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WELLS
FARGO AMENDED, RESTATED AND CONSOLIDATED PROMISSORY NOTE
Loan No. 31-0900140R
$110,000,000.00 San Francisco, California
June 28, 2000
THIS AMENDED, RESTATED AND CONSOLIDATED PROMISSORY NOTE (this
"Note") is made and entered into by and between MHC-DEANZA FINANCING LIMITED
PARTNERSHIP, an Illinois limited partnership ("DeAnza"), SNOWBIRDLAND VISTAS,
INC., an Illinois corporation ("Snowbirdland") and MHC DATE PALM, L.L.C., a
Delaware limited liability company ("Date Palm") (DeAnza, Date Palm and
Snowbirdland are individually and collectively, as the context requires and with
such determination to be made in the sole discretion of Lender, referred to
herein as the "Borrower"), and WELLS FARGO NATIONAL BANK, NATIONAL ASSOCIATION
("Lender").
RECITALS A. Lender is the holder of (a) that certain Secured Promissory
Note dated August 14, 1994, in the original principal amount of $2,218,975.33
and having a current outstanding principal balance of $2,015,403.20 ("Bay Lake
Note") made by Snowbirdland, as Agent for DeAnza, and DeAnza and payable to
Pacific Life Insurance Company, formerly known as Pacific Mutual Life Insurance
Company, a California Corporation ("Pacific"), (b) that certain Secured
Promissory Note dated August 14, 1994, in the original principal amount of
$8,081,491.39 and having a current outstanding principal balance of
$7,340,082.86 ("Buccaneer Note") made by Snowbirdland, as Agent for DeAnza, and
DeAnza and payable to Pacific, (c) that certain Secured Promissory Note dated
August 14, 1994, in the original principal amount of $13,323,714.75 and having a
current outstanding principal balance of $12,101,376.45 ("Colonies Note") made
by Snowbirdland, as Agent for DeAnza, and DeAnza and payable to Pacific and (d)
that certain Secured Promissory Note dated August 14, 1994, in the original
principal amount of $13,435,390.10 and having a current outstanding principal
balance of $12,202,806.43 ("Mid-Florida Lakes Note") made by Snowbirdland, as
Agent for DeAnza, and DeAnza and payable to Pacific. The Bay Lake Note,
Buccaneer Note, Colonies Note and Mid-Florida Lakes Note are referred to
collectively herein as the "Original Note."
B. Concurrently with the execution and delivery of this Note, Lender is
advancing to Snowbirdland and DeAnza, as an additional loan, the sum of
$2,774,596.80 pursuant to that certain Future Advance Promissory Note Secured by
Mortgage (the "Bay Lake Future Advance Note"), the sum of $11,959,917.14
pursuant to that certain Future Advance Promissory Note Secured by Mortgage (the
"Buccaneer Future Advance Note"), the sum of $8,398,623.55 pursuant to that
certain Future Advance Promissory Note Secured by Mortgage (the "Colonies Future
Advance Note") and the sum of $11,797,193.57 pursuant to that certain Future
Advance Promissory Note Secured by Mortgage (the "Mid-Florida Lakes Future
Advance Note"), the aggregate of such sums collectively referred to herein as
the "Additional Florida Loan." The Bay Lake Future Advance Note, Buccaneer
Future Advance Note, Colonies Future Advance Note and Mid-Florida Lakes Future
Advance Note are collectively referred to herein as the "Future Advance Note."
C. Borrower and Lender desire to amend, restate and consolidate the
Original Note and the Future Advance Note in their entirety to reflect, among
other things, (i) the increase in Borrower's indebtedness to Lender by the
amount of the Additional Florida Loan pursuant to the Future Advance Note, as
well as the additional sums advanced hereunder in the amount of $41,410,000.00,
(ii) a change in the interest rate and the terms of payment and (iii) additional
modifications of, additions to, and deletions of, the terms of the Original Note
and the Future Advance Note.
1. PROMISE TO PAY. For value received, Borrower promises to pay to the order
of Lender, at 1320 Willow Pass Road, Suite 205, Concord, California 94520,
or at such other place as may be designated in writing by Lender, the
principal sum of ONE HUNDRED TEN MILLION AND NO/100THS DOLLARS
($110,000,000.00) ("Loan"), with interest thereon as specified herein. All
sums owing hereunder are payable in lawful money of the United States of
America, in immediately available funds, without offset, deduction or
counterclaim of any kind.
2. SECURED BY MORTGAGE. This Note is secured by, among other things: (i) that
certain Amended, Consolidated and Restated Mortgage and Absolute
Assignment of Rents and Leases and Security Agreement (And Fixture Filing)
("Mid-Florida Lakes Mortgage") of even date herewith, executed by
Snowbirdland and DeAnza encumbering certain
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real property and improvements located in Leesburg, Florida, as more
particularly described therein ("Mid-Florida Lakes Property"); (ii) that
certain Amended, Consolidated and Restated Mortgage and Absolute
Assignment of Rents And Leases and Security Agreement (And Fixture Filing)
("Bay Lake Mortgage") of even date herewith, executed by Snowbirdland and
DeAnza encumbering certain real property and improvements located in
Nokomis, Florida, as more particularly described therein ("Bay Lake
Estates Property"); (iii) that certain Amended, Consolidated and Restated
Mortgage and Absolute Assignment of Rents and Leases and Security
Agreement (And Fixture Filing) ("Buccaneer Mortgage") of even date
herewith, executed by Snowbirdland and DeAnza encumbering certain real
property and improvements located in North Fort Myers, Florida, as more
particularly described therein ("Buccaneer Estates Property"); (iv) that
certain Amended, Consolidated and Restated Mortgage and Absolute
Assignment of Rents and Leases and Security Agreement (And Fixture Filing)
("Colonies Mortgage") of even date herewith, executed by Snowbirdland and
DeAnza encumbering certain real property and improvements located in
Margate, Florida and as more particularly described therein ("Colonies of
Margate Property"); (v) that certain Mortgage and Absolute Assignment of
Rents and Leases and Security Agreement (And Fixture Filing) ("Willow Lake
Mortgage") of even date herewith, executed by DeAnza encumbering certain
real property and improvements located in Elgin, Illinois, as more
particularly described therein ("Willow Lake Estates Property"); (vi) that
certain Deed of Trust and Absolute Assignment of Rents and Leases and
Security Agreement (And Fixture Filing) ("DeAnza Deed of Trust") of even
date herewith, executed by DeAnza encumbering certain real property and
improvements located in Santa Cruz, California, as more particularly
described therein ("DeAnza Santa Cruz Property"); (vii) that certain
Leasehold Deed of Trust and Absolute Assignment of Rents and Leases and
Security Agreement (And Fixture Filing) ("Date Palm Leasehold Deed of
Trust") of even date herewith, executed by Date Palm encumbering certain
real property and improvements located in Cathedral City, California, as
more particularly described therein ("Date Palm Country Club Property");
and (viii) those certain Stock Pledge Agreements executed by Benjamin J.
Randall and Rosalind Reed in favor of Lender (collectively referred to
herein as the "Stock Pledge Agreements"). The Mid-Florida Lakes Mortgage,
Bay Lake Mortgage, Buccaneer Mortgage, Colonies Mortgage, Willow Lake
Mortgage, DeAnza Deed of Trust and Date Palm Leasehold Deed of Trust are
referred to herein collectively and individually, as applicable, and as
modified, extended or renewed, as the "Mortgage" or the "Mortgages." The
Mid-Florida Lakes Property, the Bay Lake Estates Property, the Buccaneer
Estates Property, the Colonies of Margate Property, the Willow Lake
Estates Property, the DeAnza Santa Cruz Property and the Date Palm Country
Club Property are referred to herein collectively and individually, as
applicable, as the "Property" or the "Properties."
3. DEFINITIONS. For the purposes of this Note, the following terms shall have
the following meanings:
"Affiliate" shall mean, as to any specified Person, any other Person that,
directly or indirectly, is in Control of, is Controlled by or is under
common Control with such specified Person.
"Business Day" shall mean any day other than a Saturday, Sunday, legal
holiday or other day on which commercial banks in California are
authorized or required by law to close. All references in this Note to a
"day" or a "date" shall be to a calendar day unless specifically
referenced as a Business Day.
"Control" shall mean with respect to such Person either (i) ownership
directly or through other entities of more than 100% of all beneficial
equity interest in such Person and (ii) the power to direct the
management, operation and business of such person.
"Debt Service Coverage Ratio" shall mean, as of the last day of the
calendar month immediately preceding the applicable calculation date, the
ratio in which (a) the numerator is the sum of the Net Operating Income
for each of the applicable Properties for the immediately preceding twelve
month period and (b) the denominator is the aggregate amount of principal
and interest that would be due under this Note for such period based upon
a debt service constant of eight and sixty-six one-hundredths percent
(8.66%).
"Default" shall have the meaning set forth in the Mortgages.
"Disbursement Date" shall mean the date upon which the Loan proceeds are
funded into escrow in connection with the closing of the Loan.
"Effective Date" shall mean the date Lender authorizes the Loan proceeds
to be released to Borrower.
"Loan Documents" shall mean the documents listed in Exhibit B attached
hereto and incorporated herein by this reference.
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"Loan-to-Value Ratio" shall mean, as of the last day of the calendar month
immediately preceding the applicable calculation date, the ratio in which
(a) the numerator is the aggregate amount of principal and interest then
due under this Note and (b) the denominator is the "as-is" value of the
applicable Properties as set forth in the appraisals for such Properties.
"Maturity Date" shall mean July 1, 2010.
"Net Operating Income" shall mean, with respect to a Property, (i) the
rental payments actually received by the applicable Borrower ("Gross
Rents"); plus (ii) the expense reimbursements actually received by the
applicable Borrower ("Expense Reimbursements"); minus the sum of (w) an
adjustment for vacancy/collection losses equal to the greater of actual,
market or five percent (5%) of the Gross Rents and Expense Reimbursements;
and (x) the actual Operating Expenses (as defined below); and (y) an
amount for reasonable management expenses equal to the greater of (A) four
percent (4%) of Gross Rents or (B) actual management expenses; and (z) a
capital improvement reserve equal to $61,300.00 for the Mid-Florida Lakes
Property, $11,400.00 for the Bay Lake Estates Property, $48,550.00 for the
Buccaneer Estates Property, $40,950.00 for the Colonies of Margate
Property, $51,824.00 for the Willow Lake Estates Property, $12,650.00 for
the DeAnza Santa Cruz Property, $26,900.00 for the Date Palm Country Club
Property, and such amount as shall be reasonably determined by Lender for
any Replacement Property (as hereinafter defined).
"Operating Expenses" shall mean all reasonable operating expenses of such
Property, including without limitation, those for maintenance, repairs,
annual taxes, bond assessments, ground lease payments, insurance,
utilities, and other annual expenses (but not capital expenses) that are
standard and customary for properties of this type. Operating Expenses for
this purpose shall not include any interest or principal payments on the
Loan or any allowance for depreciation.
"Person" shall mean any individual, corporation, partnership, joint
venture, estate, trust, unincorporated association, any federal, state,
county or municipal government or any bureau, department or agency thereof
and any fiduciary acting in such capacity on behalf of any of the
foregoing.
"Property Worth" shall mean, with respect to each Borrower, the fair
market value of the Property or Properties owned by such Borrower as of
the Disbursement Date.
"Rating Agency" shall mean each of Standard & Poor's Ratings Group,
Moody's Investors Service, Inc., Duff & Phelps Rating Co., and Fitch
Investors Service, Inc., and their successors or assigns, or any other
nationally recognized statistical rating agency which rates securities in
connection with a securitization.
"Remaining Properties" shall mean all of the Properties other than those
that have been released or requested to be released from the lien of the
applicable Mortgage pursuant to a Defeasance (hereinafter defined in
Section 14) or in exchange for a Replacement Property.
4. INTEREST; PAYMENTS.
4.1 DEFINITIONS. The following terms shall have the meanings indicated:
"Actual/360 Basis" shall mean on the basis of a 360-day year and
charged on the basis of actual days elapsed for any whole or partial
month in which interest is being calculated.
"30/360 Basis" shall mean on the basis of a 360-day year consisting
of 12 months of 30 days each.
"Interest Rate" shall mean a fixed interest rate equal to 7.82%.
4.2 INTEREST ACCRUAL. Interest on the outstanding principal balance of
this Note shall accrue from the Disbursement Date at an annual rate
equal to the Interest Rate calculated on an Actual/360 Basis.
4.3 PAYMENTS. Monthly payments hereunder shall commence on the first day
of the calendar month following the Disbursement Date and continue
on the first day of each calendar month thereafter through the
Maturity Date. If the Disbursement Date is a date other than the
first day of a calendar month, the first monthly payment shall be
interest only. Subsequent monthly payments shall be calculated on
the basis of an equal-payment thirty (30) year
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amortization of principal and interest. Notwithstanding that
interest on this Note accrues on an Actual/360 Basis, the total
amount of each such amortized monthly payment of principal and
interest shall be determined using a 30/360 Basis. On the Maturity
Date, all unpaid principal and accrued but unpaid interest shall be
due and owing in full. All interest shall be paid in arrears.
4.4 ACKNOWLEDGMENTS. Borrower acknowledges that interest calculated on
an Actual/360 Basis exceeds interest calculated on a 30/360 Basis
and, therefore: (a) a greater portion of each monthly installment of
principal and interest will be applied to interest using the
Actual/360 Basis than would be the case if interest accrued on a
30/360 Basis; and (b) the unpaid principal balance of this Note on
the Maturity Date will be greater using the Actual/360 Basis than
would be the case if interest accrued on a 30/360 Basis.
4.5 APPLICATION OF PAYMENTS. In the absence of a specific determination
by Lender to the contrary, all payments paid by Borrower to Lender
in connection with the obligations of Borrower under this Note and
under the other Loan Documents shall be applied in the following
order of priority: (a) to amounts, other than principal and
interest, due to Lender pursuant to this Note or the other Loan
Documents; (b) to accrued but unpaid interest on this Note; and (c)
to the unpaid principal balance of this Note. Upon the occurrence of
a Default: (i) Borrower irrevocably waives the right to direct the
application of any and all payments at any time thereafter received
by Lender from or on behalf of Borrower, and (ii) Borrower
irrevocably agrees that Lender shall have the continuing exclusive
right to apply any and all such payments against the then due and
owing obligations of Borrower in such order of priority as Lender
may deem advisable.
5. LATE CHARGE; DEFAULT RATE.
5.1 LATE CHARGE. If any payment required hereunder is not paid on or
before the fifth calendar day of the month in which it is due,
Borrower shall pay a late or collection charge, as liquidated
damages, equal to 4% of the amount of such unpaid payment. Borrower
acknowledges that Lender will incur additional expenses as a result
of any late payments hereunder, which expenses would be
impracticable to quantify, and that Borrower's payments under this
paragraph are a reasonable estimate of such expenses. The foregoing
to the contrary notwithstanding, no late or collection charge shall
be payable by Borrower as a result of any delay in the payment of
any sum due and payable on the Maturity Date.
5.2 DEFAULT RATE. Commencing upon a Default and continuing until such
Default shall have been cured by Borrower, all sums owing on this
Note shall bear interest until paid in full at a rate per annum
equal to 5% plus the Interest Rate ("Default Rate").
6. MAXIMUM RATE PERMITTED BY LAW. Neither this Note nor any of the other Loan
Documents shall require the payment or permit the collection of any
interest or any late payment charge in excess of the maximum rate
permitted by law. If any such excess interest or late payment charge is
provided for under this Note or any of the other Loan Documents or if this
Note or any of the other Loan Documents shall be adjudicated to provide
for such excess, neither Borrower nor Borrower's successors or assigns
shall be obligated to pay such excess, and the right to demand the payment
of any such excess shall be and hereby is waived, and this provision shall
control any other provision of this Note or any of the other Loan
Documents. If Lender shall collect amounts which are deemed to constitute
interest and which would increase the effective interest rate to a rate in
excess of the maximum rate permitted by law, all such amounts deemed to
constitute interest in excess of the maximum legal rate shall, upon such
determination, at the option of Lender, be returned to Borrower or
credited against the outstanding principal balance of this Note.
7. ACCELERATION. If (a) Borrower shall fail to pay when due, subject to any
applicable grace or cure period, any sums payable under this Note; (b) any
other Default shall occur; or (c) any other event or condition shall occur
which, under the terms of any of the Mortgages or any other Loan Document,
gives rise to a right of acceleration of sums owing under this Note, then
Lender, at its sole option, shall have the right to declare all sums owing
under this Note immediately due and payable; provided, however, that if
any of the Mortgages or any other Loan Document provides for the automatic
acceleration of payment of sums owing under this Note, all sums owing
under this Note shall be automatically due and payable in accordance with
the terms of such of the Mortgages or such other Loan Document.
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8. BORROWER'S LIABILITY.
8.1 LIMITATION. Except as otherwise provided in this Section 8, Lender's
recovery against Borrower under this Note and the other Loan
Documents shall be limited solely to the Properties and the
"Collateral" (as defined in the Mortgages).
8.2 EXCEPTIONS. Nothing contained in Section 8.1 or elsewhere in this
Note or the other Loan Documents, however, shall limit in any way
the personal liability of Borrower owed to Lender for any losses or
damages incurred by Lender (including, without limitation, any
impairment of Lender's security for the Loan) with respect to any of
the following matters: (a) fraud or willful misrepresentation; (b)
material physical waste of the Properties (or any portions thereof)
or the Collateral; (c) failure to pay property or other taxes,
assessments or charges (other than amounts paid to Lender for taxes,
assessments or charges pursuant to Impounds as defined in Exhibit A
and where Lender elects not to apply such funds toward payment of
the taxes, assessments or charges owed) which may create liens
senior to the lien of any of the Mortgages on all or any portion of
the Properties; (d) failure to deliver any insurance or condemnation
proceeds or awards or any security deposits received by Borrower to
Lender as required under the terms of the Loan Documents or any
other instrument now or hereafter securing this Note or to otherwise
apply such sums as required under the terms of the Loan Documents or
any other instrument now or hereafter securing this Note; (e)
failure to apply any rents, royalties, accounts, revenues, income,
issues, profits and other benefits from the Properties (or any
portion thereof) which are collected or received by Borrower during
the period of any Default or after acceleration of the indebtedness
and other sums owing under the Loan Documents to the payment of
either (i) such indebtedness or other sums or (ii) the normal and
necessary operating expenses of the Properties; (f) any breach by
Borrower of any covenant in this Note or in any of the Mortgages
regarding Hazardous Materials (as defined in the Mortgages) or any
representation or warranty of Borrower regarding Hazardous Materials
proving to have been untrue when made; (g) failure to pay any
judgments, costs, expenses, fees and any other amounts whatsoever
owing pursuant to, as a result of or in connection with the
litigation matters pending, and that have been disclosed to Lender
prior to the Effective Date, at the Buccaneer Estates Property, the
Willow Lake Estates Property or the DeAnza Santa Cruz Property,
respectively; or (h) failure of any of the Date Palm Ground Lease
Documents (as hereinafter defined) required to be executed by the
ground lessors in connection with the release of the Date Palm
Escrow to be legally binding on all of the ground lessors under the
ground lease encumbering the Date Palm Country Club Property.
8.3 NO RELEASE OR IMPAIRMENT. Nothing contained in Section 8.1 shall be
deemed to release, affect or impair the indebtedness evidenced by
this Note or the obligations of Borrower under, or the liens and
security interests created by the Loan Documents, or Lender's rights
to enforce its remedies under this Note and the other Loan
Documents, including, without limitation, the right to pursue any
remedy for injunctive or other equitable relief, or any suit or
action in connection with the preservation, enforcement or
foreclosure of the liens, mortgages, deeds of trust, assignments and
security interests which are now or at any time hereafter security
for the payment and performance of all obligations under this Note
or the other Loan Documents.
8.4 PREVAIL AND CONTROL. The provisions of this Section 8 shall prevail
and control over any contrary provisions elsewhere in this Note or
the other Loan Documents.
9. NON-MORTGAGOR BORROWER. If any Borrower is not also a "Mortgagor" under
the Mortgages, such Borrower hereby makes all representations and
warranties in favor of Lender contained in Article 5 of the Mortgages, all
covenants contained in Section 6.15 of the Mortgages, and all indemnities
of Lender contained in Section 6.19 of the Mortgages, jointly and
severally with the "Mortgagor" under each of the Mortgages.
10. MISCELLANEOUS.
10.1 JOINT AND SEVERAL LIABILITY. If this Note is executed by more than
one person or entity as Borrower, the obligations of each such
person or entity shall be joint and several. No person or entity
shall be a mere accommodation maker, but each shall be primarily and
directly liable hereunder.
10.2 WAIVER OF PRESENTMENT. Except as otherwise provided herein or in any
other Loan Document, Borrower hereby waives presentment, demand,
notice of dishonor, notice of default or delinquency, notice of
acceleration, notice of nonpayment, notice of costs, expenses or
losses and interest thereon, and notice of interest on interest and
late charges.
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10.3 DELAY IN ENFORCEMENT. No previous waiver or failure or delay by
Lender in acting with respect to the terms of this Note or the
Mortgages shall constitute a waiver of any breach, default or
failure of condition under this Note, the Mortgages or the
obligations secured thereby. A waiver of any term of this Note, the
Mortgages or of any of the obligations secured thereby must be made
in writing signed by Lender, shall be limited to the express terms
of such waiver, and shall not constitute a waiver of any subsequent
obligation of Borrower. The acceptance at any time by Lender of any
past-due amount shall not be deemed to be a waiver of the right to
require prompt payment when due of any other amounts then or
thereafter due and payable.
10.4 TIME OF THE ESSENCE. Time is of the essence with respect to every
provision hereof.
10.5 GOVERNING LAW. This Note was accepted by Lender in the state of
California and the proceeds of this Note were disbursed from the
state of California, which state the parties agree has a substantial
relationship to the parties and to the underlying transaction
embodied hereby. Accordingly, in all respects, including, without
limiting the generality of the foregoing, matters of construction,
validity, enforceability and performance, this Note, the Mortgages
and the other Loan Documents and the obligations arising hereunder
and thereunder shall be governed by, and construed in accordance
with, the laws of the state of California applicable to contracts
made and performed in such state and any applicable law of the
United States of America, except that at all times the provisions
for the foreclosure of the liens granted under the Mortgages
securing this Note and the creation, perfection and enforcement of
the security interests created pursuant thereto and pursuant to the
other Loan Documents shall be governed by and construed according to
the law of the states where the Properties are located. Except as
provided in the immediately preceding sentence, Borrower hereby
unconditionally and irrevocably waives, to the fullest extent
permitted by law, any claim to assert that the law of any
jurisdiction other than California governs the Mortgages, this Note
and the other Loan Documents.
10.6 CONSENT TO JURISDICTION. Borrower irrevocably submits to the
jurisdiction of: (a) any state or federal court sitting in the state
of California over any suit, action, or proceeding, brought by
Borrower against Lender, arising out of or relating to this Note or
the Loan evidenced hereby; (b) any state or federal court sitting in
any of the states where the Properties are located or the state in
which Borrower's principal place of business is located over any
suit, action or proceeding, brought by Lender against Borrower,
arising out of or relating to this Note or the Loan evidenced
hereby; and (c) any state court sitting in any of the counties of
the states where the Properties are located over any suit, action,
or proceeding, brought by Lender to exercise its rights of
foreclosure under the applicable Mortgage or any action brought by
the Lender to enforce its rights with respect to the Collateral.
Borrower irrevocably waives, to the fullest extent permitted by law,
any objection that Borrower may now or hereafter have to the laying
of venue of any such suit, action, or proceeding brought in any such
court and any claim that any such suit, action, or proceeding
brought in any such court has been brought in an inconvenient forum.
10.7 COUNTERPARTS. This Note may be executed in any number of
counterparts, each of which when executed and delivered shall be
deemed an original and all of which taken together shall be deemed
to be one and the same Note.
10.8 HEIRS, SUCCESSORS AND ASSIGNS. All of the terms, covenants,
conditions and indemnities contained in this Note and the other Loan
Documents shall be binding upon the heirs, successors and assigns of
Borrower and shall inure to the benefit of the successors and
assigns of Lender. The foregoing sentence shall not be construed to
permit Borrower to assign the Loan except as otherwise permitted in
this Note or the other Loan Documents.
10.9 SEVERABILITY. If any term of this Note, or the application thereof
to any person or circumstances, shall, to any extent, be invalid or
unenforceable, the remainder of this Note, or the application of
such term to persons or circumstances other than those as to which
it is invalid or unenforceable, shall not be affected thereby, and
each term of this Note shall be valid and enforceable to the fullest
extent permitted by law.
10.10 CONSENTS, APPROVALS AND EXPENSES. Wherever Lender's consent,
approval, acceptance or satisfaction is required under any provision
of this Note or any of the other Loan Documents, such consent,
approval, acceptance or satisfaction shall not be unreasonably
withheld, conditioned or delayed by Lender unless such provision
expressly so provides. Wherever costs or expenses are required to be
paid under any provision of this Note or any of the other Loan
Documents, such costs or expenses shall be reasonable.
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11. NOTICES. All requests, demands, notices and other communications that are
required or permitted to be given to a party under this Note shall be in
writing and shall be sent to such party, either by personal delivery, by
overnight delivery service, by certified first class mail, return receipt
requested, or by facsimile transmission to the address or facsimile number
below. All such notices and communications shall be effective upon receipt
of such delivery or facsimile transmission, together with a printed
receipt of the successful delivery of such facsimile transmission. The
addresses and facsimile numbers of the parties shall be:
Borrower: Lender:
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c/o Manufactured Home Communities, Inc. Wells Fargo Bank, N.A.
Two North Riverside Plaza 1320 Willow Pass Road, Suite 205
Suite 800 Concord, CA 94520
Chicago, Illinois 60606 Loan No. 31-0900140R
Attention: General Counsel FAX No.: (925) 691-5947
FAX No.: (312) 279-1715
With a copy to:
Katz Randall Weinberg & Richmond
333 West Wacker Drive
Suite 1800
Chicago, IL 60606-1288
Attention: Benjamin J. Randall
FAX No.: (312) 807-3903
12. ADDITIONAL TERMS AND CONDITIONS. The additional terms and conditions set
forth in Exhibit A and Exhibit B attached hereto are incorporated herein
by this reference.
13. PREPAYMENT. Borrower acknowledges that any prepayment of this Note will
cause Lender to lose its interest rate yield on this Note and will
possibly require that Lender reinvest any such prepayment amount in loans
of a lesser interest rate yield (including, without limitation, in debt
obligations other than first mortgage loans on commercial properties). As
a consequence, Borrower agrees as follows, as an integral part of the
consideration for Lender's making the Loan:
13.1 RESTRICTIONS. Except for the Date Palm Repayment Option (as
hereinafter defined), any voluntary prepayment of this Note: (a) is
prohibited except during the last 3 months of the term, (b) is
permitted in full only, and not in part, and (c) may only be made on
the first day of a month.
13.2 PREPAYMENT CHARGE. Except as provided below, if this Note is prepaid
prior to the last three (3) months of the term, whether such
prepayment is involuntary or upon acceleration of the principal
amount of this Note by Lender following a Default, Borrower shall
pay to Lender on the prepayment date (in addition to all other sums
then due and owing to Lender under the Loan Documents) a prepayment
charge equal to the greater of the following two amounts: (a) an
amount equal to 1% of the then outstanding principal balance of the
Loan; or (b) an amount equal to (i) the amount, if any, by which the
sum of the present values as of the prepayment date of all unpaid
principal and interest payments required under this Note, calculated
by discounting such payments from their respective scheduled payment
dates back to the prepayment date at a discount rate equal to the
Periodic Treasury Yield (defined below) exceeds the outstanding
principal balance of the Loan as of the prepayment date, multiplied
by (ii) a fraction whose numerator is the amount of the prepayment
and whose denominator is the outstanding principal balance of the
Loan as of the prepayment date. Notwithstanding the foregoing, no
prepayment charge shall apply in respect to any insurance or
condemnation proceeds received by Lender and applied by Lender to
the outstanding principal balance of the Loan. For purposes of the
foregoing, "Periodic Treasury Yield" means (c) the annual yield to
maturity of the actively traded non-callable United States Treasury
fixed interest rate security (other than any such security which can
be surrendered at the option of the holder at face value in payment
of federal estate tax or which was issued at a substantial discount)
that has a maturity closest to (whether before, on or after) the
Maturity Date (or if two or more such securities have
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maturity dates equally close to the Maturity Date, the average
annual yield to maturity of all such securities), as reported in The
Wall Street Journal or other authoritative publication or news
retrieval service on the fifth Business Day preceding the prepayment
date, divided by (d) 12, if scheduled payment dates are monthly, or
4, if scheduled payment dates are quarterly. Notwithstanding the
foregoing, no prepayment charge shall be required in connection with
the Date Palm Repayment Option.
13.3 WAIVER. Borrower waives any right to prepay this Note except under
the terms and conditions set forth in this Section and agrees that
if this Note is prepaid, Borrower will pay the prepayment charge set
forth above. Borrower hereby acknowledges that: (a) the inclusion of
this waiver of prepayment rights and agreement to pay the prepayment
charge for the right to prepay this Note was separately negotiated
with Lender; (b) the economic value of the various elements of this
waiver and agreement was discussed; (c) the consideration given by
Borrower for the Loan was adjusted to reflect the specific waiver
and agreement negotiated between Borrower and Lender and contained
herein; and (d) this waiver is intended to comply with California
Civil Code Section 2954.10.
Borrower's Initials: ________ ________ ________
13.4 INSURANCE PROCEEDS; CONDEMNATION AWARDS. Notwithstanding anything
herein to the contrary, no prepayment charge shall be due and owing
with respect to any involuntary prepayment resulting from Lender's
application of any insurance proceeds or condemnation awards to the
Loan.
14. DEFEASANCE. At any time after the Lockout Expiration Date (defined below),
Borrower may elect to cause Lender to release one or more of the
Properties from the lien of any of the Mortgages and the other Loan
Documents and to accept other collateral in substitution therefor, in
accordance with the provisions of this Section ("Defeasance"), at
Borrower's sole cost and expense. "Lockout Expiration Date" means the
earlier of (a) the second anniversary of the "startup day" (as defined in
Internal Revenue Code Section 860(G)(a)(9)) of any "real estate mortgage
investment conduit" (as defined in Internal Revenue Code Section 860D)
that holds this Note and (b) the third anniversary of the date of this
Note. For purposes of this Section 14 only, (a) the values of the
Mid-Florida Lakes Property, the Bay Lake Estates Property, the Buccaneer
Estates Property, the Colonies of Margate Property, the Willow Lake
Estates Property, the DeAnza Santa Cruz Property and the Date Palm Country
Club Property, respectively, expressed as a percentage of the total
principal amount of the Loan ("Allocated Loan Percentage"), shall be
deemed to be 21.8182%, 4.3544%, 17.5455%, 18.6364%, 17.7273%, 5.60%, and
14.3182%; and (b) the portion of the principal amount of the Loan
allocable to each of the Properties ("Allocated Loan Amount") shall be
deemed initially to be the Allocated Loan Percentage for such Property
multiplied by the initial total principal amount of the Loan and,
thereafter, the same such amount as the same shall be reduced by ratable
application of payments of principal made under this Note from time to
time.
14.1 CONDITIONS. Borrower shall only have the right to cause a Defeasance
if no Default has occurred and is continuing and all of the
following conditions have been satisfied:
a. Notice. Borrower shall give at least 60 days but not more than
90 days' written notice to Lender specifying the date of
Borrower's intended Defeasance ("Release Date"), which date
shall be a scheduled payment date and such notice shall
indicate the principal amount of the Note to be defeased;
b. Payments. Borrower shall pay in full, on or before the Release
Date, all accrued and unpaid interest and all other sums due
under this Note and the other Loan Documents on or before the
Release Date, including without limitation, (i) all costs and
expenses paid or incurred by Lender or its agents in
connection with the Defeasance, the purchase of the Defeasance
Collateral (defined below), the release of the applicable
Properties, the review of the proposed Defeasance Collateral
and the preparation of the Defeasance Security Agreement
(defined below) and related documentation, and (ii) any
revenue, documentary stamp, intangible or other taxes, charges
or fees due in connection with the transfer or assumption of
this Note or the Defeasance;
c. Deliveries. Borrower shall deliver the following items to
Lender on or before the Release Date:
(i) immediately available funds ("Defeasance Deposit") in an
amount sufficient to enable Lender to purchase, through
means and sources customarily employed and available to
Lender, for the account of Borrower, direct,
non-callable obligations of the United States of America
that
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provide for payments prior, but as close as possible, to
all successive scheduled payment dates occurring after
the Release Date, with each such payment being equal to
or greater than one hundred twenty five percent (125%)
of the product of the Allocated Loan Percentage for the
Properties that are the subject of the applicable
Defeasance multiplied by the installments of principal
and interest required to be paid under this Note
(including, without limitation, all amounts due on the
Maturity Date) for the balance of the term hereof
("Defeasance Collateral"), each of which shall be duly
endorsed by the holder as directed by Lender or
accompanied by a written instrument of transfer in form
and substance satisfactory to Lender in its sole
discretion (including, without limitation, such
instruments as may be required by the depository
institution holding such securities or the issuer of
such securities, as the case may be, to effectuate
book-entry transfers and pledges through the book-entry
facilities of such institution) in order to perfect upon
the delivery of the Defeasance Security Agreement (as
defined below) the first priority security interest in
the Defeasance Collateral in favor of Lender.
(ii) a pledge and security agreement, in form and substance
satisfactory to Lender in its reasonable discretion,
creating a first priority security interest in favor of
Lender in the Defeasance Collateral ("Defeasance
Security Agreement"), which shall provide, among other
things, that any payments generated by the applicable
Defeasance Collateral shall be paid directly to Lender
and applied by Lender to amounts then due and payable
under this Note allocable to the Allocated Loan Amount
for the Properties that are the subject of the
applicable Defeasance and that any excess received by
Lender from the applicable Defeasance Collateral over
the amounts payable by Borrower under this Note
allocable to the Allocated Loan Amount for the
Properties that are the subject of the applicable
Defeasance shall be first, paid to Lender and applied by
Lender to any other amounts then due and payable under
this Note, and second, refunded to Borrower promptly
after each scheduled payment date;
(iii) a certificate of Borrower certifying that all of the
requirements of this Section 14.1 have been satisfied;
(iv) an opinion of counsel for Borrower in form and substance
and delivered by counsel satisfactory to Lender in its
sole discretion, subject, however, to standard
enforceability opinion qualifications and limitations,
stating, among other things, that (aa) Lender has a
perfected first priority security interest in the
Defeasance Collateral, (bb) the Defeasance Security
Agreement is enforceable against Borrower in accordance
with its terms and (cc) any REMIC Trust formed pursuant
to a securitization will not fail to maintain its status
as a "real estate mortgage investment conduit" within
the meaning of Internal Revenue Code Section 860D, as
amended from time to time, or any successor statute, as
a result of the Defeasance;
(v) a certificate from a firm of independent certified
public accountants acceptable to Lender certifying that
the Defeasance Collateral satisfies the requirements of
Section 14.1c(i);
(vi) written evidence from the applicable Rating Agencies
that the Defeasance will not result in a downgrading,
withdrawal or qualification of the respective ratings in
effect immediately prior to the Defeasance for any
securities issued in connection with the securitization
which are then outstanding;
(vii) if the Property to be released pursuant to this Section
is either the Mid-Florida Lakes Property, the Bay Lake
Estates Property, the Buccaneer Estates Property or the
Colonies of Margate Property, then a conveyance of title
to the Property to be released to a Person other than a
Borrower;
(viii) such other certificates, documents or instruments as
Lender may reasonably require, including, without
limitation, such amendments to this Note and the other
Loan Documents as Lender reasonably deems appropriate to
reflect the Defeasance.
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14.2 RELEASE OF LIEN. Upon satisfaction of all conditions specified above
with respect to any Defeasance, the Property subject to such
Defeasance shall be released from the lien of the applicable
Mortgage and the other Loan Documents to which it is subject, and
the applicable Defeasance Collateral, any Defeasance Collateral
previously delivered to Lender under this Note, the Remaining
Properties and the proceeds thereof shall constitute the only
collateral which shall secure the obligations of Borrower under this
Note and the other Loan Documents. Simultaneously with the release
of a Property pursuant to this Section, Lender shall release that
portion of all cash or other accounts maintained pursuant to the
Loan Documents relating to such Property. Lender shall, at
Borrower's expense, execute and deliver any agreements reasonably
requested by Borrower to release the lien of the applicable Mortgage
from the applicable Property.
14.3 DEFEASANCE DEPOSIT. Borrower hereby authorizes and directs Lender,
using the means and sources customarily employed and available to
Lender, to use the Defeasance Deposit to purchase the Defeasance
Collateral as agent and for the account of Borrower. Payments from
the Defeasance Collateral shall be made directly to Lender for
application to the Loan as provided hereinabove. Any part of the
Defeasance Deposit exceeding the amount necessary to purchase the
Defeasance Collateral and to pay the other costs which Borrower is
obligated to pay under this Section 14 shall be refunded to
Borrower. Borrower agrees to pay all sums referred to in Section
14.1b above on or before the Release Date.
14.4 ASSIGNMENT AND ASSUMPTION. Upon the release of any of the Properties
in accordance with this Section 14, Borrower shall, at the request
of Lender, assign all of its right, title and interest in and to the
pledged Defeasance Collateral, any Defeasance Collateral previously
delivered to Lender under this Note and all its obligations and
rights under this Note, the Defeasance Security Agreement, any
Defeasance Security Agreement previously delivered to Lender under
this Note and the other Loan Documents, to a successor entity
designated by Borrower and approved by Lender in its sole
discretion. Such successor entity shall execute an assumption
agreement in form and substance satisfactory to Lender in its sole
discretion pursuant to which it shall assume Borrower's obligations
under this Note, the Defeasance Security Agreement, any Defeasance
Security Agreement previously delivered to Lender under this Note
and the other Loan Documents. As conditions to such assignment and
assumption, Borrower shall: (a) deliver to Lender a new limited
guaranty in form and substance satisfactory to Lender in its sole
discretion executed by the principals of such successor entity; (b)
deliver to Lender an opinion of counsel in form and substance and
delivered by counsel satisfactory to Lender in its sole discretion
subject, however, to standard enforceability opinion qualifications
and limitations, stating, among other things, that such assumption
agreement is enforceable against Borrower and such successor entity
in accordance with its terms and that this Note, the Defeasance
Security Agreement, any Defeasance Security Agreement previously
delivered to Lender under this Note and the other Loan Documents, as
so assumed, are enforceable against such successor entity in
accordance with their respective terms; and (c) pay all costs and
expenses incurred by Lender or its agents in connection with such
assignment and assumption (including, without limitation, the review
of the proposed transferee and the preparation of the assumption
agreement and related documentation). Upon such assumption, Borrower
shall be relieved of its obligations under this Note, the Defeasance
Security Agreement, any Defeasance Security Agreement previously
delivered to Lender under this Note and the other Loan Documents
other than those obligations which are specifically intended to
survive the payment of the Loan or other termination, satisfaction
or assignment of this Note, the Defeasance Security Agreement, any
Defeasance Security Agreement previously delivered to Lender under
this Note or the other Loan Documents or Lender's exercise of its
rights and remedies under any of such documents and instruments.
15. WAIVER OF JURY TRIAL. LENDER AND BORROWER HEREBY KNOWINGLY, VOLUNTARILY
AND INTENTIONALLY WAIVE ANY RIGHTS THEY MAY HAVE TO A TRIAL BY JURY IN
RESPECT OF ANY LITIGATION BASED HEREON, OR ARISING OUT OF, UNDER, OR IN
CONNECTION WITH, THIS NOTE OR ANY OTHER LOAN DOCUMENT, OR ANY COURSE OF
CONDUCT, COURSE OF DEALING, STATEMENTS (WHETHER ORAL OR WRITTEN), OR
ACTIONS OF LENDER OR BORROWER. THIS PROVISION IS A MATERIAL INDUCEMENT FOR
LENDER TO MAKE THE LOAN TO BORROWER. BY ACCEPTANCE OF THIS EXECUTED NOTE,
LENDER AGREES TO THE FOREGOING WAIVER.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
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"BORROWER"
SNOWBIRDLAND VISTAS, INC.,
an Illinois corporation
By: /s/ Jennifer Usher
------------------------------
Name: Jennifer Usher
----------------------------
Its: AVP/Secretary
-----------------------------
MHC DATE PALM, L.L.C.,
a Delaware limited liability company
By: MHC-QRS DATE PALM, INC.,
a Delaware corporation, its Managing Member
By: /s/ John M Zoeller
--------------------------
Name: John M Zoeller
------------------------
Its: VP
-------------------------
MHC-DEANZA FINANCING LIMITED PARTNERSHIP,
an Illinois limited partnership
By: MHC-QRS DEANZA, INC.,
an Illinois corporation, its General Partner
By: /s/ John M Zoeller
--------------------------
Name: John M Zoeller
------------------------
Its: VP
-------------------------
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EXHIBIT A TO PROMISSORY NOTE
ADDITIONAL TERMS AND CONDITIONS
This Exhibit A is attached to and forms a part of that Amended, Restated and
Consolidated Promissory Note ("Note") executed by MHC-DEANZA FINANCING LIMITED
PARTNERSHIP, an Illinois limited partnership ("DeAnza"), SNOWBIRDLAND VISTAS,
INC., an Illinois corporation ("Snowbirdland") and MHC DATE PALM, L.L.C., a
Delaware limited liability company ("Date Palm") (DeAnza, Date Palm and
Snowbirdland are individually and collectively, as the context requires and with
such determination to be made in the sole discretion of Lender, referred to
herein as the "Borrower") in favor of WELLS FARGO BANK, NATIONAL ASSOCIATION
("Lender").
1. DISBURSEMENT OF LOAN PROCEEDS; LIMITATION OF LIABILITY. Borrower hereby
authorizes Lender to disburse the proceeds of the Loan, after deducting
any and all fees owed by Borrower to Lender in connection with the Loan,
to Commonwealth Land Title Insurance Company (the "Title Company"). With
respect to such disbursement, Borrower understands and agrees that Lender
does not accept responsibility for errors, acts or omissions of others,
including, without limitation, the escrow company, other banks,
communications carriers or clearinghouses through which the transfer of
Loan proceeds may be made or through which Lender receives or transmits
information, and no such entity shall be deemed Lender's agent. As a
consequence, Lender shall not be liable to Borrower for any actual
(whether direct or indirect), consequential or punitive damages which may
arise with respect to the disbursement of Loan proceeds, whether or not
(a) any claim for such damages is based on tort or contract, or (b) either
Lender or Borrower knew or should have known of the likelihood of such
damages in any situation.
2. FINANCIAL STATEMENTS.
2.1 STATEMENTS REQUIRED. During the term of the Loan and while any
liabilities of Borrower to Lender under any of the Loan Documents
remain outstanding and unless Lender otherwise consents in writing,
Borrower shall provide to Lender the following:
a. OPERATING STATEMENT. Not later than 10 days after and as of
each calendar month during the first 6 months of the term of
the Loan, and thereafter not later than 30 days after and as
of the end of each calendar quarter, an operating statement,
signed and dated by Borrower and in a form acceptable to
Lender, showing all revenues and expenses during such month or
quarter and year-to-date, relating to each of the Properties,
including, without limitation, all information requested under
any of the Loan Documents;
b. RENT ROLL. Not later than 10 days after and as of each
calendar month during the first 6 months of the term of the
Loan, and thereafter not later than 30 days after and as of
the end of each calendar quarter, a rent roll signed and dated
by Borrower and in a form acceptable to Lender, showing the
following lease information with regard to each tenant: the
name of the tenant, monthly or other periodic rental amount,
date of commencement of the lease, and payment status;
c. BALANCE SHEET. If requested by Lender, not later than 90 days
after and as of the end of each fiscal year, a balance sheet,
signed and dated by Borrower and in a form acceptable to
Lender (or audited financial statements if Borrower obtains
them), showing all assets and liabilities of Borrower; and
d. OTHER INFORMATION. From time to time, upon Lender's delivery
to Borrower of at least 10 days' prior written notice, such
other information with regard to Borrower, principals of
Borrower, guarantors or the Properties as Lender may
reasonably request in writing.
2.2 FORM; WARRANTY. Borrower agrees that all financial statements to be
delivered to Lender pursuant to Section 2.1 shall: (a) be complete
and correct in all material respects; (b) present fairly the
financial condition of the party; (c) disclose all liabilities that
are required to be reflected or reserved against; and (d) be
prepared in accordance with the same accounting standard used by
Borrower to prepare the financial statements delivered to and
approved by Lender in connection with the making of the Loan or
other accounting standards
EXHIBIT A
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acceptable to Lender. Borrower shall be deemed to warrant and
represent that, as of the date of delivery of any such financial
statement, there has been no material adverse change in financial
condition, nor have any assets or properties been sold, transferred,
assigned, mortgaged, pledged or encumbered since the date of such
financial statement except as disclosed by Borrower in a writing
delivered to Lender. Borrower agrees that all rent rolls and other
information to be delivered to Lender pursuant to Section 2.1 shall
not contain any misrepresentation or omission of a material fact.
2.3 LATE CHARGE. If any financial statement, leasing schedule or other
item required to be delivered to Lender pursuant to Section 2.1 is
not timely delivered, Borrower shall promptly pay to Lender, as a
late charge, the sum of $500 per item. In addition, Borrower shall
promptly pay to Lender an additional late charge of $500 per item
for each full month during which such item remains undelivered
following written notice from Lender. Borrower acknowledges that
Lender will incur additional expenses as a result of any such late
deliveries, which expenses would be impracticable to quantify, and
that Borrower's payments under this Section 2.3 are a reasonable
estimate of such expenses. Notwithstanding anything to the contrary
contained herein, once during each year of the term of the Loan
Lender will give notice to Borrower of its failure to provide any
item required to be delivered to Lender pursuant to Section 2.1 and
if any such items are not delivered within three (3) Business Days
following such notice, then at such time the late charge specified
herein shall take effect.
3. IMPOUNDS.
3.1 AMOUNTS. Borrower shall deposit with Lender the amounts ("Impounds")
stated below on the dates stated below, for the purpose of paying
the costs stated below:
a. TAXES. (i) $1,549,779.00 on the Disbursement Date, and (ii) on
the first payment date on which both principal and interest
under the Loan are payable and on each payment date
thereafter, an amount estimated from time to time by Lender in
its reasonable discretion to be sufficient to pay for taxes
and other liabilities payable by Borrower under Section 6.9 of
each of the Mortgages. The initial estimated monthly amount to
be deposited by Borrower on each payment date is $210,110.00.
b. INSURANCE. (i) $56,600.00 on the Disbursement Date, and (ii)
on the first payment date on which both principal and interest
under the Loan are payable and on each payment date
thereafter, an amount estimated from time to time by Lender in
its reasonable discretion to be sufficient to pay for premiums
for insurance payable by Borrower under Section 6.10 of each
of the Mortgages. The initial estimated monthly amount to be
deposited by Borrower on each payment date is $7,075.00.
c. DEFERRED MAINTENANCE. $78,413.00 on the Disbursement Date for
Deferred Maintenance Work (defined below).
d. CAPITAL EXPENDITURES. $21,131.17 on the first payment date on
which both principal and interest under the Loan are payable
and on each payment date thereafter for payment or
reimbursement of Capital Expenditures (defined below).
Notwithstanding the foregoing, once $760,722.12 is held in
this account (the "Capped Amount"), Borrower may temporarily
cease making payments to this account; provided, however, that
upon a release of Impounds from this account causing the
amount held in such account to drop beneath the Capped Amount,
Borrower must immediately resume payments on each payment date
until such time as the Capped Amount has been reached.
3.2 APPLICATION.
a. TAXES. If no Default exists, Lender shall apply the Impounds in a
timely fashion to the payment of the taxes and other liabilities
stated above.
b. INSURANCE. If no Default exists, Lender shall apply the Impounds to
the payment of the insurance premiums stated above.
c. DEFERRED MAINTENANCE WORK. If no Default exists, Lender shall
release the Impounds to Borrower once a quarter, no less than
$25,000.00 per release, to pay or reimburse Borrower for the
Deferred
EXHIBIT A
2
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Maintenance Work (defined below); provided, however, that Lender
shall have received and approved each of the following:
(i) Borrower's written request for such release, describing the
Deferred Maintenance Work and a cost breakdown thereof in
reasonable detail, and certifying that all such Deferred
Maintenance Work has been completed lien-free and in a
workmanlike manner; and
(ii) an inspection report signed by an inspector selected by
Lender, whose fees and expenses shall be paid by Borrower, and
such other evidence as Lender shall require, confirming
Borrower's certification.
d. CAPITAL EXPENDITURES. If no Default exists, Lender shall release the
Impounds to Borrower once a quarter, no less than $50,000.00 per
release, to pay or reimburse Borrower for the Capital Expenditures
(defined below); provided, however, that Lender shall have received
and approved each of the following:
(i) Borrower's written request for such release, describing the
Capital Expenditures and certifying that all Capital
Expenditures have been paid or incurred by Borrower for work
completed lien-free and in a workmanlike manner;
(ii) copies of invoices supporting the request for such release;
and
(iii) if deemed necessary by Lender, an inspection report signed by
an inspector selected by Lender, whose fees and expenses shall
be paid by Borrower, and such other evidence as Lender shall
reasonably require, confirming borrower's certification.
3.3 GENERAL. Any portion of the Impounds that exceeds the amount required for
payment of the foregoing costs shall be repaid to Borrower upon Borrower's
compliance with the foregoing. Reference is made to Section 6.12(b) of
each of the Mortgages for a description of the account into which the
Impounds shall be deposited and for a description of certain rights and
remedies of Lender with respect to amounts in such account.
3.4 MAINTENANCE AND CONSTRUCTION.
a. DEFERRED MAINTENANCE WORK. Borrower shall complete the lien-free
performance of the Deferred Maintenance Work (as defined below) on
or before December 31, 2000. Borrower shall perform the Deferred
Maintenance Work in a workmanlike manner and in accordance with all
applicable laws, ordinances, rules and regulations. "Deferred
Maintenance Work" shall mean the repairs to the roof drain, gazebo,
waste water treatment plant, asphalt, pool, fence and water heater
all as more fully described in the Property Condition Survey dated
May 22, 2000, prepared by National Assessment Corporation with
respect to the Colonies of Margate Property and Mid-Florida Lakes
Property, and prepared by Integrated Property Analysis, Inc. with
respect to the DeAnza Santa Cruz Property.
b. CAPITAL EXPENDITURES. Borrower shall complete the lien-free
performance or installation of the Capital Expenditures (as defined
below) from time to time as necessary, in a workmanlike manner and
in accordance with all applicable laws, ordinances, rules and
regulations. "Capital Expenditures" shall mean major repairs and
replacements to maintain or improve the Properties, including,
without limitation, structural repairs, roof replacements, HVAC
repairs and replacements, mechanical and plumbing repairs and
replacements and boiler repair and replacements.
c. RIGHT OF INSPECTION. Lender shall have the right to enter upon the
Properties at all reasonable times, subject to reasonable notice
except in the event of an emergency, in which case no notice shall
be required, to inspect all work for the purpose of verifying
information disclosed or required pursuant to this Note, in a manner
which does not unreasonably interfere with the operations on the
Properties. Notwithstanding the foregoing, Lender shall not be
obligated to supervise or inspect any work or to inform Borrower or
any third party regarding any aspect of any work.
EXHIBIT A
3
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3.5 RELEASE. Lender shall release any Impounds to Borrower through a funds
transfer of such Impounds initiated by Lender to the following account or
such other account as Borrower specifies in a notice to Lender:
Bank Name: Bank of America
ABA Routing No.: 071-000039
Account Name: 7366-9-01095
Reference: MHC Operating Limited Partnership
Advise: Megan McBride (312) 828-6274
Lender will determine the funds transfer system and other means to
be used in making each such release. Borrower agrees that each such
funds transfer initiated by Lender will be deemed to be a funds
transfer properly authorized by Borrower, even if the transfer is
not actually properly authorized by Borrower. Borrower acknowledges
that Lender will rely on the account number and ABA routing number
set forth above or specified in a notice from Borrower to Lender,
even if such account number identifies an account with a name
different from the name so specified, or the routing number
identifies a bank different from the bank so specified. If Borrower
learns of any error in the transfer of any Impounds or of any
transfer which was not properly authorized, Borrower shall notify
Lender as soon as possible in writing but in no case more than 14
days after Lender's first confirmation to Borrower of such transfer.
4. ONE-TIME RIGHT OF TRANSFER OF PROPERTY TO THIRD PARTY. Notwithstanding
anything to the contrary contained in Section 6.15 of the Mortgages,
Lender shall, one time only, consent to the voluntary sale or exchange of
all (but not less than all) of the Properties to a bona-fide third party
purchaser ("Transfer"), if no Default has occurred and is continuing, no
event has occurred which, with the giving of notice or the passage of
time, or both, would constitute a Default and all of the following
conditions have been satisfied:
4.1 Lender receives at least sixty-five (65) days prior written notice
of the proposed Transfer;
4.2 Lender's reasonable determination that the proposed purchaser, the
proposed guarantor, if any, and the Properties all satisfy Lender's
then applicable credit review and underwriting standards, taking
into consideration, among other things, (a) any decrease in the
Properties' cash flow which would result from any increase in real
property taxes due to any anticipated reassessment of the Properties
for tax purposes and (b) any then applicable requirement of Lender
that such proposed borrowing entity constitute a single purpose
asset and bankruptcy remote entity which, at the time of the
Transfer, shall be in full compliance with the representations and
covenants set forth in Section 5.2 of the Mortgages (as such
representations may be reasonably modified by Lender after reviewing
the ownership structure of the proposed borrowing entity);
4.3 if required by Lender, delivery to Lender of a non-consolidation
opinion from a law firm reasonably acceptable to Lender and in form
and substance reasonably satisfactory to Lender;
4.4 Lender's reasonable determination that the proposed purchaser
possesses satisfactory recent experience in the ownership and
operation of properties comparable to the Properties;
4.5 the execution and delivery to Lender of such documents and
instruments as Lender shall reasonably require, in form and content
reasonably satisfactory to Lender, including, without limitation,
(i) an assumption agreement under which the purchaser assumes all
obligations and liabilities of Borrower under this Note and the
other Loan Documents and agrees to periodically pay such new or
additional Impounds to Lender as Lender may reasonably require, and
(ii) a consent to the Transfer by any existing guarantor and a
reaffirmation of such guarantor's obligations and liabilities under
any guaranty made in connection with the Loan or a new guaranty
executed by a new guarantor reasonably satisfactory to Lender;
4.6 if required by Lender, delivery to Lender of evidence of title
insurance reasonably satisfactory to Lender insuring Lender that the
liens of the Mortgages and the priority thereof will not be impaired
or affected by reason of such Transfer of the Properties;
4.7 payment to Lender of an assumption fee equal to 0.5% of the then
outstanding principal balance of this Note;
4.8 if reasonably required by Lender, deposit with Lender of any new or
additional Impounds;
EXHIBIT A
4
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4.9 reimbursement to Lender of any and all costs and expenses paid or
incurred by Lender in connection with such Transfer, including,
without limitation, all in-house or outside counsel attorneys' fees,
title insurance fees, appraisal fees, inspection fees, environmental
consultant's fees and any fees or charges of the applicable Rating
Agencies;
4.10 if required by Lender, delivery to Lender of written evidence from
the applicable Rating Agencies that such Transfer will not result in
a downgrading, withdrawal or qualification of the respective ratings
in effect immediately prior to the Transfer for any securities
issued in connection with the securitization of the Loan which are
then outstanding; and
4.11 any third party consents or approvals that are required in order to
consummate the contemplated transaction shall have been obtained and
Lender shall be provided with satisfactory evidence of same.
Lender shall fully release Borrower and any existing guarantor from any further
obligation or liability to Lender under this Note and the other Loan Documents
upon the assumption by the purchaser and any new guarantor of all such
obligations and liabilities and the satisfaction of all other conditions
precedent to a Transfer in accordance with the provisions of this Section.
5. TRANSFER OF PROPERTY TO AN AFFILIATE. Notwithstanding anything to the
contrary contained in Section 6.15 of the Mortgage, Lender shall one time
only with respect to each of the Properties consent to either (a) the
voluntary sale or exchange of such Property by deed to an Affiliate of
Manufactured Home Communities, Inc. ("MHC") or (b) the assignment by
DeAnza of any Nominee Agreement executed by and between DeAnza, as
Principal, and Snowbirdland, as Agent, pertaining to such Property, to an
Affiliate of MHC (both of which are referred to herein as an "Affiliate
Transfer"), if no Default has occurred and is continuing, no event has
occurred which, with the giving of notice or the passage of time, or both,
would constitute a Default and all of the following conditions have been
satisfied:
5.1 Lender receives at least sixty-five (65) days prior written notice
of the proposed Affiliate Transfer;
5.2 Lender's reasonable determination that (a) such Property's cash flow
will not be materially and adversely impacted due to any increase in
real property taxes resulting from the Affiliate Transfer and (b)
the Affiliate of MHC satisfies any then applicable requirement of
Lender that such proposed borrowing entity constitute a single
purpose asset and bankruptcy remote entity which, at the time of the
transfer, shall be in full compliance with the representations and
covenants set forth in Section 5.2 of the Mortgage encumbering such
Property (as such representations may be reasonably modified by
Lender after reviewing the ownership structure of the proposed
borrowing entity);
5.3 if required by Lender, delivery to Lender of a non-consolidation
opinion from a law firm reasonably acceptable to Lender and in form
and substance reasonably satisfactory to Lender;
5.4 the execution and delivery to Lender of such documents and
instruments as Lender shall reasonably require, in form and content
reasonably satisfactory to Lender, including, without limitation,
(i) an assumption agreement under which the purchaser assumes all
obligations and liabilities of Borrower under this Note and the
other Loan Documents and agrees to periodically pay such new or
additional Impounds to Lender as Lender may reasonably require, and
(ii) a consent to the Affiliate Transfer by any existing guarantor
and a reaffirmation of such guarantor's obligations and liabilities
under any guaranty made in connection with the Loan or a new
guaranty executed by a new guarantor reasonably satisfactory to
Lender;
5.5 if required by Lender, delivery to Lender of evidence of title
insurance reasonably satisfactory to Lender insuring Lender that the
lien of such Mortgage and the priority thereof will not be impaired
or affected by reason of such Affiliate Transfer of any such
Property;
5.6 reimbursement to Lender of any and all costs and expenses paid or
incurred by Lender in connection with such Affiliate Transfer,
including, without limitation, all in-house or outside counsel
attorneys' fees, title insurance fees, appraisal fees, inspection
fees, environmental consultant's fees and any fees or charges of the
applicable Rating Agencies;
5.7 if required by Lender, delivery to Lender of written evidence from
the applicable Rating Agencies that such Affiliate Transfer will not
result in a downgrading, withdrawal or qualification of the
respective ratings in
EXHIBIT A
5
17
effect immediately prior to the Affiliate Transfer for any
securities issued in connection with the securitization of the Loan
which are then outstanding; and
5.8 any third party consents or approvals that are required in order to
consummate the contemplated transaction shall have been obtained and
Lender shall be provided with satisfactory evidence of same.
Lender shall fully release Borrower from any further obligation or
liability to Lender under this Note and the other Loan Documents upon the
assumption by the Affiliate of all such obligations and liabilities and
the satisfaction of all other conditions precedent to an Affiliate
Transfer in accordance with the provisions of this Section. In addition to
the Affiliate Transfer permitted above, Lender's consent shall not be
required for the normal day to day trading of shares of MHC in the public
securities market and such transactions shall not constitute an Affiliate
Transfer hereunder.
6. REPLACEMENT PROPERTIES. Upon at least 65 days' but not more than 90 days'
written notice to Lender specifying the date of Borrower's intended
substitution ("Substitution Date"), which date shall be a scheduled
payment date, Borrower may elect to cause Lender to release one or more of
the Properties from the lien of the Mortgage encumbering such Property,
provided that simultaneously with such release, Borrower shall execute and
deliver to Lender, as security for the Loan, a mortgage, deed of trust or
deed to secure debt, as applicable ("Replacement Mortgage"), encumbering a
manufactured housing community property ("Replacement Property"), in
substantially the same form as the Mortgage to be released, such other
documents as Lender may reasonably require for the purpose of granting
Lender a first priority, perfected lien on and security interest in such
Replacement Property and all related rents, personal property, reserves
and escrows on the same terms and conditions as the liens and security
interests granted to Lender in such Property on the Effective Date, and
such other modifications and amendments to the Loan Documents as may be
necessitated due to the substitution of the Replacement Property for the
Property that will be released (all of the foregoing, together with the
Replacement Mortgage, the "Replacement Documents").
6.1 Borrower's right to obtain a release of a Property shall also be
subject to the following conditions and restrictions:
a. no Default shall have occurred and be continuing and no event
has occurred which, with the giving of notice or the passage
of time, or both, would constitute a Default;
b. Borrower shall not, over the life of the Loan, be entitled to
replace Properties having, in the aggregate, an Allocated Loan
Amount of more thirty percent (30%) of the Loan;
c. at least sixty-five (65) days prior to the proposed date of
such release, Lender shall have obtained an appraisal of the
Replacement Property and, if required by Lender, updated
appraisals of the Remaining Properties, prepared by Cushman &
Wakefield, or such other third-party real estate professional
that is approved by the Rating Agencies, indicating that the
Loan-to-Value Ratio as of the date of such release, obtained
by using the "as-is" value of the proposed Replacement
Property set forth in such appraisal together with the "as-is"
value of the Remaining Properties as of the date of such
proposed release if new appraisals are required by Lender for
the Remaining Properties, or as of the Disbursement Date if
new appraisals are not required by Lender, is at least equal
to the Loan-to-Value Ratio existing on the Disbursement Date
which is sixty-three percent (63%);
d. Lender shall have obtained a Phase I environmental report and,
if recommended by such Phase I report, a Phase II
environmental report prepared by The SI Group, Inc., or such
other environmental consultant as is approved by the Rating
Agencies, stating that the Replacement Property complies with
all applicable environmental laws;
e. Lender shall have obtained an engineering report, prepared by
National Assessment Corporation, or such other consulting
engineer as is approved by the Rating Agencies, stating that
the Replacement Property complies with all applicable building
laws and does not require performance of deferred maintenance,
or if remedial steps are required to effect such compliance or
such deferred maintenance, identifying such steps and
projecting the cost thereof, which may not exceed $50,000.00,
and in which case Borrower shall be required to deposit with
Lender an amount equal to one hundred fifty percent (150%) of
such projected costs, which shall be deemed Impounds to be
released substantially in accordance with the provisions
contained in Section 3 of Exhibit A to this Note;
EXHIBIT A
6
18
f. Borrower shall have caused to be delivered all leases, title
commitments, title insurance policies, surveys, hazard and
liability insurance, evidence of compliance with zoning and
other laws, legal opinions and other items of due diligence
with respect to the Replacement Property as the Rating
Agencies may require, all of which shall be in form and
substance acceptable to the Rating Agencies;
g. the Debt Service Coverage Ratio, calculated by substituting
the Net Operating Income of the Replacement Property for the
Net Operating Income of the Property to be released, combined
with the Net Operating Income of the Remaining Properties, as
of the time of such release shall be at least equal to the
Debt Service Coverage Ratio existing on the Disbursement Date
which is 1.41 to 1;
h. the Person transferring the Replacement Property to a Borrower
shall be solvent and shall be making such transfer on an arm's
length basis and for fair consideration, and such Borrower and
such Person shall deliver certifications and evidence to such
effect and such other certifications as Lender shall
reasonably require to assure itself that the substitution does
not constitute a fraudulent conveyance on the part of any
Person (assuming such Person was not solvent at the time of
substitution);
i. Borrower shall comply with such other terms and conditions as
the Rating Agencies shall require in connection with such
substitution;
j. the organizational documents of the applicable Borrower shall,
if required, be modified to permit the ownership and operation
of the Replacement Property;
k. an opinion of counsel for Borrower in form and substance and
delivered by counsel satisfactory to Lender in its sole
discretion stating, among other things, that any REMIC Trust
formed pursuant to a securitization will not fail to maintain
its status as a "real estate mortgage investment conduit"
within the meaning of Internal Revenue Code Section 860D, as
amended from time to time, or any successor statute, as a
result of the release of such Property and the substitution of
the Replacement Property;
l. the applicable Borrower shall transfer title to the Property
to be released to a Person other than such Borrower or any
other Borrower;
m. written evidence from the applicable Rating Agencies that the
proposed release of such Property and substitution of the
Replacement Property will not result in a downgrading,
withdrawal or qualification of the respective ratings in
effect immediately prior to such release and substitution for
any securities issued in connection with the securitization
which are then outstanding;
n. any third party consents or approvals that are required in
order to consummate the contemplated transaction shall have
been obtained and Lender shall be provided with satisfactory
evidence of same;
o. delivery to Lender of evidence of title insurance reasonably
satisfactory to Lender; and
p. reimbursement to Lender of any and all costs and expenses paid
or incurred by Lender in connection with the request to
substitute a Replacement Property, including, without
limitation, all in-house or outside counsel attorneys' fees,
title insurance fees, appraisal fees, inspection fees,
environmental consultant's fees and any fees or charges of the
applicable Rating Agencies.
7. CONTRIBUTION AMONG THE ENTITIES THAT COMPRISE THE BORROWER.
7.1 CONTRIBUTION. To provide for just and equitable contribution among
the entities that comprise the Borrower, if any payment is made by a
Borrower (a "Funding Borrower") hereunder or under any other Loan
Document in respect of the Secured Obligations (as defined in each
of the Mortgages), such Funding Borrower shall be entitled to a
contribution from the other entities that comprise the Borrower for
all payments, damages and expenses incurred by such Funding Borrower
under or in connection with such Secured Obligations, such
contributions to be made in the manner and to the extent set forth
below. Any amount payable as a contribution under this Note shall be
determined as of the date on which the related payment is made by a
Funding Borrower.
EXHIBIT A
7
19
7.2 CALCULATION OF CONTRIBUTIONS. Each Borrower shall be liable for
contribution to each Funding Borrower in respect of all payments,
damages and expenses incurred by such Funding Borrower hereunder or
under any other Loan Document in an aggregate amount, subject to
Section 7.3 hereof, equal to (i) the ratio of (x) the Property Worth
of the applicable Property owned by such Borrower to (y) the
Property Worth of the Properties owned by all of the entities that
comprise the Borrower, multiplied by (ii) the aggregate amount of
such payments, damages and expenses incurred by such Funding
Borrower under or in connection with the Secured Obligations.
7.3 RIGHTS TO CONTRIBUTION SUBORDINATED. Each Borrower agrees that all
of its rights to receive contributions under this Section 7 (whether
for payments, damages, expenses or otherwise) and all of its rights,
if any, to be subrogated to any of the rights of Lender shall be
subordinated in right of payment (in liquidation or otherwise) to
the prior payment in full in cash of all of the Secured Obligations
(whether for principal, interest, premium or otherwise). If any
amount shall at any time be paid to a Borrower on account of such
rights of contribution or subrogation, or in contravention of the
provisions of this Section 7.3 at any time, such amount shall be
held in trust, segregated from the other assets of such Borrower,
for the benefit of the Lender and shall promptly be paid to the
Lender. The foregoing shall constitute a continuing offer to, and
agreement with, all persons that from time to time may become
holders of, or continue to hold, Secured Obligations under this
Note, and the provisions of the foregoing sentence are made for the
benefit of such holders and such holders, as third party
beneficiaries hereunder, are entitled to enforce such provisions.
8. DATE PALM COUNTRY CLUB PROPERTY TRANSFERS. Notwithstanding anything to the
contrary contained in Section 6.15 of the Mortgage, and in addition to the
rights contained in Section 5 of this Exhibit A, Lender shall one time
only with respect to the Date Palm Country Club Property consent to either
(a) the voluntary transfer of the Date Palm Country Club Property by
assignment of lease to DeAnza or (b) the assignment of all or any portion
of the membership interests in Date Palm to DeAnza (both of which are
referred to herein as the "Date Palm Transfer"), if no Default has
occurred and is continuing, no event has occurred which, with the giving
of notice or the passage of time, or both, would constitute a Default and
all of the following conditions have been satisfied:
8.1 Lender receives at least sixty-five (65) days prior written notice
of the proposed Date Palm Transfer;
8.2 if required by Lender, delivery to Lender of a non-consolidation
opinion from a law firm reasonably acceptable to Lender and in form
and substance reasonably satisfactory to Lender;
8.3 the execution and delivery to Lender of such documents and
instruments as Lender shall reasonably require, in form and content
reasonably satisfactory to Lender, including, without limitation, a
consent to the Date Palm Transfer by any existing guarantor and a
reaffirmation of such guarantor's obligations and liabilities under
any guaranty made in connection with the Loan or a new guaranty
executed by a new guarantor reasonably satisfactory to Lender;
8.4 if required by Lender, delivery to Lender of evidence of title
insurance reasonably satisfactory to Lender insuring Lender that the
lien of such Mortgage and the priority thereof will not be impaired
or affected by reason of such Date Palm Transfer;
8.5 reimbursement to Lender of any and all costs and expenses paid or
incurred by Lender in connection with such Date Palm Transfer,
including, without limitation, all in-house or outside counsel
attorneys' fees, title insurance fees, appraisal fees, inspection
fees, environmental consultant's fees and any fees or charges of the
applicable Rating Agencies;
8.6 if required by Lender, delivery to Lender of written evidence from
the applicable Rating Agencies that such Date Palm Transfer will not
result in a downgrading, withdrawal or qualification of the
respective ratings in effect immediately prior to the Date Palm
Transfer for any securities issued in connection with the
securitization of the Loan which are then outstanding; and
8.7 any third party consents or approvals that are required in order to
consummate the contemplated transaction shall have been obtained and
Lender shall be provided with satisfactory evidence of same.
If the Date Palm Transfer consists of an assignment of lease to DeAnza, then
Lender shall fully release Date Palm from any further obligation or liability to
Lender under this Note and the other Loan Documents upon the assumption by
DeAnza of all
EXHIBIT A
8
20
such obligations and liabilities and the satisfaction of all other conditions
precedent to the Date Palm Transfer in accordance with the provisions of this
Section.
9. DATE PALM APPROVAL, REPLACEMENT OR REPAYMENT. In the event that Borrower
has not obtained the approval of the Bureau of Indian Affairs with respect
to the Loan (the "Date Palm Approval") by the Effective Date, then the
Title Company will not record the Date Palm Leasehold Deed of Trust and
Lender will not disburse to Borrower the Allocated Loan Amount
attributable to the Date Palm Country Club Property in the amount of
$15,750,000 (the "Date Palm Escrow"). Instead, Lender shall disburse the
Date Palm Escrow into an interest-bearing pledged account maintained by
Lender for the benefit of Borrower until such time as Borrower has
delivered evidence of the Date Palm Approval to Lender in form and
substance satisfactory to Lender, together with such other documents and
instruments that were to be delivered to Lender on or before the Effective
Date if the Date Palm Approval had been obtained on or before the
Effective Date (the "Date Palm Ground Lease Documents"). Upon delivery of
the Date Palm Approval and the Date Palm Ground Lease Documents, Lender
shall disburse the Date Palm Escrow and the Title Company will be directed
to record the Date Palm Leasehold Deed of Trust.
The Date Palm Escrow shall constitute Collateral (as defined in the
Mortgages). Upon any Default, Lender shall have the right, in addition to
any other rights of Lender under the Loan Documents, to foreclose its
security interest in the Date Palm Escrow and apply the sums in the Date
Palm Escrow to the repayment of the indebtedness outstanding under this
Note in such order as Lender shall determine. At any time and from time to
time, promptly upon Lender's request, Borrower shall execute such
additional documents and instruments as Lender shall reasonably deem
necessary or desirable for the purpose of confirming and perfecting
Lender's security interest in the Date Palm Escrow.
In the event Borrower is unable to obtain the Date Palm Approval and the
Date Palm Ground Lease Documents by September 1, 2000 (the "Date Palm
Determination Date"), then on the Date Palm Determination Date Borrower
must either: (1) pay down the Loan ("Date Palm Repayment Option") in the
amount of the Date Palm Escrow with no prepayment charge, but subject to
the payment of Hedge Losses (as hereinafter defined) or (2) substitute for
the Date Palm Country Club Property a Replacement Property ("Date Palm
Replacement Option") by providing written notice to Lender on or before
August 1, 2000 ("Date Palm Notification Date") specifying Borrower's
intention to replace the Date Palm Country Club Property with the
Replacement Property. Borrower shall reimburse Lender for any and all
costs and expenses paid or incurred by Lender in connection with the Date
Palm Approval, the Date Palm Repayment Option and the Date Palm
Replacement Option, including, without limitation, all in-house or outside
counsel attorneys' fees and any title insurance fees, appraisal fees,
inspection fees and environmental consultant's fees.
9.1 In the event Borrower exercises the Date Palm Repayment Option, at
such time as Lender has received payment of the Hedge Losses, Lender
shall direct the Title Company to return the Date Palm Leasehold
Deed of Trust to Borrower, together with such other documents held
in escrow by the Title Company pertaining to the Date Palm Country
Club Property. Lender shall fully release Date Palm from any further
obligation or liability to Lender under this Note and the other Loan
Documents upon the satisfaction of all other conditions precedent to
the Date Palm Repayment Option in accordance with the provisions of
this Section. Borrower acknowledges that, in connection with the
making of this Loan, Lender has initiated either a short sale or
purchase of United States Treasury Note future or option contracts,
as well as other interest rate arrangements (collectively referred
to herein as the "Hedge Agreements") based upon the full amount of
the Loan and the full term of the Loan. Accordingly, the Date Palm
Repayment Option may cause Lender to incur certain losses, costs,
and expenses in connection with the Hedge Agreements attributable to
the funds on deposit in the Date Palm Escrow ("Hedge Losses").
Borrower agrees to be liable for the Hedge Losses, if any, in the
event it exercises the Date Palm Repayment Option.
9.2 In the event that Borrower exercises the Date Palm Replacement
Option, then Lender will direct the Title Company to return the Date
Palm Leasehold Deed of Trust to Borrower, together with such other
documents held in escrow by the Title Company pertaining to the Date
Palm Country Club Property, provided that simultaneously with such
return, Borrower shall execute and deliver to Lender, as security
for the Loan, a Replacement Mortgage encumbering the Replacement
Property, in substantially the same form as the other Mortgages, and
such other documents as Lender may reasonably require for the
purpose of granting Lender a first priority, perfected lien on and
security interest in such Replacement Property and all related
rents, personal property, reserves and escrows on the same terms and
conditions as the liens and security interests granted to Lender in
the other Properties on the Effective Date, and such other
modifications and amendments to the Loan Documents as may be
necessitated due to the substitution of the Replacement Property for
the Date
9
21
Palm Country Club Property (all of the foregoing, together with the
Replacement Mortgage, the "Date Palm Replacement Documents").
9.3 Borrower's right to replace the Date Palm Country Club Property with
a Replacement Property shall also be subject to the following
conditions and restrictions, which if not met by the Date Palm
Determination Date will result in a determination that Borrower has
elected the Date Palm Repayment Option:
a. as of the Date Palm Determination Date, no Default shall have
occurred and be continuing and no event has occurred which,
with the giving of notice or the passage of time, or both,
would constitute a Default;
b. Lender shall have obtained an appraisal of the Replacement
Property and, if required by Lender, updated appraisals of the
Remaining Properties, prepared by Cushman & Wakefield, or such
other third-party real estate professional that is approved by
Lender, indicating that the Loan-to-Value Ratio as of the Date
Palm Determination Date, obtained by using the "as-is" value
of the proposed Replacement Property set forth in such
appraisal together with the "as-is" value of the Remaining
Properties as of the Date Palm Determination Date if new
appraisals are required by Lender for the Remaining
Properties, or as of the Disbursement Date if new appraisals
are not required by Lender, is at least equal to the
Loan-to-Value Ratio existing on the Disbursement Date which is
sixty-three percent (63%);
c. Lender shall have obtained a Phase I environmental report and,
if recommended by such Phase I report, a Phase II
environmental report prepared by The SI Group, Inc., or such
other environmental consultant as is approved by Lender,
stating that the Replacement Property complies with all
applicable environmental laws;
d. Lender shall have obtained an engineering report, prepared by
National Assessment Corporation, or such other consulting
engineer as is approved by Lender, stating that the
Replacement Property complies with all applicable building
laws and does not require performance of deferred maintenance,
or if remedial steps are required to effect such compliance or
such deferred maintenance, identifying such steps and
projecting the cost thereof, which may not exceed $50,000.00,
and in which case Borrower shall be required to deposit with
Lender an amount equal to one hundred fifty percent (150%) of
such projected costs, which shall be deemed Impounds to be
released substantially in accordance with the provisions
contained in Section 3 of Exhibit A to this Note;
e. Borrower shall have caused to be delivered on or before the
Date Palm Notification Date all leases, title commitments,
title insurance policies, surveys, hazard and liability
insurance, evidence of compliance with zoning and other laws,
legal opinions and other items of due diligence with respect
to the Replacement Property as Lender may require, and which
were delineated in the loan application letter between Lender
and Borrower, all of which shall be in form and substance
acceptable to Lender;
f. the Debt Service Coverage Ratio, calculated by substituting
the Net Operating Income of the Replacement Property for the
Net Operating Income of the Date Palm Country Club Property,
combined with the Net Operating Income of the Remaining
Properties, as of the Date Palm Determination Date shall be at
least equal to the Debt Service Coverage Ratio existing on the
Disbursement Date which is 1.41 to 1;
g. the Person transferring the Replacement Property to a Borrower
shall be solvent and shall be making such transfer on an arm's
length basis and for fair consideration, and such Borrower and
such Person shall deliver certifications and evidence to such
effect and such other certifications as Lender shall
reasonably require to assure itself that the substitution does
not constitute a fraudulent conveyance on the part of any
Person (assuming such Person was not solvent at the time of
substitution);
h. the organizational documents of the applicable Borrower shall,
if required, be modified to permit the ownership and operation
of the Replacement Property;
i. if the Replacement Property is acquired by Date Palm, then
Date Palm shall transfer title to the Date Palm Country Club
Property to a Person other than Date Palm or any other
Borrower;
EXHIBIT A
10
22
j. if the Replacement Property is acquired by a Borrower other
than Date Palm, then Date Palm shall be fully released from
any further obligation or liability to Lender under this Note
and the other Loan Documents upon the satisfaction of all
other conditions precedent to the Date Palm Replacement Option
in accordance with the provisions of this Section;
k. any third party consents or approvals that are required in
order to consummate the contemplated transaction shall have
been obtained and Lender shall be provided with satisfactory
evidence of same; and
l. delivery to Lender of evidence of title insurance reasonably
satisfactory to Lender.
Borrower acknowledges and agrees that in order for Lender to obtain and analyze
the third party reports specified in Subsections 9.3(b), (c) and (d) of Exhibit
A of this Note before the Date Palm Determination Date, Borrower will need to
identify the Replacement Property to Lender before the Date Palm Notification
Date. Borrower further acknowledges and agrees that in no event shall Lender be
liable to Borrower in any aspect whatsoever in the event that the conditions
specified in 9.3(b), (c) and (d) of Exhibit A of this Note have not been
satisfied by the Date Palm Determination Date thus requiring Borrower to elect
the Date Palm Repayment Option.
EXHIBIT A
11
23
EXHIBIT B TO PROMISSORY NOTE
LOAN DOCUMENTS AND OTHER RELATED DOCUMENTS
This Exhibit B is attached to and forms a part of that Amended, Restated and
Consolidated Promissory Note ("Note") executed by MHC-DEANZA FINANCING LIMITED
PARTNERSHIP, an Illinois limited partnership ("DeAnza"), SNOWBIRDLAND VISTAS,
INC., an Illinois corporation ("Snowbirdland") and MHC DATE PALM, L.L.C., a
Delaware limited liability company ("Date Palm") (DeAnza, Date Palm and
Snowbirdland are individually and collectively, as the context requires and with
such determination to be made in the sole discretion of Lender, referred to
herein as the "Borrower") in favor of WELLS FARGO BANK, NATIONAL ASSOCIATION
("Lender").
1. LOAN DOCUMENTS. The documents numbered 1.1 through 1.21 below of even date
herewith (unless otherwise specified) and any amendments, modifications
and supplements thereto which have received the prior written approval of
Lender and any documents executed in the future that are approved by
Lender and that recite that they are "Loan Documents" for purposes of this
Note are collectively referred to as the "Loan Documents".
1.1 This Note;
1.2 Mid-Florida Lakes Mortgage, Bay Lake Mortgage, Buccaneer Mortgage,
Colonies Mortgage, Willow Lake Mortgage, DeAnza Deed of Trust and
Date Palm Leasehold Deed of Trust;
1.3 Bay Lake Note, Buccaneer Note, Colonies Note and Mid-Florida Lakes
Note, each endorsed to the order of Lender pursuant to those certain
Allonge Endorsements to Promissory Note executed by Pacific;
1.4 Notices and Acknowledgements of Future Advance executed by
Snowbirdland and DeAnza respectively for the Mid-Florida Lakes
Property, Bay Lake Estates Property, Buccaneer Estates Property and
Colonies of Margate Property;
1.5 (a) The Florida real estate mortgage dated August 14, 1994, in the
original principal amount of $2,218,975.33, executed by
Snowbirdland, as Agent for DeAnza, and DeAnza in favor of Pacific
("Bay Lake Original Mortgage"); (b) the Assignment of Rents and
Leases dated August 14, 1994, pertaining to property located in
Nokomis, Florida, executed by Snowbirdland, as Agent for DeAnza, and
DeAnza in favor or Pacific ("Bay Lake Assignment of Rents"); (c) the
Florida real estate mortgage dated August 14, 1994, in the original
principal amount of $8,081,491.39, executed by Snowbirdland, as
Agent for DeAnza, and DeAnza in favor of Pacific ("Buccaneer
Original Mortgage"); (d) the Assignment of Rents and Leases dated
August 14, 1994, pertaining to property located in North Fort Myers,
Florida, executed by Snowbirdland, as Agent for DeAnza, and DeAnza
in favor or Pacific ("Buccaneer Assignment of Rents"); (e) the
Florida real estate mortgage dated August 14, 1994, in the original
principal amount of $13,323,714.75, executed by Snowbirdland, as
Agent for DeAnza, and DeAnza in favor of Pacific ("Colonies Original
Mortgage"); (f) the Assignment of Rents and Leases dated August 14,
1994, pertaining to property located in Margate, Florida, executed
by Snowbirdland, as Agent for DeAnza, and DeAnza in favor or Pacific
("Colonies Assignment of Rents"); (g) the Florida real estate
mortgage dated August 14, 1994, in the original principal amount of
$13,435,390.10, executed by Snowbirdland, as Agent for DeAnza, and
DeAnza in favor of Pacific ("Mid-Florida Lakes Original Mortgage");
(h) the Assignment of Rents and Leases dated August 14, 1994,
pertaining to property located in Leesburg, Florida, executed by
Snowbirdland, as Agent for DeAnza, and DeAnza in favor or Pacific
("Mid-Florida Lakes Assignment of Rents"); each of the foregoing, as
assigned to Lender by an Assignment of Mortgage and Other Loan
Documents from Pacific to Lender, are collectively referred to as
the "Original Mortgages";
1.6 Bay Lake Future Advance Note, Buccaneer Future Advance Note,
Colonies Future Advance Note and Mid-Florida Lakes Future Advance
Note;
1.7 State of Illinois Commercial Code - Financing Statements - Form
UCC-1;
1.8 State of Florida Uniform Commercial Code - Financing Statements -
Form UCC-1;
EXHIBIT B
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1.9 State of California Uniform Commercial Code - Financing Statements -
Form UCC-1;
1.10 Corporate Borrowing Resolutions and Certificates of Incumbency;
1.11 Limited Liability Company Borrowing Certificate;
1.12 Partnership Borrowing Certificate;
1.13 Corporate Resolution Authorizing Limited Liability Company Activity
and Certificate of Incumbency;
1.14 Corporate Resolution Authorizing Partnership Activity and
Certificate of Incumbency;
1.15 Corporate Resolutions Authorizing Execution of Guaranty and
Endorsement and Hypothecation of Property and Certificate of
Incumbency;
1.16 Ground Lease Estoppel Certificate and Agreement;
1.17 Supplemental Agreement No. 5;
1.18 Subordination and Estoppel Agreement, executed for the Bay Lake
Estates Property, Mid-Florida Lakes Property, Buccaneer Estates
Property and Colonies of Margate Property, respectively;
1.19 Assignment of Water Services Agreements and Consent and
Subordination of Water Service Provider, executed for the Buccaneer
Estates Property, and the Assignments of Water and Sanitary Sewer
Services Agreements and Consent and Subordination of Water and
Sanitary Sewer Service Provider, executed for the Colonies of
Margate Property and the DeAnza Santa Cruz Property, respectively;
1.20 Assignment of Management Contracts and Consent and Subordination of
Manager;
1.21 Stock Pledge Agreements; and
1.22 O&M Plan Letters executed for the Mid-Florida Lakes Property,
Buccaneer Estates Property, Colonies of Margate Property, Willow
Lake Estates Property, DeAnza Santa Cruz Property and Date Palm
Country Club Property, respectively.
2. OTHER RELATED DOCUMENTS WHICH ARE NOT LOAN DOCUMENTS.
2.1 Flood Hazard Notices with respect to the Bay Lake Estates Property,
and Colonies of Margate Property, respectively;
EXHIBIT B
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2.2 Limited Guaranty; and
2.3 Bankruptcy Non-Consolidation Opinion of Borrower's legal counsel.
EXHIBIT B
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