TERM LOAN AGREEMENT
TERM LOAN AGREEMENT
THIS TERM LOAN AGREEMENT (this "Agreement") is made as of January 1,
2000 among WXI/MCN MULTIFAMILY REAL ESTATE LIMITED PARTNERSHIP, a Delaware
limited partnership, BRENDON WAY FUND XII ASSOCIATES, an Indiana general
partnership, CASTLE BLUFF FUND XII ASSOCIATES L.P., a Texas limited partnership,
and EMBARCADERO ASSOCIATES, a Georgia general partnership (each a "Borrower" and
collectively the "Borrowers"), and AMRESCO CAPITAL, L.P., a Delaware limited
partnership ("Lender").
RECITALS
A. Each of the Borrowers owns one or more Multifamily Residential
Properties (capitalized terms used but not defined shall have the meanings
ascribed to such terms in Article I of this Agreement) as more particularly
described in Exhibit A to this Agreement.
B. The Borrowers have requested that the Lender lend up to a maximum
amount of $195,783,261 to the Borrowers on a joint and several basis.
C. To secure the obligations of the Borrowers under this Agreement and
the other Loan Documents issued in connection with the Term Loan, the Borrowers
shall create a Collateral Pool in favor of the Lender. The Collateral Pool shall
be comprised of (i) Security Instruments on all of the Multifamily Residential
Properties owned by each of the Borrowers and (ii) any other Security Documents
executed by any of the Borrowers pursuant to this Agreement or any other Loan
Documents.
D. Each of the Security Documents shall be cross-defaulted (i.e., a
default under any Security Document, or under this Agreement, shall constitute a
default under each Security Document, and this Agreement) and
cross-collateralized (i.e., each Security Instrument shall secure all of the
Borrowers' obligations under this Agreement and the other Loan Documents issued
in connection with the Term Loan).
E. Subject to the terms, conditions and limitations of this Agreement,
the Lender has agreed to make the Term Loan.
NOW, THEREFORE, the Borrowers and the Lender, in consideration of the
mutual promises and agreements contained in this Agreement, hereby agree as
follows:
ARTICLE I
DEFINITIONS
For all purposes of this Agreement, the following terms shall have the
respective meanings set forth below:
"Additional Mortgaged Properties" means the Multifamily Residential
Properties identified on Exhibit A as Additional Mortgaged Properties.
"Affiliate" means, as applied to any Person, any other Person directly
or indirectly controlling, controlled by, or under common control with,
that Person. For the purposes of this definition, "control" (including with
correlative meanings, the terms "controlling," "controlled by" and "under
common control with"), as applied to any Person, means the possession,
directly or indirectly, of the power to direct or cause the direction of
the management (other than property management) and policies of that
Person, whether through the ownership of voting securities, partnership
interests or by contract or otherwise.
"Agreement" means this Term Loan Agreement, as it may be amended,
supplemented or otherwise modified from time to time, including all
Recitals and Exhibits to this Agreement, each of which is hereby
incorporated into this Agreement by this reference.
"Allocable Facility Amount" means the portion of the Term Loan
allocated to a particular Mortgaged Property as set forth on Exhibit B
attached hereto minus principal payments of the Term Loan paid to Lender
and allocated to such Mortgaged Property as determined in accordance with
the information on Schedule C to the Term Note.
"Applicable Law" means (a) all applicable provisions of all
constitutions, statutes, rules, regulations and orders of all governmental
bodies, all Governmental Approvals and all orders, judgments and decrees of
all courts and arbitrators, (b) all zoning, building, environmental and
other laws, ordinances, rules, regulations and restrictions of any
Governmental Authority affecting the ownership, management, use, operation,
maintenance or repair of any Mortgaged Property, including the Americans
with Disabilities Act (if applicable), the Fair Housing Amendment Act of
1988 and Hazardous Materials Laws, (c) any building permits or any
conditions, easements, rights-of-way, covenants, restrictions of record or
any recorded or unrecorded agreement affecting or concerning any Mortgaged
Property including planned development permits, condominium declarations,
and reciprocal easement and regulatory agreements with any Governmental
Authority, (d) all laws, ordinances, rules and regulations, whether in the
form of rent control, rent stabilization or otherwise, that limit or impose
conditions on the amount of rent that may be collected from the units of
any Mortgaged Property, and (e) requirements of insurance companies or
similar organizations, affecting the operation or
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use of any Mortgaged Property or the consummation of the transactions to be
effected by this Agreement or any of the other Loan Documents.
"Appraisal" means an appraisal of a Multifamily Residential Property
or Multifamily Residential Properties conforming to the requirements of
Chapter 5 of Part III of the DUS Guide, and accepted by the Lender.
"Asset Management Agreement" shall mean the Portfolio Advisory
Agreement between WXI/McN Realty L.L.C. and the Asset Manager as amended or
modified from time to time.
"Asset Manager" shall mean Archon Group, L.P., a Delaware limited
partnership, or such successor manager as shall be hired by the Borrowers.
"Assignment of Management Agreement" means each Assignment of
Management Agreement with respect to each Mortgaged Property by and between
each Borrower and the Manager for the benefit of Lender as the same may be
amended, modified or supplemented from time to time.
"Authorized Representative" means those persons acceptable to Lender
and duly appointed and identified as such by each Borrower, in a writing
delivered to Lender which Authorized Representative shall initially be
those persons listed on Schedule 1 attached hereto, each with the authority
to act alone or with one or more persons as may be specified in such
Schedule 1.
"Bankruptcy Code" means Title 11 of the United States Code entitled
"Bankruptcy," as now and hereafter in effect, or any successor statute.
"Bankruptcy Event" means one or more of the following events:
(a) any Borrower or any Borrower Party shall file any voluntary
petition under any Chapter of the Bankruptcy Code, or shall file any
petition for dissolution or liquidation or take other action to dissolve or
liquidate, or shall in any manner seek any relief under any local, state,
federal or other insolvency laws or other laws providing for relief of
debtors; or
(b) any involuntary petition under any Chapter of the Bankruptcy Code
shall be filed against any Borrower or any Borrower Party, or any Borrower
or any Borrower Party directly or indirectly becomes the subject of any
proceedings pursuant to any local, state, federal or other insolvency laws
or laws providing for relief of debtors, or in equity, either at the
present time or at any time hereafter, if and only if a Borrower, a
Borrower Party or any Affiliate of a Borrower or a Borrower Party has acted
in concert or conspired with such creditors of a Borrower or a Borrower
Party (other than Lender) to cause the filing thereof with the intent to
interfere with enforcement rights of Lender after the occurrence of an
Event of Default; or
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(c) any Borrower Party or any Affiliate of a Borrower Party shall file
an involuntary petition against any Borrower or any Borrower Party under
any Chapter of the Bankruptcy Code or under any insolvency, reorganization,
or similar proceeding under State law.
"Borrower" or "Borrowers" shall have the meanings set forth in the
first paragraph of this Agreement, and their permitted successors and
assigns.
"Borrower Party" means any General Partner or any Key Principal.
"Borrowing Agent" means WXI/MCN Multifamily Real Estate Limited
Partnership, a Delaware limited partnership, and its permitted successors
and assigns.
"Business Day" means a day on which each of Fannie Mae and Lender is
open for business.
"Business Plan" for any period means a business plan for operation of
the Mortgaged Properties for such period, including operating budgets,
projected rental rates, capital expenditure, budgets, leasing plans and
other items standard and customary for operation of real properties similar
to the Mortgaged Properties.
"Calendar Quarter" means, with respect to any year, any of the
following three month periods: (a) January-February-March; (b)
April-May-June; (c) July-August-September; and (d) October-November-
December.
"Closing Date" means the Initial Closing Date and each date after the
Initial Closing Date on which the funding of any remaining amount of the
Term Loan is required to take place as the result of a Term Loan Request.
"Collateral" means, the Mortgaged Properties and other collateral from
time to time or at any time encumbered by the Security Instruments, or any
other property securing any of the Borrowers' obligations under the Loan
Documents.
"Collateral Addition Description Package" has the meaning set forth in
Section 3.03-A.
"Collateral Addition Request" has the meaning set forth in Section
3.01-A.
"Collateral Agreement" shall have the meaning given that term in each
Security Instrument.
"Collateral Pool" means the aggregate total of the Collateral.
"Collateral Release Request" shall have the meaning set forth in
Section 4.02(a).
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"Collateral Release Property" shall have the meaning set forth in
Section 4.02(a).
"Completion/Repair and Security Agreement" means the Master
Completion/Repair and Security Agreement, dated January 31, 2000, by and
among the Borrowers and AMRESCO Capital, L.P., as the same may be amended,
modified or supplemented from time to time as permitted under this
Agreement.
"Compliance Certificate" means a certificate of the Borrowers in the
form attached as Exhibit C to this Agreement.
"Condemnation" with respect to any Mortgaged Property, means (a) any
action or proceeding for the taking of such Mortgaged Property, or any part
thereof or interest therein, for public or quasi-public use under the power
of eminent domain, by reason of any public improvement or condemnation
proceeding, or in any other similar manner or (b) the conveyancing of such
Mortgaged Property under the threat or contemplation of any action or
proceeding described in clause (a).
"Condemnation Proceeds" means the proceeds of any Condemnation.
"Conditions to Closing" shall have the meaning set forth in Article
III.
"Contractual Obligation" means, as to any Person, any provision of any
Security issued by such Person or of any agreement, instrument or
undertaking to which such Person is a party or by which any of its property
is bound.
"Contribution Agreement" means the Affiliate Contribution and
Indemnity Agreement entered into on January 31, 2000 by and among each of
the Borrowers.
"Controlled Group" means all members of a controlled group of
corporations and all trades or businesses (whether or not incorporated)
under common control which, together with any Borrower, are treated as a
single employer under Section 414 of the Code.
"Delaware Borrower" means WXI/MCN Multifamily Real Estate Limited
Partnership and its successors and assigns.
"DUS Guide" means the Fannie Mae Multifamily Delegated Underwriting
and Servicing (DUS) Guide, as such Guide may be amended from time to time,
including exhibits to the DUS Guide and amendments in the form of Lender
Memos, Guide Updates and Guide Announcements (and, if such Guide is no
longer used by Fannie Mae, the term "DUS Guide" as used in this Agreement
means the Fannie Mae Multifamily Negotiated Transactions Guide, as such
Guide may be amended from time to time, including amendments in the form of
Lender Memos, Guide Updates and Guide Announcements). All references to
specific articles and sections of, and exhibits to, the
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DUS Guide shall be deemed references to such articles, sections and
exhibits as they may be amended, modified, updated, superseded,
supplemented or replaced from time to time.
"DUS Underwriting Requirements" means the overall underwriting
requirements for Multifamily Residential Properties as set forth in the DUS
Guide.
"Environmental Report" means any Phase I environmental report and any
additional environmental report delivered to Lender with respect to the
Property.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended from time to time.
"Event of Default" means any event defined to be an "Event of Default"
under Article XI.
"Fannie Mae" means the federally-chartered and stockholder-owned
corporation organized and existing under the Federal National Mortgage
Association Charter Act, 12 U.S.C. 1716 et seq and its successors and
assigns.
"Fraudulent Transfer Laws" shall have the meaning set forth in Section
14.10-A.
"Future Additional Mortgaged Property Term Loan" means a Term Loan
made by Lender to the Borrowers after the Initial Closing Date pursuant to
Article III-A.
"Future Excess Proceeds Term Loan" means a Term Loan made by Lender to
the Borrowers after the Initial Closing Date pursuant to Article III-B.
"Future Term Loan" means, as the context requires, either or both of a
Future Additional Mortgaged Property Term Loan and a Future Excess Proceeds
Term Loan.
"Future Term Loan Request" shall have the meaning set forth in Section
3.01-A.
"GAAP" means generally accepted accounting principles in the United
States in effect from time to time, consistently applied.
"Georgia Borrower" means Embarcadero Associates and its successors and
assigns.
"General Partner" means each general partner of each Borrower.
"Governmental Approval" means an authorization, permit, consent,
approval, license, registration or exemption from registration or filing
with, or report to, any Governmental Authority.
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"Governmental Authority" means any court, board, agency, commission,
office or authority of any nature whatsoever for any governmental unit
(federal, state, county, district, municipal, city or otherwise) whether
now or hereafter in existence.
"Gross Revenues" means, for any period, with respect to a Mortgaged
Property, all gross rents collected from or on behalf of tenants at the
Mortgaged Property (other than unforfeited tenant security deposits), any
other income, receipts or withdrawals from reserves (but only to the extent
such reserves were included as Operating Expenses at the times they were
set aside) derived from the Mortgaged Property (including from the use or
operation thereof) without regard to its source, including, without
limitation, tenant reimbursements for utilities, services and supplies,
security deposit forfeitures, parking rents or fees, concessions and
vending fees and laundry income and proceeds from rental interruption
insurance, but excluding Insurance Proceeds (other than proceeds from
rental interruption insurance), Condemnation Proceeds, unearned portions of
prepaid rent, other refundable items, interest on any account into which
refundable items are deposited, and proceeds from the sale or other
disposition of all or any portion of the Mortgaged Property.
"Hazardous Materials", with respect to any Mortgaged Property, shall
have the meaning given that term in the Security Instrument encumbering the
Mortgaged Property.
"Hazardous Materials Law", with respect to any Mortgaged Property,
shall have the meaning given that term in the Security Instrument
encumbering the Mortgaged Property.
"Hazardous Substance Activity" means any storage, holding, existence,
release, spill, leaking, pumping, pouring, injection, escaping, deposit,
disposal, dispersal, leaching, migration, use, treatment, emission,
discharge, generation, processing, abatement, removal, disposition,
handling or transportation of any Hazardous Materials from, under, into or
on any Mortgaged Property in violation of Hazardous Materials Laws,
including the discharge of any Hazardous Materials emanating from any
Mortgaged Property in violation of Hazardous Materials Laws through the
air, soil, surface water, groundwater or property and also including the
abandonment or disposal of any barrels, containers and other receptacles
containing any Hazardous Materials from or on any Mortgaged Property in
violation of Hazardous Materials Laws, in each case whether sudden or
nonsudden, accidental or nonaccidental.
"Impositions" means, with respect to any Mortgaged Property, all real
estate and personal property taxes, water, sewer and vault charges and all
other taxes, levies, assessments, common charges and other similar charges,
general and special, ordinary and extraordinary, foreseen and unforeseen,
of every kind and nature whatsoever, which at any time prior to, at or
after the execution of this Agreement may be assessed, levied or imposed
upon such Mortgaged Property or the rents or the ownership, use, occupancy
or enjoyment thereof, and any interest, costs or penalties with respect to
any of the foregoing.
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"Indebtedness" means, with respect to any Person, as of any specified
date, without duplication, all:
(a) indebtedness of such Person for borrowed money or for the
deferred purchase price of property or services (other than (i)
current trade liabilities incurred in the ordinary course of business
and payable in accordance with customary practices, and (ii) for
construction of improvements to property, if such person has a
non-contingent contract to purchase such property);
(b) other indebtedness of such Person which is evidenced by a
note, bond, debenture or similar instrument;
(c) obligations of such Person under any lease of property, real
or personal, the obligations of the lessee in respect of which are
required by GAAP to be capitalized on a balance sheet of the lessee or
to be otherwise disclosed as such in a note to such balance sheet;
(d) obligations of such Person in respect of acceptances (as
defined in Article 3 of the Uniform Commercial Code of the State of
New York) issued or created for the account of such Person;
(e) liabilities secured by any Lien on any property owned by such
Person even though such Person has not assumed or otherwise become
liable for the payment of such liabilities; and
(f) as to any Person ("guaranteeing person"), any obligation of
(a) the guaranteeing person or (b) another Person (including any bank
under any letter of credit) to induce the creation of a primary
obligation (as defined below) with respect to which the guaranteeing
person has issued a reimbursement, counterindemnity or similar
obligation, in either case guaranteeing, or in effect guaranteeing,
any indebtedness, lease, dividend or other obligation ("primary
obligations") of any third person ("primary obligor") in any manner,
whether directly or indirectly, including any obligation of the
guaranteeing person, whether or not contingent, to (1) purchase any
such primary obligation or any property constituting direct or
indirect security therefor, (2) advance or supply funds for the
purchase or payment of any such primary obligation or to maintain
working capital or equity capital of the primary obligor or otherwise
to maintain the net worth or solvency of the primary obligor, (3)
purchase property, securities or services primarily for the purpose of
assuring the owner of any such primary obligation of the ability of
the primary obligor to make payment of such primary obligation (other
than construction of improvements to property, if the primary obligor
has a non-contingent contract to purchase such property), or (4)
otherwise assure or hold harmless the owner of any such primary
obligation against loss in respect of the primary obligation,
provided, however, that the term "Contingent Obligation" shall not
include endorsements of instruments for deposit or collection in the
ordinary course of business. The amount of
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any Contingent Obligation of any guaranteeing person shall be deemed
to be the lesser of (i) an amount equal to the stated or determinable
amount of the primary obligation in respect of which such Contingent
Obligation is made and (ii) the maximum amount for which such
guaranteeing person may be liable pursuant to the terms of the
instrument embodying such Contingent Obligation, unless such primary
obligation and the maximum amount for which such guaranteeing person
may be liable are not stated or determinable, in which case the amount
of such Contingent Obligation shall be such guaranteeing person's
maximum reasonably anticipated liability in respect thereof as
determined by such guaranteeing person in good faith.
"Indiana Partnership" means Brendon Way Fund XII Associates and
its successors and assigns.
"Initial Closing Date" means the date on which the Initial Term
Loan is advanced, which shall be on or promptly after the date of the
execution and delivery of this Agreement.
"Initial Mortgaged Properties" means the Multifamily Residential
Properties identified on Exhibit A as Initial Mortgaged Properties and
which represent the Multifamily Residential Properties which are made
part of the Collateral Pool on the Initial Closing Date.
"Initial Term Loan" means the term loan made by Lender to the
Borrower on a joint and several basis pursuant to the terms of this
Agreement in an amount equal to $181,370,917.
"Insurance Policy" means, with respect to a Mortgaged Property,
the insurance coverage and insurance certificates evidencing such
insurance required to be maintained pursuant to the Security
Instrument encumbering the Mortgaged Property.
"Insurance Proceeds" means all insurance proceeds, damages,
claims and rights of action and the right thereto under any insurance
policies with respect to a casualty or otherwise insuring and relating
to any portion of any Mortgaged Property.
"Interest Rate" means the interest rate on a Future Term Loan
determined in accordance with the procedures set forth in Article
III-A.
"Interest Rate Lock Agreement" has the meaning set forth in
Section 3.02-A.
"Internal Revenue Code" means the Internal Revenue Code of 1986,
as amended. Each reference to the Internal Revenue Code shall be
deemed to include (a) any successor internal revenue law and (b) the
applicable regulations whether final, temporary or proposed.
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"Key Principal" or "Key Principals" means (i) Whitehall Street
Real Estate Limited Partnership XI and Whitehall Street Real Estate
Limited Partnership XII; and (ii) any other Person that has agreed to
act as such acceptable to Fannie Mae in its sole and absolute
discretion, and in each case its permitted successor and assigns.
"Key Principal Guaranty" means the Key Principal Exceptions to
Non-recourse Guaranty dated as of January 31, 2000 executed and
delivered by each Key Principal, as the same may be amended,
supplemented or modified from time to time.
"Knowledge" or "knowledge" by any Borrower means that a member of
Senior Management has knowledge of the fact in question.
"Lease" means any lease, any sublease or subsublease, license,
concession or other agreement (whether written or oral and whether now
or hereafter in effect) pursuant to which any Person is granted a
possessory interest in, or right to use or occupy all or any portion
of any space in any Mortgaged Property, and every modification,
amendment or other agreement relating to such lease, sublease,
subsublease or other agreement entered into in connection with such
lease, sublease, subsublease or other agreement, and every guarantee
of the performance and observance of the covenants, conditions and
agreements to be performed and observed by the other party thereto.
"Lender" shall have the meaning set forth in the first paragraph
of this Agreement.
"Lien" means any mortgage, deed of trust, deed to secure debt,
security interest or other lien or encumbrance (including both
consensual and non-consensual liens and encumbrances).
"Loan Documents" means this Agreement, the Note, the Key
Principal Guaranty, the Security Documents, all documents executed by
any Borrower pursuant to the Conditions to Closing set forth in
Article III of this Agreement and any other documents executed by any
Borrower from time to time in connection with this Agreement or the
transactions contemplated by this Agreement.
"Manager" means AMS Management L.L.C. or any successor entity
hired to manage any Mortgaged Property and approved by Fannie Mae.
"Material Adverse Effect" means, with respect to any
circumstance, act, condition or event of whatever nature (including
any adverse determination in any litigation, arbitration, or
governmental investigation or proceeding), whether singly or in
conjunction with any other event or events, act or acts, condition or
conditions, or circumstance or circumstances, whether or not related,
a material adverse change in or a materially adverse effect upon any
of (a) the business, operations, property or condition (financial or
otherwise) of the Delaware Borrower or the Borrowers taken as a whole,
(b) the ability of the Delaware Borrower or the Borrowers taken as a
whole to perform the Obligations for which they are liable, (c) the
validity, priority, perfection or enforceability
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of this Agreement or any other Loan Document or the rights or remedies
of the Lender under any Loan Document, (d) the Lender's ability to
have recourse against any Mortgaged Property, or (e) the value of any
Mortgaged Property.
"Material Adverse Effect - Portfolio Wide" has the same meaning
as Material Adverse Effect except that clause (e) of the definition of
Material Adverse Effect shall be deemed to read "the value of all of
the Mortgaged Properties taken as a whole".
"Maturity Date" means February 1, 2007.
"Maximum Percentage" shall have the meaning set forth on Exhibit
A for each Mortgaged Property.
"Maximum Rate" means the maximum interest rate which the Lender
may designate for a Future Term Loan.
"Maximum Term Loan Amount" means $195,783,261.
"MBS" means a mortgage-backed security. A MBS which is "backed"
by a Term Loan means that it is backed by an interest in the Term Note
and the Collateral Pool securing the Term Note, which interest permits
the holder of the MBS to participate in the Term Note and the
Collateral Pool to the extent of such Term Loan.
"MBS Commitment" has the meaning set forth in Section 3.02-A.
"Mortgaged Properties" means collectively, the Additional
Mortgaged Properties (but for purposes of representations, warranties
and covenants by any Borrower, only after they are acquired by such
Borrower) and the Initial Mortgaged Properties, but excluding each
Collateral Release Property from and after the date of the release of
the Collateral Release Property from the Collateral Pool.
"Multiemployer Plan" shall have the meaning set forth in Section
4001(a)(3) of ERISA.
"Multifamily Residential Property" means a residential property,
located in the United States, containing five or more dwelling units
in which not more than twenty percent (20%) of the net rentable area
is or will be rented to non-residential tenants, and conforming to the
requirements of Sections 201 and 203 of Part III of the DUS Guide.
"Note" means the Term Note.
"Obligations" means the aggregate of the obligations of the
Borrowers under this Agreement and the other Loan Documents.
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"Operating Expenses" means, for any period, with respect to a
Mortgaged Property, the aggregate of all direct, ordinary, normal,
recurring and necessary expenses thereof including, without
duplication, (a) Impositions, (b) property and liability insurance
premiums, (c) wages, salaries and benefits of personnel employed on
site to manage, lease, maintain and operate the Mortgaged Property,
(d) costs or expenses of utility services to the Mortgaged Property
and tenant spaces to the extent payable by the respective Borrower,
(e) costs or expenses of providing security services to the Mortgaged
Property, if any, (f) costs or expenses of in-house or outside service
arrangements for landscaping, janitorial, window washing and cleaning,
trash, debris, make ready units, cable and satellite television and
other services, (g) expenses of maintaining, repairing and cleaning
the grounds, parking, amenities, exterior and interior spaces of the
Mortgaged Property, (h) expenses of repairing and maintaining in good
operable condition the mechanical, structural, electrical, elevator,
heating, ventilating, air conditioning and plumbing systems, (i)
property management fees payable to parties other than any Borrower
(and specifically including management fees paid to any Affiliate of
any Borrower), (j) administrative expenses including advertising
incurred at the site of the Mortgaged Property, (k) legal fees
associated with lease documentation and tenant matters and legal,
accounting and other professional fees relating to the operation of
the Mortgaged Property, (l) the replacement and repair amount with
respect to the Mortgaged Property which shall equal the aggregate
amount of the replacement reserve deposits as determined by the Lender
during the period as set forth on the applicable Replacement Reserve
Agreement irrespective of the waiver by Fannie Mae of the obligation
to fund the deposits, (m) costs for water and sewage fees, and (n) any
other property operation items that are not treated as capitalized
expenses under GAAP. All of the foregoing (including Impositions)
shall be computed on an accrual basis and in accordance with GAAP
consistently applied. During any period any Mortgaged Property is
managed by an Affiliate of any Borrower, Operating Expenses shall also
include the amount, if any, by which management fees paid by owners of
similar properties in the same geographic location exceed management
fees then payable by such Borrower. In addition, for all purposes
Operating Expenses shall exclude (i) payments on the Obligations, (ii)
depreciation and amortization, (iii) all legal, accounting and
professional fees not included in clause (k) above, and (iv) items
that would be treated as capital expenses under GAAP consistently
applied. All of the foregoing shall be presented in accordance with
Borrower's customary form of operating statements.
"Organizational Certificate" means a certificate of each Borrower
in the form attached as Exhibit D to this Agreement.
"Organizational Documents" means all certificates, instruments
and other documents pursuant to which an organization is organized or
operates, including but not limited to, (i) with respect to a
corporation, its articles of incorporation and bylaws, (ii) with
respect to a limited partnership, its limited partnership certificate
and partnership agreement, (iii) with respect to a general partnership
or joint venture, its partnership or joint venture agreement and (iv)
with respect to a limited liability company, its articles of
organization and operating agreement.
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"Outstanding" means, when used in connection with promissory
notes or other debt instruments, for a specified date, promissory
notes or other debt instruments which have been issued, but have not
been repaid in full as of the specified date.
"Ownership Interests" means, with respect to any entity, any
ownership interests in the entity and any economic rights (such as a
right to distributions, net cash flow or net income) to which the
owner of such ownership interests is entitled.
"Partnership Agreement" means each of (a) the Agreement of
Limited Partnership of WXI/MCN Multifamily Real Estate Limited
Partnership dated as of January 31, 2000, by and between WXI/MCN
Multifamily Gen-Par, L.L.C., a Delaware limited liability company, as
general partner, and WXI/McN Realty L.L.C., a Delaware limited
liability company, as limited partner, (b) the Amended and Restated
Agreement of General Partnership of Brendon Way Fund XII Associates
dated as of January 31, 2000, by and between WXI/MCN Gen-Par II,
L.L.C., a Delaware limited liability company, as a general partner,
and WXI/MCN Real Estate XII Limited Partnership, a California limited
partnership, as a general partner, (c) the Amended and Restated
Agreement of Limited Partnership of Castle Bluff Fund XII Associates
L.P. dated as of January 31, 2000, by and between Castle Bluff
Corporation, a Texas corporation, as general partner, and WXI/MCN Real
Estate XII Limited Partnership, a California limited partnership, as
limited partner, and (d) the Amended and Restated Agreement of General
Partnership of Embarcadero Associates dated as of January 31, 2000, by
and between WXI/MCN Gen-Par I, L.L.C., a Delaware limited liability
company, as a general partner, and WXI/MCN Real Estate XIV Limited
Partnership, a California limited partnership, as a general partner,
as each of the same may be amended, modified or supplemented from time
to time as permitted under this Agreement.
"PBGC" means the Pension Benefit Guaranty Corporation or any
entity succeeding to any or all of its functions under ERISA.
"Permits" means all permits, or similar licenses or approvals
issued and/or required by an applicable Governmental Authority or any
Applicable Law in connection with the ownership, use, occupancy,
leasing, management, operation, repair, maintenance or rehabilitation
of any Mortgaged Property or any Borrower's business.
"Permitted Liens" means, with respect to a Mortgaged Property,
(i) the exceptions to title to the Mortgaged Property set forth in the
Title Insurance Policy for the Mortgaged Property which are approved
by the Lender, (ii) the Security Instrument encumbering the Mortgaged
Property, (iii) Liens for taxes and other Impositions not yet
delinquent, (iv) Liens in respect of property imposed by law arising
in the ordinary course of business such as materialmen's, mechanics',
warehousemen's, carriers', landlords' and other nonconsensual
statutory Liens which (a) are not yet due and payable or (b) are
released of record or otherwise remedied to the Lender's satisfaction
within 60 days of the date of commencement of enforcement of any such
Lien or before such earlier date on
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which the respective Borrower's interest in the applicable property is
subject to forfeiture by enforcement of any such Lien, (v) easements,
rights-of-way, restrictions (including zoning restrictions), matters
of plat, minor defects or irregularities in title, license or lease
agreements for laundry, cable tv, telephone and other similar Liens
which, in the aggregate, do not materially reduce the value of the
Mortgaged Property or materially interfere with the operation and use
of, or the ordinary conduct of business on, the Mortgaged Property
(provided that any laundry or cable tv licenses or leases shall not be
a Permitted Lien if it does not comply with Section 108 of Part III of
the DUS Guide), (vi) rights of existing and future tenants and
residents as tenants only pursuant to written Leases, (vii) any
attachment or judgment Lien with respect to a claim provided that such
claim does not remain unpaid, unstayed on appeal, undischarged,
unbonded, not fully insured or undismissed for a period of 60 days,
and (viii) any other Liens approved by the Lender.
"Person" means an individual, an estate, a trust, a corporation,
a partnership, a limited liability company or any other organization
or entity (whether governmental or private).
"Potential Event of Default" means any event which, with the
giving of notice or the passage of time, or both, would constitute an
Event of Default.
"Prepayment Premium" shall have the meaning of such term set
forth in the Note.
"Property" means any estate or interest in any kind of property
or asset, whether real, personal or mixed, and whether tangible or
intangible.
"Rate Lock Deposit" means a deposit equal to two percent
(2.0%) of the principal amount of a proposed Future Term Loan.
"Release Closing Date" means the date upon which a release
requested in a Collateral Release Request is required to take place.
"Release Price" shall have the meaning set forth in Section
4.02(c).
"Rent Roll" means, with respect to any Multifamily Residential
Property, a rent roll prepared and certified by the owner and Manager
of the Multifamily Residential Property, on Fannie Mae Form 4243, as
set forth in Exhibit III-3 of the DUS Guide, or on each Borrower's
customary forms in existence on the date hereof or as otherwise
approved by Lender.
"Rents" shall have the meaning set forth in each Security
Instrument.
"Replacement Reserve Agreement" means the Master Replacement
Reserve and Security Agreement, reasonably required by the Lender, and
completed in accordance with the requirements of the DUS Guide.
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"Request" means either or both of a Future Term Loan Request and
a Collateral Release Request.
"Rescinded Payment" shall have the meaning set forth in Section
14.09-A.
"Satisfaction Date" shall have the meaning set forth in the Key
Principal Guaranty.
"Security" has the meaning ascribed to such term in the
Securities Act of 1933, as amended.
"Security Documents" means the Security Instruments, the
Collateral Agreements, the Replacement Reserve Agreement, UCC fixture
filings, UCC financing statements and any other documents executed by
any Borrower from time to time to secure any of the Borrowers'
obligations under the Loan Documents.
"Security Instrument" means, for each Mortgaged Property, a
separate Multifamily Mortgage, Deed of Trust or Deed to Secure Debt,
Assignment of Leases and Rents and Security Agreement given by the
respective Borrower to or for the benefit of the Lender to secure the
obligations of the Borrowers under the Loan Documents. With respect to
each Mortgaged Property owned by each Borrower, the Security Instrument
shall be substantially in the form published by Fannie Mae for use in
the state in which the Mortgaged Property is located.
"Senior Management" means the partner overseeing REPIA at The
Goldman Sachs Group, Inc. ("Goldman"), the Chief Financial Officer of
REPIA at Goldman, each Vice President of Finance of REPIA at Goldman,
the Director of Portfolio Management at Archon Group L.P., and the
Designated Portfolio Manager at Archon Group L.P. (or comparable
officers of any party who may replace Archon Group L.P. as Asset
Manager).
"Servicer" means Amresco Services, L.P., a Delaware limited
partnership, or any other Person designated by Fannie Mae.
"Single-Purpose" means, with respect to a Person which is any
form of partnership or corporation or limited liability company, that
such Person at all times since its formation:
(i) has been a duly formed and existing partnership,
corporation or limited liability company, 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;
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(iv) has observed all customary formalities regarding its
partnership or corporate existence, as the case may be;
(v) has accurately maintained its financial statements,
accounting records and other partnership 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 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 creditors
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 not identified any other Person as being a division
or a part of such Person;
(xii) has been adequately capitalized in light of its
contemplated business operations;
(xiii) has not assumed, guaranteed or become obligated for the
liabilities of any other Person or held out its credit
as being available to satisfy the obligations of any
other Person (but this shall not apply to the liability
of a general partner for the debts of a partnership in
which it is a general partner);
(xiv) has not acquired obligations or securities of any other
Person;
(xv) has not made loans or advances to any other Person (but
this shall not apply to advances by a general partner to
a partnership in which it is a general partner);
(xvi) 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 arm's-length transaction with an
unrelated third party;
(xvii) has conducted its own business in its own name;
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(xviii) has paid the salaries of its own employees, if any, and
maintained a sufficient number of employees in light of
its contemplated business operations;
(xix) has allocated fairly and reasonably any overhead for
shared office space;
(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
Internal Revenue Code;
(xxii) has engaged in the business practice of using separate
stationery, invoices and checks; and
(xxiii) has corrected any known misunderstanding regarding its
separate identity.
"SMSA" means a "standard metropolitan statistical area," as
defined from time to time by the United States Office of Management
and Budget.
"Special Completion/Repair and Security Agreement" means the
Special Completion/Repair and Security Agreement, dated January 31,
2000, by and between WXI/MCN Multifamily Real Estate Limited
Partnership and AMRESCO Capital, L.P., as the same may be amended,
modified or supplemented from time to time as permitted under this
Agreement.
"Subordinated Obligations" shall have the meaning set forth in
Section 14.06-A.
"Subsidiary" means, when used with reference to a specified
Person, (i) any Person that, directly or indirectly, through one or
more intermediaries, is controlled by the specified Person, (ii) any
Person of which the specified Person is, directly or indirectly, the
owner of more than 50% of any voting class of Ownership Interests or
(iii) any Person (A) which is a partnership and (B) of which the
specified Person is a general partner and owns more than 50% of the
partnership interests.
"Surveys" means the as-built surveys of the Mortgaged Properties
prepared in accordance with the requirements of Section 113 of the DUS
Guide, or otherwise approved by the Lender.
"Taxes" means all taxes, assessments, vault rentals and other
charges, if any, general, special or otherwise, including all
assessments for schools, public betterments and general or local
improvements, which are levied, assessed or imposed by any public
authority or quasi-public authority, and which, if not paid, will
become a lien, on the Mortgaged Properties.
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"Term Loan" means the Initial Term Loan and any Future Term Loan
made by Lender to the Borrowers on a joint and several basis pursuant
to the terms of this Agreement.
"Term Note" means the promissory note dated January 31, 2000
issued by the Borrowers on a joint and several basis to the Lender to
evidence the Borrowers' obligation to repay the Term Loan, as the same
may be amended, supplemented or modified from time to time.
"Texas Partnership" means Castle Bluff Fund XII Associates L.P.
and its successors and assigns.
"Tie-In Endorsement" means an endorsement to a Title Insurance
Policy which contains substantially the same coverages, and is subject
to substantially the same or fewer exceptions (or such other
exceptions as the Lender may approve), as the form attached as Exhibit
E to this Agreement.
"Title Company" means Lawyers Title Insurance Company or such
other nationally recognized title insurance company meeting the
requirements of the DUS Guide and which Lender may reasonably approve.
"Title Insurance Policies" means the mortgagee's policies of
title insurance issued by the Title Company from time to time relating
to each of the Security Instruments, conforming to the requirements of
Section 111 of the DUS Guide, together with such endorsements,
coinsurance, reinsurance and direct access agreements with respect to
such policies as the Lender may, from time to time, consider necessary
or appropriate, whether or not required by the DUS Guide including
Tie-In Endorsements, if available, and with a limit of liability under
the policy (subject to the limitations contained in Sections 6(a)(i)
and 6(a)(iii) of the Stipulations and Conditions of the policy)
satisfactory to Lender.
"Transfer" means (A) a sale, conveyance, assignment, grant,
lease, transfer or other disposition (whether voluntary, involuntary
or by operation of law); (B) the granting, creating or attachment of a
lien, encumbrance or security interest (whether voluntary, involuntary
or by operation of law); (C) the issuance or other creation of an
ownership interest in a legal entity, including a partnership
interest, interest in a limited liability company or corporate stock;
(D) the issuance or other creation of any rights to participate in the
revenues, income or profits of a person or a legal entity; (E) the
issuance or the creation of any options, warrants or other securities
that are convertible or exchangeable into ownership interests in a
legal entity or rights to participate in the revenues, income or
profits of a person or a legal entity; (F) the withdrawal, retirement,
removal or involuntary resignation of a partner in a partnership or a
member or manager in a limited liability company; or (G) the merger,
dissolution, liquidation, or consolidation of a legal entity. For
purposes of determining whether a Transfer of an interest has
occurred, a person or entity shall be deemed to have effected or
suffered to occur a Transfer of any such interest if such interest is
or becomes subject to a pledge,
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lien, or other security interest described in clause (B) above
(regardless of whether or not such pledge is subsequently enforced or
foreclosed by the pledgee or holder of such lien or other security
interest) and, in the case of the issuance of any options or
convertible or exchangeable securities described in clause (E) above,
there shall be given effect to the exercise, conversion or exchange of
such securities. "Transfer" does not include (i) a conveyance of a
Mortgaged Property at a judicial or non-judicial foreclosure sale
under this Instrument or (ii) a Mortgaged Property becoming part of a
bankruptcy estate by operation of law under the United States
Bankruptcy Code. For purposes of defining the term "Transfer," the
term "partnership" shall mean a general partnership, a limited
partnership, a joint venture and a limited liability partnership, and
the term "partner" shall mean a general partner, a limited partner and
a joint venturer. The term "suffer to occur" as used herein is
intended to mean that, if any of the events or circumstances referred
to herein occur, any Borrower will be deemed to have suffered those
events or circumstances to occur, even if such Borrower was powerless
to prevent those events or circumstances.
"Warrantors" means the Authorized Representatives and members of
Senior Management.
ARTICLE II
THE TERM LOAN
SECTION 2.01 Term Loan Commitment. The Lender agrees, subject to the terms and
conditions of this Agreement, to make the Term Loan to the Borrowers in a
principal amount of up to the Maximum Term Loan Amount. The Term Loan shall bear
interest at the interest rate or interest rates stated in the Note. The Term
Loan shall be made in a single advance or in a number of advances pursuant to
the terms and conditions of this Agreement. The Term Loan shall be evidenced by
the Term Note. Repayment of the Term Loan shall be made in accordance with the
terms of the Term Note and with the terms of this Agreement. In the event the
full amount of the Term Loan is not advanced by Lender to the Borrowers by May
1, 2000, the obligation of the Lender to advance any remaining amount of the
Term Loan shall terminate.
SECTION 2.02 Borrowing Agency Provisions.
(a) Each Borrower hereby irrevocably designates the Borrowing Agent to
be its agent and in such capacity to receive all Term Loan proceeds, receive all
notices on behalf of the Borrowers under this Agreement, make all requests under
this Agreement, and execute, deliver and receive all instruments, certificates,
requests, documents, writings and further assurances now or hereafter required
hereunder, on behalf of such Borrower or Borrowers, and hereby authorizes the
Lender to pay over all loan proceeds hereunder in accordance with the request of
the Borrowing Agent.
(b) The handling of this credit facility as a co-borrowing facility
with a borrowing agent in the manner set forth in this Agreement is solely as an
accommodation to
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Borrowers and at their request. Neither the Lender nor Fannie Mae shall incur
liability to Borrowers as a result thereof. To induce Lender and Fannie Mae to
do so and in consideration thereof, each Borrower hereby indemnifies the Lender
and Fannie Mae and holds Lender and Fannie Mae harmless from and against any and
all liabilities, expenses, losses, damages and claims of damage or injury
asserted against Lender or Fannie Mae by any Person arising from or incurred by
reason of the handling of the financing arrangements of the Borrowers as
provided herein, reliance by Lender or Fannie Mae on any request or instruction
from Borrowing Agent or any other action taken by the Lender or Fannie Mae with
respect to this Section 2.02 except due to willful misconduct or gross (not
mere) negligence by the indemnified party.
SECTION 2.03 Disbursement of Term Loan. Subject to the satisfaction of the
Conditions to Closing, the Lender shall make the proceeds of the Initial Term
Loan available to the Borrowers on the Initial Closing Date, or on such other
Business Day as agreed upon by the Borrowing Agent and the Lender, by wire
transfer of immediately available funds to an account or such accounts
designated in writing by the Borrowing Agent.
SECTION 2.04 Payment of Principal and Interest. Principal and interest shall be
paid and applied as set forth in the Term Note. The Borrowers shall be obligated
to pay all late charges, a Default Rate of interest, the Prepayment Premium,
loan charges and costs and expenses required to be paid under the Term Note. The
Term Loan shall be subject to voluntary and involuntary prepayments as set forth
in and subject to the conditions set forth in the Term Note including, without
limitation, the requirement to pay the Prepayment Premium.
SECTION 2.05 Joint and Several Obligations. Subject to the provisions of Section
14.10-A, all of the Borrowers shall have joint and several liability for all
Obligations.
ARTICLE III
CONDITIONS TO CLOSING
SECTION 3.01 Conditions to Closing. The obligation of the Lender to make the
Initial Term Loan is subject to the following conditions precedent:
(a) Payment of Expenses. The payment by the Borrowers of the Lender's
fees and expenses payable in accordance with this Agreement for which the Lender
has presented an invoice on or before the Closing Date.
(b) No Material Adverse Change. There has been no material adverse
change in the financial condition, business or prospects of any Borrower or in
the physical condition (including as the result of any casualty), operating
performance or value of any of the Mortgaged Properties since the date of
application to Lender.
(c) No Default. There shall exist no Event of Default or Potential
Event of Default on the Closing Date.
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(d) Representations and Warranties. All representations and warranties
made by each Borrower in the Loan Documents shall be true and correct in all
material respects on the Closing Date with the same force and effect as if such
representations and warranties had been made on and as of the Closing Date.
(e) No Condemnation or Casualty. There shall not be pending or
threatened any condemnation or other taking, whether direct or indirect, against
any Mortgaged Property, and there shall not have occurred any casualty to any
improvements located on any Mortgaged Property.
(f) Delivery of Certificate. The Borrowers shall deliver a Compliance
Certificate to Lender.
(g) Title Company Deliveries. The delivery to the Title Company, for
filing and/or recording in all applicable jurisdictions, of all applicable Loan
Documents required by the Lender, including duly executed and delivered original
copies of the Security Instruments covering the Mortgaged Properties and UCC-1
Financing Statements covering the portion of the Collateral comprised of
personal property, and other appropriate instruments, in form and substance
satisfactory to the Lender and in form proper for recordation, as may be
necessary in the opinion of the Lender to perfect the Liens created by the
applicable Security Instruments and any other Loan Documents creating a Lien in
favor of the Lender, and the payment of all taxes, fees and other charges
payable in connection with such execution, delivery, recording and filing;
(h) Loan Documents. The receipt by the Lender of fully executed
original copies of each Loan Document duly executed and delivered by the parties
thereto, each of which shall be in full force and effect.
(i) Opinion. The receipt by the Lender of favorable opinions of counsel
to the Borrowers and any Key Principal, as to the due organization and
qualification of the Borrower and Key Principal, the due authorization,
execution, delivery and enforceability of each Loan Document executed in
connection with the extension of the Term Loan, and such other matters as the
Lender may require.
(j) UCC Financing Statements. The completion and delivery to the Title
Company of UCC Financing Statements relating to, without limitation, each
Security Instrument.
(k) Organizational Documents of the Borrowers and their respective
General Partners. The receipt by the Lender of:
(i) a copy, certified to be accurate and complete by an
authorized officer of the General Partner of each Borrower, of the
document, authorizing such General Partner, in its capacity as General
Partner of the respective Borrower, to execute, deliver and perform
the Loan Documents, and in its corporate capacity to execute, deliver
and perform the Loan Documents to which the respective Borrower and/or
the General
21
Partner are parties and other matters contemplated thereby, and of all
other documents evidencing any other necessary action (which
certification shall state that such approvals are in full force and
effect on the Closing Date);
(ii) copies, certified to be accurate and complete by an
authorized officer of a General Partner acting on behalf of the
respective Borrower, of each General Partner's organizational
documents and any amendments thereto (which certification shall state
that such documents, as amended, are in full force and effect on the
Closing Date), together with Certificates of Good Standing issued by
the Secretary of State of their respective states of organization and
evidence of its good standing and that it is qualified to do business
in each jurisdiction in which such good standing and/or qualification
is necessary to the conduct of its business and where the failure to
be so qualified would materially adversely affect the validity or
ability of the respective Borrower to perform its obligations under
this Agreement and the other Loan Documents;
(iii) copies, certified to be accurate and complete by an
authorized officer of the General Partner of each Borrower, of the
certificate of limited partnership and Partnership Agreement of the
respective Borrower and any amendments thereto (which certification
shall state that such documents, as amended, are in full force and
effect on the Closing Date), together with Certificates of Good
Standing issued by the Secretary of State of their respective states
of organizations and Certificates of Authority to Do Business from
each State in which Mortgaged Property is located and in which such
foreign qualification is necessary;
(iv) copies, certified to be accurate and complete by an
authorized officer of the General Partner of each Borrower, of all
consents, licenses and approvals necessary for the respective Borrower
to enter into the Loan Documents and the transactions contemplated by
this Agreement and the other Loan Documents.
(l) Organizational Documents of the Key Principals and the General
Partner of each Key Principal. The receipt by the Lender of:
(i) a copy, certified to be accurate and complete by an
authorized officer of the general partner of each Key Principal, of
each document, authorizing each general partner, in its capacity as
general partner of the respective Key Principal, to execute, deliver
and perform the Loan Documents to which such Key Principals are a
party, and in its corporate capacity to execute, deliver and perform
the Loan Documents to which such Key Principals are a party, and other
matters contemplated thereby, and of all other documents evidencing
any other necessary action (which certification shall state that such
approvals are in full force and effect on the Closing Date);
22
(ii) copies, certified to be accurate and complete by an
authorized officer the general partner of each Key Principal acting on
behalf of the respective Key Principal, of each such general partner's
organizational documents and any amendments thereto (which
certification shall state that such documents, as amended, are in full
force and effect on the Closing Date), together with Certificates of
Good Standing issued by the Secretary of State of their respective
states of organization and evidence of its good standing and that it
is qualified to do business in each jurisdiction in which Mortgaged
Property is located and in which the failure to be so qualified would
materially adversely affect the validity or ability of each Key
Principal to perform its obligations under this Agreement and the
other Loan Documents;
(iii) copies, certified to be accurate and complete by an
authorized officer of the general partner of each respective Key
Principal, of the certificate of limited partnership and Partnership
Agreement of each respective Key Principal and any amendments thereto
(which certification shall state that such documents, as amended, are
in full force and effect on the Closing Date), together with
Certificates of Good Standing issued by the Secretary of State of
Delaware;
(iv) copies, certified to be accurate and complete by an
authorized officer of the general partner of each Key Principal, of
all consents, licenses and approvals necessary for each Key Principal
to enter into the Loan Documents to which it is a party and the
transactions contemplated by this Agreement and the other Loan
Documents.
(m) Miscellaneous. Each Borrower shall deliver to Lender the
Contribution Agreement and such other consents, documents, certificates, closing
statements and other items as Lender may require.
SECTION 3.02 Delivery of Property-Related Documents. It shall be a condition
precedent to the funding of the Initial Term Loan that the Lender receive each
of the following, each dated as of the Closing Date, in form and substance
satisfactory to the Lender in all respects:
(a) A favorable opinion of local counsel to the Borrowers as to the
enforceability of the Security Instrument, and any other Loan Documents governed
by local law, executed in connection with the Request.
(b) A commitment for the Title Insurance Policy applicable to each
Initial Mortgaged Property and a pro forma Title Insurance Policy based on such
commitment.
(c) A certificate of insurance and Environmental Report applicable to
each Initial Mortgaged Property.
(d) The Survey applicable to each Initial Mortgaged Property.
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(e) Evidence satisfactory to the Lender of compliance of each Initial
Mortgaged Property with property laws as required by Sections 205 and 206 of
Part III of the DUS Guide.
(f) An Appraisal of each Initial Mortgaged Property.
(g) A Replacement Reserve Agreement, providing for the establishment of
a replacement reserve account, to be pledged to the Lender, in which the owner
shall (unless waived by the Lender) periodically deposit amounts for
replacements for improvements at the Mortgaged Property and as additional
security for the Borrowers' obligations under the Loan Documents.
(h) A Completion/Repair and Security Agreement, the Special
Completion/Repair and Security Agreement and any other required Collateral
Agreement, on the standard form required by the DUS Guide.
(i) An Assignment of Management Agreement, on the standard form
required by the DUS Guide.
(j) An Assignment of Leases and Rents, if the Lender determines one to
be necessary or desirable, provided that the provisions of any such assignment
shall be substantively identical to those in the Security Instrument covering
the Collateral, with such modifications as may be necessitated by applicable
state or local law.
ARTICLE III-A
FUTURE ADDITIONAL MORTGAGED PROPERTY TERM LOANS
SECTION 3.01-A Future Additional Mortgaged Property Term Loans. In order to
obtain a Future Additional Mortgaged Property Term Loan, the Borrowers may from
time to time deliver to the Lender each of (i) a written request for a Future
Additional Mortgaged Property Term Loan ("Future Additional Mortgaged Property
Term Loan Request") in the form attached as Exhibit F to this Agreement, (ii) a
written request for adding Collateral as set forth in Section 3.03-A
("Collateral Addition Request"), and (iii) the underwriting documentation
required to be delivered by the Borrowers to the Lender pursuant to Section
3.03-A(c). Each Future Additional Mortgaged Property Term Loan Request shall be
accompanied by a designation of the principal amount of the Future Additional
Mortgaged Property Term Loan. Each Future Additional Mortgaged Property Term
Loan shall mature on the Maturity Date, have a yield maintenance period and
yield maintenance premium equal to the yield maintenance period and yield
maintenance premium of the Initial Term Loan and have an amortization period
consistent with the amortization period set forth in Exhibit B. Each Future
Additional Mortgaged Property Term Loan shall bear interest at a rate per annum
equal to the Interest Rate as determined pursuant to the terms of Section
3.02-A. If all conditions contained in Sections 3.02-A, 3.03-A and 3.04-A
24
are satisfied, the Lender shall make the requested Future Additional Mortgaged
Property Term Loan, at a closing to be held at offices designated by the Lender
on a Closing Date selected by the Lender, which date shall not be more than five
(5) Business Days after the Borrowing Agent's receipt of the Rate Confirmation
Form, as set forth in Section 3.02-A(c) (or on such other date to which the
Borrowers and the Lender may agree).
SECTION 3.02-A Interest on Future Terms Loans. Provided that the Closing Date
for a Future Additional Mortgaged Property Term Loan is on or prior to March 14,
2000, Borrower will have the right to obtain such Future Additional Mortgaged
Property Term Loan at the same interest rate applicable to the Initial Term Loan
pursuant to the terms and conditions of the Addendum to Rate Lock Agreement
dated as of January 31, 2000 among the Borrowers and Lender. Otherwise, the
interest rate for each Future Additional Mortgaged Property Term Loan shall be
set in accordance with the following procedures:
(a) Rate Setting. If the Borrower satisfies all of the conditions set
forth in Section 3.03-A and Section 3.04-A, then, the Borrowers may submit to
the Lender a completed and executed document in the form attached as Exhibit G
to this Agreement ("Interest Rate Lock Agreement"), together with the Rate Lock
Deposit, before 1:00 p.m. Washington, D.C. time on any Business Day.
(b) Rate Confirmation. Within one (1) Business Day after receipt of the
Rate Lock Deposit and completed and executed Interest Rate Lock Agreement, the
Lender shall solicit bids from institutional investors selected by the Lender
based on information in the Interest Rate Lock Agreement, and provided the
actual Interest Rate on the Future Additional Mortgaged Property Term Loan would
be at or below the Maximum Rate, shall obtain a commitment ("MBS Commitment")
for the purchase of Fannie Mae MBS having the bid terms described in the
Interest Rate Lock Agreement, and shall immediately deliver to the Borrowing
Agent by facsimile transmission a completed document in the form of Exhibit H
("Rate Confirmation Form").
(c) Rate Lock Deposit. In the event that the Lender obtains an MBS
Commitment and the Lender fails to fulfill the MBS Commitment because the Future
Additional Mortgaged Property Term Loan is not made, the Lender shall retain the
Rate Lock Deposit as liquidated damages, as set forth in the Interest Rate Lock
Agreement.
SECTION 3.03-A Additions of Collateral. The procedure for adding Collateral set
forth in this Section 3.03-A shall apply to all additions of Collateral in
connection with a Future Additional Mortgaged Property Term Loan requested by
the Borrowers pursuant to this Agreement. Notwithstanding anything contained
herein, Borrower may not add the properties known as Harbor Club I or Harbor
Club III, unless such properties are added pursuant to the same Collateral
Addition Request.
(a) Request. The Borrowers shall deliver a Collateral Addition Request
to the Lender, in the form attached as Exhibit I to this Agreement, to add one
or more Multifamily Residential Properties to the Collateral Pool. In the event
the Request is made prior to
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February 10, 2000, the Request shall be accompanied by a certificate executed by
an Authorized Representative stating that there has been no material adverse
change in the information shown on the most recent Rent Roll and Operating
Statement relating to the Additional Mortgaged Property from the date of the
Rent Roll and Operating Statement to the date of the Request. In the event the
Request is made after February 10, 2000 but prior to March 15, 2000, the Request
shall be accompanied by a current operating statement and current Rent Roll with
respect to each proposed Additional Mortgaged Property. In the event the request
is made on or after March 15, 2000, each Collateral Addition Request shall be
accompanied by the information required in the prior sentence and the following:
(i) pro forma balance sheets for the Delaware Borrower and (ii) the 1999
year-end balance sheet of the Key Principal, if available or, if not available,
a certificate from an Authorized Representative to the effect that the Key
Principal has not breached its Net Worth covenant set forth in Section 5 of the
Key Principal Guaranty.
(b) Additional Information. The Borrowers shall promptly deliver to the
Lender any additional information concerning the proposed Additional Mortgaged
Property that the Lender may from time to time reasonably request.
(c) Underwriting. If the respective Borrower owns or is about to
acquire any Additional Mortgaged Property and delivers to the Lender a
Collateral Addition Request, together with the underwriting documentation
required pursuant to Section 3.03-A(a), on or before March 15, 2000, the Lender
shall determine the amount of the proposed Future Additional Mortgaged Property
Term Loan based on the Lender's evaluation of the information provided pursuant
to Section 3.03-A(a) in accordance with the DUS Underwriting Requirements. In no
event shall the amount of any Future Additional Mortgaged Property Term Loan
allocated to a proposed Additional Mortgaged Property result in a debt service
coverage ratio of below 1.25:1 or a loan to value ratio of above 80%, in each
case calculated in accordance with DUS Underwriting Requirements.
SECTION 3.04-A Conditions Precedent to Future Additional Mortgaged Property Term
Loans. The obligation of the Lender to make a requested Future Additional
Mortgaged Property Term Loan is subject to the following conditions precedent:
(a) The receipt by the Lender of a Future Additional Mortgaged Property
Term Loan Request;
(b) The receipt by the Lender of a Collateral Addition Request,
together with the underwriting documentation delivered pursuant to Section
3.03-A(c);
(c) The receipt by the Lender of an executed Interest Rate Lock
Agreement, together with the Rate Lock Deposit defined therein;
(d) The approval by the Lender of the proposed Additional Mortgaged
Properties;
(e) The amount of the Future Additional Mortgaged Property Term Loan
shall not exceed the amount by which (i) the sum of the principal amount of the
Initial Term Loan and the
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principal amount of any previously advanced Future Additional Mortgaged Property
Term Loan is less than (ii) the Maximum Term Loan Amount.
(f) If required by the Lender, amendments to the Security Instruments,
reflecting the addition of the Additional Mortgaged Property to the Collateral
Pool, and the receipt by the Lender of an endorsement to each Title Insurance
Policy applicable to each Mortgaged Property, amending the effective date of the
Title Insurance Policy to the Closing Date of the proposed Future Additional
Mortgaged Property Term Loan, and showing no additional exceptions to coverage
other than the exceptions shown on the Initial Closing Date and other exceptions
approved by the Lender;
(g) The receipt of a commitment for the Title Insurance Policy
applicable to each Additional Mortgaged Property and a pro forma Title Insurance
Policy based on such commitment including a Future Additional Mortgaged Property
Term Loan and Rate Adjustment Endorsements in the forms of Exhibit L and a
Tie-In Endorsement;
(h) If any Title Insurance Policy for any Additional Mortgaged Property
contains a Tie-In Endorsement, an endorsement to each other Title Insurance
Policy containing a Tie-In Endorsement, adding a reference to the Additional
Mortgaged Property;
(i) The receipt by the Lender of a Future Term Loan origination fee
equal to 1/2 of 1% of the principal amount of the Future Term Loan and all legal
fees and expenses payable by the Borrower pursuant to Section 10.03(b);
(j) The receipt by the Lender of an Organizational Certificate;
(k) The receipt by the Lender of the deposit required under the
Replacement Reserve Agreement;
(l) The receipt by the Lender of the deposit required under the
Completion/Repair and Security Agreement and the deposit required under any
Special Completion Repair and Security Agreement;
(m) The satisfaction of all Conditions to Closing set forth in Section
3.01(a), (b), (c), (f), (g), (h) and (j) and the satisfaction of all the
Conditions set forth in Section 3.02 (as if Section 3.02 referred to the
Additional Mortgaged Properties being added to the Collateral Pool instead of
the Initial Mortgaged Properties) except for the conditions set forth in
Sections 3.02(b), (e) and (h);
(n) There shall not be pending or threatened any condemnation or other
taking, whether direct or indirect, against any Mortgaged Property, and there
shall not have occurred any casualty to any improvements located on any
Mortgaged Property, which in the case of any such condemnation or taking or
casualty would have or may reasonably be expected to have a Material Adverse
Effect - Portfolio Wide;
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(o) There has been no material adverse change in the financial
condition, business or prospects of any Borrower or in the physical condition
(including as the result of any casualty) operating performance or value of any
of the Mortgaged Properties since the Initial Closing Date which would have or
could reasonably be expected to have a Material Adverse Effect - Portfolio Wide;
(p) The representations and warranties set forth in Section 6.01(f),
(h), (l), (m), (n), (p) and (q) and in Section 6.02 shall be true and correct on
the Closing Date with the same force and effect as if such representations and
warranties had been made on or as of the Closing Date (except that such Sections
shall be deemed to refer only to matters relating to the Additional Mortgaged
Properties being added to the Collateral Pool);
(q) The representations and warranties set forth in Section 6.01(b),
(c), (d), (e), (g) shall be true and correct on the Closing Date with the same
force and effect as if such representations and warranties had been made on and
as of the Closing Date;
(r) Receipt by Lender of a lien search by Title Company relating to all
the Mortgaged Properties showing no new liens, encumbrances or other matters
adversely affecting title since the Initial Closing Date;
(s) Receipt by Lender of a T-3 endorsement to the title insurance
policy relating to the Mortgaged Properties located in Texas insuring that there
are no new liens, encumbrances or other matters adversely affecting title since
the date of the issuance of such title insurance policies; and
(t) The delivery of a written acknowledgment by Borrower of the portion
of the Term Loan allocated to each Mortgaged Property, as reasonably determined
by Lender and reflected in a revised Exhibit B prepared by Lender.
ARTICLE III - B
FUTURE EXCESS PROCEEDS TERM LOAN
SECTION 3.01-B Future Excess Proceeds Term Loan. In order to obtain a Future
Excess Proceeds Term Loan the Borrowers must deliver to the Lender within
forty-five (45) days of the Initial Closing Date, current Rent Rolls and
operating statements for each of the Mortgaged Properties, each certified by an
Authorized Representative. In addition, the Borrowers shall promptly deliver to
the Lender any additional information concerning the Mortgaged Properties that
the Lender may from time to time reasonably request. Any Future Excess Proceeds
Term Loan shall mature on the Maturity Date, have a yield maintenance period and
yield maintenance premium equal to the yield maintenance period and yield
maintenance premium of the Initial Term Loan and have an amortization period
consistent with the amortization period set forth in Exhibit B. Each Future
Excess Proceeds Term Loan shall bear interest at a rate per annum equal to the
Interest Rate as determined pursuant to the terms of Section 3.03-B. If all
conditions
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contained in Sections 3.01-B, 3.02-B, 3.03-B and 3.04-B are satisfied, the
Lender shall make the Future Excess Proceeds Term Loan, at a closing to be held
at offices designed by the Lender on a Closing Date selected by the Lender,
which date shall not be more than five (5) Business Days after the Borrowing
Agent's receipt of the Rate Confirmation Form or on such other date on which the
Borrower and Lender may agree but in any event no later than May 1, 2000.
Section 3.02-B Determination of Amount of Future Excess Proceeds Term Loan. In
the underwriting process, Lender shall rely on the cost allocation and
underwriting values used in the underwriting of the Initial Term Loan. Based on
the information provided by Borrower to Lender pursuant to the terms of Section
3.01-B, Lender shall take the following steps to determine the amount, if any,
of the Future Excess Proceeds Term Loan.
1. Lender shall evaluate each Mortgaged Property on a stand alone basis
and shall determine the maximum amount of the Term Loan which can be allocated
to each Mortgaged Property resulting from a debt service coverage ratio of not
less than 1.25:1 and a loan to value ratio of not greater than 80%, in each case
calculated in accordance with DUS Underwriting Requirements (in relation to each
Mortgaged Property, the "Post-Closing Allocation Amount" and in relation to all
Mortgaged Properties, the "Post-Closing Loan Amount").
2. Lender shall compare the original principal amount of the Initial
Term Loan (the "Closing Loan Amount") allocated to each Mortgaged Property (the
"Closing Allocation Amount") with the Post-Closing Allocation Amount relating to
each Mortgaged Property. Lender shall calculate for each Mortgaged Property the
amount, if any, by which the Closing Allocation Amount exceeds the Post-Closing
Allocation Amount (such amount, if any, in relation to each Mortgaged Property,
the "Allocation Deficit" and in relation to all the Mortgaged Properties the
"Aggregate Allocation Deficit"). If the Post-Closing Loan Amount minus the
Aggregate Allocation Deficit exceeds the Closing Loan Amount (such excess, the
"Aggregate Surplus"), then, pursuant to the terms and conditions of this Article
III-B, Lender shall advance a Future Excess Proceeds Term Loan. Such Future
Excess Proceeds Term Loan shall be an amount which approximately equals the
Aggregate Surplus. The actual principal amount of the Future Excess Proceeds
Term Loan will be determined at the time the interest rate is determined in
accordance with the provisions of Section 3.03-B below and in accordance with
DUS Underwriting Requirements. Lender shall allocate the principal amount of the
Future Excess Proceeds Term Loan to each Mortgaged Property.
SECTION 3.03-B Interest on Future Excess Proceeds Term Loans. The interest rate
for each Future Excess Proceeds Term Loan shall be set in accordance with the
following procedures:
(a) Rate Setting. If the Borrower satisfies all of the conditions set
forth in Section 3.01-B, Section 3.02-B and 3.04-B then, the Borrowers may
submit to the Lender a complete and executed document in the form attached as
Exhibit G (the Interest Rate Lock Agreement), together with the Rate Lock
Deposit, before 1:00 p.m. Washington, D.C. time on any Business Day prior to
April 24, 2000.
(b) Rate Confirmation. Within one (1) Business Day after receipt of the
Rate
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Lock Deposit and completed and executed Interest Rate Lock Agreement, the Lender
shall solicit bids from institutional investors selected by the Lender based on
information in the Interest Rate Lock Agreement, and provided the actual
Interest Rate on the Future Excess Proceeds Term Loan would be at or below the
Maximum Rate, shall obtain a commitment ("MBS Commitment") for the purchase of
Fannie Mae MBS having the bid terms described in the Interest Rate Lock
Agreement, and shall immediately deliver to the Borrowing Agent by facsimile
transmission a completed document in the form of Exhibit H ("Rate Confirmation
Form").
(c) Rate Lock Deposit. In the event that the Lender obtains an MBS
Commitment and the Lender fails to fulfill the MBS Commitment because the Future
Excess Proceeds Term Loan is not made the Lender shall retain the Rate Lock
Deposit as liquidated damages, as set forth in the Interest Rate Lock Agreement.
SECTION 3.04-B Conditions Precedent to Future Excess Proceeds Term Loan. The
obligation of the Lender to make a requested Future Excess Proceeds Term Loan is
also subject to the following conditions precedent:
(a) The receipt by the Lender of all the underwriting documentation
required by Section 3.01-B;
(b) The receipt by the Lender of an executed Interest Rate Lock
Agreement, together with the Rate Lock Deposit defined therein;
(c) The amount of the Future Excess Proceeds Term Loan shall not exceed
the amount by which the sum of the principal amount of the Initial Term Loan and
the principal amount of any previously advanced Future Term Loan is less than
the Maximum Term Loan Amount;
(d) The receipt by the Lender of a Future Term Loan origination fee
equal to 1/2 of 1% of the principal amount of the Future Term Loan and all legal
fees and expenses payable by the Borrower pursuant to Section 10.03(b);
(e) The receipt by the Lender of an Organizational Certificate;
(f) The satisfaction of all Conditions to Closing set forth in Section
3.01(a), (b), (c), (d), (f) and (h) and the satisfaction of all the Conditions
set forth in Section 3.02, except for the conditions set forth in Section
3.02(b), (e) and (h);
(g) There shall not be pending or threatened any condemnation or other
taking, whether direct or indirect, against any Mortgaged Property, and there
shall not have occurred any casualty to any improvements located on any
Mortgaged Property, which in the case of any such condemnation or taking or
casualty would have or may reasonably be expected to have a Material Adverse
Effect - Portfolio Wide;
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(h) There has been no material adverse change in the financial
condition, business or prospects of any Borrower or in the physical condition
(including as the result of any casualty) operating performance or value of any
of the Mortgaged Properties since the Initial Closing Date which would have or
could reasonably be expected to have a Material Adverse Effect - Portfolio Wide;
(i) Receipt by Lender of a lien search by Title Company relating to all
the Mortgaged Properties showing no new liens, encumbrances or other matters
adversely affecting title since the Initial Closing Date;
(j) Receipt by Lender of a T-3 endorsement to the title insurance
policy relating to the Mortgaged Properties located in Texas insuring that there
are no new liens, encumbrances or other matters adversely affecting title since
the date of the issuance of such title insurance policy; and
(k) The delivery of a written acknowledgment by Borrower of the portion
of the Term Loan allocated to each Mortgaged Property, as reasonably determined
by Lender and reflected in a revised Exhibit B prepared by Lender.
ARTICLE IV
RELEASES OF COLLATERAL
SECTION 4.01 Right to Obtain Releases of Collateral. Subject to the terms and
conditions of this Article, the Borrowers shall have the right to obtain a
release of Collateral from the Collateral Pool.
SECTION 4.02 Procedure for Obtaining Releases of Collateral.
(a) Request. In order to obtain a release of Collateral from the
Collateral Pool, the Borrowing Agent may deliver a written request for the
release of Collateral from the Collateral Pool ("Collateral Release Request") to
the Lender, in the form attached as Exhibit M to this Agreement. The Collateral
Release Request shall not be effective unless it is accompanied by the name,
address and location of the Mortgaged Property to be released from the
Collateral Pool ("Collateral Release Property").
(b) Release Closing. If all conditions contained in Section 4.03 are
satisfied, the Lender shall cause the Collateral Release Property to be released
from the Collateral Pool, at a closing to be held at offices designated by the
Lender on a Release Closing Date selected by the Lender, and Lender shall use
its commercially reasonable efforts to cause such Release Closing Date to occur
within 14 days and in any event will cause it to occur no later than 30 days
after the Lender's receipt of the Collateral Release Request (or on such other
date to which the Borrowing Agent and the Lender may agree) by executing and
delivering, and causing all applicable parties to execute and deliver, all at
the sole cost and expense of the Borrowers, instruments, in the form customarily
used by the Lender for releases in the jurisdiction governing
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the perfection of the security interest being released, releasing the applicable
Security Instrument as a Lien on the Collateral Release Property, and UCC-3
Termination Statements terminating the UCC-1 Financing Statements perfecting a
Lien on the portion of the Collateral Release Property comprised of personal
property and such other documents and instruments as the Borrowing Agent may
reasonably request evidencing the release of the applicable Collateral from any
lien securing the Obligations (including a termination of any restriction on the
use of any accounts relating to the Collateral Release Property) and the release
and return to the Borrowing Agent of any and all escrowed amounts relating
thereto. The instruments referred to in the preceding sentence are referred to
in this Article as the "Collateral Release Documents."
(c) Release Price. The "Release Price" for each Mortgaged Property
means 100% of the Allocable Facility Amount for the Mortgaged Property to be
released. In addition to the Release Price, the Borrower shall pay to the Lender
all other amounts due under the Note including interest on the principal amount
of the Note being prepaid. If the Release Closing Date occurs on a date other
than the last Business Day of a calendar month, the Borrowers shall pay to
Lender an amount equal to the interest on the amount of the principal amount of
the Note being prepaid for the entire month in which the Release Closing Date
occurs. The Borrowers agree that any Release Price relating to the Mortgaged
Properties known as Harbour Club I and Harbour Club III located in Belleville,
Michigan must be paid on the same date, i.e., the release of one such Mortgaged
Property from the Collateral Pool may only take place if the other such
Mortgaged Property is simultaneously released.
(d) Application of Release Price. The Release Price shall be treated
and applied as an optional prepayment under the Note pursuant to Section 10 of
the Note and may be paid only on the last Business Day of a calendar month. If
the Release Closing Date occurs on a day other than the last Business Day of a
calendar month, the Lender shall hold the payments as additional Collateral in
an interest bearing account until the last Business Day of such month, at which
time the Lender shall apply the amounts held by it (including interest earned
thereon) to the amount of the prepayment of the Note.
SECTION 4.03 Conditions Precedent to Release of Collateral Release Property from
the Collateral. The obligation of the Lender to release a Collateral Release
Property from the Collateral Pool by executing and delivering the Collateral
Release Documents on the Release Closing Date is subject to the satisfaction of
the following conditions precedent on or before the Release Closing Date:
(a) Receipt by the Lender of the Release Price in accordance with
Section 4.02;
(b) Receipt by the Lender of all legal fees and expenses payable by the
Borrowers in connection with the release pursuant to Section 10.03(b);
(c) Receipt by the Lender on the Release Closing Date of one or more
counterparts of each Collateral Release Document, dated as of the Release
Closing Date, signed
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by each of the parties (other than the Lender) who is a party to such Collateral
Release Document;
(d) If reasonably required by the Lender, amendments to the Note and
the Security Instruments, reflecting the release of the Collateral Release
Property from the Collateral Pool and, as to any Security Instrument so amended,
the receipt by the Lender of an endorsement to the Title Insurance Policy
insuring the Security Instrument, amending the effective date of the Title
Insurance Policy to the Release Closing Date and showing no additional
exceptions to coverage other than the exceptions shown on the Closing Date and
other exceptions approved by the Lender;
(e) If the Lender reasonably determines the Collateral Release Property
to be one phase of a project, and one or more other phases of the project are
Mortgaged Properties which will remain in the Collateral Pool ("Remaining
Mortgaged Properties"), the Lender's determination that the Remaining Mortgaged
Properties can be operated separately from the Collateral Release Property and
any other phases of the project which are not Mortgaged Properties. In making
this determination, the Lender shall evaluate whether the Remaining Mortgaged
Properties comply with the terms of Sections 203 and 208 of the DUS Guide,
which, as of the date of this Agreement, require, among other things, that a
phase which constitutes collateral for a loan made in accordance with the terms
of the DUS Guide (i) have adequate ingress and egress to existing public
roadways, either by location of the phase on a dedicated, all-weather road or by
access to such a road by means of a satisfactory easement, (ii) have access
which is sufficiently attractive and direct from major thoroughfares to be
conducive to continued good marketing, (iii) have a location which is not (A)
inferior to other phases, (B) such that inadequate maintenance of other phases
would have a significant negative impact on the phase, and (C) such that the
phase is visible only after passing through the other phases of the project and
(iv) comply with such other issues as are dictated by prudent practice. Lender
agrees that this paragraph (e) only applies to Harbour Club I and Harbour Club
III;
(f) Receipt by the Lender of endorsements to the Tie-In Endorsements of
the Title Insurance Policies, if deemed reasonably necessary by the Lender, to
reflect the release;
(g) Receipt by the Lender on the Release Closing Date of a writing,
dated as of the Release Closing Date, signed by the Borrowers, in the form
attached as Exhibit N to this Agreement, pursuant to which the Borrowers confirm
that their obligations under the Loan Documents are not adversely affected by
the release of the Collateral Release Property from the Collateral;
(h) Payment by the Borrowers of the Prepayment Premium, if any; and
(i) The satisfaction of all of the following conditions:
(i) The payment by the Borrowers of the Lender's fees and
expenses payable in accordance with this Agreement for which Lender
has presented an invoice on or before the Release Closing Date;
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(ii) There shall not be pending or threatened any condemnation or
other taking, whether direct or indirect against any Mortgaged
Property, and there shall not have occurred any casualty to any
improvements located on any Mortgaged Property, which in the case of
any such condemnation or taking or casualty would have or may
reasonably be expected to have a Material Adverse Effect Portfolio
Wide;
(iii) The receipt by the Lender of the following, each dated as
of the Release Closing Date, in form and substance satisfactory to the
Lender in all respects:
A) A Compliance Certificate;
B) An Organizational Certificate; and
C) Such other documents, instruments, approvals (and, if
requested by the Lender, certified duplicates of executed copies
thereof) and opinions as the Lender may reasonably request.
(i) There shall exist no Event of Default or Potential Event of
Default on the Release Closing Date and, after giving effect to the
transaction requested in the Collateral Release Request, no Event of
Default or Potential Event of Default shall have occurred provided
that if a Potential Event of Default exists on the proposed Release
Closing Date by virtue of a notice from Lender in accordance with
Section 11.01(g) or in the event of the failure of any Borrower to
comply with any Governmental Authority as set forth in Section
11.01(m) which Potential Event of Default in Lender's reasonable
judgment (x) is with respect to a particular Mortgaged Property and
(y) is being corrected by action instituted by the respective Borrower
and is being pursued diligently and in good faith, then the existence
of such Potential Event of Default shall not be a condition to such
Collateral Release Request provided that Borrowers satisfy all other
conditions set forth in this Section 4.03 and pledge and deposit with
Lender an amount equal to the gross proceeds of the sale of the
Collateral Release Property net of all third-party non-affiliate
transaction costs minus the Release Price. Such deposit shall be held
by Servicer in a custodial account pursuant to the DUS Guide and shall
be (i) released to the Borrowing Agent if and when the Potential Event
of Default is cured or (ii) if an Event of Default occurs, applied in
Lender's discretion. In addition, if a Potential Event of Default has
occurred that in the reasonable judgment of Lender is with respect to
a particular Mortgaged Property, then the existence of such Potential
Event of Default shall not be a condition to a Collateral Release
Request for the release of such Collateral Release Property provided
that the Borrowers satisfy all other conditions set forth in this
Section 4.03.
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ARTICLE V
TRANSFERS OF THE MORTGAGED PROPERTY OR INTERESTS IN BORROWER
SECTION 5.01 Transfers and Events that Constitute an Event of Default. Subject
to the provisions of Section 5.02, the occurrence of any of the following events
shall constitute an Event of Default under this Agreement and each Security
Instrument:
(1) a Transfer of all or any part of any Mortgaged Property or any
interest in any Mortgaged Property (including, without
limitation, any legal or equitable interest therein); or
(2) a Transfer which results in any Borrower not being a GSG
Controlled Entity; or
(3) a Transfer which results in WXI/McN Realty, L.L.C. owning,
directly or indirectly, less than 51% of the limited partnership
interests in any Borrower which is a limited partnership or less
than 51% of the general partnership interests in any Borrower
which is a general partnership; or
(4) a Transfer which results in WXI/MNL Real Estate L.L.C. (i)
owning, directly or indirectly, less than 51% of the membership
interests in WXI/McN Realty L.L.C. or (ii) no longer Controlling
WXI/McN Realty L.L.C.; or
(5) a Transfer which results in Whitehall XI (i) owning, directly or
indirectly less than 51% of the membership interests in WXI/MNL
Real Estate L.L.C. or (ii) no longer Controlling WXI/MNL Real
Estate L.L.C.; or
(6) a Transfer with respect to any Person who is at the time of
reference a Key Principal which results in such Person not being
a GSG Controlled Entity; or
(7) a Transfer which results in any general partner of any Borrower
not being a GSG Controlled Entity; or
(8) a conversion of any Borrower or Whitehall from one type of legal
entity into another type of legal entity, whether or not there is
a Transfer, including without limitation, any transaction
affecting any Borrower described in clause (G) of the definition
of "Transfer".
Lender shall not be required to demonstrate any actual impairment of
its security or any increased risk of default in order to exercise any of its
remedies with respect to an Event of
35
Default under this Section 5.01.
SECTION 5.02 Exceptions to Events of Default. The occurrence of any of the
following events shall not constitute an Event of Default under this Agreement
or any Security Instrument, notwithstanding any provision of Section 5.01 to the
contrary:
(1) a Transfer to which Lender has consented pursuant to the
provisions of Section 5.03;
(2) a Transfer that occurs by devise, descent, or by operation of law
upon the death of a natural person;
(3) the grant of a leasehold interest in an individual dwelling unit
for a term of two years or less not containing an option to
purchase;
(4) a Transfer of obsolete, worn out or no longer useful Personalty
or Fixtures (as such terms are defined in the Security
Instruments) in the normal course of any Borrower's maintenance
or improvement with respect to the Mortgaged Properties in
accordance with terms hereof and the Security Instruments;
(5) the grant of an easement, if before the grant Lender determines
that the easement will not materially affect the operation or
value of the affected Mortgaged Property or Lender's interest in
the Mortgaged Property, and the Borrowers pay to Lender, upon
demand, all costs and expenses incurred by Lender in connection
with reviewing Borrowers' request;
(6) the creation of any Permitted Lien;
(7) the release by Lender of any Mortgaged Property from the lien of
a Security Instrument pursuant to Article IV of this Agreement;
(8) conversion of Whitehall XI or Whitehall XII from one type of
legal entity into another type of legal entity, or merger or
consolidation of Whitehall XI or Whitehall XII with or into
another legal entity, provided that (i) the surviving entity is a
GSG Controlled Entity, (ii) the surviving entity satisfies the
minimum net worth requirement applicable to it, if any such
requirement is applicable at the time in question, pursuant to
Section 5 of the Key Principal Guaranty executed by it, (iii) the
surviving entity is bound by all of the terms and provisions of
the Key Principal Guaranty executed by Whitehall XI and Whitehall
XII and (iv) the Lender shall receive such documentation
(including an opinion of counsel as to items (i) and (iii) above)
as Lender shall reasonably require to confirm the foregoing;
36
SECTION 5.03 Procedure for Approval. Lender may, in its sole and absolute
discretion, from time to time, consent to an event that would otherwise
constitute an Event of Default under Sections 5.01 and 5.02, including, without
limitation, a Transfer of a Controlling Interest in any Borrower, which would
otherwise permit Lender to accelerate the indebtedness secured hereby or to
exercise its remedies permitted under the Loan Documents including Section 43 of
the Security Instruments. It is understood and agreed that Lender shall not
consent to a Transfer constituting an assumption of the Term Loan in part or in
whole.
In the event the Borrowing Agent requests such a consent from the
Lender, the Borrowers shall pay to Lender a $3,000 non-refundable application
fee, and if such consent is granted, a fee equal to one percent (1%) of the sums
secured by the applicable Security Instruments. In addition, the Borrowers shall
be required to reimburse Lender and Loan Servicer (as defined in the Security
Instruments) for all of Lender's and Loan Servicer's fees, costs and expenses,
including, without limitation, reasonable legal fees and expenses, incurred in
connection with considering such a request, and all other fees, costs and
expenses incurred in connection with reviewing documentation required by Lender
to analyze and evaluate all aspects of such Transfer, including without
limitation, any Transfer of a Controlling Interest in any Borrower, to the
extent such amounts exceed $3,000, irrespective of whether or not the request
for consent is approved or denied by Lender in its discretion.
SECTION 5.04 Certain Definitions. For purposes of this Section and this
Agreement, the following terms shall have the meanings set forth below:
(1) "Controlling Interest" shall mean, with respect to any entity,
ownership interests in such entity that confer upon the legal or
beneficial holder thereof Control of such entity.
(2) "Whitehall XI" means Whitehall Street Real Estate Limited
Partnership XI, a Delaware limited partnership or any entity
resulting from the merger or consolidation of Whitehall permitted
pursuant to Section 5.02(8).
(3) "Whitehall XII" means Whitehall Street Real Estate Limited
Partnership XII, a Delaware limited partnership or any entity
resulting from the merger or consolidation of Whitehall permitted
pursuant to Section 5.02(8).
(4) "Whitehall" means Whitehall XI, or Whitehall XII, or both, as the
context requires.
(5) WXI/McN Realty L.L.C. means WXI/McN Realty L.L.C., a Delaware
limited liability company.
(6) WXI/MNL Real Estate, L.L.C. means WXI/MNL Real Estate L.L.C., a
Delaware limited liability company.
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(7) "GSG" means The Goldman Sachs Group, Inc., a Delaware
corporation, or any successor thereto, including, without
limitation, any Person who succeeds to substantially all of the
business of The Goldman Sachs Group, Inc.
(8) "GSG Controlled Entity" means a partnership, corporation, limited
liability company, business trust or other business entity of
which GSG has, directly or indirectly, Control.
(9) "Control" (or any variation of such term) of one entity (the
"controlled entity") by another (the "controlling entity") means,
subject to clauses (a) and (b) below, that the controlling entity
has the power, directly or indirectly, to direct or cause the
direction of the management and policies of the controlled
entity, whether through the ownership of voting securities, by
contract, or otherwise.
(a) Except in the case of determining "Control" over Whitehall
as provided in subsection (b) below, a controlling entity
shall be deemed not to have control of a controlled entity,
unless the following circumstances also exist: (i) if the
controlled entity is a corporation, the controlling entity
owns more than 51% of the shares of the controlled entity's
capital stock that have voting power to elect directors,
including shares that have voting power by reason of the
occurrence of one or more conditions or contingencies; (ii)
if the controlled entity is a limited partnership, the
controlling entity Controls (in accordance with the balance
of this definition) the sole general partner or all of the
general partners of the partnership; (iii) if the controlled
entity is a general partnership or a joint venture, the
controlling entity owns more than 51% of the partnership or
joint venture interest in such entity; (iv) if the
controlled entity is a limited liability company, the
controlling entity owns more than 51% of the equity
interests in the limited liability company and Controls (in
accordance with the balance of this definition) a majority
of the managers or members of the limited liability company,
or (v) if the controlled entity is a business trust, the
controlling entity owns more than 51% of the equity
interests in the business trust and Controls (in accordance
with the balance of this definition) a majority of the
trustees of the business trust.
(b) In the case of determining whether an entity has "Control"
over Whitehall, "Control" means that the controlling entity
has the sole power and authority, directly or indirectly, to
direct or cause the direction of the management and policies
of the controlled entity, whether through the ownership of
voting securities, by contract, or
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otherwise, without the need for any approval from any
shareholder, member, partner or other owner of such
controlled entity or any other person or entity, except for:
(i) the rights of approval conferred on the Lender to the
extent provided in the Loan Documents;
(ii) rights conferred on a shareholder, member, partner or
other owner (r) as matter of statutory, regulatory,
decisional or common law; (s) to consent or withhold
consent to a merger, consolidation, dissolution or
liquidation; (t) to consent or withhold consent to a
sale or other disposition of all or substantially all
of the entity's assets; and (u) to consent or withhold
consent to a fundamental change in investment policies.
ARTICLE VI
REPRESENTATIONS AND WARRANTIES
SECTION 6.01 Representations and Warranties of the Borrowers. Each Borrower
hereby represents and warrants to the Lender as follows:
(a) Due Organization; Qualification. WXI/MCN Multifamily Real Estate
Limited Partnership is a limited partnership duly organized, validly existing
and in good standing under the laws of Delaware. Castle Bluff Fund XII
Associates L.P. is a limited partnership duly organized, validly existing and in
good standing under the laws of Texas. Brendon Way Fund XII Associates is a
general partnership duly organized and validly existing under the laws of
Indiana. Embarcadero Associates is a general partnership duly organized and
validly existing under the laws of Georgia. Each Borrower is duly qualified to
do business, and is in good standing, in each state in which any Mortgaged
Property is located and in each other jurisdiction in which such qualification
and/or standing is necessary to the conduct of its business and where the
failure to be so qualified would adversely affect the validity of, the
enforceability of, or the ability of the Borrower to perform its obligations
under, this Agreement and the other Loan Documents. Each General Partner of each
Borrower is a duly organized and validly existing limited liability company or
limited partnership duly qualified to do business in and in good standing under
the laws of its respective state of organization and in each other jurisdiction
in which such qualification and/or standing is necessary to the conduct of its
business and where the failure to be so qualified would adversely affect the
validity, the enforceability, or the ability of any Borrower to perform its
obligations under this Agreement and the other Loan Documents. The Partnership
Agreement of each Borrower has been duly executed and delivered by each partner,
is a legal and valid and binding agreement, enforceable in accordance with its
terms, and is in full force and effect. Each Borrower has its principal place of
business, principal office and office where it keeps its records at the notice
address set forth for the Borrowing Agent in
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Section 16.08 of this Agreement. The partners of each Borrower and the
percentage of their ownership interests and/or capital accounts of such partners
are as set forth in Schedule 2 attached hereto.
(b) Power and Authority. Each Borrower has the requisite power and
authority (i) to own its properties and to carry on its business as now
conducted and as contemplated to be conducted in connection with the performance
of the Obligations hereunder and under the other Loan Documents and (ii) to
execute and deliver this Agreement and the other Loan Documents and to carry out
the transactions contemplated by this Agreement and the other Loan Documents.
(c) Due Authorization. The execution, delivery and performance of this
Agreement and the other Loan Documents have been duly authorized by all
necessary action and proceedings by or on behalf of each Borrower, and no
further approvals or filings of any kind, including any approval of or filing
with any Governmental Authority, are required by or on behalf of any Borrower as
a condition to the valid execution, delivery and performance by such Borrower of
this Agreement or any of the other Loan Documents.
(d) Valid and Binding Obligations. This Agreement and the other Loan
Documents have been duly authorized, executed and delivered by each Borrower and
constitute the legal, valid and binding obligations of each Borrower,
enforceable against each Borrower in accordance with their respective terms,
except as such enforceability may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium or similar laws or equitable principles
affecting the enforcement of creditors' rights generally or by equitable
principles or by the exercise of discretion by any court.
(e) Non-contravention; No Liens. Neither the execution and delivery of
this Agreement and the other Loan Documents, nor the fulfillment of or
compliance with the terms and conditions of this Agreement and the other Loan
Documents nor the performance of the Obligations:
(1) does or will conflict with or result in any breach or violation of
any Applicable Law enacted or issued by any Governmental Authority or other
agency having jurisdiction over any Borrower, any of the Mortgaged
Properties or any other portion of the Collateral or other assets of any
Borrower or any judgment or order applicable to any Borrower or to which
any Borrower, any of the Mortgaged Properties or other assets of any
Borrower are subject;
(2) does or will conflict with or result in any breach or violation
of, or constitute a default under, any of the terms, conditions or
provisions of any Borrower's Organizational Documents, any indenture,
existing agreement or other instrument to which any Borrower is a party or
to which any Borrower, any of the Mortgaged Properties or any other portion
of the Collateral or other assets of any Borrower are subject;
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(3) does or will result in or require the creation of any Lien on all
or any portion of the Collateral or any of the Mortgaged Properties, except
for the Permitted Liens; or
(4) does or will require the consent or approval of any creditor of
any Borrower, any Governmental Authority or any other Person except such
consents or approvals which have already been obtained.
(f) Pending Litigation or other Proceedings. Except as set forth on
Schedule 3 attached hereto, there is no pending or, to the best knowledge of
each Warrantor, threatened action, suit, proceeding or investigation, at law or
in equity, before any court, board, body or official of any Governmental
Authority or arbitrator against or affecting any Mortgaged Property or any other
portion of the Collateral or other assets of any Borrower, which, if decided
adversely to any Borrower, would have, or may reasonably be expected to have, a
Material Adverse Effect. No Borrower is in default with respect to any order of
any Governmental Authority.
(g) Solvency. Neither any Borrower, any General Partner, nor any Key
Principal is insolvent (within the meaning of any applicable federal or state
law relating to bankruptcy or fraudulent transfers) and will not be rendered
insolvent by the transactions contemplated by the provisions of this Agreement
and the other Loan Documents. Taking into account the benefits to each Borrower
arising pursuant to the Contribution Agreements, in connection with the
execution and delivery of each Security Instrument and the other Loan Documents
(and the delivery to, or for the benefit of, Lender of any collateral
contemplated thereunder), and the incurrence by each Borrower of the
Obligations:
(i) each Borrower did not receive less than a reasonably equivalent
value in exchange for such transfer or incurrence of the Obligations; and
(ii) each Borrower
(A) was solvent on the date that such transfer was made or such
Obligations were incurred, and did not become insolvent as a result of
such transfer or incurrence of the Obligations;
(B) is not engaged in a business or a transaction, or is not
about to engage in a business or a transaction, for which any property
remaining with such Borrower is an unreasonably small capital; and
(C) does not intend to incur, and does not believe that it will
incur, debts that would be beyond such Borrower's ability to pay as
such debts matured.
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The present fair saleable value of each Borrower's assets is not less
than the amount that will be required to pay each Borrower's probable liability
on its existing debts (including the Obligations). There (i) is no pending or,
to any Borrower's knowledge, threatened or contemplated, bankruptcy,
reorganization, receivership, insolvency or like proceeding, whether voluntary
or involuntary, affecting any Borrower, any General Partner, or any Key
Principal or any Mortgaged Property and (ii) has been no assertion or exercise
of jurisdiction over any Borrower, any General Partner or any Key Principal or
any Mortgaged Property by any court empowered to exercise bankruptcy powers.
Neither any Borrower, any General Partner, nor any Key Principal is currently
the subject of any judgment unsatisfied of record or docketed in any court of
the state in which any Mortgaged Property is located or in any court located in
the United States.
(h) No Contractual Defaults. There are no defaults by any Borrower or,
to the knowledge of any Warrantor, by any other Person under any contract to
which any Borrower is a party relating to any Mortgaged Property, including any
management, rental, service, supply, security, maintenance or similar contract,
other than defaults which do not have, and are not reasonably expected to have,
a Material Adverse Effect. No Borrower nor, to the knowledge of any Warrantor,
any other Person, has received notice or has any knowledge of any existing
circumstances in respect of which it could receive any notice of default or
breach in respect of any contracts affecting or concerning any Mortgaged
Property other than defaults which do not have, and are not reasonably expected
to have, a Material Adverse Effect. No event has occurred and is continuing, or
would result from the execution of this Agreement, or any other transaction
contemplated hereby, which constitutes a Potential Event of Default or an Event
of Default. There are no Potential Events of Default or Events of Default.
(i) Compliance with the Loan Documents. Each Borrower is in compliance
with all provisions of the Loan Documents to which it is a party or by which it
is bound. The representations and warranties made by each Borrower in the Loan
Documents are true, complete and correct as of the Closing Date and do not
contain any untrue statement of material fact or omit to state a material fact
required to be stated therein or necessary in order to make the statements made
therein, in light of the circumstances under which they were made, not
misleading.
(j) ERISA. Each Borrower is in compliance in all material respects with
all applicable provisions of ERISA and has not incurred any liability to the
PBGC for a Plan under Title IV of ERISA. None of the assets of any Borrower
constitute plan assets (within the meaning of Department of Labor Regulation ss.
2510.3-101) of any employee benefit plan subject to Title I of ERISA. Neither
any Borrower nor any member of such Borrower's Controlled Group is or ever has
been obligated to contribute to any Multiemployer Plan.
(k) Financial Information. The financial projections relating to each
Borrower and delivered to the Lender on or prior to the date hereof, if any,
were prepared on the basis of assumptions believed by the Warrantors, in good
faith at the time of preparation, to be reasonable and each Borrower is not
aware of any fact or information that would lead it to believe that such
assumptions are incorrect or misleading in any material respect. The financial
statements of each
42
Borrower which have been furnished to the Lender present fairly the financial
condition of each Borrower, as of its date in accordance with GAAP, applied on a
consistent basis, and since the date of the most recent of such financial
statements no event has occurred which would have, or may reasonably be expected
to have a Material Adverse Effect, and there has not been any material
transaction entered into by each Borrower other than transactions in the
ordinary course of business. No Borrower has material contingent obligations
which are not disclosed in its most recent financial statements. No material
adverse change in the financial condition of any General Partner or any Key
Principal has occurred between the respective dates of the financial statements
which were furnished to Lender relating to such entities and the date hereof.
(l) Accuracy of Information. Each Borrower has disclosed to the Lender
in writing any fact or circumstance known to the Warrantors concerning Mortgaged
Property zoning/legal compliance, insurance coverage, access to public streets,
availability of utilities, provision of service, existing matters of title and
survey, leases, and current property taxes/assessments, which has had, or in the
reasonable judgment of such Borrower could reasonably be expected to have, a
Material Adverse Effect. All information, reports and other papers and data
furnished by each Borrower, any General Partner or any Key Principal to the
Lender were, at the time the same were so furnished, complete and correct in all
material respects, or based on good faith estimates on the date as of which such
information is stated or certified. Each Borrower has disclosed to the Lender in
writing any and all facts known to the Warrantors that have had, or in the
reasonable judgment of any Borrower could reasonably be expected to have a
Material Adverse Effect. In response to each inquiry to each Borrower relating
to any Borrower, each Mortgaged Property and the transactions contemplated by
the Loan Documents made by the Lender or Fannie Mae, each Borrower has not to
the knowledge of the Warrantors omitted to state a material fact necessary in
order to make the response to each inquiry, in light of the circumstances under
which such response was made, not misleading.
(m) No Conflicts of Interest. To the best knowledge of the Warrantors,
no member, officer, agent or employee of the Lender has been or is in any manner
interested, directly or indirectly, in that Person's own name, or in the name of
any other Person, in the Loan Documents, any Borrower or any Mortgaged Property,
in any contract for property or materials to be furnished or used in connection
with such Mortgaged Property or in any aspect of the transactions contemplated
by the Loan Documents.
(n) Governmental Approvals. No Governmental Approval not already
obtained or made is required for the execution and delivery of this Agreement or
any other Loan Document or the performance of the terms and provisions hereof or
thereof by any Borrower.
(o) Governmental Orders. No Borrower is presently under any cease or
desist order or other orders of a similar nature, temporary or permanent, of any
Governmental Authority which would have the effect of preventing or hindering
performance of its duties hereunder, nor are there any proceedings presently in
progress or to its knowledge contemplated which would, if successful, lead to
the issuance of any such order.
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(p) No Reliance. Each Borrower acknowledges, represents and warrants
that it understands the nature and structure of the transactions contemplated by
this Agreement and the other Loan Documents, that it is familiar with the
provisions of all of the documents and instruments relating to such
transactions; that it understands the risks inherent in such transactions,
including the risk of loss of all or any of the Mortgaged Properties; and that
it has not relied on the Lender or Fannie Mae for any guidance or expertise in
analyzing the financial or other consequences of the transactions contemplated
by this Agreement or any other Loan Document or otherwise relied on the Lender
or Fannie Mae in any manner in connection with interpreting, entering into or
otherwise in connection with this Agreement, any other Loan Document or any of
the matters contemplated hereby or thereby.
(q) Compliance with Applicable Law. Each of the following statements is
subject to those matters disclosed in Schedule 4. Each Borrower is in compliance
with Applicable Law, including all Governmental Approvals, if any, except for
such items of noncompliance that, singly or in the aggregate, have not had and
are not reasonably expected to cause, a Material Adverse Effect. To the
knowledge of the Warrantors, each Borrower has disclosed all violations of all
Applicable Laws. There are no state or local Applicable Laws regarding rents,
occupancy or resale restrictions which adversely affect any Mortgaged Property.
All rental restrictions relating to any Mortgaged Property as a result of any
federal government loan or assistance have been fully terminated. To the
knowledge of the Warrantors, there is no evidence of any illegal activities
relating to controlled substances on any Mortgaged Property.
(r) Single Purpose Entity. The Delaware Partnership and each General
Partner is a Single Purpose entity. The only real or personal property owned by
the Georgia Borrower are the Mortgaged Properties known as Embarcadero Club
Apartments and Tanglewood Village Apartments and assets related to or arising
out of the ownership, the operations and maintenance of such Mortgaged
Properties. The only real or personal property owned by the Indiana Borrower is
the Mortgaged Property known as Brendon Way Apartments and assets related to or
arising out of the ownership, the operations and maintenance of such Mortgaged
Property. The only real or personal property owned by the Texas Borrower is the
Mortgaged Property known as Castle Bluff Apartments and assets related to or
arising out of the ownership, the operations and maintenance of such Mortgaged
Property. None of the Georgia Borrower, the Indiana Borrower and the Texas
Borrower (i) is engaged in any business or activity other than in connection
with the ownership, management and operation of any Mortgaged Property or (ii)
owes any Indebtedness other than Indebtedness relating to the Term Loan or
secured by Permitted Liens. To the knowledge of the Warrantors, each of the
Georgia Borrower, the Indiana Borrower and the Texas Borrower is a Single
Purpose entity.
(s) Lines of Business. No Borrower is engaged in any businesses other
than the acquisition, ownership, development, leasing or management of the
Mortgaged Properties, and the conduct of these businesses does not violate its
Organizational Documents pursuant to which it is formed.
(t) Disclosure of Indebtedness. Other than as set forth on Schedule 5
attached hereto, no Borrower has any outstanding Indebtedness.
44
(u) Reserved.
(v) Absence of Default in Payment of Indebtedness. No Borrower is in
default in the payment of the principal of or interest on any of its
indebtedness for borrowed money, if any, and no event of default under any
instrument under and subject to which any indebtedness has been incurred, has
occurred and is continuing, and no event has occurred and is continuing under
the provisions of any such instrument which with the lapse of time or the giving
of notice, or both, would constitute an event of default under any such
instrument.
(w) No Transfer of Interests in any Borrower. Except as otherwise
disclosed in writing to Fannie Mae or the Lender, no Transfer of any Controlling
Interest in any Borrower has occurred and is continuing since the date of the
application submitted by any Borrower to the Lender.
SECTION 6.02 Representations and Warranties of the Borrowers Relating to
Mortgaged Properties. Each Borrower hereby represents and warrants to the Lender
as follows with respect to each of the Mortgaged Properties owned by such
Borrower (as set forth on Exhibit A hereto) and with respect to other related
subject matter as set forth below.
(a) Title. The Borrower has good, valid, marketable and indefeasible
title in fee to each Mortgaged Property, free and clear of all Liens whatsoever
except the Permitted Liens. If a Mortgaged Property is a condominium, as defined
by the statutes in effect in the jurisdiction in which such Mortgaged Property
is located, a legal, valid and binding declaration establishing such condominium
is in full force and effect and the Borrower has good, valid, marketable and
indefeasible title in fee to each and every condominium unit and its appurtenant
undivided interest in the applicable common elements related to each condominium
unit subject to such declaration and the condominium units and their appurtenant
interests created by the declaration in the aggregate comprise the entire
integrated structure of which each such unit is a part. Each Mortgage, if and
when properly recorded in the appropriate records, together with any Uniform
Commercial Code financing statements required to be filed in connection
therewith, will create a valid, perfected first lien on the Mortgaged Property
to which it relates (including the Leases, the rents and all rights to collect
rents thereunder), which, in the case of a condominium, includes each and every
condominium unit and its appurtenant undivided interest in the applicable common
elements related to each condominium unit, subject only to Permitted Liens.
Except for any Permitted Liens, there are no Liens or claims for work, labor or
materials affecting any Mortgaged Property which are or may be prior to,
subordinate to, or of equal priority with, the Liens created by the Security
Documents. The Borrower represents and warrants that the Permitted Liens do not
have, and may not reasonably be expected to have, a Material Adverse Effect.
(b) Taxes. The Borrower has filed all property and similar tax returns
required to have been filed by it with respect to each Mortgaged Property and
has paid and discharged, or caused to be paid and discharged, all installments
for the payment of real estate, property or similar taxes due to date, and all
other material Impositions imposed against,
45
affecting or relating to each Mortgaged Property other than those which have not
become due, together with any fine, penalty, interest or cost for nonpayment
pursuant to such returns or pursuant to any assessments received by it. To
Borrower's knowledge, there are not presently pending any special assessments
except as otherwise disclosed by Borrower in writing to Lender prior to the date
hereof against any Mortgaged Property or any part thereof. The Borrower has no
knowledge of any tax, levy or other governmental or private assessment or charge
in respect of any Mortgaged Property which has been enacted and is not effective
on the date hereof or has been proposed and which has not been disclosed in
writing to the Lender or Fannie Mae.
(c) Zoning. Except as set forth in Schedule 4, each Mortgaged Property
complies in all material respects with all Applicable Laws affecting such
Mortgaged Property and without limiting the foregoing, all Permits, including
certificates of occupancy, have been issued and are in full force and effect.
Except as set forth on Schedule 4, neither the Borrower nor, to the knowledge of
the Borrower, any former owner of any Mortgaged Property has received any
written notification or threat of any actions or proceedings regarding the
noncompliance or nonconformity of such Mortgaged Property with Applicable Laws
or Permits, nor is the Borrower otherwise aware of any such pending actions or
proceedings.
(d) Liability for Hazardous Substances. Except as disclosed in any
Environmental Report or otherwise disclosed in writing by the Borrower to the
Lender before the date of this Agreement, to the knowledge of the Warrantors,
the Borrower has no liability, contingent or otherwise, in connection with any
Hazardous Substance Activity on or affecting any Mortgaged Property in violation
of Hazardous Materials Laws as in effect as of the Closing Date.
(e) Prohibited Activities or Conditions. Except as disclosed in any
Environmental Report or otherwise disclosed in writing by the Borrower to the
Lender before the date of this Agreement, (a) to the knowledge of the
Warrantors, no Prohibited Activities or Conditions exist or have existed at,
upon, under or within any Mortgaged Property that have not been remedied and (b)
the Borrower has not at any time caused or permitted any Prohibited Activities
or Conditions to exist at, upon, under or within any Mortgaged Property.
(f) Hazardous Materials. Except as disclosed in any Environmental
Report or otherwise disclosed in writing by the Borrower to the Lender before
the date of this Agreement, (i) neither the Borrower nor, to the knowledge of
the Warrantors, any other party has been or is involved in operations at any
Mortgaged Property which operations could reasonably be expected to lead to (A)
the imposition of liability on the Borrower under any Hazardous Materials Law in
effect as of the date of this Agreement, or on any subsequent or former owner of
such Mortgaged Property, or (B) the creation of a Lien with respect to a
liability on such Mortgaged Property under any Hazardous Materials Law in effect
as of the date hereof; (ii) the Borrower has not permitted any tenant or
occupant of such Mortgaged Property to engage in any activity that could
reasonably be expected to impose a claim or liability under any Hazardous
Materials Law in effect as of the date hereof on such tenant or occupant, on the
Borrower or on any other subsequent or former owner of such Mortgaged Property;
and (iii) the Borrower has
46
not received, and has no knowledge of the issuance of, any claim, citation or
notice of any Governmental Actions.
(g) Reserved.
(h) Rent Roll. The Borrower has executed and delivered to the Lender a
Rent Roll for each Mortgaged Property. Each Rent Roll sets forth each and every
unit subject to a Lease as of the date of the Rent Roll. The information set
forth on the Rent Roll is true, correct and complete in all material respects as
of its date and there has occurred no material adverse change in the information
shown on the Rent Roll from the date of the Rent Roll to the Closing Date.
(i) Status of Landlord under Leases. Except for any assignment of
leases and rents which is a Permitted Lien or which is to be released in
connection with the consummation of the transactions contemplated by this
Agreement, the Borrower is the owner and holder of the landlord's interest under
each of the Leases of units in each Mortgaged Property and there are no prior
enforceable outstanding assignments of any such Lease, or any portion of the
rents, additional rents, charges, issues or profits due and payable or to become
due and payable thereunder. The Borrower has not granted any possessory interest
in any Mortgaged Property or right to occupy the same except under and pursuant
to provisions of existing Leases.
(j) Enforceability of Leases. The Borrower has delivered to the Lender
a true and correct copy of its current form of apartment Lease for the units in
each Mortgaged Property. The Borrower leases apartment units in each Mortgaged
Property in the ordinary course of its business. Each unit in each Mortgaged
Property that is not vacant and that has been leased by Borrower has been leased
pursuant to the Lease delivered to the Lender, with no material modifications
thereto, or pursuant to a previously used form that is not materially less
advantageous to the Borrower, except as disclosed in writing to the Lender. Each
Lease constitutes the legal, valid and binding obligation of the Borrower and,
to the knowledge of the Borrower, of each of the other parties thereto, and
except as disclosed in writing to the Lender, no notice of any default by the
Borrower which remains uncured has been delivered to Borrower by any tenant
under any Lease.
(k) No Lease Options. All premises demised to tenants under Leases for
the units in each Mortgaged Property are occupied by such tenants as tenants
only. No Lease contains any option to purchase, right of first refusal or any
other similar provision which is enforceable against the Borrower. No option to
purchase, right of first refusal or similar right which is enforceable against
the Borrower exists with respect to any Mortgaged Property.
(l) Insurance. The Borrower has delivered to the Lender certificates of
insurance currently in effect as of the date of this Agreement with respect to
each Mortgaged Property. Each such insurance policy complies in all respects
with the requirements set forth in the Security Documents. All insurance
premiums which have become due and payable have been paid.
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(m) Tax Parcels. Each Mortgaged Property is on one or more separate tax
parcels, and each such parcel or parcels is separate and apart from any other
property.
(n) Encroachments. Except as may be shown on the Survey for each
Mortgaged Property delivered to the Lender, none of the improvements located on
any Mortgaged Property encroaches upon the property of any other Person nor lies
outside of the boundaries and building restriction lines of such Mortgaged
Property and no improvement located on property adjoining any Mortgaged Property
lies within the boundaries of or in any way encroaches upon such Mortgaged
Property.
(o) Independent Unit. Except as otherwise disclosed by Borrower in
writing to Lender in connection with the application for the Term Loan, each of
the following statements in this Section 6.02(o) is true. Each Mortgaged
Property is an independent unit which does not rely on any drainage, sewer,
access, parking, structural or other facilities located on any property not
included in such Mortgaged Property or on public or utility easements for the
(a) fulfillment of any zoning, building code or other requirement of any
Governmental Authority that has jurisdiction over such Mortgaged Property, (b)
structural support or (c) the fulfillment of the requirements of any Lease or
other agreement affecting such Mortgaged Property. The Borrower, directly or
indirectly, has the right to use all amenities, easements, public or private
utilities, parking, access routes or other items necessary or currently used for
the operation of each Mortgaged Property. All public utilities are installed and
operating at each Mortgaged Property and all billed installation and connection
charges have been paid in full. Each Mortgaged Property is either (a) contiguous
to, or (b) benefits from an irrevocable unsubordinated easement permitting
access from such Mortgaged Property to a physically open, dedicated public
street, and has all necessary permits for ingress and egress and is adequately
serviced by public water, sewer systems and utilities. No building or other
improvement not located on any Mortgaged Property relies on any part of such
Mortgaged Property to fulfill any zoning requirements, building code or other
requirement of any Governmental Authority that has jurisdiction over such
Mortgaged Property for structural support or to furnish to such building or
improvement any essential building systems or utilities.
(p) Condition of Mortgaged Property. Except as otherwise disclosed by
Borrower in writing to Lender in connection with the application for the Term
Loan each of the following statements in this Section 6.02(p) is true. Each
Mortgaged Property is in good condition, order and repair, there exist no
structural or other material defects in any Mortgaged Property, whether latent
or otherwise, and the Borrower has not received notice from any insurance
company or bonding company of any defects or inadequacies in any Mortgaged
Property, or any part of it, which would adversely affect the insurability of
any Mortgaged Property or cause the imposition of extraordinary premiums or
charges for insurance or of any termination or threatened termination of any
policy of insurance or bond. To the best knowledge of the Borrower, no claims
have been made against any contractor, architect or other party with respect to
the condition of any Mortgaged Property or the existence of any structural or
other material defect therein. Each Mortgaged Property has not been materially
damaged by fire, or other casualty which damage has not been fully repaired or
for which insurance proceeds have not been received or are not expected to be
received except as disclosed in writing to Fannie Mae
48
or the Lender; there are no proceedings pending for partial or total
condemnation of any Mortgaged Property except as disclosed in writing to Fannie
Mae or the Lender. No Mortgaged Property is under construction or substantial
rehabilitation.
(q) Title Insurance. The title insurance policy issued on the Closing
Date, relating to each Mortgaged Property and naming Fannie Mae as the insured
accurately reflects all liens and encumbrances known by the Borrower to exist
on, or which otherwise affect, each respective Mortgaged Property.
(r) Affiliate Contracts. Except for the contracts set forth on Schedule
6 attached hereto, the Borrower has not entered into any Contractual Obligation,
lease or other agreement with any Person that directly or indirectly controls,
is controlled by, or is under common control with, the Borrower for the
provision of any service, materials or supplies to any Mortgaged Property
(including, without limitation, any contract, Lease or agreement for the
provision of property management services, cable television services or
equipment, gas, electric or other utilities, security services or equipment,
parking services, laundry services or equipment or telephone services or
equipment).
(s) Commercial Leases. Except as disclosed on Schedule 7 attached
hereto, there are no commercial leases affecting any Mortgaged Property. Neither
the Borrower, the Key Principals the General Partner nor any Affiliate of the
Borrower, the Key Principals or the General Partner is an Affiliate or otherwise
related to the lessee under any cable television lease relating to any Mortgaged
Property.
SECTION 6.03 Representations and Warranties of the Lender. The Lender hereby
represents and warrants to the Borrower as follows:
(a) Due Organization. The Lender is a limited partnership duly
organized, validly existing and in good standing under the laws of the State of
Delaware.
(b) Power and Authority. The Lender has the requisite power and
authority to execute and deliver this Agreement and to perform its obligations
under this Agreement.
(c) Due Authorization. The execution and delivery by the Lender of this
Agreement, and the consummation by it of the transactions contemplated thereby,
and the performance by it of its obligations thereunder, have been duly and
validly authorized by all necessary action and proceedings by it or on its
behalf.
ARTICLE VII
AFFIRMATIVE COVENANTS OF THE BORROWER
Each Borrower agrees and covenants with the Lender as follows:
49
SECTION 7.01 [RESERVED.]
SECTION 7.02 Maintenance of Existence. Each Borrower shall maintain its
existence and continue to be a limited partnership or a general partnership (as
the case may be), organized and in good standing (if applicable) under the laws
of its respective state of organization and continue to be duly qualified to do
business in and shall remain in good standing (if applicable) in each state in
which any Mortgaged Property is located and in each other jurisdiction in which
such qualification and/or standing is necessary to the conduct of its business
and where the failure to be so qualified would adversely affect the validity,
the enforceability, or the ability of the Borrower to perform its obligations
under this Agreement and the other Loan Documents. Each General Partner shall
maintain its existence and continue to be a limited liability company organized
and in good standing under the laws of its respective state of organization, and
continue to be duly qualified to do business in and shall remain in good
standing in each jurisdiction in which such qualification and/or standing is
necessary to the conduct of its business and where the failure to be so
qualified would materially adversely affect the validity, the enforceability or
the ability of any Borrower to perform its obligations under this Agreement and
the other Loan Documents.
SECTION 7.03 [RESERVED.]
SECTION 7.04 Financial Statements; Accountants' Reports; Other Information. Each
Borrower shall keep and maintain at all times complete and accurate books of
account and records in sufficient detail to correctly reflect (x) all of their
own financial transactions and assets and (y) the results of the operation of
each Mortgaged Property and copies of all written contracts, Leases and other
material instruments which affect each Mortgaged Property (including bills,
invoices and contracts for electrical service, gas service, water and sewer
service, waste management service, telephone service and management services).
In addition, each Borrower shall furnish, or cause to be furnished, to the
Lender:
(a) Annual Financial Statements. As soon as available, and in any event
within 120 days after the close of each Borrower's fiscal year, the Borrowing
Agent shall deliver the balance sheets, statement of income, partners' equity
and retained earnings and statements of cash flow of each Borrower and each Key
Principal for such fiscal year, all in reasonable detail and stating in
comparative form the respective figures for the corresponding date and period in
the prior fiscal year, prepared in accordance with GAAP, consistently applied,
and accompanied by a certificate of each Borrower (or each Borrower's
independent certified public accountants if requested by the Lender in its
discretion) to the effect that such financial statements have been prepared in
accordance with GAAP, consistently applied, and that such financial statements
fairly present the results of its operations and financial condition for the
periods and dates indicated, with such certification to be free of exceptions
and qualifications as to the scope of the audit or as to the going concern
nature of the business.
(b) Quarterly Financial Statements. As soon as available, and in any
event within 45 days after each of the first three fiscal quarters of each
fiscal year, the unaudited
50
balance sheet of each Borrower as of the end of such fiscal quarter, the
unaudited statement of income and retained earnings of each Borrower and the
unaudited statement of cash flows of each Borrower for the portion of the fiscal
year ended with the last day of such quarter, all in reasonable detail and
stating in comparative form the respective figures for the corresponding date
and period in the previous fiscal year, accompanied by a certificate of each
Borrower's Authorized Representative to the effect that such financial
statements have been prepared in accordance with GAAP, consistently applied, and
that such financial statements fairly present the results of its operations and
financial condition for the periods and dates indicated subject to year end
adjustments in accordance with GAAP.
(c) Quarterly Property Statements. As soon as available, and in any
event within 30 days after each Calendar Quarter, a statement of income and
expenses of each Mortgaged Property accompanied by a certificate of each
Borrower's Authorized Representative to the effect that each such statement of
income and expenses fairly presents the operations of each such Mortgaged
Property for the period indicated.
(d) Annual Property Statements. On an annual basis within one-hundred
twenty (120) days of the end of its fiscal year, an annual statement of income
and expenses of each Mortgaged Property accompanied by a certificate of each
Borrower's Authorized Representative to the effect that each such statement of
income and expenses fairly presents the operations of each such Mortgaged
Property for the period indicated. At Lender's request each Borrower shall
provide to Lender, at Borrower's expense, certified annual statements of income
and expenses of each Mortgaged Property prepared by an independent certified
public accountant satisfactory to the Lender.
(e) Updated Rent Rolls. Upon the Lender's request (but not more
frequently than quarterly), a current Rent Roll for each Mortgaged Property,
showing the name of each tenant, and for each tenant, the space occupied, the
lease expiration date, the rent payable, the rent paid and any other information
requested by the Lender and accompanied by a certificate of such Borrower's
Authorized Representative to the effect that the information set forth in such
Rent Roll is true and correct in all material respects as of its date and
contains all of the information as and when requested by the Lender.
(f) Security Deposit Information. Upon the Lender's request, an
accounting of all security deposits held in connection with any Lease of any
part of any Mortgaged Property, including the name and identification number of
the accounts in which such security deposits are held, the name and address of
the financial institutions in which such security deposits are held and the name
and telephone number of the person to contact at such financial institution,
along with any authority or release necessary for the Lender to access
information regarding such accounts.
(g) Securities Law Reporting Information. If, and for so long as, any
Borrower or any Key Principal is a reporting company under the Securities and
Exchange Act of 1934, promptly upon becoming available, (a) copies of all
financial statements, reports and proxy statements sent or made available
generally by Borrower or any Key Principal, or any of their
51
Affiliates, to their respective security holders, (b) all regular and periodic
reports and all registration statements (other than the exhibits thereto and any
registration statements on Form S-8 or a similar form) and prospectuses, if any,
filed by Borrower or any Key Principal, or any of their Affiliates, with the
Securities and Exchange Commission or other Governmental Authorities, and (c)
all press releases and other statements made available generally by Borrower or
any Key Principal, or any of their Affiliates, to the public concerning material
developments in the business of Borrower or other party.
(h) Accountants' Reports. Within 30 days after any Borrower's receipt,
copies of any reports or management letters submitted to any Borrower by its
independent certified public accountants in connection with the examination of
its financial statements made by such accountants (except for reports otherwise
provided pursuant to subsection (a) above).
(i) Business Plan. Promptly after finalization thereof, the Business
Plan of each Borrower for the year then in progress within 90 days after the end
of each calendar year.
(j) Complaints. Within 10 days after any Borrower's receipt, copies of
any complaint filed against any Borrower or any Mortgaged Property management
alleging any violation of fair housing law, handicap access or the Americans
with Disabilities Act and any final administrative or judicial dispositions of
such complaints.
(k) Asset Manager Reports. Promptly, after receipt, the reports
delivered by the Asset Manager under Section 4.4 and 5.2.1(a) of the Asset
Management Agreement as in effect as of the date hereof.
(l) [RESERVED.]
(m) Other Reports. Promptly upon receipt thereof, all schedules,
financial statements or other similar reports delivered by any Borrower pursuant
to the Loan Documents or requested by the Lender with respect to any Borrower's
business affairs or condition (financial or otherwise) or any of the Mortgaged
Properties.
(n) Certification. All certifications required to be delivered pursuant
to this Section 7.04 shall run directly to and be for the benefit of Lender and
Fannie Mae.
SECTION 7.05 Certificate of Compliance. Each Borrower shall deliver to the
Lender concurrently with the delivery of the financial statements and/or reports
required to be delivered pursuant to Section 7.04 (a) and (b) above a
certificate signed by its Authorized Representative or by it stating that, to
the best knowledge of such individual following reasonable inquiry, (i) no event
described in Section 7.08 has occurred or that notice has been given, and (ii)
no Event of Default or Potential Event of Default has occurred, or if an Event
of Default or Potential Event of Default has occurred, specifying the nature
thereof in reasonable detail and the action which Borrower is taking or proposes
to take with respect thereto. Any certificate required by this Section 7.05
shall run directly to and be for the benefit of Lender and Fannie Mae.
52
SECTION 7.06 Maintain Licenses. Each Borrower shall procure and maintain in full
force and effect all licenses, Permits, charters and registrations which are
material to the conduct of its business and shall abide by and satisfy all terms
and conditions of all such licenses, Permits, charters and registrations.
SECTION 7.07 Access to Records; Discussions With Officers and Accountants. To
the extent permitted by law and in addition to the applicable requirements of
the Security Instruments, each Borrower shall permit the Lender:
(a) to inspect, make copies and abstracts of, and have reviewed or
audited, such of Borrower's books and records as may relate to the Obligations
or any Mortgaged Property;
(b) to discuss Borrower's affairs, finances and accounts with Senior
Management and, solely with respect to any information specific to any Mortgaged
Property, any site manager of such Mortgaged Property;
(c) to discuss Borrower's affairs, finances and accounts with its
independent public accountants, provided that Borrower's Authorized
Representative has been given the opportunity by the Lender to be a party to
such discussions; and
(d) to receive any other information that the Lender deems necessary or
relevant in connection with the Term Loan, any Loan Document, or the
Obligations.
Each Borrower shall maintain complete and accurate books and records
(i) reflecting all of its business affairs and transactions in accordance with
GAAP consistently applied and any applicable regulations, (ii) in sufficient
detail to correctly reflect the results of the operation of each Mortgaged
Property, and (iii) of all written contracts, leases and other instruments which
affect any Mortgaged Property (including but not limited to all bills, invoices
and contracts for electrical service, gas service, water and sewer service,
waste management service, telephone service and management services). Lender
shall have reasonable access to each Borrower's books and records and the books
and records relating to the transactions contemplated by the Loan Documents.
The books and records of each Borrower and the books and records
relating to the transactions contemplated by the provisions of the Loan
Documents shall be maintained at the address of the Borrowing Agent set forth in
Section 16.08 of this Agreement, unless any Borrower shall otherwise advise
Lender in writing.
Notwithstanding the foregoing, prior to an Event of Default or
Potential Event of Default, all inspections shall be conducted with prior notice
at reasonable times during normal business hours and during a Potential Event of
Default all such inspections shall be conducted with one day prior notice.
53
SECTION 7.08 Inform the Lender of Material Events. Each Borrower shall promptly
inform the Lender in writing of any of the following (and shall deliver to the
Lender copies of any related written communications, complaints, orders,
judgments and other documents relating to the following) of which any member of
Senior Management has actual knowledge:
(a) Defaults. The occurrence of any Event of Default or any Potential
Event of Default under this Agreement or any other Loan Document;
(b) [RESERVED.];
(c) Legal Proceedings. The commencement or threat of, or amendment to,
any proceedings by or against any Borrower in any Federal, state or local court
or before any Governmental Authority, or before any arbitrator, which, if
adversely determined, would have, or at the time of determination may reasonably
be expected to have, a Material Adverse Effect;
(d) Bankruptcy Proceedings. The commencement of any proceedings by or
against any Borrower, any General Partner or any Key Principal under any
applicable bankruptcy, reorganization, liquidation, insolvency or other similar
law now or hereafter in effect or of any proceeding in which a receiver,
liquidator, trustee or other similar official is sought to be appointed for any
such party;
(e) Regulatory Supervision or Penalty. The receipt of notice from any
Governmental Authority having jurisdiction over any Borrower that (A) any
Borrower is being placed under regulatory supervision, (B) any license, Permit,
charter, membership or registration material to the conduct of any Borrower's
business or the Mortgaged Properties is to be suspended or revoked or (C) any
Borrower is to cease and desist any practice, procedure or policy employed by
it, as the case may be, in the conduct of its business, and such cessation would
have, or may reasonably be expected to have, a Material Adverse Effect;
(f) Environmental Claim. The receipt from any Governmental Authority or
other Person of any notice of violation, claim, demand, abatement, order or
other order or direction (conditional or otherwise) for any damage, including
personal injury (including sickness, disease or death), tangible or intangible
property damage, contribution, indemnity, indirect or consequential damages,
damage to the environment, pollution, contamination or other adverse effects on
the environment, removal, cleanup or remedial action or for fines, penalties or
restrictions, resulting from or based upon (a) the existence or occurrence, or
the alleged existence or occurrence, of a Hazardous Substance Activity or (b)
the violation, or alleged violation, of any Hazardous Materials Laws in
connection with any Mortgaged Property or any of the other assets of any
Borrower;
(g) Tax Audit. The receipt of notice from the Internal Revenue Service
or any state or local tax authority of any assessment relating to the tax
treatment of any Borrower as other than a partnership;
54
(h) Trade Creditor Defaults. The failure of the Delaware Borrower to
pay any trade liabilities to any Persons pursuant to any Contractual Obligations
in an amount in excess of $500,000 in the aggregate or the failure of any other
Borrower to pay any trade liabilities to any Persons pursuant to any Contractual
Obligations in an amount in excess of $100,000 in the aggregate;
(i) Material Adverse Effects. The occurrence of any act, omission,
change or event which has a Material Adverse Effect subsequent to the date of
the most recent audited financial statements of any Borrower delivered by it
pursuant to Section 7.04;
(j) Accounting Changes. Any material change in any Borrower's
accounting policies or financial reporting practices;
(k) Change in Senior Management. Any change in the identity of any
member of Senior Management or any Key Principal.
SECTION 7.09 Single-Purpose Entities. Each Borrower shall at all times maintain
and conduct itself as a Single-Purpose entity.
SECTION 7.10 Inspection. Each Borrower shall permit any Person designated by the
Lender: (i) to make entries upon and inspections of the Mortgaged Properties;
and (ii) to otherwise verify, examine and inspect the amount, quantity, quality,
value and/or condition of, or any other matter relating to, any Mortgaged
Property; provided, however, that prior to an Event of Default or Potential
Event of Default, all such entries, examinations and inspections shall be
conducted with prior notice to the Borrower that owns the applicable Mortgaged
Property at reasonable times during normal business hours and during a Potential
Event of Default all such entries, examinations and inspections shall be
conducted with one day prior notice to the Borrower that owns the applicable
Mortgaged Property.
SECTION 7.11 Compliance with Applicable Laws. Each Borrower shall comply in all
material respects with all Applicable Laws now or hereafter affecting any
Mortgaged Property or any part of any Mortgaged Property or requiring any
alterations, repairs or improvements to any Mortgaged Property. Each Borrower
shall procure and continuously maintain in full force and effect, and shall
abide by and satisfy all material terms and conditions of all Permits. Borrower
shall be deemed to be in compliance with all Applicable Laws relating to and
despite the matters disclosed on Schedule 4 as required by the prior sentence
during the period in which and so long as Borrower completes the repairs
specified in Schedule 4 by May 1, 2000.
SECTION 7.12 Warranty of Title. Each Borrower shall warrant and defend (a) the
title to each Mortgaged Property and every part of each Mortgaged Property,
subject only to Permitted Liens, and (b) the validity and priority of the lien
of the applicable Loan Documents, subject only to Permitted Liens, in each case
against the claims of all Persons whatsoever.
SECTION 7.13 Defense of Actions. Each Borrower shall appear in and defend any
action or proceeding purporting to affect the security for this Agreement or the
rights or power of the
55
Lender hereunder, and shall pay all reasonable out-of-pocket costs and expenses,
including the cost of evidence of title and reasonable attorneys' fees, in any
such action or proceeding in which the Lender may appear. If any Borrower fails
to perform any of the covenants or agreements contained in this Agreement, or if
any action or proceeding is commenced that is not diligently defended by it
which affects in any material respect the Lender's interest in any Mortgaged
Property or any part thereof, including eminent domain, code enforcement or
proceedings of any nature whatsoever under any Applicable Law, whether now
existing or hereafter enacted or amended, then the Lender may, but without
obligation to do so and without notice to or demand upon the Borrowing Agent or
the applicable Borrower and without releasing any Borrower from any Obligation,
make such appearances, disburse such sums and take such action as the Lender
deems necessary or appropriate to protect the Lender's interest, including
disbursement of attorney's fees, entry upon such Mortgaged Property to make
repairs or take other action to protect the security of said Mortgaged Property,
and payment, purchase, contest or compromise of any encumbrance, charge or lien
which in the judgment of the Lender appears to be prior or superior to the Loan
Documents. In the event (i) that any Security Instrument is foreclosed in whole
or in part or that any Loan Document is put into the hands of an attorney for
collection, suit, action or foreclosure, or (ii) of the foreclosure of any
mortgage, deed to secure debt, deed of trust or other security instrument prior
to or subsequent to any Security Instrument or any Loan Document in which
proceeding the Lender is made a party or (iii) of the bankruptcy of any Borrower
or any Key Principal or an assignment by any Borrower or Key Principal for the
benefit of their respective creditors, such Borrower or any Key Principal shall
be chargeable with and agrees to pay all reasonable out-of-pocket costs of
collection and defense, including actual attorneys' fees in connection therewith
and in connection with any appellate proceeding or post-judgment action involved
therein, which shall be due and payable together with all required service or
use taxes.
SECTION 7.14 Insurance Escrow. (a) So long as no Event of Default has occurred
and is continuing, Lender hereby waives the obligations of Borrower under
Section 7 of each Security Instrument with respect to the escrow of premiums for
insurance (the "Required Escrow Payments"). During any period in which the
obligation to pay the Required Escrow Payments has been waived pursuant to this
Section 7.14, each Borrower shall do one of the following:
(1) Each Borrower shall pay such insurance premiums directly to
the payee thereof and send to the Lender invoices and paid receipts,
or other documentation satisfactory to Lender, evidencing payment of
insurance premiums on the earlier of the date that such insurance is
due and payable or thirty (30) days prior to the expiration date of
the insurance policy, and shall include all such payments in its
monthly and annual property income and expense data; or
(2) at least 15 days prior to the expiration date of the
insurance policy (the "Expiring Policy") each Borrower shall provide
to Lender written proof that the expiration date of the Expiring
Policy has been extended by at least 30 days certified by the issuer
of the insurance policy. Then, at least 10 days before the original
expiration date (not the extended expiration date) of
56
the Expiring Policy, each Borrower shall either (i) deliver to Lender
written proof certified by the issuer of the insurance policy that an
insurance policy replacing the Expiring Policy, or an extension of the
Expiring Policy, has been obtained, for a period of at least one year
after the original expiration date of the Expiring Policy (as
applicable, the "Renewal Policy"), and paid receipts or other
documentation establishing that it has paid its portion of the
insurance premium for the Renewal Policy or (ii) deliver an amount
equal to its portion of such insurance premium as reasonably
determined by the Lender (the "Deposit"). If any Borrower delivers the
Deposit to Lender, Lender shall hold the Deposit in a custodial
account meeting the requirements of the DUS Guide, and shall only
disburse the Deposit (plus interest) as follows:
(A) Whenever any Borrower delivers to Lender written proof
certified by the issuer of the insurance policy that the Renewal
Policy has been obtained and paid receipts or documentation
establishing that it has paid its portion of the insurance
premium, Lender shall disburse the Deposit (plus interest) to the
Borrowing Agent (unless Lender has already disbursed it pursuant
to paragraph (B) below) (the "Borrower Disbursement").
(B) If, at any time before any Borrower has delivered the
proof referred to in paragraph (A) above, the expiration date of
the Expiring Policy, as it may have been extended from time to
time according to certificates issued by the issuer to Lender, is
less than 30 days in the future, Lender may disburse the Deposit
(plus interest) to purchase the required insurance on behalf of
the Borrower (the "Purchase Event").
(b) Lender's waiver of the Required Escrow Payments shall, at the
option of Lender, be revoked upon the occurrence of any of the following events,
and each Borrower's obligations under Section 7 of the Security Instruments
shall immediately be reinstated:
(1) an Event of Default; or
(2) a Purchase Event; or
(3) a Borrower Disbursement has not taken place within three
months after original expiration date of the Expiring Policy; or
(4) any Borrower's failure to perform its obligations under
paragraph (1) and (2) of subsection (a); or
(5) any Borrower's failure to perform its obligations under
paragraph (1) of subsection (a) unless it performs its alternative
obligations under paragraph (2) of subsection (a).
57
SECTION 7.15 ERISA. Each Borrower shall at all times remain in compliance in all
material respects with all applicable provisions of ERISA and similar
requirements of the PBGC.
SECTION 7.16 Loan Document Taxes. If any tax, assessment or Imposition (other
than a tax imposed on or measured by, the net income or capital (including
branch profits tax) of the Lender (or any transferee or assignee thereof,
including a participation holder)) ("Loan Document Taxes") is levied, assessed
or charged by the United States, or any State in the United States, or any
political subdivision or taxing authority thereof or therein upon any of the
Loan Documents or the obligations secured thereby, the interest of the Lender in
the Mortgaged Properties, or the Lender by reason of or as holder of the Loan
Documents, each Borrower shall pay all such Loan Document Taxes to, for, or on
account of the Lender (or provide funds to the Lender for such payment, as the
case may be) as they become due and payable and shall promptly furnish proof of
such payment to the Lender, as applicable. In the event of passage of any law or
regulation permitting, authorizing or requiring such Loan Document Taxes to be
levied, assessed or charged, which law or regulation in the opinion of counsel
to the Lender may prohibit each Borrower from paying the Loan Document Taxes to
or for the Lender, each Borrower shall enter into such further instruments as
may be permitted by law to obligate it to pay such Loan Document Taxes. In
addition, such Borrower shall pay all documentary stamp, recording, transfer,
mortgage, intangible or filing or other taxes or fees and any and all
liabilities with respect thereto, or resulting therefrom which may be payable or
determined to be payable in connection with the execution and delivery of, or
consummation or administration of any of the transactions contemplated by, or
any amendment, supplement or modification of, or any waiver or consent under or
in respect of or filing of record, recordation, release or discharge of, this
Agreement, the Security Instruments, or any other Loan Document. All amounts due
under this Section 7.16 shall be payable within 10 days after delivery of
written notice from the Lender to the Borrowing Agent unless a non-appealable
judicial order requires that any such payments must be made on an earlier date
in which case payment shall be made by such date on written demand therefor.
SECTION 7.17 Further Assurances. Each Borrower, at the request of the Lender,
shall execute and deliver and, if necessary, file or record such statements,
documents, agreements, UCC financing and continuation statements and such other
instruments and take such further action as the Lender from time to time may
request as reasonably necessary, desirable or proper to carry out more
effectively the purposes of this Agreement or any of the other Loan Documents or
to subject the Collateral to the lien and security interests of the Loan
Documents or to evidence, perfect or otherwise implement, to assure the lien and
security interests intended by the terms of the Loan Documents or in order to
exercise or enforce its rights under the Loan Documents.
SECTION 7.18 [RESERVED.]
SECTION 7.19 [RESERVED.]
SECTION 7.20 [RESERVED.]
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SECTION 7.21 Affiliate Contracts. Except as set forth on Schedule 6, each
Borrower shall not enter into any Contractual Obligation, lease or other
agreement with any person that directly or indirectly controls, is controlled
by, or is under common control with it for the provision of any service,
materials or supplies to any Mortgaged Property (including, without limitation,
any contract, lease or agreement for the provision of property management
services, cable television services or equipment, gas, electric or other
utilities, security services or equipment, parking services, laundry services or
equipment or telephone services or equipment).
SECTION 7.22 Manager; Management Fees. If any Manager is removed by Lender
pursuant to the terms and conditions of the Loan Documents, each Borrower agrees
to use commercially reasonable efforts to hire a new Manager on or prior to the
effective date of termination unless otherwise directed by Lender. Any new
Manager must be approved in writing by Lender prior to being hired which
approval shall be granted if Lender determines that such proposed Manager is
qualified in accordance with the criteria set forth in Section 701 of the DUS
Guide. The management agreement between the applicable Borrowers or Borrower and
the new Manager must be approved in writing by Lender and the applicable
Borrower or Borrowers and new Manager must execute and deliver to Lender a new
Assignment of Management Agreement. During any period in which any Mortgaged
Property is managed by a subsidiary of any Borrower or of any Affiliate of any
Borrower or any member of any Borrower, the management fee paid to such
management entity in respect of such Property shall not exceed the Maximum
Percentage of the Gross Revenues of such Property as specified on Exhibit A.
SECTION 7.23 [RESERVED.]
SECTION 7.24 [RESERVED.]
SECTION 7.25 Ownership of Mortgaged Properties. Each Borrower shall be the sole
owner of each of the Mortgaged Properties free and clear of any Liens other than
Permitted Liens.
SECTION 7.26 Post-Closing Requirements (a) Not later than March 1,
2000, (i) Borrower will deliver to Lender a Survey of each Initial Mortgaged
Property for which Borrower did not deliver a Survey on or before the Initial
Closing Date which Survey shall include, without limitation, a certification of
the Surveyor as set forth in paragraph 5 of the Surveyor's Certificate required
by the DUS Guide referencing the respective Title Insurance Policy delivered on
January 31, 2000 and (ii) the Title Company shall issue an endorsement to those
Title Insurance Policies relating to Mortgaged Properties where the legal
description in Schedule A (and Exhibit A attached thereto) of such Title
Insurance Policies does not conform with the legal description set forth in the
Survey with respect to such Mortgaged Properties, insuring that the legal
description contained in the Security Instruments relating to such Mortgaged
Properties is the same as the property described in Schedule A (and Exhibit A
attached thereto) of such Title Insurance Policy and as the property described
in such Survey (the "Survey Endorsement"). Borrower's failure to deliver any
such Survey or Survey Endorsement shall be an Event of Default. Lender agrees
that such an Event of Default relates solely to the
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Initial Mortgaged Properties for which the Surveys or Survey Endorsement are not
delivered and may be cured pursuant to the last paragraph of Section 11.01.
(b) After the Initial Closing Date, Borrower will deliver to Lender the
following good standing certificates or opinions of Borrower's local counsel:
(1) Not later than March 1, 2000 or March 15, 2000 with respect to the
state of Ohio (the "Initial Good Standing Deadline"), Borrowers will
deliver a good standing certificate with respect to the Delaware Borrower,
Texas Borrower and each General Partner of such Borrowers issued by the
secretary of state (or similar officer) of every state in which the
Delaware Borrower and the Texas Borrower owns a Mortgaged Property except
to the extent any such good standing certificate was delivered on or before
the Initial Closing Date (a "Missing Good Standing State").
(2) The Initial Good Standing Deadline in any Missing Good Standing
State will be extended through May 31, 2000 if Borrower's local counsel in
such Missing Good Standing State delivers, not later than the Initial Good
Standing Deadline, a legal opinion addressed to Lender to the effect that
the Delaware Borrower's failure, or the Texas Borrower's failure, or either
such Borrower's General Partner's failure, or all such failures, as the
case may be, to be duly qualified and in good standing in the state in
question will not (i) impair the legal right or ability of either such
Borrower (which will be represented by its General Partner) to employ legal
process in such state to evict a tenant of the Mortgaged Property in such
state for nonpayment of rent, or if it does impair that legal ability, such
impairment will end when such Borrower, or such Borrower's General Partner,
or both, as the case may be, becomes duly qualified and in good standing in
such state (including with respect to tenant defaults that occur before it
becomes duly qualified and in good standing), and (ii) impair the ability
of Lender to enforce the terms and provisions of the Loan Documents against
such Borrowers.
(3) Notwithstanding paragraph (1), no good standing certificate will
be required with respect to any such Borrower's General Partner in any
state in which local counsel delivers a legal opinion addressed to Lender
to the effect that such Borrower's General Partner is not required to be
qualified as a foreign corporation in such state or that the failure of
such Borrower's General Partner to be duly qualified and in good standing
in the state in question does not materially and adversely affect such
Borrower's General Partner or such Borrower.
ARTICLE VIII
NEGATIVE COVENANTS OF THE BORROWER
Each Borrower, with respect to itself, agrees and covenants with the
Lender that, at all times during the Term of this Agreement:
SECTION 8.01 Other Activities. Each Borrower shall not:
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(i) acquire any real or personal property other than any Mortgaged
Property and assets related to the operations and maintenance of any
Mortgaged Property or engage in any business or activity other than in
connection with the ownership, management and operation of any Mortgaged
Property;
(ii) amend, modify, supplement or waive any terms or provisions of
its Partnership Agreement without the prior written consent of Fannie Mae,
provided that such consent shall not be withheld, after request therefor,
if the proposed change is not inconsistent with the terms of the Loan
Documents, and will not have a Material Adverse Effect or result in a
Potential Event of Default or Event of Default;
(iii) use, or permit to be used, any Mortgaged Property for any uses
or purposes other than as a Multifamily Residential Property;
(iv) either directly or indirectly sell, transfer, exchange or
otherwise dispose of any of its assets except as permitted hereunder or by
each Mortgage;
(v) dissolve or liquidate in whole or in part (except that it is
understood that sales of Mortgaged Properties in accordance with the Loan
Documents and distribution of the resulting sales proceeds shall not be
regarded as dissolution or liquidation, even though the long-run effect
will be to result in the eventual dissolution or liquidation of any
Borrower); or
(vi) merge or consolidate with any Person.
SECTION 8.02 [RESERVED.]
SECTION 8.03 Zoning. No Borrower shall initiate or consent to any zoning
reclassification of any Mortgaged Property or seek any variance under any zoning
ordinance or use or permit the use of any Mortgaged Property in any manner that
could result in the use becoming a nonconforming use under any zoning ordinance
or any other applicable land use law, rule or regulation.
SECTION 8.04 Liens. No Borrower shall create, incur, assume or suffer to exist
any Lien on any Mortgaged Property or any part of any Mortgaged Property, except
the Permitted Liens.
SECTION 8.05 Sale. No Borrower shall sell, convey, transfer, assign or otherwise
relinquish any Mortgaged Property or any part of any Mortgaged Property or any
interest therein without the prior written consent of Lender, other than (a) as
may be permitted by the Loan Documents, or (b) to enter into Leases for units or
other space in any Mortgaged Property to any tenant in the ordinary course of
business.
SECTION 8.06 Indebtedness. No Borrower shall now or at any time in the future be
obligated with respect to Indebtedness other than (i) the Obligations, (ii)
obligations defined in subsection (c) of the definition of "Indebtedness" which
are capital leases permitted as Permitted Liens and (iii) payments owing under
the Contribution Agreement.
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SECTION 8.07 Principal Place of Business. No Borrower shall change its principal
place of business or the location of its books and records, each as set forth in
Section 6.01, without first giving 30 days' prior written notice to the Lender.
SECTION 8.08 [RESERVED]
SECTION 8.09 Condominiums. No Borrower shall submit any Mortgaged Property to a
condominium regime during the Term of this Agreement.
SECTION 8.10 Restrictions on Partnership Distributions. No Borrower shall make
any distributions of any nature or kind whatsoever to the owners of its
Ownership Interests as such if, at the time of such distribution, an Event of
Default has occurred and remains uncured.
ARTICLE IX
INDEMNIFICATION, LIABILITY AND OTHER MATTERS
SECTION 9.01 Indemnification. Each Borrower hereby releases the Lender, Fannie
Mae, the Servicer and their respective officers, directors, members,
shareholders, officials, agents, independent contractors and employees from, and
covenants and agrees to indemnify, hold harmless and defend the Lender, Fannie
Mae, the Servicer and their respective officers, members, directors,
shareholders, officials, agents, independent contractors and employees and each
of them (each an "indemnified party") from and against (a) any and all claims,
joint or several, by or on behalf of any person arising from any cause
whatsoever in connection with the transactions provided for in the Loan
Documents or otherwise in connection with each Mortgaged Property or the
execution or amendment of any document relating thereto; (b) any and all claims,
joint or several, arising from any cause whatsoever in connection with the
approval of the financing of any Mortgaged Property; (c) any and all claims,
joint or several, arising from any act or omission of any Borrower or any of its
agents, servants, employees or licensees, in connection with the Loan Documents
or any Mortgaged Property; (d) any certifications or representations made by any
person other than the party seeking indemnification in connection therewith and
the carrying out by any Borrower of any of the transactions contemplated by the
Loan Documents; (e) any and all claims arising in connection with the operations
of any Mortgaged Property, or the conditions, occupancy, use, possession,
conduct or management of work done in or about, or from the planning, design,
acquisition, installation or construction of, any Mortgaged Property or any part
of any Mortgaged Property or with respect to any act, event, condition or
circumstance in connection with any Mortgaged Property; (f) any and all losses,
claims, damages, liabilities or expenses, joint or several, arising out of or
connected with the exercise by the Lender, Fannie Mae, or the Servicer of their
respective powers or duties under any of the Loan Documents; (g) the misfeasance
or malfeasance of, or theft committed by any director, officer, employee,
partner or agent of any Borrower; (h) the violation by any Borrower of any
federal or state laws, rules or regulations relating to the maximum amount of
interest permitted to be received on account of the loan of money; (i)
representations or warranties of any Borrower contained in this Agreement, any
Loan Document
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or in any certificate furnished or delivered to the Lender, Fannie Mae or the
Servicer shall have been false when made; (j) any and all claims by any other
Person in connection with such Person having an interest in any Mortgaged
Property, other than with respect to a Permitted Lien; and (k) all reasonable
costs, counsel fees, expenses or liabilities incurred in connection with any
such claim or proceeding referred to in clause (a) through (j) above; provided,
however, that the foregoing indemnification shall not be effective to the extent
such damages are determined by a court of competent jurisdiction by final and
nonappealable judgment to have resulted from the gross negligence or willful
misconduct of the indemnified party. In the event that any action or proceeding
is brought against any indemnified party with respect to which indemnity may be
sought hereunder, the Borrowers, upon written notice from the indemnified party
to the Borrowing Agent, shall assume the investigation and defense thereof,
including the employment of counsel selected by the Borrowing Agent but
reasonably acceptable to the indemnified party, and shall assume the payment of
all expenses related thereto, with full power to litigate, compromise or settle
the same in its sole discretion, provided that such indemnified party shall have
the right to review and approve or disapprove any such compromise or settlement.
Each indemnified party shall have the right, if such indemnified party shall
reasonably conclude in good faith that a conflict of interest exists, to employ
separate counsel in any such action or proceeding and participate in the
investigation and defense thereof, and the Borrowers shall pay the reasonable
fees and expenses of such separate counsel. In the event that an indemnified
party does not conclude that a conflict of interest exists and yet such party
prefers to employ separate counsel in such action or proceeding, it may do so at
its own cost and expense. If separate counsel are employed as described above,
the Borrowers and any such indemnified party agree to cooperate as may
reasonably be required in order to ensure the proper and adequate defense of any
such action, suit or proceeding, including, but not limited to, making available
to each other, and their counsel and accountants, all books and records relating
to such action, suit or proceeding. If any such counsel reasonably determines
that the rendering of such assistance will adversely affect the defense or
interests of its client, such counsel shall not be required to comply with the
terms of the immediately preceding sentence.
Notwithstanding any Transfer of any Mortgaged Property to another owner, the
Borrowers shall remain obligated to indemnify each indemnified party pursuant to
this Section with respect to acts occurring prior to the date of transfer of
legal title to such Mortgaged Property (irrespective of when a claim is actually
made).
SECTION 9.02 Survival. The indemnity provisions of Section 9.01 shall survive
the termination of this Agreement and foreclosure of any Security Instrument or
other disposition of any Mortgaged Property to the fullest extent permitted by
law. All amounts due under Section 9.01 shall be payable within 30 days after
delivery of written notice from Lender or Servicer to the Borrowing Agent unless
judicial order requires that any such payments must be made on an earlier date
in which case payment shall be made by such date on written demand therefor.
Notwithstanding anything to the contrary contained herein, any liability of a
Borrower (and any trustee or other person or persons winding up the affairs of
such Borrower pursuant to Section 17-803 of the Delaware Revised Limited
Partnership Act or the equivalent provisions of any other Applicable Law under
which a Borrower is organized) shall be deemed satisfied in full
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and fully discharged (and such Borrower and any partner, controlling Person or
Affiliate thereof shall be forever released) on (A) the date that is one year
after the Obligations are paid in full (the "Satisfaction Date"), or (B) solely
with respect to any claim or demand pending or threatened for environmental
liabilities that is actually known to such Borrower as of the Satisfaction Date,
the later to occur of (i) the date that is one year after the Satisfaction Date
or (ii) the date on which liquidation of such Borrower and final distribution of
the assets of such Borrower occurs pursuant to Section 17-804 of the Delaware
Revised Uniform Limited Partnership Act or the equivalent provisions of any
other Applicable Law under which a Borrower is organized.
SECTION 9.03 Liability of the Borrowers. The obligation of the Borrowers to make
any and all payments to Lender required by this Agreement shall not be subject
to diminution by set-off, recoupment, counterclaim (other than mandatory
counterclaims), abatement or otherwise.
SECTION 9.04 Lender, Fannie Mae and Servicer Not Liable. Neither the Lender,
Fannie Mae, the Servicer nor any of their respective officials, officers,
directors, members, shareholders, agents, independent contractors or employees
shall be responsible for or liable to any Borrower or any of its officials,
officers, directors, shareholders, members, partners, affiliates, independent
contractors or employees for (i) any act or omission of the Lender, Fannie Mae,
the Servicer or any other Person made in good faith with respect to the
validity, sufficiency, accuracy or genuineness of documents, or of any
endorsement(s) thereon (except for documents and endorsements provided by the
Lender, Fannie Mae or the Servicer, as applicable), even if such documents
should be in fact prove to be in any or all respects invalid, insufficient,
fraudulent or forged; (ii) for errors, omissions, interruptions or delays in
transmission or delivery of any messages, by mail, cable, telegraph, telex,
telecopier or otherwise; (iii) for any loss or delay in the transmission or
otherwise of any document or draft required in order to make a Term Loan; and
(iv) for any consequences arising from causes beyond the control of the Lender,
Fannie Mae or the Servicer, as applicable. In furtherance and not in limitation
of the foregoing, the Lender (or Fannie Mae or the Servicer) may accept
documents that appear on their face to be valid and in order, without any
responsibility for further investigation. None of the above shall affect,
impair, or prevent the vesting of any rights or powers of the Lender, Fannie Mae
or the Servicer under this Agreement.
In furtherance and extension and not in limitation of the specific provisions
set forth above, any action taken or omitted by the Lender, Fannie Mae or the
Servicer under or in connection with any Loan Document or any related
certificates or other documents, if taken or omitted in good faith, shall be
binding upon each Borrower and shall not put the Lender, Fannie Mae or the
Servicer under any resulting liability to any Borrower.
SECTION 9.05 WAIVERS AND CONSENTS. EACH BORROWER AGREES TO BE BOUND BY THIS
AGREEMENT AND, TO THE EXTENT PERMITTED BY LAW, (A) WAIVES AND RENOUNCES ANY AND
ALL REDEMPTION AND EXEMPTION RIGHTS AND THE BENEFIT OF ALL VALUATION AND
APPRAISAL PRIVILEGES AGAINST THE INDEBTEDNESS AND OBLIGATIONS EVIDENCED BY THIS
AGREEMENT AND THE OTHER LOAN DOCUMENTS OR BY ANY EXTENSION OR RENEWAL OF THIS
AGREEMENT AND THE OTHER LOAN DOCUMENTS; (B) WAIVES
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PRESENTMENT AND DEMAND FOR PAYMENT, NOTICES OF NONPAYMENT AND OF DISHONOR,
PROTEST OF DISHONOR AND NOTICE OF PROTEST; (C) WAIVES ALL NOTICES IN CONNECTION
WITH THE DELIVERY AND ACCEPTANCE OF THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS
AND ALL OTHER NOTICES IN CONNECTION WITH THE PERFORMANCE, DEFAULT OR ENFORCEMENT
OF THE PAYMENT OF ANY OBLIGATIONS UNDER THIS AGREEMENT AND THE OTHER LOAN
DOCUMENTS EXCEPT AS REQUIRED BY THIS AGREEMENT OR THE OTHER LOAN DOCUMENTS; (D)
AGREES THAT ITS LIABILITIES UNDER THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS
SHALL NOT BE CONDITIONED ON THE LIABILITY OF ANY OTHER PERSON; AND (E) AGREES
THAT ANY CONSENT, WAIVER OR FORBEARANCE UNDER THIS AGREEMENT AND THE OTHER LOAN
DOCUMENTS WITH RESPECT TO AN EVENT SHALL OPERATE ONLY FOR SUCH EVENT AND NOT FOR
ANY SUBSEQUENT EVENT.
SECTION 9.06 WAIVER OF CLAIMS. IN ORDER TO INDUCE LENDER TO EXECUTE AND DELIVER
THE AGREEMENT, EACH BORROWER HEREBY REPRESENTS AND WARRANTS THAT IT HAS NO
CLAIMS, SET-OFFS OR DEFENSES AS OF THE CLOSING DATE IN CONNECTION WITH THE
TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT OR IN CONNECTION WITH ANY OF THE
OTHER LOAN DOCUMENTS. TO THE EXTENT ANY SUCH CLAIMS, SET-OFFS OR DEFENSES MAY
EXIST, WHETHER KNOWN OR UNKNOWN, THEY ARE EACH HEREBY WAIVED AND RELINQUISHED IN
THEIR ENTIRETY.
ARTICLE X
FEES
SECTION 10.01 Origination Fees. The Borrowers shall pay to the Lender an
origination fee ("Origination Fee") equal to the greater of (i) 1/2 of 1% of the
original principal amount of the Term Loan or (ii) $600,000. The Borrowers shall
pay the Origination Fee on the Initial Closing Date.
SECTION 10.02 [RESERVED.]
SECTION 10.03 Legal Fees and Expenses
(a) Legal Fees. The Borrowers shall pay, or reimburse the Lender for,
all out-of-pocket legal fees and expenses incurred by the Lender and by Fannie
Mae in connection with the preparation, review and negotiation of this Agreement
and any other Loan Documents executed on the date of this Agreement. On the date
of this Agreement, the Borrowers shall pay all such legal fees and expenses not
previously paid or for which funds have not been previously provided.
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(b) Fees and Expenses Associated with all Requests. With respect to all
Requests after the Closing Date, the Borrowers shall pay, or reimburse the
Lender for, all costs and expenses incurred by the Lender, including the
out-of-pocket legal fees and expenses incurred by the Lender in connection with
the preparation, review and negotiation of all documents, instruments and
certificates to be executed and delivered in connection with each Request, the
performance by the Lender of any of its obligations with respect to the Request,
the satisfaction of all conditions precedent to the Borrowers' rights or the
Lender's obligations with respect to the Request, and all transactions related
to any of the foregoing, including all other costs and expenses in connection
with a Request. The obligations of the Borrowers under this subsection shall be
absolute and unconditional, regardless of whether the transaction requested in
the Request actually occurs. The Borrowers shall pay such costs and expenses to
the Lender on the Closing Date or, as the case may be, after demand by the
Lender when the Lender determines that such Request will not close.
ARTICLE XI
EVENTS OF DEFAULT
SECTION 11.01 Events of Default. Each of the following events shall constitute
an "Event of Default" under this Agreement, whatever the reason for such event
and whether it shall be voluntary or involuntary, or within or without the
control of any Borrower, or be effected by operation of law or pursuant to any
judgment or order of any court or any order, rule or regulation of any
Governmental Authority:
(a) the occurrence of a default under any Loan Document beyond the cure
period, if any, set forth therein or the failure by any Key Principal to pay any
amount owing under a Key Principal Guaranty; or
(b) the failure by the Borrowers to pay when due any amount payable by
the Borrowers under the Note, any Security Instrument, this Agreement or any
other Loan Document including any fees, costs or expenses; or
(c) the failure by the Borrowers to pay any amounts due and owing under
Sections 16.03 hereof within five (5) days after the receipt of written notice
from the Lender that such amounts are due and owing; or
(d) any Borrower shall fail to observe or perform any term, covenant,
condition or agreement set forth in Sections 7.07, 7.08, 7.10, 7.14, 7.21, 7.22,
7.25, and 7.26 Article V and VIII; or
(e) any Borrower shall fail to observe or perform any term, covenant,
condition or agreement set forth in Section 7.02 within ten (10) days of
knowledge by any Borrower of such failure; or
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(f) the failure by any Borrower to perform or observe any covenant set
forth in Sections 7.04, 7.05, 7.09, 7.12 and 7.13 within ten (10) days after
receipt of notice from the Lender identifying such failure; or
(g) the failure by any Borrower to perform or observe any term,
covenant, condition or agreement set forth in this Agreement not specified in
paragraphs (a) though (f) above within thirty (30) days after receipt of notice
from the Lender identifying such failure; provided, however, that if such
failure shall be such that, in Lender's sole and exclusive judgment, it cannot
be corrected within such period, it shall not constitute an Event of Default if
such failure is correctable, in Lender's sole and exclusive judgment, without
resulting in a Material Adverse Effect and if corrective action is instituted by
any Borrower within such period and pursued diligently and in good faith, to
Lender's sole and exclusive satisfaction, until the failure is corrected, and
provided further that any such failure shall have been cured within 90 days of
receipt of notice of such failure; or
(h) any warranty, representation or other written statement made by or
on behalf of any Borrower, any General Partner or any Key Principal contained in
this Agreement, any other Loan Document or in any instrument furnished in
compliance with or in reference to any of the foregoing, is false or misleading
in any material respect on any date when made or deemed made; or
(i) failure by the Key Principal to maintain a Net Worth as defined in
and to the extent required under the Key Principal Guaranty, as applicable;
provided, however, such failure shall not be an Event of Default, if, within
thirty (30) days of knowledge by any Borrower of such failure, the Borrowing
Agent proposes to Lender one or more substitute "Key Principals" who have
executed a Key Principal Guaranty including the same Net Worth requirement and
otherwise identical to the existing Key Principal Guaranty in all material
respects (the effectiveness of which shall be conditioned on Lender's approval
of such substitute Key Principal) and the Lender shall have approved in its
discretion such substitute Key Principal within 60 days thereafter; or
(j) any Borrower or any General Partner or any Key Principal shall (A)
commence a voluntary case under the Federal bankruptcy laws (as now or hereafter
in effect), (B) file a petition seeking to take advantage of any other laws,
domestic or foreign, relating to bankruptcy, insolvency, reorganization, debt
adjustment, winding up or composition or adjustment of debts, (C) consent to or
fail to contest in a timely and appropriate manner any petition filed against it
in an involuntary case under such bankruptcy laws or other laws, (D) apply for
or consent to, or fail to contest in a timely and appropriate manner, the
appointment of, or the taking of possession by, a receiver, custodian, trustee
or liquidator of itself or of a substantial part of its property, domestic or
foreign, (E) admit in writing its inability to pay, or generally not be paying,
its debts as they become due, (F) make a general assignment for the benefit of
creditors, (G) assert that any Borrower has no liability or obligations under
this Agreement or any other Loan Document to which it is a party; (H) take any
action for the purpose of effecting any of the foregoing; or (I) suffer an
attachment or other judicial seizure of
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any substantial portion of its assets or suffer an execution of a substantial
portion of its assets and such seizure is not discharged or released by bonding
or the posting of other security acceptable in form and substance to Lender
within thirty days; or (J) a case or other proceeding shall be commenced against
any Borrower or any General Partner or any Key Principal in any court of
competent jurisdiction seeking (x) relief under the Federal bankruptcy laws (as
now or hereafter in effect) or under any other laws, domestic or foreign,
relating to bankruptcy, insolvency, reorganization, winding up or composition or
adjustment of debts, or (y) the appointment of a trustee, receiver, custodian,
liquidator or the like of such Borrower, such General Partner or such Key
Principal, or of all or a substantial part of the property, domestic or foreign,
of such Borrower, such General Partner or such Key Principal and any such case
or proceeding shall continue undismissed or unstayed for a period of 60
consecutive calendar days, or any order granting the relief requested in any
such case or proceeding against such Borrower, such General Partner or such Key
Principal (including an order for relief under such Federal bankruptcy laws)
shall be entered; or
(k) if any provision of this Agreement or any other Loan Document or
the lien and security interest purported to be created hereunder or under any
Loan Document shall at any time for any reason cease to be valid and binding in
accordance with its terms on any Borrower or any General Partner, or any Key
Principal, as the case may be, or shall be declared to be null and void, or the
validity or enforceability hereof or thereof or the validity or priority of the
lien and security interest created hereunder or under any other Loan Document
shall be contested by any Borrower or any General Partner, or any Key Principal
seeking to establish the invalidity or unenforceability hereof or thereof, or
any Borrower, any General Partner, or any Key Principal, as the case may be,
shall deny that it has any further liability or obligation hereunder or
thereunder; or
(l) an event constituting an "Event of Default" under Article V;
(m) the failure by any Borrower to comply with any requirement of any
Governmental Authority within 30 days after written notice of such requirement
shall have been given to such Borrower by such Governmental Authority; provided
that, if action is commenced and diligently pursued by such Borrower within such
30 days, then such Borrower shall have an additional 30 days to comply with such
requirement; or
(n) a dissolution or liquidation for any reason (whether voluntary or
involuntary) of any Borrower; or
(o) any judgment against any Borrower, any attachment or other levy
against any portion of any Borrower's assets with respect to a claim or claims
in an amount in excess of $250,000 individually or $500,000 in the aggregate
remains unpaid, unstayed on appeal, undischarged, unbonded, not fully insured or
undismissed for a period of 60 days.
Notwithstanding anything to the contrary herein or in the other Loan Documents,
if an Event of Default shall occur hereunder or under another Loan Document
because a representation, warranty, affirmative covenant, negative covenant or
other provision hereunder or thereunder
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shall be breached or violated which in Lender's sole and exclusive judgment is
with respect to a particular Mortgaged Property (other than any misappropriation
of funds collected in respect thereof except for any misappropriation consisting
of (i) theft by an employee of a Manager that is not an Affiliate of any
Borrower or (ii) theft by an employee of a Manager or Asset Manager that is in
each case an Affiliate of any Borrower if all losses occasioned thereby are
fully covered by insurance), such Event of Default shall be deemed cured, upon
Borrowers' satisfaction of the conditions set forth in Article IV relating to
the release of such Mortgaged Property from the Collateral Pool within 30 days
of knowledge by the Borrower of the Event of Default. The existence of such cure
right by the Borrowers shall not in any way limit or restrict Lender's right to
exercise any and all remedies set forth in Article XII; provided, however, if
any Borrower releases such Mortgaged Property pursuant to the provisions of
Article IV as described in the preceding sentence and at the time of such
release no other Event of Default has occurred and is continuing, Lender shall
cease exercising its remedies and discontinue any proceedings it may have
initiated and the parties shall be restored to their former positions and rights
hereunder. Upon such payment and the satisfaction of the conditions set forth in
Article IV relating to the release of such Mortgaged Property, so long as no
other Event of Default shall have occurred and be continuing hereunder (other
than one that is simultaneously being cured pursuant to this paragraph), Lender
shall release all Liens on such Mortgaged Property.
ARTICLE XII
REMEDIES
SECTION 12.01 Remedies; Waivers. Upon the occurrence of an Event of Default, the
Lender may do any one or more of the following (without presentment, protest or
notice of protest, all of which are expressly waived by each Borrower):
(a) by written notice to the Borrowing Agent, to be effective upon
dispatch declare the principal of, and interest on, the Term Loan and all other
sums owing by the Borrowers to the Lender under any of the Loan Documents
forthwith due and payable, whereupon the principal of, and interest on, the Term
Loan and all other sums owing by the Borrowers to the Lender under any of the
Loan Documents will become forthwith due and payable.
(b) pursue any other remedies available to it under any of the Loan
Documents.
(c) pursue all remedies available to it at law or in equity, including
obtaining specific performance and injunctive relief.
(d) have access to and have the right to inspect, examine, have audited
and make copies of books and records and any and all accounts, data, and income
tax and other tax returns of each Borrower.
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(e) terminate contracts or employment arrangements providing for the
management or maintenance of the Property and terminate any obligation to make
Future Term Loans.
SECTION 12.02 Waivers; Rescission of Declaration. The Lender shall have the
right, to be exercised in its complete discretion, to waive any breach hereunder
(including the occurrence of an Event of Default), by a writing setting forth
the terms, conditions, and extent of such waiver signed by the Lender and
delivered to the Borrowing Agent. Unless such writing expressly provides to the
contrary, any waiver so granted shall extend only to the specific event or
occurrence which gave rise to the waiver and not to any other similar event or
occurrence which occurs subsequent to the date of such waiver.
SECTION 12.03 The Lender's Right to Protect Collateral and Perform Covenants and
Other Obligations. If any Borrower fails to perform the covenants and agreements
contained in this Agreement or any of the other Loan Documents, then the Lender
at the Lender's option may make such appearances, disburse such sums and take
such action as the Lender deems necessary, in its sole discretion, to protect
the Lender's interest, including (i) disbursement of attorneys' fees, (ii) entry
upon the Mortgaged Property to make repairs and replacements, (iii) procurement
of satisfactory insurance as provided in paragraph 5 of the Security Instrument
encumbering the Mortgaged Property, and (iv) if the Security Instrument is on a
leasehold, exercise of any option to renew or extend the ground lease on behalf
of the respective Borrower and the curing of any default of such Borrower in the
terms and conditions of the ground lease. Any amounts disbursed by the Lender
pursuant to this Section, with interest thereon, shall become additional
indebtedness of the Borrowers secured by the Loan Documents. Unless the
Borrowing Agent and the Lender agree to other terms of payment, such amounts
shall be immediately due and payable and shall bear interest from the date of
disbursement at the interest rate set forth in the Note unless collection from
the Borrowers of interest at such rate would be contrary to applicable law, in
which event such amounts shall bear interest at the highest rate which may be
collected from the Borrowers under applicable law. Nothing contained in this
Section shall require the Lender to incur any expense or take any action
hereunder.
SECTION 12.04 No Remedy Exclusive. Unless otherwise expressly provided, no
remedy herein conferred upon or reserved is intended to be exclusive of any
other available remedy, but each remedy shall be cumulative and shall be in
addition to other remedies given under the Loan Documents or existing at law or
in equity.
SECTION 12.05 No Waiver. No delay or omission to exercise any right or power
accruing under any Loan Document upon the happening of any Event of Default or
Potential Event of Default shall impair any such right or power or shall be
construed to be a waiver thereof, but any such right and power may be exercised
from time to time and as often as may be deemed expedient.
SECTION 12.06 No Notice. In order to entitle the Lender to exercise any remedy
reserved to the Lender in this Article, it shall not be necessary to give any
notice, other than such notice as
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may be required under the applicable provisions of this Agreement or any of the
other Loan Documents.
SECTION 12.07 Application of Payments. Except as otherwise expressly provided in
the Loan Documents, and unless applicable law provides otherwise, (i) all
payments received by the Lender from the Borrowers under the Loan Documents
shall be applied by the Lender against any amounts then due and payable under
the Loan Documents by the Borrowers, in any order of priority that the Lender
may determine and (ii) the Borrowers shall have no right to determine the order
of priority or the allocation of any payment it makes to the Lender.
SECTION 12.08 No Requirement of Tender of Performance. Nothing in this Agreement
shall require or be construed to require Lender to accept tender of performance
of any of the Borrowers' obligations under this Agreement after the expiration
of any time period set forth in this Agreement for the performance of such
obligations and the expiration of any applicable cure periods, if any.
ARTICLE XIII
RIGHTS OF FANNIE MAE
SECTION 13.01 [RESERVED.]
SECTION 13.02 Assignment of Rights. Each Borrower acknowledges and consents to
the assignment to Fannie Mae of all of the rights of the Lender under this
Agreement and all other Loan Documents, including the right and power to make
all decisions on the part of the Lender to be made under this Agreement and the
other Loan Documents, but Fannie Mae, by virtue of this assignment, shall not be
obligated to perform the obligations of Lender to fund the Term Loan under this
Agreement. The Servicer shall service the Term Loan.
SECTION 13.03 Release of Collateral. Each Borrower hereby acknowledges that,
after the assignment of Loan Documents contemplated in Section 13.02, the Lender
shall not have the right or power to effect a release of any Collateral pursuant
to Article IV. Each Borrower acknowledges that the Security Instruments provide
for the release of the Collateral under Article IV. Accordingly, no Borrower
shall look to the Lender for performance of any obligations set forth in Article
IV, but shall look solely to the party secured by the Collateral (i.e., Fannie
Mae) to be released for such performance. The Lender represents and warrants to
the Borrowers that the party secured by the Collateral shall be subject to the
release provisions contained in Article IV by virtue of the release provisions
in each Security Instrument.
SECTION 13.04 Replacement of Lender. At the request of Fannie Mae, the Borrowing
Agent and the Lender shall agree to the assumption by another
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lender designated by Fannie Mae, of all of the obligations of the Lender under
this Agreement and the other Loan Documents, and/or any related servicing
obligations, and, at Fannie Mae's option, the concurrent release of the Lender
from its obligations under this Agreement and the other Loan Documents, and/or
any related servicing obligations, and shall execute all releases, modifications
and other documents which Fannie Mae determines are necessary or desirable to
effect such assumption.
SECTION 13.05 Fannie Mae and Lender Fees and Expenses. Each Borrower agrees that
any provision providing for the payment of fees, costs or expenses incurred or
charged by the Lender pursuant to this Agreement shall be deemed to provide for
the Borrowers' payment of all fees, costs and expenses incurred or charged by
the Lender or Fannie Mae in connection with the matter for which fees, costs or
expenses are payable.
SECTION 13.06 Third-Party Beneficiary. Each Borrower hereby acknowledges and
agrees that Fannie Mae is a third party beneficiary of all of the
representations, warranties and covenants made by each Borrower to, and all
rights under this Agreement conferred upon, the Lender, and, by virtue of its
status as third-party beneficiary and/or assignee of the Lender's rights under
this Agreement, Fannie Mae shall have the right to enforce all of the provisions
of this Agreement against any and all of the Borrowers.
ARTICLE XIV
INSURANCE, REAL ESTATE TAXES
AND REPLACEMENT RESERVES
SECTION 14.01 Insurance and Real Estate Taxes. Each Borrower shall (unless
waived by Lender) establish funds for taxes, insurance premiums and certain
other charges for each Mortgaged Property to the extent required by Section 7(a)
of the Security Instrument for each Mortgaged Property.
SECTION 14.02 Replacement Reserves. Each of the Borrowers shall execute the
Replacement Reserve Agreement for the Mortgaged Properties and shall (unless
waived by the Lender) make all deposits for replacement reserves in accordance
with the terms of the Replacement Reserve Agreement.
ARTICLE XIV-A
CROSS-GUARANTY AND OTHER INTERBORROWER MATTERS
Section 14.01-A Cross-Guaranty. Each Borrower, on a joint and several
basis, hereby irrevocably guarantees to the Lender and its successors and
assigns, the full and prompt payment (whether at stated maturity, by
acceleration or otherwise) and performance of, all Obligations owed or hereafter
owing to the Lender by each other Borrower. In addition, each
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Borrower, on a joint and several basis, hereby irrevocably guarantees to Lender
the full and prompt payment when due, whether at maturity or earlier, by reason
of acceleration or otherwise, and at all times thereafter, of all amounts for
which each other Borrower would have been liable under Section 15.01(d) of the
Term Loan Agreement in respect of Section 18 of the Security Instruments, had it
not been for the termination of such other Borrower's obligations in respect
thereof pursuant to the last sentence of Section 18(o) of the Security
Instruments executed by such other Borrower. Each Borrower agrees that its
guaranty obligation hereunder is an unconditional guaranty of payment and
performance and not merely a guaranty of collection. The guaranty obligations of
each Borrower under this Article XIV-A shall not be subject to any counterclaim,
set-off, recoupment, deduction, cross-claim or defense based upon any claim any
Borrower may have against Lender or any other Borrower.
Section 14.02-A Waivers by Borrowers and Other Rights.
(a) The obligations of each Borrower under this Article XIV-A shall
survive any foreclosure proceeding, any foreclosure sale, any delivery of any
deed in lieu of foreclosure, and any release of record of the Security
Instruments. The obligations of each Borrower under this Article XIV-A shall be
performed without demand by the Lender and shall be unconditional irrespective
of the genuineness, validity, regularity or enforceability of this Agreement,
the Note, the Security Instruments, or any other Loan Document, and without
regard to any other circumstance which might otherwise constitute a legal or
equitable discharge of a surety or a guarantor. Each Borrower hereby waives the
benefit of all principles or provisions of law, statutory or otherwise, which
are or might be in conflict with the terms of this Article XIV-A and agrees that
its obligations shall not be affected by any circumstances, whether or not
referred to in this Article XIV-A, which might otherwise constitute a legal or
equitable discharge of a surety or a guarantor. Each Borrower hereby waives the
benefits of any right of discharge under any and all statutes or other laws
relating to guarantors or sureties and any other rights of sureties and
guarantors thereunder. Without limiting the generality of the foregoing, each
Borrower hereby waives, to the fullest extent permitted by law, diligence in
collecting the indebtedness of such Borrower to the Lender, any rights or
defenses based upon an offset by any Borrower against any obligation now or
hereafter owed to such Borrower by any other Borrower, presentment, demand for
payment, protest, all notices with respect to the Term Loan Agreement and the
Note which may be required by statute, rule of law or otherwise to preserve the
Lender's rights against such Borrower under this Article XIV-A, including notice
of acceptance, notice of any amendment of the Loan Documents, notice of the
occurrence of any default, potential Event of Default or Event of Default,
notice of intent to accelerate, notice of acceleration, notice of dishonor,
notice of foreclosure, notice of protest, and notice of the incurring by any
Borrower of any obligation or indebtedness. Each Borrower also waives, to the
fullest extent permitted by law, all rights to require the Lender to (a) proceed
against any Borrower or any other guarantor of Borrower's payment or performance
with respect to the Obligations, (b) if any Borrower or any guarantor is a
partnership, proceed against any General Partner of such Borrower or the
guarantor, (c) proceed against or exhaust any Collateral held by the Lender to
secure the repayment of the Obligations, or (d) pursue any other remedy it may
now or hereafter have against any Borrower or any General Partner of such
Borrower. It is agreed among each Borrower and Lender that all of the
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foregoing waivers and the other provisions of this Article XIV-A are of the
essence of the transaction contemplated by this Agreement and other Loan
Documents and that but for the provisions of this Article XIV-A and such waivers
the Lender would decline to enter into this Agreement.
(b) At any time or from time to time any number of times, without
notice to any Borrower in its capacity as guarantor and without affecting the
liability of any Borrower, (a) the time for payment of the principal of or
interest on the Term Loan may be extended or the Term Loan may be renewed in
whole or in part; (b) the time any Borrower's performance of or compliance with
any covenant or agreement contained in the Term Loan Agreement, the Note, the
Security Instruments or any other Loan Document, whether presently existing or
hereinafter entered into, may be extended or such performance or compliance may
be waived; (c) the maturity of the Term Loan may be accelerated as provided in
the Term Loan Agreement, the Note, the Security Instruments, or any other Loan
Document; (d) the Note, the Security Instruments, or any other Loan Document may
be modified or amended by Lender and Borrowers in any respect, including an
increase in the principal amount; and (e) and security for the Term Loan may be
modified, exchanged, surrendered or otherwise dealt with or additional security
may be pledged or mortgaged for the Term Loan.
(c) The obligations of the Borrowers under this Agreement shall be
absolute, unconditional and irrevocable and shall be paid and performed strictly
in accordance with the terms of this Agreement under all circumstances
whatsoever, including, without limitation, the following circumstances: (a) any
invalidity or unenforceability of any of the Loan Documents or any other
agreement or instrument related to the Loan Documents; (b) the existence of any
claim, set-off, defense or other right which any Borrower may have at any time
against Lender or any other Person, whether in connection with this Agreement,
any of the other Loan Documents, any Mortgaged Property, or any unrelated
transaction; (c) the surrender or impairment of any security for the performance
or observance of any of the agreements or terms of this Agreement or the other
Loan Documents; or (d) defect in title to any Mortgaged Property, any acts or
circumstances that may constitute failure of consideration, destruction of,
damage to or condemnation of any Mortgaged Property, commercial frustration of
purpose, or any change in the tax or other laws of the United States of America
or of the State or any political subdivision of either.
(d) The provisions of this Section 14.02-A(c) override all other
provisions of Sections 14.01-A and 14.02-A. Each Borrower to the extent it is
deemed a guarantor shall have the right to assert all defenses and counterclaims
that would have been available to it if it had been treated as a Borrower
(jointly and severally with the other Borrowers) instead of as a guarantor,
except for the following defenses, which each Borrower waives:
(a) any other Borrower's lack of legal capacity, the defense of ultra
vires, failure of due authorization or execution of any of the Loan
Documents and any similar defenses based on matters personal to any other
Borrower or any other Borrower's ability (or lack thereof) to enter into
and perform its obligations under the Loan Documents;
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(b) discharge of any other Borrower by reason of insolvency
proceedings or bankruptcy proceedings or any similar discharge by reason of
any of the events described in Section 11.01(j) of the Term Loan Agreement;
(c) usury;
(d) discharge of any other Borrower under an applicable statute of
limitations; and
(e) discharge of any other Borrower pursuant to the last sentence of
Section 18(o) of the Security Instruments executed by any other Borrower.
Section 14.03-A No Impairment. Each Borrower agrees that the provisions
of this Article XIV-A are for the benefit of the Lender and its successors,
transferees, endorsees and assigns, and nothing herein contained shall impair,
as between any other Borrower and the Lender, the obligations of such other
Borrower under the Loan Documents.
Section 14.04-A No Subrogation. No Borrower shall have the right of,
and hereby waives any claim for, subrogation, contribution, indemnity or
reimbursement (other than claims for contribution and indemnity under the
Contribution Agreement) against any other Borrower or any General Partner of any
other Borrower by reason of any payment by such Borrower under this Article
XIV-A, whether such right or claim arises at law or in equity or under any
contract (other than claims for contribution and indemnity under the
Contribution Agreement) or statute or otherwise, until the Obligations have been
paid in full and all the Loan Documents have been terminated.
Section 14.05-A [RESERVED].
Section 14.06-A Election of Remedies.
The Lender, in its discretion, may (a) bring suit against any one or
more of the Borrowers, jointly and severally, without any requirement that the
Lender first proceed against any other Borrower or any other Person; (b)
compromise or settle with any one or more of the Borrowers, or any other Person,
for such consideration as the Lender may deem proper; (c) release one or more of
the Borrowers, or any other Person, from liability; and (d) otherwise deal with
any Borrower and any other Person, or any one or more of them, in any manner, or
resort to any of the Collateral at any time held by it for performance of the
Obligations or any other source or means of obtaining payment of the
Obligations, and no such action shall impair the rights of the Lender to collect
from any Borrower any amount guaranteed by any Borrower under this Article
XIV-A. Nothing contained in this paragraph shall in any way affect or impair the
rights or obligations of any Borrower with respect to any other Borrower.
Section 14.07-A Subordination of Other Obligations.
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(a) Each Borrower hereby irrevocably and unconditionally agrees that
all amounts payable from time to time to such Borrower by any other Borrower
pursuant to any agreement (including the Contribution Agreement), whether
secured or unsecured, whether of principal, interest or otherwise, other than
the amounts referred to in this Article XIV-A (collectively, the "Subordinated
Obligations"), shall be and such rights, claims and indebtedness are, hereby
deferred, postponed and fully subordinated in time and right of payment to the
prior payment, performance and satisfaction in full of the Obligations;
provided, however, that payments may be received by any Borrower in accordance
with, and only in accordance with, the provisions of Section 14.07-A(b) hereof.
(b) Until the Obligations have been finally paid in full and all the
Loan Documents have been terminated, each Borrower irrevocably and
unconditionally agrees it will not ask, demand, sue for, take or receive,
directly or indirectly, by set-off, redemption, purchase or in any other manner
whatsoever, any payment with respect to, or any security or guaranty for, the
whole or any part of the Subordinated Obligations, and in issuing notes,
documents, instruments or agreements of any kind evidencing the Subordinated
Obligations, each Borrower hereby agrees that it will not receive any payment of
any kind on account of the Subordinated Obligations, so long as any of the
Obligations under the Loan Documents are outstanding or any of the terms and
conditions of any of the Loan Documents are in effect; provided, however, that,
notwithstanding anything to the contrary contained herein, if no Potential Event
of Default or Event of Default or any other event or condition which would
constitute an Event of Default after notice or lapse of time or both has
occurred and is continuing under the Loan Documents, then payments may be
received by such Borrower in respect of the Subordinated Obligations in
accordance with and provided that such Borrower and the other Borrowers make
such payment in full and strict compliance with the Contribution Agreement.
Except as aforesaid, each Borrower agrees not to accept any payment or
satisfaction of any kind of indebtedness of any other Borrower in respect of the
Subordinated Obligations and hereby assigns such rights or indebtedness to the
Lender, including the right to file proofs of claim and to vote thereon in
connection with any case under the Bankruptcy Code, including the right to vote
on any plan of reorganization. In the event that any payment on account of
Subordinated Obligations shall be received by any Borrower in violation of the
foregoing, such payment shall be held in trust for the benefit of the Lender,
and any amount so collected shall be turned over to the Lender upon demand for
application to the Obligations.
Section 14.08-A Insolvency and Liability of Other Borrowers. So long as
any of the Obligations are outstanding, if a petition under the Bankruptcy Code
is filed by or against any Borrower, the other Borrowers agree that Lender has
the right to file all claims against such Borrower in any bankruptcy or other
proceeding in which the filing of claims is required by law in connection with
indebtedness owed by such Borrower to the other Borrowers. In all such cases,
the Person or Persons authorized to pay such claims shall pay to the Lender the
full amount thereof and Lender agrees to pay such Borrower any amounts received
in excess of the amount necessary to pay the Obligations. Such Borrowers hereby
assign to the Lender, as additional Collateral, all of such Borrowers' rights to
all such payments to which such Borrowers would otherwise be entitled but not to
exceed the full amount of the Obligations. In the event that, notwithstanding
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the foregoing, any such payment shall be received by any Borrower before the
Obligations shall have been finally paid in full and all the Loan Documents have
been terminated, such payment shall be held in trust for the benefit of and
shall be paid over to the Lender upon demand. Furthermore, notwithstanding the
foregoing, the liability of each Borrower hereunder shall in no way be affected
by:
(a) the release or discharge of any other Borrower in any creditors',
receivership, bankruptcy or other proceedings; or
(b) the impairment, limitation or modification of the liability of any
other Borrower or the estate of any other Borrower in bankruptcy resulting
from the operation of any present or future provisions of the Bankruptcy
Code or other statute or from the decision in any court.
Section 14.09-A Preferences, Fraudulent Conveyances, Etc. If the Lender
is required to refund, or voluntarily refunds, any payment received from any
Borrower because such payment is or may be avoided, invalidated, declared
fraudulent, set aside or determined to be void or voidable as a preference,
fraudulent conveyance, impermissible setoff or a diversion of trust funds under
the bankruptcy laws or for any similar reason, including without limitation any
judgment, order or decree of any court or administrative body having
jurisdiction over any Borrower or any of its property, or upon or as a result of
the appointment of a receiver, intervenor, custodian or conservator of, or
trustee or similar officer for, any Borrower or any substantial part of its
property, or otherwise, or any statement or compromise of any claim effected by
the Lender with any Borrower or any other claimant (a "Rescinded Payment"), then
the other Borrowers' liability to the Lender shall continue in full force and
effect, or the other Borrowers' liability to the Lender shall be reinstated and
renewed, as the case may be, with the same effect and to the same extent as if
the Rescinded Payment had not been received by the Lender, notwithstanding the
cancellation or termination of any of the Loan Documents, and regardless of
whether the Lender contested the order requiring the return of such payment. In
addition, the other Borrowers shall pay, or reimburse the Lender for, all
expenses (including all reasonable attorneys' fees, court costs and related
disbursements) incurred by the Lender in the defense of any claim that a payment
received by the Lender in respect of all or any part of the Obligations must be
refunded. The provisions of this Section 14.09-A shall survive the termination
of the Loan Documents.
Section 14.10-A Maximum Liability of Each Borrower. Notwithstanding
anything contained in this Agreement or any of the Loan Documents to the
contrary, if the obligations of any Borrower under this Agreement or the other
Loan Documents exceed the limitations imposed under any Fraudulent Transfer Law
(as hereinafter defined), then such liability of such Borrower shall be limited
to a maximum aggregate amount equal to the largest amount that would not render
its obligations under this Agreement or the other Loan Documents subject to
avoidance as a fraudulent transfer or conveyance under Section 548 of Title 11
of the United States Code or any applicable provisions of comparable state law
(collectively, the "Fraudulent Transfer Laws"), in each case after giving effect
to all other liabilities of such Borrower, contingent or otherwise, that
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are relevant under the Fraudulent Transfer Laws (specifically excluding,
however, any liabilities of such Borrower in respect of indebtedness to any
other Borrower or any other Person that is an Affiliate of the other Borrowers
to the extent that such indebtedness would be discharged in an amount equal to
the amount paid by such Borrower in respect of the Obligations) and after giving
effect (as assets) to the value (as determined under the applicable provisions
of the Fraudulent Transfer Laws) of any rights to subrogation, reimbursement,
indemnification or contribution of such Borrower pursuant to applicable law or
pursuant to the terms of any agreement including the Contribution Agreement.
Section 14.11-A Liability Cumulative. The liability of each Borrower
under this Article XIV-A shall be cumulative with all liabilities of such
Borrower to the Lender under this Agreement and the other Loan Documents to
which such Borrower is a party or in respect of any Obligations of any other
Borrower.
ARTICLE XV
LIMITS ON PERSONAL LIABILITY
SECTION 15.01 Limits on Personal Liability.
(a) Except as otherwise provided in this Section 15.01, no Borrower nor
any partners of any Borrower or other persons owning any direct or indirect
interests in any Borrower shall have personal liability under this Agreement, or
any Loan Document for the repayment of the Obligations thereunder or for the
performance of any other obligations of any Borrower under the Agreement and the
Loan Documents, and Lender's only recourse for the satisfaction of the
Obligations and the performance of such other obligations shall be Lender's
exercise of its rights and remedies with respect to Mortgaged Properties and any
other collateral held by Lender as security for such Obligations. This
limitation on each Borrower's liability shall not limit or impair Lender's
enforcement of its rights against any guarantor of the Obligations or any
obligations of any Borrower.
(b) Each Borrower shall be personally liable to Lender for the
repayment of a portion of the Obligations equal to any loss or damage suffered
by Lender as a result of (1) failure of any Borrower to pay to Lender upon
demand after an Event of Default, all Rents to which Fannie Mae is entitled
under Section 3 of each Security Instrument and the amount of all security
deposits collected by any Borrower from tenants then in residence (net of all
prior disbursements therefrom pursuant to the applicable leases); or (2) failure
of any Borrower to apply all insurance proceeds and condemnation proceeds as
required by each Mortgage; or (3) failure of any Borrower to either deliver to
Lender upon written demand all books and records relating to any Mortgaged
Property after the occurrence and during the continuation of an Event of Default
or to permit Lender or its agents to audit any Borrower's books and records as
required by Section 14(d) of each Security Instrument; or (4) fraud or written
material misrepresentation by any Borrower, any Key Principal, or any officer,
director, partner, member or employee of any Borrower in connection with the
application for or creation of the Obligations or any request for any action or
consent by Lender; or (5) failure to apply Rents,
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first, to the payment of reasonable Operating Expenses (other than Mortgaged
Property management fees that are not currently payable pursuant to the term of
an Assignment of Management Agreement or any other agreement with Lender
executed in connection with this Agreement) and then to amounts ("Debt Service
Amounts") payable under this Agreement or any Loan Document, except in the case
of the foregoing clauses (1), (2) and (5) that the Borrowers will not be
personally liable (i) to the extent that the applicable Borrower lacks the legal
right to direct the disbursement of such sums or to deposit, apply or pay such
funds because of a bankruptcy, receivership or similar judicial proceeding, and
except to the extent such action by the applicable Borrower (a) would violate a
court order of a court of competent jurisdiction sought or obtained by a Person
unaffiliated with and not acting jointly or in concert with any Borrower or a
Key Principal or (b) is subject to a competing claim of a Person unaffiliated
with and not acting jointly or in concert with any Borrower or a Key Principal
(provided that no Borrower shall be relieved from liability hereunder as a
consequence of any such competing claim unless such Borrower has deposited the
disputed amount into a court of competent jurisdiction pursuant to a valid
interpleader or comparable action duly commenced), or (ii) with respect to Rents
that are distributed to any Borrower's partners if at the time of distribution
such Borrower has paid all Operating Expenses and Debt Service Amounts for the
previous months of the same calendar year in which the distribution is made; or
(6) any willful or wanton act of any Borrower which causes material damage to
any Mortgaged Property; or (7) distributions in violation of Section 8.10.
(c) Each Borrower shall become personally liable to Lender for the
repayment of all of the Obligations upon the occurrence of any of the following
Events of Default: (1) Any Borrower's acquisition of any property or operation
of any business not permitted by Section 33 of each Mortgage; or (2) a
Bankruptcy Event or (3) a Transfer that is an Event of Default under Article V
provided, however, if such Transfer arises from the grant of a leasehold
interest or the grant of an easement which fails to satisfy the requirements set
forth in Section 5.02, each Borrower shall not be personally liable to Lender
for repayment of all the Obligations if Borrower cures such Event of Default
within 30 days to Lender's satisfaction.
(d) Each Borrower shall be personally liable to Lender for full
recourse liability under any and all indemnification obligations contained in
Section 18 of each Mortgage.
(e) To the extent that any Borrower has personal liability under this
Section 15.01, Lender may exercise its rights against any Borrower personally
without regard to whether Lender has exercised any rights against any Mortgaged
Property or any other security, or pursued any rights against any guarantor, or
pursued any other rights available to Lender under the Loan Documents or
applicable law. For purposes of this Section 15.01, the term "Mortgaged
Property" shall not include any funds that (1) have been applied by any Borrower
as required or permitted by any Security Instrument prior to the occurrence of
the Event of Default, or (2) any Borrower was unable to apply as required or
permitted by such Security Instrument because of a bankruptcy, receivership or
similar judicial proceeding.
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ARTICLE XVI
MISCELLANEOUS PROVISIONS
SECTION 16.01 Counterparts. To facilitate execution, this Agreement may be
executed in any number of counterparts. It shall not be necessary that the
signatures of, or on behalf of, each party, or that the signatures of all
persons required to bind any party, appear on each counterpart, but it shall be
sufficient that the signature of, or on behalf of, each party, appear on one or
more counterparts. All counterparts shall collectively constitute a single
agreement. It shall not be necessary in making proof of this Agreement to
produce or account for more than the number of counterparts containing the
respective signatures of, or on behalf of, all of the parties hereto.
SECTION 16.02 Amendments, Changes and Modifications. This Agreement may be
amended, changed, modified, altered or terminated only by written instrument or
written instruments signed by all of the parties hereto.
SECTION 16.03 Payment of Costs, Fees and Expenses. The Borrowers shall pay, on
demand, all fees, costs, charges or expenses (including the fees and expenses of
attorneys, accountants and other experts) incurred by the Lender in connection
with:
(a) Any amendment, consent or waiver to this Agreement or any of the
Loan Documents (whether or not any such amendments, consents or waivers are
entered into).
(b) [RESERVED.]
(c) The enforcement of, or preservation of rights or remedies under,
this Agreement or any other Loan Documents or in connection with the foreclosure
upon, sale of or other disposition of any Collateral granted pursuant to the
Loan Documents.
(d) The reasonable fees and disbursements of Lender's counsel and
accountants, including fees and expenses relating to any collection,
disbursement or application of insurance or condemnation awards, proceeds,
damages or other payments including, without limitation, all costs incurred in
connection with the application of insurance or condemnation awards to restore
or repair any Property, including, reasonable appraiser fees.
Any attorneys' fees and expenses payable by the Borrowers pursuant to this
Section shall be recoverable separately from and in addition to any other amount
included in such judgment, and such obligation is intended to be severable from
the other provisions of this Agreement and to survive and not be merged into any
such judgment. Any amounts payable by the Borrowers pursuant to this Section,
with interest thereon if not paid when due, shall become additional indebtedness
of the Borrowers secured by the Loan Documents. Such amounts shall bear interest
from the date such amounts are due until paid in full at the interest rate
applicable to the Term Loan unless collection from the Borrowers of interest at
such rate would be contrary to applicable law, in which event such amounts shall
bear interest at the highest rate which may be collected from the Borrowers
under applicable law. The provisions of this Section are
80
cumulative with, and do not exclude the application and benefit to the Lender
of, any provision of any other Loan Document relating to any of the matters
covered by this Section.
SECTION 16.04 Payment Procedure. All payments to be made to the Lender pursuant
to this Agreement or any of the Loan Documents shall be made in lawful currency
of the United States of America and in immediately available funds by wire
transfer to an account designated by the Lender before 1:00 p.m. (Washington,
D.C. time) on the date when due.
SECTION 16.05 Payments on Business Days. In any case in which the date of
payment to the Lender or the expiration of any time period hereunder occurs on a
day which is not a Business Day, then such payment or expiration of such time
period need not occur on such date but may be made on the next succeeding
Business Day with the same force and effect as if made on the day of maturity or
expiration of such period, except that interest shall continue to accrue for the
period after such date to the next Business Day.
SECTION 16.06 CHOICE OF LAW; CONSENT TO JURISDICTION; WAIVER OF JURY TRIAL.
NOTWITHSTANDING ANYTHING IN THE NOTE, THE SECURITY DOCUMENTS OR ANY OF THE OTHER
LOAN DOCUMENTS TO THE CONTRARY, EACH OF THE TERMS AND PROVISIONS, AND RIGHTS AND
OBLIGATIONS OF EACH BORROWER UNDER THE NOTE, AND UNDER THE OTHER LOAN DOCUMENTS,
SHALL BE GOVERNED BY, INTERPRETED, CONSTRUED AND ENFORCED PURSUANT TO AND IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK (EXCLUDING THE LAW APPLICABLE
TO CONFLICTS OR CHOICE OF LAW) EXCEPT TO THE EXTENT OF PROCEDURAL AND
SUBSTANTIVE MATTERS RELATING ONLY TO (1) THE CREATION, PERFECTION AND
FORECLOSURE OF LIENS AND SECURITY INTERESTS, AND ENFORCEMENT OF THE RIGHTS AND
REMEDIES, AGAINST THE MORTGAGED PROPERTIES, WHICH MATTERS SHALL BE GOVERNED BY
THE LAWS OF THE JURISDICTION IN WHICH THE MORTGAGED PROPERTY IS LOCATED AND (2)
THE PERFECTION, THE EFFECT OF PERFECTION AND NON-PERFECTION AND FORECLOSURE OF
DEPOSIT ACCOUNTS, WHICH MATTERS SHALL BE GOVERNED BY THE LAWS OF THE
JURISDICTION IN WHICH THE DEPOSIT ACCOUNT IS LOCATED. EACH BORROWER AGREES THAT
ANY CONTROVERSY ARISING UNDER OR IN RELATION TO THE NOTE, THE SECURITY DOCUMENTS
OR ANY OTHER LOAN DOCUMENT SHALL BE, EXCEPT AS OTHERWISE PROVIDED HEREIN,
LITIGATED IN THE STATE OF NEW YORK. THE LOCAL AND FEDERAL COURTS AND AUTHORITIES
WITH JURISDICTION IN THE STATE OF NEW YORK SHALL, EXCEPT AS OTHERWISE PROVIDED
HEREIN, HAVE JURISDICTION OVER ALL CONTROVERSIES WHICH MAY ARISE UNDER OR IN
RELATION TO THE LOAN DOCUMENTS, INCLUDING THOSE CONTROVERSIES RELATING TO THE
EXECUTION, JURISDICTION, BREACH, ENFORCEMENT OR COMPLIANCE WITH THE NOTE, THE
SECURITY DOCUMENTS OR ANY OTHER ISSUE ARISING UNDER, RELATING TO, OR IN
CONNECTION WITH ANY OF THE LOAN DOCUMENTS. EACH BORROWER IRREVOCABLY CONSENTS TO
SERVICE, JURISDICTION, AND VENUE OF SUCH COURTS FOR ANY LITIGATION ARISING FROM
THE NOTE,
81
THE SECURITY DOCUMENTS OR ANY OF THE OTHER LOAN DOCUMENTS, AND WAIVES ANY OTHER
VENUE TO WHICH IT MIGHT BE ENTITLED BY VIRTUE OF DOMICILE, HABITUAL RESIDENCE OR
OTHERWISE. EACH BORROWER HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES, TO THE
FULLEST EXTENT IT MAY LEGALLY AND EFFECTIVELY DO SO, ANY OBJECTION WHICH IT MAY
NOW OR HEREAFTER HAVE TO THE LAYING OF VENUE OF ANY SUIT, ACTION OR PROCEEDING
ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE LOAN DOCUMENTS, IN THE STATE
OF NEW YORK OR FEDERAL COURT. EACH BORROWER HEREBY IRREVOCABLY WAIVES, TO THE
FULLEST EXTENT PERMITTED BY LAW, THE DEFENSE OF ANY INCONVENIENT FORUM TO THE
MAINTENANCE OF SUCH ACTION OR PROCEEDING IN ANY SUCH COURT. EACH BORROWER
IRREVOCABLY CONSENTS TO SERVICE OF PROCESS IN THE MANNER PROVIDED FOR NOTICES IN
SECTION 16.08. NOTHING IN THIS AGREEMENT WILL AFFECT THE RIGHT OF ANY PARTY TO
THIS AGREEMENT TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY LAW. NOTHING
CONTAINED HEREIN, HOWEVER, SHALL PREVENT THE LENDER FROM BRINGING ANY SUIT,
ACTION OR PROCEEDING OR EXERCISING ANY RIGHTS AGAINST ANY BORROWER, AND AGAINST
THE COLLATERAL IN ANY OTHER JURISDICTION. INITIATING SUCH SUIT, ACTION OR
PROCEEDING OR TAKING SUCH ACTION IN ANY OTHER JURISDICTION SHALL IN NO EVENT
CONSTITUTE A WAIVER OF THE AGREEMENT CONTAINED HEREIN THAT THE LAWS OF THE STATE
OF NEW YORK SHALL GOVERN THE RIGHTS AND OBLIGATIONS OF EACH BORROWER AND THE
LENDER AS PROVIDED HEREIN OR THE SUBMISSION HEREIN BY EACH BORROWER TO PERSONAL
JURISDICTION WITHIN THE STATE OF NEW YORK. EACH BORROWER (I) COVENANTS AND
AGREES NOT TO ELECT A TRIAL BY JURY WITH RESPECT TO ANY ISSUE ARISING UNDER ANY
OF THE LOAN DOCUMENTS TRIABLE BY A JURY AND (II) WAIVES ANY RIGHT TO TRIAL BY
JURY TO THE EXTENT THAT ANY SUCH RIGHT SHALL NOW OR HEREAFTER EXIST. THIS WAIVER
IS INTENDED TO ENCOMPASS INDIVIDUALLY EACH INSTANCE AND EACH ISSUE AS TO WHICH
THE RIGHT TO A JURY TRIAL WOULD OTHERWISE ACCRUE. FURTHER, EACH BORROWER HEREBY
CERTIFIES THAT NO REPRESENTATIVE OR AGENT OF LENDER (INCLUDING, BUT NOT LIMITED
TO, LENDER'S COUNSEL) HAS REPRESENTED, EXPRESSLY OR OTHERWISE, TO SUCH BORROWER
THAT LENDER WILL NOT SEEK TO ENFORCE THE PROVISIONS OF THIS SECTION. THE
FOREGOING PROVISIONS WERE KNOWINGLY, WILLINGLY AND VOLUNTARILY AGREED TO BY EACH
BORROWER UPON CONSULTATION WITH INDEPENDENT LEGAL COUNSEL SELECTED BY SUCH
BORROWER'S FREE WILL.
SECTION 16.07 Severability. In the event any provision of this Agreement or in
any other Loan Document shall be held invalid, illegal or unenforceable in any
jurisdiction, such provision will be severable from the remainder hereof as to
such jurisdiction and the validity, legality and enforceability of the remaining
provisions will not in any way be affected or impaired in any jurisdiction.
82
SECTION 16.08 Notices.
(a) Manner of Giving Notice. Each notice, direction, certificate or
other communication hereunder (in this Section referred to collectively as
"notices" and singly as a "notice") which any party is required or permitted to
give to the other party pursuant to this Agreement shall be in writing and shall
be deemed to have been duly and sufficiently given if:
(1) personally delivered with proof of delivery thereof (any notice so
delivered shall be deemed to have been received at the time so delivered);
(2) sent by Federal Express (or other similar overnight courier)
designating morning delivery (any notice so delivered shall be deemed to
have been received on the Business Day it is delivered by the courier);
(3) sent by United States registered or certified mail, return receipt
requested, postage prepaid, at a post office regularly maintained by the
United States Postal Service (any notice so sent shall be deemed to have
been received on the Business Day it is delivered); or
(4) sent by telecopier or facsimile machine which automatically
generates a transmission report that states the date and time of the
transmission, the length of the document transmitted, and the telephone
number of the recipient's telecopier or facsimile machine (to be confirmed
with a copy thereof sent in accordance with paragraphs (1), (2) or (3)
above within two Business Days) (any notice so delivered shall be deemed to
have been received (i) on the date of transmission, if so transmitted
before 5:00 p.m. (local time of the recipient) on a Business Day, or (ii)
on the next Business Day, if so transmitted on or after 5:00 p.m. (local
time of the recipient) on a Business Day or if transmitted on a day other
than a Business Day);
addressed to the parties as follows:
As to any Borrower, to the Borrowing Agent:
WXI/MCN Multifamily Real Estate Limited Partnership
100 Crescent Court
Suite 1000
Dallas, TX 75201
Telecopy: (214) 855-6305
Attn: Doug Gunn
83
with a copy to:
WXI/MCN Multifamily Real Estate Limited Partnership
85 Broad Street, 19th Floor
New York, NY 10004
Telecopy: (212) 357-5505
Attn: Chief Financial Officer
with a copy to:
WXI/MCN Multifamily Real Estate Limited Partnership
c/o Archon Group, L.P.
600 East Las Colinas Boulevard
Suite 400
Irving, TX 75039
Telecopy: (972) 368-3698
Attn: Elizabeth W. Lambert
with a copy to:
Arent Fox Kintner Plotkin & Kahn PLLC
1050 Connecticut Avenue, NW
Washington, DC 20036-5339
Telecopy: (202) 857-6395
Attn: Alan S. Dubin, Esq.
As to the Lender:
AMRESCO Capital, L.P.
700 North Pearl, Suite 2400, LB #342
Dallas, TX 75201-7424
Attn: Vice President, Multifamily Finance
Telecopy: (214) 720-1505
with a copy to:
AMRESCO Capital, L.P.
c/o AMRESCO Services, L.P.
245 Peachtree Center Avenue. N.E., Suite 1800
Atlanta, GA 30303-1231
Attn: Vice President, Loan Servicing
Phone: (800) 982-0692 or (404) 654-2418
Fax: (404) 654-2623
84
with a copy to:
AMRESCO Capital, L.P.
700 North Pearl, Suite 2400, LB #342
Dallas, TX 75201-7424
Attn: General Counsel
Telecopy: (214) 999-7495
As to Fannie Mae:
Fannie Mae
3939 Wisconsin Avenue, N.W.
Washington, D.C. 20016-2899
Telecopy: (202) 752-5016
Attn: Vice President for Multifamily Asset Management
with a copy to:
Torys
237 Park Avenue
New York, NY 10017
Telecopy: (212) 682-0200
Attn: David L. Dubrow, Esq.
As to any Trustee to a Security Instrument:
to the address that is
indicated on page one of each
Security Instrument for each
Mortgaged Property
(b) Change of Notice Address; Refusal. Any party may, except in the
case of the Borrowers with respect to their designation of the Borrowing Agent
as the agent for the receipt of notices, by notice given pursuant to this
Section, change the person or persons and/or address or addresses, or designate
an additional person or persons or an additional address or addresses, for its
notices, but notice of a change of address shall only be effective upon receipt.
Each party agrees that it shall not refuse or reject delivery of any notice
given hereunder, that it shall acknowledge, in writing, receipt of the same upon
request by the other party and that any notice rejected or refused by it shall
be deemed for all purposes of this Agreement to have been received by the
rejecting party on the date so refused or rejected, as conclusively established
by the records of the U.S. Postal Service, the courier service or facsimile.
Lender and the Borrowers agree that if Lender is obligated to send a notice to
the Borrowing Agent under this Agreement, Lender shall endeavor to send a copy
to the other parties set forth above at the addresses specified above; provided,
however, any failure on the part of Lender to send such copies of any
85
notices shall not render invalid or otherwise affect the validity of any such
notice to the Borrowers properly delivered thereunder.
SECTION 16.09 Further Assurances and Corrective Instruments.
(a) Further Assurances. To the extent permitted by law, the parties
hereto agree that they shall, from time to time, execute, acknowledge and
deliver, or cause to be executed, acknowledged and delivered, such supplements
hereto and such further instruments as the Lender or the Borrowing Agent may
request and as may be required in the reasonable opinion of the Lender or its
counsel to effectuate the intention of or facilitate the performance of this
Agreement or any Loan Document.
(b) Further Documentation. Without limiting the generality of
subsection (a), in the event any further documentation or information is
required by the Lender to correct patent mistakes in the Loan Documents,
materials relating to the Title Insurance Policies or the funding of the Term
Loan, the Borrowers shall provide, or cause to be provided to the Lender, at
their cost and expense, such documentation or information. The Borrowers shall
execute and deliver to the Lender such documentation, including any amendments,
corrections, deletions or additions to the Notes, the Security Instruments or
the other Loan Documents as is reasonably required by the Lender.
SECTION 16.10 Term of this Agreement. This Agreement shall continue in effect
until the Termination Date.
SECTION 16.11 Assignments; Third-Party Rights. No Borrower shall assign this
Agreement, or delegate any of its obligations hereunder, without the prior
written consent of the Lender. The Lender may assign its rights and obligations
under this Agreement separately or together, without any Borrower's consent,
only to Fannie Mae, but may not delegate its obligations under this Agreement
unless required to do so pursuant to Section 13.04.
SECTION 16.12 Headings. Article and Section headings used herein are for
convenience of reference only, are not part of this Agreement and are not to
affect the construction of, or to be taken into consideration in interpreting,
this Agreement.
SECTION 16.13 General Interpretive Principles. For purposes of this Agreement,
except as otherwise expressly provided or unless the context otherwise requires,
(i) the terms defined in Article I, Section 5.04, and elsewhere in this
Agreement have the meanings assigned to them in this Agreement and include the
plural as well as the singular, and the use of any gender herein shall be deemed
to include the other genders; (ii) accounting terms not otherwise defined herein
have the meanings assigned to them in accordance with GAAP; (iii) references
herein to "Articles," "Sections," "subsections," "paragraphs" and other
subdivisions without reference to a document are to designated Articles,
Sections, subsections, paragraphs and other subdivisions of this Agreement; (iv)
a reference to a subsection without further reference to a Section is a
reference to such subsection as contained in the same Section in which the
reference appears, and this rule shall also apply to paragraphs and other
subdivisions; (v) a reference to an Exhibit or a
86
Schedule without a further reference to the document to which the Exhibit or
Schedule is attached is a reference to an Exhibit or Schedule to this Agreement;
(vi) the words "herein," "hereof," "hereunder" and other words of similar import
refer to this Agreement as a whole and not to any particular provision; and
(vii) the word "including" means "including, but not limited to."
SECTION 16.14 Interpretation. The parties hereto acknowledge that each party and
their respective counsel have participated in the drafting and revision of this
Agreement and the Loan Documents. Accordingly, the parties agree that any rule
of construction which disfavors the drafting party shall not apply in the
interpretation of this Agreement and the Loan Documents or any amendment or
supplement or exhibit hereto or thereto.
SECTION 16.15 [RESERVED.]
SECTION 16.16 Survival of Representation and Warranties. All statements
contained in any Loan Document, or in any certificate, financial statement or
other instrument delivered by or on behalf of any Borrower (but excluding any
certificates delivered by any Persons formerly in control of a Borrower)
pursuant to or in connection with this Agreement (including but not limited to
any such statement made in or in connection with any amendment hereto or
thereto) shall constitute representations and warranties made under this
Agreement. All representations and warranties made under this Agreement (i)
shall be made and shall be true at and as of the date of this Agreement and (ii)
shall survive the execution and delivery of this Agreement, regardless of any
investigation made by Lender or on its behalf.
SECTION 16.17 Decisions in Writing. Any approval, designation, determination,
selection, action or decision of the Lender must be in writing to be effective.
SECTION 16.18 Closing Date. The parties agree that this Agreement is dated as of
the date first above written for the convenience of the parties, and agree that
it shall be effective on, from and after, and all representations and warranties
shall be made as of January 31, 2000.
[THE REMAINDER OF THIS PAGE IS LEFT INTENTIONALLY BLANK]
87
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the day and year first above written.
BORROWERS:
WXI/MCN MULTIFAMILY REAL ESTATE
LIMITED PARTNERSHIP, a Delaware
limited partnership
By: WXI/MCN Multifamily Gen-Par,
L.L.C., a Delaware limited
liability company, its General
Partner
By: WXI/McN Realty L.L.C.,
a Delaware limited liability
company, its Managing Member
By:
---------------------------
Name:
----------------------
Title:
---------------------
BRENDON WAY FUND XII ASSOCIATES, an
Indiana general partnership
By: WXI/MCN Gen-Par II, L.L.C., a
Delaware limited liability company,
its General Partner
By: WXI/McN Realty L.L.C.,
a Delaware limited liability
company, its Managing Member
By:
---------------------------
Name:
----------------------
Title:
---------------------
CASTLE BLUFF FUND XII ASSOCIATES L.P.,
a Texas limited partnership
By: Castle Bluff Corporation, a Texas
corporation, its General Partner
By:
--------------------------------
Name:
---------------------------
Title:
--------------------------
S-1
EMBARCADERO ASSOCIATES, a Georgia
general partnership
By: WXI/MCN Gen-Par I, L.L.C., a
Delaware limited liability company,
its General Partner
By: WXI/McN Realty L.L.C., a
Delaware limited liability
company, its Managing Member
By:
---------------------------
Name:
----------------------
Title:
---------------------
S-2
LENDER:
AMRESCO CAPITAL, L.P., a Delaware
limited partnership
By: AMRESCO Mortgage Capital, Inc.,
a Delaware corporation
Its: Sole General Partner
By:
--------------------------------
Name:
---------------------------
Title:
--------------------------
S-3
EXHIBIT A
SCHEDULE OF MORTGAGED PROPERTIES
INITIAL MORTGAGED PROPERTY BORROWER MAXIMUM PERCENTAGE
-------------------------- -------- ------------------
(for purposes of
Section 7.22)
1. Berkley Hills Apartments, Madison, TN............. WXI/MCN Multifamily Real Estate 4.00%
Limited Partnership
2. Brendon Way Apartments, Indianapolis, IN.......... Brendon Way Fund XII Associates 3.50%
3. Castle Bluff Apartments, Kentwood, MI............. Castle Bluff Fund XII Associates 4.00%
L.P.
4. Cedar Run Apartments, Lexington, KY............... WXI/MCN Multifamily Real Estate 4.50%
Limited Partnership
5. Embarcadero Club Apartments, College Park, GA..... Embarcadero Associates 4.00%
6. Fairfax Apartments, Tallahassee, FL............... WXI/MCN Multifamily Real Estate 4.00%
Limited Partnership
7. Forest Park Village Apartments, Columbus, OH...... WXI/MCN Multifamily Real Estate 4.00%
Limited Partnership
8. Harbour Club I Apartments, Belleville, MI......... WXI/MCN Multifamily Real Estate 3.25%
Limited Partnership
9. Harbour Club II Apartments, Belleville, MI........ WXI/MCN Multifamily Real Estate 3.25%
Limited Partnership
10. Harbour Club III Apartments, Belleville, MI....... WXI/MCN Multifamily Real Estate 3.25%
Limited Partnership
11. Heather Square Apartments, Dallas, TX............. WXI/MCN Multifamily Real Estate 4.00%
Limited Partnership
12. Knollwood Apartments, Kansas City, MO............. WXI/MCN Multifamily Real Estate 4.00%
Limited Partnership
13. Pennbrook Place Apartments, Dallas, TX............ WXI/MCN Multifamily Real Estate 4.00%
Limited Partnership
14. Pine Hills Apartments, Livingston, TX............. WXI/MCN Multifamily Real Estate 4.00%
Limited Partnership
15. Regency Park Apartments, Fort Wayne, IN........... WXI/MCN Multifamily Real Estate 4.25%
Limited Partnership
A-1
INITIAL MORTGAGED PROPERTY BORROWER MAXIMUM PERCENTAGE
-------------------------- -------- ------------------
(for purposes of
Section 7.22)
16. Rock Creek Apartments, Portland, OR............... WXI/MCN Multifamily Real Estate 4.00%
Limited Partnership
17. Rolling Hills Apartments, Louisville,
KY................................................ WXI/MCN Multifamily Real Estate 4.00%
Limited Partnership
18. Ruskin Place Apartments, Lincoln, NE.............. WXI/MCN Multifamily Real Estate 4.00%
Limited Partnership
19. Sheraton Hills Apartments, Nashville, TN.......... WXI/MCN Multifamily Real Estate 4.00%
Limited Partnership
20. Sleepy Hollow Apartments, Cleveland, TX........... WXI/MCN Multifamily Real Estate 5.00%
Limited Partnership
21. Summer Hill Apartments, Dallas, TX................ WXI/MCN Multifamily Real Estate 3.75%
Limited Partnership
22. Sun Valley Apartments, Charlotte, NC.............. WXI/MCN Multifamily Real Estate 4.00%
Limited Partnership
23. Tanglewood Village Apartments, Carson Village,
NV................................................ Embarcadero Associates 3.25%
24. The Village Apartments, Gresham, OR............... WXI/MCN Multifamily Real Estate 3.50%
Limited Partnership
25. Westgate Apartments, Lansing, MI.................. WXI/MCN Multifamily Real Estate 4.00%
Limited Partnership
ADDITIONAL MORTGAGED PROPERTY BORROWER MAXIMUM PERCENTAGE
----------------------------- -------- ------------------
(for purposes of
Section 7.22)
1. Amargosa Creek Apartments, Lancaster, CA.......... WXI/MCN Multifamily Real Estate 4.00%
Limited Partnership
2. Cedarwood Hills Apartments, Cedar Rapids, IA...... WXI/MCN Multifamily Real Estate 4.00%
Limited Partnership
S-2
EXHIBIT B
ALLOCABLE FACILITY AMOUNTS
ALLOCABLE
PROPERTY/LOCATION FACILITY
----------------- AMOUNT
------
1. Berkley Hills Apartments, Madison, TN.................... $5,887,779
2. Brendon Way Apartments, Indianapolis, IN................. 17,981,923
3. Castle Bluff Apartments, Kentwood, MI.................... 5,837,889
4. Cedar Run Apartments, Lexington, KY...................... 3,169,180
5. Embarcadero Club Apartments, College Park, GA............ 10,883,084
6. Fairfax Apartments, Tallahassee, FL...................... 2,435,228
7. Forest Park Village Apartments, Columbus, OH............. 11,119,542
8. Harbour Club I Apartments, Belleville, MI................ 10,214,176
9. Harbour Club II Apartments, Belleville, MI............... 6,900,324
10. Harbour Club III Apartments, Belleville, MI.............. 12,778,134
11. Heather Square Apartments, Dallas, TX.................... 7,370,931
12. Knollwood Apartments, Kansas City, MO.................... 8,046,766
13. Pennbrook Place Apartments, Dallas, TX................... 5,691,965
14. Pine Hills Apartments, Livingston, TX.................... 2,693,440
15. Regency Park Apartments, Fort Wayne, IN.................. 3,956,776
16. Rock Creek Apartments, Portland, OR...................... 10,032,123
17. Rolling Hills Apartments, Louisville, KY................. 10,531,177
18. Ruskin Place Apartments, Lincoln, NE..................... 7,646,432
19. Sheraton Hills Apartments, Nashville, TN................. 6,126,581
20. Sleepy Hollow Apartments, Cleveland, TX.................. 2,044,358
21. Summer Hill Apartments, Dallas, TX....................... 5,725,662
22. Sun Valley Apartments, Charlotte, NC..................... 8,560,000
23. Tanglewood Village Apartments, Carson Village, NV........ 4,838,936
24. The Village Apartments, Gresham, OR...................... 4,711,414
25. Westgate Apartments, Lansing, MI......................... 6,187,097
B-1
EXHIBIT C
COMPLIANCE CERTIFICATE
The undersigned (the "BORROWING AGENT") hereby certify to AMRESCO Capital, L.P.,
a California limited partnership (the "Lender"), and Fannie Mae on behalf of the
Borrowers as follows:
ARTICLE I. AGREEMENT. Each Borrower is a party to that certain Term Loan
Agreement, dated as of January 1, 2000, by and among the Borrowers and the
Lender (as amended from time to time, the "AGREEMENT"). The rights of the Lender
under the Agreement have been assigned to Fannie Mae. This Certificate is issued
pursuant to the terms of the Agreement.
ARTICLE II. SATISFACTION OF CONDITIONS. The Borrowing Agent hereby represents,
warrants and covenants to the Lender on behalf of the Borrowers that all
conditions to the Request with respect to which this Certificate is issued have
been satisfied.
ARTICLE III. CAPITALIZED TERMS. All capitalized terms used but not defined in
this Certificate shall have the meanings ascribed to such terms in the
Agreement.
Dated: _______________, ____
THE BORROWING AGENT:
WXI/MCN MULTIFAMILY REAL ESTATE LIMITED
PARTNERSHIP, a Delaware limited partnership
By: WXI/MCN Multifamily Gen-Par, L.L.C., a
Delaware limited liability company, its
general partner
By: WXI/McN Realty, L.L.C.,
a Delaware limited liability
company, its managing member
By:
--------------------------------
Name:
---------------------------
Title:
--------------------------
C-1
EXHIBIT D
ORGANIZATIONAL CERTIFICATE (DELAWARE BORROWER)
I, _______________, hereby certify as follows:
SECTION 1. POSITION. I am the _______________ of WXI/McN Realty L.L.C.,
a Delaware limited liability company, which is the Managing Member of WXI/MCN
Multifamily Gen-Par, L.L.C., a Delaware limited liability company, which is the
general partner of WXI/MCN Multifamily Real Estate Limited Partnership, a
Delaware limited partnership (the "BORROWER"), and I am authorized to deliver
this Certificate on behalf of the Borrowers.
SECTION 2. TERM LOAN AGREEMENT. The Borrowers entered into that certain
Agreement, dated as of January 1, 2000, between the Borrowers and the Lender (as
amended from time to time, the "TERM LOAN AGREEMENT"). The rights of the Lender
under the Term Loan Agreement have been assigned to Fannie Mae. This Certificate
is issued pursuant to the terms of the Term Loan Agreement.
SECTION 3. DUE AUTHORIZATION OF REQUEST. I hereby certify that no
action by the partners of the Borrowing Agent is necessary to duly authorize the
execution and delivery of, and the consummation of the transaction contemplated
by, the Request with respect to which this Certificate is delivered, or, if such
action is necessary, that attached as Exhibit A to this Certificate is a true
copy of resolutions authorizing such action duly adopted at a meeting of the
partners. Any such resolutions are in full force and effect and are unmodified
as of the date of this Certificate.
SECTION 4. NO CHANGES. Since the date of the most recent Organizational
Certificate delivered to the Lender or, if there have been none, since the date
of the Term Loan Agreement, there have been no changes in any of the
Organizational Documents of any Borrower, except as set forth in Exhibit B to
this Certificate, and each Borrower remains in good standing or is duly
qualified in each of the jurisdictions in which it is required to be in good
standing or duly qualified under the terms of the Term Loan Agreement.
[SECTION 5. INCUMBENCY CERTIFICATE. ONE OR MORE OF THE PERSONS
AUTHORIZED TO EXECUTE AND DELIVER ANY DOCUMENTS REQUIRED TO BE DELIVERED IN
CONNECTION WITH THE REQUEST ARE SET FORTH BELOW, AND A SPECIMEN SIGNATURE OF
EACH HAS BEEN PREVIOUSLY DELIVERED TO THE LENDER.
WXI/MCN REALTY L.L.C.:
1) [NAME, TITLE]
2) [NAME, TITLE]
3) [NAME, TITLE]
4) [NAME, TITLE]] [INCLUDE THIS SECTION 5 IF A CHANGE IS BEING MADE FROM
THE MOST RECENT INCUMBENCY CERTIFICATE.]
SECTION [5./6.] CAPITALIZED TERMS. All capitalized terms used but not
defined in this Certificate shall have the meanings ascribed to such terms in
the Term Loan Agreement.
D-1
Dated: _________________, _____
THE BORROWER:
WXI/MCN Multifamily Real Estate Limited
Partnership a Delaware limited partnership
By: WXI/MCN Multifamily Gen-Par, L.L.C., a
Delaware limited liability company, its
general partner
By: WXI/McN Multifamily Gen-Par,
L.L.C., a Delaware limited
liability company, its managing
member
By:
--------------------------------
Name:
---------------------------
Title:
--------------------------
D-2
EXHIBIT E
TIE-IN ENDORSEMENT
To be annexed to and form a part of Policy No. ________________.
The said policy is hereby amended in the following manner:
The Company acknowledges that the land described in Schedule A of this policy is
part of the security for an indebtedness in the amount of [$____________] which
indebtedness is also secured by mortgages or deeds of trust which are insured
concurrently by the following policies:
Policy No. County State Amount
- ---------- ------ ----- ------
E-1
Anything to the contrary notwithstanding in Paragraph 6(a)(ii) of the Conditions
and Stipulations of the Policy, the insurance coverage afforded in this Policy
is aggregated with the insurance coverage in all of the other policies
identified in this endorsement so the effective insurance coverage is
[$______________]. The total liability of the Company under this and all
policies identified in this endorsement shall not exceed such amount, but its
liability in this Policy for the land described in Schedule A remains limited by
the provisions of Paragraph 6(a)(i) and 6(a)(iii) of the Conditions and
Stipulations of this Policy. Any payment by the Company on this or any of the
Policies listed in this Endorsement shall reduce pro tanto the liability of the
Company under all policies, and the amount so paid shall be deemed a payment
under all policies.
The total liability of the Company under said Policy and any prior endorsements
attached thereto shall not exceed, in the aggregate, the face amount of said
Policy, as the same may be specifically amended in dollar amount by this or any
prior endorsements, and the costs which the Company is obligated under the
provisions of said Policy to pay.
Nothing herein contained shall be construed as extending or changing the
effective date of said commitment or policy unless otherwise expressly stated.
This endorsement is made a part of said Policy and is subject to the exclusions,
schedules, endorsements, conditions, stipulations and terms thereof, except as
modified by the provisions hereof.
Executed this ____ day of _______, 2000.
---------------------------------
COUNTERSIGNED: ________________________, President
- -------------------
__________________________ Attest:___________________, Secretary
Authorized Signatory
E-2
EXHIBIT F
FUTURE ADDITIONAL MORTGAGED PROPERTY TERM LOAN REQUEST
THE TERM LOAN AGREEMENT PURSUANT TO WHICH THIS REQUEST IS DELIVERED REQUIRES YOU
TO MAKE THE REQUESTED FUTURE ADDITIONAL MORTGAGED PROPERTY TERM LOAN, IF ALL
CONDITIONS CONTAINED IN SECTIONS 3.02-A, 3.03-A AND 3.04-A OF THE TERM LOAN
AGREEMENT ARE SATISFIED, AT A CLOSING TO BE HELD AT OFFICES DESIGNATED BY YOU ON
A CLOSING DATE SELECTED BY YOU, AND OCCURRING ON A DATE WHICH SHALL NOT BE MORE
THAN 5 BUSINESS DAYS, AFTER THE BORROWING AGENT'S RECEIPT OF THE RATE
CONFIRMATION FORM (OR ON SUCH OTHER DATE TO WHICH WE MAY AGREE).
- --------------------, ------
VIA: _______________________
AMRESCO Capital, L.P.
700 North Pearl, Suite 2400
Dallas, TX 75201
Attention: Vice President, Multifamily Finance
[NOTE: SUBJECT TO CHANGE IN THE EVENT LENDER OR ITS ADDRESS CHANGES]
Re: FUTURE ADDITIONAL MORTGAGED PROPERTY TERM LOAN REQUEST issued pursuant
to Term Loan Agreement, dated as of January 1, 2000, by and among the
undersigned (the "Borrowers") and the Lender (as amended from time to
time, the "Term Loan Agreement")
Ladies and Gentlemen:
This constitutes a Future Additional Mortgaged Property Term Loan Request
pursuant to the terms of the above-referenced Term Loan Agreement.
SECTION 1. REQUEST. The Borrowers hereby request that the Lender make a Future
Additional Mortgaged Property Term Loan in accordance with the terms of the Term
Loan Agreement. Following is the information required by the Term Loan Agreement
with respect to this Request:
ITEM 1. Amount. The amount of the Future Additional Mortgaged Property
Term Loan shall be $_______________.
ITEM 2. Maturity Date. The Maturity Date of the Future Additional
Mortgaged Property Term Loan is as follows:
February 1, 2007.
F-1
ITEM 3. Accompanying Documents and Deposit. This Future Additional
Mortgaged Property Term Loan Request is being delivered together with (i) a
Collateral Addition Request and a Collateral Addition Description Package, (ii)
the underwriting documentation required to be delivered by us pursuant to
Section 3.03-A of the Term Loan Agreement and (iii) the Rate Lock Deposit.
ITEM 4. Closing Documents. All documents, instruments and certificates
required to be delivered pursuant to the conditions contained in Sections
3.02-A, 3.03-A and 3.04-A of the Term Loan Agreement, including, but not limited
to (i) a Rate Setting Form, (ii) a Compliance Certificate, and (iii) an
Organizational Certificate will be delivered on or before the Closing Date.
ITEM 5. Wiring Information. Please wire the Future Additional Mortgaged
Property Term Loan on or before the Closing Date into our account in accordance
with the following wiring information:
-------------------------------------------
-------------------------------------------
-------------------------------------------
-------------------------------------------
-------------------------------------------
SECTION 2. AVAILABLE COMMITMENT. The information contained in the
following table is true, correct and complete, to the undersigned's knowledge.
The undersigned acknowledges and agrees that the final determination of the
information shall be made by the Lender.
- --------------------------------------------------------------------------------
Currently Available Principal
Amount
- --------------------------------------------------------------------------------
Proposed Amount of Future
Additional Mortgaged Property
Term Loan
- --------------------------------------------------------------------------------
Remaining Available Principal
Amount after the Proposed
Future Term Loan
- --------------------------------------------------------------------------------
SECTION 3. CAPITALIZED TERMS. All capitalized terms used but not
defined in this Request shall have the meanings ascribed to such terms in the
Term Loan Agreement.
F-2
Sincerely,
THE BORROWERS:
WXI/MCN MULTIFAMILY REAL ESTATE
LIMITED PARTNERSHIP, a Delaware limited
partnership
By: WXI/MCN Multifamily Gen-Par, L.L.C., a
Delaware limited liability company, its
General Partner
By: WXI/McN Realty L.L.C., a Delaware
limited liability company, its
Managing Member
By:
--------------------------------
Name:
---------------------------
Title:
--------------------------
BRENDON WAY FUND XII ASSOCIATES, an Indiana
general partnership
By: WXI/MCN Gen-Par II, L.L.C., a Delaware
limited liability company, its General
Partner
By: WXI/McN Realty L.L.C., a Delaware
limited liability company, its
Managing Member
By:
--------------------------------
Name:
---------------------------
Title:
--------------------------
CASTLE BLUFF FUND XII ASSOCIATES, L.P., a
Texas limited partnership
By: Castle Bluff Corporation, a Texas
corporation, its General Partner
By:
-------------------------------------
Name:
--------------------------------
Title:
-------------------------------
F-3
EMBARCADERO ASSOCIATES, a Georgia general
partnership
By: WXI/MCN Gen-Par I, L.L.C., a Delaware
limited liability company, its General
Partner
By: WXI/McN Realty L.L.C., a Delaware
limited liability company, its
Managing Member
By:
--------------------------------
Name:
---------------------------
Title:
--------------------------
LENDER:
AMRESCO CAPITAL, L.P., a Delaware limited
partnership
By: AMRESCO Mortgage Capital, Inc., a
Delaware corporation
Its: Sole General Partner
By:
------------------------------------
Name:
-------------------------------
Title:
------------------------------
F-4
WXI/MCN Real Estate Limited Partnership
- --------- ---, ----
Page 1
EXHIBIT G
WXI/MCN Multifamily Real Estate Limited Partnership
100 Crescent Court VIA FACSIMILE AND OVERNIGHT MAIL
Suite 1000
Dallas, Texas 75201
Attention: Doug Gunn
RE: INTEREST RATE LOCK RELATED TO A PROPOSED FUTURE TERM LOAN TO WXI/MCN
MULTIFAMILY REAL ESTATE LIMITED PARTNERSHIP, BRENDON WAY FUND XII
ASSOCIATES, CASTLE BLUFF FUND XII ASSOCIATES L.P. AND EMBARCADERO
ASSOCIATES (COLLECTIVELY REFERRED TO AS "BORROWERS"), BY AMRESCO CAPITAL,
L.P. ("LENDER").
Ladies/Gentlemen:
Capitalized terms not defined herein shall have the meanings given to the same
in the Term Loan Agreement among Borrowers and Lender, dated as of January 1,
2000 (the "Term Loan Agreement"). This Agreement (herein so called) confirms
that in connection with the Term Loan Agreement, and in consideration of the
mutual covenants and agreements set forth herein, we agree as follows:
1. The undertakings by Lender described below are contingent upon
Lender's receipt of (i) a fully executed copy of this Agreement and (ii) a
deposit equal to two percent (2.0%) of the proposed amount of the Loan (the
"Rate Lock Deposit"), which Rate Lock Deposit shall be non-refundable except as
set forth hereinbelow. Within the 48 hour period immediately following Lender's
receipt of the latter of the items described in (i) and (ii) preceding, Lender
is authorized by Borrowers to "lock" the interest rate payable on the Future
Term Loan at a fixed rate not to exceed the following maximum rate per annum
(the "Maximum Rate"):
_________________ percent (______%) per annum
BORROWERS' INITIALS: ___________
KEY PRINCIPAL(S)' INITIALS: ________
Subject to (i) the Maximum Rate limitation and (ii) to any election by the
Borrowers to buy down the Interest Rate, the rate at which Lender locks the
interest rate on the Future Term Loan shall be the interest rate on the Future
Term Loan. In the event that the DSCR for any Additional Mortgaged Property is
less than 1.25:1, Lender's only recourse shall be to reduce the amount of the
proposed Future Term Loan allocated to such Additional Mortgaged Property to a
level that results in (i) the DSCR for such Additional Mortgaged Property being
1.25:1, and (ii) the
G-1
WXI/MCN Real Estate Limited Partnership
- --------- ---, ----
Page 2
Maximum LTV for such Additional Mortgaged Property not exceeding 80%; all in
accordance with the terms of the DUS Guide Underwriting Requirements.
2. The Rate Lock Deposit will not bear interest and shall be refundable
to Borrowers only in the event of one of the following:
(a) The Future Term Loan closes and funds on or before _________ __,
_____ (the "Designated Closing Date") in accordance with the terms of the
Term Loan Agreement;
(b) If no Designated Closing Date is specified in the blank in the
preceding paragraph 2(a), the Future Term Loan closes and funds on or
before an alternative closing date (agreed to by the Borrowers and the
Lender) in accordance with the terms of the Term Loan Agreement; or
(c) Within the time period prescribed above, Lender is unable by use
of reasonable efforts to lock the interest rate on the Future Term Loan at
a rate equal to or less than the Maximum Rate.
In the event of 2(a), 2(b) or 2(c), the Rate Lock Deposit (net of the sum by
which loan expenses exceed any deposits placed by Borrowers with Lender), shall
be refunded to Borrowers by Lender promptly after the occurrence of such event.
If neither 2(a), 2(b) or 2(c) above are applicable, then Lender will be
entitled to retain the Rate Lock Deposit in full as liquidated damages. If
Lender is entitled under this Section 2 to retain the Rate Lock Deposit,
Borrowers acknowledge and agree that such fee is intended to compensate Lender
for the costs, administrative expenses and risks associated with Lender's
entering into a forward trade agreement with an investor to purchase the
prospective mortgage backed security that Lender expects to be issued by Fannie
Mae in payment of the Future Term Loan at the time Fannie Mae purchases same
from Lender, including, without limitation, breakage fees (e.g. out-of-pocket
losses or expenses incurred or paid by Lender in connection with the
establishment and termination of the Interest Rate if locked pursuant to this
Agreement and the Term Loan Agreement is terminated for any reason without the
Future Term Loan being closed and funded). Borrowers acknowledge and agree that
(a) during the period of time occurring from the point of rate lock to the
closing and funding of the Future Term Loan and purchase thereof by Fannie Mae,
Lender will be exposed to market interest rate fluctuations and (b) the damages
described in this paragraph are difficult to ascertain and that the Rate Lock
Deposit is a fair and reasonable estimate of such damages.
EXCEPT AS DESCRIBED ABOVE IN THIS SECTION 2, THE RATE LOCK DEPOSIT (OR
ANY PORTION THEREOF) SHALL NOT BE REFUNDABLE UNDER ANY OTHER CIRCUMSTANCES.
3. Lender's agreement to lock the interest rate under this Agreement
has no bearing on
G-2
WXI/MCN Real Estate Limited Partnership
- --------- ---, ----
Page 3
whether Lender will be satisfied as to all of the conditions under Sections
3.02-A, 3.03-A and 3.04-A of the Term Loan Agreement for making the Future Term
Loan.
4. THIS AGREEMENT SHALL BE DEEMED TO BE EXECUTED IN AND PERFORMABLE IN,
AND GOVERNED BY THE SUBSTANTIVE LAWS OF, THE STATE OF TEXAS (WITHOUT REGARD TO
ANY CONFLICT OF LAWS PRINCIPLES).
5. This Agreement may be executed in any number of counterparts, each
of which when so executed shall be deemed to be an original, but all such
counterparts together constitute one and the same instrument.
6. Borrowers may not, without the prior written consent of Lender,
assign, transfer or set over to another, in whole or in part, all or any part of
its benefits, rights, duties and obligations hereunder. Borrowers agree that
Lender may assign its benefits, rights, duties and obligations under this
Agreement, without the consent of Borrowers, to any potential purchaser of the
Future Term Loan.
7. This Agreement may be amended, changed or modified by Borrowers and
Lender only by an instrument in writing setting forth the terms of such change,
modification or amendment, and signed by each party.
8. All notices, demands, consents or requests that are either required
or desired to be given or furnished hereunder shall be in writing and shall be
sent to the appropriate party at the following addresses: (i) if to Borrowers,
to the Borrowing Agent at the address set forth on the first page hereof; and
(ii) if to Lender, at the address set forth on the first page hereof, to the
attention of the undersigned. Any such notice sent by means of telecopy shall be
deemed to be received on the day such telecopy is sent once orally confirmed by
the sender via telephone.
9. This Agreement constitutes the entire and final agreement between
Borrowers and Lender with respect to the subject matter hereof, and there are no
other agreements, understandings, undertakings, representations or warranties
among the parties hereto with respect to the subject matter hereof except as set
forth herein.
If the foregoing is in accordance with your understanding of our agreement,
please sign and return to the undersigned a counterpart hereof, whereupon this
Agreement and your acceptance shall represent a binding agreement by and among
Borrowers and Lender.
G-3
WXI/MCN Real Estate Limited Partnership
- --------- ---, ----
Page 4
AMRESCO CAPITAL, L.P.,
A DELAWARE LIMITED PARTNERSHIP
By: AMRESCO Mortgage Capital, Inc.,
a Delaware corporation
Its sole General Partner
By: ______________________________
Name: ___________________________
Title: ____________________________
THE FOREGOING AGREEMENT IS HEREBY CONFIRMED AND ACCEPTED AS OF THE DATE FIRST
WRITTEN ABOVE.
WXI/MCN MULTIFAMILY REAL ESTATE LIMITED
PARTNERSHIP, a Delaware limited partnership
By: WXI/MCN Multifamily Gen-Par, L.L.C.,
a Delaware limited liability company,
its General Partner
By: WXI/McN Realty L.L.C., a Delaware
limited liability company,
its Managing Member
By:
--------------------------------
Name:
---------------------------
Title:
--------------------------
BRENDON WAY FUND XII ASSOCIATES, an Indiana
general partnership
By: WXI/MCN Gen-Par II, L.L.C., a Delaware
limited liability company, its General
Partner
By: WXI/McN Realty L.L.C., a Delaware
limited liability company, its
Managing Member
By:
--------------------------------
Name:
---------------------------
Title:
--------------------------
G-4
WXI/MCN Real Estate Limited Partnership
- --------- ---, ----
Page 5
CASTLE BLUFF FUND XII ASSOCIATES, L.P., a
Texas limited partnership
By: Castle Bluff Corporation, a Texas
corporation, its General Partner
By:
-------------------------------------
Name:
--------------------------------
Title:
-------------------------------
EMBARCADERO ASSOCIATES, a Georgia general
partnership
By: WXI/MCN Gen-Par I, L.L.C., a Delaware
limited liability company, its General
Partner
By: WXI/McN Realty L.L.C., a Delaware
limited liability company, its
Managing Member
By:
--------------------------------
Name:
---------------------------
Title:
--------------------------
LENDER:
AMRESCO CAPITAL, L.P., a Delaware limited
partnership
By: AMRESCO Mortgage Capital, Inc., a
Delaware corporation
Its: Sole General Partner
By:
------------------------------------
Name:
-------------------------------
Title:
------------------------------
G-5
EXHIBIT H
RATE CONFIRMATION FORM
Pursuant to Section 3.02-A(b) of that certain Term Loan Agreement dated
as of January 1, 2000, as amended from time to time, the "TERM LOAN AGREEMENT")
among AMRESCO Capital, L.P., a Delaware limited partnership, (the "LENDER"), and
WXI/MCN Multifamily Real Estate Limited Partnership, a Delaware limited
partnership, Brendon Way Fund XII Associates, an Indiana general partnership,
Castle Bluff Fund XII Associates L.P., a Texas limited partnership and
Embarcadero Associates, a Georgia general partnership (the "BORROWERS"), and the
Rate Setting Form dated ______________, from the Borrowers to the Lender, the
Lender hereby confirms that it has obtained a commitment for the purchase of a
Fannie Mae MBS with the following terms:
Future Term Loan Amount $_______________________
Term/Maturity Date ___ months; Maturity Date: February 1, 2007
Interest Rate ______ %
Closing Date no later than ________________________
H-1
Dated: ____________________, ______
THE LENDER:
AMRESCO Capital, L.P.,
a Delaware limited partnership
By: AMRESCO Mortgage Capital, Inc.,
a Delaware corporation
Its: Sole General Partner
By:
------------------------------------------
Name:
-------------------------------------
Title:
------------------------------------
Rate Setting Date: ____________________, ______, ___:___ AM/PM Eastern Time
H-2
EXHIBIT I
COLLATERAL ADDITION REQUEST
THE TERM LOAN AGREEMENT PURSUANT TO WHICH THIS REQUEST IS DELIVERED REQUIRES
THAT (1) IF YOU CONSENT TO THE ADDITION OF THE PROPOSED ADDITIONAL MORTGAGED
PROPERTY TO THE COLLATERAL POOL, (2) WE ELECT TO CAUSE THE PROPOSED ADDITIONAL
MORTGAGED PROPERTY TO BE ADDED TO THE COLLATERAL POOL AND (3) ALL CONDITIONS
CONTAINED IN SECTIONS 3.02-A, 3.03-A AND 3.04-A OF THE TERM LOAN AGREEMENT ARE
SATISFIED, THEN YOU SHALL PERMIT THE PROPOSED ADDITIONAL MORTGAGED PROPERTY TO
BE ADDED TO THE COLLATERAL POOL, AT A CLOSING TO BE HELD AT OFFICES DESIGNATED
BY YOU ON A CLOSING DATE SELECTED BY YOU, AND OCCURRING WITHIN 5 BUSINESS DAYS
AFTER THE BORROWING AGENT'S RECEIPT OF THE RATE CONFIRMATION FORM (OR ON SUCH
OTHER DATE TO WHICH WE MAY AGREE).
- --------------------, ------
VIA:
------------------------
AMRESCO Capital, L.P.
700 North Pearl
Suite 2400
Dallas, Texas 75201
Attention: Vice President, Multifamily Finance
[NOTE: SUBJECT TO CHANGE IN THE EVENT LENDER OR ITS ADDRESS CHANGES]
Re: COLLATERAL ADDITION REQUEST issued pursuant to Term Loan Agreement, dated
as of January 1, 2000, among the undersigned (the "BORROWERS") and the
Lender (as amended from time to time, the "TERM LOAN AGREEMENT")
Ladies and Gentlemen:
This constitutes a Collateral Addition Request pursuant to the terms of the
above-referenced Term Loan Agreement.
SECTION 1. REQUEST. The Borrowers hereby request that the Multifamily
Residential Property described in this Request be added to the Collateral Pool
in accordance with the terms of the Term Loan Agreement. Following is the
information required by the Term Loan Agreement with respect to this Request:
(a) Collateral Addition Description Package. Attached to this Request
is all information and documents relating to the Additional Mortgaged Property
required by Section 3.03-A of the Term Loan Agreement; and
I-1
(b) Accompanying Documents. All reports, certificates and documents
required to be delivered pursuant to the conditions contained in Sections
3.02-A, 3.03-A and 3.04-A of the Term Loan Agreement will be delivered on or
before the Closing Date.
SECTION 2. CAPITALIZED TERMS. All capitalized terms used but not defined in
this Request shall have the meanings ascribed to such terms in the Term Loan
Agreement.
Sincerely,
THE BORROWERS:
WXI/MCN MULTIFAMILY REAL ESTATE LIMITED
PARTNERSHIP, a Delaware limited partnership
By: WXI/MCN Multifamily Gen-Par, L.L.C.,
a Delaware limited liability company,
its General Partner
By: WXI/McN Realty L.L.C., a Delaware
limited liability company, its
Managing Member
By:
--------------------------------
Name:
---------------------------
Title:
--------------------------
BRENDON WAY FUND XII ASSOCIATES, an Indiana
general partnership
By: WXI/MCN Gen-Par II, L.L.C., a Delaware
limited liability company, its General
Partner
By: WXI/McN Realty L.L.C., a Delaware
limited liability company, its
Managing Member
By:
--------------------------------
Name:
---------------------------
Title:
--------------------------
I-2
CASTLE BLUFF FUND XII ASSOCIATES L.P., a
Texas limited partnership
By: Castle Bluff Corporation, a Texas
corporation, its General Partner
By:
-------------------------------------
Name:
--------------------------------
Title:
-------------------------------
EMBARCADERO ASSOCIATES, a Georgia general
partnership
By: WXI/MCN Gen-Par I, L.L.C., a Delaware
limited liability company, its General
Partner
By: WXI/McN Realty L.L.C., a Delaware
limited liability company, its
Managing Member
By:
--------------------------------
Name:
---------------------------
Title:
--------------------------
I-3
EXHIBIT L
FUTURE ADDITIONAL MORTGAGED PROPERTY
TERM LOAN RATE ADJUSTMENT ENDORSEMENTS
See the attached forms.
L-1
EXHIBIT M
COLLATERAL RELEASE REQUEST
THE TERM LOAN AGREEMENT PURSUANT TO WHICH THIS REQUEST IS DELIVERED REQUIRES FOR
THERE TO OCCUR A CLOSING WITHIN 30 DAYS AFTER YOUR RECEIPT OF THIS REQUEST,
SUBJECT TO SATISFACTION OF ALL CONDITIONS CONTAINED IN SECTION 4.03 OF THE TERM
LOAN AGREEMENT. REFERENCE IS MADE TO THE TERM LOAN AGREEMENT FOR THE SCOPE OF
THE LENDER'S OBLIGATIONS WITH RESPECT TO THIS REQUEST.
- --------------------, ------
VIA:
-----------------------
AMRESCO Capital, L.P.
700 North Pearl, Suite 2400, LB #342
Dallas, TX 75201-7424
Attn: Vice President, Multifamily Finance
AMRESCO Services, L.P.
245 Peachtree Center Avenue. N.E., Suite 1800
Atlanta, GA 30303-1231
Attn: Vice President, Loan Servicing
[NOTE: SUBJECT TO CHANGE IN THE EVENT LENDER OR ITS ADDRESS CHANGES]
Re: COLLATERAL RELEASE REQUEST issued pursuant to Term Loan Agreement, dated
__________, by and between the undersigned (the "BORROWERS") and the Lender
(as amended from time to time, the "TERM LOAN AGREEMENT")
Ladies and Gentlemen:
This constitutes a Collateral Release Request pursuant to the terms of the
above-referenced Term Loan Agreement.
SECTION 1. REQUEST. The Borrowers hereby request that the Collateral
Release Property described in this Request be released from the Collateral Pool
in accordance with the terms of the Term Loan Agreement. Following is the
information required by the Term Loan Agreement with respect to this Request:
M-1
(a) Description of Collateral Release Property. The name, address and
location (county and state) of the Mortgaged Property, or other designation of
the Collateral, to be released from the Collateral Pool is as follows:
Name:
------------------------------------------------
Address:
------------------------------------------------
------------------------------------------------
Location:
------------------------------------------------
(b) Accompanying Documents. All documents, instruments and certificates
required to be delivered pursuant to the conditions contained in Section 4.03 of
the Term Loan Agreement will be delivered on or before the Closing Date.
SECTION 2. RELEASE PRICE. The Borrowers shall pay the Release Price, or
such portion thereof, and all other amounts as is required pursuant to Sections
4.02 of the Term Loan Agreement as a condition to the closing of the release of
the Collateral Release Property from the Collateral Pool.
SECTION 3. CAPITALIZED TERMS. All capitalized terms used but not defined in
this Request shall have the meanings ascribed to such terms in the Term Loan
Agreement.
Sincerely,
THE BORROWING AGENT:
WXI/MCN Multifamily Real Estate Limited
Partnership a Delaware limited partnership
By: WXI/MCN Multifamily Gen-Par, L.L.C., a
Delaware limited liability company, its
general partner
By: WXI/McN Realty, L.L.C., a Delaware
limited liability company, its
Managing Member
By:
-------------------------------
Name:
--------------------------
Title:
-------------------------
M-2
EXHIBIT N
BORROWERS' CONFIRMATION OF OBLIGATIONS
THIS BORROWER CONFIRMATION OF OBLIGATIONS (the "CONFIRMATION OF OBLIGATIONS") is
made on the ______ day of _____, _____, by and among
___________________________, a Delaware limited partnership, [OTHER BORROWERS]
(each a "Borrower" and collectively the "Borrowers") and AMRESCO CAPITAL, L.P.,
a Delaware limited partnership ("LENDER"), and Fannie Mae, a federally-chartered
and stockholder-owned corporation organized and existing under the Federal
National Mortgage Association Charter Act, 12 U.S.C. ss. 1716 et seq. ("FANNIE
MAE").
RECITALS
A. The Borrowers and the Lender are parties to that certain Term Loan Agreement,
dated _________________ (as amended from time to time, the "TERM LOAN
AGREEMENT").
B. All of the Lender's right, title and interest in the Term Loan Agreement and
the Loan Documents executed in connection with the Term Loan Agreement or the
transactions contemplated by the Term Loan Agreement have been assigned to
Fannie Mae pursuant to that certain Assignment of Term Loan Agreement and Other
Loan Documents, dated ____________ (the "TERM LOAN ASSIGNMENT"). Fannie Mae has
designated the Lender as the servicer of the Term Loan.
C. The Borrowing Agent has delivered to the Lender a Collateral Release Request
pursuant to the Term Loan Agreement to release a Collateral Release Property
from the Collateral Pool.
D. The Lender has consented to the Collateral Release Request.
E. Each Borrower is executing this Confirmation of Obligations pursuant to the
Term Loan Agreement to confirm it remains liable for all of its obligations
under the Term Loan Agreement and the other Loan Documents notwithstanding the
release of the Collateral Release Property from the Collateral Pool.
NOW, THEREFORE, each Borrower, in consideration of the Lender's consent to the
release of the Collateral Release Property from the Collateral Pool and other
good and valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, hereby agree as follows:
SECTION 1. CONFIRMATION OF OBLIGATIONS. Each Borrower confirms that none of
its obligations under the Term Loan Agreement and the Loan Documents is affected
by the release of the Collateral Release Property from the Collateral, and each
of its respective obligations under the Term Loan Agreement and the Loan
Documents shall remain in full force and effect, and each Borrower shall be
fully liable (subject to Section 15 of the Term Loan Agreement) for the
observance of all such obligations, notwithstanding the release of the
Collateral Release Property from the Collateral Pool.
SECTION 2. BENEFICIARIES. This Confirmation of Obligations is made for the
express benefit of both the Lender and Fannie Mae.
N-1
SECTION 3. CAPITALIZED TERMS. All capitalized terms used in this
Confirmation of Obligations which are not specifically defined herein shall have
the respective meanings set forth in the Term Loan Agreement.
SECTION 4. COUNTERPARTS. This Confirmation of Obligations may be executed
in counterparts by the parties hereto, and each such counterpart shall be
considered an original and all such counterparts shall constitute one and the
same instrument.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
day and year first above written.
[SIGNATURES ON THE FOLLOWING PAGES]
N-2
THE BORROWERS:
WXI/MCN MULTIFAMILY REAL ESTATE LIMITED
PARTNERSHIP, a Delaware limited partnership
By: WXI/MCN Multifamily Gen-Par, L.L.C.,
a Delaware limited liability company,
its General Partner
By: WXI/McN Realty L.L.C., a Delaware
limited liability company, its
Managing Member
By:
--------------------------------
Name:
---------------------------
Title:
--------------------------
BRENDON WAY FUND XII ASSOCIATES, an Indiana
general partnership
By: WXI/MCN Gen-Par II, L.L.C., a Delaware
limited liability company, its
General Partner
By: WXI/McN Realty L.L.C., a Delaware
limited liability company, its
Managing Member
By:
--------------------------------
Name:
---------------------------
Title:
--------------------------
CASTLE BLUFF FUND XII ASSOCIATES L.P., a
Texas limited partnership
By: Castle Bluff Corporation, a Texas
corporation, its General Partner
By:
-------------------------------------
Name:
--------------------------------
Title:
-------------------------------
N-3
EMBARCADERO ASSOCIATES, a Georgia general
partnership
By: WXI/MCN Gen-Par I, L.L.C., a Delaware
limited liability company, its General
Partner
By: WXI/McN Realty L.L.C., a Delaware
limited liability company, its
Managing Member
By:
--------------------------------
Name:
---------------------------
Title:
-------------------------
N-4
AGREED TO AND ACKNOWLEDGED:
By: WHITEHALL STREET REAL ESTATE LIMITED
PARTNERSHIP XI, a Delaware limited
partnership
By: WH Advisors, L.L.C. XI, a Delaware
limited liability company, its
general partner
By:
--------------------------------
Name:
Title:
By: WHITEHALL STREET REAL ESTATE LIMITED
PARTNERSHIP XII, a Delaware limited
partnership
By: WH Advisors, L.L.C. XII, a
Delaware limited liability company,
its general partner
By:
--------------------------------
Name:
Title:
N-5
THE LENDER:
AMRESCO CAPITAL, L.P., a Delaware limited
partnership
By: AMRESCO Mortgage Capital, Inc., a
Delaware corporation
Its: Sole General Partner
By:
-------------------------------
Name:
--------------------------
Title:
-------------------------
N-6
FANNIE MAE:
By:
------------------------------------------
Name:
-------------------------------------
Title:
------------------------------------
N-7
SCHEDULE 1
LIST OF AUTHORIZED REPRESENTATIVES
(1) The following individuals each qualify as an "Authorized Representative" as
said term is defined in Article I of the Term Loan Agreement between [Borrowers]
and AMRESCO Capital, L.P.:
NAME OFFICE
Daniel M. Neidich President
Michael K. Klingher Vice-President
Kevin D. Naughton Vice-President
Ralph F. Rosenberg Vice-President
Stuart M. Rothenberg Vice-President
Edward M. Siskind Vice-President
David M. Weil Vice-President
Todd A. Williams Vice-President
Elizabeth A. O'Brien Vice-President
Katharine K. Lauer Vice-President
Elizabeth M. Burban Vice-President
Angie Madison Vice-President
G. Douglas Gunn Vice-President
Susan L. Sack Vice-President
Steven M. Feldman Vice-President
Alan S. Kava Vice-President
Brian J. Lahey Vice-President
Brahm S. Cramer Vice-President
Larry J. Goodwin Vice-President
Ronald L. Bernstein Assistant Vice President
Zubin P. Irani Assistant Vice President
Kevin D. Naughton Secretary
Kevin D. Naughton Treasurer
Ralph F. Rosenberg Assistant Secretary
Todd A. Williams Assistant Secretary
Katharine K. Lauer Assistant Secretary
Elizabeth A. O'Brien Assistant Secretary
Elizabeth M. Burban Assistant Secretary
Angie Madison Assistant Secretary
G. Douglas Gunn Assistant Secretary
Ronald L. Bernstein Assistant Secretary
Zubin P. Irani Assistant Secretary
Brahm S. Cramer Assistant Secretary
Larry J. Goodwin Assistant Secretary
Edward M. Siskind Assistant Treasurer
Todd A. Williams Assistant Treasurer
Brian J. Lahey Assistant Treasurer
Mitchell S. Weiss Assistant Treasurer
SCHEDULE 2
BORROWER/PARTNERS PERCENTAGE
- ----------------- OWNERSHIP INTEREST
------------------
WXI/MCN Multifamily Real Estate Limited Partnership
WXI/MCN Multifamily Gen-Par, L.L.C. 1%
WXI/McN Realty L.L.C. 99%
Brendon Way Fund XII Associates
WXI/MCN Gen-Par II, L.L.C. 1%
WXI/ MCN Real Estate XII Limited Partnership 99%
Castle Bluff Fund XII Associates L.P.
Castle Bluff Corporation 1%
WXI/ MCN Real Estate XII Limited Partnership 99%
Embarcadero Associates
WXI/MCN Gen-Par I, L.L.C. 1%
WXI/ MCN Real Estate XIV Limited Partnership 9%
SCHEDULE 3
PENDING LITIGATION OR OTHER PROCEEDINGS
None.
SCHEDULE 4
NONCOMPLIANCE/NONCONFORMITY WITH APPLICABLE LAWS OR PERMITS
1) Harbour Club - a letter dated 1/28/00 regarding Harbour's non-compliance
for docking facilities constructed at the Harbor Club, Ltd. Condominiums
under DEQ Permit No. 98-10-1133.
2) Various pool permits as disclosed to Lender.
SCHEDULE 5
DISCLOSURE OF INDEBTEDNESS
None.
SCHEDULE 6
CONTRACTUAL OBLIGATIONS
Management Agreement by and between applicable Borrower and AMS Management,
L.L.C. (one for each Mortgaged Property)
Portfolio Advisory Agreement by and between WXI/McN Realty L.L.C. and Archon
Group, L.P.
SCHEDULE 7
COMMERCIAL LEASES
Miscellaneous laundry room leases - all disclosed to Lender.
EXECUTION COPY
- --------------------------------------------------------------------------------
TERM LOAN AGREEMENT
among
WXI/MCN MULTIFAMILY REAL ESTATE LIMITED PARTNERSHIP,
a Delaware limited partnership
and
BRENDON WAY FUND XII ASSOCIATES,
an Indiana general partnership
and
CASTLE BLUFF FUND XII ASSOCIATES L.P.,
a Texas limited partnership
and
EMBARCADERO ASSOCIATES,
a Georgia general partnership
and
AMRESCO CAPITAL, L.P.,
a Delaware limited partnership
dated as of
January 1, 2000
- --------------------------------------------------------------------------------
TABLE OF CONTENTS
Page
----
RECITALS..........................................................................................................1
ARTICLE I.........................................................................................................1
ARTICLE II.......................................................................................................18
2.01 Term Loan Commitment.........................................................................18
2.02 Borrowing Agency Provisions..................................................................19
2.03 Disbursement of Term Loan....................................................................19
2.04 Payment of Principal and Interest............................................................20
2.05 Joint and Several Obligations................................................................20
ARTICLE III......................................................................................................20
3.01 Conditions to Closing........................................................................20
3.02 Delivery of Property-Related Documents.......................................................23
ARTICLE III-A....................................................................................................24
3.01-A Future Additional Mortgaged Property Term Loans..............................................24
3.02-A Interest on Future Terms Loans...............................................................24
3.03-A Additions of Collateral......................................................................25
3.04-A Conditions Precedent to Future Additional Mortgaged Property Term
Loans........................................................................................26
ARTICLE III-B....................................................................................................28
3.01-B Future Excess Proceeds Term Loan.............................................................28
3.02-B Determination of Amount of Future Excess Proceeds Term Loan..................................28
3.03-B Interest on Future Excess Proceeds Term Loans................................................29
3.04-B Conditions Precedent to Future Excess Proceeds Term Loan.....................................29
ARTICLE IV.......................................................................................................30
4.01 Right to Obtain Releases of Collateral.......................................................30
4.02 Procedure for Obtaining Releases of Collateral...............................................31
4.03 Conditions Precedent to Release of Collateral Release Property from
the Collateral...............................................................................32
ARTICLE V........................................................................................................34
5.01 Transfers and Events that Constitute an Event of Default.....................................34
5.02 Exceptions to Events of Default..............................................................35
5.03 Procedure for Approval.......................................................................36
5.04 Certain Definitions..........................................................................36
ARTICLE VI.......................................................................................................38
6.01 Representations and Warranties of the Borrowers..............................................38
6.02 Representations and Warranties of the Borrowers Relating to
Mortgaged Properties.........................................................................44
6.03 Representations and Warranties of the Lender.................................................48
i
ARTICLE VII......................................................................................................48
7.01 [Reserved.]..................................................................................48
7.02 Maintenance of Existence.....................................................................48
7.03 [Reserved.]..................................................................................49
7.04 Financial Statements; Accountants' Reports; Other Information................................49
7.05 Certificate of Compliance....................................................................51
7.06 Maintain Licenses............................................................................51
7.07 Access to Records; Discussions With Officers and Accountants.................................51
7.08 Inform the Lender of Material Events.........................................................52
7.09 Single-Purpose Entities......................................................................54
7.10 Inspection...................................................................................54
7.11 Compliance with Applicable Laws..............................................................54
7.12 Warranty of Title............................................................................54
7.13 Defense of Actions...........................................................................54
7.14 Insurance Escrow.............................................................................55
7.15 ERISA........................................................................................56
7.16 Loan Document Taxes..........................................................................56
7.17 Further Assurances...........................................................................57
7.18 [Reserved.]..................................................................................57
7.19 [Reserved.]..................................................................................57
7.20 [Reserved.]..................................................................................57
7.21 Affiliate Contracts..........................................................................57
7.22 Manager; Management Fees.....................................................................57
7.23 [Reserved.]..................................................................................58
7.24 [Reserved.]..................................................................................58
7.25 Ownership of Mortgaged Properties............................................................58
7.26 Post-Closing Requirements....................................................................58
ARTICLE VIII.....................................................................................................59
8.01 Other Activities.............................................................................59
8.02 [Reserved.]..................................................................................60
8.03 Zoning.......................................................................................60
8.04 Liens........................................................................................60
8.05 Sale.........................................................................................60
8.06 Indebtedness.................................................................................60
8.07 Principal Place of Business..................................................................60
8.08 [Reserved.]..................................................................................60
8.09 Condominiums.................................................................................60
8.10 Restrictions on Partnership Distributions....................................................60
ARTICLE IX.......................................................................................................61
9.01 Indemnification..............................................................................61
9.02 Survival.....................................................................................62
9.03 Liability of the Borrowers...................................................................62
9.04 Lender, Fannie Mae and Servicer Not Liable...................................................63
9.05 Waivers and Consents.........................................................................63
ii
9.06 Waiver of Claims.............................................................................64
ARTICLE X........................................................................................................64
10.01 Origination Fees.............................................................................64
10.02 [Reserved.]..................................................................................64
10.03 Legal Fees and Expenses......................................................................64
ARTICLE XI.......................................................................................................65
11.01 Events of Default............................................................................65
ARTICLE XII......................................................................................................68
12.01 Remedies; Waivers............................................................................68
12.02 Waivers; Rescission of Declaration...........................................................68
12.03 The Lender's Right to Protect Collateral and Perform Covenants and
Other Obligations............................................................................68
12.04 No Remedy Exclusive..........................................................................69
12.05 No Waiver....................................................................................69
12.06 No Notice....................................................................................69
12.07 Application of Payments......................................................................69
12.08 No Requirement of Tender of Performance......................................................69
ARTICLE XIII.....................................................................................................70
13.01 [Reserved.]..................................................................................70
13.02 Assignment of Rights.........................................................................70
13.03 Release of Collateral........................................................................70
13.04 Replacement of Lender........................................................................70
13.05 Fannie Mae and Lender Fees and Expenses......................................................70
13.06 Third-Party Beneficiary......................................................................70
ARTICLE XIV......................................................................................................71
14.01 Insurance and Real Estate Taxes..............................................................71
14.02 Replacement Reserves.........................................................................71
ARTICLE XIV-A....................................................................................................71
14.01-A Cross-Guaranty...............................................................................71
14.02-A Waivers by Borrowers and Other Rights........................................................71
14.03-A No Impairment................................................................................73
14.04-A No Subrogation...............................................................................73
14.05-A [Reserved]...................................................................................74
14.06-A Election of Remedies.........................................................................74
14.07-A Subordination of Other Obligations...........................................................74
14.08-A Insolvency and Liability of Other Borrowers..................................................75
14.09-A Preferences, Fraudulent Conveyances, Etc.....................................................75
14.10-A Maximum Liability of Each Borrower...........................................................76
14.11-A Liability Cumulative.........................................................................76
ARTICLE XV.......................................................................................................76
15.01 Limits on Personal Liability.................................................................76
iii
ARTICLE XVI......................................................................................................78
16.01 Counterparts.................................................................................78
16.02 Amendments, Changes and Modifications........................................................78
16.03 Payment of Costs, Fees and Expenses..........................................................78
16.04 Payment Procedure............................................................................79
16.05 Payments on Business Days....................................................................79
16.06 Choice of Law; Consent to Jurisdiction; Waiver of Jury Trial.................................79
16.07 Severability.................................................................................81
16.08 Notices......................................................................................81
16.09 Further Assurances and Corrective Instruments................................................84
16.10 Term of this Agreement.......................................................................84
16.11 Assignments; Third-Party Rights..............................................................84
16.12 Headings.....................................................................................84
16.13 General Interpretive Principles..............................................................84
16.14 Interpretation...............................................................................85
16.15 [Reserved.]..................................................................................85
16.16 Survival of Representation and Warranties....................................................85
16.17 Decisions in Writing.........................................................................85
16.18 Closing Date.................................................................................85
EXHIBIT A - Schedule of Mortgaged Properties
EXHIBIT B - Initial Allocable Facility Amounts
EXHIBIT C - Compliance Certificate
EXHIBIT D - Organizational Certificate (Each Borrower)
EXHIBIT E - Tie-In Endorsement
EXHIBIT F - Future Term Loan Request
EXHIBIT G - Interest Rate Lock Agreement
EXHIBIT H - Rate Confirmation Form
EXHIBIT I - Collateral Addition Request
EXHIBIT J - [Reserved]
EXHIBIT K - [Reserved]
EXHIBIT L - Future Term Loan Endorsement
EXHIBIT M - Collateral Release Request
EXHIBIT N - Borrowers' Confirmation of Obligations
Schedule 1 - Authorized Representatives
Schedule 2 - Partners of Borrowers/Percentage of Ownership Interest
Schedule 3 - Pending Litigation or other Proceedings
Schedule 4 - Noncompliance/Nonconformity with Applicable Laws or Permits
Schedule 5 - Disclosure of Indebtedness
Schedule 6 - Contractual Obligations
Schedule 7 - Commercial Leases
iv