in any such court has been brought in an inconvenient forum. Nothing
herein shall affect the right of Lender to serve process in any other manner
permitted by law or to commence legal proceedings or otherwise proceed against
Borrower in any other jurisdiction.
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Section 9.07 Confidentiality Disclosure of Information. Each party
hereto shall treat the transactions contemplated hereby and all financial and
other information furnished to it about Borrower and the Real Property Assets,
as confidential; provided, however, that such confidential information may be
disclosed (a) as required by law or pursuant to generally accepted accounting
procedures, (b) to officers, directors, employees, agents, partners, attorneys,
accountants, engineers and other consultants of the parties hereto who need to
know such information, provided such Persons are instructed to treat such
information confidentially, (c) by Lender to any servicer, or assignee
("Transferee"), which disclosure to Transferees and prospective Transferees may
include any and all information which has been delivered to Lender by Borrower
pursuant to this Agreement or the other Loan Documents or which has been
delivered to Lender in connection with Lender's credit evaluation of Borrower
prior to entering into this Agreement, or (d) upon the written consent of the
party whose otherwise confidential information would be disclosed.
Section 9.08. Non-Recourse Liability.
(a) Except as otherwise provided, Lender shall not enforce the Loan,
Security Instruments or any other Loan Document by any action or proceeding
wherein a money judgment shall be sought against Borrower or General Partner,
except that Lender may bring a foreclosure action, action for specific
performance or other appropriate action or proceeding to enable Lender to
enforce and realize upon this Agreement, the Security Instruments or any other
Loan Document, and the interest in the Real Property Assets, the Rents, the
Accounts Receivable and any other Collateral given to Lender created by this
Agreement, the Security Instruments or any other Loan Document; provided,
however, that any judgment in any action or proceeding shall be enforceable
against Borrower only to the extent of Borrower's interest in the Real Property
Assets, in the Rents, in the Accounts Receivable and in any other Collateral
given to Lender. Lender, by accepting this Agreement, the Security Instruments
or any other Loan Document, agrees that it shall not, except as otherwise
provided in this Section 9.08 of this Agreement and Article 15 of the Security
Instruments, sue for, seek or demand any deficiency judgment against Borrower in
any action or proceeding, under or by reason of or in connection with this
Agreement, the Security Instruments or any other Loan Document.
(b) The provisions of this Section 9.08 shall not (i) constitute a
waiver, release or impairment of any obligation evidenced or secured by this
Agreement, the Security Instruments or any other Loan Document; (ii) impair the
right of Lender to obtain a deficiency judgment in any action or proceeding in
order to preserve its rights and remedies, including, without limitation, an
action against Borrower under the Note, foreclosure, non-judicial foreclosure,
or the exercise of a power of sale, under the Additional Security Instruments
(as defined in the Security Instruments); however, Lender agrees that it shall
not enforce such deficiency judgment against any assets of Borrower other than
the Additional Properties (as defined in the Security Instruments) or in the
exercise of its rights and remedies under the Additional Security Instruments;
(iii) impair the right of Lender to name Borrower as a party defendant in any
action or suit for judicial foreclosure and sale under the Security Instruments;
(iv) affect the validity or enforceability of any indemnity, guaranty, master
lease or similar instrument made in connection with this Agreement, the Security
Instruments or any other Loan
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Document; (v) impair the right of Lender to obtain the appointment of a
receiver; (vi) impair the enforcement of the Assignment of Leases and Rents
executed in connection herewith; or (vii) impair the right of Lender to enforce
the provisions of Sections 9.01(a)(i), 9.01(c) and this 9.08 of this Agreement
or Section 13.2 of the Security Instruments.
(c) Notwithstanding the provisions of Section 9.08(a) to the contrary,
Borrower shall be personally liable to Lender for the Losses (as defined in the
Security Instruments) it incurs due to: (i) fraud or intentional
misrepresentation by Borrower or any other person or entity in connection with
the execution and the delivery of this Agreement, the Security Instruments or
any other Loan Document; (ii) Borrower's misapplication or misappropriation of
Rents received by such parties after the occurrence of a Default or Event of
Default; (iii) Borrower's misappropriation of tenant security deposits or Rents
collected in advance; (iv) the misapplication or the misappropriation of
insurance proceeds or condemnation awards; (v) Borrower's failure to pay Taxes,
Insurance Premiums (as defined in the Security Instruments), Other Charges (as
defined in the Security Instruments) (except to the extent that sums sufficient
to pay such amounts have been deposited in the Basic Carrying Costs Sub-Account
pursuant to the terms hereof), charges for labor or materials or other charges
that can create liens on the Real Property Assets; (vi) Borrower's failure to
maintain, repair or restore the Real Property Assets in accordance with this
Agreement, the Security Instruments or any other Loan Document; (vii) Borrower's
failure to return or to reimburse Lender for all Personal Property (as defined
in the Security Instruments) taken from the Real Property Assets by or on behalf
of Borrower and not replaced with Personal Property of the same utility and of
the same or greater value; (viii) any act of actual waste or arson by Borrower,
or any principal, affiliate or general partner thereof; (ix) any fees or
commissions paid by Borrower to any principal, Affiliate or general partner of
Borrower in violation of the terms of this Agreement, the Security Instruments
or any other Loan Document; or (x) Borrower's failure to comply with the
provisions of Sections 4.12 and 5.11 of this Agreement and Sections 12.1 and
12.2 of the Security Instruments.
(d) Notwithstanding the foregoing, the agreement of Lender not to
pursue recourse liability as set forth in Section 9.08(a) above SHALL BECOME
NULL AND VOID and shall be of no further force and effect in the event of
Borrower's Default under Sections 6.02 or 6.06 of this Agreement and Article 8
of the Security Instruments or if the Real Property Assets or any part thereof
shall become an asset in a voluntary bankruptcy or insolvency proceeding.
(e) Nothing herein shall be deemed to be a waiver of any right which
Lender may have under Sections 506(a), 506(b), 1111(b) or any other provisions
of the U.S. Bankruptcy Code to file a claim for the full amount of the Debt (as
defined in the Security Instruments) secured by the Security Instruments or to
require that all Collateral shall continue to secure all of the Debt owing to
Lender in accordance with this Agreement, the Security Instruments or any other
Loan Document.
Section 9.09. Transfer of Loan; Cooperation. (a) Lender shall have the
right in its sole discretion at any time enter into a Secondary Market
Transaction. Lender may forward to each purchaser, transferee, assignee,
servicer, participant, investor or their respective successors (collectively,
the "Investor") or the Rating Agencies and each prospective Investor, all
documents and information which Lender now has or may hereafter acquire relating
to the Loan and to the
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Borrower and the Real Property Assets, which shall have been furnished by or on
behalf of the Borrower, as Lender determines necessary or desirable. Borrower
agrees to cooperate with Lender in connection with any Secondary Market
Transaction, including, without limitation, the delivery of an estoppel
certificate required in accordance with Section 9.09(b) hereof and such other
documents as may be reasonably requested by Lender. Borrower shall also furnish
and Borrower consents to Lender furnishing to such Investors or such prospective
Investors or such Rating Agency any and all information concerning the Real
Property Assets, the Leases and the financial condition of Borrower as may be
requested by Lender, any Investor, any prospective Investor or any Rating Agency
in connection with any Secondary Market Transaction.
(b) Upon any Secondary Market Transaction or proposed Secondary Market
Transaction contemplated by this Agreement, at Lender's request, Borrower,
General Partner and Managing Member shall provide an estoppel certificate to the
Investor or any prospective Investor in such form, substance and detail as
Lender, such Investor or prospective Investor may reasonably require.
Section 9.10 Borrower's Assignment. Borrower shall not assign its
rights or obligations hereunder without the prior written consent of Lender.
Section 9.11 Counterparts. This Agreement may be executed in any number
of counterparts and by the different parties hereto on separate counterparts,
each of which when so executed and delivered shall be an original, but all of
which shall together constitute one and the same instrument.
Section 9.12 Effectiveness. This Agreement shall become effective on
the date on which all of the parties hereto shall have signed a counterpart
hereof and shall have delivered the same to Lender.
Section 9.13 Headings Descriptive. The heading of the several Sections
and subsections of this Agreement are inserted for convenience only and shall
not in any way affect the meaning or construction of any provision of this
Agreement.
Section 9.14 Marshaling; Recapture. Lender shall be under no obligation
to marshal any assets in favor of Borrower or any other party or against or in
payment of any or all of the Obligations. To the extent Lender receives any
payment by or on behalf of Borrower which payment or any part thereof is
subsequently invalidated, declared to be fraudulent or preferential, set aside
or required to be repaid to Borrower or its estate, trustee, receiver, custodian
or any other party under any bankruptcy law, state or federal law, common law or
equitable cause, then to the extent of such payment or repayment, the obligation
or part thereof which has been paid, reduced or satisfied by the amount so
repaid shall be reinstated by the amount so repaid and shall be included within
the liabilities of Borrower to Lender as of the date such initial payment,
reduction or satisfaction occurred.
Section 9.15 Severability. In case any provision in or obligation under
this Agreement or the Note or the other Loan Documents shall be invalid, illegal
or unenforceable in any jurisdiction, the validity, legality and enforceability
of the remaining provisions or
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obligations, or of such provision or obligation in any other jurisdiction, shall
not in any way be affected or impaired thereby.
Section 9.16 Survival. Except as expressly provided to the contrary
herein, all indemnities set forth herein including, without limitation, in
Sections 2.19 and 9.01 shall survive the execution and delivery of this
Agreement, the Note and the Loan Documents and the making and repayment of the
Loan hereunder.
Section 9.17 Intentionally Deleted.
Section 9.18 Calculations; Computations. Except as otherwise expressly
provided herein, the financial statements to be furnished to Lender pursuant
hereto shall be made and prepared in accordance with GAAP consistently applied
throughout the periods involved and consistent with GAAP as used in the
preparation of the financial statements referred to in Section 4.05.
SECTION 9.19 WAIVER OF TRIAL BY JURY. TO THE EXTENT PERMITTED BY
APPLICABLE LAW, BORROWER AND LENDER EACH HEREBY IRREVOCABLY WAIVE ALL RIGHT OF
TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM ARISING OUT OF OR IN
CONNECTION WITH THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT OR ANY MATTER ARISING
HEREUNDER OR THEREUNDER.
Section 9.20 No Joint Venture. Notwithstanding anything to the contrary
herein contained, Lender by entering into this Agreement or by taking any action
pursuant hereto, will not be deemed a partner or joint venturer with Borrower
and Borrower agrees to hold Lender harmless from any damages and expenses
resulting from such a construction of the relationship of the parties hereto or
any assertion thereof.
Section 9.21 Estoppel Certificates. (a) Borrower and Lender each hereby
agree at any time and from time to time upon not less than ten (10) days prior
written notice by Borrower or Lender to execute, acknowledge and deliver to the
party specified in such notice, a statement, in writing, certifying whether this
Agreement is unmodified and in full force and effect (or if there have been
modifications, whether the same, as modified, is in full force and effect and
stating the modifications hereto), and stating whether or not, to the best
knowledge of such certifying party, any Default or Event of Default has occurred
and is then continuing, and, if so, specifying each such Default or Event of
Default; provided, however, that it shall be a condition precedent to Lender's
obligation to deliver the statement pursuant to this Section, that Lender shall
receive, together with Borrower's request for such statement, a certificate of
the general partner and a Responsible Officer of Borrower stating to its best
knowledge that no Default or Event of Default exists as of the date of such
certificate (or specifying such Default or Event of Default).
(b) Within five (5) Business Days of Lender's request, Borrower shall
execute and deliver a certificate of the general partner of Borrower and a
Responsible Officer of Borrower confirming the then aggregate outstanding
principal balance of the Loan and the dates
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to which all interest has been paid. Such statement shall be binding and
conclusive on Borrower absent manifest error.
Section 9.22 No Other Agreements. The Loan Documents and the Side
Letters constitute the entire understanding of the parties with respect to the
transactions contemplated hereby, and all prior understandings with respect
thereto, whether written or oral, shall be of no force and effect.
Section 9.23 Controlling Document. In the event of a conflict between
the provisions of this Agreement and the other Loan Documents, the provisions of
this Agreement shall control and govern the conflicting provisions of the other
Loan Documents.
Section 9.24 No Benefit to Third Parties. This Agreement is for the
sole and exclusive benefit of Borrower and Lender and all conditions of the
obligation of Lender to make the Loan hereunder are imposed solely and
exclusively for the benefit of Lender and its assigns and no other person shall
have standing to require satisfaction of such conditions in accordance with
their terms or be entitled to assume that Lender will refuse to make the Loan in
the absence of strict compliance with any and all thereof and no other person
shall under any circumstances be deemed to be a beneficiary of such conditions,
any or all of which may be freely waived in whole or in part by Lender at any
time if it in its sole discretion deems it advisable to do so. Without limiting
the generality of the foregoing, Lender shall not have any duty or obligation to
anyone to ascertain that funds advanced hereunder are used as required by the
terms hereof or to pay the cost of constructing the improvements on any of the
Real Property Assets or to acquire materials and supplies to be used in
connection therewith or to pay costs of owning, operating and maintaining same.
Section 9.25 Intentionally Deleted.
[NO FURTHER TEXT ON THIS PAGE
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IN WITNESS WHEREOF, the parties hereto have executed and delivered this
Agreement as of the date first above written.
SUN COMMUNITIES FUNDING LIMITED
PARTNERSHIP, a Michigan limited
partnership
By: Sun Communities Funding GP
L.L.C., a Michigan limited
liability company, its
general partner
By: SCF Manager, Inc., a
Michigan corporation, its
managing member
By:
-------------------------------
Name:
Title:
LEHMAN BROTHERS HOLDINGS INC.
D/B/A LEHMAN CAPITAL, A DIVISION
OF LEHMAN BROTHERS HOLDINGS INC.,
a Delaware corporation
By:
--------------------------------
Name:
Title:
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