EXHIBIT 10.48
LOAN AGREEMENT
Dated as of October 17, 2003
Between
MHC GOLF VISTA ESTATES, L.L.C.,
as Borrower
and
BANK OF AMERICA, N.A.,
as Lender
TABLE OF CONTENTS
Page
ARTICLE 1 DEFINITIONS; PRINCIPLES OF CONSTRUCTION............................................................ 1
SECTION 1.1. DEFINITIONS............................................................................ 1
SECTION 1.2. PRINCIPLES OF CONSTRUCTION............................................................. 15
ARTICLE 2 GENERAL TERMS...................................................................................... 15
SECTION 2.1. LOAN COMMITMENT; DISBURSEMENT TO BORROWER.............................................. 15
SECTION 2.2. LOAN PAYMENTS.......................................................................... 16
SECTION 2.3. LATE PAYMENT CHARGE.................................................................... 17
SECTION 2.4. PREPAYMENT; DEFEASANCE................................................................. 17
SECTION 2.5. SUBSTITUTION OF PROPERTIES [FOR APPROVED "SINGLE ASSET" LOANS/CROSSED LOANS ONLY]...... 22
SECTION 2.6. PAYMENTS AFTER DEFAULT................................................................. 22
SECTION 2.7. USURY SAVINGS.......................................................................... 22
ARTICLE 3 CONDITIONS PRECEDENT............................................................................... 23
SECTION 3.1. REPRESENTATIONS AND WARRANTIES; COMPLIANCE WITH CONDITIONS............................. 23
SECTION 3.2. DELIVERY OF LOAN DOCUMENTS; TITLE INSURANCE; REPORTS; LEASES........................... 23
SECTION 3.3. RELATED DOCUMENTS...................................................................... 24
SECTION 3.4. ORGANIZATIONAL DOCUMENTS............................................................... 24
SECTION 3.5. OPINIONS OF BORROWER'S COUNSEL......................................................... 25
SECTION 3.6. ANNUAL BUDGET.......................................................................... 25
SECTION 3.7. TAXES AND OTHER CHARGES................................................................ 25
SECTION 3.8. COMPLETION OF PROCEEDINGS.............................................................. 25
SECTION 3.9. PAYMENTS............................................................................... 25
SECTION 3.10. TRANSACTION COSTS...................................................................... 25
SECTION 3.11. NO MATERIAL ADVERSE CHANGE............................................................. 26
SECTION 3.12. LEASES AND RENT ROLL................................................................... 26
SECTION 3.13. INTENTIONALLY DELETED.................................................................. 26
SECTION 3.14. INTENTIONALLY DELETED.................................................................. 26
SECTION 3.15. INTENTIONALLY DELETED.................................................................. 26
SECTION 3.16. TAX LOT................................................................................ 26
SECTION 3.17. PHYSICAL CONDITIONS REPORT............................................................. 26
SECTION 3.18. MANAGEMENT AGREEMENT................................................................... 26
SECTION 3.19. APPRAISAL.............................................................................. 26
SECTION 3.20. FINANCIAL STATEMENTS................................................................... 26
SECTION 3.21. INTENTIONALLY DELETED.................................................................. 27
SECTION 3.22. FURTHER DOCUMENTS...................................................................... 27
ARTICLE 4 REPRESENTATIONS AND WARRANTIES..................................................................... 27
SECTION 4.1. ORGANIZATION........................................................................... 27
SECTION 4.2. STATUS OF BORROWER..................................................................... 27
SECTION 4.3. VALIDITY OF DOCUMENTS.................................................................. 28
SECTION 4.4. NO CONFLICTS........................................................................... 28
SECTION 4.5. LITIGATION............................................................................. 28
SECTION 4.6. AGREEMENTS............................................................................. 28
SECTION 4.7. SOLVENCY............................................................................... 29
SECTION 4.8. FULL AND ACCURATE DISCLOSURE........................................................... 29
SECTION 4.9. NO PLAN ASSETS......................................................................... 29
- i -
SECTION 4.10. NOT A FOREIGN PERSON................................................................... 30
SECTION 4.11. ENFORCEABILITY......................................................................... 30
SECTION 4.12. BUSINESS PURPOSES...................................................................... 30
SECTION 4.13. COMPLIANCE............................................................................. 30
SECTION 4.14. FINANCIAL INFORMATION.................................................................. 30
SECTION 4.15. CONDEMNATION........................................................................... 31
SECTION 4.16. UTILITIES AND PUBLIC ACCESS; PARKING................................................... 31
SECTION 4.17. SEPARATE LOTS.......................................................................... 31
SECTION 4.18. ASSESSMENTS............................................................................ 31
SECTION 4.19. INSURANCE.............................................................................. 31
SECTION 4.20. USE OF PROPERTY........................................................................ 32
SECTION 4.21. CERTIFICATE OF OCCUPANCY; LICENSES..................................................... 32
SECTION 4.22. FLOOD ZONE............................................................................. 32
SECTION 4.23. PHYSICAL CONDITION..................................................................... 32
SECTION 4.24. BOUNDARIES............................................................................. 33
SECTION 4.25. LEASES AND RENT ROLL................................................................... 33
SECTION 4.26. FILING AND RECORDING TAXES............................................................. 34
SECTION 4.27. MANAGEMENT AGREEMENT................................................................... 34
SECTION 4.28. ILLEGAL ACTIVITY....................................................................... 34
SECTION 4.29. CONSTRUCTION EXPENSES.................................................................. 34
SECTION 4.30. PERSONAL PROPERTY...................................................................... 34
SECTION 4.31. TAXES.................................................................................. 35
SECTION 4.32. PERMITTED ENCUMBRANCES................................................................. 35
SECTION 4.33. FEDERAL RESERVE REGULATIONS............................................................ 35
SECTION 4.34. INVESTMENT COMPANY ACT................................................................. 35
SECTION 4.35. RECIPROCAL EASEMENT AGREEMENTS......................................................... 35
SECTION 4.36. NO CHANGE IN FACTS OR CIRCUMSTANCES; DISCLOSURE........................................ 36
SECTION 4.37. INTELLECTUAL PROPERTY.................................................................. 36
SECTION 4.38. SURVEY................................................................................. 37
SECTION 4.39. EMBARGOED PERSON....................................................................... 37
SECTION 4.40. PATRIOT ACT............................................................................ 37
SECTION 4.41. INTENTIONALLY DELETED.................................................................. 38
SECTION 4.42. OPERATING LEASE REPRESENTATIONS........................................................ 38
SECTION 4.43. SURVIVAL............................................................................... 38
ARTICLE 5 BORROWER COVENANTS................................................................................. 39
SECTION 5.1. EXISTENCE; COMPLIANCE WITH LEGAL REQUIREMENTS.......................................... 39
SECTION 5.2. MAINTENANCE AND USE OF PROPERTY........................................................ 39
SECTION 5.3. WASTE.................................................................................. 40
SECTION 5.4. TAXES AND OTHER CHARGES................................................................ 40
SECTION 5.5. LITIGATION............................................................................. 41
SECTION 5.6. ACCESS TO PROPERTY..................................................................... 41
SECTION 5.7. NOTICE OF DEFAULT...................................................................... 41
SECTION 5.8. COOPERATE IN LEGAL PROCEEDINGS......................................................... 41
SECTION 5.9. PERFORMANCE BY BORROWER................................................................ 41
SECTION 5.10. AWARDS; INSURANCE PROCEEDS............................................................. 41
SECTION 5.11. FINANCIAL REPORTING.................................................................... 42
SECTION 5.12. ESTOPPEL STATEMENT..................................................................... 45
SECTION 5.13. LEASING MATTERS........................................................................ 45
SECTION 5.14. PROPERTY MANAGEMENT.................................................................... 46
SECTION 5.15. LIENS.................................................................................. 47
SECTION 5.16. DEBT CANCELLATION...................................................................... 47
SECTION 5.17. ZONING................................................................................. 48
SECTION 5.18. ERISA.................................................................................. 48
SECTION 5.19. NO JOINT ASSESSMENT.................................................................... 48
SECTION 5.20. RECIPROCAL EASEMENT AGREEMENTS......................................................... 48
- ii -
SECTION 5.21. ALTERATIONS............................................................................ 49
SECTION 5.22. TAX CREDITS............................................................................ 49
SECTION 5.23. GOLF COURSE PROPERTIES................................................................. 49
ARTICLE 6 ENTITY COVENANTS................................................................................... 50
SECTION 6.1. SINGLE PURPOSE ENTITY/SEPARATENESS..................................................... 50
SECTION 6.2. CHANGE OF NAME, IDENTITY OR STRUCTURE.................................................. 53
SECTION 6.3. BUSINESS AND OPERATIONS................................................................ 54
SECTION 6.4. INDEPENDENT DIRECTOR................................................................... 54
ARTICLE 7 NO SALE OR ENCUMBRANCE............................................................................. 55
SECTION 7.1. TRANSFER DEFINITIONS................................................................... 55
SECTION 7.2. NO SALE/ENCUMBRANCE.................................................................... 55
SECTION 7.3. PERMITTED TRANSFERS.................................................................... 56
SECTION 7.4. LENDER'S RIGHTS........................................................................ 56
SECTION 7.5. ASSUMPTION............................................................................. 57
SECTION 7.6. INTENTIONALLY DELETED.................................................................. 59
SECTION 7.7. ASSUMPTIONS IN CONNECTION WITH CERTAIN TRANSFERS TO AFFILIATES......................... 59
SECTION 7.8. ADDITIONAL PERMITTED TRANSFERS......................................................... 62
ARTICLE 8 INSURANCE; CASUALTY; CONDEMNATION; RESTORATION..................................................... 62
SECTION 8.1. INSURANCE.............................................................................. 62
SECTION 8.2. CASUALTY............................................................................... 66
SECTION 8.3. CONDEMNATION........................................................................... 66
SECTION 8.4. RESTORATION............................................................................ 66
ARTICLE 9 RESERVE FUNDS...................................................................................... 70
SECTION 9.1. REQUIRED REPAIRS....................................................................... 70
SECTION 9.2. REPLACEMENTS........................................................................... 71
SECTION 9.3. INTENTIONALLY DELETED.................................................................. 71
SECTION 9.4. REQUIRED WORK.......................................................................... 71
SECTION 9.5. RELEASE OF RESERVE FUNDS............................................................... 73
SECTION 9.6. TAX AND INSURANCE RESERVE FUNDS........................................................ 75
SECTION 9.7. EXCESS CASH............................................................................ 75
SECTION 9.8. TERRORISM RESERVE...................................................................... 76
SECTION 9.9. RESERVE FUNDS GENERALLY................................................................ 78
ARTICLE 10 CASH MANAGEMENT................................................................................... 78
SECTION 10.1. LOCKBOX ACCOUNT AND CASH MANAGEMENT ACCOUNT............................................ 78
SECTION 10.2. DEPOSITS AND WITHDRAWALS............................................................... 79
SECTION 10.3. SECURITY INTEREST...................................................................... 82
SECTION 10.4. DEFINITIONS............................................................................ 83
ARTICLE 11 EVENTS OF DEFAULT; REMEDIES....................................................................... 83
SECTION 11.1. EVENT OF DEFAULT....................................................................... 83
SECTION 11.2. REMEDIES............................................................................... 85
ARTICLE 12 ENVIRONMENTAL PROVISIONS.......................................................................... 86
SECTION 12.1. ENVIRONMENTAL REPRESENTATIONS AND WARRANTIES........................................... 86
SECTION 12.2. ENVIRONMENTAL COVENANTS................................................................ 86
SECTION 12.3. LENDER'S RIGHTS........................................................................ 87
SECTION 12.4. OPERATIONS AND MAINTENANCE PROGRAMS.................................................... 87
SECTION 12.5. ENVIRONMENTAL DEFINITIONS.............................................................. 88
SECTION 12.6. INDEMNIFICATION........................................................................ 88
- iii -
ARTICLE 13 SECONDARY MARKET.................................................................................. 90
SECTION 13.1. TRANSFER OF LOAN....................................................................... 90
SECTION 13.2. DELEGATION OF SERVICING................................................................ 90
SECTION 13.3. DISSEMINATION OF INFORMATION........................................................... 90
SECTION 13.4. COOPERATION............................................................................ 90
SECTION 13.5. SECURITIZATION INDEMNIFICATION......................................................... 92
SECTION 13.6. INTENTIONALLY DELETED.................................................................. 95
ARTICLE 14 INDEMNIFICATIONS.................................................................................. 95
SECTION 14.1. GENERAL INDEMNIFICATION................................................................ 95
SECTION 14.2. MORTGAGE AND INTANGIBLE TAX INDEMNIFICATION............................................ 95
SECTION 14.3. ERISA INDEMNIFICATION.................................................................. 95
SECTION 14.4. SURVIVAL............................................................................... 96
ARTICLE 15 EXCULPATION....................................................................................... 96
SECTION 15.1. EXCULPATION............................................................................ 96
ARTICLE 16 NOTICES........................................................................................... 98
SECTION 16.1. NOTICES................................................................................ 98
ARTICLE 17 FURTHER ASSURANCES................................................................................ 99
SECTION 17.1. REPLACEMENT DOCUMENTS.................................................................. 99
SECTION 17.2. RECORDING OF MORTGAGE, ETC............................................................. 99
SECTION 17.3. FURTHER ACTS, ETC...................................................................... 99
SECTION 17.4. CHANGES IN TAX, DEBT, CREDIT AND DOCUMENTARY STAMP LAWS................................ 100
SECTION 17.5. EXPENSES............................................................................... 100
ARTICLE 18 WAIVERS........................................................................................... 101
SECTION 18.1. REMEDIES CUMULATIVE; WAIVERS........................................................... 101
SECTION 18.2. MODIFICATION, WAIVER IN WRITING........................................................ 101
SECTION 18.3. DELAY NOT A WAIVER..................................................................... 102
SECTION 18.4. TRIAL BY JURY.......................................................................... 102
SECTION 18.5. WAIVER OF NOTICE....................................................................... 102
SECTION 18.6. REMEDIES OF BORROWER................................................................... 103
SECTION 18.7. WAIVER OF MARSHALLING OF ASSETS........................................................ 103
SECTION 18.8. WAIVER OF STATUTE OF LIMITATIONS....................................................... 103
SECTION 18.9. WAIVER OF COUNTERCLAIM................................................................. 103
ARTICLE 19 GOVERNING LAW..................................................................................... 103
SECTION 19.1. CHOICE OF LAW.......................................................................... 103
SECTION 19.2. SEVERABILITY........................................................................... 104
SECTION 19.3. PREFERENCES............................................................................ 104
ARTICLE 20 MISCELLANEOUS..................................................................................... 104
SECTION 20.1. SURVIVAL............................................................................... 104
SECTION 20.2. LENDER'S DISCRETION.................................................................... 104
SECTION 20.3. HEADINGS............................................................................... 105
SECTION 20.4. COST OF ENFORCEMENT.................................................................... 105
SECTION 20.5. SCHEDULES INCORPORATED................................................................. 105
SECTION 20.6. OFFSETS, COUNTERCLAIMS AND DEFENSES.................................................... 105
SECTION 20.7. NO JOINT VENTURE OR PARTNERSHIP; NO THIRD PARTY BENEFICIARIES.......................... 105
SECTION 20.8. PUBLICITY.............................................................................. 106
SECTION 20.9. CONFLICT; CONSTRUCTION OF DOCUMENTS; RELIANCE.......................................... 107
SECTION 20.10. ENTIRE AGREEMENT....................................................................... 107
SECTION 20.11. TAX DISCLOSURE......................................................................... 107
- iv -
SECTION 20.12. EXECUTION BY BORROWER PRINCIPAL........................................................ 108
ARTICLE 21 OUT PARCEL RELEASE................................................................................ 108
- v -
LOAN AGREEMENT
THIS LOAN AGREEMENT, dated as of October 17, 2003 (as amended,
restated, replaced, supplemented or otherwise modified from time to time, this
"AGREEMENT"), between BANK OF AMERICA, N.A., having an address at Bank of
America Corporate Center, 214 North Tryon Street, Charlotte, North Carolina
28255 (together with its successors and/or assigns, "LENDER") and MHC GOLF VISTA
ESTATES, L.L.C., a Delaware limited liability company having an address at c/o
Manufactured Home Communities, Inc., Two North Riverside Plaza, Suite 800,
Chicago, Illinois 60606 (together with its successors and/or assigns,
"BORROWER").
RECITALS:
Borrower desires to obtain the Loan (defined below) from Lender.
Lender is willing to make the Loan to Borrower, subject to and in
accordance with the terms of this Agreement and the other Loan Documents
(defined below).
In consideration of the making of the Loan by Lender and the covenants,
agreements, representations and warranties set forth in this Agreement, the
parties hereto hereby covenant, agree, represent and warrant as follows:
ARTICLE 1
DEFINITIONS; PRINCIPLES OF CONSTRUCTION
SECTION 1.1. DEFINITIONS
For all purposes of this Agreement, except as otherwise expressly
required or unless the context clearly indicates a contrary intent:
"ACCEPTABLE ACCOUNTANT" shall mean a "Big Four" accounting firm or
other independent certified public accountant acceptable to Lender.
"ACQUIRED PROPERTY" shall have the meaning set forth in Section
5.11(c)(i)(A) hereof.
"ACQUIRED PROPERTY STATEMENTS" shall have the meaning set forth in
Section 5.11(c)(i)(A) hereof.
"ACT" shall have the meaning set forth in Section 6.1(c) hereof.
"ACT OF TERROR" shall have the meaning set forth in Section 9.8 hereof.
"ADVISORY AGREEMENT" shall have the meaning set forth in Section 13.3
hereof.
"AFFILIATE" shall mean, as to any Person, any other Person that,
directly or indirectly, is in control of, is controlled by or is under common
control with such Person or is a director or officer of such Person or of an
Affiliate of such Person.
"AFFILIATED LOANS" shall mean a loan made by Lender to a parent,
subsidiary or such other entity affiliated with Borrower or Borrower Principal.
"AFFILIATED MANAGER" shall have the meaning set forth in Section 7.1
hereof.
"AFFILIATE TRANSFER PORTION OF THE PROPERTY" shall have the meaning set
forth in Section 7.7 hereof.
"AFFILIATE TRANSFEREE" shall have the meaning set forth in Section 7.7
hereof.
"ALTA" shall mean American Land Title Association, or any successor
thereto.
"ALTERATION THRESHOLD" means five percent (5%) of the original
principal amount of the Loan.
"ANNEX" shall have the meaning set forth in Section 4.40 hereof.
"ASSIGNMENT OF MANAGEMENT AGREEMENT" shall mean that certain Assignment
and Subordination of Management Agreement dated the date hereof among Lender,
Borrower and Manager, as the same may be amended, restated, replaced,
supplemented or otherwise modified from time to time.
"AWARD" shall mean any compensation paid by any Governmental Authority
in connection with a Condemnation in respect of all or any part of the Property.
"BORROWER ACCOUNT" shall have the meaning set forth on Schedule 3
attached hereto.
"BORROWER PRINCIPAL" shall mean Manufactured Home Communities, Inc., a
Maryland corporation.
"BORROWER PRINCIPAL AFFILIATE" shall mean an entity Controlled by
Borrower Principal and in which Borrower Principal owns directly or indirectly,
at least a 51% interest.
"BUSINESS DAY" shall mean a day on which Lender is open for the conduct
of substantially all of its banking business at its office in the city in which
the Note is payable (excluding Saturdays and Sundays).
"CASH MANAGEMENT ACCOUNT" shall have the meaning set forth in Section
10.1(a) hereof.
"CASH MANAGEMENT PERIOD" shall mean the existence and continuance of an
Event of Default.
"CASUALTY" shall have the meaning set forth in Section 8.2.
"CLOSING DATE" shall mean the date of the funding of the Loan.
"CONSTANT MONTHLY PAYMENT AMOUNT" shall mean the monthly payment of
interest and principal due on each Scheduled Payment Date as set forth in
Section 2.2(b) hereof.
- 2 -
"CONTROL" shall have the meaning set forth in Section 7.1 hereof.
"CONDEMNATION" shall mean a temporary or permanent taking by any
Governmental Authority as the result, in lieu or in anticipation, of the
exercise of the right of condemnation or eminent domain, of all or any part of
the Property, or any interest therein or right accruing thereto, including any
right of access thereto or any change of grade affecting the Property or any
part thereof.
"CONDEMNATION PROCEEDS" shall have the meaning set forth in Section
8.4(b).
"CREDITORS RIGHTS LAWS" shall mean with respect to any Person any
existing or future law of any jurisdiction, domestic or foreign, relating to
bankruptcy, insolvency, reorganization, conservatorship, arrangement,
adjustment, winding-up, liquidation, dissolution, composition or other relief
with respect to its debts or debtors.
"DEBT" shall mean the outstanding principal amount set forth in, and
evidenced by, this Agreement and the Note together with all interest accrued and
unpaid thereon and all other sums due to Lender in respect of the Loan under the
Note, this Agreement, the Mortgage or any other Loan Document.
"DEBT SERVICE" shall mean, with respect to any particular period of
time, scheduled principal and/or interest payments under the Note.
"DEBT SERVICE COVERAGE RATIO" shall mean, as of any date of
determination, for the applicable period of calculation, the ratio, as
determined by Lender, of (i) Net Operating Income to (ii) the aggregate amount
of Debt Service which would be due for the same period. The Debt Service
Coverage Ratio shall be determined by Lender at the end of each calendar quarter
throughout the term of the Loan.
"DEFEASED NOTE" shall have the meaning set forth in Section
2.4(c)(i)(D) hereof.
"DEFAULT" shall mean the occurrence of any event hereunder or under any
other Loan Document which, but for the giving of notice or passage of time, or
both, would be an Event of Default.
"DEFAULT RATE" shall mean, with respect to the Loan, a rate per annum
equal to the lesser of (a) the maximum rate permitted by applicable law, or (b)
four percent (4%) above the Note Rate.
"DEFEASANCE COLLATERAL" shall have the meaning set forth in Section
2.4(b)(i)(D)(2) hereof.
"DEFEASANCE SECURITY AGREEMENT" shall have the meaning set forth in
Section 2.4(b)(i)(D)(2) hereof.
"DISCLOSURE DOCUMENT" shall have the meaning set forth in Section 13.5
hereof.
- 3 -
"ELIGIBLE ACCOUNT" shall mean a separate and identifiable account from
all other funds held by the holding institution that is either (a) an account or
accounts maintained with a federal or state chartered depository institution or
trust company which complies with the definition of Eligible Institution or (b)
a segregated trust account or accounts maintained with a federal or state
chartered depository institution or trust company acting in its fiduciary
capacity which, in the case of a state chartered depository institution or trust
company, is subject to regulations substantially similar to 12 C.F.R.
Section 9.10(b), having in either case a combined capital and surplus of at
least $50,000,000 and subject to supervision or examination by federal and state
authority. An Eligible Account will not be evidenced by a certificate of
deposit, passbook or other instrument.
"ELIGIBLE INSTITUTION" shall mean either (i) the entity set forth on
Schedule 1, attached hereto or (ii) a depository institution or trust company
insured by the Federal Deposit Insurance Corporation, the short term unsecured
debt obligations or commercial paper of which are rated at least "A-1+" by S&P,
"P-1" by Moody's and "F-1+" by Fitch in the case of accounts in which funds are
held for thirty (30) days or less (or, in the case of accounts in which funds
are held for more than thirty (30) days, the long term unsecured debt
obligations of which are rated at least "AA" by Fitch and S&P and "Aa2" by
Moody's).
"EMBARGOED PERSON" shall the meaning set forth in Section 4.39.
"ENVIRONMENTAL INDEMNITY" shall mean, in the event such indemnity was
executed in connection with the closing of the Loan, an Environmental Indemnity
Agreement, dated as of the date hereof, executed by Borrower and Borrower
Principal in connection with the Loan for the benefit of Lender, as the same may
be amended, restated, replaced, supplemented or otherwise modified from time to
time.
"ENVIRONMENTAL LAW" shall have the meaning set forth in Section 12.5
hereof.
"ENVIRONMENTAL LIENS" shall have the meaning set forth in Section 12.5
hereof.
"ENVIRONMENTAL PROBLEM" shall have the meaning set forth in Section
12.6 hereof.
"ENVIRONMENTAL REPORT" shall have the meaning set forth in Section 12.5
hereof.
"ERISA" shall mean the Employee Retirement Income Security Act of 1974,
as amended from time to time and any successor statutes thereto and applicable
regulations issued pursuant thereto in temporary or final form.
"EVENT OF DEFAULT" shall have the meaning set forth in Section 11.1
hereof.
"EXCHANGE ACT" shall mean the Securities and Exchange Act of 1934, as
amended.
"EXCHANGE ACT FILING" shall have the meaning set forth in Section
5.11(c) hereof.
"EXCESS CASH RESERVE ACCOUNT" shall have the meaning set forth in
Section 9.7 hereof.
"EXCESS CASH RESERVE FUNDS" shall have the meaning set forth in Section
9.7 hereof.
- 4 -
"FITCH" shall mean Fitch, Inc.
"GAAP" shall mean generally accepted accounting principles in the
United States of America as of the date of the applicable financial report.
"GOLF COURSE OPERATION" shall have the meaning set forth in Section
5.23 hereof.
"GOVERNMENTAL AUTHORITY" shall mean any court, board, agency,
department, commission, office or other authority of any nature whatsoever for
any governmental unit (federal, state, county, municipal, city, town, special
district or otherwise) whether now or hereafter in existence.
"HAZARDOUS MATERIALS" shall have the meaning set forth in Section 12.5
hereof.
"IMPROVEMENTS" shall have the meaning set forth in the granting clause
of the Mortgage.
"INDEMNIFIED PARTIES" shall mean (a) Lender, (b) any prior owner or
holder of the Loan or Participations in the Loan, (c) any servicer or prior
servicer of the Loan, (d) any Investor or any prior Investor in any Securities,
(e) any trustees, custodians or other fiduciaries who hold or who have held a
full or partial interest in the Loan for the benefit of any Investor or other
third party, (f) any receiver or other fiduciary appointed in a foreclosure or
other Creditors Rights Laws proceeding, (g) any officers, directors,
shareholders, partners, members, employees, agents, servants, representatives,
contractors, subcontractors, affiliates or subsidiaries of any and all of the
foregoing, and (h) the heirs, legal representatives, successors and assigns of
any and all of the foregoing (including, without limitation, any successors by
merger, consolidation or acquisition of all or a substantial portion of the
Indemnified Parties' assets and business), in all cases whether during the term
of the Loan or as part of or following a foreclosure of the Mortgage.
"INDEPENDENT DIRECTOR" shall have the meaning set forth in Section
6.4(a).
"INSOLVENCY OPINION" shall mean a bankruptcy non-consolidation opinion,
which such opinion shall be provided by outside counsel acceptable to Lender
and, if the Loan has been securitized, the Rating Agencies and shall otherwise
be in form, scope and substance acceptable to Lender and, if the Loan has been
securitized, the Rating Agencies.
"INSURANCE CERTIFICATES" shall have the meaning set forth in Section
8.1 hereof.
"INSURANCE PREMIUMS" shall have the meaning set forth in Section 8.1(b)
hereof.
"INSURANCE PROCEEDS" shall have the meaning set forth in Section 8.4(b)
hereof.
"INTEREST SHORTFALL" shall have the meaning set forth in Section 2.4(h)
hereof.
"INTERNAL REVENUE CODE" shall mean the Internal Revenue Code of 1986,
as amended, as it may be further amended from time to time, and any successor
statutes thereto, and applicable U.S. Department of Treasury regulations issued
pursuant thereto in temporary or final form.
- 5 -
"INVESTOR" shall have the meaning set forth in Section 13.3 hereof.
"I/O MONTHLY PAYMENT AMOUNT" shall have the meaning set forth in
Section 2.2(b) hereof.
"ISSUER GROUP" shall have the meaning set forth in Section 13.5(b)
hereof.
"ISSUER PERSON" shall have the meaning set forth in Section 13.5(b)
hereof.
"LAUNDRY LEASE" shall have the meaning set forth in Section 4.25
hereof.
"LEASE" shall have the meaning set forth in the Mortgage.
"LEGAL REQUIREMENTS" shall mean all statutes, laws, rules, orders,
regulations, ordinances, judgments, decrees and injunctions of Governmental
Authorities affecting the Property or any part thereof, or the construction,
use, alteration or operation thereof, whether now or hereafter enacted and in
force, and all permits, licenses, authorizations and regulations relating
thereto, and all covenants, agreements, restrictions and encumbrances contained
in any instruments, either of record or known to Borrower, at any time in force
affecting the Property or any part thereof, including, without limitation, any
which may (a) require repairs, modifications or alterations in or to the
Property or any part thereof, or (b) in any way limit the use and enjoyment
thereof.
"LIEN" shall mean any mortgage, deed of trust, lien, pledge,
hypothecation, assignment, security interest, or any other encumbrance, charge
or transfer of, on or affecting Borrower, the Property, any portion thereof or
any interest therein, including, without limitation, any conditional sale or
other title retention agreement, any financing lease having substantially the
same economic effect as any of the foregoing, the filing of any financing
statement, and mechanic's, materialmen's and other similar liens and
encumbrances.
"LLC AGREEMENT" shall have the meaning set forth in Section 6.1(c).
"LOAN" shall mean the loan made by Lender to Borrower pursuant to this
Agreement.
"LOAN DOCUMENTS" shall mean, collectively, this Agreement, the Note,
the Mortgage, the Environmental Indemnity, (if applicable) the Assignment of
Management Agreement, the Lockbox Agreement, and any and all other documents,
agreements and certificates executed and/or delivered in connection with the
Loan, as the same may be amended, restated, replaced, supplemented or otherwise
modified from time to time.
"LOCKBOX ACCOUNT" shall mean an Eligible Account established pursuant
to the Lockbox Agreement for deposit of all Rents and other receipts from the
Property.
"LOCKBOX AGREEMENT" shall mean that certain lockbox account, deposit
account or restricted account agreement among Borrower, Lender and Lockbox Bank
providing for, among other things, control of the Lockbox Account.
"LOCKBOX BANK" shall have the meaning set forth on Schedule 1, attached
hereto.
- 6 -
"LOCKOUT PERIOD" shall mean the period commencing on the date hereof
and ending on the date which is three (3) months prior to the Maturity Date.
"LOSSES" shall mean any and all claims, suits, liabilities (including,
without limitation, strict liabilities), actions, proceedings, obligations,
debts, damages, losses, costs, expenses, fines, penalties, charges, fees,
judgments, awards, amounts paid in settlement of whatever kind or nature
(including but not limited to reasonable legal fees and other costs of defense).
"MAJOR LEASE" shall mean as to the Property (i) any Lease (other than a
mobile home or recreational vehicle pad lease) which, individually or when
aggregated with all other leases at the Property with the same Tenant or its
Affiliate, either (A) accounts for five percent (5%) or more of the Property's
aggregate Net Operating Income, or (B) demises 5,000 square feet or more of the
Property's gross leasable area, (ii) any Lease which provides the Tenant
thereunder any option, offer, right of first refusal or other similar
entitlement to acquire all or any portion of the Property except to the extent
rights of first refusal are provided to (A) Tenants occupying the Property under
pad leases or (B) a homeowner's association, each solely as a result of
applicable Legal Requirements, (iii) any Operating Lease or commercial Lease or
(iv) any instrument guaranteeing or providing credit support for any Lease
meeting the requirements of (i), (ii) or (iii) above.
"MANAGEMENT AGREEMENT" shall mean the management agreement entered into
by and between Borrower and Manager, pursuant to which Manager is to provide
management and other services with respect to the Property, as the same may be
amended, restated, replaced, supplemented or otherwise modified in accordance
with the terms of this Agreement.
"MANAGER" shall mean (i) MHCOP, (ii) MHC, (iii) any entity under the
Control of either MHCOP or MHC or (iv) such other entity selected as the manager
of the Property in accordance with the terms of this Agreement.
"MATURITY DATE" shall have the meaning set forth on Schedule 1,
attached hereto.
"MAXIMUM LEGAL RATE" shall mean the maximum nonusurious interest rate,
if any, that at any time or from time to time may be contracted for, taken,
reserved, charged or received on the indebtedness evidenced by the Note and as
provided for herein or the other Loan Documents, under the laws of such state or
states whose laws are held by any court of competent jurisdiction to govern the
interest rate provisions of the Loan.
"MEMBER" shall have the meaning set forth in Section 6.1(c) hereof.
"MHC" shall mean Manufactured Home Communities, Inc., a Maryland
corporation.
"MHCOP" shall mean MHC Operating Limited Partnership, an Illinois
limited partnership.
"MHC SUBSIDIARY" shall have the meaning set forth in Section 7.3
hereof.
"MONTHLY PAYMENT AMOUNT" shall having the meaning set forth in Section
2.2(b) hereof.
- 7 -
"MOODY'S" shall mean Moody's Investors Service, Inc.
"MORTGAGE" shall mean that certain first priority mortgage/deed of
trust/deed to secure debt and security agreement dated the date hereof, executed
and delivered by Borrower as security for the Loan and encumbering the Property,
as the same may be amended, restated, replaced, supplemented or otherwise
modified from time to time.
"NET OPERATING INCOME" shall mean, with respect to any period of time,
the amount obtained by subtracting Operating Expenses from Operating Income.
"NET PROCEEDS" shall have the meaning set forth in Section 8.4(b)
hereof.
"NET PROCEEDS DEFICIENCY" shall have the meaning set forth in Section
8.4(b)(vi) hereof.
"NOTE" shall mean that certain promissory note of even date herewith in
the principal amount set forth on Schedule 1, attached hereto, made by Borrower
in favor of Lender, as the same may be amended, restated, replaced, supplemented
or otherwise modified from time to time.
"NOTE RATE" shall have the meaning set forth on Schedule 1, attached
hereto.
"OFFERING DOCUMENT Date" shall have the meaning set forth in Section
5.11(c)(i)(D) hereof.
"OPERATING EXPENSES" shall mean, with respect to any period of time,
the total of all expenses actually paid or payable, computed in accordance with
GAAP, of whatever kind relating to the operation, maintenance and management of
the Property, including without limitation, utilities, ordinary repairs and
maintenance, Insurance Premiums, license fees, Taxes and Other Charges,
advertising expenses, payroll and related taxes, computer processing charges,
management fees equal to the greater of 4% of the Operating Income and the
management fees actually paid under the Management Agreement, operational
equipment or other lease payments, normalized capital expenditures equal to $50
per pad per annum, but specifically excluding depreciation and amortization,
income taxes, Debt Service, any incentive fees due under the Management
Agreement, any item of expense that in accordance with GAAP should be
capitalized, any item of expense that would otherwise be covered by the
provisions hereof but which is paid by any Tenant under such Tenant's Lease or
other agreement directly to a third party other than Borrower, and deposits into
the Reserve Accounts.
"OPERATING INCOME" shall mean, with respect to any period of time, all
income, computed in accordance with GAAP, derived from the ownership and
operation of the Property from whatever source, including, but not limited to,
Rents (including percentage rents), utility charges, escalations, forfeited
security deposits, interest on credit accounts, service fees or charges, license
fees, parking fees, rent concessions or credits, and other required
pass-throughs but excluding sales, use and occupancy or other taxes on receipts
required to be accounted for by Borrower to any Governmental Authority, refunds
and uncollectible accounts, sales of furniture, fixtures and equipment, interest
income from any source other than the escrow accounts, Reserve Accounts or other
accounts required pursuant to the Loan Documents, Insurance Proceeds (other than
business interruption or other loss of income insurance), Awards, unforfeited
security
- 8 -
deposits, utility and other similar deposits, income from Tenants (under Major
Leases) not paying rent, income from tenants (under Major Leases) in bankruptcy,
non-recurring or extraordinary income, including, without limitation lease
termination payments, and any disbursements to Borrower from the Reserve Funds.
"OPERATING LEASE" shall have the meaning set forth on Schedule 1,
attached hereto.
"ORIGINAL BORROWER" shall mean the entity that was Borrower under the
Loan as of the Closing Date.
"OTHER CHARGES" shall mean all ground rents, maintenance charges,
impositions other than Taxes, and any other charges, including, without
limitation, vault charges and license fees for the use of vaults, chutes and
similar areas adjoining the Property, now or hereafter levied or assessed or
imposed against the Property or any part thereof.
"OUT PARCEL" shall have the meaning set forth in Section 21.1 hereof.
"PARTICIPATIONS" shall have the meaning set forth in Section 13.1
hereof.
"PATRIOT ACT" shall have the meaning set forth in Section 4.40 hereof.
"PERMITTED ENCUMBRANCES" shall mean collectively, (a) the Lien and
security interests created by the Loan Documents, (b) all Liens, encumbrances
and other matters disclosed in the Title Insurance Policy, (c) Liens, if any,
for Taxes imposed by any Governmental Authority not yet due or delinquent, (d)
such other title and survey exceptions as Lender has approved or may approve in
writing in Lender's reasonable discretion and (e) utility easements and other
easements granted by Borrower in accordance with the terms and conditions set
forth herein.
"PERMITTED INVESTMENTS" shall mean to the extent available from Lender
or Lender's servicer for deposits in the Reserve Accounts and the Lockbox
Account, any one or more of the following obligations or securities acquired at
a purchase price of not greater than par, including those issued by a servicer
of the Loan, the trustee under any securitization or any of their respective
Affiliates, payable on demand or having a maturity date not later than the
Business Day immediately prior to the date on which the funds used to acquire
such investment are required to be used under this Agreement and meeting one of
the appropriate standards set forth below:
(a) obligations of, or obligations fully guaranteed as to payment
of principal and interest by, the United States or any agency or instrumentality
thereof provided such obligations are backed by the full faith and credit of the
United States of America including, without limitation, obligations of: the U.S.
Treasury (all direct or fully guaranteed obligations), the Farmers Home
Administration (certificates of beneficial ownership), the General Services
Administration (participation certificates), the U.S. Maritime Administration
(guaranteed Title XI financing), the Small Business Administration (guaranteed
participation certificates and guaranteed pool certificates), the U.S.
Department of Housing and Urban Development (local authority bonds) and the
Washington Metropolitan Area Transit Authority (guaranteed transit bonds);
provided, however, that the investments described in this clause must (i) have a
predetermined fixed dollar of principal due at maturity that cannot vary or
change, (ii) be rated
- 9 -
"AAA" or the equivalent by each of the Rating Agencies, (iii) if rated by S&P,
must not have an "r" highlighter affixed to their rating, (iv) if such
investments have a variable rate of interest, such interest rate must be tied to
a single interest rate index plus a fixed spread (if any) and must move
proportionately with that index, and (v) such investments must not be subject to
liquidation prior to their maturity;
(b) Federal Housing Administration debentures;
(c) obligations of the following United States government
sponsored agencies: Federal Home Loan Mortgage Corp. (debt obligations), the
Farm Credit System (consolidated systemwide bonds and notes), the Federal Home
Loan Banks (consolidated debt obligations), the Federal National Mortgage
Association (debt obligations), the Financing Corp. (debt obligations), and the
Resolution Funding Corp. (debt obligations); provided, however, that the
investments described in this clause must (i) have a predetermined fixed dollar
of principal due at maturity that cannot vary or change, (ii) if rated by S&P,
must not have an "r" highlighter affixed to their rating, (iii) if such
investments have a variable rate of interest, such interest rate must be tied to
a single interest rate index plus a fixed spread (if any) and must move
proportionately with that index, and (iv) such investments must not be subject
to liquidation prior to their maturity;
(d) federal funds, unsecured certificates of deposit, time
deposits, bankers' acceptances and repurchase agreements with maturities of not
more than 365 days of any bank, the short term obligations of which at all times
are rated in the highest short term rating category by each Rating Agency (or,
if not rated by all Rating Agencies, rated by at least one Rating Agency in the
highest short term rating category and otherwise acceptable to each other Rating
Agency, as confirmed in writing that such investment would not, in and of
itself, result in a downgrade, qualification or withdrawal of the initial, or,
if higher, then current ratings assigned to the Securities); provided, however,
that the investments described in this clause must (i) have a predetermined
fixed dollar of principal due at maturity that cannot vary or change, (ii) if
rated by S&P, must not have an "r" highlighter affixed to their rating, (iii) if
such investments have a variable rate of interest, such interest rate must be
tied to a single interest rate index plus a fixed spread (if any) and must move
proportionately with that index, and (iv) such investments must not be subject
to liquidation prior to their maturity;
(e) fully Federal Deposit Insurance Corporation-insured demand and
time deposits in, or certificates of deposit of, or bankers' acceptances with
maturities of not more than 365 days and issued by, any bank or trust company,
savings and loan association or savings bank, the short term obligations of
which at all times are rated in the highest short term rating category by each
Rating Agency (or, if not rated by all Rating Agencies, rated by at least one
Rating Agency in the highest short term rating category and otherwise acceptable
to each other Rating Agency, as confirmed in writing that such investment would
not, in and of itself, result in a downgrade, qualification or withdrawal of the
initial, or, if higher, then current ratings assigned to the Securities);
provided, however, that the investments described in this clause must (i) have a
predetermined fixed dollar of principal due at maturity that cannot vary or
change, (ii) if rated by S&P, must not have an "r" highlighter affixed to their
rating, (iii) if such investments have a variable rate of interest, such
interest rate must be tied to a single interest rate index plus a fixed
- 10 -
spread (if any) and must move proportionately with that index, and (iv) such
investments must not be subject to liquidation prior to their maturity;
(f) debt obligations with maturities of not more than 365 days and
at all times rated by each Rating Agency (or, if not rated by all Rating
Agencies, rated by at least one Rating Agency and otherwise acceptable to each
other Rating Agency, as confirmed in writing that such investment would not, in
and of itself, result in a downgrade, qualification or withdrawal of the
initial, or, if higher, then current ratings assigned to the Securities) in its
highest long-term unsecured rating category; provided, however, that the
investments described in this clause must (i) have a predetermined fixed dollar
of principal due at maturity that cannot vary or change, (ii) if rated by S&P,
must not have an "r" highlighter affixed to their rating, (iii) if such
investments have a variable rate of interest, such interest rate must be tied to
a single interest rate index plus a fixed spread (if any) and must move
proportionately with that index, and (iv) such investments must not be subject
to liquidation prior to their maturity;
(g) commercial paper (including both non-interest-bearing discount
obligations and interest-bearing obligations payable on demand or on a specified
date not more than one year after the date of issuance thereof) with maturities
of not more than 365 days and that at all times is rated by each Rating Agency
(or, if not rated by all Rating Agencies, rated by at least one Rating Agency
and otherwise acceptable to each other Rating Agency, as confirmed in writing
that such investment would not, in and of itself, result in a downgrade,
qualification or withdrawal of the initial, or, if higher, then current ratings
assigned to the Securities) in its highest short-term unsecured debt rating;
provided, however, that the investments described in this clause must (i) have a
predetermined fixed dollar of principal due at maturity that cannot vary or
change, (ii) if rated by S&P, must not have an "r" highlighter affixed to their
rating, (iii) if such investments have a variable rate of interest, such
interest rate must be tied to a single interest rate index plus a fixed spread
(if any) and must move proportionately with that index, and (iv) such
investments must not be subject to liquidation prior to their maturity;
(h) units of taxable money market funds or mutual funds, with
maturities of not more than 365 days and which funds are regulated investment
companies, seek to maintain a constant net asset value per share and invest
solely in obligations backed by the full faith and credit of the United States,
which funds have the highest rating available from each Rating Agency (or, if
not rated by all Rating Agencies, rated by at least one Rating Agency and
otherwise acceptable to each other Rating Agency, as confirmed in writing that
such investment would not, in and of itself, result in a downgrade,
qualification or withdrawal of the initial, or, if higher, then current ratings
assigned to the Securities) for money market funds or mutual funds; and
(i) any other security, obligation or investment which has been
approved as a Permitted Investment in writing by (i) Lender and (ii) each Rating
Agency, as evidenced by a written confirmation that the designation of such
security, obligation or investment as a Permitted Investment will not, in and of
itself, result in a downgrade, qualification or withdrawal of the initial, or,
if higher, then current ratings assigned to the Securities by such Rating
Agency;
provided, however, that no obligation or security shall be a Permitted
Investment if (A) such obligation or security evidences a right to receive only
interest payments, (B) the right to receive principal and interest payments on
such obligation or security are derived from an
- 11 -
underlying investment that provides a yield to maturity in excess of one hundred
twenty percent (120%) of the yield to maturity at par of such underlying
investment or (C) such obligation or security has a remaining term to maturity
in excess of one (1) year.
"PERSON" shall mean any individual, corporation, partnership, joint
venture, limited liability company, 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.
"PERSONAL PROPERTY" shall have the meaning set forth in the granting
clause of the Mortgage.
"PHYSICAL CONDITIONS REPORT" shall mean a report prepared by a company
satisfactory to Lender regarding the physical condition of the Property,
satisfactory in form and substance to Lender in its sole discretion.
"POLICIES" shall have the meaning set forth in Section 8.1 hereof.
"PROHIBITED TRANSFER" shall have the meaning set forth in Section 7.2
hereof.
"PROPERTY" shall mean the parcel of real property, the Improvements
thereon and all Personal Property owned by Borrower and encumbered by the
Mortgage, together with all rights pertaining to such property and Improvements,
as more particularly described in the granting clause of the Mortgage and
referred to therein as the "Property".
"PROVIDED INFORMATION" shall have the meaning set forth in Section
13.4(a) hereof.
"QUALIFIED MANAGER" shall mean Manager or a reputable and experienced
professional management organization (a) which manages, together with its
affiliates, mobile home communities, exclusive of the Property containing, in
the aggregate, at least one thousand five hundred (1,500) mobile home pads and/
or recreational vehicle pads or (b) (i) approved by Lender, which approval shall
not have been unreasonably withheld and (ii) for which Lender shall have
received written confirmation from the Rating Agencies that the employment of
such manager will not result in a downgrade, withdrawal or qualification of the
initial, or if higher, then current ratings issued in connection with a
Securitization, or if a Securitization has not occurred, any ratings to be
assigned in connection with a Securitization. In the event Manager is an
Affiliated Manager, Borrower shall deliver to Lender a revised substantive
non-consolidation opinion if one was delivered in connection with the closing of
the Loan.
"RATING AGENCIES" shall mean each of S&P, Moody's and Fitch, or any
other nationally-recognized statistical rating agency which has been approved by
Lender.
"REA" shall mean any construction, operation and reciprocal easement
agreement or similar agreement (including any separate agreement or other
agreement between Borrower and one or more other parties to an REA with respect
to such REA) affecting the Property or portion thereof.
"RELEASE" shall have the meaning set forth in Section 12.5 hereof.
- 12 -
"REMIC PROHIBITION PERIOD" shall have the meaning set forth in Section
2.4(b)(iv) hereof.
"REMIC TRUST" shall mean a "real estate mortgage investment conduit"
(within the meaning of Section 860D, or applicable successor provisions, of the
Code) that holds the Note.
"RENT ROLL" shall have the meaning set forth in Section 4.24 hereof.
"RENTS" shall have the meaning set forth in the Mortgage.
"RENT DIRECTION LETTER" shall have the meaning set forth in Section
10.2(a) hereof.
"REPLACEMENT RESERVE ACCOUNT" shall have the meaning set forth in
Section 9.2(b) hereof.
"REPLACEMENT RESERVE FUNDS" shall have the meaning set forth in Section
9.2(b) hereof.
"REPLACEMENT RESERVE MONTHLY DEPOSIT" shall have the meaning set forth
in Section 9.2(b) hereof.
"REPLACEMENT RESERVE PERIOD" shall mean the period commencing on the
earlier of the following to occur: (i) the date upon which the Debt Service
Coverage Ratio for the Property, as reasonably determined by Lender, for the
immediately preceding twelve (12) month period is less than 1.15 to 1.00, and
ending on the date the Debt Service Coverage Ratio equals or exceeds 1.15 to
1.00 for the immediately preceding twelve (12) month period or (ii) the
existence and continuance of an Event of Default.
"REPLACEMENTS" shall have the meaning set forth in Section 9.2(a)
hereof.
"REQUIRED REPAIRS" shall have the meaning set forth in Section 9.1(a)
hereof.
"REQUIRED WORK" shall have the meaning set forth in Section 9.4 hereof.
"RESERVE ACCOUNTS" shall mean the Tax and Insurance Reserve Account,
the Replacement Reserve Account, the Excess Cash Reserve Account, the Terrorism
Reserve Account, if applicable, or any other escrow account established by the
Loan Documents.
"RESERVE FUNDS" shall mean the Tax and Insurance Reserve Funds, the
Replacement Reserve Funds, the Excess Cash Reserve Funds, the Terrorism Reserve
Funds, if applicable, or any other escrow funds established by the Loan
Documents.
"RESTORATION" shall mean, following the occurrence of a Casualty or a
Condemnation which is of a type necessitating the repair of the Property, the
completion of the repair and restoration of the Property as nearly as possible
to the condition the Property was in immediately prior to such Casualty or
Condemnation, with such alterations as may be reasonably approved by Lender.
"RESTORATION CONSULTANT" shall have the meaning set forth in Section
8.4(b)(iii) hereof.
- 13 -
"RESTORATION RETAINAGE" shall have the meaning set forth in Section
8.4(b)(iv) hereof.
"RESTRICTED PARTY" shall have the meaning set forth in Section 7.1
hereof.
"SALE OR PLEDGE" shall have the meaning set forth in Section 7.1
hereof.
"SCHEDULED PAYMENT DATE" shall have the meaning set forth in Section
2.2(b) hereof.
"SECURITIES" shall have the meaning set forth in Section 13.1 hereof.
"SECURITIES ACT" shall mean the Securities Act of 1933, as amended.
"SECURITIES LIABILITIES" shall have the meaning set forth in Section
13.5 hereof.
"SECURITIZATION" shall have the meaning set forth in Section 13.1
hereof.
"SPECIAL MEMBER" shall have the meaning set forth in Section 6.1(c).
"SPE COMPONENT ENTITY" shall have the meaning set forth in Section
6.1(b) hereof.
"STANDARD STATEMENTS" shall have the meaning set forth in Section
5.11(c)(i)(A) hereof.
"SUBSTITUTION/DEFEASANCE LOCKOUT PERIOD" shall have the meaning set
forth in Schedule 1, attached hereto.
"S&P" shall mean Standard & Poor's Ratings Services, a division of The
McGraw-Hill Companies, Inc.
"STATE" shall mean the state in which the Property or any part thereof
is located.
"SUCCESSOR BORROWER" shall have the meaning set forth in Section
2.4(b)(iii) hereof.
"TAX AND INSURANCE RESERVE FUNDS" shall have the meaning set forth in
Section 9.6 hereof. "TAX AND INSURANCE RESERVE ACCOUNT" shall have the
meaning set forth in Section 9.6 hereof.
"TAX AND INSURANCE RESERVE PERIOD" shall mean the earlier of the
following to occur (i) the period commencing on the date upon which the Debt
Service Coverage Ratio for the Property as determined by Lender, for the
immediately preceding twelve (12) month period is less than 1.15 to 1.00, and
ending on the date the Debt Service Coverage Ratio for the immediately preceding
twelve (12) month period equals or exceeds 1.15 to 1.00, (ii) the period during
the existence and continuance of an Event of Default or (iii) the period
commencing upon Borrower's failure to deliver to Lender evidence of payment of
(A) all Taxes and Other Charges in accordance with Section 5.4 hereof or (B) all
Insurance Premiums in accordance with Section 8.1 hereof, which evidence shall
be reasonably satisfactory to Lender in all respects, and ending upon delivery
of such evidence to Lender.
- 14 -
"TAXES" shall mean all real estate and personal property taxes,
assessments, water rates or sewer rents, now or hereafter levied or assessed or
imposed against the Property or part thereof.
"TENANT" shall mean any Person leasing, subleasing or otherwise
occupying any portion of the Property under a Lease or other occupancy agreement
with Borrower.
"TERMINATION FEE DEPOSIT" shall have the meaning set forth in Section
9.3(b).
"TERRORISM RESERVE ACCOUNT" shall have the meaning set forth in Section
9.8 hereof.
"TERRORISM RESERVE FUNDS" shall have the meaning set forth in Section
9.8 hereof.
"TITLE INSURANCE POLICY" shall mean that certain ALTA mortgagee title
insurance policy issued with respect to the Property and insuring the lien of
the Mortgage.
"TRANSFEREE" shall have the meaning set forth in Section 7.5 hereof.
"TRIBUNAL" shall mean any state, commonwealth, federal, foreign,
territorial or other court or governmental department, commission, board,
bureau, district, authority, agency, central bank, or instrumentality, or any
arbitration authority.
"UCC" or "UNIFORM COMMERCIAL CODE" shall mean the Uniform Commercial
Code as in effect in the State where the applicable Property is located.
SECTION 1.2. PRINCIPLES OF CONSTRUCTION.
All references to sections and schedules are to sections and schedules
in or to this Agreement unless otherwise specified. All uses of the word
"including" shall mean "including, without limitation" unless the context shall
indicate otherwise. Unless otherwise specified, the words "hereof," "herein" and
"hereunder" and words of similar import when used in this Agreement shall refer
to this Agreement as a whole and not to any particular provision of this
Agreement. Unless otherwise specified, all meanings attributed to defined terms
herein shall be equally applicable to both the singular and plural forms of the
terms so defined.
ARTICLE 2
GENERAL TERMS
SECTION 2.1. LOAN COMMITMENT; DISBURSEMENT TO BORROWER
(a) Subject to and upon the terms and conditions set forth herein,
Lender hereby agrees to make and Borrower hereby agrees to accept the Loan on
the Closing Date.
(b) Borrower may request and receive only one borrowing in respect
of the Loan and any amount borrowed and repaid in respect of the Loan may not be
reborrowed.
(c) The Loan shall be evidenced by the Note and secured by the
Mortgage and the other Loan Documents.
- 15 -
(d) Borrower shall use the proceeds of the Loan to (i) pay certain
costs in connection with the financing of the Property, (ii) make deposits into
the Reserve Funds on the Closing Date in the amounts provided herein, (iii) pay
costs and expenses incurred in connection with the closing of the Loan, as
approved by Lender, (iv) fund any working capital requirements of the Property,
and (v) distribute the balance, if any, to its partners or members, as
applicable.
SECTION 2.2. LOAN PAYMENTS
(a) The Loan shall bear interest at a fixed rate per annum equal
to the Note Rate. Interest shall be computed based on the daily rate produced
assuming a three hundred sixty (360) day year, multiplied by the actual number
of days elapsed. Except as otherwise set forth in this Agreement, interest shall
be paid in arrears.
(b) Borrower hereby agrees to pay sums due under the Note as
follows: An initial payment of is due on the Closing Date for interest from the
Closing Date through and including October 31, 2003. Thereafter, except as may
be adjusted in accordance with the last sentence of Section 2.2(c), (1)
consecutive monthly installments of interest only in an amount calculated in
accordance with Section 2.2(a) above (such amount, the "I/O Monthly Payment
Amount") shall be payable on the first day of each month beginning December 1,
2003 (each such date through and including the Maturity Date, a "Scheduled
Payment Date") through and including the Scheduled Payment Date occurring in
November, 2004 and (2) thereafter, consecutive monthly installments of principal
and interest in an amount equal to the sum set forth on Schedule 1, attached
hereto, shall be payable pursuant to the terms of Section 2.2(d) (the "Constant
Monthly Payment Amount"; the I/O Monthly Payment Amount and the Constant Monthly
Payment Amount shall hereinafter be collectively referred to as the "Monthly
Payment Amount") on each Scheduled Payment Date until the entire indebtedness
evidenced hereby is fully paid, except that any remaining indebtedness, if not
sooner paid, shall be due and payable on the Maturity Date.
(c) The Constant Monthly Payment Amount shall mean the amount of
interest and principal which would be due in order to fully amortize the
principal amount of the Loan over an amortization term of thirty (30) years
assuming an annual interest rate equal to the Note Rate, computed on the basis
of a three hundred sixty (360) day year consisting of twelve (12) months of
thirty (30) days each. Borrower expressly understands and agrees that such
computation of interest based on a three hundred sixty (360) day year consisting
of twelve (12) months of thirty (30) days each is solely for the purpose of
determining the Monthly Payment Amount, and, notwithstanding such computation,
interest shall accrue on the outstanding principal amount of the Loan as
provided in Section 2.2(a) above. Borrower understands and acknowledges that
such interest accrual requirement results in more interest accruing on the Loan
than if either a thirty (30) day month and a three hundred sixty (360) day year
or the actual number of days and a three hundred sixty-five (365) day year were
used to compute the accrual of interest on the Loan. Borrower recognizes that
such interest accrual requirement will not fully amortize the Loan within the
amortization period set forth above. Following any partial prepayment occurring
solely as a result of the application of Insurance Proceeds or Awards pursuant
to the terms of this Agreement, Lender may, in its sole and absolute discretion,
adjust the Monthly Payment Amount to give effect to any such partial prepayment,
provided, however, that in no event will any such adjustment result in any such
installment becoming due and payable on any date after the Maturity Date.
- 16 -
(d) Each payment by Borrower hereunder or under the Note shall be
payable at the payment address set forth on Schedule 1, attached hereto, or at
such other place as the Lender may designate from time to time in writing, on
the date such payment is due, to Lender by deposit to such account as Lender may
designate by written notice to Borrower. Whenever any payment hereunder or under
the Note shall be stated to be due on a day which is not a Business Day, such
payment shall be made on the first Business Day preceding such scheduled due
date.
(e) Prior to the occurrence and following the cure (in accordance
with the terms hereof) of an Event of Default, all monthly payments made as
scheduled under this Agreement and the Note shall be applied first to the
payment of interest computed at the Note Rate, and the balance toward the
reduction of the principal amount of the Note. All voluntary and involuntary
prepayments on the Note shall be applied, to the extent thereof, to accrued but
unpaid interest on the amount prepaid, to the remaining principal amount, and
any other sums due and unpaid to Lender in connection with the Loan, in such
manner and order as Lender may elect in its sole and absolute discretion,
including, but not limited to, application to principal installments in inverse
order of maturity. Following the occurrence and during the continuance of an
Event of Default, any payment made on the Note shall be applied to accrued but
unpaid interest, late charges, accrued fees, the unpaid principal amount of the
Note, and any other sums due and unpaid to Lender in connection with the Loan,
in such manner and order as Lender may elect in its sole and absolute
discretion.
(f) All payments made by Borrower hereunder or under the Note or
the other Loan Documents shall be made irrespective of, and without any
deduction for, any setoff, defense or counterclaims.
SECTION 2.3. LATE PAYMENT CHARGE
If any principal or interest payment is not paid by Borrower on or
before the date which is ten (10) calendar days after the same is due, Borrower
shall pay to Lender upon demand an amount equal to the lesser of four percent
(4%) of such unpaid sum or the maximum amount permitted by applicable law in
order to defray the expense incurred by Lender in handling and processing such
delinquent payment and to compensate Lender for the loss of the use of such
delinquent payment. Any such amount shall be secured by the Mortgage and the
other Loan Documents to the extent permitted by applicable law.
SECTION 2.4. PREPAYMENT; DEFEASANCE
Except as otherwise expressly permitted by this Section 2.4, no
voluntary prepayments, whether in whole or in part, of the Loan or any other
amount at any time due and owing under the Note can be made by Borrower or any
other Person without the express written consent of Lender.
(a) Lockout Period. Borrower has no right to make, and Lender
shall have no obligation to accept, any voluntary prepayment, whether in whole
or in part, of the Loan during the Lockout Period. Notwithstanding the
foregoing, if either (i) Lender, in its sole and absolute discretion, accepts a
full or partial voluntary prepayment during the Lockout Period or (ii) there is
an involuntary prepayment during the Lockout Period, then, in either case,
Borrower shall, in
- 17 -
addition to any portion of the Loan prepaid (together with all interest accrued
and unpaid thereon), pay to Lender a prepayment premium in an amount calculated
in accordance with Section 2.4(d) hereof.
(b) Total Defeasance.
(i) Notwithstanding any provisions of this Section 2.4 to
the contrary, including, without limitation, subsection (a) of this
Section 2.4, at any time after the earlier to occur of the (1)
expiration of the REMIC Prohibition Period or (2) expiration of the
Substitution/Defeasance Lockout Period, Borrower may cause the release
of the Property from the lien of the Mortgage and the other Loan
Documents upon the satisfaction of the following conditions:
(A) no Event of Default shall exist under any of
the Loan Documents;
(B) not less than thirty (30) (but not more than
ninety (90)) days prior written notice shall be given to
Lender specifying a date on which the Defeasance Collateral
(as hereinafter defined) is to be delivered (the "RELEASE
DATE"), such date being on a Scheduled Payment Date; provided,
however, that Borrower shall have the right (i) to cancel such
notice by providing Lender with notice of cancellation ten
(10) days prior to the scheduled Release Date, or (ii) to
extend the scheduled Release Date until the next Scheduled
Payment Date; provided that in each case, Borrower shall pay
all of Lender's reasonable costs and expenses incurred as a
result of such cancellation or extension;
(C) all accrued and unpaid interest and all
other sums due under the Note, this Agreement and under the
other Loan Documents up to the Release Date, including,
without limitation, all reasonable fees, costs and expenses
incurred by Lender and its agents in connection with such
release (including, without limitation, reasonable legal fees
and expenses for the review and preparation of the Defeasance
Security Agreement (as hereinafter defined) and of the other
materials described in Section 2.4(b)(i)(D) below and any
related documentation, and any servicing fees, Rating Agency
fees or other costs related to such release), shall be paid in
full on or prior to the Release Date;
(D) Borrower shall deliver to Lender on or prior
to the Release Date:
(1) a pledge and security agreement, in form and
substance which would be satisfactory to a prudent institutional mortgage loan
lender, creating a first priority security interest in favor of Lender in the
Defeasance Collateral, as defined herein (the "DEFEASANCE SECURITY AGREEMENT"),
which shall provide, among other things, that any excess amounts received by
Lender from the Defeasance Collateral over the amounts payable by Borrower on a
given Scheduled Payment Date, which excess amounts are not required to cover all
or any portion of amounts payable on a future Scheduled Payment Date, shall be
refunded to Borrower promptly after each such Scheduled Payment Date;
(2) direct non-callable obligations of the United States
of America (or other obligations which are "government securities" within the
meaning of Section 2(a)(16) of the
- 18 -
Investment Company Act of 1940, to the extent the applicable Rating Agencies
rating the Securities have confirmed in writing will not cause a downgrade,
withdrawal or qualification of the initial, or, if higher, then applicable
ratings of the Securities), that provide for payments prior and as close as
possible to (but in no event later than) all successive Scheduled Payment Dates
occurring after the Release Date, with each such payment being equal to or
greater than the amount of the corresponding Monthly Payment Amount required to
be paid under this Agreement and the Note (including all amounts due on the
Maturity Date) for the balance of the term hereof (the "DEFEASANCE COLLATERAL"),
each of which shall be duly endorsed by the holder thereof as directed by Lender
or accompanied by a written instrument of transfer in form and substance which
would be satisfactory to a prudent lender (including, without limitation, such
certificates, documents and instruments as may be required by the depository
institution holding such securities or the issuer thereof, as the case may be,
to effectuate book-entry transfers and pledges through the book-entry facilities
of such institution) in order to perfect upon the delivery of the Defeasance
Security Agreement the first priority security interest therein in favor of
Lender in conformity with all applicable state and federal laws governing
granting of such security interests;
(3) a certificate of Borrower certifying that all of the
requirements set forth in this Section 2.4(b)(i) have been satisfied;
(4) one or more opinions of counsel for Borrower in form
and substance and delivered by counsel which would be satisfactory to a prudent
lender stating, among other things, that (i) Lender has a perfected first
priority security interest in the Defeasance Collateral and that the Defeasance
Security Agreement is enforceable against Borrower in accordance with its terms,
(ii) the release of the lien of the Mortgage and the pledge of Defeasance
Collateral will not directly or indirectly result in or cause any REMIC Trust
that then holds the Note to fail to maintain its status as a REMIC Trust and
(iii) the defeasance will not cause any REMIC Trust to be an "investment
company" under the Investment Company Act of 1940, at Borrower's cost;
(5) a certificate in form and scope which would be
acceptable to a prudent lender from an Acceptable Accountant certifying that the
Defeasance Collateral will generate amounts sufficient to make all payments of
principal and interest due under the Note (including the scheduled outstanding
principal balance of the Loan due on the Maturity Date); and
(6) such other certificates, documents and instruments as
a prudent institutional lender would require; and
(E) in the event the Loan is held by a REMIC
Trust, Lender has received written confirmation from any
Rating Agency rating any Securities that substitution of the
Defeasance Collateral will not result in a downgrade,
withdrawal, or qualification of the ratings then assigned to
any of the Securities.
(ii) Upon compliance with the requirements of Section
2.4(b)(i), the Property shall be released from the lien of the Mortgage
and the other Loan Documents, and the Defeasance Collateral shall
constitute collateral which shall secure the Note and all other
obligations under the Loan Documents. Lender will, at Borrower's
expense, execute and
- 19 -
deliver any agreements reasonably requested by Borrower to release the
lien of the Mortgage and the other Loan Documents from the Property.
(iii) Upon the release of the Property in accordance with
this Section 2.4(b), Borrower shall (at Lender's sole and absolute
discretion) assign all its obligations and rights under the Note,
together with the pledged Defeasance Collateral, to a successor entity
designated and approved by Lender in its sole and absolute discretion
("SUCCESSOR BORROWER"). Successor Borrower shall execute an assignment
and assumption agreement in form and substance which would be
satisfactory to a prudent lender pursuant to which it shall assume
Borrower's obligations under the Note and the Defeasance Security
Agreement. As conditions to such assignment and assumption, Borrower
shall (A) deliver to Lender one or more opinions of counsel in form and
substance and delivered by counsel which would be satisfactory to a
prudent lender stating, among other things, that such assignment and
assumption agreement is enforceable against Borrower and the Successor
Borrower in accordance with its terms and that the Note, the Defeasance
Security Agreement and the other Loan Documents, as so assigned and
assumed, are enforceable against the Successor Borrower in accordance
with their respective terms, and opining to such other matters relating
to Successor Borrower and its organizational structure as Lender may
require, and (B) pay all reasonable fees, costs and expenses incurred
by Lender or its agents in connection with such assignment and
assumption (including, without limitation, legal fees and expenses and
for the review of the proposed transferee and the preparation of the
assignment and assumption agreement and related certificates, documents
and instruments and any fees payable to any Rating Agencies and their
counsel in connection with the issuance of the confirmation referred to
in subsection (b)(i)(E) above). Upon such assignment and assumption,
Borrower shall be relieved of its obligations hereunder, under the
Note, under the other Loan Documents and under the Defeasance Security
Agreement, except as expressly set forth in the assignment and
assumption agreement.
(iv) For purposes of this Section 2.4, "REMIC PROHIBITION
PERIOD" means the two-year period commencing with the "startup day"
within the meaning of Section 860G(a)(9) of the Code of any REMIC Trust
that holds the Note. In no event shall Lender have any obligation to
notify Borrower that a REMIC Prohibition Period is in effect with
respect to the Loan, except that Lender shall notify Borrower if any
REMIC Prohibition Period is in effect with respect to the Loan after
receiving any notice described in Section 2.4(b)(i)(B); provided,
however, that the failure of Lender to so notify Borrower shall not
impose any liability on Lender or grant Borrower any right to defease
the Loan during any such REMIC Prohibition Period.
(c) Intentionally deleted.
(d) Involuntary Prepayment During the Lockout Period. During the
Lockout Period, in the event of any involuntary prepayment of the Loan or any
other amount under the Note, whether in whole or in part, in connection with or
following Lender's acceleration of the Note or otherwise, and whether the
Mortgage is satisfied or released by foreclosure (whether by power of sale or
judicial proceeding), deed in lieu of foreclosure or by any other means,
including, without limitation, repayment of the Loan by Borrower or any other
Person pursuant to any statutory or
- 20 -
common law right of redemption, Borrower shall, in addition to any portion of
the principal balance of the Loan prepaid (together with all interest accrued
and unpaid thereon and in the event the prepayment is made on a date other than
a Scheduled Payment Date, a sum equal to the amount of interest which would have
accrued under the Note on the amount of such prepayment if such prepayment had
occurred on the next Scheduled Payment Date), pay to Lender a prepayment premium
in an amount calculated in accordance with this Section 2.4(d). Such prepayment
premium shall be in an amount equal to the greater of:
(i) 1% of the portion of the Loan being prepaid; or
(ii) the product obtained by multiplying:
(A) the portion of the Loan being prepaid,
times;
(B) the difference obtained by subtracting (I)
the Yield Rate from (II) the Note Rate, times;
(C) the present value factor calculated using
the following formula:
1-(1+r)-n
---------
r
r = Yield Rate
n = the number of years and any fraction
thereof, remaining between the date the
prepayment is made and the Maturity
Date of the Note.
As used herein, "YIELD RATE" means the yield per annum calculated by
Lender by the linear interpolation of the yield of U.S. Treasury Securities
having a maturity date (one longer and one shorter) most nearly approximating
the Maturity Date as reported on the fifth Business Day preceding the Prepayment
Calculation Date. The "PREPAYMENT CALCULATION DATE" shall mean, as applicable,
the date on which (i) Lender applies any partial prepayment to the reduction of
the outstanding principal amount of the Note, in the case of a voluntary partial
prepayment which is accepted by Lender, (ii) Lender accelerates the Loan, in the
case of a prepayment resulting from acceleration, or (iii) Lender applies funds
held under any Reserve Account, in the case of a prepayment resulting from such
an application (other than in connection with acceleration of the Loan).
(e) Insurance and Condemnation Proceeds; Excess Interest.
Notwithstanding any other provision herein to the contrary, and provided no
Event of Default exists, Borrower shall not be required to pay any prepayment
premium in connection with any prepayment occurring solely as a result of (i)
the application of Insurance Proceeds or Condemnation Proceeds pursuant to the
terms of the Loan Documents, or (ii) the application of any interest in excess
of the Maximum Legal Rate.
(f) After the Lockout Period. Commencing on the day after the
expiration of the Lockout Period, and upon giving Lender at least thirty (30)
days (but not more than ninety (90) days) prior written notice, Borrower may
voluntarily prepay (without premium) the Note in
- 21 -
whole (but not in part) on a Scheduled Payment Date. Lender shall accept a
prepayment pursuant to this Section 2.4(h) on a day other than a Scheduled
Payment Date provided that, in addition to payment of the full outstanding
principal balance of the Note, Borrower pays to Lender a sum equal to the amount
of interest which would have accrued on the Note if such prepayment occurred on
the next Scheduled Payment Date (the "INTEREST SHORTFALL").
(g) Limitation on Partial Prepayments. Except as set forth in
Section 2.4(e), in no event shall Lender have any obligation to accept a partial
prepayment.
SECTION 2.5. INTENTIONALLY DELETED.
SECTION 2.6. PAYMENTS AFTER DEFAULT.
Upon the occurrence and during the continuance of an Event of Default,
interest on the outstanding principal balance of the Loan and, to the extent
permitted by law, overdue interest and other amounts due in respect of the Loan,
(a) shall accrue at the Default Rate, and (b) Lender shall be entitled to
receive and Borrower shall pay to Lender all cash flow from the Property in
accordance with the terms of Article X hereof, such amount to be applied by
Lender to the payment of the Debt in such order as Lender shall determine in its
sole discretion, including, without limitation, alternating applications thereof
between interest and principal. Interest at the Default Rate shall be computed
from the occurrence of the Event of Default until the earlier of (i) the actual
receipt and collection of the Debt (or that portion thereof that is then due)
and (ii) the cure of such Event of Default. To the extent permitted by
applicable law, interest at the Default Rate shall be added to the Debt, shall
itself accrue interest at the same rate as the Loan and shall be secured by the
Mortgage. This paragraph shall not be construed as an agreement or privilege to
extend the date of the payment of the Debt, nor as a waiver of any other right
or remedy accruing to Lender by reason of the occurrence of any Event of
Default; the acceptance of any payment from Borrower shall not be deemed to cure
or constitute a waiver of any Event of Default; and Lender retains its rights
under this Agreement to accelerate and to continue to demand payment of the Debt
upon the happening of and during the continuance any Event of Default, despite
any payment by Borrower to Lender.
SECTION 2.7. USURY SAVINGS
This Agreement and the Note are subject to the express condition that
at no time shall Borrower be obligated or required to pay interest on the
principal balance of the Loan at a rate which could subject Lender to either
civil or criminal liability as a result of being in excess of the Maximum Legal
Rate. If, by the terms of this Agreement or the other Loan Documents, Borrower
is at any time required or obligated to pay interest on the principal balance
due hereunder at a rate in excess of the Maximum Legal Rate, the Note Rate or
the Default Rate, as the case may be, shall be deemed to be immediately reduced
to the Maximum Legal Rate and all previous payments in excess of the Maximum
Legal Rate shall be deemed to have been payments in reduction of principal and
not on account of the interest due hereunder. All sums paid or agreed to be paid
to Lender for the use, forbearance, or detention of the sums due under the Loan,
shall, to the extent permitted by applicable law, be amortized, prorated,
allocated, and spread throughout the full stated term of the Loan until payment
in full so that the rate or amount
- 22 -
of interest on account of the Loan does not exceed the Maximum Legal Rate of
interest from time to time in effect and applicable to the Loan for so long as
the Loan is outstanding.
ARTICLE 3
CONDITIONS PRECEDENT
The obligation of Lender to make the Loan hereunder is subject to the
fulfillment by Borrower or waiver by Lender of the following conditions
precedent no later than the Closing Date.
SECTION 3.1. REPRESENTATIONS AND WARRANTIES; COMPLIANCE WITH CONDITIONS
The representations and warranties of Borrower contained in this
Agreement and the other Loan Documents shall be true and correct in all material
respects on and as of the Closing Date with the same effect as if made on and as
of such date, and Lender shall have determined that no Default or an Event of
Default shall have occurred and be continuing nor will any Default or Event of
Default occur immediately following the Closing Date; and Borrower shall be in
compliance in all material respects with all terms and conditions set forth in
this Agreement and in each other Loan Document on its part to be observed or
performed.
SECTION 3.2. DELIVERY OF LOAN DOCUMENTS; TITLE INSURANCE; REPORTS;
LEASES
(a) Mortgage, Loan Agreement and Note. Lender shall have received
from Borrower a fully executed and acknowledged counterpart of the Mortgage and
evidence that counterparts of the Mortgage and Uniform Commercial Code financing
statements have been delivered to the title company for recording, in the
reasonable judgment of Lender, so as to effectively create upon such recording
valid and enforceable Liens upon the Property, of the requisite priority, in
favor of Lender (or such other trustee as may be required or desired under local
law), subject only to the Permitted Encumbrances and such other Liens as are
permitted pursuant to the Loan Documents. Lender shall have also received from
Borrower fully executed counterparts of the Environmental Indemnity (if
applicable), this Agreement, the Note and Assignment of Management Agreement and
all other Loan Documents.
(b) Title Insurance. Lender shall have received a Title Insurance
Policy issued by a title company acceptable to Lender and dated as of the
Closing Date. Such Title Insurance Policy shall (i) provide coverage in the
amount of the Loan, (ii) insure Lender that the Mortgage creates a valid lien on
the Property of the requisite priority, free and clear of all exceptions from
coverage other than Permitted Encumbrances and standard exceptions and
exclusions from coverage (as modified by the terms of any endorsements), (iii)
contain such endorsements and affirmative coverages as Lender may reasonably
request, and (iv) name Lender as the insured. The Title Insurance Policy shall
be assignable. Lender also shall have received evidence that all premiums in
respect of such Title Insurance Policy have been paid.
(c) Survey. Lender shall have received a current title survey for
the Property, certified to the title company and Lender and their successors and
assigns, in form and content satisfactory to Lender and prepared by a
professional and properly licensed land surveyor satisfactory to Lender in
accordance with the 1999 Minimum Standard Detail Requirements for ALTA/ACSM Land
Title Surveys. The survey shall meet the classification of an "Urban
- 23 -
Survey" and the following additional items from the list of "Optional Survey
Responsibilities and Specifications" (Table A) should be added to each survey:
2, 3, 4, 6, 8, 9, 10 and 11(a) (excluding individual manufactured home pads and
individual parking spaces provided the applicable surveyor certifies that the
same do not violate any boundaries, setbacks or easements). Such survey shall
reflect the same legal description contained in the Title Insurance Policy
referred to in subsection (b) above and shall include, among other things, a
metes and bounds or recorded plat description of the real property comprising
part of the Property reasonably satisfactory to Lender. The surveyor's seal
shall be affixed to the survey and the surveyor shall provide a certification
for each survey in form and substance acceptable to Lender.
(d) Insurance. Lender shall have (i) had an opportunity to have
its insurance representative review copies of the Policies required hereunder,
(ii) received certificates with respect to the Policies and (iii) received
evidence of the payment of all Insurance Premiums payable for the existing
policy period all of which shall be satisfactory to Lender in its sole
discretion. In no event shall Borrower be required to provide terrorism
insurance.
(e) Environmental Reports. Lender shall have received an
Environmental Report in respect of the Property satisfactory to Lender.
(f) Zoning/Building Code. Lender shall have received evidence of
compliance with zoning and building ordinances and codes, including, without
limitation, required certificates of occupancy for any permanent structure,
reasonably acceptable to Lender.
(g) Encumbrances. Borrower shall have taken or caused to be taken
such actions in such a manner so that Lender has a valid and perfected first
Lien as of the Closing Date on the Property, subject only to applicable
Permitted Encumbrances and such other Liens as are permitted pursuant to the
Loan Documents, and Lender shall have received satisfactory evidence thereof.
(h) Lien Searches. Lender shall have received certified search
results pertaining to Borrower, Borrower Principal and such other Persons or any
SPE Component Entity as reasonably required by Lender for state and federal tax
liens, bankruptcy, judgment, litigation and state and local UCC filings
SECTION 3.3. RELATED DOCUMENTS
Each additional document not specifically referenced herein, but
relating to the transactions contemplated herein, shall have been duly
authorized, executed and delivered by all parties thereto and at Lender's
written request, Lender shall have received and approved certified copies
thereof.
SECTION 3.4. ORGANIZATIONAL DOCUMENTS
On or before the Closing Date, Borrower shall deliver or cause to be
delivered to Lender (a) copies certified by Borrower of all organizational
documentation related to Borrower, each SPE Component Entity and Borrower
Principal which must be acceptable to Lender in its reasonable discretion, and
(b) such other evidence of the formation, structure, existence, good standing
and/or qualification to do business of Borrower, each SPE Component Entity and
- 24 -
Borrower Principal, as Lender may request in its reasonable discretion,
including, without limitation, good standing or existence certificates,
qualifications to do business in the appropriate jurisdictions, resolutions
authorizing the entering into of the Loan and incumbency certificates as may be
requested by Lender.
SECTION 3.5. OPINIONS OF BORROWER'S COUNSEL
Lender shall have received opinions of Borrower's counsel (a) with
respect to non-consolidation issues (if the amount of the Loan equals or exceeds
$20,000,000) and (b) with respect to due execution, authority, enforceability of
the Loan Documents and such other matters as Lender may require, all such
opinions in form, scope and substance satisfactory to Lender and Lender's
counsel in their sole discretion.
SECTION 3.6. ANNUAL BUDGET
Borrower shall have delivered to Lender an annual budget for the
current fiscal year.
SECTION 3.7. TAXES AND OTHER CHARGES
Borrower shall have paid all Taxes and Other Charges (including any in
arrears) relating to the Property, which amounts may be funded with proceeds of
the Loan.
SECTION 3.8. COMPLETION OF PROCEEDINGS
All corporate and other proceedings taken or to be taken in connection
with the transactions contemplated by this Agreement and other Loan Documents
and all documents incidental thereto shall be satisfactory in form and substance
to Lender, and Lender shall have received all such counterpart originals or
certified copies of such documents as Lender may reasonably request.
SECTION 3.9. PAYMENTS
All payments, deposits or escrows required to be made or established by
Borrower under this Agreement, the Note and the other Loan Documents on or
before the Closing Date shall have been paid.
SECTION 3.10. TRANSACTION COSTS
Except as otherwise expressly provided herein, Borrower shall have paid
or reimbursed Lender for all reasonable out of pocket expenses in connection
with the underwriting, negotiation, and closing of the Loan, including title
insurance premiums and other title company charges; recording, registration,
filing and similar fees, taxes and charges; transfer, mortgage, deed, stamp or
documentary taxes or similar fees or charges; costs of third-party reports,
including without limitation, environmental studies, credit reports, seismic
reports, engineer's reports, appraisals and surveys; underwriting and
origination expenses; and all actual, reasonable legal fees and expenses charged
by counsel to Lender.
- 25 -
SECTION 3.11. NO MATERIAL ADVERSE CHANGE
There shall have been no material adverse change in the financial
condition or business condition of the Property, Borrower, Borrower Principal,
any SPE Component Entity or Manager since the date of the most recent financial
statements and/or other information delivered to Lender. The income and expenses
of the Property, the occupancy and leases thereof, and all other features of the
transaction shall be as represented to Lender without material adverse change.
Neither Borrower nor Borrower Principal, any SPE Component Entity or Affiliated
Manager shall be the subject of any bankruptcy, reorganization, or insolvency
proceeding.
SECTION 3.12. LEASES AND RENT ROLL
Lender shall have received copies of all Major Leases affecting the
Property, which shall be satisfactory in form and substance to Lender. Lender
shall have received a current certified rent roll of the Property, reasonably
satisfactory in form and substance to Lender.
SECTION 3.13. INTENTIONALLY DELETED.
SECTION 3.14. INTENTIONALLY DELETED.
SECTION 3.15. INTENTIONALLY DELETED.
SECTION 3.16. TAX LOT
Lender shall have received evidence that the Property constitutes one
(1) or more separate tax lots, which evidence shall be reasonably satisfactory
in form and substance to Lender.
SECTION 3.17. PHYSICAL CONDITIONS REPORT
Lender shall have received a Physical Conditions Report with respect to
the Property, which report shall be reasonably satisfactory in form and
substance to Lender.
SECTION 3.18. MANAGEMENT AGREEMENT
Lender shall have received a certified copy of the Management Agreement
with respect to the Property which shall be satisfactory in form and substance
to Lender.
SECTION 3.19. APPRAISAL
Lender shall have received an appraisal of the Property, which shall be
satisfactory in form and substance to Lender.
SECTION 3.20. FINANCIAL STATEMENTS
Lender shall have received financial statements and related information
in form and substance satisfactory to Lender and in compliance with any Legal
Requirements promulgated by the Securities and Exchange Commission, including,
without limitation, a balance sheet, income and expense statement and statement
of cash flows with respect to MHC (on a
- 26 -
consolidated basis with MHCOP) and an operating statement with respect to the
Property for the year-to-date 2003, 2002, 2001, 2000 and 1999.
SECTION 3.21. INTENTIONALLY DELETED
SECTION 3.22. FURTHER DOCUMENTS
Lender or its counsel shall have received such other and further
approvals, opinions, documents and information as Lender or its counsel may have
reasonably requested including the Loan Documents in form and substance
satisfactory to Lender and its counsel.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES
Borrower and, with respect to Sections 4.1, 4.3, 4.4, 4.5, 4.7, 4.8,
4.10, 4.14 (with respect to financial information of Borrower Principal), 4.31,
4.39, and 4.40, each Borrower Principal represents and warrants to Lender as of
the Closing Date that:
SECTION 4.1. ORGANIZATION
Borrower and each Borrower Principal (when not an individual) (a) has
been duly organized and is validly existing and in good standing with requisite
power and authority to own its properties and to transact the businesses in
which it is now engaged, (b) is duly qualified to do business and is in good
standing in each jurisdiction where it is required to be so qualified in
connection with its properties, businesses and operations, (c) to the best of
Borrower's knowledge, possesses all material rights, licenses, permits and
authorizations, governmental or otherwise, necessary to entitle it to own its
properties and to transact the businesses in which it is now engaged, and the
sole business of Borrower is the ownership, management and operation of the
Property, and (d) in the case of Borrower, has full power, authority and legal
right to mortgage, grant, bargain, sell, pledge, assign, warrant, transfer and
convey the Property pursuant to the terms of the Loan Documents, and in the case
of Borrower and each Borrower Principal, has full power, authority and legal
right to keep and observe all of the terms of the Loan Documents to which it is
a party. Borrower and each Borrower Principal represent and warrant that the
chart attached hereto as Exhibit B sets forth an accurate listing of the direct
and indirect owners of the equity interests in Borrower and each SPE Component
Entity (if any).
SECTION 4.2. STATUS OF BORROWER
Borrower's exact legal name is correctly set forth on the first page of
this Agreement, on the Mortgage and on any UCC-1 Financing Statements filed in
connection with the Loan. Borrower is an organization of the type specified on
the first page of this Agreement. Borrower is incorporated in or organized under
the laws of the state of Delaware. Borrower's principal place of business and
chief executive office, and the place where Borrower keeps its books and
records, including recorded data of any kind or nature, regardless of the medium
of recording, including software, writings, plans, specifications and
schematics, has been for the preceding four months (or, if less, the entire
period of the existence of Borrower) the address of Borrower set forth on the
first page of this Agreement. Borrower's organizational identification number,
if
- 27 -
any, assigned by the state of incorporation or organization is set forth on
Schedule 1, attached hereto.
SECTION 4.3. VALIDITY OF DOCUMENTS
Borrower and each Borrower Principal have taken all necessary action to
authorize the execution, delivery and performance of this Agreement and the
other Loan Documents to which they are parties. This Agreement and such other
Loan Documents have been duly executed and delivered by or on behalf of Borrower
and each Borrower Principal and constitute the legal, valid and binding
obligations of Borrower and each Borrower Principal enforceable against Borrower
and each Borrower Principal in accordance with their respective terms, subject
only to applicable bankruptcy, insolvency and similar laws affecting rights of
creditors generally, and subject, as to enforceability, to general principles of
equity (regardless of whether enforcement is sought in a proceeding in equity or
at law).
SECTION 4.4. NO CONFLICTS
The execution, delivery and performance of this Agreement and the other
Loan Documents by Borrower and each Borrower Principal will not conflict with or
result in a breach of any of the terms or provisions of, or constitute a default
under, or result in the creation or imposition of any lien, charge or
encumbrance (other than pursuant to the Loan Documents) upon any of the property
or assets of Borrower or any Borrower Principal pursuant to the terms of any
agreement or instrument to which Borrower or any Borrower Principal is a party
or by which any of Borrower's or Borrower Principal's property or assets is
subject, nor to the best of Borrower's knowledge will such action result in any
violation of the provisions of any statute or any order, rule or regulation of
any Governmental Authority having jurisdiction over Borrower or any Borrower
Principal or any of Borrower's or Borrower Principal's properties or assets, and
any consent, approval, authorization, order, registration or qualification of or
with any Governmental Authority required for the execution, delivery and
performance by Borrower or Borrower Principal of this Agreement or any of the
other Loan Documents has been obtained and is in full force and effect.
SECTION 4.5. LITIGATION
There are no actions, suits or proceedings at law or in equity by or
before any Governmental Authority or other agency now pending or, to Borrower's
or Borrower Principal's knowledge, threatened against or affecting Borrower, any
Borrower Principal, Manager or the Property, which actions, suits or
proceedings, if determined against Borrower, any Borrower Principal, Manager or
the Property, would materially adversely affect the condition (financial or
otherwise) or business of Borrower or any Borrower Principal or the condition or
ownership of the Property other than as disclosed in Schedule 4.5 attached
hereto.
SECTION 4.6. AGREEMENTS
Borrower is not a party to any agreement or instrument or subject to
any restriction which would materially and adversely affect Borrower or the
Property, or Borrower's business, properties or assets, operations or condition,
financial or otherwise. Borrower is not in default in any material respect in
the performance, observance or fulfillment of any of the obligations,
- 28 -
covenants or conditions contained in any agreement or instrument to which it is
a party or by which Borrower or the Property is bound. Borrower has no material
financial obligation under any agreement or instrument to which Borrower is a
party or by which Borrower or the Property is otherwise bound, other than (a)
obligations incurred in the ordinary course of the operation of the Property and
(b) obligations under the Loan Documents.
SECTION 4.7. SOLVENCY
Borrower and each Borrower Principal have (a) not entered into the
transaction or executed the Note, this Agreement or any other Loan Documents
with the actual intent to hinder, delay or defraud any creditor and (b) received
reasonably equivalent value in exchange for their obligations under such Loan
Documents. Giving effect to the Loan, the fair saleable value of the assets of
Borrower and each Borrower Principal exceeds and will, immediately following the
making of the Loan, exceed the total liabilities of Borrower and each Borrower
Principal, including, without limitation, subordinated, unliquidated, disputed
and contingent liabilities. No petition in bankruptcy has been filed against
Borrower, any Borrower Principal, any SPE Component Entity (if any) or
Affiliated Manager in the last ten (10) years, and neither Borrower nor any
Borrower Principal, any SPE Component Entity (if any) or Affiliated Manager in
the last ten (10) years has made an assignment for the benefit of creditors or
taken advantage of any Creditors Rights Laws. Neither Borrower nor any Borrower
Principal, any SPE Component Entity (if any) or Affiliated Manager is
contemplating either the filing of a petition by it under any Creditors Rights
Laws or the liquidation of all or a major portion of Borrower's assets or
property, and Borrower has no knowledge of any Person contemplating the filing
of any such petition against Borrower or any Borrower Principal, any SPE
Component Entity (if any) or Affiliated Manager.
SECTION 4.8. FULL AND ACCURATE DISCLOSURE
To the best of Borrower's knowledge, no statement of fact made by or on
behalf of Borrower or any Borrower Principal in this Agreement or in any of the
other Loan Documents or in any other document or certificate delivered by or on
behalf of Borrower or any Borrower Principal contains any untrue statement of a
material fact or omits to state any material fact necessary to make statements
contained herein or therein not misleading. There is no material fact presently
known to Borrower or any Borrower Principal which has not been disclosed to
Lender which materially and adversely affects, nor as far as Borrower or any
Borrower Principal can reasonably foresee, might materially and adversely
affect, the Property or the business, operations or condition (financial or
otherwise) of Borrower or any Borrower Principal.
SECTION 4.9. NO PLAN ASSETS
Borrower is not an "employee benefit plan," as defined in Section 3(3)
of ERISA, subject to Title I of ERISA, and none of the assets of Borrower
constitutes or will constitute "plan assets" of one or more such plans within
the meaning of 29 C.F.R. Section 2510.3-101. In addition, (a) Borrower is not a
"governmental plan" within the meaning of Section 3(32) of ERISA and (b)
transactions by or with Borrower are not subject to state statutes regulating
investment of, and fiduciary obligations with respect to, governmental plans
similar to the
- 29 -
provisions of Section 406 of ERISA or Section 4975 of the Internal Revenue Code
currently in effect, which prohibit or otherwise restrict the transactions
contemplated by this Agreement.
SECTION 4.10. NOT A FOREIGN PERSON
Neither Borrower nor Borrower Principal is a "foreign person" within
the meaning of Section 1445(f)(3) of the Internal Revenue Code.
SECTION 4.11. ENFORCEABILITY
The Loan Documents are not subject to any right of rescission, set-off,
counterclaim or defense by Borrower, including the defense of usury, nor would
the operation of any of the terms of the Loan Documents, or the exercise of any
right thereunder, render the Loan Documents unenforceable, and neither Borrower
nor Borrower Principal has asserted any right of rescission, set-off,
counterclaim or defense with respect thereto. No Default or Event of Default
exists under or with respect to any Loan Document.
SECTION 4.12. BUSINESS PURPOSES
The Loan is solely for the business purpose of Borrower, and is not for
personal, family, household, or agricultural purposes.
SECTION 4.13. COMPLIANCE
To the best of Borrower's knowledge, Borrower and the Property, and the
use and operation thereof, comply in all material respects with all Legal
Requirements, including, without limitation, building and zoning ordinances and
codes and the Americans with Disabilities Act except as expressly disclosed in
any written materials furnished by Borrower to Lender or as expressly disclosed
in any physical condition report or environmental report received by Lender in
connection with the closing of the Loan. To Borrower's knowledge, Borrower is
not in default or violation of any order, writ, injunction, decree or demand of
any Governmental Authority and Borrower has received no written notice of any
such default or violation which if determined against Borrower or the Property
would materially adversely affect Borrower or the Property. There has not been
committed by Borrower or, to Borrower's knowledge, any other Person in occupancy
of or involved with the operation or use of the Property any act or omission
affording any Governmental Authority the right of forfeiture as against the
Property or any part thereof or any monies paid in performance of Borrower's
obligations under any of the Loan Documents.
SECTION 4.14. FINANCIAL INFORMATION
All financial data, including, without limitation, the balance sheets,
statements of cash flow, statements of income and operating expense and rent
rolls, that have been delivered to Lender in respect of Borrower, any Borrower
Principal and/or the Property (a) are true, complete and correct in all material
respects, (b) accurately represent the financial condition of Borrower, Borrower
Principal or the Property, as applicable, as of the date of such reports, and
(c) to the extent prepared or audited by an independent certified public
accounting firm, have been prepared in accordance with GAAP throughout the
periods covered, except as disclosed therein.
- 30 -
To Borrower's actual knowledge after due inquiry, Borrower does not have any
contingent liabilities, liabilities for taxes, unusual forward or long-term
commitments or unrealized or anticipated losses from any unfavorable commitments
that are known to Borrower and reasonably likely to have a material adverse
effect on the Property or the current and/or intended operation thereof, except
as referred to or reflected in said financial statements. Since the date of such
financial statements, there has been no materially adverse change in the
financial condition, operations or business of Borrower or Borrower Principal
from that set forth in said financial statements.
SECTION 4.15. CONDEMNATION
No Condemnation or other proceeding has been commenced or, to
Borrower's best knowledge, is threatened or contemplated with respect to all or
any portion of the Property or for the relocation of roadways providing access
to the Property.
SECTION 4.16. UTILITIES AND PUBLIC ACCESS; PARKING
The Property (i) has adequate rights of access to public ways directly,
or indirectly, pursuant to private easements which have been adequately insured
under the Title Insurance Policy and (ii) is served by water, sewer, sanitary
sewer and storm drain facilities which, to the best of Borrower's knowledge, are
adequate to service the Property for full utilization of the Property for its
intended uses. All public utilities necessary to the full use and enjoyment of
the Property as currently used and enjoyed are located either in the public
right-of-way abutting the Property (which are connected so as to serve the
Property without passing over other property) or in recorded easements serving
the Property and such easements are set forth in and insured by the Title
Insurance Policy. All roads necessary for the use of the Property for its
current purposes have been completed and dedicated to public use and accepted by
all Governmental Authorities. The Property has, or is served by, parking to the
extent required to comply with all Legal Requirements in all material respects.
SECTION 4.17. SEPARATE LOTS
The Property is assessed for real estate tax purposes as one or more
wholly independent tax lot or lots, separate from any adjoining land or
improvements not constituting a part of such lot or lots, and no other land or
improvements is assessed and taxed together with the Property or any portion
thereof.
SECTION 4.18. ASSESSMENTS
To Borrower's knowledge after due inquiry, there are no pending or
proposed special or other assessments for public improvements or otherwise
affecting the Property, nor are there any contemplated improvements to the
Property that may result in such special or other assessments.
SECTION 4.19. INSURANCE
Borrower has obtained and has delivered to Lender certified copies of
all Policies or, to the extent such Policies are not available as of the Closing
Date, certificates of insurance with respect to all such Policies reflecting the
insurance coverages, amounts and other requirements
- 31 -
set forth in this Agreement. No claims have been made under any of the Policies,
and to Borrower's knowledge, no Person, including Borrower, has done, by act or
omission, anything which would impair the coverage of any of the Policies.
SECTION 4.20. USE OF PROPERTY
The Property is used exclusively for mobile home community and/or
recreational vehicle resort purposes, as applicable, and other appurtenant and
related uses.
SECTION 4.21. CERTIFICATE OF OCCUPANCY; LICENSES
All material certifications, permits, licenses and approvals,
including, without limitation, certificates of completion or occupancy and any
applicable liquor license required for the legal use, occupancy and operation of
the Property for the purpose intended herein, have been obtained and are valid
and in full force and effect. Borrower shall keep and maintain all licenses
necessary for the operation of the Property for the purpose intended herein. The
use being made of the Property is in conformity with any certificates of
occupancy and any permits or licenses issued for the Property. The Property
contains all equipment necessary to use and operate the Property as a mobile
home community and/or recreational vehicle resort, as applicable.
SECTION 4.22. FLOOD ZONE
None of the Improvements on the Property are located in an area
identified by the Federal Emergency Management Agency as an area having special
flood hazards, or, if any portion of the Improvements is located within such
area, Borrower has obtained the insurance prescribed in Section 8.1(a)(i).
SECTION 4.23. PHYSICAL CONDITION
To Borrower's knowledge after due inquiry and except as disclosed in
the physical condition report delivered to Lender in connection with the closing
of the Loan, the Property, including, without limitation, all buildings,
improvements, parking facilities, sidewalks, storm drainage systems, roofs,
plumbing systems (including, but not limited to, liquid and solid waste
disposal, septic and sewer systems), HVAC systems, fire protection systems,
electrical systems, equipment, elevators, exterior sidings and doors,
landscaping, irrigation systems and all structural components, are in good
condition, order and repair in all material respects. To Borrower's knowledge
after due inquiry and except as disclosed in the physical condition report
delivered to Lender in connection with the closing of the Loan, there exists no
structural or other material defects or damages in the Property, as a result of
a Casualty or otherwise, and whether latent or otherwise. Borrower has not
received notice from any insurance company or bonding company of any defects or
inadequacies in the Property, or any part thereof, which would adversely affect
the insurability of the same or cause the imposition of extraordinary premiums
or charges thereon or of any termination or threatened termination of any policy
of insurance or bond.
- 32 -
SECTION 4.24. BOUNDARIES
(a) Except as disclosed in the Survey of the Property delivered to
Lender in connection with the closing of the Loan and for which adequate
insurance has been obtained under the Title Insurance Policy, none of the
Improvements which were included in determining the appraised value of the
Property lie outside the boundaries and building restriction lines of the
Property to any material extent, and (b) no improvements on adjoining properties
encroach upon the Property and no easements or other encumbrances upon the
Property encroach upon any of the Improvements so as to materially affect the
value or marketability of the Property and for which title endorsements that are
reasonably acceptable to Lender have not been obtained.
SECTION 4.25. LEASES AND RENT ROLL
Borrower has delivered to Lender a true, correct and complete rent roll
for the Property (a "RENT ROLL") which includes all Leases affecting the
Property and contains an aging report setting forth past due amounts with
respect to the Tenants; provided, however, that Lender acknowledges that, to the
extent the Property consists of a recreational vehicle resort, written Leases
are not used in the ordinary course of the Property's operation. Except as set
forth in the Rent Roll (as same has been updated by written notice thereof to
Lender): (a) each Lease is in full force and effect; (b) the premises demised
under any Major Leases have been completed and the Tenants under the Leases have
accepted possession of and are in occupancy of all of their respective demised
premises; (c) the Tenants under any Major Leases have commenced the payment of
rent under the Leases, there are no offsets, claims or defenses to the
enforcement thereof, and Borrower has no monetary obligations to any Tenant
under any such Leases; (d) all Rents due and payable under any Major Leases have
been paid and no portion thereof has been paid for any period more than thirty
(30) days in advance; (e) the rent payable under each Lease is the amount of
fixed rent set forth in the Rent Roll, and there is no claim or basis for a
claim by the Tenant thereunder for an offset or adjustment to the rent; (f) (1)
no Tenant has made any written claim of a material default against the landlord
under any Major Lease which remains outstanding nor has Borrower or Manager
received, by telephonic, in-person, e-mail or other communication, any notice of
a material default under any Lease and (2) no more than five percent (5%) of
Tenants under pad leases have made any written claims of material defaults from
against the landlord which remain outstanding nor has Borrower or Manager
received any written notice of material defaults from greater than five percent
(5%) of the Tenants under such Leases; (g) to Borrower's knowledge there is no
present material default by a Tenant under any Major Lease; (h) all security
deposits under the Leases have been collected by Borrower; (i) Borrower is the
sole owner of the entire landlord's interest in each Lease; (j) each Lease is
the valid, binding and enforceable obligation of Borrower and the applicable
Tenant thereunder and there are no agreements with the Tenants under any Major
Leases other than as expressly set forth in the Leases; (k) no Person has any
possessory interest in, or right to occupy, the Property or any portion thereof
except under the terms of a Lease (or as otherwise provided for under applicable
law); provided, however, that Lender acknowledges that, to the extent the
Property consists of a recreational vehicle resort (and for so long as either
Original Borrower or a Borrower Principal Affiliate is Borrower under the Loan),
written Leases are not used in the ordinary course of the Property's operation;
(l) none of the Leases contains any option or offer to purchase or right of
first refusal to purchase the Property or any part thereof, except to the extent
such rights of first refusal are provided to Tenants (occupying the Property
under pad Leases) or
- 33 -
a homeowner's association, solely as the result of applicable Legal
Requirements; (m) neither the Leases nor the Rents have been assigned, pledged
or hypothecated except to Lender, and no other Person has any interest therein
except the Tenants thereunder; and (n) no conditions exist which now give any
Tenant or party the right to "go dark" pursuant to the provision of any Major
Lease and/or the any REA. In the event there are any Leases affecting the
Property relating to laundry facilities (each, a "LAUNDRY LEASE"), none of any
such Laundry Leases (A) provides that the Tenant under such Laundry Lease shall
be entitled to any proceeds payable in connection with a Casualty of
Condemnation, (B) contains any option or offer to purchase or right of first
refusal or right of first offer to purchase the Property or any part thereof,
(C) comprises a material portion of the Property or (D) imposes any material
obligations upon Borrower.
SECTION 4.26. FILING AND RECORDING TAXES
All mortgage, mortgage recording, stamp, intangible or other similar
tax required to be paid by any Person under applicable Legal Requirements
currently in effect in connection with the execution, delivery, recordation,
filing, registration, perfection or enforcement of any of the Loan Documents,
including, without limitation, the Mortgage, have been paid or will be paid,
and, under current Legal Requirements, the Mortgage is enforceable in accordance
with its terms by Lender (or any subsequent holder thereof).
SECTION 4.27. MANAGEMENT AGREEMENT
The Management Agreement is in full force and effect and there is no
default thereunder by any party thereto and, to Borrower's knowledge, no event
has occurred that, with the passage of time and/or the giving of notice would
constitute a default thereunder. No management fees under the Management
Agreement are accrued and unpaid.
SECTION 4.28. ILLEGAL ACTIVITY
No portion of the Property has been or will be purchased with proceeds
of any illegal activity, and no part of the proceeds of the Loan will be used in
connection with any illegal activity.
SECTION 4.29. CONSTRUCTION EXPENSES
All costs and expenses of any and all labor, materials, supplies and
equipment used in the construction maintenance or repair of the Improvements
have been paid in full or to the extent any such costs and expenses have
resulted in a Lien against the Property, the Title Insurance Policy provides
Lender satisfactory affirmative insurance with respect to such Lien. To
Borrower's knowledge after due inquiry, there are no claims for payment for
work, labor or materials affecting the Property which are or may become a lien
prior to, or of equal priority with, the Liens created by the Loan Documents.
SECTION 4.30. PERSONAL PROPERTY
Borrower has paid in full for, and is the owner of, all Personal
Property (other than tenants' property) used in connection with the operation of
the Property, free and clear of any
- 34 -
and all security interests, liens or encumbrances, except for Permitted
Encumbrances and the Lien and security interest created by the Loan Documents.
SECTION 4.31. TAXES
Borrower and Borrower Principal have filed all federal, state, county,
municipal, and city income, personal property and other tax returns required to
have been filed by them and have paid all taxes and related liabilities which
have become due pursuant to such returns or pursuant to any assessments received
by them. Neither Borrower nor Borrower Principal knows of any basis for any
additional assessment in respect of any such taxes and related liabilities for
prior years.
SECTION 4.32. PERMITTED ENCUMBRANCES
None of the Permitted Encumbrances, individually or in the aggregate,
materially interferes with the benefits of the security intended to be provided
by the Loan Documents, materially and adversely affects the value of the
Property, impairs the use or the operation of the Property or impairs Borrower's
ability to pay its obligations in a timely manner.
SECTION 4.33. FEDERAL RESERVE REGULATIONS
Borrower will use the proceeds of the Loan for the purposes set forth
in Section 2.1(d) hereof and not for any illegal activity. No part of the
proceeds of the Loan will be used for the purpose of purchasing or acquiring any
"margin stock" within the meaning of Regulation U of the Board of Governors of
the Federal Reserve System or for any other purpose which would be inconsistent
with such Regulation U or any other Regulations of such Board of Governors, or
for any purposes prohibited by Legal Requirements or prohibited by the terms and
conditions of this Agreement or the other Loan Documents.
SECTION 4.34. INVESTMENT COMPANY ACT
Borrower is not (a) an "investment company" or a company "controlled"
by an "investment company," within the meaning of the Investment Company Act of
1940, as amended; (b) a "holding company" or a "subsidiary company" of a
"holding company" or an "affiliate" of either a "holding company" or a
"subsidiary company" within the meaning of the Public Utility Holding Company
Act of 1935, as amended; or (c) subject to any other federal or state law or
regulation which purports to restrict or regulate its ability to borrow money.
SECTION 4.35. RECIPROCAL EASEMENT AGREEMENTS
(a) Neither Borrower, nor any other party is currently in default
(nor has any notice been given or received with respect to an alleged or current
default) under any of the terms and conditions of any REA, and any such REA
remains unmodified and in full force and effect;
(b) All easements granted pursuant to any REA which were to have
survived the site preparation and completion of construction (to the extent that
the same has been completed), remain in full force and effect and have not been
released, terminated, extinguished or discharged by agreement or otherwise;
- 35 -
(c) All sums due and owing by Borrower to the other parties to any
REA (or by the other parties to any such REA to Borrower) pursuant to the terms
of any such REA, including without limitation, all sums, charges, fees,
assessments, costs, and expenses in connection with any taxes, site preparation
and construction, non-shareholder contributions, and common area and other
property management activities have been paid, are current, and no lien has
attached on the Property (or threat thereof been made) for failure to pay any of
the foregoing;
(d) The terms, conditions, covenants, uses and restrictions
contained in any REA do not conflict in any manner with any terms, conditions,
covenants, uses and restrictions contained in any Lease or in any agreement
between Borrower and occupant of any peripheral parcel, including without
limitation, conditions and restrictions with respect to kiosk placement, tenant
restrictions (type, location or exclusivity), sale of certain goods or services,
and/or other use restrictions; and
(e) The terms, conditions, covenants, uses and restrictions
contained in each Lease do not conflict in any manner with any terms,
conditions, covenants, uses and restrictions contained in any REA, any other
Lease or in any agreement between Borrower and occupant of any peripheral
parcel, including without limitation, conditions and restrictions with respect
to kiosk placement, tenant restrictions (type, location or exclusivity), sale of
certain goods or services, and/or other use restrictions.
SECTION 4.36. NO CHANGE IN FACTS OR CIRCUMSTANCES; DISCLOSURE
All information submitted by Borrower or its agents to Lender and in
all financial statements, rent rolls, reports, certificates and other documents
submitted in connection with the Loan or in satisfaction of the terms thereof
and all statements of fact made by Borrower in this Agreement or in any other
Loan Document, are accurate, complete and correct in all material respects.
There has been no material adverse change in any condition, fact, circumstance
or event that would make any such information inaccurate, incomplete or
otherwise misleading in any material respect or that otherwise materially and
adversely affects or, to the best of Borrower's knowledge, could reasonably be
expected to materially and adversely affect the Property or the business
operations or the financial condition of Borrower. To the best of Borrower's
knowledge, Borrower has disclosed to Lender all material facts and has not
failed to disclose any material fact that could cause any representation or
warranty made herein to be materially misleading.
SECTION 4.37. INTELLECTUAL PROPERTY
All trademarks, trade names and service marks necessary to the business
of Borrower as presently conducted or as Borrower contemplates conducting its
business are in good standing and, to the extent of Borrower's actual knowledge,
uncontested. Borrower has not infringed, is not infringing, and has not received
notice of infringement with respect to asserted trademarks, trade names and
service marks of others. To Borrower's knowledge, there is no infringement by
others of trademarks, trade names and service marks of Borrower.
- 36 -
SECTION 4.38. SURVEY
The Survey for the Property delivered to Lender in connection with this
Agreement has been prepared in accordance with the provisions of Section 3.2(c)
hereof, and to the actual knowledge of Borrower does not fail to reflect any
material matter affecting the Property or the title thereto, which was required
to be set forth therein pursuant to Section 3.2(c) hereof.
SECTION 4.39. EMBARGOED PERSON
As of the date hereof and at all times throughout the term of the Loan,
including after giving effect to any transfers of interests permitted pursuant
to the Loan Documents, (a)(1) none of the funds or other assets of Borrower
constitute property of, or are beneficially owned, directly or indirectly, by
any person, entity or government and (2) none of the funds or other assets of
Borrower Principal constitute property of, or are beneficially owned, directly
or indirectly by any person, entity or government owning, directly or
indirectly, greater than a 10% interest in Borrower Principal, that is subject
to trade restrictions under U.S. law, including but not limited to, the
International Emergency Economic Powers Act, 50 U.S.C. Sections 1701 et seq.,
The Trading with the Enemy Act, 50 U.S.C. App. 1 et seq., and any Executive
Orders or regulations promulgated thereunder with the result that the investment
in Borrower or Borrower Principal, as applicable (whether directly or
indirectly), is prohibited by law or the Loan made by Lender is in violation of
law ("EMBARGOED PERSON"); (b) no Embargoed Person has any interest of any nature
whatsoever in Borrower or Borrower Principal, as applicable, with the result
that the investment in Borrower or Borrower Principal, as applicable, (whether
directly or indirectly), is prohibited by law or the Loan is in violation of
law; and (c) none of the funds of Borrower or Borrower Principal, as applicable,
have been derived from any unlawful activity with the result that the investment
in Borrower or Borrower Principal, as applicable, (whether directly or
indirectly), is prohibited by law or the Loan is in violation of law.
SECTION 4.40. PATRIOT ACT
All capitalized words and phrases and all defined terms used in the USA
Patriot Act of 2001, 107 Public Law 56 (October 26, 2001) and in other statutes
and all orders, rules and regulations of the United States government and its
various executive departments, agencies and offices related to the subject
matter of the Patriot Act, including Executive Order 13224 effective September
24, 2001 (collectively referred to in this Section only as the "PATRIOT ACT")
and are incorporated into this Section. Each of Borrower and Borrower Principal
hereby represents and warrants that Borrower and Borrower Principal and each and
every Person affiliated with Borrower or owning directly or indirectly greater
than a 10% interest in Borrower Principal or that to Borrower's knowledge has an
economic interest in Borrower, or, to Borrower's knowledge, that has or will
have an interest in the transaction contemplated by this Agreement or in the
Property or will participate, in any manner whatsoever, in the Loan, is: (i) not
a "blocked" person listed in the Annex to Executive Order Nos. 12947, 13099 and
13224 and all modifications thereto or thereof (as used in this Section only,
the "ANNEX"); (ii) in full compliance with the requirements of the Patriot Act
and all other requirements contained in the rules and regulations of the Office
of Foreign Assets Control, Department of the Treasury (as used in this Section
only, "OFAC"); (iii) operated under policies, procedures and practices, if any,
that are in compliance with the Patriot Act and available to Lender for Lender's
review and
- 37 -
inspection during normal business hours and upon reasonable prior notice; (iv)
not in receipt of any notice from the Secretary of State or the Attorney General
of the United States or any other department, agency or office of the United
States claiming a violation or possible violation of the Patriot Act; (v) not
listed as a Specially Designated Terrorist or as a "blocked" person on any lists
maintained by the OFAC pursuant to the Patriot Act or any other list of
terrorists or terrorist organizations maintained pursuant to any of the rules
and regulations of the OFAC issued pursuant to the Patriot Act or on any other
list of terrorists or terrorist organizations maintained pursuant to the Patriot
Act; (vi) not a person who has been determined by competent authority to be
subject to any of the prohibitions contained in the Patriot Act; and (vii) not
owned or controlled by or now acting and or will in the future act for or on
behalf of any person named in the Annex or any other list promulgated under the
Patriot Act or any other person who has been determined to be subject to the
prohibitions contained in the Patriot Act. Borrower covenants and agrees that in
the event Borrower receives any notice that Borrower Principal or Borrower (or
any of its beneficial owners or affiliates or participants) become listed on the
Annex or any other list promulgated under the Patriot Act or is indicted,
arraigned, or custodially detained on charges involving money laundering or
predicate crimes to money laundering, Borrower shall immediately notify Lender.
It shall be an Event of Default hereunder if Borrower, Borrower Principal or any
other party to any Loan Document becomes listed on any list promulgated under
the Patriot Act or is indicted, arraigned or custodially detained on charges
involving money laundering or predicate crimes to money laundering.
SECTION 4.41. INTENTIONALLY DELETED.
SECTION 4.42. OPERATING LEASE REPRESENTATIONS.
With respect to any Operating Leases relating to the Property, each
such Operating Lease provides that (i) it is subject and subordinate to the
lien, terms and conditions of the Mortgage and the other Loan Documents and (ii)
in the event that the Lender takes possession of the Property, either as the
result of foreclosure of the Mortgage or accepting a deed to the Property in
lieu of foreclosure, or otherwise (or the Property shall be purchased at such a
foreclosure by a third party), the Tenant shall attorn to the Lender or such
third party and recognize the Lender or such third party as its landlord under
the applicable Operating Lease, whereupon, the Operating Lease shall continue in
full force and effect as a direct lease between the Lender or such third party
and the Tenant for the full term thereof, together with all extensions and
renewals thereof. None of the Operating Leases (and none of the underlying real
property relating to any such Operating Lease), if any, produce any income to
Borrower or the Tenant thereunder, and there are currently no Rents payable by
the Tenant to the Borrower under such Operating Lease. Each Operating Lease is
in full force and effect, has not been modified or amended in any manner
whatsoever, (b) there are no defaults under any Operating Lease by Borrower, or,
to the best of Borrower's knowledge, the Tenant thereunder, and, to the best of
Borrower's knowledge, no event has occurred which but for the passage of time,
or notice, or both would constitute a default under such Operating Lease.
SECTION 4.43. SURVIVAL
Borrower agrees that, unless expressly provided otherwise, all of the
representations and warranties of Borrower set forth in this Agreement and
elsewhere in this Agreement and in the
- 38 -
other Loan Documents shall survive for so long as any portion of the Debt
remains owing to Lender. All representations, warranties, covenants and
agreements made in this Agreement or in the other Loan Documents by Borrower
shall be deemed to have been relied upon by Lender notwithstanding any
investigation heretofore or hereafter made by Lender or on its behalf.
ARTICLE 5
BORROWER COVENANTS
From the date hereof and until repayment of the Debt in full and
performance in full of all obligations of Borrower under the Loan Documents or
the earlier release of the Lien of the Mortgage (and all related obligations) in
accordance with the terms of this Agreement and the other Loan Documents,
Borrower hereby covenants and agrees with Lender that:
SECTION 5.1. EXISTENCE; COMPLIANCE WITH LEGAL REQUIREMENTS
(a) Borrower shall do or cause to be done all things necessary to
preserve, renew and keep in full force and effect its existence, rights,
licenses, permits and franchises and comply in all material respects with all
Legal Requirements applicable to it and the Property. Borrower hereby covenants
and agrees not to commit, permit or suffer to exist any act or omission
affording any Governmental Authority the right of forfeiture as against the
Property or any part thereof or any monies paid in performance of Borrower's
obligations under any of the Loan Documents.
(b) After prior written notice to Lender, Borrower, at its own
expense, may contest by appropriate legal proceeding, promptly initiated and
conducted in good faith and with due diligence, the Legal Requirements affecting
the Property, provided that (i) no Default or Event of Default has occurred and
is continuing; (ii) such proceeding shall be permitted under and be conducted in
accordance with the provisions of any other instrument to which Borrower or the
Property is subject and shall not constitute a default thereunder; (iii) neither
the Property, any part thereof or interest therein, any of the tenants or
occupants thereof, nor Borrower shall be affected in any material adverse way as
a result of such proceeding; (iv) non-compliance with the Legal Requirements
shall not impose civil or criminal liability on Borrower or Lender; (v) Borrower
shall have furnished the security as may be required in the proceeding or by
Lender to ensure compliance by Borrower with the Legal Requirements; and (vi)
Borrower shall have furnished to Lender all other items reasonably requested by
Lender.
SECTION 5.2. MAINTENANCE AND USE OF PROPERTY
Borrower shall cause the Property to be maintained in a good and safe
condition and repair. The Improvements and the Personal Property shall not be
removed, demolished or materially altered (except for normal replacement of
Personal Property) other than in accordance with the provisions of Section 5.21
without the prior written consent of Lender. If under applicable zoning
provisions the use of all or any portion of the Property is or shall become a
nonconforming use, Borrower will not cause or permit the nonconforming use to be
discontinued or the nonconforming Improvement to be abandoned without the
express written consent of Lender.
- 39 -
SECTION 5.3. WASTE
Borrower shall not commit or suffer any waste of the Property or make
any change in the use of the Property which will in any way materially increase
the risk of fire or other hazard arising out of the operation of the Property,
or take any action that might invalidate or give cause for cancellation of any
Policy, or do or permit to be done thereon anything that may in any way
materially impair the value of the Property or the security for the Loan.
Borrower will not, without the prior written consent of Lender, permit any
drilling or exploration for or extraction, removal, or production of any
minerals from the surface or the subsurface of the Property, regardless of the
depth thereof or the method of mining or extraction thereof.
SECTION 5.4. TAXES AND OTHER CHARGES
(a) Borrower shall pay all Taxes and Other Charges now or
hereafter levied or assessed or imposed against the Property or any part thereof
no later than ten (10) Business Days prior to the date on which such Taxes or
Other Charges would be delinquent; provided, however, Borrower's obligation to
directly pay Taxes shall be suspended for so long as Borrower complies with the
terms and provisions of Section 9.6 hereof. Borrower shall furnish to Lender
receipts (or copies of checks and transmittal letters evidencing the payment of
such Taxes or Other Charges) for the payment of the Taxes and the Other Charges
prior to the date the same shall become delinquent (provided, however, that
Borrower is not required to furnish such receipts for payment of Taxes in the
event that such Taxes have been paid by Lender pursuant to Section 9.6 hereof).
Subject to any rights of Borrower under this Agreement to contest Liens,
Borrower shall not suffer and shall promptly cause to be paid and discharged any
Lien or charge whatsoever which may be or become a Lien or charge against the
Property, and shall promptly pay for all utility services provided to the
Property, except to the extent the costs of such utility services are not
payable by Borrower and are billed to Tenants at the Property.
(b) After prior written notice to Lender, Borrower, at its own
expense, may contest by appropriate legal proceeding, promptly initiated and
conducted in good faith and with due diligence, the amount or validity or
application in whole or in part of any Taxes or Other Charges, provided that (i)
no Event of Default has occurred and remains uncured; (ii) such proceeding shall
be permitted under and be conducted in accordance with the provisions of any
other instrument to which Borrower is subject and shall not constitute a default
thereunder and such proceeding shall be conducted in accordance with all
applicable Legal Requirements; (iii) neither the Property nor any part thereof
or interest therein will be in danger of being sold, forfeited, terminated,
canceled or lost; (iv) Borrower shall promptly upon final determination thereof
pay the amount of any such Taxes or Other Charges, together with all costs,
interest and penalties which may be payable in connection therewith; (v) such
proceeding shall suspend the collection of such contested Taxes or Other Charges
from the Property; and (vi) Borrower shall furnish such security as may be
required in the proceeding, or, in the event that neither Original Borrower nor
a Borrower Principal Affiliate is Borrower under the Loan, deliver to Lender
such reserve deposits as may be requested by Lender, to insure the payment of
any such Taxes or Other Charges, together with all interest and penalties
thereon (unless Borrower has paid all of the Taxes or Other Charges under
protest). Lender may pay over any such cash deposit or part thereof held by
Lender to the claimant entitled thereto at any time when, in the judgment of
Lender, the entitlement of such claimant is established or the Property (or part
thereof or interest
- 40 -
therein) shall be in danger of being sold, forfeited, terminated, canceled or
lost or there shall be any danger of the Lien of the Mortgage being primed by
any related Lien.
SECTION 5.5. LITIGATION
Borrower shall give prompt written notice to Lender of any litigation
or governmental proceedings pending or threatened in writing against Borrower
which could reasonably be expected to materially adversely affect Borrower's
condition (financial or otherwise) or business or the Property.
SECTION 5.6. ACCESS TO PROPERTY
Borrower shall permit agents, representatives and employees of Lender
to inspect the Property or any part thereof at reasonable hours upon reasonable
advance notice.
SECTION 5.7. NOTICE OF DEFAULT
Borrower shall promptly advise Lender of any material adverse change in
the condition (financial or otherwise) of Borrower, any Borrower Principal or
the Property or of the occurrence of any Default or Event of Default of which
Borrower has knowledge.
SECTION 5.8. COOPERATE IN LEGAL PROCEEDINGS
Borrower shall at Borrower's expense cooperate fully with Lender with
respect to any proceedings before any court, board or other Governmental
Authority which may in any way affect the rights of Lender hereunder or any
rights obtained by Lender under any of the other Loan Documents and, in
connection therewith, permit Lender, at its election, to participate in any such
proceedings.
SECTION 5.9. PERFORMANCE BY BORROWER
Borrower shall in a timely manner observe, perform and fulfill each and
every covenant, term and provision to be observed and performed by Borrower
under this Agreement and the other Loan Documents and any other agreement or
instrument affecting or pertaining to the Property and any amendments,
modifications or changes thereto.
SECTION 5.10. AWARDS; INSURANCE PROCEEDS
Borrower shall cooperate with Lender in obtaining for Lender the
benefits of any Awards or Insurance Proceeds lawfully or equitably payable in
connection with the Property, and Lender shall be reimbursed for any expenses
incurred in connection therewith (including reasonable, actual attorneys' fees
and disbursements, and the payment by Borrower of the expense of an appraisal on
behalf of Lender in case of a Casualty or Condemnation affecting the Property or
any part thereof) out of such Awards or Insurance Proceeds.
- 41 -
SECTION 5.11. FINANCIAL REPORTING
(a) Borrower and Borrower Principal shall keep adequate books and
records of account in accordance with methods acceptable to Lender in its
reasonable discretion, consistently applied and shall furnish to Lender:
(i) prior to a Securitization, at the request of Lender,
monthly, and following a Securitization, quarterly and annual certified
rent rolls signed and dated by Borrower in the form prepared by
Borrower in the ordinary course of the operation of its business and
providing at least as much detail as contained in the rent rolls
delivered to Lender in connection with the closing of the Loan, within
twenty (20) days after the end of each calendar month, forty-five (45)
days after the end of each fiscal quarter or ninety (90) days after the
close of each fiscal year of Borrower, as applicable;
(ii) prior to a Securitization, at the request of Lender,
monthly, and following a Securitization, quarterly and annual operating
statements of the Property, prepared and certified by Borrower in the
form used by Borrower in the ordinary course of its operations,
detailing the revenues received, the expenses incurred and the net
operating income before and after debt service (principal and interest)
and major capital improvements for the period of calculation and
containing appropriate year-to-date information, within twenty (20)
days after the end of each calendar month, forty-five (45) days after
the end of each fiscal quarter or ninety (90) days after the close of
each fiscal year of Borrower, as applicable; and
(iii) annually, with respect to MHC, financial statements
(on a consolidated basis with MHCOP) prepared and audited by an
Acceptable Accountant, within ninety (90) days of the close of each
fiscal year of MHC and MHCOP, as applicable.
(b) Intentionally deleted.
(c) Borrower shall comply with the following:
(i) Intentionally deleted.
(ii) If requested by Lender, Borrower shall provide
Lender, promptly upon request, with summaries of the financial
statements referenced in Section 5.11(c)(ii)(A)-(D) below if, at the
time a Disclosure Document is being prepared for a Securitization, it
is expected that the principal amount of the Loan and any Affiliated
Loans at the time of Securitization may, or if the principal amount of
the Loan and any Affiliated Loans at any time during which the Loan and
any Affiliated Loans are included in a Securitization does, equal or
exceed 10% of the aggregate principal amount of all mortgage loans
included or expected to be included, as applicable, in a
Securitization. Such summaries shall meet the requirements for
"summarized financial information," as defined in Section 210.1-02(bb)
of Regulation S-X, or such other requirements as may be reasonably
determined to be necessary or appropriate by Lender.
(A) A balance sheet with respect to the Property
for the two most recent fiscal years, meeting the requirements
of Section 210.3-01 of Regulation S-X
- 42 -
of the Securities Act and statements of income and statements
of cash flows with respect to the Property for the three most
recent fiscal years, meeting the requirements of Section
210.3-02 of Regulation S-X, and, to the extent that such
balance sheet is more than 135 days old as of the date of the
document in which such financial statements are included,
interim financial statements of the Property meeting the
requirements of Section 210.3-01 and 210.3-02 of Regulation
S-X (all of such financial statements, collectively, the
"Standard Statements"); provided, however, that with respect
to a Property (other than properties that are hotels, nursing
homes, or other properties that would be deemed to constitute
a business and not real estate under Regulation S-X or other
legal requirements) that has been acquired by Borrower from an
unaffiliated third party (such Property, "Acquired Property"),
as to which the other conditions set forth in Section 210.3-14
of Regulation S-X for provision of financial statements in
accordance with such Section have been met, in lieu of the
Standard Statements otherwise required by this section,
Borrower shall instead provide the financial statements
required by such Section 210.3-14 of Regulation S-X ("Acquired
Property Statements").
(B) Not later than 30 days after the end of each
fiscal quarter following the date hereof, a balance sheet of
the Property as of the end of such fiscal quarter, meeting the
requirements of Section 210.3-01 of Regulation S-X, and
statements of income and statements of cash flows of the
Property for the period commencing following the last day of
the most recent fiscal year and ending on the date of such
balance sheet and for the corresponding period of the most
recent fiscal year, meeting the requirements of Section
210.3-02 of Regulation S-X.
(C) Not later than 75 days after the end of each
fiscal year following the date hereof, a balance sheet of the
Property as of the end of such fiscal year, meeting the
requirements of Section 210.3-01 of Regulation S-X, and
statements of income and statements of cash flows of the
Property for such fiscal year, meeting the requirements of
Section 210.3-02 of Regulation S-X.
(D) Within ten Business Days after notice from
Lender in connection with the Securitization of this Loan,
such additional financial statements, such that, as of the
date (each an "Offering Document Date") of each Disclosure
Document, Borrower shall have provided Lender with all
financial statements as described in subsection (f)(i) above;
provided that the fiscal year and interim periods for which
such financial statements shall be provided shall be
determined as of such Offering Document Date.
(iii) All financial statements provided by Borrower
hereunder pursuant to Section 5.11(c)(ii) hereof shall be prepared in
accordance with GAAP, and shall meet the requirements of Regulation S-X
and other applicable legal requirements. All financial statements
(audited or unaudited) provided by Borrower under this Section 5.11
shall be certified by an authorized officer or administrative member of
Borrower, which certification shall state that such financial
statements meet the requirements set forth in the first sentence of
this Section 5.11(c)(iii).
- 43 -
(iv) If requested by Lender, Borrower shall provide
Lender, promptly upon request, with any other or additional financial
statements, or financial, statistical or operating information, as
Lender shall determine to be required pursuant to Regulation S-X or any
amendment, modification or replacement thereto or other legal
requirements in connection with any Disclosure Document or any filing
under or pursuant to the Exchange Act in connection with or relating to
a Securitization (hereinafter an "Exchange Act Filing") or as shall
otherwise be reasonably requested by Lender.
(v) In the event Lender determines, in connection with a
Securitization, that the financial statements required in order to
comply with Regulation S-X or other legal requirements are other than
as provided herein, then notwithstanding the provisions of Section
5.11(c) hereof, Lender may request, and Borrower shall promptly
provide, such combination of Acquired Property Statement and/or
Standard Statements or such other financial statements as Lender
determines to be necessary or appropriate for such compliance.
(vi) Any reports, statements or other information required
to be delivered under this Agreement shall be delivered in paper form
and in the event that Lender requires financial statements in
connection with subsection (c) above because the Loan when combined
with the principal amount of any Affiliated Loans equal or exceed 20%
of the aggregate principal amount of all mortgage loans included in a
Securitization (defined below), Borrower shall deliver such reports,
statements and other information (A) on a diskette, and (B) if
requested by Lender and within the capabilities of Borrower's data
systems without change or modification thereto, in electronic form and
prepared using Microsoft Word for Windows or WordPerfect for Windows
files (which files may be prepared using a spreadsheet program and
saved as word processing files).
(d) Borrower and Borrower Principal shall furnish Lender with such
other additional financial or management information (including state and
federal tax returns) as may, from time to time, be reasonably required by Lender
in form and substance satisfactory to Lender (including, without limitation, any
financial reports required to be delivered by any Tenant or any guarantor of any
Lease pursuant to the terms of such Lease), and shall furnish to Lender and its
agents convenient facilities for the examination and audit of any such books and
records.
(e) All items requiring the certification of Borrower shall,
except where Borrower is an individual, require a certificate executed by the
general partner, managing member or authorized/senior officer of Borrower, as
applicable (and the same rules shall apply to any sole shareholder, general
partner or managing member which is not an individual).
(f) Notwithstanding anything to the contrary contained herein, in
no event shall Borrower be required to comply with the financial reporting
requirements of Regulation S-X that would be applicable solely as a result of
the principal amount of the Loan and any Affiliated Loans (at the time of
Securitization) equaling or exceeding 20% of the aggregate principal amount of
all mortgage loans included or expected to be included, as applicable, in a
Securitization.
- 44 -
SECTION 5.12. ESTOPPEL STATEMENT
(a) After request by Lender, Borrower shall within fifteen (15)
Business Days furnish Lender with a statement, duly acknowledged and certified,
setting forth (i) the amount of the original principal amount of the Note, (ii)
the rate of interest on the Note, (iii) the unpaid principal amount of the Note,
(iv) the date installments of interest and/or principal were last paid, (v) any
offsets or defenses to the payment of the Debt, if any, and (vi) that the Note,
this Agreement, the Mortgage and the other Loan Documents are valid, legal and
binding obligations and have not been modified or if modified, giving
particulars of such modification.
(b) Borrower shall use its reasonable efforts to deliver to
Lender, promptly upon request, but subject to the terms of the applicable Major
Leases that are either Ground Leases or Operating Leases, duly executed estoppel
certificates from any one or more Tenants thereunder as required by Lender (but
no more frequently than once every twelve (12) months provided no Event of
Default has occurred and is continuing) attesting to such facts regarding the
related Lease as Lender may reasonably require, including, but not limited to
attestations that each Lease covered thereby is in full force and effect with no
defaults thereunder on the part of any party, that none of the Rents have been
paid more than one month in advance, except as security, and that the Tenant
claims no defense or offset against the full and timely performance of its
obligations under the Lease.
SECTION 5.13. LEASING MATTERS.
(a) Except as otherwise consented to by Lender in writing, all
Leases shall be written on the standard form of lease which shall have been (i)
with respect to pad Leases, delivered to Lender in connection with the closing
of the Loan and (ii) with respect to Operating Leases or Ground Leases, if any,
approved by Lender, provided however that Lender acknowledges that to the extent
any portion of the Property consists of a recreational vehicle resort, Borrower
shall not be required to enter into written Leases with any occupant or tenant
of such portion of the Property and such tenants and/or occupants of such
recreational vehicle resorts shall be deemed month to month tenants or licensees
of Borrower. So long as either Original Borrower or a Borrower Principal
Affiliate is Borrower under the Loan, Borrower may modify its standard form of
pad lease in accordance with sound business practices and Legal Requirements,
provided that the form of such Lease contains covenants and conditions that are
consistent with those contained in comparable leases in the applicable local
market. Notwithstanding the foregoing, in the event that the majority of owners,
managers and/or operators of comparable recreational vehicle resorts in the
applicable local market enter into written Leases with the occupants of
recreational vehicle resorts, Borrower shall be required to enter into written
Leases with respect to such occupants, and the form of such lease shall contain
terms and conditions that are consistent with those of Leases of comparable
properties in the applicable market or sub-market. Upon request, Borrower (1)
shall furnish Lender with executed copies of all Major Leases and (2) shall make
available to Lender at Borrower's offices (upon reasonable notice to Borrower),
executed copies of all other Leases. No material changes may be made to the
Lender-approved standard form of Operating Lease and Ground Lease, if
applicable, without the prior written consent of Lender. In addition, all
renewals of Leases and all proposed leases shall provide for rental rates and
terms comparable to existing local market rates and terms and, except with
respect to one pad at the Property used for on-site community managers (or other
employees of
- 45 -
Manager), shall be arm's-length transactions with bona fide, independent third
party tenants. All proposed Major Leases and renewals of existing Major Leases
shall be subject to the prior approval of Lender and its counsel, at Borrower's
expense. All Leases shall provide that they are subordinate to the Mortgage and
that the tenant agrees to attorn to Lender.
(b) Borrower (i) shall observe and perform all the obligations
imposed upon the landlord under the Leases and shall not do or permit to be done
anything to impair the value of the Leases as security for the Debt; (ii) shall
enforce all of the material terms, covenants and conditions contained in the
Leases upon the part of the Tenant thereunder to be observed or performed, short
of termination thereof; provided however, with respect to pad leases, a pad
Lease may be terminated in the event of a default by the tenant thereunder;
(iii) with respect to any Leases (other than Leases relating to mobile home park
pads or recreational vehicle resort pads), shall not collect any of the Rents
more than one (1) month in advance; provided, however, that in no event shall
Borrower collect any Rents under Leases (or any other applicable occupancy
agreements (written or otherwise)) relating to mobile home park pads or
recreational vehicle resort pads more than one (1) year in advance; (iv) shall
not execute any other assignment of the landlord's interest in the Leases or the
Rents; and (v) shall not consent to any assignment of or subletting under the
Major Leases not in accordance with their terms, without the prior written
consent of Lender.
(c) Notwithstanding the provisions of subsection (a) above,
renewals of existing commercial Leases and proposed Leases for commercial space
shall not be subject to the prior approval of Lender, provided all of the
following conditions are satisfied: (i) the rental income pursuant to the
renewal or proposed Lease is not more than five (5%) percent of the total rental
income for the Property, (ii) the renewal or proposed Lease has a base term of
less than six (6) years including options to renew, (iii) no rent, credits, free
rents or concessions have been granted under the renewal or proposed Lease
(except to the extent consistent with current market conditions), (iv) the
renewal or proposed Lease is subject and subordinate to the Mortgage and the
tenant thereunder shall have agreed to attorn to Lender, (v) the renewal or
proposed Lease is on the standard form of lease approved by Lender, (vi) the
renewal or proposed Lease does not contain any option, offer, right of first
refusal, or other similar right to acquire all or any portion of the Property,
and (vii) except with respect to the Operating Lease the renewal or proposed
Lease provides for rental rates and terms comparable to existing market rates
and terms and is an arm's-length transaction with a bona fide, independent third
party tenant. Borrower shall deliver to Lender copies of all Leases which are
entered into pursuant to the preceding sentence together with Borrower's
certification that it has satisfied all of the conditions of the preceding
sentence within thirty (30) days after the execution of the Lease.
SECTION 5.14. PROPERTY MANAGEMENT
(a) Borrower shall (i) promptly perform and observe all of the
covenants required to be performed and observed by it under the Management
Agreement and do all things necessary to preserve and to keep unimpaired its
material rights thereunder; (ii) promptly notify Lender of any material default
under the Management Agreement of which it is aware; (iii) promptly deliver to
Lender a copy of any notice of default or other material notice received by
Borrower under the Management Agreement; (iv) promptly give notice to Lender of
any notice or information that Borrower receives which indicates that Manager is
terminating the Management
- 46 -
Agreement or that Manager is otherwise discontinuing its management of the
Property; and (v) promptly enforce the performance and observance of all of the
covenants required to be performed and observed by Manager under the Management
Agreement.
(b) If at any time, (i) an Event of Default under Section 11.1(a)
hereof has occurred and is continuing; or (ii) Manager is not an Affiliated
Manager and either (A) a default has occurred and is continuing under the
Management Agreement or (B) Manager has become insolvent or a debtor in a
bankruptcy proceeding, Borrower shall, at the request of Lender, terminate the
Management Agreement upon thirty (30) days prior notice to Manager and replace
Manager with a Qualified Manager approved by Lender on terms and conditions
satisfactory to Lender, it being understood and agreed that the management fee
for such replacement manager shall not exceed then prevailing market rates.
(c) Intentionally deleted.
(d) Any entity Controlled by MHC or MHCOP shall be deemed
Qualified Manager. Borrower shall not, without the prior written consent of
Lender (which consent shall not be unreasonably withheld, conditioned or
delayed): (i) surrender, terminate or cancel the Management Agreement or
otherwise replace Manager or enter into any other management agreement with
respect to the Property; (ii) reduce or consent to the reduction of the term of
the Management Agreement; (iii) increase or consent to the increase of the
amount of any charges under the Management Agreement; or (iv) otherwise modify,
change, supplement, alter or amend, or waive or release any of its rights and
remedies under, the Management Agreement in any material respect, provided,
however, that if Manager is Controlled by MHC or MHCOP, then Borrower shall have
the right to enter into amendments to the Management Agreement (1) which are
consistent with good operating practices, (2) which do not increase any of the
fees or other similar charges payable by Borrower thereunder and (3) which do
not otherwise materially increase any of Borrower's obligations thereunder, and
Borrower shall have the right to enter into a new management agreement with
another entity Controlled by MHC or MHCOP on substantially the same terms and
conditions as those set forth in the Management Agreement approved by Lender in
connection with the closing of the Loan and otherwise in accordance with the
terms permitted hereunder, without the consent of Lender. In the event that
Borrower replaces Manager at any time during the term of Loan pursuant to this
subsection, such Manager shall be a Qualified Manager.
SECTION 5.15. LIENS
Borrower shall not, without the prior written consent of Lender,
create, incur, assume or suffer to exist any Lien on any portion of the Property
or permit any such action to be taken, except Permitted Encumbrances.
SECTION 5.16. DEBT CANCELLATION
Borrower shall not cancel or otherwise forgive or release any claim or
debt (other than termination of Leases in accordance herewith) owed to Borrower
by any Person, except for adequate consideration and in the ordinary course of
Borrower's business.
- 47 -
SECTION 5.17. ZONING
Borrower shall not initiate or consent to any zoning reclassification
of any portion of the Property or seek any variance under any existing zoning
ordinance or use or permit the use of any portion of the Property in any manner
that could result in such use becoming a non-conforming use under any zoning
ordinance or any other applicable land use law, rule or regulation, without the
prior written consent of Lender.
SECTION 5.18. ERISA
(a) Borrower shall not engage in any transaction which would cause
any obligation, or action taken or to be taken, hereunder (or the exercise by
Lender of any of its rights under the Note, this Agreement or the other Loan
Documents) to be a non-exempt (under a statutory or administrative class
exemption) prohibited transaction under ERISA.
(b) Borrower further covenants and agrees to deliver to Lender
such certifications or other evidence from time to time throughout the term of
the Loan, as requested by Lender in its sole discretion, that (i) Borrower is
not and does not maintain an "employee benefit plan" as defined in Section 3(3)
of ERISA, which is subject to Title I of ERISA, or a "governmental plan" within
the meaning of Section 3(3) of ERISA; (ii) Borrower is not subject to state
statutes regulating investments and fiduciary obligations with respect to
governmental plans; and (iii) one or more of the following circumstances is
true:
(A) Equity interests in Borrower are publicly
offered securities, within the meaning of 29 C.F.R.
Section 2510.3-101(b)(2);
(B) Less than twenty-five percent (25%) of each
outstanding class of equity interests in Borrower are held by
"benefit plan investors" within the meaning of 29 C.F.R.
Section 2510.3-101(f)(2); or
(C) Borrower qualifies as an "operating company"
or a "real estate operating company" within the meaning of 29
C.F.R. Section 2510.3-101(c) or (e).
SECTION 5.19. NO JOINT ASSESSMENT
Borrower shall not suffer, permit or initiate the joint assessment of
the Property with (a) any other real property constituting a tax lot separate
from the Property, or (b) any portion of the Property which may be deemed to
constitute personal property, or any other procedure whereby the Lien of any
taxes which may be levied against such personal property shall be assessed or
levied or charged to the Property.
SECTION 5.20. RECIPROCAL EASEMENT AGREEMENTS
Borrower shall not enter into, terminate or modify (in any material
respects) any REA without Lender's prior written consent, which consent shall
not be unreasonably withheld, conditioned or delayed. Borrower shall enforce,
comply with, and cause each of the parties to the REA to comply with all of the
material economic terms and conditions contained in the REA. Lender acknowledges
that it would be unreasonable to withhold its consent to Borrower entering
- 48 -
into an REA with an Affiliate owning property adjacent to the Property with
respect to the use of certain amenities and facilities at the Property, provided
that (A) any such REA would not (i) have a material adverse affect on the
Property or the Borrower, (ii) impose any material obligations on the Borrower,
(B) the terms of any such REA provide that Borrower shall be paid fair market
value for the use of such amenities and/or facilities under any such REA and (C)
sufficient utilities, facilities and other amenities shall continue to be
available to and serve the Property.
SECTION 5.21. ALTERATIONS
Lender's prior approval shall be required in connection with any
alterations to any Improvements, exclusive of alterations to tenant spaces
required under any Lease, (a) that may have a material adverse effect on the
Property or (b) that, together with any other alterations undertaken at the same
time (including any related alterations, improvements or replacements), are
reasonably anticipated to have a cost in excess of the Alteration Threshold.
Notwithstanding the provisions of subsection (b) above and provided that either
the Original Borrower or a Borrower Principal Affiliate is Borrower under the
Loan, Lender's prior approval shall not be required in connection with any
alterations in excess of the Alteration Threshold, provided that Lender shall
have received (a) a current Appraisal of the Property (or a letter update to the
Appraisal delivered in connection with the closing of the Loan), (b) a
certificate from Borrower and (c) such other evidence that would be satisfactory
to a prudent institutional mortgage loan lender each indicating that such
alterations will not impair (as security for the Loan) the fair market value of
the real estate collateral portion of the Property, as determined by a prudent
institutional secondary market lender. If the total unpaid amounts incurred and
to be incurred with respect to such alterations to the Improvements shall at any
time exceed the Alteration Threshold and regardless of whether Lender's consent
is required in connection with any such alterations, Borrower shall promptly
deliver to Lender as security for the payment of such amounts and as additional
security for Borrower's obligations under the Loan Documents any of the
following: (i) cash, (ii) direct non-callable obligations of the United States
of America or other obligations which are "government securities" within the
meaning of Section 2(a)(16) of the Investment Company Act of 1940, to the extent
acceptable to the applicable Rating Agencies, (iii) other securities acceptable
to Lender and the Rating Agencies, or (iv) a completion bond, provided that such
completion bond is acceptable to the Lender and the Rating Agencies. Such
security shall be in an amount equal to the excess of the total unpaid amounts
incurred and to be incurred with respect to such alterations to the Improvements
over the Alteration Threshold.
SECTION 5.22. TAX CREDITS
Borrower shall not claim a low income housing credit for the Property
under Section 42 of the Internal Revenue Code without Lender's prior written
consent.
SECTION 5.23. GOLF COURSE PROPERTIES.
Borrower Principal hereby agrees, until such time as Lender has
exercised any of its remedies under Section 11.2 hereof to obtain an entry of a
judgment of foreclosure, exercise any power of sale, or delivery of a deed in
lieu of foreclosure of the Mortgage, to cause to be maintained and continuously
operated (other than through Borrower) the golf course located on
- 49 -
the Property and all ancillary Improvements related thereto (including, without
limitation, the clubhouse, the golf shop, and restaurant, if any) (collectively,
the "Golf Course Operation") in a condition, quality, and standard equal to or
exceeding the current condition, quality, and standard of the Golf Course
Operation as of the date hereof (including, without limitation, the current
physical condition of the course and applicable physical plant and the revenue
operations).
ARTICLE 6
ENTITY COVENANTS
SECTION 6.1. SINGLE PURPOSE ENTITY/SEPARATENESS
Until the Debt has been paid in full, Borrower represents, warrants and
covenants as follows:
(a) Borrower has not and will not:
(i) engage in any business or activity other than the
ownership, operation and maintenance of the Property, and activities
incidental thereto;
(ii) acquire or own any assets other than (A) the
Property, and (B) such incidental Personal Property as may be necessary
for the operation of the Property;
(iii) merge into or consolidate with any Person, or
dissolve, terminate, liquidate in whole or in part, transfer or
otherwise dispose of all or substantially all of its assets or change
its legal structure;
(iv) fail to observe all organizational formalities, or
fail to preserve its existence as an entity duly organized, validly
existing and in good standing (if applicable) under the applicable
Legal Requirements of the jurisdiction of its organization or
formation, or amend, modify, terminate or fail to comply with the
provisions of its organizational documents;
(v) own any subsidiary, or make any investment in, any
Person;
(vi) commingle its assets with the assets of any other
Person;
(vii) incur any debt, secured or unsecured, direct or
contingent (including guaranteeing any obligation), other than (A) the
Debt, (B) trade and operational indebtedness incurred in the ordinary
course of business with trade creditors, provided such indebtedness is
(1) unsecured, (2) not evidenced by a note, (3) on commercially
reasonable terms and conditions, and (4) due not more than sixty (60)
days past the date incurred and paid on or prior to such date, and/or
(C) financing leases and purchase money indebtedness incurred in the
ordinary course of business relating to Personal Property on
commercially reasonable terms and conditions; provided however, the
aggregate amount of the indebtedness described in (B) and (C) shall not
exceed at any time three percent (3%) of the outstanding principal
amount of the Note;
- 50 -
(viii) fail to maintain its records, books of account, bank
accounts, financial statements, accounting records and other entity
documents separate and apart from those of any other Person; except
that Borrower's financial position, assets, liabilities, net worth and
operating results may be included in the consolidated financial
statements of an Affiliate, provided that such consolidated financial
statements indicate that Borrower is a separate legal entity and that
it maintains separate books and records;
(ix) enter into any contract or agreement with any general
partner, member, shareholder, principal, guarantor of the obligations
of Borrower, or any Affiliate of the foregoing, except upon terms and
conditions that are intrinsically fair, commercially reasonable and
substantially similar to those that would be available on an
arm's-length basis with unaffiliated third parties;
(x) maintain its assets in such a manner that it will be
costly or difficult to segregate, ascertain or identify its individual
assets from those of any other Person;
(xi) assume or guaranty the debts of any other Person,
hold itself out to be responsible for the debts of any other Person, or
otherwise pledge its assets for the benefit of any other Person or hold
out its credit as being available to satisfy the obligations of any
other Person;
(xii) make any loans or advances to any Person;
(xiii) fail to file its own tax returns or files a
consolidated federal income tax return with any Person (unless
prohibited or required, as the case may be, by applicable Legal
Requirements);
(xiv) fail either to hold itself out to the public as a
legal entity separate and distinct from any other Person or to conduct
its business solely in its own name or fail to correct any known
misunderstanding regarding its separate identity;
(xv) fail to maintain adequate capital for the normal
obligations reasonably foreseeable in a business of its size and
character and in light of its contemplated business operations,
provided, however, that any such failure to maintain adequate capital
will not constitute a breach of this covenant if cash flow from the
Property is insufficient for Borrower to maintain adequate capital as
set forth above;;
(xvi) if it is a partnership or limited liability company,
without the unanimous written consent of all of its partners or
members, as applicable, and the written consent of 100% of the managers
of Borrower (if any), including, without limitation, each Independent
Director, (a) file or consent to the filing of any petition, either
voluntary or involuntary, to take advantage of any Creditors Rights
Laws, (b) seek or consent to the appointment of a receiver, liquidator
or any similar official, (c) take any action that might cause such
entity to become insolvent, or (d) make an assignment for the benefit
of creditors;
- 51 -
(xvii) fail to allocate shared expenses (including, without
limitation, shared office space and services performed by an employee
of an Affiliate) among the Persons sharing such expenses and to use
separate stationery, invoices and checks;
(xviii) make any distributions so as to render Borrower
insolvent or cause Borrower to become unable to pay its own liabilities
(including, without limitation, the salaries of its own employees, if
any) from its own funds;
(xix) acquire obligations or securities of its partners,
members, shareholders or other affiliates, as applicable; or
(xx) violate or cause to be violated the assumptions made
with respect to Borrower and its principals in any opinion letter
pertaining to substantive consolidation delivered to Lender in
connection with the Loan; or
(xxi) If Borrower is a partnership or limited liability
company, each general partner in the case of a general partnership,
each general partner in the case of a limited partnership, or the
managing member in the case of a limited liability company (each an
"SPE COMPONENT ENTITY") of Borrower, as applicable, shall be a
corporation or a single member Delaware limited liability company whose
sole asset is its interest in Borrower. Each SPE Component Entity (i)
will at all times comply with each of the covenants, terms and
provisions contained in Section 6.1(a)(iii) - (vi) and (viii) - (xxi),
as if such representation, warranty or covenant was made directly by
such SPE Component Entity; (ii) will not engage in any business or
activity other than owning an interest in Borrower; (iii) will not
acquire or own any assets other than its partnership, membership, or
other equity interest in Borrower; (iv) will not incur any debt,
secured or unsecured, direct or contingent (including guaranteeing any
obligation); (v) will at all times when the Loan is outstanding own at
least a one hundredth of one percent (.01%) general partnership or
managing membership interest in Borrower; and (vi) will cause Borrower
to comply with the provisions of this Section 6.1 and Section 6.4.
Prior to the withdrawal or the disassociation of any SPE Component
Entity from Borrower, Borrower shall immediately appoint a new general
partner or managing member whose articles of incorporation or limited
liability company operating agreement, as applicable, are substantially
similar to those of such SPE Component Entity and, if an opinion letter
pertaining to substantive consolidation was required at closing,
deliver a new opinion letter acceptable to Lender and the Rating
Agencies with respect to the new SPE Component Entity and its equity
owners. Notwithstanding the foregoing, to the extent Borrower is a
single member Delaware limited liability company, so long as Borrower
maintains such formation status, no SPE Component Entity shall be
required.
(b) In the event Borrower is a single member Delaware limited
liability company, the limited liability company agreement of Borrower (the "LLC
AGREEMENT") shall provide that (i) upon the occurrence of any event that causes
the sole member of Borrower ("MEMBER") to cease to be the member of Borrower
(other than (A) upon an assignment by Member of all of its limited liability
company interest in Borrower and the admission of the transferee in accordance
with the Loan Documents and the LLC Agreement, or (B) the resignation of Member
and the admission of an additional member of Borrower in accordance with the
terms of the Loan
- 52 -
Documents and the LLC Agreement), any person acting as Independent Director of
Borrower shall, without any action of any other Person and simultaneously with
the Member ceasing to be the member of Borrower, automatically be admitted to
Borrower ("SPECIAL MEMBER") and shall continue Borrower without dissolution and
(ii) Special Member may not resign from Borrower or transfer its rights as
Special Member unless (A) a successor Special Member has been admitted to
Borrower as Special Member in accordance with requirements of Delaware law and
(B) such successor Special Member has also accepted its appointment as an
Independent Director. The LLC Agreement shall further provide that (i) Special
Member shall automatically cease to be a member of Borrower upon the admission
to Borrower of a substitute Member, (ii) Special Member shall be a member of
Borrower that has no interest in the profits, losses and capital of Borrower and
has no right to receive any distributions of Borrower assets, (iii) pursuant to
Section 18-301 of the Delaware Limited Liability Company Act (the "ACT"),
Special Member shall not be required to make any capital contributions to
Borrower and shall not receive a limited liability company interest in Borrower,
(iv) Special Member, in its capacity as Special Member, may not bind Borrower
and (v) except as required by any mandatory provision of the Act, Special
Member, in its capacity as Special Member, shall have no right to vote on,
approve or otherwise consent to any action by, or matter relating to, Borrower,
including, without limitation, the merger, consolidation or conversion of
Borrower; provided, however, such prohibition shall not limit the obligations of
Special Member, in its capacity as Independent Director, to vote on such matters
required by the Loan Documents or the LLC Agreement. In order to implement the
admission to Borrower of Special Member, Special Member shall execute a
counterpart to the LLC Agreement. Prior to its admission to Borrower as Special
Member, Special Member shall not be a member of Borrower.
Upon the occurrence of any event that causes the Member to cease to be
a member of Borrower, to the fullest extent permitted by law, the personal
representative of Member shall, within ninety (90) days after the occurrence of
the event that terminated the continued membership of Member in Borrower, agree
in writing (i) to continue Borrower and (ii) to the admission of the personal
representative or its nominee or designee, as the case may be, as a substitute
member of Borrower, effective as of the occurrence of the event that terminated
the continued membership of Member of Borrower in Borrower. Any action initiated
by or brought against Member or Special Member under any Creditors Rights Laws
shall not cause Member or Special Member to cease to be a member of Borrower and
upon the occurrence of such an event, the business of Borrower shall continue
without dissolution. The LLC Agreement shall provide that each of Member and
Special Member waives any right it might have to agree in writing to dissolve
Borrower upon the occurrence of any action initiated by or brought against
Member or Special Member under any Creditors Rights Laws, or the occurrence of
an event that causes Member or Special Member to cease to be a member of
Borrower.
SECTION 6.2. CHANGE OF NAME, IDENTITY OR STRUCTURE
Borrower shall not change or permit to be changed (a) Borrower's name,
(b) Borrower's identity (including its trade name or names), (c) Borrower's
principal place of business set forth on the first page of this Agreement, (d)
the corporate, partnership or other organizational structure of Borrower, each
SPE Component Entity (if any), or Borrower Principal, (e) Borrower's state of
organization, or (f) Borrower's organizational identification number, without in
each case notifying Lender of such change in writing at least thirty (30) days
prior to
- 53 -
the effective date of such change and, in the case of a change in Borrower's
structure, without first obtaining the prior written consent of Lender. In
addition, Borrower shall not change or permit to be changed any organizational
documents of Borrower or any SPE Component Entity (if any) if such change would
adversely impact the covenants set forth in Section 6.1 and Section 6.4 hereof.
Borrower authorizes Lender to file any financing statement or financing
statement amendment required by Lender to establish or maintain the validity,
perfection and priority of the security interest granted herein. At the request
of Lender, Borrower shall execute a certificate in form satisfactory to Lender
listing the trade names under which Borrower intends to operate the Property,
and representing and warranting that Borrower does business under no other trade
name with respect to the Property. If Borrower does not now have an
organizational identification number and later obtains one, or if the
organizational identification number assigned to Borrower subsequently changes,
Borrower shall promptly notify Lender of such organizational identification
number or change.
SECTION 6.3. BUSINESS AND OPERATIONS
Borrower will qualify to do business and will remain in good standing
under the laws of the State as and to the extent the same are required for the
ownership, maintenance, management and operation of the Property.
SECTION 6.4. INDEPENDENT DIRECTOR
(a) The organizational documents of Borrower or each SPE Component
Entity (if any), as applicable, shall provide that at all times there shall be,
and Borrower shall cause there to be, at least one manager (each an "INDEPENDENT
DIRECTOR") of Borrower or such SPE Component Entity, as applicable, reasonably
satisfactory to Lender each of whom are not at the time of such individual's
initial appointment, and shall not have been at any time during the preceding
five (5) years, and shall not be at any time while serving as a director of
Borrower or such SPE Component Entity, as applicable, either (i) a shareholder
(or other equity owner) of, or an officer, director, partner, manager, member
(other than as a Special Member in the case of single member Delaware limited
liability companies), employee, attorney or counsel of, Borrower, such SPE
Component Entity or any of their respective shareholders, partners, members,
subsidiaries or affiliates; (ii) a customer or creditor of, or supplier to,
Borrower or any of its respective shareholders, partners, members, subsidiaries
or affiliates who derives any of its purchases or revenue from its activities
with Borrower or such SPE Component Entity or any Affiliate of any of them;
(iii) a Person who Controls or is under common Control with any such
shareholder, officer, director, partner, manager, member, employee, supplier,
creditor or customer; or (iv) a member of the immediate family of any such
shareholder, officer, director, partner, manager, member, employee, supplier,
creditor or customer.
(b) The organizational documents of Borrower or each SPE Component
Entity (if any), as the case may be, shall provide that the manager of Borrower
or such SPE Component Entity, as applicable, shall not take any action which,
under the terms of any articles of organization or operating agreement, as
applicable, requires an unanimous vote of the members and manager of Borrower or
such SPE Component Entity, as the case may be, unless at the time of such action
there shall be at least one manager who is an Independent Director. Borrower or
such SPE Component Entity, as applicable, will not, without the unanimous
written consent of
- 54 -
its members and managers, including each Independent Director, on behalf of
itself or Borrower, (i) file or consent to the filing of any petition, either
voluntary or involuntary, to take advantage of any applicable Creditors Rights
Laws; (ii) seek or consent to the appointment of a receiver, liquidator or any
similar official; (iii) take any action that might cause such entity to become
insolvent; or (iv) make an assignment for the benefit of creditors.
ARTICLE 7
NO SALE OR ENCUMBRANCE
SECTION 7.1. TRANSFER DEFINITIONS
For purposes of this Article 7 an "AFFILIATED MANAGER" shall mean any
managing agent in which Borrower, Borrower Principal, any SPE Component Entity
(if any) or any affiliate of such entities has, directly or indirectly, any
legal, beneficial or economic interest; "CONTROL" shall mean the power to direct
the management and policies of a Restricted Party, directly or indirectly,
whether through the ownership of voting securities or other beneficial
interests, by contract or otherwise; "RESTRICTED PARTY" shall mean Borrower,
Borrower Principal, any SPE Component Entity (if any), any Affiliated Manager,
or any shareholder, partner, member or non-member manager, or any direct or
indirect legal or beneficial owner of Borrower, Borrower Principal, any SPE
Component Entity (if any), any Affiliated Manager or any non-member manager; and
a "SALE OR PLEDGE" shall mean a voluntary or involuntary sale, conveyance,
mortgage, grant, bargain, encumbrance, pledge, assignment, grant of any options
with respect to, or any other transfer or disposition of (directly or
indirectly, voluntarily or involuntarily, by operation of law or otherwise, and
whether or not for consideration or of record) of a legal or beneficial
interest.
SECTION 7.2. NO SALE/ENCUMBRANCE
(a) Borrower shall not cause or permit a Sale or Pledge of the
Property or any part thereof or any legal or beneficial interest therein nor
permit a Sale or Pledge of an interest in any Restricted Party (in each case, a
"PROHIBITED TRANSFER"), other than pursuant to Leases to Tenants in accordance
with the provisions of Section 5.13, without the prior written consent of
Lender.
(b) A Prohibited Transfer shall include, but not be limited to,
(i) an installment sales agreement wherein Borrower agrees to sell the Property
or any part thereof for a price to be paid in installments; (ii) except to the
extent permitted pursuant to Section 7.7 hereof, an agreement by Borrower
leasing all or a substantial part of the Property for other than actual
occupancy by a space tenant thereunder or a sale, assignment or other transfer
of, or the grant of a security interest in, Borrower's right, title and interest
in and to any Leases or any Rents; (iii) if a Restricted Party is a corporation,
any merger, consolidation or Sale or Pledge of such corporation's stock or the
creation or issuance of new stock in one or a series of transactions; (iv) if a
Restricted Party is a limited or general partnership or joint venture, any
merger or consolidation or the change, removal, resignation or addition of a
general partner or the Sale or Pledge of the partnership interest of any general
or limited partner or any profits or proceeds relating to such partnership
interests or the creation or issuance of new partnership interests; (v) if a
Restricted Party is a limited liability company, any merger or consolidation or
the change,
- 55 -
removal, resignation or addition of a managing member or non-member manager (or
if no managing member, any member) or the Sale or Pledge of the membership
interest of any member or any profits or proceeds relating to such membership
interest; or (vi) if a Restricted Party is a trust or nominee trust, any merger,
consolidation or the Sale or Pledge of the legal or beneficial interest in a
Restricted Party or the creation or issuance of new legal or beneficial
interests.
SECTION 7.3. PERMITTED TRANSFERS
(a) Notwithstanding the provisions of Section 7.2, the following
transfers shall not be deemed to be a Prohibited Transfer: (i) a transfer by
devise or descent or by operation of law upon the death of a member, partner or
shareholder of a Restricted Party; (ii) the Sale or Pledge, in one or a series
of transactions, of not more than forty-nine percent (49%) in the aggregate of
the stock, limited partnership interests or non-managing membership interests
(as the case may be) in Borrower; provided, however, no such transfers shall
result in a change in Control in the Restricted Party or change in control of
the Property, and as a condition to each such transfer, Lender shall receive not
less than thirty (30) days prior written notice of such proposed transfer or
(iii) the sale, transfer or issuance of stock in MHC provided that MHC is listed
on the New York Stock Exchange or such other nationally recognized stock
exchange. Notwithstanding the foregoing, any transfer that results in any Person
owning in excess of forty-nine percent (49%) of the ownership interest in a
Restricted Party shall comply with the requirements of Section 7.4 hereof,
provided however, that with respect to transfers provided for in subsection
(a)(iii) hereof, Borrower shall not be required to deliver a revised substantive
non-consolidation opinion to Lender in connection with any such transfers.
(b) In addition to the foregoing and supplementing subsection (a)
above, Lender's prior written consent shall not be required with respect to (i)
direct or indirect transfers of interests in Borrower among MHC, MHCOP and their
Affiliates, (ii) transfers of limited partnership interests in MHCOP, provided
that MHC or an MHC Subsidiary remains the controlling general partner of MHCOP,
(iii) the merger or consolidation of MHC or MHCOP without regard to whether MHC
or MHCOP, as applicable, is the surviving entity or (iv) MHC's contribution of
ownership interests in MHCOP to a MHC Subsidiary, provided that with respect to
the transfers set forth in clauses (i), (ii), (iii) and (iv) above, the Property
shall continue to be managed by Manager or a Qualified Manager and Borrower and
any SPE Component Entity shall continue to comply with Article 6 hereof.
Notwithstanding the requirements set forth in Section 7.4 hereof, Borrower shall
not be required to deliver a revised substantive non-consolidation opinion to
Lender in connection with any transfers permitted under this subsection
(b)(ii),(iii) and (iv). "MHC SUBSIDIARY" means an entity (A) in which MHC
directly owns at least a ninety-five percent (95%) interest and (B) that is
under the Control of MHC.
SECTION 7.4. LENDER'S RIGHTS
Lender reserves the right to condition the consent to a Prohibited
Transfer requested hereunder upon (a) a modification of the terms hereof and an
assumption of the Note and the other Loan Documents as so modified by the
proposed Prohibited Transfer, (b) receipt of payment of a transfer fee equal to
one percent (1%) of the outstanding principal balance of the Loan and all of
Lender's expenses incurred in connection with such Prohibited Transfer, (c)
- 56 -
receipt of written confirmation from the Rating Agencies that the Prohibited
Transfer will not result in a downgrade, withdrawal or qualification of the
initial, or if higher, then current ratings issued in connection with a
Securitization, or if a Securitization has not occurred, any ratings to be
assigned in connection with a Securitization, (d) the proposed transferee's
continued compliance with the covenants set forth in this Agreement (including,
without limitation, the covenants in Article 6) and the other Loan Documents,
(e) a new manager for the Property and a new management agreement satisfactory
to Lender, and (f) the satisfaction of such other conditions and/or legal
opinions as Lender shall determine in its sole discretion to be in the interest
of Lender. All expenses incurred by Lender shall be payable by Borrower whether
or not Lender consents to the Prohibited Transfer. Lender shall not be required
to demonstrate any actual impairment of its security or any increased risk of
default hereunder in order to declare the Debt immediately due and payable upon
a Prohibited Transfer made without Lender's consent. This provision shall apply
to each and every Prohibited Transfer, whether or not Lender has consented to
any previous Prohibited Transfer. Notwithstanding anything to the contrary
contained in this Section 7.4, in the event a substantive non-consolidation
opinion was delivered to Lender and the Rating Agencies in connection with the
closing of the Loan, and if any Sale or Pledge permitted under this Article 7
results in any Person and its Affiliates owning in excess of forty-nine percent
(49%) of the ownership interests in a Restricted Party, Borrower shall, prior to
such transfer, and in addition to any other requirement for Lender consent
contained herein, deliver a revised substantive non-consolidation opinion to
Lender reflecting such Prohibited Transfer, which opinion shall be in form,
scope and substance acceptable in all respects to Lender and the Rating
Agencies.
SECTION 7.5. ASSUMPTION
Notwithstanding the foregoing provisions of this Article 7, Lender
shall not unreasonably withhold consent to a transfer of the Property in its
entirety to, and the related assumption of the Loan by, any Person (a
"TRANSFEREE") and Lender shall release Borrower and Borrower Principal from
their obligations under the Loan (to the extent such obligations arise from
events occurring after the date of the assumption), provided that each of the
following terms and conditions are satisfied:
(a) no Default or Event of Default has occurred;
(b) Borrower shall have (i) delivered written notice to Lender of
the terms of such prospective transfer not less than sixty (60) days before the
date on which such transfer is scheduled to close and, concurrently therewith,
all such information concerning the proposed Transferee as Lender shall
reasonably require and (ii) paid to Lender a non-refundable processing fee in
the amount of $10,000 (which fee shall be credited against the assumption fee
payable in connection with such assumption). Lender shall have the right to
approve or disapprove the proposed transfer based on its then current
underwriting and credit requirements for similar loans secured by similar
properties which loans are sold in the secondary market, such approval not to be
unreasonably withheld. In determining whether to give or withhold its approval
of the proposed transfer, Lender shall consider the experience and track record
of Transferee and its principals in owning and operating facilities similar to
the Property, the financial strength of Transferee and its principals, the
general business standing of Transferee and its principals and Transferee's and
its principals' relationships and experience with
- 57 -
contractors, vendors, tenants, lenders and other business entities; provided,
however, that, notwithstanding Lender's agreement to consider the foregoing
factors in determining whether to give or withhold such approval, such approval
shall be given or withheld based on what Lender determines to be commercially
reasonable and, if given, may be given subject to such conditions as Lender may
deem reasonably appropriate;
(c) Borrower shall have paid to Lender, concurrently with the
closing of such transfer, (i) a non-refundable assumption fee in an amount equal
to one percent (1.0%) of the then outstanding principal balance of the Note
(subject to credit for any previously paid non-refundable processing fees), and
(ii) all reasonable out-of-pocket costs and expenses, including reasonable
attorneys' fees, incurred by Lender in connection with the transfer;
(d) Transferee assumes and agrees to pay the Debt as and when due
subject to the provisions of Article 15 hereof and, prior to or concurrently
with the closing of such transfer, Transferee and its constituent partners,
members or shareholders as Lender may require, shall execute, without any cost
or expense to Lender, such documents and agreements as Lender shall reasonably
require to evidence and effectuate said assumption;
(e) Borrower and Transferee, without any cost to Lender, shall
furnish any information requested by Lender for the preparation of, and shall
authorize Lender to file, new financing statements and financing statement
amendments and other documents to the fullest extent permitted by applicable
law, and shall execute any additional documents reasonably requested by Lender;
(f) Borrower shall have delivered to Lender, without any cost or
expense to Lender, such endorsements to Lender's Title Insurance Policy insuring
that fee simple or leasehold title to the Property, as applicable, is vested in
Transferee (subject to Permitted Encumbrances), hazard insurance endorsements or
certificates and other similar materials as Lender may deem necessary at the
time of the transfer, all in form and substance satisfactory to Lender;
(g) Transferee shall have furnished to Lender, if Transferee is a
corporation, partnership, limited liability company or other entity, all
appropriate papers evidencing Transferee's organization and good standing, and
the qualification of the signers to execute the assumption of the Debt, which
papers shall include certified copies of all documents relating to the
organization and formation of Transferee and of the entities, if any, which are
partners or members of Transferee. Transferee and such constituent partners,
members or shareholders of Transferee (as the case may be), as Lender shall
require, shall comply with the covenants set forth in Article 6 hereof;
(h) Transferee shall assume the obligations of Borrower under any
Management Agreement or provide a new management agreement with a new manager
which meets with the requirements of Section 5.14 hereof and assign to Lender as
additional security such new management agreement;
(i) Transferee shall furnish an opinion of counsel satisfactory to
Lender and its counsel (A) that Transferee's formation documents provide for the
matters described in subparagraph (g) above, (B) that the assumption of the Debt
has been duly authorized, executed
- 58 -
and delivered, and that the Note, the Mortgage, this Agreement, the assumption
agreement and the other Loan Documents are valid, binding and enforceable
against Transferee in accordance with their terms, (C) that Transferee and any
entity which is a controlling stockholder, member or general partner of
Transferee, have been duly organized, and are in existence and good standing,
and (E) with respect to such other matters as Lender may reasonably request;
(j) if required by Lender, Lender shall have received confirmation
in writing from the Rating Agencies that rate the Securities to the effect that
the transfer will not result in a qualification, downgrade or withdrawal of any
rating initially assigned or to be assigned to the Securities;
(k) Borrower's obligations under the contract of sale pursuant to
which the transfer is proposed to occur shall expressly be subject to the
satisfaction of the terms and conditions of this Section 7.5; and
(l) in the event a substantive non-consolidation opinion was
delivered to Lender in connection with the closing of the Loan, Transferee
shall, prior to such transfer, deliver a new or updated substantive
non-consolidation opinion to Lender, which opinion shall be in form, scope and
substance acceptable in all respects to Lender and the Rating Agencies.
A consent by Lender with respect to a transfer of the Property in its entirety
to, and the related assumption of the Loan by, a Transferee pursuant to this
Section 7.5 shall not be construed to be a waiver of the right of Lender to
consent to any subsequent transfer of the Property. Notwithstanding anything to
the contrary contained in this Section 7.5, prior to a Securitization Lender's
consent to any transfer of the Property and assumption of the Loan pursuant to
this Section 7.5 shall not be required if the consideration to be paid to
Borrower by the proposed Transferee is less than the appraised value of the
Property as determined by Lender.
SECTION 7.6. INTENTIONALLY DELETED.
SECTION 7.7. ASSUMPTIONS IN CONNECTION WITH CERTAIN TRANSFERS TO
AFFILIATES.
Notwithstanding the foregoing provisions of this Article 7, Lender
shall not unreasonably withhold consent to a transfer (by deed or ground lease
for nominal consideration), of a portion of the Property (the "AFFILIATE
TRANSFER PORTION OF THE PROPERTY") to, and the related assumption of the Loan
by, an Affiliate of Borrower (i) in which Borrower Principal owns, directly or
indirectly, at least a 70% ownership interest or (ii) in which MHCOP owns,
directly or indirectly, at least a 99% ownership interest (an "AFFILIATE
TRANSFEREE") such Affiliate Transferee to be a co-obligor and co-mortgagee under
the Loan and jointly and severally obligated thereunder, provided that, among
other things, each of the following conditions are satisfied:
(a) no Default or Event of Default has occurred;
(b) Borrower shall have (i) delivered written notice to Lender of
the terms of such prospective transfer and assumption not less than sixty (60)
days before the date on which such transfer and assumption is scheduled to close
and, concurrently therewith, all such information
- 59 -
concerning the proposed Affiliate Transferee as Lender shall reasonably require
and (ii) paid to Lender a non-refundable processing fee in the amount of
$10,000;
(c) Borrower shall have paid to Lender all reasonable
out-of-pocket costs and expenses, including reasonable attorneys' fees, incurred
by Lender in connection with the transfer and assumption;
(d) Affiliate Transferee assumes and agrees to pay the Debt as and
when due subject to the provisions of Article 15 hereof and, prior to or
concurrently with the closing of such transfer and assumption, Affiliate
Transferee shall execute, without any cost or expense to Lender, such documents
and agreements as Lender shall reasonably require to evidence and effectuate
such transfer and assumption;
(e) Borrower and Affiliate Transferee, without any cost to Lender,
shall furnish any information requested by Lender for the preparation of, and
shall authorize Lender to file, new and/or amended security instruments,
financing statements and financing statement amendments and other documents to
the fullest extent permitted by applicable law, and shall execute any additional
documents reasonably requested by Lender;
(f) Affiliate Transferee shall have furnished to Lender, if
Affiliate Transferee is a corporation, partnership, limited liability company or
other entity, all appropriate papers evidencing Affiliate Transferee's
organization and good standing, and the qualification of the signers to execute
the assumption of the Debt, which papers shall include certified copies of all
documents relating to the organization and formation of Affiliate Transferee and
of the entities, if any, which are partners or members of Affiliate Transferee.
Affiliate Transferee and such constituent partners, members or shareholders of
Affiliate Transferee (as the case may be), as Lender shall require, shall comply
with the covenants set forth in Article 6 hereof;
(g) Affiliate Transferee shall (i) assume the obligations of
Borrower under any Management Agreement as they relate to the Affiliate Transfer
Portion of the Property, provided, however, that in the event the Affiliate
Transfer Portion of the Property is operated solely as a sewage treatment and/or
water treatment facility and operated solely by Affiliate Transferee (and
Manager does not perform any services with respect to the Affiliate Transfer
Portion of the Property), Affiliate Transferee shall not be required to assume
the obligations of Borrower under the Management Agreement, and (ii) if
applicable, execute an assignment to Lender of such Management Agreement as
additional security for the Loan;
(h) Affiliate Transferee shall furnish an opinion of counsel
satisfactory to Lender and its counsel (A) that Affiliate Transferee's formation
documents provide for the matters described in subparagraph (f) above, (B) that
the assumption of the Debt has been duly authorized, executed and delivered, and
that the Note, the Mortgage, this Agreement, the assumption agreement and the
other Loan Documents are valid, binding and enforceable against Affiliate
Transferee in accordance with their terms, (C) that Affiliate Transferee and any
entity which is a controlling stockholder, managing or sole member or general
partner of Affiliate Transferee, have been duly organized, and are in existence
and good standing, and (E) with respect to such other matters as Lender may
reasonably request;
- 60 -
(i) if required by Lender, Lender shall have received confirmation
in writing from the Rating Agencies that rate the Securities to the effect that
the transfer will not result in a qualification, downgrade or withdrawal of any
rating initially assigned or to be assigned to the Securities;
(j) Borrower's obligations under the contract of sale, if any,
pursuant to which the transfer is proposed to occur shall expressly be subject
to the satisfaction of the terms and conditions of this Section 7.7;
(k) in the event an Insolvency Opinion was delivered to Lender in
connection with the closing of the Loan, Borrower and Affiliate Transferee
shall, prior to such transfer and assumption, deliver a new or updated
Insolvency Opinion to Lender, which opinion shall be in form, scope and
substance acceptable in all respects to Lender and the Rating Agencies;
(l) Borrower shall deliver to Lender evidence which would be
satisfactory to a prudent lender that (i) the Affiliate Transfer Portion of the
Property has been legally split or subdivided from the remainder of the
Property; (ii) after giving effect to such transfer, each of the Affiliate
Transfer Portion of the Property and the balance of the Property conforms and is
in compliance in all material respects with applicable Legal Requirements and
constitutes a separate tax lot and (iii) the Affiliate Transfer Portion of the
Property is not necessary for the Property to comply with any zoning, building,
land use or parking or other Legal Requirements applicable to the Property or
for the then current use of the Property, including, without limitation, for
access, driveways, parking, utilities or drainage or, to the extent that the
Affiliate Transfer Portion of the Property is necessary for any such purposes, a
reciprocal easement agreement has been executed and recorded that would allow
the owner of the Property to continue to use the Affiliate Transfer Portion of
the Property to the extent necessary for such purposes;
(m) Borrower shall deliver to Lender an endorsement to the Title
Insurance Policy (i) extending the effective date of the Title Insurance Policy
to the effective date of the transfer; (ii) confirming no change in the priority
of the Mortgage on the Property (including the Affiliate Transfer Portion of the
Property) or in the amount of the insurance or the coverage of the Property
under the Title Insurance Policy; and (iii) insuring the rights and benefits
under any new or amended reciprocal easement agreement or such other agreement
required pursuant to subsection 7.7(l)(iii) hereof that has been executed and
recorded, if any. Borrower shall have delivered to Lender, without any cost or
expense to Lender, such endorsements to Lender's Title Insurance Policy insuring
that fee simple or leasehold title to the Affiliate Transfer Portion of the
Property, as applicable, is vested in Affiliate Transferee (subject to Permitted
Encumbrances), hazard insurance endorsements or certificates and other similar
materials as Lender may deem necessary at the time of the transfer, all in form
and substance satisfactory to Lender;
(n) not less than three (3) Business Days prior to the date of the
transfer and assumption, Borrower delivers to Lender approvals to the transfer
executed by any entities other than Lender holding Liens encumbering the
Property or the Affiliate Transfer Portion of the Property (or holding any other
interest therein that would be affected by the transfer), if and to the extent
such approval is required pursuant to the terms of any of the documents
evidencing or securing such Lien or interest;
- 61 -
(o) Borrower and Affiliate Transferee have complied with any
requirements applicable to the transfer in any Major Leases, REA's, operating
agreements, parking agreements or other similar agreements affecting the
Property or the Affiliate Transfer Portion of the Property and the transfer does
not violate any of the provisions of such documents in any respect that would
result in a termination (or give any other party thereto the right to
terminate), extinguishment or other loss of material right of Borrower or in a
material increase in Borrower's obligations under such documents and, to the
extent necessary to comply with such documents, the Affiliate Transferee has
assumed Borrower's obligations, if any, relating to the Affiliate Transfer
Portion of the Property under such documents; and
(p) if a securitization shall have occurred, Borrower shall
deliver to Lender one or more opinions of counsel for Borrower and Affiliate
Transferee in form and substance and delivered by counsel which would be
satisfactory to a prudent lender stating, among other things, that the transfer
and assumption by Affiliate Transferee pursuant to this Section 7.7 (1) will not
directly or indirectly result in or cause any REMIC Trust that then holds the
Note to fail to maintain its status as a REMIC Trust and (2) will not cause any
REMIC Trust to be an "investment company" under the Investment Company Act of
1940, at Borrower's cost; and
(q) Borrower delivers to Lender any other information, approvals
and documents which would be required by a prudent Lender in connection with
such transfer and assumption.
A consent by Lender with respect to a transfer of a portion of the
Property to, and the related assumption of the Loan by, an Affiliate Transferee
pursuant to this Section 7.7 shall not be construed to be a waiver of the right
of Lender to consent to any subsequent transfer of the Property or assumption of
the Loan. Notwithstanding any transfer and assumption to an Affiliate Transferee
pursuant to this Section 7.7, the Property and the Affiliate Transfer Portion of
the Property shall be deemed a single Property for purposes of this Agreement
and the Loan.
SECTION 7.8. ADDITIONAL PERMITTED TRANSFERS.
Notwithstanding anything to the contrary contained in this Article 7,
Borrower may grant easements, restrictions, covenants, reservations and rights
of way with respect to the Property in the ordinary course of business for water
and sewer lines, telephone and telegraph lines, electric lines and other
utilities or for other similar purposes, provided that such transfers,
conveyances or encumbrances (i) shall not impair the utility and operation of
the Property or materially adversely affect the value of the Property or
adversely affect Borrower's ability to pay the Debt or the Monthly Payment
Amount and (ii) shall be in a form that is reasonably acceptable to Lender.
ARTICLE 8
INSURANCE; CASUALTY; CONDEMNATION; RESTORATION
SECTION 8.1. INSURANCE
(a) Borrower shall obtain and maintain, or cause to be maintained,
at all times insurance for Borrower and the Property providing at least the
following coverages:
-62-
(i) comprehensive "all risk" insurance (excluding
terrorism coverage) on the Improvements and the Personal Property, in
each case (A) in an amount equal to one hundred percent (100%) of the
"Full Replacement Cost," which for purposes of this Agreement shall
mean actual replacement value (exclusive of costs of excavations,
foundations, underground utilities and footings) with a waiver of
depreciation; (B) containing an agreed amount endorsement with respect
to the Improvements and Personal Property waiving all co-insurance
provisions; (C) providing for no deductible in excess of $100,000 for
all such insurance coverage; and (D) if any of the Improvements or the
use of the Property shall at any time constitute legal non-conforming
structures or uses, providing coverage for contingent liability from
Operation of Building Laws, Demolition Costs and Increased Cost of
Construction Endorsements and containing an "Ordinance or Law Coverage"
or "Enforcement" endorsement. In addition, Borrower shall obtain: (y)
if any portion of the Improvements is currently or at any time in the
future located in a "special flood hazard area" designated by the
Federal Emergency Management Agency, flood hazard insurance in an
amount equal to the maximum amount of such insurance available under
the National Flood Insurance Act of 1968, the Flood Disaster Protection
Act of 1973 or the National Flood Insurance Reform Act of 1994, as each
may be amended, and providing for no deductible in excess of $250,000;
and (z) earthquake insurance in amounts and in form and substance
reasonably satisfactory to Lender in the event the Property is located
in an area with a high degree of seismic risk, provided that the
insurance pursuant to clauses (y) and (z) hereof shall be on terms
consistent with the comprehensive all risk insurance policy required
under this subsection (i);
(ii) Commercial General Liability insurance against claims
for personal injury, bodily injury, death or property damage occurring
upon, in or about the Property, with such insurance (A) to be on the
so-called "occurrence" form with a general aggregate limit of not less
than $2,000,000 and a per occurrence limit of not less than $1,000,000;
(B) to continue at not less than the aforesaid limit until required to
be changed by Lender in writing by reason of changed economic
conditions making such protection inadequate; and (C) to cover at least
the following hazards: (1) premises and operations; (2) products and
completed operations; (3) independent contractors; (4) blanket
contractual liability; and (5) contractual liability covering the
indemnities contained in Article 12 and Article 14 hereof to the extent
the same is available;
(iii) loss of rents insurance or business income insurance,
as applicable, (A) with loss payable to Lender; (B) covering all risks
required to be covered by the insurance provided for in subsection (i)
above; and (C) which provides that after the physical loss to the
Improvements and Personal Property occurs, the loss of rents or income,
as applicable, will be insured until completion of Restoration or the
expiration of twelve (12) months, whichever first occurs, and
notwithstanding that the policy may expire prior to the end of such
period; and (D) which contains an extended period of indemnity
endorsement which provides that after the physical loss to the
Improvements and Personal Property has been repaired, the continued
loss of income will be insured until such income either returns to the
same level it was at prior to the loss, or the expiration of twelve
(12) months from the date that the Property is repaired or replaced and
operations are resumed, whichever first occurs, and notwithstanding
that the policy may expire prior to the end of such period. The amount
of such loss of rents or business
-63-
income insurance, as applicable, shall be determined prior to the date
hereof and at least once each year thereafter based on Borrower's
reasonable estimate of the gross income from the Property for the
succeeding period of coverage required above. All proceeds payable to
Lender pursuant to this subsection shall be held by Lender and shall be
applied to the obligations secured by the Loan Documents from time to
time due and payable hereunder and under the Note; provided, however,
that nothing herein contained shall be deemed to relieve Borrower of
its obligations to pay the obligations secured by the Loan Documents on
the respective dates of payment provided for in the Note, this
Agreement and the other Loan Documents except to the extent such
amounts are actually paid out of the proceeds of such loss of rents or
business income insurance, as applicable;
(iv) at all times during which structural construction,
repairs or alterations are being made with respect to the Improvements,
and only if the Property coverage form does not otherwise apply, (A)
owner's contingent or protective liability insurance covering claims
not covered by or under the terms or provisions of the above mentioned
commercial general liability insurance policy; and (B) the insurance
provided for in subsection (i) above written in a so-called Builder's
Risk Completed Value form (1) on a non-reporting basis, (2) against
"all risks" insured against pursuant to subsection (i) above, (3)
including permission to occupy the Property, and (4) with an agreed
amount endorsement waiving co-insurance provisions;
(v) workers' compensation, subject to the statutory
limits of the State, and employer's liability insurance in respect of
any work or operations on or about the Property, or in connection with
the Property or its operation (if applicable);
(vi) comprehensive boiler and machinery insurance, if
applicable, in amounts as shall be reasonably required by Lender on
terms consistent with the commercial property insurance policy required
under subsection (i) above;
(vii) excess liability insurance in an amount not less than
$50,000,000 per occurrence on terms consistent with the commercial
general liability insurance required under subsection (ii) above; and
(viii) upon sixty (60) days' written notice, such other
reasonable insurance and in such reasonable amounts as Lender from time
to time may reasonably request against such other insurable hazards
which at the time are commonly insured against for property similar to
the Property located in or around the region in which the Property is
located.
(b) All insurance provided for in Section 8.1(a) shall be obtained
under valid and enforceable policies (collectively, the "POLICIES" or in the
singular, the "POLICY"), and shall be subject to the approval of Lender as to
insurance companies, amounts, deductibles, loss payees and insureds. The
Policies shall be issued by financially sound and responsible insurance
companies authorized to do business in the State and having a claims paying
ability rating of either (1) "AA" or better by at least two Rating Agencies, one
of which must be S&P or such other Rating Agencies approved by Lender or (2) at
least A-/VII by A.M. Best Company, Inc. The Policies described in Section 8.1(a)
shall designate Lender and its successors and assigns as additional insureds,
mortgagees and/or loss payee as deemed appropriate by Lender. To the
-64-
extent such Policies are not available as of the Closing Date, Borrower shall
deliver certified copies of all Policies to Lender not later than thirty (30)
days after the Closing Date. Not less than ten (10) days prior to the expiration
dates of the Policies theretofore furnished to Lender, Borrower shall deliver to
Lender certificates evidencing renewal of the Policies (such certificates, the
"INSURANCE CERTIFICATES")accompanied by evidence satisfactory to Lender of
payment of the premiums due thereunder (the "INSURANCE PREMIUMS") and within
sixty (60) days after the expiration date of such Policies, Borrower shall
deliver to Lender renewal Policies
(c) Any blanket insurance Policy shall specifically allocate to
the Property the amount of coverage from time to time required hereunder and
shall otherwise provide the same protection as would a separate Policy insuring
only the Property in compliance with the provisions of Section 8.1(a).
(d) All Policies provided for or contemplated by Section 8.1(a),
except for the Policy referenced in Section 8.1(a)(v), shall name Borrower as
the insured, as its interests may appear, and in the case of property damage,
boiler and machinery, flood and earthquake insurance, shall contain a so-called
New York standard non-contributing mortgagee clause in favor of Lender providing
that the loss thereunder shall be payable to Lender.
(e) All Policies provided for in Section 8.1(a) shall contain
clauses or endorsements to the effect that:
(i) no act or negligence of Borrower, or anyone acting
for Borrower, or of any Tenant or other occupant, or failure to comply
with the provisions of any Policy, which might otherwise result in a
forfeiture of the insurance or any part thereof, shall in any way
affect the validity or enforceability of the insurance insofar as
Lender is concerned;
(ii) the Policies shall not be materially changed (other
than to increase the coverage provided thereby) or canceled without at
least thirty (30) days' prior written notice to Lender and any other
party named therein as an additional insured;
(iii) the issuers thereof shall give written notice to
Lender if the Policies have not been renewed thirty (30) days prior to
its expiration; and
(iv) Lender shall not be liable for any Insurance Premiums
thereon or subject to any assessments thereunder.
(f) If at any time Lender is not in receipt of written evidence
that all insurance required hereunder is in full force and effect, Lender shall
have the right, without notice to Borrower, to take such action as Lender deems
necessary to protect its interest in the Property, including, without
limitation, obtaining such insurance coverage as Lender in its sole discretion
deems appropriate. All premiums incurred by Lender in connection with such
action or in obtaining such insurance and keeping it in effect shall be paid by
Borrower to Lender upon demand and, until paid, shall be secured by the Mortgage
and shall bear interest at the Default Rate.
-65-
SECTION 8.2. CASUALTY
If the Property shall be damaged or destroyed, in whole or in part in
any material respect, by fire or other casualty (a "CASUALTY"), Borrower shall
give prompt notice of such damage to Lender and shall promptly commence and
diligently prosecute the Restoration of the Property in accordance with Section
8.4, whether or not Lender makes any Net Proceeds available pursuant to Section
8.4. Borrower shall pay all costs of such Restoration whether or not such costs
are covered by insurance. Lender may, but shall not be obligated to make proof
of loss if not made promptly by Borrower. Borrower shall adjust all claims for
Insurance Proceeds in consultation with, and approval of, Lender; provided,
however, if an Event of Default has occurred and is continuing, Lender shall
have the exclusive right to participate in the adjustment of all claims for
Insurance Proceeds.
SECTION 8.3. CONDEMNATION
Borrower shall promptly give Lender notice of the actual or threatened
commencement of any proceeding for the Condemnation of the Property of which
Borrower has knowledge and shall deliver to Lender copies of any and all papers
served in connection with such proceedings. Lender may participate in any such
proceedings, and Borrower shall from time to time deliver to Lender all
instruments requested by it to permit such participation. Borrower shall, at its
expense, diligently prosecute any such proceedings, and shall consult with
Lender, its attorneys and experts, and cooperate with them in the carrying on or
defense of any such proceedings. Notwithstanding any taking by any public or
quasi-public authority through Condemnation or otherwise (including but not
limited to any transfer made in lieu of or in anticipation of the exercise of
such taking), Borrower shall continue to pay the Debt at the time and in the
manner provided for its payment in the Note and in this Agreement and the Debt
shall not be reduced until any Award shall have been actually received and
applied by Lender, after the deduction of expenses of collection, to the
reduction or discharge of the Debt. Lender shall not be limited to the interest
paid on the Award by the condemning authority but shall be entitled to receive
out of the Award interest at the rate or rates provided herein or in the Note.
If the Property or any portion thereof is taken by a condemning authority,
Borrower shall promptly commence and diligently prosecute the Restoration of the
Property and otherwise comply with the provisions of Section 8.4, whether or not
Lender makes any Net Proceeds available pursuant to Section 8.4. If the Property
is sold, through foreclosure or otherwise, prior to the receipt by Lender of the
Award, Lender shall have the right, whether or not a deficiency judgment on the
Note shall have been sought, recovered or denied, to receive the Award, or a
portion thereof sufficient to pay the Debt.
SECTION 8.4. RESTORATION
The following provisions shall apply in connection with the Restoration
of the Property:
(a) If the Net Proceeds shall be less than $250,000 and the costs
of completing the Restoration shall be less than $250,000, the Net Proceeds will
be disbursed by Lender to Borrower upon receipt, provided that all of the
conditions set forth in Section 8.4(b)(i) are met and Borrower delivers to
Lender a written undertaking to expeditiously commence and to
-66-
satisfactorily complete with due diligence the Restoration in accordance with
the terms of this Agreement.
(b) If the Net Proceeds are equal to or greater than $250,000 or
the costs of completing the Restoration are equal to or greater than $250,000,
Lender shall make the Net Proceeds available for the Restoration in accordance
with the provisions of this Section 8.4. The term "NET PROCEEDS" for purposes of
this Section 8.4 shall mean: (i) the net amount of all insurance proceeds
received by Lender pursuant to Section 8.1(a)(i), (iv), (vi) and (viii) as a
result of a Casualty, after deduction of its reasonable costs and expenses
(including, but not limited to, reasonable counsel fees), if any, in collecting
the same ("INSURANCE PROCEEDS"), or (ii) the net amount of the Award as a result
of a Condemnation, after deduction of its reasonable costs and expenses
(including, but not limited to, reasonable counsel fees), if any, in collecting
the same ("CONDEMNATION PROCEEDS"), whichever the case may be.
(i) The Net Proceeds shall be made available to Borrower
for Restoration provided that each of the following conditions are met:
(A) no Event of Default shall have occurred and
be continuing;
(B) (1) in the event the Net Proceeds are
Insurance Proceeds, less than twenty-five percent (25%) of the
mobile home and/or recreational vehicle pads, as applicable,
on the Property shall be rendered unusable for a period in
excess of twelve (12) months as a result of a Casualty or (2)
in the event the Net Proceeds are Condemnation Proceeds, less
than fifteen percent (15%) of the rentable area of the
Property and fifteen percent (15%) of the fair market value of
the Land constituting the Property is taken, such land is
located along the perimeter or periphery of the Property, and
no portion of the permanent Improvements is located on such
land;
(C) intentionally deleted;
(D) Borrower shall commence the Restoration as
soon as reasonably practicable (but in no event later than
sixty (60) days after such Casualty or Condemnation, whichever
the case may be, occurs) and shall diligently pursue the same
to satisfactory completion;
(E) Lender shall be satisfied that any operating
deficits, including all scheduled payments of principal and
interest under the Note, which will be incurred with respect
to the Property as a result of the occurrence of any such
Casualty or Condemnation, whichever the case may be, will be
covered out of the insurance coverage referred to in Section
8.1(a)(iii) above;
(F) Lender shall be satisfied that the
Restoration will be completed on or before the earliest to
occur of (1) six (6) months prior to the Maturity Date, (2)
the earliest date required for such completion under the terms
of any Major Leases, Ground Leases, if applicable, Operating
Leases, if applicable, or material agreements affecting the
Property, (3) such time as may be required under
-67-
applicable zoning law, ordinance, rule or regulation, or (4)
the expiration of the insurance coverage referred to in
Section 8.1(a)(iii);
(G) the Property and the use thereof after the
Restoration will be in compliance with and permitted under all
Legal Requirements;
(H) the Restoration shall be done and completed
by Borrower in an expeditious and diligent fashion and in
compliance with all applicable Legal Requirements;
(I) such Casualty or Condemnation, as
applicable, does not result in the loss of access to the
Property or the Improvements;
(J) Borrower shall deliver, or cause to be
delivered, to Lender a signed detailed budget approved in
writing by Borrower's architect or engineer stating the entire
cost of completing the Restoration, which budget shall be
reasonably acceptable to Lender; and
(K) the Net Proceeds together with any cash or
cash equivalent deposited by Borrower with Lender are
sufficient in Lender's reasonable judgment to cover the cost
of the Restoration.
(ii) The Net Proceeds shall be held by Lender until
disbursements commence, and, until disbursed in accordance with the
provisions of this Section 8.4, shall constitute additional security
for the Debt and other obligations under the Loan Documents. The Net
Proceeds shall be disbursed by Lender to, or as directed by, Borrower
on a monthly basis during the course of the Restoration in accordance
with customary construction lending practices, upon receipt of evidence
satisfactory to Lender that (A) all the conditions precedent to such
advance, including those set forth in Section 8.4(b)(i), have been
satisfied, (B) all materials installed and work and labor performed
(except to the extent that they are to be paid for out of the requested
disbursement) in connection with the related Restoration item have been
paid for in full, and (C) there exist no notices of pendency, stop
orders, mechanic's or materialman's liens or notices of intention to
file same, or any other liens or encumbrances of any nature whatsoever
on the Property which have not either been fully bonded to the
satisfaction of Lender and discharged of record or in the alternative
fully insured to the satisfaction of Lender by the title company
issuing the Title Insurance Policy. Notwithstanding the foregoing,
Insurance Proceeds from the Policies required to be maintained by
Borrower pursuant to Section 8.1(a)(iii) shall be controlled by Lender
at all times, shall not be subject to the provisions of this Section
8.4 and shall be used for the payment of all of the obligations due and
payable under the Loan Documents for the entire time period for which
any such Insurance Proceeds relate. After such application of the
Insurance Proceeds, the remaining balance, if any, of any such proceeds
shall be disbursed and/or applied as follows: (A) provided no Event of
Default has occurred and is continuing, to Borrower and (B) upon the
occurrence and during the continuance of an Event of Default, to
Operating Expenses.
-68-
(iii) All plans and specifications required in connection
with the Restoration shall be subject to prior review and acceptance in
all respects by Lender and to the extent the Restoration relates to any
permanent Improvements on the Property, by an independent consulting
engineer selected by Lender (the "Restoration Consultant"). Lender
shall have the use of the plans and specifications and all permits,
licenses and approvals required or obtained in connection with the
Restoration. To the extent the Restoration relates to any permanent
Improvements on the Property, the identity of the contractors,
subcontractors and materialmen engaged in the Restoration, as well as
the contracts in excess of $100,000 under which they have been engaged,
shall be subject to prior review and acceptance by Lender and the
Restoration Consultant. All costs and expenses incurred by Lender in
connection with making the Net Proceeds available for the Restoration,
including, without limitation, reasonable counsel fees and
disbursements and the Restoration Consultant's fees, shall be paid by
Borrower.
(iv) In no event shall Lender be obligated to make
disbursements of the Net Proceeds in excess of an amount equal to the
costs actually incurred from time to time for work in place as part of
the Restoration, as certified by the Restoration Consultant, minus the
Restoration Retainage. The term "Restoration Retainage" shall mean an
amount equal to ten percent (10%) of the costs actually incurred for
work in place as part of the Restoration, as certified by the
Restoration Consultant, until the Restoration has been completed. The
Restoration Retainage shall be reduced to five percent (5%) of the
costs incurred upon receipt by Lender of satisfactory evidence that
fifty percent (50%) of the Restoration has been completed. The
Restoration Retainage shall in no event, and notwithstanding anything
to the contrary set forth above in this Section 8.4(b), be less than
the amount actually held back by Borrower from contractors,
subcontractors and materialmen engaged in the Restoration. The
Restoration Retainage shall not be released until the Restoration
Consultant certifies to Lender that the Restoration has been completed
in accordance with the provisions of this Section 8.4(b) and that all
approvals necessary for the re-occupancy and use of the Property have
been obtained from all appropriate Governmental Authorities, and Lender
receives evidence satisfactory to Lender that the costs of the
Restoration have been paid in full or will be paid in full out of the
Restoration Retainage; provided, however, that Lender will release the
portion of the Restoration Retainage being held with respect to any
contractor, subcontractor or materialman engaged in the Restoration as
of the date upon which the Restoration Consultant certifies to Lender
that the contractor, subcontractor or materialman has satisfactorily
completed all work and has supplied all materials in accordance with
the provisions of the contractor's, subcontractor's or materialman's
contract, the contractor, subcontractor or materialman delivers the
lien waivers and evidence of payment in full of all sums due to the
contractor, subcontractor or materialman as may be reasonably requested
by Lender or by the title company issuing the Title Insurance Policy,
and Lender receives an endorsement to the Title Insurance Policy
insuring the continued priority of the lien of the Mortgage and
evidence of payment of any premium payable for such endorsement. If
required by Lender, the release of any such portion of the Restoration
Retainage shall be approved by the surety company, if any, which has
issued a payment or performance bond with respect to the contractor,
subcontractor or materialman.
-69-
(v) Lender shall not be obligated to make disbursements
of the Net Proceeds more frequently than once every calendar month.
(vi) If at any time the Net Proceeds or the undisbursed
balance thereof shall not, in the reasonable opinion of Lender in
consultation with the Restoration Consultant, as applicable, be
sufficient to pay in full the balance of the costs which are estimated
to be incurred in connection with the completion of the Restoration,
Borrower shall deposit the deficiency (the "Net Proceeds Deficiency")
with Lender before any further disbursement of the Net Proceeds shall
be made. The Net Proceeds Deficiency deposited with Lender shall be
held by Lender and shall be disbursed for costs actually incurred in
connection with the Restoration on the same conditions applicable to
the disbursement of the Net Proceeds, and until so disbursed pursuant
to this Section 8.4(b) shall constitute additional security for the
Debt and other obligations under the Loan Documents.
(vii) The excess, if any, of the Net Proceeds and the
remaining balance, if any, of the Net Proceeds Deficiency deposited
with Lender after Borrower and the Restoration Consultant, to the
extent applicable, certifies to Lender that the Restoration has been
completed in accordance with the provisions of this Section 8.4(b), and
the receipt by Lender of evidence satisfactory to Lender that all costs
incurred in connection with the Restoration have been paid in full,
shall be remitted by Lender to Borrower, provided no Event of Default
shall have occurred and shall be continuing under the Note, this
Agreement or any of the other Loan Documents.
(c) All Net Proceeds not required (i) to be made available for the
Restoration or (ii) to be returned to Borrower as excess Net Proceeds pursuant
to Section 8.4(b)(vii) may (x) be retained and applied by Lender toward the
payment of the Debt whether or not then due and payable in such order, priority
and proportions as Lender in its sole discretion shall deem proper, or, (y) at
the sole discretion of Lender, the same may be paid, either in whole or in part,
to Borrower for such purposes and upon such conditions as Lender shall
designate.
(d) In the event of foreclosure of the Mortgage, or other transfer
of title to the Property in extinguishment in whole or in part of the Debt, all
right, title and interest of Borrower in and to the Policies then in force
concerning the Property and all proceeds payable thereunder shall thereupon vest
in the purchaser at such foreclosure, Lender or other transferee in the event of
such other transfer of title.
ARTICLE 9
RESERVE FUNDS
SECTION 9.1. REQUIRED REPAIRS
(a) Borrower shall make the repairs and improvements to the
Property set forth on Schedule 2 and as more particularly described in the
Physical Conditions Report prepared in connection with the closing of the Loan
(such repairs hereinafter referred to as "REQUIRED REPAIRS"). Borrower shall
complete the Required Repairs in a good and workmanlike manner on or before the
date that is twelve (12) months from the date hereof or within such other time
frame for completion specifically set forth on Schedule 2.
-70-
SECTION 9.2. REPLACEMENTS
(a) On an ongoing basis throughout the term of the Loan, Borrower
shall make capital repairs, replacements and improvements necessary to keep the
Property in good order and repair and in a good marketable condition or prevent
deterioration of the Property (the "REPLACEMENTS"). Borrower shall complete all
Replacements in a good and workmanlike manner as soon as commercially reasonable
after commencing to make each such Replacement.
(b) Borrower shall establish on the date hereof an Eligible
Account with Lender or Lender's agent to fund the Replacements (the "REPLACEMENT
RESERVE ACCOUNT"). In addition, Borrower shall deposit $4.17 monthly per pad
(the "REPLACEMENT RESERVE MONTHLY DEPOSIT") into the Replacement Reserve Account
on each Scheduled Payment Date during any Replacement Reserve Period. Amounts so
deposited shall hereinafter be referred to as "REPLACEMENT RESERVE FUNDS."
SECTION 9.3. INTENTIONALLY DELETED.
SECTION 9.4. REQUIRED WORK
Borrower shall diligently pursue all Required Repairs and Replacements
(collectively, the "REQUIRED WORK") to completion in accordance with the
following requirements:
(a) Lender reserves the right, at its option, to approve all
contracts or work orders with materialmen, mechanics, suppliers, subcontractors,
contractors or other parties providing labor or materials in connection with the
Required Work to the extent such contracts or work orders exceed $100,000. Upon
Lender's request, Borrower shall assign any contract or subcontract to Lender.
(b) In the event Lender determines in its reasonable discretion
that any Required Work is not being or has not been performed in a workmanlike
or timely manner, upon ten (10) days notice to Borrower and Borrower's failure
to commence performance of such Required Work in accordance with this Section
9.4, Lender shall have the option to withhold disbursement for such
unsatisfactory Required Work and to proceed under existing contracts or to
contract with third parties to complete such Required Work and to apply
Replacement Reserve Funds, if any, toward the labor and materials necessary to
complete such Required Work, without providing any prior notice to Borrower and
to exercise any and all other remedies available to Lender upon an Event of
Default hereunder.
(c) In order to facilitate Lender's completion of the Required
Work as permitted in subsection 9.4(b) above, Borrower grants Lender the right
to enter onto the Property and perform any and all work and labor necessary to
complete the Required Work and/or employ watchmen to protect the Property from
damage. All sums so expended by Lender, to the extent not from the Reserve
Funds, shall be deemed to have been advanced under the Loan to Borrower and
secured by the Mortgage. For this purpose Borrower constitutes and appoints
Lender its true and lawful attorney-in-fact with full power of substitution to
complete or undertake the Required Work in the name of Borrower upon Borrower's
failure to do so in a workmanlike and timely manner. Such power of attorney
shall be deemed to be a power coupled with an interest and cannot be revoked.
Borrower empowers said attorney-in-fact as follows: (i) to use any of the
-71-
Reserve Funds for the purpose of making or completing the Required Work; (ii) to
make such additions, changes and corrections to the Required Work as shall be
reasonably necessary to complete the Required Work; (iii) to employ such
contractors, subcontractors, agents, architects and inspectors as shall be
required for such purposes; (iv) to pay, settle or compromise all existing bills
and claims which are or may become Liens against the Property, or as may be
reasonably necessary for the completion of the Required Work, or for clearance
of title; (v) to execute all applications and certificates in the name of
Borrower which may be required by any of the contract documents; (vi) to
prosecute and defend all actions or proceedings in connection with the Property
or the rehabilitation and repair of the Property; and (vii) to do any and every
act which Borrower would be required to do on its own behalf to fulfill the
terms of this Agreement.
(d) Nothing in this Section 9.4 shall: (i) make Lender responsible
for making or completing the Required Work; (ii) require Lender to expend funds
in addition to the Reserve Funds to make or complete any Required Work; (iii)
obligate Lender to proceed with the Required Work; or (iv) obligate Lender to
demand from Borrower additional sums to make or complete any Required Work.
(e) Borrower shall permit Lender and Lender's agents and
representatives (including, without limitation, Lender's engineer, architect, or
inspector) or third parties performing Required Work pursuant to this Section
9.4 to enter onto the Property during normal business hours (subject to the
rights of tenants under their Leases) to inspect the progress of any Required
Work and all materials being used in connection therewith, to examine all plans
and shop drawings relating to such Required Work which are or may be kept at the
Property, and to complete any Required Work made pursuant to this Section 9.4.
Borrower shall cause all contractors and subcontractors to cooperate with Lender
and Lender's representatives or such other persons described above in connection
with inspections described in this Section 9.4 or the completion of Required
Work pursuant to this Section 9.4.
(f) Lender may, to the extent any Required Work would reasonably
require an inspection of the Property, inspect the Property at Borrower's
expense prior to making a disbursement of the Reserve Funds in order to verify
completion of the Required Work for which reimbursement is sought. Borrower
shall pay Lender a reasonable inspection fee not exceeding $500 for each such
inspection. Lender may require that such inspection be conducted by an
appropriate independent qualified professional selected by Lender and/or may
require a copy of a certificate of completion by an independent qualified
professional acceptable to Lender prior to the disbursement of the Reserve
Funds. Borrower shall pay the expense of the inspection as required hereunder,
whether such inspection is conducted by Lender or by an independent qualified
professional.
(g) The Required Work and all materials, equipment, fixtures, or
any other item comprising a part of any Required Work shall be constructed,
installed or completed, as applicable, free and clear of all mechanic's,
materialman's or other Liens (except for Permitted Encumbrances).
(h) Before each disbursement of the Reserve Funds, if any, Lender
may require Borrower to provide Lender with a search of title to the Property
effective to the date of the
-72-
disbursement, which search shows that no mechanic's or materialmen's or other
Liens of any nature have been placed against the Property since the date of
recordation of the Mortgage and that title to the Property is free and clear of
all Liens (except for Permitted Encumbrances).
(i) All Required Work shall comply with all Legal Requirements in
all material respects and applicable insurance requirements including, without
limitation, applicable building codes, special use permits, environmental
regulations, and requirements of insurance underwriters.
(j) Borrower hereby assigns to Lender all rights and claims
Borrower may have against all Persons supplying labor or materials in connection
with the Required Work; provided, however, that Lender may not pursue any such
rights or claims unless an Event of Default has occurred and remains uncured.
SECTION 9.5. RELEASE OF RESERVE FUNDS
(a) Upon written request from Borrower and satisfaction of the
requirements set forth in this Agreement, Lender shall disburse to Borrower
amounts, if any, from the Replacement Reserve Account to the extent necessary to
reimburse Borrower for the actual costs of any approved Replacements.
Notwithstanding the preceding sentence, in no event shall Lender be required to
(x) disburse funds from any of the Reserve Accounts if an Event of Default
exists or (y) disburse funds (if any) from the Replacement Reserve Account to
reimburse Borrower for the costs of routine repairs or maintenance to the
Property or for costs which are to be reimbursed from funds held in any other
Reserve Account.
(b) Each request for disbursement from any of the Reserve Accounts
shall be on a form provided or approved by Lender and shall (i) include copies
of invoices for all items or materials purchased and all labor or services
provided and (ii) specify (A) the Required Work for which the disbursement is
requested, (B) the quantity and price of each item purchased, if the Required
Work includes the purchase or replacement of specific items, (C) the price of
all materials (grouped by type or category) used in any Required Work other than
the purchase or replacement of specific items, and (D) the cost of all
contracted labor or other services applicable to each Required Work for which
such request for disbursement is made. With each request Borrower shall certify
that all Required Work has been performed in accordance with all Legal
Requirements. Except as provided in Section 9.5(d), each request for
disbursement shall be made only after completion of the Replacement (or the
portion thereof completed in accordance with Section 9.5(d)) for which
disbursement is requested. Borrower shall provide Lender evidence satisfactory
to Lender in its reasonable judgment of such completion or performance.
(c) Upon Borrower's request, Lender shall disburse funds from the
Replacement Reserve Account to Borrower on a monthly basis, and Borrower shall
use such funds to pay all invoices in connection with the Required Work with
respect to which a disbursement is requested. In addition, as a condition to any
disbursement, Lender may require Borrower to obtain lien waivers from each
contractor, supplier, materialman, mechanic or subcontractor who receives
payment in an amount equal to or greater than $10,000 for completion of its work
or delivery of its materials. Any lien waiver delivered hereunder shall conform
to all Legal Requirements and shall cover all work performed and materials
supplied (including equipment
-73-
and fixtures) for the Property by that contractor, supplier, subcontractor,
mechanic or materialman through the date covered by the current disbursement
request (or, in the event that payment to such contractor, supplier,
subcontractor, mechanic or materialmen is to be made by a joint check, the
release of lien shall be effective through the date covered by the previous
release of funds request).
(d) If (i) the cost of any item of Required Work exceeds $25,000
and (ii) the contractor performing such Required Work requires periodic payments
pursuant to terms of a written contract, a request for disbursement from the
Reserve Accounts may be made after completion of a portion of the work under
such contract, provided (A) such contract requires payment upon completion of
such portion of work, (B) the materials for which the request is made are on
site at the Property and are properly secured or have been installed in the
Property, (C) all other conditions in this Agreement for disbursement have been
satisfied, and (D) in the case of a Replacement, funds remaining in the
Replacement Reserve Account are, in Lender's judgment, sufficient to complete
such Replacement and other Replacements when required.
(e) Borrower shall not make a request for, nor shall Lender have
any obligation to make, any disbursement from any Reserve Account more
frequently than once in any calendar month and (except in connection with the
final disbursement) in any amount less than the lesser of (i) $10,000 or (ii)
the total cost of the Required Work for which the disbursement is requested.
(f) Intentionally deleted.
(g) Intentionally deleted.
(h) Lender's disbursement of any Reserve Funds or other
acknowledgment of completion of any Required Work in a manner satisfactory to
Lender shall not be deemed a certification or warranty by Lender to any Person
that the Required Work has been completed in accordance with Legal Requirements.
(i) If the funds in any Reserve Account should exceed the amount
of payments actually applied by Lender for the purposes of the account, Lender
in its sole discretion shall either return any excess to Borrower or credit such
excess against future payments to be made to that Reserve Account. In allocating
any such excess, Lender may deal with the Person shown on Lender's records as
being the owner of the Property.
(j) The insufficiency of any balance in any of the Reserve
Accounts shall not relieve Borrower from its obligation to fulfill all
preservation and maintenance covenants in the Loan Documents.
(k) INTENTIONALLY DELETED.
(l) Upon termination of the Replacement Reserve Period or payment
in full of the Debt, all amounts remaining on deposit, if any, in the
Replacement Reserve Account shall be returned to Borrower or the Person shown on
Lender's records as being the owner of the Property and no other party shall
have any right or claim thereto.
-74-
SECTION 9.6. TAX AND INSURANCE RESERVE FUNDS
Borrower shall establish on the date hereof an Eligible Account with
Lender or Lender's agent sufficient to discharge Borrower's obligations for the
payment of Taxes and Insurance Premiums pursuant to Section 5.4 and Section 8.1
hereof (the "TAX AND INSURANCE RESERVE ACCOUNT"). Borrower shall deposit into
the Tax and Insurance Reserve Account on each Scheduled Payment Date during any
Tax and Insurance Reserve Period (a) one-twelfth of the Taxes that Lender
estimates will be payable during the next ensuing twelve (12) months or such
higher amount necessary to accumulate with Lender sufficient funds to pay all
such Taxes at least thirty (30) days prior to the earlier of (i) the date that
the same will become delinquent and (ii) the date that additional charges or
interest will accrue due to the non-payment thereof, and (b) except to the
extent Lender has waived the insurance escrow because the insurance required
hereunder is maintained under a blanket insurance Policy acceptable to Lender in
accordance with Section 8.1(c), one-twelfth of the Insurance Premiums that
Lender estimates will be payable during the next ensuing twelve (12) months for
the renewal of the coverage afforded by the Policies upon the expiration thereof
or such higher amount necessary to accumulate with Lender sufficient funds to
pay all such Insurance Premiums at least thirty (30) days prior to the
expiration of the Policies (said amounts in (a) and (b) above hereinafter called
the "TAX AND INSURANCE RESERVE FUNDS"). Lender will apply the Tax and Insurance
Reserve Funds to payments of Taxes and Insurance Premiums required to be made by
Borrower pursuant to Section 5.4 and Section 8.1 hereof. In making any
disbursement from the Tax and Insurance Reserve Account, Lender may do so
according to any bill, statement or estimate procured from the appropriate
public office or tax lien service (with respect to Taxes) or insurer or agent
(with respect to Insurance Premiums), without inquiry into the accuracy of such
bill, statement or estimate or into the validity of any tax, assessment, sale,
forfeiture, tax lien or title or claim thereof. If the amount of the Tax and
Insurance Reserve Funds shall exceed the amounts due for Taxes and Insurance
Premiums pursuant to Section 5.4 and Section 8.1 hereof, Lender shall, in its
sole discretion, return any excess to Borrower or credit such excess against
future payments to be made to the Tax and Insurance Reserve Account. In
allocating any such excess, Lender may deal with the person shown on Lender's
records as being the owner of the Property. Any amount remaining in the Tax and
Insurance Reserve Account after the Debt has been paid in full shall be returned
to Borrower or the person shown on Lender's records as being the owner of the
Property and no other party shall have any right or claim thereto. If at any
time Lender reasonably determines that the Tax and Insurance Reserve Funds are
not or will not be sufficient to pay Taxes and Insurance Premiums by the dates
set forth in (a) and (b) above, Lender shall notify Borrower of such
determination and Borrower shall pay to Lender any amount necessary to make up
the deficiency within ten (10) days after notice from Lender to Borrower
requesting payment thereof.
SECTION 9.7. EXCESS CASH
Borrower shall establish on the date hereof a sub-account of the Cash
Management Account into which Borrower shall deposit all Excess Cash on each
Scheduled Payment Date during any Cash Management Period (the "EXCESS CASH
RESERVE ACCOUNT"). Amounts so deposited shall hereinafter be referred to as the
"EXCESS CASH RESERVE FUNDS." Sums from the Excess Cash Reserve Account shall be
disbursed to Borrower's Account upon the discontinuation of a Cash Management
Period.
-75-
SECTION 9.8. TERRORISM RESERVE.
Upon the occurrence of an Act of Terror (i) Borrower shall establish an
Eligible Account with Lender or Lender's agent (the "TERRORISM RESERVE ACCOUNT")
and (ii) Borrower Principal shall immediately deposit into the Terrorism Reserve
Account an amount equal to the sum of the three (3) Monthly Payment Amounts that
would be payable by Borrower for the three (3) Scheduled Payment Dates
immediately following the occurrence of such Act of Terror. Amounts so deposited
shall hereinafter be referred to as the "TERRORISM RESERVE FUNDS". "ACT OF
TERROR" shall mean any foreign acts of terrorism or similar acts of sabotage
(excluding acts of war or nuclear, chemical and biological acts) in which the
Property is directly affected by such acts. Lender shall apply Terrorism Reserve
Funds, if any, to any amounts due hereunder.
SECTION 9.9. RESERVE FUNDS GENERALLY
(a) Funds on deposit in the Reserve Accounts shall be held by
Lender or any Loan servicer, as applicable, and invested in Permitted
Investments as directed by Lender, and interest shall be credited to Borrower.
All such interest shall be and become part of the applicable Reserve Accounts
and shall be disbursed in accordance with Section 9.5 above, provided, however,
that Lender may, at its election, retain any such interest for its own account
for application to the Debt in accordance with this Agreement and the other Loan
Documents during the occurrence and continuance of an Event of Default. Borrower
agrees that it shall include all interest on the applicable Reserve Funds as the
income of Borrower (and, if Borrower is a partnership or other pass-through
entity, the partners, members or beneficiaries of Borrower, as the case may be),
and shall be the owner of the applicable Reserve Funds for federal and
applicable state and local tax purposes.
(b) Borrower grants to Lender a first-priority perfected security
interest in, and assigns and pledges to Lender, each of the Reserve Accounts and
any and all Reserve Funds now or hereafter deposited in the Reserve Accounts as
additional security for payment of the Debt. Until expended or applied in
accordance herewith, the Reserve Accounts and the Reserve Funds shall constitute
additional security for the Debt. The provisions of this Section 9.9 are
intended to give Lender or any subsequent holder of the Loan "control" of the
Reserve Accounts within the meaning of the UCC.
(c) The Reserve Accounts and any and all Reserve Funds now or
hereafter deposited in the Reserve Accounts shall be subject to the exclusive
dominion and control of Lender, which shall hold the Reserve Accounts and any or
all Reserve Funds now or hereafter deposited in the Reserve Accounts subject to
the terms and conditions of this Agreement. Borrower shall have no right of
withdrawal from the Reserve Accounts or any other right or power with respect to
the Reserve Accounts or any or all of the Reserve Funds now or hereafter
deposited in the Reserve Accounts, except as expressly provided in this
Agreement.
(d) Lender shall furnish or cause to be furnished to Borrower,
without charge, an annual accounting of each Reserve Account in the normal
format of Lender or its loan servicer, showing credits and debits to such
Reserve Account and the purpose for which each debit to each Reserve Account was
made.
- 76 -
(e) As long as no Event of Default has occurred and is continuing,
Lender shall make disbursements from the Reserve Accounts in accordance with
this Agreement. All such disbursements shall be deemed to have been expressly
pre-authorized by Borrower, and shall not be deemed to constitute the exercise
by Lender of any remedies against Borrower unless an Event of Default has
occurred and is continuing and Lender has expressly stated in writing its intent
to proceed to exercise its remedies as a secured party, pledgee or lienholder
with respect to the Reserve Accounts.
(f) If any Event of Default occurs, Borrower shall immediately
lose all of its rights to receive disbursements from the Reserve Accounts until
the earlier to occur of (i) the date on which such Event of Default is cured to
Lender's satisfaction, or (ii) the payment in full of the Debt. In addition, at
Lender's election, Borrower shall lose all of its rights to receive interest on
the Reserve Accounts during the occurrence and continuance of an Event of
Default. Upon the occurrence and during the continuance of an Event of Default,
Lender may exercise any or all of its rights and remedies as a secured party,
pledgee and lienholder with respect to the Reserve Accounts. Without limitation
of the foregoing, during the continuance of any Event of Default, Lender may use
and disburse the Reserve Funds (or any portion thereof) for any of the following
purposes: (A) repayment of the Debt, including, but not limited to, principal
prepayments and the prepayment premium applicable to such full or partial
prepayment (as applicable); (B) reimbursement of Lender for all losses, fees,
costs and expenses (including, without limitation, reasonable legal fees)
suffered or incurred by Lender as a result of such Event of Default; (C) payment
of any amount expended in exercising any or all rights and remedies available to
Lender at law or in equity or under this Agreement or under any of the other
Loan Documents; (D) payment of any item from any of the Reserve Accounts as
required or permitted under this Agreement; or (E) any other purpose permitted
by applicable law; provided, however, that any such application of funds shall
not cure or be deemed to cure any Event of Default. Without limiting any other
provisions hereof, each of the remedial actions described in the immediately
preceding sentence shall be deemed to be a commercially reasonable exercise of
Lender's rights and remedies as a secured party with respect to the Reserve
Funds and shall not in any event be deemed to constitute a setoff or a
foreclosure of a statutory banker's lien. Nothing in this Agreement shall
obligate Lender to apply all or any portion of the Reserve Funds to effect a
cure of any Event of Default, or to pay the Debt, or in any specific order of
priority. The exercise of any or all of Lender's rights and remedies under this
Agreement or under any of the other Loan Documents shall not in any way
prejudice or affect Lender's right to initiate and complete a foreclosure under
the Mortgage.
(g) The Reserve Funds shall not constitute escrow or trust funds
and may be commingled with other monies held by Lender. Notwithstanding anything
else herein to the contrary, Lender may commingle in one or more Eligible
Accounts any and all funds controlled by Lender, including, without limitation,
funds pledged in favor of Lender by other borrowers, whether for the same
purposes as the Reserve Accounts or otherwise. Without limiting any other
provisions of this Agreement or any other Loan Document, the Reserve Accounts
may be established and held in such name or names as Lender or its loan
servicer, as agent for Lender, shall deem appropriate, including, without
limitation, in the name of Lender or such loan servicer as agent for Lender. In
the case of any Reserve Account which is held in a commingled account, Lender or
its loan servicer, as applicable, shall maintain records sufficient to enable it
to determine at all times which portion of such account is related to the Loan.
The Reserve
-77-
Accounts are solely for the protection of Lender. With respect to the Reserve
Accounts, Lender shall have no responsibility beyond the allowance of due credit
for the sums actually received by Lender or beyond the reimbursement or payment
of the costs and expenses for which such accounts were established in accordance
with their terms. Upon assignment of the Loan by Lender, any Reserve Funds shall
be turned over to the assignee and any responsibility of Lender as assignor
shall terminate. The requirements of this Agreement concerning Reserve Accounts
in no way supersede, limit or waive any other rights or obligations of the
parties under any of the Loan Documents or under applicable law.
(h) Borrower shall not, without obtaining the prior written
consent of Lender, further pledge, assign or grant any security interest in the
Reserve Accounts or the Reserve Funds deposited therein or permit any Lien to
attach thereto, except for the security interest granted in this Section 9.9, or
any levy to be made thereon, or any UCC Financing Statements, except those
naming Lender as the secured party, to be filed with respect thereto.
(i) Borrower will maintain the security interest created by this
Section 9.9 as a first priority perfected security interest and will defend the
right, title and interest of Lender in and to the Reserve Accounts and the
Reserve Funds against the claims and demands of all Persons whomsoever. At any
time and from time to time, upon the written request of Lender, and at the sole
expense of Borrower, Borrower will promptly and duly execute and deliver such
further instruments and documents and will take such further actions as Lender
reasonably may request for the purpose of obtaining or preserving the full
benefits of this Agreement and of the rights and powers herein granted.
ARTICLE 10
CASH MANAGEMENT
SECTION 10.1. LOCKBOX ACCOUNT AND CASH MANAGEMENT ACCOUNT
(a) Borrower acknowledges and confirms that Borrower has
established, and Borrower covenants that it shall maintain, (i) pursuant to the
Lockbox Agreement, an Eligible Account into which Borrower shall, and shall
cause Manager to, deposit or cause to be deposited, all Rents and other revenue
from the Property (such account, all funds at any time on deposit therein and
any proceeds, replacements or substitutions of such account or funds therein,
are referred to herein as the "LOCKBOX ACCOUNT"), and (ii) an Eligible Account
with Lender or any Loan servicer, as applicable, into which funds in the Lockbox
Account shall be transferred pursuant to the terms of Section 10.2(b) hereof
(such account, the sub-accounts thereof, all funds at any time on deposit
therein and any proceeds, replacements or substitutions of such account or funds
therein, are referred to herein as the "CASH MANAGEMENT ACCOUNT").
(b) The Lockbox Account and Cash Management Account shall each be
in the name of Borrower for the benefit of Lender, as secured party, provided
that Borrower shall be the owner of all funds on deposit in such accounts for
federal and applicable state and local tax purposes. Sums on deposit in the Cash
Management Account shall not be invested except in such Permitted Investments as
determined and directed by Lender and all income earned thereon shall be the
income of Borrower and be applied to and become part of the Cash Management
Account, to be disbursed in accordance with this Article 10. Neither Lockbox
Bank nor Lender
-78-
shall have any liability for any loss resulting from the investment of funds in
Permitted Investments in accordance with the terms and conditions of this
Agreement.
(c) The Lockbox Account and Cash Management Account shall be
subject to the exclusive dominion and control of Lender and, except as otherwise
expressly provided herein, neither Borrower, Manager nor any other party
claiming on behalf of, or through, Borrower or Manager, shall have any right of
withdrawal therefrom or any other right or power with respect thereto.
(d) Borrower agrees to pay the customary fees and expenses of
Lockbox Bank (incurred in connection with maintaining the Lockbox Account) and
Lender (incurred in connection with maintaining the Cash Management Account) and
any successors thereto in connection therewith, as separately agreed by them
from time to time.
(e) Lender shall be responsible for the performance only of such
duties with respect to the Cash Management Account as are specifically set forth
herein, and no duty shall be implied from any provision hereof. Lender shall not
be under any obligation or duty to perform any act which would involve it in
expense or liability or to institute or defend any suit in respect hereof, or to
advance any of its own monies. Borrower shall indemnify and hold Lender and its
directors, employees, officers and agents harmless from and against any loss,
cost or damage (including, without limitation, reasonable attorneys' fees and
disbursements) incurred by such parties in connection with the Cash Management
Account other than such as result from the gross negligence or willful
misconduct of Lender or intentional nonperformance by Lender of its obligations
under this Agreement.
SECTION 10.2. DEPOSITS AND WITHDRAWALS
(a) Borrower represents, warrants and covenants that:
(i) Concurrently with the execution of this Agreement,
Borrower shall notify and advise Manager to deposit directly into the
Lockbox Account all payments of Rents or any other item payable under
such Leases pursuant to an instruction letter in the form of Exhibit A
attached hereto (a "RENT DIRECTION LETTER"). If Borrower fails to
provide any such notice (and without prejudice to Lender's rights with
respect to such default), Lender shall have the right, and Borrower
hereby grants to Lender a power of attorney (which power of attorney
shall be coupled with an interest and irrevocable so long as any
portion of the Debt remains outstanding), to sign and deliver a Rent
Direction Letter;
(ii) Borrower shall, and shall cause Manager to, instruct
all Persons that maintain open accounts with Borrower or Manager with
respect to the Property or with whom Borrower or Manager does business
on an "accounts receivable" basis with respect to the Property to
deliver all payments due under such accounts to the Lockbox Account.
Neither Borrower nor Manager shall direct any such Person to make
payments due under such accounts in any other manner;
(iii) All Rents or other income from the Property shall (A)
be deemed additional security for payment of the Debt and shall be held
in trust for the benefit, and as the property, of Lender, (B) not be
commingled with any other funds or property of
-79-
Borrower or Manager, and (C) if received by Borrower notwithstanding
the delivery of a Rent Direction Letter, be deposited in the Lockbox
Account within one (1) Business Day of receipt;
(iv) Without the prior written consent of Lender, so long
as any portion of the Debt remains outstanding, Borrower shall not
terminate, amend, revoke or modify any Rent Direction Letter in any
manner whatsoever or direct or cause Manager to pay any amount in any
manner other than as provided in the Rent Direction Letter; and
(v) So long as any portion of the Debt remains
outstanding, neither Borrower, Manager nor any other Person shall open
or maintain any accounts other than the Lockbox Account into which
revenues from the ownership and operation of the Property are
deposited. The foregoing shall not prohibit Borrower from utilizing one
or more separate accounts for the disbursement or retention of funds
that have been transferred to Borrower pursuant to the express terms of
this Agreement.
(b) Provided no Event of Default has occurred, at all times other
than during a Cash Management Period, Lockbox Bank shall, on each Business Day,
withdraw all collected and available funds in excess of $2,500 (funds are not
available if, in the reasonable determination of Lockbox Bank, such funds are
subject to a bank hold or freeze (pursuant to applicable Legal Requirements),
dispute or legal process preventing their withdrawal) held in the Lockbox
Account and disburse such funds to the Borrower Account. Upon the occurrence and
during the continuance of a Cash Management Period, Lockbox Bank shall (and
Lender shall instruct Lockbox Bank to), on each Business Day, withdraw all
collected and available funds (funds are not available if, in the reasonable
determination of Lockbox Bank, such funds are subject to a bank hold or freeze
(pursuant to applicable Legal Requirements), dispute or legal process preventing
their withdrawal) held in the Lockbox Account and transfer by wire transfer or
other method of transfer mutually agreeable to Lockbox Bank and Lender to the
Cash Management Account to be held until disbursed by Lender pursuant to Section
10.2(c). Provided no Event of Default has occurred and is continuing, upon the
earlier to occur of (a) payment in full of the Debt or (b) the discontinuation
of a Cash Management Period, Lockbox Bank shall no longer transfer funds in the
Lockbox Account to the Cash Management Account in accordance with this
subsection (b) and shall transfer funds (if any) in the Lockbox Account to the
Borrower Account or, upon payment in full of the Debt, as otherwise directed by
Borrower. In the event a Cash Management Period occurs three times during the
term of the Loan and if required by the Lockbox Bank, Borrower shall not be
entitled to any rights to the withdrawal of funds from the Lockbox Account
during the remaining term of the Loan, the Cash Management Period shall
continue, and Lender shall continue to have the right to the withdrawal of funds
from the Lockbox Account until the Debt is paid in full.
(c) During a Cash Management Period, on each Scheduled Payment
Date (and if such day is not a Business Day, then the immediately preceding day
which is a Business Day) commencing the month immediately following the month
during which the Cash Management Period commences, Borrower hereby irrevocably
authorizes Lender to withdraw or allocate to the sub-accounts of the Cash
Management Account, as the case may be, amounts received in the Cash Management
Account, in each case to the extent that sufficient funds remain therefor and
Lender may, at its option, withdraw or allocate such funds as follows:
-80-
(i) during a Tax and Insurance Reserve Period, funds
sufficient to pay the monthly deposits to the Tax and Insurance Reserve
Account shall be allocated to the Tax and Insurance Reserve Account to
be held and disbursed in accordance with Section 9.6;
(ii) funds sufficient to pay the Monthly Payment Amount
(or an amount up to the entire amount of the Debt upon an acceleration
of the Loan in accordance with the terms hereof), shall be withdrawn
and paid to Lender;
(iii) during a Replacement Reserve Period, funds sufficient
to pay the Replacement Reserve Monthly Deposit shall be allocated to
the Replacement Reserve Account to be held and disbursed in accordance
with Section 9.5;
(iv) funds sufficient to pay any interest accruing at the
Default Rate, late payment charges, if any, and any other sums due and
payable to Lender under any of the Loan Documents, shall be withdrawn
and paid to Lender and applied against such items;
(v) funds sufficient to pay Lockbox Bank for all costs
and expenses incurred by Lockbox Bank in connection with the
maintenance and administration of the Lockbox Account;
(vi) funds sufficient to pay Lender or any Loan servicer,
as applicable, the customary fees and expenses incurred in connection
with maintaining the Cash Management Account; and
(vii) funds in an amount equal to the balance (if any)
remaining on deposit in the Cash Management Account after the foregoing
withdrawals and allocations shall be deposited in the Excess Cash
Reserve Account to be held and disbursed in accordance with Section
9.7. Upon the discontinuance of a Cash Management Period, funds (if
any) on deposit in the Excess Cash Reserve Account shall be transferred
to Borrower's Account.
(d) Notwithstanding anything to the contrary herein, Borrower
acknowledges that Borrower is responsible for monitoring the sufficiency of
funds deposited in the Cash Management Account and that Borrower is liable for
any deficiency in available funds, irrespective of whether Borrower has received
any account statement, notice or demand from Lender or Lender's servicer. If the
amount on deposit in the Cash Management Account is insufficient to make all of
the withdrawals and allocations described in Section 10.2(c)(i) through (vi)
above, Borrower shall deposit such deficiency into the Cash Management Account
within five (5) days (provided that such five day period shall not constitute a
grace period for any default or Event of Default under this Agreement or any
other Loan Document based on a failure to satisfy any monetary obligation
provided in any Loan Document).
(e) Notwithstanding anything to the contrary contained herein, if
an Event of Default shall have occurred and be continuing, Borrower hereby
irrevocably authorizes Lender to make any and all withdrawals from the Lockbox
Account and Cash Management Account and transfers between any of the Reserve
Accounts as Lender shall determine in Lender's sole and absolute discretion and
Lender may use all funds contained in any such accounts for any purpose,
including but not limited to repayment of the Debt in such order, proportion and
priority
-81-
as Lender may determine in its sole and absolute discretion. Lender's right to
withdraw and apply funds as stated herein shall be in addition to all other
rights and remedies provided to Lender under this Agreement, the Note, the
Mortgage and the other Loan Documents.
SECTION 10.3. SECURITY INTEREST
(a) To secure the full and punctual payment of the Debt and
performance of all obligations of Borrower now or hereafter existing under this
Agreement and the other Loan Documents, Borrower hereby grants to Lender a
first-priority perfected security interest in the Lockbox Account and Cash
Management Account, all interest, cash, checks, drafts, certificates and
instruments, if any, from time to time deposited or held therein, any and all
amounts invested in Permitted Investments, and all "proceeds" (as defined in the
UCC as in effect in the state in which the Lockbox Account and Cash Management
Account are located or maintained) of any or all of the foregoing. Furthermore,
Borrower shall not, without obtaining the prior written consent of Lender,
further pledge, assign or grant any security interest in any of the foregoing or
permit any Lien to attach thereto or any levy to be made thereon or any UCC
Financing Statements to be filed with respect thereto. Borrower will maintain
the security interest created by this Section 10.3(a) as a first priority
perfected security interest and will defend the right, title and interest of
Lender in and to the Lockbox Account and Cash Management Account against the
claims and demands of all Persons whomsoever.
(b) Borrower authorizes Lender to file any financing statement or
statements required by Lender to establish or maintain the validity, perfection
and priority of the security interest granted herein in connection with the
Lockbox Account and Cash Management Account. Borrower agrees that at any time
and from time to time, at the expense of Borrower, Borrower will promptly and
duly execute and deliver all further instruments and documents, and take all
further action, that may be necessary or desirable, or that Lender may
reasonably request, in order to perfect and protect any security interest
granted or purported to be granted hereby (including, without limitation, any
security interest in and to any Permitted Investments) or to enable Lender to
exercise and enforce its rights and remedies hereunder.
(c) Upon the occurrence and during the continuance of an Event of
Default, Lender may exercise any or all of its rights and remedies as a secured
party, pledgee and lienholder with respect to the Lockbox Account and Cash
Management Account. Without limitation of the foregoing, upon any Event of
Default, Lender may use the Lockbox Account and Cash Management Account for any
of the following purposes: (A) repayment of the Debt, including, but not limited
to, principal prepayments and the prepayment premium applicable to such full or
partial prepayment (as applicable); (B) reimbursement of Lender for all losses,
fees, costs and expenses (including, without limitation, reasonable legal fees)
suffered or incurred by Lender as a result of such Event of Default; (C) payment
of any amount expended in exercising any or all rights and remedies available to
Lender at law or in equity or under this Agreement or under any of the other
Loan Documents; (D) payment of any item as required or permitted under this
Agreement; or (E) any other purpose permitted by applicable law; provided,
however, that any such application of funds shall not cure or be deemed to cure
any Event of Default. Without limiting any other provisions hereof, each of the
remedial actions described in the immediately preceding sentence shall be deemed
to be a commercially reasonable exercise of Lender's rights and remedies as a
secured party with respect to the Lockbox Account and Cash Management
-82-
Account and shall not in any event be deemed to constitute a setoff or a
foreclosure of a statutory banker's lien. Nothing in this Agreement shall
obligate Lender to apply all or any portion of the Lockbox Account or Cash
Management Account to effect a cure of any Event of Default, or to pay the Debt,
or in any specific order of priority. The exercise of any or all of Lender's
rights and remedies under this Agreement or under any of the other Loan
Documents shall not in any way prejudice or affect Lender's right to initiate
and complete a foreclosure under the Mortgage.
SECTION 10.4. DEFINITIONS. Notwithstanding anything to the contrary
contained herein, For purposes of this Article 10 only, Business Day shall mean
a day on which Lender and Lockbox Bank are both open for the conduct of
substantially all of their respective banking business at the office in the city
in which the Note is payable, with respect to Lender and at the office in the
city where the Lockbox Account is maintained, with respect to Lockbox Bank (in
both instances, excluding Saturdays and Sundays).
ARTICLE 11
EVENTS OF DEFAULT; REMEDIES
SECTION 11.1. EVENT OF DEFAULT
The occurrence of any one or more of the following events shall
constitute an "EVENT OF DEFAULT":
(a) if any portion of the Debt is not paid prior to the tenth
(10th) calendar day following the date the same is due or if the entire Debt is
not paid on or before the Maturity Date;
(b) except as otherwise expressly provided in the Loan Documents,
if any of the Taxes or Other Charges are not paid when the same are due and
payable, unless there is sufficient money in the Tax and Insurance Reserve
Account for payment of amounts then due and payable and Lender's access to such
money has not been constrained or restricted in any manner;
(c) if the Policies are not kept in full force and effect, or if
the Insurance Certificates or certified copies of the Policies are not delivered
to Lender as provided in Section 8.1;
(d) if Borrower breaches (i) any covenant with respect to itself
or any SPE Component Entity (if any) contained in Article 6 and (A) such breach
is not cured within ten (10) days of the occurrence thereof and (B) if an
Insolvency Opinion was delivered to Lender in connection with the closing of the
Loan, Borrower fails to deliver to Lender, within such ten (10) day period, a
new or revised Insolvency Opinion, in form and substance, and from a source
satisfactory to Lender and if the Loan has been Securitized, the Rating
Agencies, to the effect that such breach does not negate or impair the opinion
previously delivered to Lender, or (ii) any covenant contained in Article 7
hereof;
(e) if any representation or warranty of, or with respect to,
Borrower, Borrower Principal, any SPE Component Entity, or any member, general
partner, principal or beneficial owner of any of the foregoing, made herein, in
any other Loan Document, or in any certificate, report, financial statement or
other instrument or document furnished to Lender at the time of the
-83-
closing of the Loan or during the term of the Loan shall have been false or
misleading in any material respect when made;
(f) if (i) Borrower, or any managing member or general partner of
Borrower, Borrower Principal, or any SPE Component Entity (if any) shall
commence any case, proceeding or other action (A) under any Creditors Rights
Laws, seeking to have an order for relief entered with respect to it, or seeking
to adjudicate it a bankrupt or insolvent, or seeking reorganization, or (B)
seeking appointment of a receiver, trustee, custodian, conservator or other
similar official for it or for all or any substantial part of its assets, or
Borrower, any managing member or general partner of Borrower, Borrower
Principal, or any SPE Component Entity (if any) shall make a general assignment
for the benefit of its creditors; or (ii) there shall be commenced against
Borrower, any managing member or general partner of Borrower, Borrower
Principal, or any SPE Component Entity (if any) any case, proceeding or other
action of a nature referred to in clause (i) above which (A) results in the
entry of an order for relief or any such adjudication or appointment or (B)
remains undismissed, undischarged or unbonded for a period of sixty (60) days;
or (iii) there shall be commenced against Borrower, any managing member or
general partner of Borrower, Borrower Principal, or any SPE Component Entity (if
any) any case, proceeding or other action seeking issuance of a warrant of
attachment, execution, distraint or similar process against all or any
substantial part of its assets which results in the entry of any order for any
such relief which shall not have been vacated, discharged, or stayed or bonded
pending appeal within sixty (60) days from the entry thereof; or (iv) Borrower,
any managing member or general partner of Borrower, Borrower Principal, or any
SPE Component Entity (if any) shall take any action in furtherance of, or
indicating its consent to, approval of, or acquiescence in, any of the acts set
forth in clause (i), (ii), or (iii) above; or (v) Borrower, any managing member
or general partner of Borrower, Borrower Principal, or any SPE Component Entity
(if any) shall generally not, or shall be unable to, or shall admit in writing
its inability to, pay its debts as they become due;
(g) if Borrower shall be in default beyond applicable notice and
grace periods under any other mortgage, deed of trust, deed to secure debt or
other security agreement covering any part of the Property, whether it be
superior or junior in lien to the Mortgage;
(h) if the Property becomes subject to any mechanic's,
materialman's or other Lien other than a Lien for any Taxes or Other Charges not
then due and payable and the Lien shall remain undischarged of record (by
payment, bonding or otherwise) for a period of sixty (60) days;
(i) if any federal tax lien is filed against Borrower, any member
or general partner of Borrower, Borrower Principal, or any SPE Component Entity
(if any) or the Property and same is not discharged of record within sixty (60)
days after same is filed;
(j) if a final non-appealable judgment is filed against Borrower
in excess of $500,000 which is not vacated or discharged within 45 days;
(k) intentionally deleted;
-84-
(l) if Borrower shall permit any event within its control to occur
that would cause any material REA to terminate without notice or action by any
party thereto or would entitle any party to terminate any material REA and the
term thereof by giving notice to Borrower; or any material REA shall be
surrendered, terminated or canceled for any reason or under any circumstance
whatsoever except as provided for in such REA; or any term of any material REA
shall be modified or supplemented in any material respect without Lender's prior
written consent; or Borrower shall fail, within ten (10) Business Days after
demand by Lender, to exercise its option to renew or extend the term of any
material REA or shall fail or neglect to pursue diligently all actions necessary
to exercise such renewal rights pursuant to such REA except as provided for in
such REA; or
(m) if Borrower shall continue to be in default under any other
term, covenant or condition of this Agreement or any of the Loan Documents
(including, but not limited to, any guaranty or indemnity, but excluding Section
5.23)) for more than ten (10) days after notice from Lender in the case of any
default which can be cured by the payment of a sum of money or for thirty (30)
days after notice from Lender in the case of any other default, provided that if
such default cannot reasonably be cured within such thirty (30) day period and
Borrower shall have commenced to cure such default within such thirty (30) day
period and thereafter diligently and expeditiously proceeds to cure the same,
such thirty (30) day period shall be extended for so long as it shall require
Borrower in the exercise of due diligence to cure such default, it being agreed
that no such extension shall be for a period in excess of sixty (60) days.
SECTION 11.2. REMEDIES
(a) Upon the occurrence and during the continuance of an Event of
Default (other than an Event of Default described in Section 11.1(f) above) and
at any time thereafter (until such Event of Default is cured) Lender may, in
addition to any other rights or remedies available to it pursuant to this
Agreement and the other Loan Documents or at law or in equity, take such action,
without notice or demand, that Lender deems advisable to protect and enforce its
rights against Borrower and in the Property, including, without limitation,
declaring the Debt to be immediately due and payable, and Lender may enforce or
avail itself of any or all rights or remedies provided in the Loan Documents
against Borrower and the Property, including, without limitation, all rights or
remedies available at law or in equity; and upon any Event of Default described
in Section 11.1(f) above, the Debt and all other obligations of Borrower
hereunder and under the other Loan Documents shall immediately and automatically
become due and payable, without notice or demand, and Borrower hereby expressly
waives any such notice or demand, anything contained herein or in any other Loan
Document to the contrary notwithstanding.
(b) Upon the occurrence of an Event of Default, all or any one or
more of the rights, powers, privileges and other remedies available to Lender
against Borrower under this Agreement or any of the other Loan Documents
executed and delivered by, or applicable to, Borrower or at law or in equity may
be exercised by Lender at any time and from time to time, whether or not all or
any of the Debt shall be declared due and payable, and whether or not Lender
shall have commenced any foreclosure proceeding or other action for the
enforcement of its rights and remedies under any of the Loan Documents with
respect to the Property. Any such actions taken by Lender shall be cumulative
and concurrent and may be pursued independently, singularly, successively,
together or otherwise, at such time and in such order as Lender may
-85-
determine in its sole discretion, to the fullest extent permitted by law,
without impairing or otherwise affecting the other rights and remedies of Lender
permitted by law, equity or contract or as set forth herein or in the other Loan
Documents.
ARTICLE 12
ENVIRONMENTAL PROVISIONS
SECTION 12.1. ENVIRONMENTAL REPRESENTATIONS AND WARRANTIES
Borrower represents and warrants, to its knowledge based upon an
Environmental Report of the Property and information that Borrower knows or
should reasonably have known, that: (a) there are no Hazardous Materials or
underground storage tanks in, on, or under the Property, except those that are
both (i) in compliance with Environmental Laws and with permits issued pursuant
thereto (if such permits are required), if any, and (ii) either (A) in the case
of Hazardous Materials, in amounts not in excess of that necessary to operate
the Property for the purposes set forth herein or (B) fully disclosed to and
approved by Lender in writing pursuant to an Environmental Report; (b) there are
no past, present or threatened Releases of Hazardous Materials in violation of
any Environmental Law or which would require remediation by a Governmental
Authority in, on, under or from the Property except as described in the
Environmental Report; (c) there is no threat of any Release of Hazardous
Materials migrating to the Property except as described in the Environmental
Report; (d) there is no past or present non-compliance with Environmental Laws,
or with permits issued pursuant thereto, in connection with the Property except
as described in the Environmental Report; (e) Borrower has not received any
written notice or other communication from any Person relating to Hazardous
Materials in, on, under or from the Property; and (f) Borrower has truthfully
and fully provided to Lender, in writing, any and all information relating to
material environmental conditions in, on, under or from the Property known to
Borrower or contained in Borrower's files and records, including but not limited
to any reports relating to Hazardous Materials in, on, under or migrating to or
from the Property and/or to the environmental condition of the Property.
SECTION 12.2. ENVIRONMENTAL COVENANTS
Borrower covenants and agrees that so long as Borrower owns, manages,
is in possession of, or otherwise controls the operation of the Property: (a)
all uses and operations on or of the Property, whether by Borrower or any other
Person, shall be in material compliance with all Environmental Laws and permits
issued pursuant thereto; (b) there shall be no Releases (in violation of any
Environmental Laws) of Hazardous Materials in, on, under, or from the Property;
(c) there shall be no Hazardous Materials in, on, or under the Property, except
those that are both (i) in material compliance with all Environmental Laws and
with permits issued pursuant thereto, if and to the extent required, and (ii)
(A) in amounts not in excess of that necessary to operate the Property for the
purposes set forth herein or (B) fully disclosed to and approved by Lender in
writing; (d) Borrower shall keep the Property free and clear of all
Environmental Liens; (e) Borrower shall, at its sole cost and expense, fully and
expeditiously cooperate in all activities pursuant to Section 12.4 below,
including but not limited to providing all relevant information and making
knowledgeable persons available for interviews; (f) Borrower shall, at its sole
cost and expense, perform any environmental site assessment or other
investigation of environmental conditions in connection with the Property,
pursuant to any
-86-
reasonable written request of Lender, upon Lender's reasonable belief that the
Property is not in full compliance with all Environmental Laws, and share with
Lender the reports and other results thereof, and Lender and other Indemnified
Parties shall be entitled to rely on such reports and other results thereof; (g)
Borrower shall, at its sole cost and expense, comply with all reasonable written
requests of Lender to (i) reasonably effectuate remediation of any Hazardous
Materials in, on, under or from the Property; and (ii) comply in all material
respects with any Environmental Law; (h) Borrower shall not allow any tenant or
other user of the Property to violate any Environmental Law; and (i) Borrower
shall immediately notify Lender in writing after it has become aware of (A) any
presence or Release or threatened Release of Hazardous Materials in, on, under,
from or migrating towards the Property; (B) any material non-compliance with any
Environmental Laws related in any way to the Property; (C) any actual or
potential Environmental Lien against the Property; (D) any required or proposed
remediation of environmental conditions relating to the Property; and (E) any
written notice or other communication of which Borrower becomes aware from any
source whatsoever (including but not limited to a Governmental Authority)
relating in any way to Hazardous Materials.
SECTION 12.3. LENDER'S RIGHTS
Lender and any other Person designated by Lender, including but not
limited to any representative of a Governmental Authority, and any environmental
consultant, and any receiver appointed by any court of competent jurisdiction,
shall have the right, but not the obligation, to enter upon the Property at all
reasonable times (upon reasonable notice) to assess any and all aspects of the
environmental condition of the Property and its use, including but not limited
to conducting any environmental assessment or audit (the scope of which shall be
determined in Lender's reasonable discretion) and taking samples of soil,
groundwater or other water, air, or building materials, and conducting other
invasive testing. Borrower shall cooperate with and provide access to Lender and
any such person or entity designated by Lender.
SECTION 12.4. OPERATIONS AND MAINTENANCE PROGRAMS
If recommended by the Environmental Report or any other environmental
assessment or audit of the Property, Borrower shall establish and comply with an
operations and maintenance program with respect to the Property, in form and
substance reasonably acceptable to Lender, prepared by an environmental
consultant reasonably acceptable to Lender, which program shall address any
asbestos-containing material or lead based paint that may now or in the future
be detected at or on the Property. Without limiting the generality of the
preceding sentence, Lender may require (a) periodic notices or reports to Lender
in form, substance and at such intervals as Lender may specify, (b) an amendment
to such operations and maintenance program to address changing circumstances,
laws or other matters, (c) at Borrower's sole expense, supplemental examination
of the Property by consultants specified by Lender, (d) access to the Property
by Lender, its agents or servicer, to review and assess the environmental
condition of the Property and Borrower's compliance with any operations and
maintenance program, and (e) variation of the operations and maintenance program
in response to the reports provided by any such consultants.
-87-
SECTION 12.5. ENVIRONMENTAL DEFINITIONS
"ENVIRONMENTAL LAW" means any present and future federal, state and
local laws, statutes, ordinances, rules, regulations, standards, policies and
other government directives or requirements, as well as common law, including
but not limited to the Comprehensive Environmental Response, Compensation and
Liability Act and the Resource Conservation and Recovery Act, that apply to
Borrower or the Property and relate to Hazardous Materials or protection of
human health or the environment. "ENVIRONMENTAL LIENS" means all Liens and other
encumbrances imposed pursuant to any Environmental Law, whether due to any act
or omission of Borrower or any other Person. "ENVIRONMENTAL REPORT" means the
written reports resulting from the environmental site assessments of the
Property delivered to Lender in connection with the Loan. "HAZARDOUS MATERIALS"
shall mean petroleum and petroleum products and compounds containing them,
including gasoline, diesel fuel and oil; explosives, flammable materials;
radioactive materials; polychlorinated biphenyls and compounds containing them;
lead and lead-based paint; asbestos or asbestos-containing materials in any form
that is or could become friable; underground or above-ground storage tanks,
whether empty or containing any substance; any substance the presence of which
on the Property is prohibited by any federal, state or local authority; any
substance that requires special handling; and any other material or substance
now or in the future defined as a "hazardous substance," "hazardous material",
"hazardous waste", "toxic substance", "toxic pollutant", "contaminant", or
"pollutant" within the meaning of any Environmental Law. "RELEASE" of any
Hazardous Materials includes but is not limited to any release, deposit,
discharge, emission, leaking, spilling, seeping, migrating, injecting, pumping,
pouring, emptying, escaping, dumping, disposing or other movement of Hazardous
Materials.
SECTION 12.6. INDEMNIFICATION
(a) [Borrower and Borrower Principal covenant and agree at their
sole cost and expense, to protect, defend, indemnify, release and hold
Indemnified Parties harmless from and against any and all Losses imposed upon or
incurred by or asserted against any Indemnified Parties and directly or
indirectly arising out of or in any way relating to any one or more of the
following: (i) any presence of any Hazardous Materials in, on, above, or under
the Property; (ii) any past, present or threatened Release of Hazardous
Materials in, on, above, under or from the Property; (iii) any activity by
Borrower, any Person affiliated with Borrower, and any Tenant or other user of
the Property in connection with any actual, proposed or threatened use,
treatment, storage, holding, existence, disposition or other Release,
generation, production, manufacturing, processing, refining, control,
management, abatement, removal, handling, transfer or transportation to or from
the Property of any Hazardous Materials at any time located in, under, on or
above the Property or any actual or proposed remediation of any Hazardous
Materials at any time located in, under, on or above the Property, whether or
not such remediation is voluntary or pursuant to court or administrative order,
including but not limited to any removal, remedial or corrective action; (iv)
any past, present or threatened non-compliance or violations of any
Environmental Laws (or permits issued pursuant to any Environmental Law) in
connection with the Property or operations thereon, including but not limited to
any failure by Borrower, any person or entity affiliated with Borrower, and any
tenant or other user of the Property to comply with any order of any
Governmental Authority in connection with any Environmental Laws; (v) the
imposition, recording or filing or the threatened imposition,
-88-
recording or filing of any Environmental Lien encumbering the Property; (vi) any
acts of Borrower, any person or entity affiliated with Borrower, and any tenant
or other user of the Property in (A) arranging for disposal or treatment, or
arranging with a transporter for transport for disposal or treatment, of
Hazardous Materials at any facility or incineration vessel containing such or
similar Hazardous Materials or (B) accepting any Hazardous Materials for
transport to disposal or treatment facilities, incineration vessels or sites
from which there is a Release, or a threatened Release of any Hazardous
Substance which causes the incurrence of costs for remediation; and (vii) any
misrepresentation or inaccuracy in any representation or warranty or material
breach or failure to perform any covenants or other obligations pursuant to this
Agreement relating to environmental matters (the matters listed in clauses (i)
through (vii) above are each hereinafter referred to as an "ENVIRONMENTAL
PROBLEM".
(b) Upon written request by any Indemnified Party, Borrower and
Borrower Principal shall defend same (if requested by any Indemnified Party, in
the name of the Indemnified Party) by attorneys and other professionals approved
by the Indemnified Parties. Notwithstanding the foregoing, any Indemnified
Parties may, in their reasonable discretion, engage their own attorneys and
other professionals to defend or assist them, and, at the option of Indemnified
Parties, their attorneys shall control the resolution of any claim or
proceeding. Upon demand, Borrower and Borrower Principal shall pay or, in the
sole discretion of the Indemnified Parties, reimburse, the Indemnified Parties
for the payment of reasonable fees and disbursements of attorneys, engineers,
environmental consultants, laboratories and other professionals in connection
therewith.
(c) Notwithstanding the foregoing, Borrower shall have no
liability for any Losses imposed upon or incurred by or asserted against any
Indemnified Parties and described in subsection (a) above to the extent that
Borrower can conclusively prove both that such Losses were caused solely by
actions, conditions or events that occurred after the date that Lender (or any
purchaser at a foreclosure sale) actually acquired title to the Property and
that such Losses were not caused by the direct or indirect actions of Borrower,
Borrower Principal, or any partner, member, principal, officer, director,
trustee or manager of Borrower or Borrower Principal or any employee, agent,
contractor or Affiliate of Borrower or Borrower Principal. The obligations and
liabilities of Borrower and Borrower Principal under this Section 12.6 shall
fully survive indefinitely notwithstanding any termination, satisfaction,
assignment, entry of a judgment of foreclosure, exercise of any power of sale,
or delivery of a deed in lieu of foreclosure of the Mortgage, provided however,
that in the event (i) the Debt is paid in full in the ordinary course, (ii)
Borrower delivers to Lender a Phase I environmental site assessment with respect
to the Property which concludes that the Property does not contain any Hazardous
Materials and is not subject to any significant risk of contamination from any
off site Hazardous Materials in violation of the representations, warranties,
and covenants set forth in this Article 12 Agreement, as determined by Lender,
(iii) no Event of Default exists and is continuing, (iv) Lender has not
exercised any of its remedies under Section 11.2 hereof to obtain an entry of a
judgment of foreclosure, exercise any power of sale, or delivery of a deed in
lieu of foreclosure of the Mortgage, (v) as of the date of determination, all of
the representations and warranties contained in this Article 12 are true and
correct, as determined by Lender and (vi) there has been no change, between the
date hereof and the date the Loan is paid in full, in any Environmental Law
which would impose liability on a mortgagee or lender with respect to any
Environmental Problem notwithstanding the payment in full of the Loan, Borrower
and Borrower Principal shall
-89-
be released from its obligations under this Agreement on the third (3rd)
anniversary of the date on which items (i)-(vi) above are satisfied.
ARTICLE 13
SECONDARY MARKET
SECTION 13.1. TRANSFER OF LOAN
Lender may, at any time, sell, transfer or assign the Loan Documents,
or grant participations therein ("PARTICIPATIONS") or syndicate the Loan
("SYNDICATION") or issue mortgage pass-through certificates or other securities
evidencing a beneficial interest in a rated or unrated public offering or
private placement ("SECURITIES") (a Syndication or the issuance of
Participations and/or Securities, a "SECURITIZATION").
SECTION 13.2. DELEGATION OF SERVICING
At the option of Lender, the Loan may be serviced by a servicer/trustee
selected by Lender and Lender may delegate all or any portion of its
responsibilities under this Agreement and the other Loan Documents to such
servicer/trustee pursuant to a servicing agreement between Lender and such
servicer/trustee.
SECTION 13.3. DISSEMINATION OF INFORMATION
Lender may forward to each purchaser, transferee, assignee, or servicer
of, and each participant, or investor in, the Loan, or any Participations and/or
Securities or any of their respective successors (collectively, the "INVESTOR")
or any Rating Agency rating the Loan, or any Participations and/or Securities,
each prospective Investor, and any organization maintaining databases on the
underwriting and performance of commercial mortgage loans, all documents and
information which Lender now has or may hereafter acquire relating to the Debt
and to Borrower, any managing member or general partner thereof, Borrower
Principal, any SPE Component Entity (if any) and the Property, including
financial statements, whether furnished by Borrower or otherwise, as Lender
determines necessary or desirable. Borrower irrevocably waives any and all
rights it may have under applicable Legal Requirements to prohibit such
disclosure, including but not limited to any right of privacy. In the event of a
conflict between any of the provisions of this Section 13.3 and paragraph 5 of
that certain letter agreement dated as of August 25, 2003 by Banc of America
Securities LLC and accepted and agreed to by Borrower Principal (the "ADVISORY
AGREEMENT") (the provisions of which are set forth on Schedule 2, attached
hereto) relating to, among other things, confidentiality and the dissemination
of certain confidential information, the provisions of the Advisory Agreement
shall control.
SECTION 13.4. COOPERATION
At the request of the holder of the Note and, to the extent not already
required to be provided by Borrower under this Agreement, Borrower and Borrower
Principal shall use reasonable efforts to provide updates of the information (i)
delivered by Borrower under Section 3.20 hereof or (ii) required to be delivered
by Borrower under Article 5 hereof, including, without limitation, to:
-90-
(a) provide updated financial, budget and other information with
respect to the Property, Borrower, Borrower Principal and Manager (all of the
foregoing being referred to as the "PROVIDED INFORMATION");
(b) make changes to the organizational documents of Borrower, any
SPE Component Entity and their respective principals;
(c) at Borrower's expense, cause counsel to render or update
existing opinion letters as to enforceability and non-consolidation, which may
be relied upon by the holder of the Note, the Rating Agencies and their
respective counsel, which shall be dated as of the closing date of the
Securitization;
(d) at Lender's sole cost and expense, permit site inspections in
accordance with the terms of this Agreement, appraisals, market studies and
other due diligence investigations of the Property, as may be reasonably
requested by the holder of the Note or the Rating Agencies or as may be
necessary or appropriate in connection with the Securitization;
(e) intentionally deleted;
(f) execute such amendments to the Loan Documents as may be
requested by the holder of the Note or the Rating Agencies or otherwise to
effect the Securitization including, without limitation, bifurcation of the Loan
into two or more components and/or separate notes and/or creating a
senior/subordinate note structure; provided, however, that Borrower shall not be
required to modify or amend any Loan Document if such modification or amendment
would (i) change the interest rate, the stated maturity or the amortization of
principal set forth in the Note, except in connection with a bifurcation of the
Loan which may result in varying fixed interest rates and amortization
schedules, but which shall have the same initial weighted average coupon of the
original Note, or (ii) in the reasonable judgment of Borrower, modify or amend
any other material economic term of the Loan, or (iii) in the reasonable
judgment of Borrower, materially increase Borrower's obligations and liabilities
under the Loan Documents;
(g) deliver to Lender and/or any Rating Agency one or more
certificates executed by an officer of Borrower certifying as to the accuracy,
as of the closing date of the Securitization, of all representations made by
Borrower in the Loan Documents as of the Closing Date or, if such
representations are no longer accurate, certifying as to what modifications to
the representations would be required to make such representations accurate as
of the closing date of the Securitization;
(h) have reasonably appropriate personnel participate in a bank
meeting and/or presentation for the Rating Agencies or Investors;
(i) cooperate with and assist Lender in obtaining ratings of the
Securities from two (2) or more of the Rating Agencies; and
(j) if required by any Rating Agency, deliver, at Borrower's sole
cost and expense and within fifteen (15) Business Days of Lender's request
therefore, (1) opinions relating to certain aspects of federal and Delaware law
and Borrower's status as a single member Delaware limited liability company
thereunder and (2) an Insolvency Opinion, which such opinions shall
-91-
be given by a law firm acceptable to such Rating Agency and shall otherwise be
in form and substance acceptable to such Rating Agency. Lender hereby
acknowledges that Borrower may deliver such opinions in one consolidated opinion
that, together with the Loan, addresses other Loans (made by Lender) relating to
Affiliates of Borrower, provided that such opinion adequately identifies
Borrower, the Property and other applicable matters relating to the Loan. In
addition, Borrower shall make any changes to its organizational documents to the
extent required in connection with the issuance of such opinions, provided that
such changes shall not result in an adverse economic effect to Borrower.
All reasonable third party costs and expenses incurred by Borrower in
connection with Borrower's complying with requests made under this Section 13.4
shall be paid by Borrower. Lender shall be responsible for all of its
out-of-pocket costs in connection with a securitization.
In the event that Borrower requests any consent or approval hereunder
and the provisions of this Agreement or any Loan Documents require the receipt
of written confirmation from each Rating Agency with respect to the rating on
the Securities, or, in accordance with the terms of the transaction documents
relating to a Securitization, such a rating confirmation is required in order
for the consent of Lender to be given, Borrower shall pay all of the costs and
expenses of Lender, Lender's servicer and each Rating Agency in connection
therewith, and, if applicable, shall pay any fees imposed by any Rating Agency
as a condition to the delivery of such confirmation. Lender agrees, upon
request, to use commercially reasonable efforts to cooperate with Borrower and
to facilitate Borrower's efforts to obtain any such rating confirmation as
required hereunder, which cooperation shall include supplying the Rating
Agencies with copies of reports, documents and other information and materials
provided to Lender by Borrower, provided however, that in no event shall (1)
Lender be required to incur any costs or expenses (other than de minimus costs
or expenses) in connection with such cooperation or (2) Lender's agreement
hereunder to cooperate with Borrower in obtaining a rating confirmation obligate
Lender to institute (or threaten to institute) or participate in (or threaten to
participate in) any litigation, suits, or proceedings at law or in equity
against any Rating Agency in connection with Borrower's efforts to obtain such
rating confirmation.
SECTION 13.5. SECURITIZATION INDEMNIFICATION
(a) Borrower understands that certain of the Provided Information
may be included in disclosure documents in connection with the Securitization,
including, without limitation, a prospectus, prospectus supplement, offering
memorandum or private placement memorandum (each, a "DISCLOSURE DOCUMENT") and
may also be included in filings with the Securities and Exchange Commission
pursuant to the Securities Act or the Exchange Act, or provided or made
available to investors or prospective investors in the Securities, the Rating
Agencies, and service providers relating to the Securitization. In the event
that the Disclosure Document is required to be revised prior to the sale of all
Securities, Borrower will cooperate with the holder of the Note in updating the
Disclosure Document by providing all current information required to be
delivered by Borrower under Article 5 hereof necessary to keep the Disclosure
Document accurate and complete in all material respects.
(b) Borrower agrees to provide in connection with each of (i) a
preliminary and a final offering memorandum or private placement memorandum or
similar document (including
-92-
any Investor or Rating Agency "term sheets" or presentations relating to the
Property and/or the Loan) or (ii) a preliminary and final prospectus or
prospectus supplement, as applicable, an indemnification certificate (A)
indemnifying Lender (and for purposes of this Section 13.5, Lender hereunder
shall include its officers and directors) and the Affiliate of Lender that (i)
has filed the registration statement, if any, relating to the Securitization
and/or (ii) which is acting as issuer, depositor, sponsor and/or a similar
capacity with respect to the Securitization (any Person described in (i) or
(ii), an "ISSUER PERSON") and each director and officer of any Issuer Person,
and each Person or entity who controls any Issuer Person within the meaning of
Section 15 of the Securities Act or Section 20 of the Exchange Act
(collectively, the "ISSUER GROUP") for any Losses to which Lender or the Issuer
Group may become subject insofar as the Losses arise out of or are based upon
any untrue statement or alleged untrue statement of any material fact contained
in such sections (including any Investor or Rating Agency "term sheets" or
presentations relating to the Property and/or the Loan) or arise out of or are
based upon the omission or alleged omission to state therein a material fact
required to be stated in such sections (including any Investor or Rating Agency
"term sheets" or presentations relating to the Property and/or the Loan) or
necessary in order to make the statements in such sections (including any
Investor or Rating Agency "term sheets" or presentations relating to the
Property and/or the Loan) or in light of the circumstances under which they were
made, not misleading (collectively the "SECURITIES LIABILITIES") and (B)
agreeing to reimburse Lender and the Issuer Group for any legal or other
expenses reasonably incurred by Lender and Issuer Group in connection with
investigating or defending the Securities Liabilities; provided, however, that
Borrower will be liable in any such case under clauses (A) or (B) above only to
the extent that any such Securities Liabilities arise out of or is based upon
any such untrue statement or omission made therein in reliance upon and in
conformity with information furnished to Lender or any member of the Issuer
Group by or on behalf of Borrower in connection with the Provided Information.
This indemnity agreement will be in addition to any liability which Borrower may
otherwise have. Moreover, the indemnification provided for in Clauses (A) and
(B) above shall be effective in the event an indemnification certificate
certifying that Borrower has carefully examined any preliminary or a final
offering memorandum described above or prospectus or other document (including
any Investor or Rating Agency "term sheets" or presentations relating to the
Property and/or the Loan), as applicable, including without limitation, the
sections entitled "Special Considerations," and/or "Risk Factors," and "Certain
Legal Aspects of the Mortgage Loan," or similar sections, and all sections
relating to Borrower, Borrower Principal, Manager, their Affiliates, the Loan,
the Loan Documents and the Property, and any risks or special considerations
relating thereto, and that, to the best of Borrower's knowledge, such sections
(and any other sections reasonably requested) do not contain any untrue
statement of a material fact or omit to state a material fact necessary in order
to make the statements made, in the light of the circumstances under which they
were made, not misleading has been requested by Lender and has not been provided
by Borrower and shall be applicable based on information previously provided by
Borrower or its Affiliates if Borrower does not provide such requested
indemnification certificate.
(c) In connection with filings under the Exchange Act or any
information provided to holders of Securities on an ongoing basis, Borrower
agrees to indemnify (i) Lender and the Issuer Group for Losses to which Lender
or the Issuer Group may become subject insofar as the Securities Liabilities
arise out of or are based upon the omission or alleged omission to state in the
Provided Information a material fact required to be stated in the Provided
Information in
-93-
order to make the statements in the Provided Information, in light of the
circumstances under which they were made not misleading and (ii) reimburse
Lender or the Issuer Group for any legal or other expenses reasonably incurred
by Lender or the Issuer Group in connection with defending or investigating the
Securities Liabilities.
(d) Promptly after receipt by an indemnified party under this
Section 13.5 of notice of the commencement of any action, such indemnified party
will, if a claim in respect thereof is to be made against the indemnifying party
under this Section 13.5, notify the indemnifying party in writing of the
commencement thereof, but the omission to so notify the indemnifying party will
not relieve the indemnifying party from any liability which the indemnifying
party may have to any indemnified party hereunder except to the extent that
failure to notify causes prejudice to the indemnifying party. In the event that
any action is brought against any indemnified party, and it notifies the
indemnifying party of the commencement thereof, the indemnifying party will be
entitled, jointly with any other indemnifying party, to participate therein and,
to the extent that it (or they) may elect by written notice delivered to the
indemnified party promptly after receiving the aforesaid notice from such
indemnified party, to assume the defense thereof with counsel reasonably
satisfactory to such indemnified party. After notice from the indemnifying party
to such indemnified party under this Section 13.5 the indemnifying party shall
be responsible for any legal or other expenses subsequently incurred by such
indemnified party in connection with the defense thereof other than reasonable
costs of investigation; provided, however, if the defendants in any such action
include both the indemnified party and the indemnifying party and the
indemnified party shall have reasonably concluded that there are any legal
defenses available to it and/or other indemnified parties that are different
from or additional to those available to the indemnifying party, the indemnified
party or parties shall have the right to select separate counsel to assert such
legal defenses and to otherwise participate in the defense of such action on
behalf of such indemnified party or parties. The indemnifying party shall not be
liable for the expenses of more than one such separate counsel unless an
indemnified party shall have reasonably concluded that there may be legal
defenses available to it that are different from or additional to those
available to another indemnified party.
(e) In order to provide for just and equitable contribution in
circumstances in which the indemnity agreements provided for in Section 13.5(c)
or Section 13.5(d) is or are for any reason held to be unenforceable by an
indemnified party in respect of any losses, claims, damages or liabilities (or
action in respect thereof) referred to therein which would otherwise be
indemnifiable under Section 13.5(c) or Section 13.5(d), the indemnifying party
shall contribute to the amount paid or payable by the indemnified party as a
result of such losses, claims, damages or liabilities (or action in respect
thereof); provided, however, that no Person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities Act)
shall be entitled to contribution from any Person who was not guilty of such
fraudulent misrepresentation. In determining the amount of contribution to which
the respective parties are entitled, the following factors shall be considered:
(i) the indemnified party's and Borrower's relative knowledge and access to
information concerning the matter with respect to which claim was asserted; (ii)
the opportunity to correct and prevent any statement or omission; and (iii) any
other equitable considerations appropriate in the circumstances. Lender and
Borrower hereby agree that it would not be equitable if the amount of such
contribution were determined by pro rata or per capita allocation.
-94-
(f) The liabilities and obligations of Borrower, and Lender under
this Section 13.5 shall survive the satisfaction of this Agreement and the
satisfaction and discharge of the Debt.
SECTION 13.6. INTENTIONALLY DELETED
ARTICLE 14
INDEMNIFICATIONS
SECTION 14.1. GENERAL INDEMNIFICATION
Borrower shall indemnify, defend and hold harmless the Indemnified
Parties from and against any and all Losses imposed upon or incurred by or
asserted against any Indemnified Parties and directly or indirectly arising out
of or in any way relating to any one or more of the following: (a) any accident,
injury to or death of persons or loss of or damage to property occurring in, on
or about the Property or any part thereof or on the adjoining sidewalks, curbs,
adjacent property or adjacent parking areas, streets or ways; (b) any use,
nonuse or condition in, on or about the Property or any part thereof or on the
adjoining sidewalks, curbs, adjacent property or adjacent parking areas, streets
or ways; (c) performance of any labor or services or the furnishing of any
materials or other property in respect of the Property or any part thereof; (d)
any failure of the Property to be in compliance with any Applicable Legal
Requirements; (e) any and all claims and demands whatsoever which may be
asserted against Lender by reason of any alleged obligations or undertakings on
its part to perform or discharge any of the terms, covenants, or agreements
contained in any Lease; (f) the holding or investing of the Reserve Accounts or
the performance of the Required Work, or Additional Replacements, or (g) the
payment of any commission, charge or brokerage fee to anyone which may be
payable in connection with the funding of the Loan (collectively, the
"INDEMNIFIED LIABILITIES"); provided, however, that Borrower shall not have any
obligation to Lender hereunder to the extent that such Indemnified Liabilities
arise from the gross negligence, illegal acts, fraud or willful misconduct of
Lender. To the extent that the undertaking to indemnify, defend and hold
harmless set forth in the preceding sentence may be unenforceable because it
violates any law or public policy, Borrower shall pay the maximum portion that
it is permitted to pay and satisfy under applicable law to the payment and
satisfaction of all Indemnified Liabilities incurred by Lender.
SECTION 14.2. MORTGAGE AND INTANGIBLE TAX INDEMNIFICATION
Borrower shall, at its sole cost and expense, protect, defend,
indemnify, release and hold harmless the Indemnified Parties from and against
any and all Losses imposed upon or incurred by or asserted against any
Indemnified Parties and directly or indirectly arising out of or in any way
relating to any tax on the making and/or recording of the Mortgage, the Note or
any of the other Loan Documents, but excluding any income, franchise or other
similar taxes.
SECTION 14.3. ERISA INDEMNIFICATION
Borrower shall, at its sole cost and expense, protect, defend,
indemnify, release and hold harmless the Indemnified Parties from and against
any and all Losses (including, without limitation, reasonable attorneys' fees
and costs incurred in the investigation, defense, and settlement of Losses
incurred in correcting any prohibited transaction or in the sale of a prohibited
loan, and in obtaining any individual prohibited transaction exemption under
ERISA
-95-
that may be required, in Lender's sole discretion) that Lender may incur,
directly or indirectly, as a result of a default under Section 4.8 or Section
5.18 of this Agreement.
SECTION 14.4. SURVIVAL
The obligations and liabilities of Borrower under this Article 14 shall
fully survive indefinitely notwithstanding any termination, satisfaction,
assignment, entry of a judgment of foreclosure, exercise of any power of sale,
or delivery of a deed in lieu of foreclosure of the Mortgage.
ARTICLE 15
EXCULPATION
SECTION 15.1. EXCULPATION
(a) Except as otherwise provided herein or in the other Loan
Documents, Lender shall not enforce the liability and obligation of Borrower or
Borrower Principal, as applicable, to perform and observe the obligations
contained herein or in the other Loan Documents by any action or proceeding
wherein a money judgment shall be sought against Borrower or Borrower Principal,
except that Lender may, except with respect to Section 5.23 hereof, bring a
foreclosure action, action for specific performance or other appropriate action
or proceeding to enable Lender to enforce and realize upon this Agreement, the
Note, the Mortgage and the other Loan Documents, and the interest in the
Property, the Rents and any other collateral given to Lender created by this
Agreement, the Note, the Mortgage and the other Loan Documents; provided,
however, that any judgment in any such action or proceeding shall be enforceable
against Borrower only to the extent of Borrower's interest in the Property, in
the Rents and in any other collateral given to Lender. Lender, by accepting this
Agreement, the Note, the Mortgage and the other Loan Documents, agrees that it
shall not, except as otherwise provided in this Section 15.1, sue for, seek or
demand any deficiency judgment against Borrower or Borrower Principal in any
such action or proceeding, under or by reason of or under or in connection with
this Agreement, the Note, the Mortgage or the other Loan Documents. The
provisions of this Section 15.1 shall not, however, (i) constitute a waiver,
release or impairment of any obligation evidenced or secured by this Agreement,
the Note, the Mortgage or the other Loan Documents; (ii) impair the right of
Lender to name Borrower or Borrower Principal as a party defendant in any action
or suit for judicial foreclosure and sale under this Agreement and the Mortgage;
(iii) affect the validity or enforceability of any indemnity (including, without
limitation, those contained in Section 12.6, with respect to Borrower or
Borrower Principal, Section 13.5, with respect to Borrower, and Article 14 of
this Agreement, with respect to Borrower), guaranty, master lease or similar
instrument made in connection with this Agreement, the Note, the Mortgage and
the other Loan Documents; (iv) impair the right of Lender to obtain the
appointment of a receiver; (v) impair the enforcement of the assignment of
leases provisions contained in the Mortgage; or (vi) impair the right of Lender
to obtain a deficiency judgment or other judgment on the Note against Borrower
or Borrower Principal if necessary to obtain any Insurance Proceeds or Awards to
which Lender would otherwise be entitled under this Agreement; provided however,
Lender shall only enforce such judgment to the extent of the Insurance Proceeds
and/or Awards.
(b) Notwithstanding the provisions of this Section 15.1 to the
contrary:
-96-
(1) Borrower and Borrower Principal shall be personally
liable to Lender on a joint and several basis for Losses due to:
(i) fraud or intentional misrepresentation by Borrower,
Borrower Principal or any other Affiliate of Borrower or Borrower
Principal in connection with the execution and the delivery of this
Agreement, the Note, the Mortgage, any of the other Loan Documents, or
any certificate, report, financial statement or other instrument or
document furnished to Lender at the time of the closing of the Loan or
during the term of the Loan;
(ii) Borrower's misapplication or misappropriation of
Rents received by Borrower after the occurrence and during the
continuance of an Event of Default;
(iii) Borrower's misapplication or misappropriation of
tenant security deposits or Rents collected in advance and which have
not been applied to the operation of the Property;
(iv) the misapplication or the misappropriation of
Insurance Proceeds or Awards;
(v) Borrower's failure to pay Taxes, Other Charges
(except to the extent that sums sufficient to pay such amounts have
been deposited in escrow with Lender pursuant to the terms hereof and
there exists no impediment to Lender's utilization thereof) beyond any
applicable notice and cure periods specified therein;
(vi) any act of actual intentional physical waste or arson
by Borrower, any principal, Affiliate, member or general partner
thereof or by Borrower Principal, any principal, Affiliate, member or
general partner thereof;
(vii) the portion of any Rent paid by any Tenant more than
thirty (30) days in advance that would have been payable by such Tenant
from and after the occurrence of an Event of Default; or
(viii) the failure by Borrower Principal to comply with the
covenant set forth in Section 5.23 of this Agreement; and
(2) Borrower Principal shall be personally liable to
Lender for Losses due to the Property, or any part thereof, becoming an asset in
(A) a voluntary bankruptcy or insolvency proceeding of Borrower or Borrower
Principal, or (B) an involuntary bankruptcy or insolvency proceeding of Borrower
or Borrower Principal in connection with which Borrower, Borrower Principal, SPE
Component Entity or any Affiliate of any of the foregoing has or have solicited,
procured, or supported in any way with the creditors commencing or filing such
proceeding. Additionally, Borrower Principal shall be personally liable to
Lender for Losses in the event of a breach by Borrower or SPE Component Entity
of any of the covenants set forth in Article 6, except to the extent that such
breach was inadvertent, immaterial and is promptly cured in accordance with
Section 11.1(d).
(c) Notwithstanding the foregoing, the agreement of Lender not to
pursue recourse liability as set forth in subsection (a) above SHALL BECOME NULL
AND VOID and shall be
-97-
of no further force and effect and the Debt shall become fully recourse (1) to
Borrower and Borrower Principal, jointly and severally, in the event of a breach
of any of the covenants set forth in Article 7 hereof and (2) to Borrower in the
event (i) of a breach by Borrower or SPE Component Entity of any of the
covenants set forth in Article 6, except the extent that such breach was
inadvertent, immaterial and is promptly cured in accordance with Section 11.1(d)
hereof or (ii) the Property or any part thereof shall become an asset in (A) a
voluntary bankruptcy or insolvency proceeding of Borrower or Borrower Principal,
or (B) an involuntary bankruptcy or insolvency proceeding of Borrower or
Borrower Principal in connection with which Borrower, Borrower Principal, SPE
Component Entity or any Affiliate of any of the foregoing has or have solicited,
procured, or supported in any way with the creditors commencing or filing such
proceeding.
(d) Nothing herein shall be deemed to be a waiver of any right
which Lender may have under Section 506(a), 506(b), 1111(b) or any other
provision of the U.S. Bankruptcy Code to file a claim for the full amount of the
indebtedness secured by the Mortgage or to require that all collateral shall
continue to secure all of the indebtedness owing to Lender in accordance with
this Agreement, the Note, the Mortgage or the other Loan Documents.
ARTICLE 16
NOTICES
SECTION 16.1. NOTICES
All notices, consents, approvals and requests required or permitted
hereunder or under any other Loan Document shall be given in writing and shall
be effective for all purposes if hand delivered or sent by (a) certified or
registered United States mail, postage prepaid, return receipt requested, (b)
expedited prepaid overnight delivery service, either commercial or United States
Postal Service, with proof of attempted delivery, or by (c) telecopier (with
answer back acknowledged provided an additional notice is given pursuant to
subsection (b) above), addressed as follows (or at such other address and Person
as shall be designated from time to time by any party hereto, as the case may
be, in a written notice to the other parties hereto in the manner provided for
in this Section):
If to Lender: To the Lender notice addresses set forth on
Schedule 1, attached hereto.
If to Borrower: c/o Manufactured Home Communities, Inc.
Two North Riverside Plaza, Suite 800
Chicago, Illinois 60606
Attention: President
Facsimile No.: (312) 279-1710
With a copy to: c/o Manufactured Home Communities, Inc.
Two North Riverside Plaza, Suite 800
Chicago, Illinois 60606
Attention: General Counsel
Facsimile No.: (312) 279-1715
-98-
and to: Katten Muchin Zavis Rosenman
525 West Monroe Street, Suite 1600
Chicago, Illinois 60661
Attention: Daniel J. Perlman, Esq.
Facsimile No.: (312) 902-1061
A notice shall be deemed to have been given: in the case of hand delivery, at
the time of delivery; in the case of registered or certified mail, when
delivered or the first attempted delivery on a Business Day; or in the case of
expedited prepaid delivery and telecopy, upon the first attempted delivery on a
Business Day.
ARTICLE 17
FURTHER ASSURANCES
SECTION 17.1. REPLACEMENT DOCUMENTS
Upon receipt of an affidavit of an officer of Lender as to the loss,
theft, destruction or mutilation of the Note or any other Loan Document which is
not of public record, and, in the case of any such mutilation, upon surrender
and cancellation of such Note or other Loan Document, Borrower will issue, in
lieu thereof, a replacement Note or other Loan Document, dated the date of such
lost, stolen, destroyed or mutilated Note or other Loan Document in the same
principal amount thereof and otherwise of like tenor.
SECTION 17.2. RECORDING OF MORTGAGE, ETC.
Borrower forthwith upon the execution and delivery of the Mortgage and
thereafter, from time to time, will cause the Mortgage and any of the other Loan
Documents creating a lien or security interest or evidencing the lien hereof
upon the Property and each instrument of further assurance to be filed,
registered or recorded in such manner and in such places as may be required by
any present or future law in order to publish notice of and fully to protect and
perfect the lien or security interest hereof upon, and the interest of Lender
in, the Property. Borrower will pay all taxes, filing, registration or recording
fees, and all expenses incident to the preparation, execution, acknowledgment
and/or recording of the Note, the Mortgage, the other Loan Documents, any note,
deed of trust or mortgage supplemental hereto, any security instrument with
respect to the Property and any instrument of further assurance, and any
modification or amendment of the foregoing documents, and all federal, state,
county and municipal taxes, duties, imposts, assessments and charges arising out
of or in connection with the execution and delivery of the Mortgage, any deed of
trust or mortgage supplemental hereto, any security instrument with respect to
the Property or any instrument of further assurance, and any modification or
amendment of the foregoing documents, except where prohibited by law so to do.
SECTION 17.3. FURTHER ACTS, ETC.
Borrower will, at the cost of Borrower, and without expense to Lender,
do, execute, acknowledge and deliver all and every further acts, deeds,
conveyances, deeds of trust, mortgages, assignments, security agreements,
control agreements, notices of assignments, transfers and assurances as Lender
shall, from time to time, reasonably require, for the better
-99-
assuring, conveying, assigning, transferring, and confirming unto Lender the
property and rights hereby mortgaged, deeded, granted, bargained, sold,
conveyed, confirmed, pledged, assigned, warranted and transferred or intended
now or hereafter so to be, or which Borrower may be or may hereafter become
bound to convey or assign to Lender, or for carrying out the intention or
facilitating the performance of the terms of this Agreement or for filing,
registering or recording the Mortgage, or for complying with all Legal
Requirements. Borrower, on demand, will execute and deliver, and in the event it
shall fail to so execute and deliver, hereby authorizes Lender to execute in the
name of Borrower or without the signature of Borrower to the extent Lender may
lawfully do so, one or more financing statements and financing statement
amendments to evidence more effectively, perfect and maintain the priority of
the security interest of Lender in the Property. Borrower grants to Lender an
irrevocable power of attorney coupled with an interest for the purpose of
exercising and perfecting any and all rights and remedies available to Lender at
law and in equity, including without limitation, such rights and remedies
available to Lender pursuant to this Section 17.3.
SECTION 17.4. CHANGES IN TAX, DEBT, CREDIT AND DOCUMENTARY STAMP LAWS
(a) If any law is enacted or adopted or amended after the date of
this Agreement which deducts the Debt from the value of the Property for the
purpose of taxation or which imposes a tax, either directly or indirectly, on
the Debt or Lender's interest in the Property, Borrower will pay the tax, with
interest and penalties thereon, if any. If Lender is advised by counsel chosen
by it that the payment of tax by Borrower would be unlawful or taxable to Lender
or unenforceable or provide the basis for a defense of usury then Lender shall
have the option by written notice of not less than one hundred twenty (120) days
to declare the Debt immediately due and payable without any prepayment premium.
(b) Borrower will not claim or demand or be entitled to any credit
or credits on account of the Debt for any part of the Taxes or Other Charges
assessed against the Property, or any part thereof, and no deduction shall
otherwise be made or claimed from the assessed value of the Property, or any
part thereof, for real estate tax purposes by reason of the Mortgage or the
Debt. If such claim, credit or deduction shall be required by law, Lender shall
have the option, by written notice of not less than one hundred twenty (120)
days, to declare the Debt immediately due and payable without any prepayment
premium.
If at any time the United States of America, any State thereof or any
subdivision of any such State shall require revenue or other stamps to be
affixed to the Note, the Mortgage, or any of the other Loan Documents or impose
any other tax or charge on the same, Borrower will pay for the same, with
interest and penalties thereon, if any.
SECTION 17.5. EXPENSES
Borrower covenants and agrees to pay or, if Borrower fails to pay, to
reimburse, Lender upon receipt of written notice from Lender for all reasonable
costs and expenses (including reasonable, actual attorneys' fees and
disbursements reasonably incurred by Lender in accordance with this Agreement in
connection with (a) the preparation, negotiation, execution and delivery of this
Agreement and the other Loan Documents and the consummation of the transactions
contemplated hereby and thereby and all the costs of furnishing all opinions by
-100-
counsel for Borrower (including without limitation any opinions requested by
Lender as to any legal matters arising under this Agreement or the other Loan
Documents with respect to the Property); (b) Borrower's ongoing performance of
and compliance with Borrower's respective agreements and covenants contained in
this Agreement and the other Loan Documents on its part to be performed or
complied with after the Closing Date, including, without limitation, confirming
compliance with environmental and insurance requirements; (c) following a
request by Borrower, Lender's ongoing performance and compliance with all
agreements and conditions contained in this Agreement and the other Loan
Documents on its part to be performed or complied with after the Closing Date;
(d) the negotiation, preparation, execution, delivery and administration of any
consents, amendments, waivers or other modifications to this Agreement and the
other Loan Documents and any other documents or matters requested by Lender; (e)
securing Borrower's compliance with any requests made pursuant to the provisions
of this Agreement; (f) the filing and recording fees and expenses, title
insurance and reasonable fees and expenses of counsel for providing to Lender
all required legal opinions, and other similar expenses incurred in creating and
perfecting the Lien in favor of Lender pursuant to this Agreement and the other
Loan Documents; (g) enforcing or preserving any rights, in response to third
party claims or the prosecuting or defending of any action or proceeding or
other litigation, in each case against, under or affecting Borrower, this
Agreement, the other Loan Documents, the Property, or any other security given
for the Loan; and (h) enforcing any obligations of or collecting any payments
due from Borrower under this Agreement, the other Loan Documents or with respect
to the Property or in connection with any refinancing or restructuring of the
credit arrangements provided under this Agreement in the nature of a "work-out"
or of any insolvency or bankruptcy proceedings; provided, however, that Borrower
shall not be liable for the payment of any such costs and expenses to the extent
the same arise by reason of the gross negligence, illegal acts, fraud or willful
misconduct of Lender.
ARTICLE 18
WAIVERS
SECTION 18.1. REMEDIES CUMULATIVE; WAIVERS
The rights, powers and remedies of Lender under this Agreement shall be
cumulative and not exclusive of any other right, power or remedy which Lender
may have against Borrower or Borrower Principal pursuant to this Agreement or
the other Loan Documents, or existing at law or in equity or otherwise. Lender's
rights, powers and remedies may be pursued singularly, concurrently or
otherwise, at such time and in such order as Lender may determine in Lender's
sole discretion. No delay or omission to exercise any remedy, right or power
accruing upon an Event of Default shall impair any such remedy, right or power
or shall be construed as a waiver thereof, but any such remedy, right or power
may be exercised from time to time and as often as may be deemed expedient. A
waiver of one Default or Event of Default with respect to Borrower shall not be
construed to be a waiver of any subsequent Default or Event of Default by
Borrower or to impair any remedy, right or power consequent thereon.
SECTION 18.2. MODIFICATION, WAIVER IN WRITING
No modification, amendment, extension, discharge, termination or waiver
of any provision of this Agreement, or of the Note, or of any other Loan
Document, nor consent to any
-101-
departure by Borrower therefrom, shall in any event be effective unless the same
shall be in a writing signed by the party against whom enforcement is sought,
and then such waiver or consent shall be effective only in the specific
instance, and for the purpose, for which given. Except as otherwise expressly
provided herein, no notice to, or demand on Borrower, shall entitle Borrower to
any other or future notice or demand in the same, similar or other
circumstances.
SECTION 18.3. DELAY NOT A WAIVER
Neither any failure nor any delay on the part of Lender in insisting
upon strict performance of any term, condition, covenant or agreement, or
exercising any right, power, remedy or privilege hereunder, or under the Note or
under any other Loan Document, or any other instrument given as security
therefor, shall operate as or constitute a waiver thereof, nor shall a single or
partial exercise thereof preclude any other future exercise, or the exercise of
any other right, power, remedy or privilege. In particular, and not by way of
limitation, by accepting payment after the due date of any amount payable under
this Agreement, the Note or any other Loan Document, Lender shall not be deemed
to have waived any right either to require prompt payment when due of all other
amounts due under this Agreement, the Note or the other Loan Documents, or to
declare a default for failure to effect prompt payment of any such other amount.
SECTION 18.4. TRIAL BY JURY
BORROWER, BORROWER PRINCIPAL AND LENDER EACH HEREBY AGREES NOT TO ELECT
A TRIAL BY JURY OF ANY ISSUE TRIABLE OF RIGHT BY JURY, AND WAIVES ANY RIGHT TO
TRIAL BY JURY FULLY TO THE EXTENT THAT ANY SUCH RIGHT SHALL NOW OR HEREAFTER
EXIST WITH REGARD TO THE LOAN DOCUMENTS, OR ANY CLAIM, COUNTERCLAIM OR OTHER
ACTION ARISING IN CONNECTION THEREWITH. THIS WAIVER OF RIGHT TO TRIAL BY JURY IS
GIVEN KNOWINGLY AND VOLUNTARILY BY BORROWER, BORROWER PRINCIPAL AND LENDER, AND
IS INTENDED TO ENCOMPASS INDIVIDUALLY EACH INSTANCE AND EACH ISSUE AS TO WHICH
THE RIGHT TO A TRIAL BY JURY WOULD OTHERWISE ACCRUE. EACH OF LENDER, BORROWER
PRINCIPAL AND BORROWER IS HEREBY AUTHORIZED TO FILE A COPY OF THIS PARAGRAPH IN
ANY PROCEEDING AS CONCLUSIVE EVIDENCE OF THIS WAIVER BY BORROWER, BORROWER
PRINCIPAL AND LENDER.
SECTION 18.5. WAIVER OF NOTICE
Borrower shall not be entitled to any notices of any nature whatsoever
from Lender except with respect to matters for which this Agreement or the other
Loan Documents specifically and expressly provide for the giving of notice by
Lender to Borrower and except with respect to matters for which Borrower is not,
pursuant to applicable Legal Requirements, permitted to waive the giving of
notice. Borrower hereby expressly waives the right to receive any notice from
Lender with respect to any matter for which this Agreement or the other Loan
-102-
Documents do not specifically and expressly provide for the giving of notice by
Lender to Borrower.
SECTION 18.6. REMEDIES OF BORROWER
In the event that a claim or adjudication is made that Lender or its
agents have acted unreasonably or unreasonably delayed acting in any case where
by law or under this Agreement or the other Loan Documents, Lender or such
agent, as the case may be, has an obligation to act reasonably or promptly,
Borrower agrees that neither Lender nor its agents shall be liable for any
monetary damages, and Borrower's sole remedies shall be limited to commencing an
action seeking injunctive relief or declaratory judgment. The parties hereto
agree that any action or proceeding to determine whether Lender has acted
reasonably shall be determined by an action seeking declaratory judgment. Lender
agrees that, in such event, it shall cooperate in expediting any action seeking
injunctive relief or declaratory judgment.
SECTION 18.7. WAIVER OF MARSHALLING OF ASSETS
To the fullest extent permitted by law, Borrower, for itself and its
successors and assigns, waives all rights to a marshalling of the assets of
Borrower, Borrower's partners and others with interests in Borrower, and of the
Property, and agrees not to assert any right under any laws pertaining to the
marshalling of assets, the sale in inverse order of alienation, homestead
exemption, the administration of estates of decedents, or any other matters
whatsoever to defeat, reduce or affect the right of Lender under the Loan
Documents to a sale of the Property for the collection of the Debt without any
prior or different resort for collection or of the right of Lender to the
payment of the Debt out of the net proceeds of the Property in preference to
every other claimant whatsoever.
SECTION 18.8. WAIVER OF STATUTE OF LIMITATIONS
Borrower hereby expressly waives and releases, to the fullest extent
permitted by law, the pleading of any statute of limitations as a defense to
payment of the Debt or performance of its Other Obligations.
SECTION 18.9. WAIVER OF COUNTERCLAIM
Borrower hereby waives the right to assert a counterclaim, other than a
compulsory counterclaim, in any action or proceeding brought against it by
Lender or its agents.
ARTICLE 19
GOVERNING LAW
SECTION 19.1. CHOICE OF LAW
This Agreement shall be deemed to be a contract entered into pursuant
to the laws of the State of New York and shall in all respects be governed,
construed, applied and enforced in accordance with the laws of the State of New
York, provided however, (a) that with respect to the creation, perfection,
priority and enforcement of any Lien created by the Loan Documents, and the
determination of deficiency judgments, the laws of the state where the Property
is located
-103-
shall apply, and (b) with respect to the security interest in each of the
Reserve Accounts and the Lockbox Account, the laws of the state where each such
account is located shall apply.
SECTION 19.2. SEVERABILITY
Wherever possible, each provision of this Agreement shall be
interpreted in such manner as to be effective and valid under applicable law,
but if any provision of this Agreement shall be prohibited by or invalid under
applicable law, such provision shall be ineffective to the extent of such
prohibition or invalidity, without invalidating the remainder of such provision
or the remaining provisions of this Agreement.
SECTION 19.3. PREFERENCES
Lender shall have the continuing and exclusive right to apply or
reverse and reapply any and all payments by Borrower to any portion of the
obligations of Borrower hereunder. To the extent Borrower makes a payment or
payments to Lender, which payment or proceeds or any part thereof are
subsequently invalidated, declared to be fraudulent or preferential, set aside
or required to be repaid to a trustee, receiver or any other party under any
Creditors Rights Laws, state or federal law, common law or equitable cause,
then, to the extent of such payment or proceeds received, the obligations
hereunder or part thereof intended to be satisfied shall be revived and continue
in full force and effect, as if such payment or proceeds had not been received
by Lender.
ARTICLE 20
MISCELLANEOUS
SECTION 20.1. SURVIVAL
This Agreement and all covenants, agreements, representations and
warranties made herein and in the certificates delivered pursuant hereto shall
survive the making by Lender of the Loan and the execution and delivery to
Lender of the Note, and shall continue in full force and effect so long as all
or any of the Debt is outstanding and unpaid unless a longer period is expressly
set forth herein or in the other Loan Documents. Whenever in this Agreement any
of the parties hereto is referred to, such reference shall be deemed to include
the legal representatives, successors and assigns of such party. All covenants,
promises and agreements in this Agreement, by or on behalf of Borrower, shall
inure to the benefit of the legal representatives, successors and assigns of
Lender.
SECTION 20.2. LENDER'S DISCRETION
Whenever pursuant to this Agreement, Lender exercises any right given
to it to approve or disapprove, or any arrangement or term is to be satisfactory
to Lender, the decision of Lender to approve or disapprove or to decide whether
arrangements or terms are satisfactory or not satisfactory shall (except as is
otherwise specifically herein provided) be in the sole discretion of Lender and
shall be final and conclusive.
-104-
SECTION 20.3. HEADINGS
The Article and/or Section headings and the Table of Contents in this
Agreement are included herein for convenience of reference only and shall not
constitute a part of this Agreement for any other purpose.
SECTION 20.4. COST OF ENFORCEMENT
In the event (a) that the Mortgage is foreclosed in whole or in part,
(b) of the bankruptcy, insolvency, rehabilitation or other similar proceeding in
respect of Borrower or any of its constituent Persons or an assignment by
Borrower or any of its constituent Persons for the benefit of its creditors, or
(c) Lender exercises any of its other remedies under this Agreement or any of
the other Loan Documents, Borrower shall be chargeable with and agrees to pay
all costs of collection and defense, including attorneys' fees and costs,
incurred by Lender or Borrower in connection therewith and in connection with
any appellate proceeding or post-judgment action involved therein, together with
all required service or use taxes.
SECTION 20.5. SCHEDULES INCORPORATED
The Schedules annexed hereto are hereby incorporated herein as a part
of this Agreement with the same effect as if set forth in the body hereof.
SECTION 20.6. OFFSETS, COUNTERCLAIMS AND DEFENSES
Any assignee of Lender's interest in and to this Agreement, the Note
and the other Loan Documents shall take the same free and clear of all offsets,
counterclaims or defenses which are unrelated to such documents which Borrower
may otherwise have against any assignor of such documents, and no such unrelated
counterclaim or defense shall be interposed or asserted by Borrower in any
action or proceeding brought by any such assignee upon such documents and any
such right to interpose or assert any such unrelated offset, counterclaim or
defense in any such action or proceeding is hereby expressly waived by Borrower.
SECTION 20.7. NO JOINT VENTURE OR PARTNERSHIP; NO THIRD PARTY
BENEFICIARIES
(a) Borrower and Lender intend that the relationships created
hereunder and under the other Loan Documents be solely that of borrower and
lender. Nothing herein or therein is intended to create a joint venture,
partnership, tenancy-in-common, or joint tenancy relationship between Borrower
and Lender nor to grant Lender any interest in the Property other than that of
mortgagee, beneficiary or lender.
(b) This Agreement and the other Loan Documents are solely for the
benefit of Lender and Borrower and nothing contained in this Agreement or the
other Loan Documents shall be deemed to confer upon anyone other than Lender and
Borrower any right to insist upon or to enforce the performance or observance of
any of the obligations contained herein or therein. All conditions to the
obligations of Lender to make the Loan hereunder are imposed solely and
exclusively for the benefit of Lender and no other Person shall have standing to
require satisfaction of such conditions in accordance with their terms or be
entitled to assume that Lender will refuse to make the Loan in the absence of
strict compliance with any or all thereof
-105-
and no other Person shall under any circumstances be deemed to be a beneficiary
of such conditions, any or all of which may be freely waived in whole or in part
by Lender if, in Lender's sole discretion, Lender deems it advisable or
desirable to do so.
(c) The general partners, members, principals and (if Borrower is
a trust) beneficial owners of Borrower are experienced in the ownership and
operation of properties similar to the Property, and Borrower and Lender are
relying solely upon such expertise and business plan in connection with the
ownership and operation of the Property. Borrower is not relying on Lender's
expertise, business acumen or advice in connection with the Property.
(d) Notwithstanding anything to the contrary contained herein,
Lender is not undertaking the performance of (i) any obligations under the
Leases; or (ii) any obligations with respect to such agreements, contracts,
certificates, instruments, franchises, permits, trademarks, licenses and other
documents.
(e) By accepting or approving anything required to be observed,
performed or fulfilled or to be given to Lender pursuant to this Agreement, the
Mortgage, the Note or the other Loan Documents, including, without limitation,
any officer's certificate, balance sheet, statement of profit and loss or other
financial statement, survey, appraisal, or insurance policy, Lender shall not be
deemed to have warranted, consented to, or affirmed the sufficiency, the
legality or effectiveness of same, and such acceptance or approval thereof shall
not constitute any warranty or affirmation with respect thereto by Lender.
(f) Borrower recognizes and acknowledges that in accepting this
Agreement, the Note, the Mortgage and the other Loan Documents, Lender is
expressly and primarily relying on the truth and accuracy of the representations
and warranties set forth in Article 4 of this Agreement without any obligation
to investigate the Property and notwithstanding any investigation of the
Property by Lender; that such reliance existed on the part of Lender prior to
the date hereof, that the warranties and representations are a material
inducement to Lender in making the Loan; and that Lender would not be willing to
make the Loan and accept this Agreement, the Note, the Mortgage and the other
Loan Documents in the absence of the warranties and representations as set forth
in Article 4 of this Agreement.
SECTION 20.8. PUBLICITY
All news releases, publicity or advertising by Borrower or its
Affiliates through any media intended to reach the general public which refers
to the Loan, Lender, Banc of America Securities LLC, or any of their Affiliates
shall be subject to the prior written approval of Lender, not to be unreasonably
withheld, provided however, that Lender's consent shall not be required in
connection with any such news releases, publicity or advertising by Borrower or
its Affiliates to the extent Borrower or its Affiliates are required to make
such news releases pursuant to applicable Legal Requirements. Lender shall be
permitted to make any news, releases, publicity or advertising by Lender or its
Affiliates through any media intended to reach the general public which refers
to the Loan, the Property, Borrower, Borrower Principal and their respective
Affiliates without the approval of Borrower or any such Persons. Borrower also
agrees that Lender may share any information pertaining to the Loan with Bank of
America Corporation, including its bank subsidiaries, Banc of America Securities
LLC and any other Affiliates of the
-106-
foregoing, in connection with the sale or transfer of the Loan or any
Participations and/or Securities created. In the event of a conflict between any
of the provisions of this Section 20.8 and paragraph 5 of the Advisory
Agreement, the applicable provisions of the Advisory Agreement shall control.
SECTION 20.9. CONFLICT; CONSTRUCTION OF DOCUMENTS; RELIANCE
In the event of any conflict between the provisions of this Agreement
and any of the other Loan Documents, the provisions of this Agreement shall
control. The parties hereto acknowledge that they were represented by competent
counsel in connection with the negotiation, drafting and execution of the Loan
Documents and that such Loan Documents shall not be subject to the principle of
construing their meaning against the party which drafted same. Borrower
acknowledges that, with respect to the Loan, Borrower shall rely solely on its
own judgment and advisors in entering into the Loan without relying in any
manner on any statements, representations or recommendations of Lender or any
parent, subsidiary or Affiliate of Lender. Lender shall not be subject to any
limitation whatsoever in the exercise of any rights or remedies available to it
under any of the Loan Documents or any other agreements or instruments which
govern the Loan by virtue of the ownership by it or any parent, subsidiary or
Affiliate of Lender of any equity interest any of them may acquire in Borrower,
and Borrower hereby irrevocably waives the right to raise any defense or take
any action on the basis of the foregoing with respect to Lender's exercise of
any such rights or remedies. Borrower acknowledges that Lender engages in the
business of real estate financings and other real estate transactions and
investments which may be viewed as adverse to or competitive with the business
of Borrower or its Affiliates.
SECTION 20.10. ENTIRE AGREEMENT
This Agreement and the other Loan Documents contain the entire
agreement of the parties hereto and thereto in respect of the transactions
contemplated hereby and thereby, and all prior agreements among or between such
parties, whether oral or written between Borrower and Lender are superseded by
the terms of this Agreement and the other Loan Documents.
SECTION 20.11. TAX DISCLOSURE
Notwithstanding anything herein to the contrary, except as reasonably
necessary to comply with applicable securities laws, each party (and each
employee, representative or other agent of each party) hereto may disclose to
any and all persons, without limitation of any kind, any information with
respect to the United States federal income "tax treatment" and "tax structure"
(in each case, within the meaning of Treasury Regulation Section 1.6011-4) of
the transactions contemplated hereby and all materials of any kind (including
opinions or other tax analyses) that are provided to such parties (or their
representatives) relating to such tax treatment and tax structure; provided that
with respect to any document or similar item that in either case contains
information concerning the tax treatment or tax structure of the transaction as
well as other information, this sentence shall only apply to such portions of
the document or similar item that relate to the United States federal income tax
treatment or tax structure of the transactions contemplated hereby.
-107-
SECTION 20.12. EXECUTION BY BORROWER PRINCIPAL
Borrower Principal is executing this Agreement solely for the purpose
of (a) making the representations and warranties applicable to Borrower
Principal contained in Sections 4.1, 4.3, 4.4, 4.5, 4.7, 4.8, 4.10, 4.14 (with
respect to financial information of Borrower Principal), 4.31, 4.39, and 4.40 of
this Agreement, and (b) agreeing to the terms, covenants and conditions
applicable to Borrower Principal contained in Sections 5.23, 9.8, 12.6, 13.4,
15.1(b), 15.1(c), 18.4, and 18.10.
ARTICLE 21 OUT PARCEL RELEASE
Section 21.1. Out Parcel Release. Provided no Event of Default exists
and is continuing, Borrower shall be entitled to a release from the lien of the
Mortgage of a portion of the Property (the "OUT PARCEL") more particularly
described as on Exhibit C hereof upon the following terms and conditions:
(a) Borrower shall deliver evidence satisfactory to Lender that
(i) the Property remaining encumbered by the lien of the Mortgage shall comply
with all Legal Requirements (including, without limitation, all zoning and
building codes), (ii) the Property remaining encumbered by the lien of the
Security Instrument shall constitute a separate lot for tax and assessment
purposes by no later than the earliest date permitted under applicable Legal
Requirements, (iii) the Out Parcel, at the time of release, remains an
unimproved parcel of land (exclusive of parking areas contained thereon), (iv)
such release shall not adversely affect ingress or egress to or from the
Property, (v) the documents with respect to such release shall not impose any
obligations or otherwise burden the Property in any way, (vi) Borrower has
obtained or caused to be obtained all necessary approvals, consents or permits
with respect to such release and (vii) the Out Parcel has been transferred to an
entity other than Borrower or any SPE Component Entity.
(b) Borrower shall (i) deliver to Lender (A) a revised, updated
Title Insurance Policy (or an endorsement to the existing Title Insurance
Policy) acceptable to Lender in all respects reflecting the release of the Out
Parcel and containing such endorsements as Lender shall reasonably require
(including, without limitation, a "date-down" or similar endorsement), (B) if
the Loan is part of a Securitization, Borrower shall deliver to Lender an
opinion of counsel acceptable to Lender and the Rating Agencies (issued by
counsel acceptable to Lender and the Rating Agencies) that the release of the
Out Parcel would not constitute a "significant modification" of the Loan under
Section 1001 of the Internal Revenue Code or otherwise cause a tax to be imposed
on a "prohibited transaction" by any REMIC Trust, and (C) such amendments or
modifications to the Loan Documents as Lender may reasonably require to reflect
the release of the Out Parcel (including, without limitation, an amendment to
the Mortgage substituting a revised legal description reflecting the release of
the Out Parcel), and (ii) pay all of Lender's reasonable costs and expenses in
connection with a release of the Out Parcel, including, without limitation,
reasonable counsel fees and disbursements and all recording fees and title
charges.
-108-
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed by their duly authorized representatives, all as of the day and
year first above written.
BORROWER:
___________________________________________ , a
_______________________________________________
By: ___________________________________________
Name: _____________________________________
Title: ____________________________________
BORROWER PRINCIPAL:
Acknowledged and agreed to with respect to
its obligations set forth in Section 20.12
hereof:
___________________________________________ , a
_______________________________________________
By: ___________________________________________
Name: _____________________________________
Title: ____________________________________
LENDER:
[BANK OF AMERICA, N.A.,] [MORGAN STANLEY
MORTGAGE CAPITAL INC.] [WELLS FARGO BANK,
NATIONAL ASSOCIATION]
By: ___________________________________________
Name: _____________________________________
Title: ____________________________________
[[LOCKBOX BANK:]
-109-
ACKNOWLEDGED AND AGREED TO WITH RESPECT TO
ITS OBLIGATIONS SET FORTH IN ARTICLE 10
HEREOF:
___________________________________________ , A
_______________________________________________
BY: ___________________________________________
NAME: _____________________________________
TITLE: ____________________________________]
-110-
EXHIBIT A
RENT DIRECTION LETTER
EXHIBIT B
BORROWER EQUITY OWNERSHIP STRUCTURE
EXHIBIT C [RELEASE PARCEL PROPERTIES ONLY]
(OUT PARCEL)
(see attached)
SCHEDULE 1
GOLF VISTA ESTATES
ELIGIBLE INSTITUTION: Bank of America, N.A.
LOCKBOX BANK: Bank of America, N.A.
OPERATING LEASE:
PRINCIPAL AMOUNT OF NOTE: $14,592,788
NOTE RATE: 5.715%
MATURITY DATE (SECTION 2.2(b)): 11/01/2010
MONTHLY PAYMENT AMOUNT (SECTION 2.2(b)): $84,835.37
PAYMENT ADDRESS (SECTION 2.2(d)):
SUBSTITUTION/DEFEASANCE LOCKOUT PERIOD (SECTION 2.4(B) AND SECTION 2.5): the
date that is forty-two (42) months after the first Scheduled Payment Date
BORROWER ORGANIZATIONAL IDENTIFICATION NUMBER (SECTION 4.2):
LENDER NOTICE ADDRESS (SECTION 16.1):
-2-
SCHEDULE 2
REQUIRED REPAIRS
(see attached)
-3-
SCHEDULE 3
BORROWER ACCOUNT
SCHEDULE 4
(ADVISORY AGREEMENT)
The Manufactured Home Communities, Inc. (the "Company") agrees that all
advice given by Banc of America Securities LLC ("BAS") in connection with its
engagement hereunder is for the benefit and use of the Company in considering
its strategic situation and that no such advice shall be used for any other
purpose or be disclosed, reproduced, disseminated, quoted or referred to at any
time, in any manner or for any purpose, nor shall any public references to BAS
be made by or on behalf of the Company, in each case without BAS' prior written
consent, which consent shall not be unreasonably withheld. BAS agrees to
maintain the confidentiality of the confidential or proprietary information
("Confidential Information") provided by the Company to BAS in connection with
this engagement and to utilize or disclose the Confidential Information only in
connection with the activities and transactions contemplated by this letter
agreement (the "Permitted Use"). BAS shall only disclose the Confidential
Information (i) to its employees, officers, agents, advisors and other
representatives (collectively, its "Representatives") who need to know such
Confidential Information in connection with the Permitted Use or (ii) as
required by law, regulation or legal, governmental or regulatory process but
only after, in the case of this clause (iii), notice to the Company, unless such
notice is prohibited by law, regulation or legal, governmental or regulatory
process. Notwithstanding the foregoing, the following will not constitute
Confidential Information: (i) information which was already known to BAS prior
to its disclosure by the Company; (ii) information which is obtained by the BAS
from a third party who is not known by the BAS to be prohibited from disclosing
the information to the BAS by a contractual, legal or fiduciary obligation to
the Company; (iii) information which is or becomes publicly available (other
than as a result of disclosure by the BAS in violation of this paragraph); and
(iv) information which is independently developed, discovered or arrived at by
the BAS or any of its Representatives without use of Confidential Information.
BAS shall be liable for any beach of the provisions of this paragraph by its
Representatives. The obligations related to Confidential Information contained
in this paragraph shall terminate two years from the date of this letter
agreement and will survive any earlier termination of this letter agreement.
Notwithstanding anything to the contrary contained herein, BAS and the Company
shall be permitted to disclose the tax treatment and tax structure of any
strategic alternative (including any materials, opinions or analyses relating to
such tax treatment or tax structure, but without disclosure of identifying
information or, except to the extent relating to such tax structure or tax
treatment, any nonpublic commercial or financial information) on and after the
earliest to occur of the date of (i) public announcement of discussions relating
to such strategic alternative, (ii) public announcement of such strategic
alternative or (iii) execution of a definitive agreement (with or without
conditions) to enter into such strategic alternative; provided, however, that if
such strategic alternative is not consummated for any reason, the provisions of
this sentence shall cease to apply with respect to such strategic alternative.
-2-
SCHEDULE 4.5
(LITIGATION)
NONE
-3-