EXHIBIT 10.2
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EXECUTION COPY
LOAN AND SECURITY AGREEMENT
DATED AS OF DECEMBER 3, 2004
BETWEEN
CAPE PLACE (DE), LLC; CLAYTON PLACE (DE), LLC; CLEMSON PLACE (DE), LLC;
JACKSONVILLE PLACE (DE), LLC; MACON PLACE (DE), LLC; MARTIN PLACE (DE), LLC;
MURRAY PLACE (DE), LLC; RIVER PLACE (DE), LLC; AND
TROY PLACE (DE), LLC,
COLLECTIVELY, AS BORROWER
AND
GREENWICH CAPITAL FINANCIAL PRODUCTS, INC.,
AS LENDER
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LOAN AND SECURITY AGREEMENT
This LOAN AND SECURITY AGREEMENT (this "Loan Agreement") is dated as
of December 3, 2004, and entered into by and between CAPE PLACE (DE), LLC;
CLAYTON PLACE (DE), LLC; CLEMSON PLACE (DE), LLC; JACKSONVILLE PLACE (DE), LLC;
MACON PLACE (DE), LLC; MARTIN PLACE (DE), LLC; MURRAY PLACE (DE), LLC; RIVER
PLACE (DE), LLC; and TROY PLACE (DE), LLC, each a Delaware limited liability
company (individually, each a "Borrower" and collectively, the "Borrowers"); and
GREENWICH CAPITAL FINANCIAL PRODUCTS, INC., a Delaware corporation (together
with its successors and assigns, whether one or more, "Lender").
NOW, THEREFORE, in consideration of the premises and the agreements,
provisions and covenants herein contained, Borrowers and Lender agree as
follows:
ARTICLE I
DEFINITIONS
SECTION 1.1 CERTAIN DEFINED TERMS. The terms defined below are used in this Loan
Agreement as so defined. Terms defined in the preamble to this Loan Agreement
are used in this Loan Agreement as so defined.
"Accounts" means, collectively, the Local Collection Account, the Central
Account, the Sub-Accounts thereof, and any other accounts pledged to Lender
pursuant to this Loan Agreement or any other Loan Document.
"Account Collateral" means all of Borrowers' right, title and interest in
and to the Operating Account, the Accounts, the Reserves, all monies and amounts
which may from time to time be on deposit therein, all monies, checks, notes,
instruments, documents, deposits, and credits from time to time in the
possession of Lender representing or evidencing such Accounts and Reserves and
all earnings and investments held therein and proceeds thereof, including, but
not limited to, the Account Collateral specified in Section 7.6(A) hereof.
"Adjusted Net Cash Flow" for any twelve month calculation period means, as
of the date of such calculation, the excess of (a) all Receipts, including,
without limitation, base rents and monthly recoveries under bona fide Leases at
the Properties, actually received by Borrowers and attributable to such twelve
month period over (b) Operating Expenses (exclusive of any deposits by Borrowers
into the Reserve Sub-Accounts) attributable to such twelve month calculation
period (determined on an accrual basis), in each case adjusted to reflect
Lender's determination of (i) a base management fee equal to the greater of (A)
the actual base management for such period and (B) 3% of gross revenues for such
period; (ii) subtraction of a reserve for Capital Expenditures equal to $214 per
Unit per annum, (iii) exclusion of (X) Prepaid Rents not attributable and
actually applied in such twelve month period, (Y) amounts representing
nonrecurring items as reasonably determined by Lender and (Z) amounts received
from tenants affiliated with any Borrower Parties; and (iv) reasonable
adjustment of Operating Expenses to reflect the higher of actual Operating
Expenses for such period and historical annualized
Operating Expenses and historical operating levels at the Properties. Lender's
calculation of Adjusted Net Cash Flow shall be final absent manifest error.
"Affiliate" means in relation to any Person, any other Person: (i) directly
or indirectly controlling, controlled by, or under common control with, the
first Person; (ii) directly or indirectly owning or holding five percent (5%) or
more of any equity interest in the first Person; or (iii) five percent (5%) or
more of whose voting stock or other equity interest is directly or indirectly
owned or held by the first Person. Notwithstanding the foregoing, Place
Properties' limited partners and their Affiliates (other than Cecil M. Phillips
and his family members or their trusts and Persons directly or indirectly
controlling, controlled by or under common control with Cecil M. Phillips or his
family members or their trusts) shall not be deemed Affiliates of Borrower, Sole
Member or Place Properties by operation of clauses (ii) or (iii) above so long
as such limited partners are not otherwise associated with Borrower, Sole Member
or Place Properties and their relationship with Borrower, Sole Member or Place
Properties derives solely from their status as limited partners of Place
Properties. In addition, the Affiliates of each Borrower Party include, without
limitation, all other Borrower Parties, irrespective of whether they now or
hereafter satisfy the foregoing criteria. For purposes of this definition,
"control" (including with correlative meanings, the terms "controlling",
"controlled by" and "under common control with") means the possession directly
or indirectly of the power to direct or cause the direction of the management
and policies of a Person, whether through the ownership of voting securities, by
contract or otherwise. Where expressions such as "[name of party] or any
Affiliate" are used, the same shall refer to the named party and any Affiliate
of the named party.
"Allocated Mezzanine Loan Amount" for any Individual Property has the
meaning set forth in the Mezzanine Loan Agreement, subject to adjustment in
connection with an increase or decrease in the Mezzanine Loan under Section
10.1.
"Allocated Senior Loan Amount" means, for each Individual Property, the
amount for such Individual Property as set forth in the table below (subject to
adjustment in connection with an increase or decrease in the Loan under Section
10.1):
Individual Property
[identified by common address/description Allocated Senior
and by reference to Schedule A-l through Loan Amount for
A-10 hereto] Individual Property
- ------------------------------------------ -------------------
1. Cape Place [Schedule A-l] $ 8,520,000.00
2. Clayton Place I and II [Schedule A-2] $24,540,000.00
3. Clemson Place [Schedule A-3] $ 8,160,000.00
4. Jacksonville Place [Schedule A-4] $11,120,000.00
5. Macon Place [Schedule A-5] $ 7,440,000.00
6. Martin Place [Schedule A-6] $ 8,960,000.00
7. Murray Place [Schedule A-7] $ 6,800,000.00
8. River Place [Schedule A-8] $13,680,000.00
9. Troy Place [Schedule A-9] $ 9,440,000.00
"Approved Architect" has the meaning set forth in Section 5.5.
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"Approved Bank" shall mean a bank, the long term unsecured debt obligations
of which are rated at least "AA" by S&P and the equivalent by Fitch and Moody's
(unless Lender approves in writing a financial institution other than a bank or
a lower rating, in each case in Lender's sole and absolute discretion).
"Approved Operating Budget" has the meaning set forth in Section 7.3.
"Approved Capital Expenditures" has the meaning set forth in Section 6.4.
"Approved Capital Expenditures Budget" has the meaning set forth in Section
7.3.
"Approved Expenditures" has the meaning set forth in Section 6.6.
"Assignment of Leases" means the Assignment of Leases and Rents of even
date herewith from Borrowers to Lender, constituting an assignment of the Leases
and proceeds therefrom as Collateral for the Loan, as same may be amended or
modified from time to time.
"Assignment of Management Agreement" means that certain Conditional
Assignment of Management Agreement (whether one or more) of even date herewith
executed by Borrower and current Manager, constituting an assignment of the
Management Agreement as Collateral for the Loan, as same may be amended or
modified from time to time.
"Bankruptcy Code" means Title 11 of the United States Code, as amended from
time to time, and all rules and regulations promulgated thereunder.
"Bedroom Unit" means each room within a Unit designated as a bedroom for
occupancy by one or more residents.
"Borrower" and "Borrowers" shall have the meanings set forth in the
preamble.
"Borrower Party" and "Borrower Parties" mean, individually or collectively,
the Borrowers, the Sole Member, Environmental Indemnitor and Guarantor.
"Business Day" means any day excluding (i) Saturday, (ii) Sunday, (iii) any
day which is a legal holiday under the laws of the State of New York, and (iv)
any day on which banking institutions located in such state are generally not
open for the conduct of regular business.
"Calendar Quarter" means each of the four periods of three consecutive
months each from January 1 - March 31, April 1 - June 30, July 1 - September 30
and October 1 - December 31, respectively.
"Capital Expenditures" means expenditures for capital improvements,
furnishings, fixtures and equipment (whether paid in cash or property or accrued
as liabilities) made by Borrowers that, in conformity with GAAP, are required to
be included in the property, plant, or equipment, or similar fixed asset account
or otherwise capitalized.
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"Capital Expenditure Budget" means Borrowers' budget for Capital
Expenditures for the Properties, the costs of which are to be paid from the
Replacement Reserve, which budget has been approved by Lender as and to the
extent required hereunder.
"Cash Trap Condition" shall exist (1) upon the occurrence of an Event of
Default and during the continuance thereof, or (2) in the event a Debt Service
Coverage Ratio, as measured by Lender as of the end of any Calendar Quarter
(commencing with the Calendar Quarter ending December 31, 2005 and continuing
each Calendar Quarter thereafter) based upon Adjusted Net Cash Flow for the
twelve (12) month period ended as of the end of such Calendar Quarter, is less
than the Minimum DSCR Threshold (in the event of a failure of the Borrower to
deliver the certification and documentation required under Section 5.1(A)(iv)
within five (5) Business Days after written notice from Lender of such
nondelivery, Lender, at its option, may presume that such Debt Service Coverage
Ratio does not satisfy the Minimum DSCR Threshold).
"Cash Trap Cure" has the meaning set forth in Section 7.1
"Central Account" has the meaning set forth in Section 7.1
"Central Account Agreement" means the written agreement(s) among Borrowers,
Lender and the holder(s) of the Accounts with respect to the maintenance and
control thereof.
"Central Account Bank" means Wachovia Bank, N.A., or any successor
financial institution appointed by Lender pursuant hereto or pursuant to the
Central Account Agreement.
"Claims" has the meaning set forth in Section 5.3.
"Clayton Place Property" means that certain Individual Property commonly
known as Clayton Place, the legal description of which is set forth on Schedule
A-2.
"Closing" means the funding of the Loan contemplated by this Loan
Agreement.
"Closing Date" means the date on which the Closing occurs.
"Collateral" means rights, interests, and property of every kind, real and
personal, tangible and intangible, which is granted, pledged, liened, or
encumbered as security for the Loan or any of the other Obligations under this
Loan Agreement, the Mortgage or other Loan Documents, including without
limitation the Properties, the Improvements, the Rents and the Accounts.
"Compliance Certificate" has the meaning set forth in Section 5.1.
"Condemnation Proceeds" means, in the event of a Taking with respect to any
Individual Property, the proceeds in respect of such Taking.
"Contingent Obligation", as applied to any Person, means any direct or
indirect liability, contingent or otherwise, of that Person: (A) with respect to
any indebtedness, lease, dividend or other obligation of another if the primary
purpose or intent of the Person incurring such liability, or the primary effect
thereof, is to provide assurance to the obligee of such liability that such
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liability will be paid or discharged, or that any. agreements relating thereto
will be complied with, or that the holders of such liability will be protected
(in whole or in part) against loss with respect thereto; (B) with respect to any
letter of credit issued for the account of that Person or as to which that
Person is otherwise liable for reimbursement of drawings; (C) under any interest
rate swap agreement, interest rate cap agreement, interest rate collar agreement
or other similar agreement or arrangement designed to protect against
fluctuations in interest rates; or (D) under any foreign exchange contract,
currency swap agreement or other similar agreement or arrangement designed to
protect that Person against fluctuations in currency values. Contingent
Obligations shall include (i) the direct or indirect guaranty, endorsement
(other than for collection or deposit in the ordinary course of business),
co-making, discounting with recourse or sale with recourse by such Person of the
obligation of another, (ii) the obligation to make take-or-pay or similar
payments if required regardless of nonperformance by any other party or parties
to an agreement, and (iii) any liability of such Person for the obligations of
another through any agreement to purchase, repurchase or otherwise acquire such
obligation or any property constituting security therefor, to provide funds for
the payment or discharge of such obligation or to maintain the solvency,
financial condition or any balance sheet item or level of income of another. For
purposes of this definition, the amount of any Contingent Obligation at any time
shall be computed as the amount that, in light of all of the facts and
circumstances existing at such time, represents the amount that can reasonably
be expected to become an actual or matured liability.
"Contractual Obligation", as applied to any Person, means any indenture,
mortgage, deed of trust, contract, undertaking, agreement or other instrument to
which that Person is a party or by which it or any of its properties is bound or
to which it or any of its properties is subject including, without limitation,
the Loan Documents.
"Contribution Agreement" shall mean that certain Contribution Agreement
executed by the Borrowers as of the Closing Date.
"Debt Service Coverage Ratio" shall mean, for any trailing twelve (12)
month period measured as of the end of any Calendar Quarter, the ratio of (i)
Adjusted Net Cash Flow for such twelve (12) month period (excluding any Adjusted
Net Cash Flow attributable to any Individual Property(ies) which have been the
subject of a Partial Release prior to the end of such twelve (12) month period)
to (ii) interest on the Loan attributable to such twelve (12) month period (less
any portion of debt service attributable to the Allocated Senior Loan Amount
with respect to the Individual Property(ies) subject to a Partial Release during
such twelve (12) month period).
"Debt Service Sub-Account" has the meaning set forth in Section 7.1.
"Default" means any breach or default under any of the Loan Documents,
whether or not the same is an Event of Default, and also any condition or event
that, after notice or lapse of time or both, would constitute an Event of
Default if that condition or event were not cured or removed within any
applicable grace or cure period.
"Default Rate" has the meaning set forth in Section 2.2.
"Defeasance" has the meaning set forth in Section 2.3.
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"Defeasance Collateral Account" has the meaning set forth in Section 2.3.
"Defeasance Date" has the meaning set forth in Section 2.3.
"Defeased Note" has the meaning set forth in Section 2.3.
"Documents" means all "documents" as defined in the UCC or other receipts
covering, evidencing or representing goods now owned or hereafter acquired by
Borrowers.
"Dollars" and the sign "$" mean the lawful money of the United States of
America.
"Eligible Account" shall mean a separate and identifiable account from all
other funds held by the holding institution, which account is either (i) an
account maintained with an Eligible Bank or (ii) a segregated trust account
maintained by a corporate trust department of a federal depository institution
or a state chartered depository institution subject to regulations regarding
fiduciary funds on deposit similar to Title 12 of the Code of Federal
Regulations Section 9.10(B), which has corporate trust powers and is acting in
its fiduciary capacity and in either case having combined capital and surplus of
at least $100,000,000 or otherwise acceptable to the Rating Agencies.
"Eligible Bank" shall mean a bank that (i) satisfies the Rating Criteria
and (ii) insures the deposits hereunder through the Federal Deposit Insurance
Corporation.
"Employee Benefit Plan" means any employee benefit plan within the meaning
of Section 3(3) of ERISA (including any Multiemployer Plan) (i) which is
maintained for employees of Borrowers or any ERISA Affiliate, (ii) which has at
any time within the preceding six (6) years been maintained for the employees of
Borrower or any current or former ERISA Affiliate or (iii) for which Borrowers
or any ERISA Affiliate has any liability, including contingent liability.
"Environmental Claims" has the meaning set forth in Section 4.16.
"Environmental Indemnity" means the Environmental Indemnity Agreement of
even date herewith from Borrowers and Place Properties (together with any
permitted substitute therefor pursuant to a Transfer and Assumption or New
Investor Transfer, "Environmental Indemnitor") to Lender, as same may be
amended, modified or replaced from time to time, together with any new or
replacement environmental indemnity executed and delivered in connection with a
Transfer and Assumption or New Investor Transfer.
"Environmental Indemnitor" has the meaning set forth in the definition of
Environmental Indemnity above.
"Environmental Laws" means any federal, state, or local law, ordinance or
regulation or any court judgment or order of any federal, state or local agency
or regulatory body applicable to Borrower or to any Individual Property relating
to industrial hygiene or to environmental or unsafe conditions including, but
not limited to, those relating to the generation, manufacture, storage,
handling, transportation, disposal, release, emission or discharge of Hazardous
Material, those in connection with the construction, fuel supply, power
generation and transmission, waste
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disposal or any other operations or processes relating to any Individual
Property, and those relating to the atmosphere, soil, surface and ground water,
wetlands, stream sediments and vegetation on, under, in or about any Individual
Property. "Environmental Laws" also shall include, but not be limited to, the
Comprehensive Environmental Response, Compensation and Liability Act, the
Hazardous Materials Transportation Act, the Resource Conservation and Recovery
Act, the Solid Waste Disposal Act, the Clean Water Act, the Clean Air Act, the
Toxic Substance Control Act, the Safe Drinking Water Act and the Occupational
Safety and Health Act, and all regulations adopted in respect to the foregoing
laws.
"Environmental Report" means the environmental assessment reports listed on
Schedule C attached hereto.
"EO13224" has the meaning set forth in Section 4.34.
"ERISA" means the Employee Retirement Income Security Act of 1974, and all
rules and regulations promulgated thereunder. Section references to ERISA are to
ERISA, as in effect at the date of this Agreement and, as of the relevant date,
any subsequent provisions of ERISA, amendatory thereof, supplemental thereto or
substituted therefor.
"ERISA Affiliate" means a corporation, trade or business that is, along
with Borrowers and Sole Member a member of a controlled group of corporations or
a controlled group of trades or businesses, as described in Section 414 of the
Internal Revenue Code of 1986, as amended, or Section 4001 of ERISA.
"Event of Default" has the meaning set forth in Section 8.1.
"Excess Prepaid Rent Amount" has the meaning set forth in Section 6.8.
"Excess Interest" has the meaning set forth in Section 2.2.
"Financial Statements" means statements of operations and retained
earnings, statements of cash flow, and balance sheets.
"Financing Statements" means the Uniform Commercial Code Financing
Statements naming the applicable Borrower Parties as debtor, and Lender as
secured party, required under applicable state law to perfect the security
interests created hereunder or under the other Loan Documents.
"First Open Payment Date" is the Payment Date which is in the second month
preceding the month in which the Scheduled Maturity Date occurs. For example, if
the Scheduled Maturity Date is March 6, 2010, the First Open Payment Date is the
Payment Date in the month of January, 2010.
"First Payment Date" has the meaning set forth in Section 2.4.
"Fitch" means Fitch, Inc. and its successors.
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"GAAP" means generally accepted accounting principles as in effect in the
United States of America from time to time.
"Governmental Authority" means, with respect to any Person, any federal or
state government or other political subdivision thereof and any entity,
including any regulatory or administrative authority or court, exercising
executive, legislative, judicial, regulatory or administrative or
quasi-administrative functions of or pertaining to government, and any
arbitration board or tribunal in each case having jurisdiction over such
applicable Person or such Person's property, and any stock exchange on which
shares of capital stock of such Person are listed or admitted for trading.
"Guaranty" means the Exceptions to Non-Recourse Guaranty of even date
herewith executed by Guarantor in favor of Lender, as same may be amended,
modified or substituted from time to time, together with any new or replacement
guaranty executed and delivered in connection with a Transfer and Assumption or
New Investor Transfer.
"Guarantor" means Cecil M. Phillips and Place Properties and any permitted
substitute guarantor pursuant to a Transfer and Assumption or New Investor
Transfer.
"Hazardous Material" means all or any of the following: (i) substances,
materials, compounds, wastes, products, emissions and vapors that are defined or
listed in, regulated by, or otherwise classified pursuant to, any applicable
Environmental Laws, including any so defined, listed, regulated or classified as
"hazardous substances", "hazardous materials", "hazardous wastes", "toxic
substances", "pollutants", "contaminants", or any other formulation intended to
regulate, define, list or classify substances by reason of deleterious, harmful
or dangerous properties; (ii) waste oil, oil, petroleum or petroleum derived
substances, natural gas, natural gas liquids or synthetic gas and drilling
fluids, produced waters and other wastes associated with the exploration,
development or production of crude oil, natural gas or geothermal resources;
(iii) any flammable substances or explosives or any radioactive materials; (iv)
fungus, mold, mildew or other biological agents the presence of which may
adversely affect the health of individuals or other animals or materially
adversely affect the value or utility of the Properties, (v) asbestos in any
form; (vi) electrical or hydraulic equipment which contains any oil or
dielectric fluid containing polychlorinated biphenyls; (vii) radon; or (viii)
urea formaldehyde.
"Holdback Reserve" has the meaning set forth in Section 6.9.
"Holdback Reserve Release Deadline" has the meaning set forth in Section
6.9.
"Holdback Reserve Sub-Account" has the meaning set forth in Section 7.1.
"Immediate Repairs" has the meaning set forth in Section 6.8.
"Impositions" means all taxes (including, without limitation, all real
estate, ad valorem, excise and sales (including those imposed on lease rentals),
use, single business, gross receipts, value added, intangible transaction
privilege, privilege, license or similar taxes), assessments, ground rents,
water, sewer or other rents and charges, excises, levies, fees (including,
without limitation, license, permit, inspection, authorization and similar
fees), and all other governmental charges, in each case whether general or
special, ordinary or extraordinary, foreseen or
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unforeseen, of every character in respect of Borrowers, the Collateral, and the
Properties (including all interest and penalties thereon), which at any time
prior to, during or in respect of the term hereof may be assessed or imposed on
or in respect of or be a lien upon (i) Borrowers (including, without limitation,
all income, franchise, single business, excise or other taxes imposed on
Borrowers, for the privilege of doing business in any jurisdiction) or Lender or
(ii) the Properties, or any other Collateral or any part thereof. Nothing
contained in this Agreement shall be construed to require Borrowers to pay (and
Impositions shall not include) any tax, assessment, levy or charge imposed on
Lender, in the nature of a franchise, capital levy, estate, inheritance,
succession, income or net revenue tax.
"Impositions and Insurance Reserve" means the reserve established pursuant
to Section 6.3.
"Impositions and Insurance Reserve Sub-Account" has the meaning set forth
in Section 7.1(A)(ii).
"Improvements" means all buildings, structures and improvements of every
kind and nature existing and to be constructed upon the land which comprises any
portion of any Individual Property.
"Indebtedness" or "indebtedness", as applied to any Person, means: (A) all
indebtedness for borrowed money; (B) that portion of obligations with respect to
leases that is properly classified as a liability on a balance sheet in
conformity with GAAP (excluding any prepaid rents and security deposits under
Leases); (C) notes payable and drafts accepted representing extensions of credit
whether or not representing obligations for borrowed money; (D) any obligation
owed for all or any part of the deferred purchase price of property or services
if the purchase price is due more than thirty (30) days from the date the
obligation is incurred or is evidenced by a note or similar written instrument;
and (E) all indebtedness secured by any Lien on any property or asset owned or
held by that Person regardless of whether the indebtedness secured thereby shall
have been assumed by that Person or is nonrecourse to the credit of that Person.
"Indemnified Liabilities" has the meaning set forth in Section 13.2.
"Independent Director" has the meaning set forth in Section 9.1.
"Individual Property" means, individually, each of the ten (10) parcels of
real estate (including land and Improvements) identified on Schedules A-l
through A-9, respectively.
"Qualified Investor" shall mean any one of the following Persons:
(i) a pension fund, pension trust, pension account or pension advisory
firm that (a) has total real estate assets of at least $250,000,000
immediately prior to the transfer and (b) is managed by a Person who
controls at least $250,000,000 of real estate equity assets immediately
prior to the transfer;
(ii) an insurance company which is subject to supervision by the
insurance commissioner, or similar official or agency, of a state of the
United States (a) with a net
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worth of at least $250,000,000 immediately prior to the transfer and (b)
which, immediately prior to the transfer, controls real estate equity
assets of at least $250,000,000;
(iii) a bank corporation organized under the banking laws of the
United States (a) with a combined capital and surplus of at least
$250,000,000 immediately prior to the transfer, and (b) which, immediately
prior to the transfer, controls total real estate assets of at least
$250,000,000; or
(iv) a real estate investment trust, investment bank, investment
company, money management firm or "qualified institutional buyer" within
the meaning of Rule 144A under the Securities Act of 1933, as amended, or
an "accredited investor" within the meaning of Regulation D under the
Securities Act of 1933, as amended, which (a) if an institution (rather
than a natural person) has a long-term unsecured debt rating from the
Rating Agencies of at least investment grade, and (b) which (i) has a net
worth of at least $150,000,000 and (ii) controls Real Estate Equity assets
of at least $300,000,000.
"Insurance Premiums" means the annual insurance premiums for the insurance
policies required to be maintained by Borrower with respect to the Properties
under Section 5.4.
"Intercreditor Agreement" shall mean any subordination and/or intercreditor
or other agreement or agreements from time to time entered into at the
discretion of Lender and any Mezzanine Lender with respect to the Loan and any
Mezzanine Loan, on such terms and conditions as Lender and Mezzanine Lender may
agree.
"Intellectual Property" means all of Borrowers' right, title and interest,
whether now owned or hereafter acquired, in, to and under the trademark
licenses, trademarks, rights in intellectual property, trade names, service
marks and copyrights, copyright licenses, patents, patent licenses or the
license to use intellectual property such as computer software owned or licensed
by any Borrower or other proprietary business information relating to such
Borrower's policies, procedures, manuals and trade secrets.
"Interest" means interest accrued or accruing on the Loan.
"Interest Rate" shall mean a rate per annum of 6.439%.
"Involuntary Borrower Party Bankruptcy" means any involuntary case under
the Bankruptcy Code or any applicable bankruptcy, insolvency or other similar
law now or hereafter in effect, in which any Borrower Party is a debtor or all
or any portion of the Properties is property of the estate therein.
"IRC" means the Internal Revenue Code of 1986, and any rule or regulation
promulgated thereunder from time to time, in each case as amended.
"IRS" means the Internal Revenue Service or any successor thereto.
"Lease" means any lease, tenancy, license, sublease, assignment and/or
other rental or occupancy agreement (including, without limitation, any and all
guarantees of any of the
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foregoing) heretofore or hereafter entered into affecting the use, enjoyment or
occupancy of any Individual Property or any portion thereof, including any
extensions, renewals, modifications or amendments thereof.
"Legal Requirements" shall mean, with respect to the Borrowers and the
Properties, all federal, state, county, municipal and other governmental
statutes, laws, rules, orders, regulations, ordinances, judgments, decrees and
injunctions of governmental authorities affecting the Borrowers or the
Properties or any part thereof or the construction, use, alteration or operation
thereof, or any part thereof, whether now or hereafter enacted and in force,
including, without limitation, the Americans with Disabilities Act of 1990, and
all permits, licenses and authorizations and regulations relating thereto, and
all covenants, agreements, restrictions and encumbrances contained in any
instruments, either of record or known to Borrowers, at any time in force
affecting any Individual Property or any part thereof, including, without
limitation, any which may (i) require repairs, modifications or alterations in
or to any Individual Property or any part thereof, or (ii) in any way limit the
use and enjoyment thereof.
"Lender" is defined in the preamble.
"Lien" means any lien, mortgage, pledge, security interest, charge or
encumbrance of any kind, whether voluntary or involuntary, (including any
conditional sale or other title retention agreement, any lease in the nature
thereof, and any agreement to give any security interest).
"Loan" has the meaning set forth in Section 2.1.
"Loan Agreement" means this Loan and Security Agreement, as same may be
amended or modified from time to time (including all schedules, exhibits,
annexes and appendices hereto).
"Loan Documents" means this Loan Agreement, the Note, the Mortgage, the
Assignment of Leases, the Assignment of Management Agreement, the Guaranty, the
Central Account Agreement, the Environmental Indemnity, the Financing
Statements, the Contribution Agreement and any and all other documents and
agreements accepted by Lender for the purposes of evidencing and/or securing the
Loan and any certificates delivered in connection with the Loan.
"Local Collection Account" has the meaning set forth in Section 7.1.
"Local Collection Bank" has the meaning set forth in Section 7.1.
"Management Agreement" means individually or collectively, as the context
requires, the management agreement(s) for the Properties in effect on the date
hereof between Borrowers and the current Manager and any management agreement
which may hereafter be entered into in accordance with the terms and conditions
hereof, pursuant to which any subsequent Manager may hereafter manage the
Properties.
"Manager" means, collectively, the Person(s) (approved by Lender in
accordance with the terms and conditions hereof) that may hereafter be charged
with management of the Properties pursuant to a Management Agreement.
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"Material Adverse Effect" means (A) a material adverse effect upon the
business, operations, properties, assets or condition (financial or otherwise)
of Borrowers or any other Borrower Party with respect to such party taken as a
whole, or (B) the material impairment of the ability of Borrowers or any other
Borrower Party to perform its material obligations under any Loan Documents, or
(C) the impairment of the ability of Lender to enforce or collect any of the
Obligations. In determining whether any individual event would result in a
Material Adverse Effect, notwithstanding that such event does not of itself have
such effect, a Material Adverse Effect shall be deemed to have occurred if the
cumulative effect of such event and all other then occurring events and existing
conditions would result in a Material Adverse Effect.
"Material Alteration" means any improvement or alteration affecting
structural elements of any Individual Property the cost of which exceeds
$300,000.00 for each such affected Individual Property; provided, however, that
in no event shall (i) any tenant improvement work which does not affect the
structural integrity of any Individual Property performed pursuant to any Lease
existing on the date hereof or entered into hereafter in accordance with the
provisions of this Loan Agreement or (ii) alterations performed as part of a
Restoration, constitute a Material Alteration.
"Maturity Date" shall mean the Scheduled Maturity Date, or such other date
on which the final payment of principal of the Note becomes due an payable as
therein or herein provided, whether at such Scheduled Maturity Date, by
acceleration, or otherwise.
"Maximum Rate" has the meaning-set forth in Section 2.2(D).
"Mezzanine Collection Account" means the account designated in the
Intercreditor Agreement (or otherwise by written agreement of Lender and
Mezzanine Lender) as the account for the deposit of the Monthly Mezzanine Debt
Service Payment Amount.
"Mezzanine Lender" has the meaning set forth in Section 5.17.
"Mezzanine Loan" has the meaning set forth in Section 5.17.
"Mezzanine Loan Documents" has the meaning set forth in Section 5.17.
"Minimum DSCR Threshold" means a Debt Service Coverage Ratio of 1.10 to
1.00 for measurement made at the end of any Calendar Quarter.
"Moody's" means Moody's Investors Services, Inc. and its successors.
"Monthly Debt Service Payment" has the meaning set forth in Section 2.4(A).
"Monthly Mezzanine Debt Service Payment Amount" means the regularly
scheduled monthly debt service payment amount provided for under the Mezzanine
Loan Documents, exclusive of any default interest, late charges or other similar
amounts.
"Mortgage" means, collectively, those certain Mortgages/Deeds of
Trust/Deeds to Secure Debt, Assignment of Leases and Rents, Financing Statement,
Security Agreement and Fixture Filings of even date herewith from each Borrower
to Lender, constituting a Lien on the
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Improvements and the Properties as Collateral for the Loan as same may be
modified or amended from time to time.
"Multiemployer Plan" means a "multiemployer plan" as defined in Section
3(37) or Section 4001(a)(3) of ERISA to which Borrower or any ERISA Affiliate
is making, or is accruing an obligation to make, contributions or has made, or
been obligated to make, contributions within the preceding six (6) years, or for
which Borrower or any ERISA Affiliate has any liability, including contingent
liability.
"Net Available Cash" has the meaning set forth in Section 7.3.
"New Investor" has the meaning set forth in Section 11.2.
"New Investor Change of Control" has the meaning set forth in Section 11.2.
"New Investor Control Election" has the meaning set forth in Section 11.2.
"New Investor Transfer" has the meaning set forth in Section 11.2.
"New Payment Date" has the meaning set forth in Section 2.4(A).
"Note" means that certain Promissory Note, dated of even date herewith,
made by Borrower to Lender evidencing the Loan, as amended, modified, restated
or split, and any replacement notes therefor.
"0 & M Program" has the meaning set forth in Section 5.7(D).
"Obligations" means the Loan and all other obligations, liabilities and
indebtedness of every nature of Borrower from time to time owed to Lender under
the Loan Documents, including the principal amount of all debts, claims and
indebtedness, accrued and unpaid interest and all fees, costs and expenses,
whether primary, secondary, direct, contingent, fixed or otherwise, heretofore,
now and/or from time to time hereafter owing, due or payable under the Loan
Documents whether before or after the filing of a proceeding under the
Bankruptcy Code by or against Borrower.
"Operating Account" means Borrowers' operating account(s) established for
the purposes of holding and managing Borrowers' funds from time to time, but not
the Central Account or any Sub-Accounts thereof.
"Operating Budget" means Borrowers' budget setting forth Borrowers' best
estimate, after due consideration, of all revenue, costs, expenses and Operating
Expenses for the Properties, which budget has been reasonably approved by Lender
if and to the extent required hereunder.
"Operating Expenses" means, with respect to any period of calculation, all
costs and expenses accrued in accordance with GAAP relating to the operation,
maintenance, repair, use and management of the Properties, including, without
limitation, utilities, repairs and maintenance, insurance, property taxes and
assessments, advertising expenses, payroll and
13
related taxes, equipment lease payments, actual management fees and all amounts
paid into Reserves but excluding (i) principal, interest and other payments made
by Borrowers under the Loan Documents, (ii) depreciation, amortization and other
non-cash expenses of the Properties; and (iii) capital expenditures to the
extent paid from Reserves the funding of which was deducted from revenues for
the purpose of determining Adjusted Net Cash Flow.
"Operating Expenses Sub-Account" has the meaning set forth in Section 7.1.
"Partial Defeasance" has the meaning set forth in Section 2.3.
"Partial Defeasance Collateral" shall mean U.S. Obligations, which provide
payments (i) on or prior to, but as close as possible to, all Payment Dates and
other scheduled payment dates, if any, under the Defeased Note after the
Defeasance Date and up to and including the Scheduled Maturity Date, and (ii) in
amounts equal to or greater than the respective Scheduled Defeasance Payments
related to such Payment Dates.
"Payment Date" has the meaning set forth in Section 2.4.
"PBGC" means the Pension Benefit Guaranty Corporation or any successor
thereto.
"Pension Plan" means any Employee Benefit Plan, other than a Multiemployer
Plan, which is subject to the provisions of Part 3 of Title I of ERISA, Title IV
of ERISA or Section 412 of the IRC and (i) which is maintained for employees of
Borrowers, or any of its ERISA Affiliates, (ii) which has at any time within the
preceding six (6) years been maintained for the employees of Borrowers or any of
its current or former ERISA Affiliates, or (iii) for which Borrowers or any
ERISA Affiliate has any liability, including contingent liability.
"Permitted Encumbrances" means (i) the Mortgage and the other Liens of the
Loan Documents in favor of Lender; (ii) the items shown in Schedule B to the
Title Policy as of Closing; (iii) future liens for property taxes and
assessments not then delinquent; (iv) Liens for Impositions not yet due and
payable or Liens arising after the date hereof which are being contested in good
faith by appropriate proceedings promptly instituted and diligently conducted in
accordance with Section 5.3(B) hereof; (v) in the case of Liens arising after
the date hereof, statutory Liens of carriers, warehousemen, mechanics,
materialmen and other similar Liens arising by operation of law, which are
incurred in the ordinary course of business and discharged by Borrowers by
payment, bonding or otherwise within thirty (30) days after the filing thereof
or which are being contested in good faith in accordance with Section 5.3(B)
hereof; (vi) rights of existing and future tenants, as tenants only, pursuant to
the Leases; and (vii) any other Lien to which Lender may expressly consent in
writing.
"Permitted Investments" means any one or more of the following obligations
or securities acquired at a purchase price of not greater than par (unless
Borrowers deposit into the applicable Sub-Account cash in the amount by which
the purchase price exceeds par), including those issued by any Servicer, 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 invested sums are required for payment of an
obligation for which the related Sub-Account was created and meeting one of the
appropriate standards set forth below:
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(i) 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 (i) must (A)
have a predetermined fixed dollar amount of principal due at maturity that
cannot vary or change, (B) if rated by S&P, not have an "r" highlighter affixed
to their rating, (C) if such investments have a variable rate of interest, have
an interest rate tied to a single interest rate index plus a fixed spread (if
any) and must move proportionately with that index, and (D) not be subject to
liquidation prior to their maturity;
(ii) Federal Housing Administration debentures;
(iii) 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 Student Loan Marketing Association (debt obligations), the
Financing Corp. (debt obligations), and the Resolution Funding Corp. (debt
obligations); provided, however, that the investments described in this clause
(iii) must (A) have a predetermined fixed dollar amount of principal due at
maturity that cannot vary or change, (B) if rated by S&P, not have an "r"
highlighter affixed to their rating, (C) if such investments have a variable
rate of interest, have an interest rate tied to a single interest rate index
plus a fixed spread (if any) and must move proportionately with that index, and
(D) not be subject to liquidation prior to their maturity;
(iv) 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 any class of certificates or other securities issued
in connection with any Securitization backed in whole or in part by the Loan
(collectively the "Certificates") provided, however, that the investments
described in this clause (iv) must (A) have a predetermined fixed dollar amount
of principal due at maturity that cannot vary or change, (B) if rated by S&P,
not have an "r" highlighter affixed to their rating, (C) if such investments
have a variable rate of interest, have an interest rate tied to a single
interest rate index plus a fixed spread (if any) and must move proportionately
with that index, and (D) not be subject to liquidation prior to their maturity;
(v) fully Federal Deposit Insurance Corporation-insured demand and
time deposits in, or certificates of deposit of, or bankers' acceptances issued
by, any bank or trust
15
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 any class of Certificates); provided, however, that the investments
described in this clause (v) must (A) have a predetermined fixed dollar of
principal due at maturity that cannot vary or change, (B) if rated by S&P, not
have a "r" highlighter affixed to their rating, (C) if such investments have a
variable rate of interest, have an interest rate tied to a single interest rate
index plus a fixed spread (if any) and must move proportionately with that
index, and (D) not be subject to liquidation prior to their maturity;
(vi) 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 investments 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 Certificates) in its highest
long-term unsecured debt rating category; provided, however, that the
investments described in this clause (vi) must (A) have a predetermined fixed
dollar amount of principal due at maturity that cannot vary or change, (B) if
rated by S&P, not have an "r" highlighter affixed to their rating, (C) if such
investments have a variable rate of interest, have an interest rate tied to a
single interest rate index plus a fixed spread (if any) and must move
proportionately with that index, and (D) not be subject to liquidation prior to
their maturity;
(vii) 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 any class of Certificates) in its highest short-term unsecured debt
rating; provided, however, that the investments described in this clause (vii)
must (A) have a predetermined fixed dollar amount of principal due at maturity
that cannot vary or change, (B) if rated by S&P, not have a "r" highlighter
affixed to their rating, (C) if such investments have a variable rate of
interest, have an interest rate tied to a single interest rate index plus a
fixed spread (if any) and must move proportionately with that index, and (D) not
be subject to liquidation prior to their maturity;
(viii) units of taxable money market funds, which funds are regulated
investment companies, seek to maintain a constant net asset value per share and
have the highest rating 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 any class of Certificates) for
money market funds or mutual funds; and
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(ix) any other security, obligation or investment which has been
approved as a Permitted Investment in writing by (a) Lender and (b) 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 any class of Certificates by such
Rating Agency;
provided, however, that such instrument continues to qualify as a "cash
flow investment" pursuant to Code Section 860G(a)(6) earning a passive return in
the nature of interest and no obligation or security shall be a Permitted
Investment if (A) such obligation or security evidences a right to receive only
interest payments or (B) the right to receive principal and interest payments on
such obligation or security are derived from an underlying investment that
provides a yield to maturity in excess of 120% of the yield to maturity at par
of such underlying investment.
"Person" means and includes natural persons, corporations, limited
liability companies, limited partnerships, general partnerships, joint stock
companies, joint ventures, associations, companies, trusts, banks, trust
companies, land trusts, business trusts or other organizations, whether or not
legal entities, and governments and agencies and political subdivisions thereof
and their respective permitted successors and assigns (or in the case of a
governmental Person, the successor functional equivalent of such Person).
"Place Properties" means Place Properties, L.P., a Tennessee limited
partnership.
"Pre-Existing Condition" has the meaning set forth in Section 5.5.
"Prepaid Rent" means any base rents and other monthly recoveries under bona
fide Leases at the Properties actually received by Borrowers (including, any
nonrefundable reservation deposits) which are not currently due and owing by
such tenant under such Lease but are attributable to a future obligation under
such Lease.
"Prepaid Rent Condition" has the meaning set forth in Section 6.8.
"Prepaid Rent Reduction" has the meaning set forth in Section 6.8.
"Prepaid Rent Reserve Sub-Account" has the meaning set forth in Section
7.1.
"Prepaid Rent Reserve Threshold" has the meaning set forth in Section 6.8.
"Prepayment Consideration" has the meaning set forth in Section 2.6(C).
"Principal Balance" means the outstanding principal balance of the Loan
from time to time.
"Proceeds" shall have the meaning given in the UCC and, in any event, shall
include, without limitation, all proceeds, products, offspring, rents, profits
or receipts, in whatever form, arising from the Collateral.
17
"Properties" mean collectively, each Individual Property listed on Schedule
A-l through A-10 which serves as Collateral for the Loan and which shall be
encumbered by and are more particularly described in the Mortgage as the
"Mortgaged Property" (as defined in the Mortgage).
"Property Condition Report(s)" has the meaning set forth in Section 3.1
(S).
"Rating Agency" shall mean any of S&P, Moody's, Fitch, any successors
thereto, or any other nationally-recognized statistical rating organization
designated by Lender in its sole discretion.
"Rating Confirmation" with respect to the transaction or matter in
question, shall mean: (i) if all or any portion of the Loan, by itself or
together with other loans, has been the subject of a Securitization, then each
applicable Rating Agency shall have confirmed in writing that such transaction
or matter shall not result in a downgrade, qualification, or withdrawal of any
rating then in effect for any class of certificates or other securities issued
in connection with such Securitization; and (ii) if the Loan or any portion
thereof has not been the subject of a Securitization, (a) the applicable Rating
Agency shall have confirmed in writing that such transaction or matter shall not
result in a downgrade, qualification, or withdrawal of any shadow rating or
other rating provided to the Loan or any portion thereof not the subject of a
Securitization, and (b) Lender shall have determined in its reasonable
discretion (taking into consideration such factors as Lender may reasonably
determine, including the attributes of the loan pool in which the Loan might
reasonably be expected to be securitized) that no rating for any certificate or
other securities that would be issued in connection with Securitization of such
portion of the Loan would be downgraded, qualified, or withheld by reason of
such transaction or matter.
"Rating Criteria" with respect to any Person, shall mean that (i) the
short-term unsecured debt obligations of such Person are rated at least "A-l" by
S&P, "P-l" by Moody's and "F-l" by Fitch, if deposits are held by such Person
for a period of less than one month, or (ii) the long-term unsecured debt
obligations of such Person are rated at least "AA-" by S&P, "Aa3" by Moody's and
"AA-" by Fitch, if deposits are held by such Person for a period of one month or
more.
"Receipts" means all revenues, receipts and other payments of every kind
arising from ownership or operation of the Properties and received by Borrowers
or any Affiliate of Borrowers (excluding any property management fees paid to
any Affiliate Manager and excluding any distributions to members permitted in
this Loan Agreement so long as such funds were initially deposited into the
Central Account as required under this Loan Agreement), including, without
limitation, all Prepaid Rents, warrants, stock options, or equity interests in
any tenant, licensee or other Person occupying space at, or providing services
related to or for the benefit of, the Properties received by Borrowers or any
Affiliate of Borrowers in lieu of rent or other payment.
"Related Person" means in relation to any Person, any other Person that is
(i) an Affiliate of the first Person; (ii) the sibling of the first Person or of
the Affiliate; (iii) the then-current and former spouses of the first Person or
of the Affiliate; (iv) a Person that shares or has shared a residence with the
first Person or with the Affiliate; (v) the ancestor or descendant of the first
18
Person or of any other Person described in this items (i) through (iv) above; or
(vi) any other Person that, by reason of familial, economic, social or other
relationship, would reasonably be expected to favor the first Person or to act
as requested by the first Person. Where expressions such as "[name of party] or
any Related Person" are used, the same shall refer to the named party and any
Related Person of the named party.
"Release Date" shall mean the earlier of (i) the Payment Date in June,
2008, or (ii) the date that is two (2) years from the "start up day" (within the
meaning of Section 860G(a)(9) of the IRC) of the REMIC Trust established in
connection with the final Securitization involving the Loan.
"Rent Roll" has the meaning set forth in Section 3.1.
"Rents" has the meaning set forth in the Granting Clauses of the Mortgage.
"Replacement Reserve" means the reserve established pursuant to Section
6.4.
"Replacement Reserve Sub-Account" has the meaning set forth in Section
7.1(A)(ii).
"Reserves" means the reserves held by or on behalf of Lender pursuant to
this Loan Agreement or other Loan Documents, including without limitation, the
reserves established pursuant to Article VI.
"Reserve Sub-Accounts" has the meaning set forth in Section 7.1.
"Restoration" has the meaning set forth in Section 5.5.
"Restoration Threshold" means an amount equal to $500,000.00 for each
Individual Property.
"S&P" shall mean Standard & Poor's Rating Services, a division of The
McGraw-Hill Companies, Inc and its successors.
"Scheduled Defeasance Payments" shall mean scheduled payments of interest
and principal under the Note in the case of a Total Defeasance and under the
Defeased Note in the case of a Partial Defeasance for all Payment Dates
occurring after the Defeasance Date and up to and including the Scheduled
Maturity Date (including, in the case of a Total Defeasance, the outstanding
principal balance of the Loan as of the Scheduled Maturity Date and, in the case
of a Partial Defeasance, the outstanding principal balance of the Defeased Note
as of the Scheduled Maturity Date), and all payments required after the
Defeasance Date, if any, under the Loan Documents for servicing fees, and other
similar charges.
"Scheduled Maturity Date" shall mean December 6, 2009.
"Secondary Market Transaction" has the meaning set forth in Section 10.1.
"Securities" (whether or not capitalized) means any stock, shares, voting
trust certificates, bonds, debentures, options, warrants, notes, or other
evidences of indebtedness, secured or
19
unsecured, convertible, subordinated or otherwise, or in general any instruments
commonly known as "securities" or any certificates of interest, shares or
participations in temporary or interim certificates for the purchase or
acquisition of, or any right to subscribe to, purchase or acquire, any of the
foregoing.
"Securitization" means a public or private rated offering of securities
representing direct or indirect interests in one or more mortgage loans or the
right to receive income therefrom.
"Security Agreement" shall mean a security agreement in form and substance
that would be satisfactory to a prudent lender pursuant to which Borrower grants
Lender a perfected, first priority security interest in the Defeasance
Collateral Account and the Defeasance Collateral.
"Security Deposits" shall mean all refundable security deposits (whether
cash, letter of credit or otherwise) given to Borrowers or any agent or Person
acting on behalf of Borrowers in connection with the Leases.
"Servicer" means a servicer selected by Lender, as Lender's agent, from
time to time in its sole discretion to service the Loan.
"Sole Member" means Place Mezz Borrower, LLC, a Delaware limited liability
company.
"Sub-Accounts" has the meaning set forth in Section 7.1.
"Successor Borrower" has the meaning set forth in Section 2.3.
"Supplemental Debt Reserve Sub-Account" has the meaning set forth in
Section 7.1.
"Survey" has the meaning set forth in Section 3.1(G).
"Taking" means a taking or voluntary conveyance during the term hereof of
all or part of any Individual Property, or any interest therein or right
accruing thereto or use thereof, as the result of, or in settlement of, any
condemnation or other eminent domain proceeding by any Governmental Authority
affecting any Individual Property or any portion thereof whether or not the same
shall have actually been commenced.
"Tax Liabilities" has the meaning given to such term in Section 2.8.
"Title Company" means Chicago Title Insurance Company, or such other
national title insurance company as may be reasonably acceptable to Lender.
"Title Policy" means a mortgagee's policy or policies of title insurance
pertaining to the Mortgage issued to Lender in connection with the Closing
meeting the requirements of Section 3.1(G).
"Total Defeasance" shall have the meaning set forth in Section 2.3.
20
"Total Defeasance Collateral" shall mean U.S. Obligations, which provide
payments (i) on or prior to, but as close as possible to, all Payment Dates and
other scheduled payment dates, if any, under the Note after the Defeasance Date
and up to and including the Scheduled Maturity Date, and (ii) in amounts equal
to or greater than the respective Scheduled Defeasance Payments related to such
Payment Dates.
"Transfer and Assumption" and "Transferee Borrower" have the respective
meanings set forth in Section 11.3.
"TRIA" means the Terrorism Risk Insurance Act of 2002.
"UCC" means the New York Uniform Commercial Code, as amended from time to
time.
"Unit" means each residential unit at the Properties containing one or more
bedrooms for occupancy by one or more residents.
"U.S. Obligations" shall mean securities that are (i) direct obligations of
the United States of America for the full and timely payment of which its full
faith and credit is pledged or (ii) obligations of an entity controlled or
supervised by and acting as an agency or instrumentality and guaranteed as a
full faith and credit obligation which shall be fully and timely paid by the
United States of America, which in either case are not callable or redeemable at
the option of the issuer thereof (including a depository receipt issued by a
bank (as defined in Section 3(a)(2) of the United States Securities Act)) as
custodian with respect to any such U.S. Obligations or a specific payment of
principal of or interest on any such U.S. Obligations held by such custodian for
the account of the holder of such depository receipt, provided that (except as
required by law) such custodian is not authorized to make any deduction from the
amount payable to the holder of such depository receipt from any amount received
by the custodian in respect of the securities or the specific payment of
principal of or interest on the securities evidenced by such depository receipt.
"Work" has the meaning set forth in Section 6.6.
"Work Reserves" has the meaning set forth in Section 6.6.
SECTION 1.2 ACCOUNTING TERMS.
Except as otherwise expressly provided herein, all accounting terms not
otherwise defined herein shall have the meanings assigned to such terms in
conformity with GAAP.
SECTION 1.3 OTHER DEFINITIONAL PROVISIONS.
References to "Articles", "Sections", "Subsections", "Exhibits" and
"Schedules" shall be to Articles, Sections, Subsections, Exhibits and Schedules,
respectively, of this Loan Agreement unless otherwise specifically provided. Any
of the terms defined in Section 1.1 may, unless the context otherwise requires,
be used in the singular or the plural depending on the reference. In this Loan
Agreement, "hereof", "herein", "hereto", "hereunder" and the like mean and refer
to this Loan Agreement as a whole and not merely to the specific article,
section, subsection, paragraph or clause in which the respective word appears;
words importing any gender include
21
the other genders; references to "writing" include printing, typing, lithography
and other means of reproducing words in a tangible visible form; the words
"including", "includes" and "include" shall be deemed to be followed by the
words "without limitation"; and any reference to any statute or regulation may
include any amendments of same and any successor statutes and regulations.
Further, (i) any reference to any agreement or other document shall include
subsequent amendments, assignments, and other modifications thereto, and (ii)
any reference to any Person may include such Person's respective permitted
successors and assigns or, in the case of governmental Persons, Persons
succeeding to the relevant functions of such Persons.
ARTICLE II
TERMS OF THE LOAN
SECTION 2.1 LOAN.
(A) LOAN. Subject to the terms and conditions of this Loan Agreement and in
reliance upon the representations and warranties of Borrowers contained herein,
Lender agrees to lend to Borrowers, and Borrowers agree to borrow from Lender,
the Loan, in the aggregate amount of $98,660,000.00 (such loan and the
obligation of Borrowers to repay the same together with all interest and other
amounts from time to time owing hereunder are referred to collectively herein as
the "Loan").
(B) NOTE. On the Closing Date, Borrowers shall execute and deliver to
Lender the Note, made by Borrowers to the order of Lender, in the aggregate
original principal amount of $98,660,000.00.
(C) USE OF PROCEEDS. The proceeds of the Loan funded at Closing shall be
used to (i) repay any existing indebtedness secured by any mortgage encumbering
all or any part of the Properties; (ii) pay all recording fees and taxes, title
insurance premiums, the reasonable costs and expenses incurred by Lender,
including the legal fees and expenses of counsel to Lender, and other costs and
expenses approved by Lender (which approval will not be unreasonably withheld)
related to the Loan and (iii) establish the Reserves required hereunder. The
remaining proceeds of the Loan, if any, shall be disbursed to Borrowers;
provided, however, that any and all such remaining proceeds of the Loan will be
used for commercial purposes only and will not be used for personal, family,
agricultural or household use.
SECTION 2.2 INTEREST.
(A) RATE OF INTEREST. The outstanding principal balance of the Loan shall
bear interest at a rate per annum equal to the Interest Rate.
(B) DEFAULT RATE. Notwithstanding the foregoing, upon the occurrence and
during the continuance of an Event of Default and in any event from and after
the Maturity Date of the Loan, the Principal Balance of the Loan and all other
outstanding Obligations shall bear interest until paid in full at a rate per
annum that is five percent (5.0%) in excess of the Interest Rate otherwise
applicable under this Loan Agreement and the Note (the "Default Rate").
(C) COMPUTATION OF INTEREST. Interest on the Loan and all other Obligations
owing to Lender shall be computed on the basis of a 360-day year, and shall be
charged for the actual
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number of days elapsed during any month or other accrual period. Interest shall
be payable in arrears (except as provided in the first sentence of Section
2.4(A) hereof).
(D) INTEREST LAWS. Notwithstanding any provision to the contrary contained
in this Loan Agreement or the other Loan Documents, Borrowers shall not be
required to pay, and Lender shall not be permitted to collect, any amount of
interest in excess of the maximum amount of interest permitted by law ("Excess
Interest"). If any Excess Interest is provided for or determined by a court of
competent jurisdiction to have been provided for in this Loan Agreement or in
any of the other Loan Documents, then in such event: (1) the provisions of this
Section shall govern and control; (2) Borrowers shall not be obligated to pay
any Excess Interest; (3) any Excess Interest that Lender may have received
hereunder shall be, at Lender's option, (a) applied as a credit against either
or both of the Principal Balance of the Loan or accrued and unpaid interest
thereunder (not to exceed the maximum amount permitted by law), (b) refunded to
the payor thereof, or (c) any combination of the foregoing; (4) the interest
rate(s) provided for herein shall be automatically reduced to the maximum lawful
rate allowed from time to time under applicable law (the "Maximum Rate"), and
this Loan Agreement and the other Loan Documents shall be deemed to have been
and shall be, reformed and modified to reflect such reduction; and (5) Borrowers
shall not have any action against Lender for any damages arising out of the
payment or collection of any Excess Interest. If the Default Rate shall be
finally determined to be unlawful, then the applicable Interest Rate shall be
applicable during any time when the Default Rate would have been applicable
hereunder, provided however that if the Maximum Rate is greater or lesser than
the applicable Interest Rate, then the foregoing provisions of this paragraph
shall apply.
(E) LATE CHARGES. If any payment of principal, interest or other sums shall
not be made to Lender within five (5) days of the date the same is due hereunder
or under any of the other Loan Documents (excluding, if an Event of Default has
occurred and is continuing), then Borrowers shall pay to Lender, in addition to
all sums otherwise due and payable, a late fee in an amount equal to five
percent (5.0%) of such principal, interest or other sums due hereunder or under
any other Loan Document (or, in the case of a partial payment, the unpaid
portion thereof), such late charge to be immediately due and payable without
demand by Lender; provided, that if Borrowers are satisfying their obligations
under Section 7.2 of this Loan Agreement and on a Payment Date prior to the
Maturity Date funds sufficient to pay any scheduled payments (whether principal,
interest, Reserves or otherwise) on such Payment Date are as of 11:00 am,
Eastern Standard Time on such Payment Date on deposit in the Central Account (of
any Sub-Accounts), a delay in payment of such scheduled payment on the Payment
Date due to a failure by Lender to direct the Central Account Bank to disburse
such funds to Lender or due to a failure of the Central Account Bank to disburse
such funds as directed by Lender shall not in and of itself trigger a late
charge hereunder with respect to such scheduled payment, so long as Lender's
access to such funds has not been and is not constrained or constricted in any
manner by the actions or inactions of any Borrower Party or any Affiliate
thereof (or any Person controlling, controlled by or under the control of any
Borrower Party or any such Affiliate), such that Lender may continue to cause
such payment to be made upon Lender's authorization and direction to the Central
Account Bank.
(F) ADDITIONAL ADMINISTRATIVE FEE. In addition to the Default Rate provided
for above, upon failure of any Borrower Party to deliver any of the financial
statements, reports or
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other information required to be delivered to Lender as provided in Section 5.1
hereof upon their due dates, if any such failure shall continue for ten (10)
Business Days following notice thereof from Lender, Borrowers shall pay to
Lender together with the scheduled monthly payments of principal and interest on
the Loan, for each month or portion thereof that any such financial statement,
report or other information remains undelivered, an administrative fee in the
amount of $2,500. Borrowers agree that such administrative fee (i) is a fair and
reasonable fee necessary to compensate Lender for its additional administrative
costs under the circumstances, (ii) is not a penalty and (iii) is necessary to
compensate Lender for increased costs and obligations to third parties in
connection with the planned Securitization of the Loan.
SECTION 2.3 DEFEASANCE.
(A) TOTAL DEFEASANCE, (i) Borrowers shall have the right at any time after
the Release Date and prior to the First Open Payment Date to obtain a release of
the Lien of the Mortgage encumbering the Properties (a "Total Defeasance") upon
satisfaction of the following conditions:
(a) Borrowers shall provide Lender at least thirty (30) days' prior
written notice (or such shorter period of time if permitted by Lender in
its sole discretion) specifying a date (the "Defeasance Date") on which
Borrower shall have satisfied the conditions in this Section 2.3(A) and on
which it shall effect the Total Defeasance;
(b) Borrowers shall pay to Lender (A) all payments of interest due on
the Loan to and including the Defeasance Date and (B) all other sums, then
due under the Note, this Loan Agreement, the Mortgage and the other Loan
Documents;
(c) Borrowers shall irrevocably deposit the Total Defeasance
Collateral into the Defeasance Collateral Account and otherwise comply with
the provisions of Sections 2.3(C) and (D) hereof;
(d) Borrowers shall execute and deliver to Lender a Security Agreement
in respect of the Defeasance Collateral Account and the Total Defeasance
Collateral;
(e) Borrowers shall deliver to Lender an opinion of counsel for
Borrowers that is customary in commercial lending transactions and subject
only to normal qualifications, assumptions and exceptions opining, among
other things, that (v) Lender has a legal and valid perfected first
priority security interest in the Defeasance Collateral Account and the
Total Defeasance Collateral, (w) if a Securitization has occurred, the
REMIC Trust formed pursuant to such Securitization will not fail to
maintain its status as a "real estate mortgage investment conduit" within
the meaning of Section 860D of the Code as a result of the defeasance
pursuant to this Section 2.3(A), (x) a defeasance pursuant to this Section
2.3(A) will not result in a deemed exchange for purposes of the Code and
will not adversely affect the status of the Note as indebtedness for
federal income tax purposes, (y) delivery of the Total Defeasance
Collateral and the grant of a security interest therein to Lender shall not
constitute an avoidable preference under Section 547 of the Bankruptcy Code
or applicable state law and (z) if and to the extent required by the Rating
Agencies, a non-consolidation opinion with respect to the Successor
Borrower;
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(f) In the event Certificates have been issued in connection with the
Securitization of the Loan, Borrowers shall deliver to Lender a
confirmation in writing from the applicable Rating Agencies to the
effect that the release of the Properties from the Lien of the Mortgage as
contemplated by this Section 2.3(A) and the substitution of the Defeasance
Collateral will not result in a downgrading, withdrawal or qualification of
the respective ratings in effect immediately prior to such defeasance for
the Certificates issued in connection with the Securitization which are
then outstanding;
(g) Borrowers shall deliver an officer's certificate certifying that
the requirements set forth in this Section 2.3(A) have been satisfied;
(h) Borrowers shall deliver a certificate of a nationally recognized
public accounting firm reasonably acceptable to Lender certifying that the
Total Defeasance Collateral will generate monthly amounts equal to or
greater than the Scheduled Defeasance Payments;
(i) Borrowers shall deliver such other certificates, opinions,
documents and instruments as Lender may reasonably request; and
(j) Borrowers shall pay all reasonable costs and expenses of Lender
incurred in connection with the defeasance, including Lender's reasonable
attorneys' fees and expenses and Rating Agency fees and expenses.
(ii) If a Total Defeasance occurs and all of the requirements of this
Section 2.3 have been satisfied, Lender shall execute any and all documents
required to release the Properties from the Lien of the Mortgage and the
Assignment of Leases and the Defeasance Collateral, pledged pursuant to the
Security Agreement, shall be the sole source of collateral securing the Note. In
connection with the release of the Lien, Borrowers shall submit to Lender, not
less than thirty (30) days prior to the Defeasance Date (or such shorter time as
permitted by Lender in its sole discretion), a release of Lien (and related Loan
Documents) for execution by Lender. Such release shall be in a form appropriate
in the jurisdictions in which the Properties are located and contain standard
provisions protecting the rights of a releasing lender. In addition, Borrowers
shall provide all other documentation Lender reasonably requires to be delivered
by Borrowers in connection with such release. Borrowers shall pay all costs,
taxes and expenses associated with the release of the Lien of the Mortgage and
the Assignment of Leases, including Lender's reasonable attorneys' fees. Except
as set forth in this Section 2.3(A), no repayment, prepayment or defeasance of
all or any portion of the Note shall cause, give rise to a right to require, or
otherwise result in, the release of the Lien of the Mortgage on the Properties.
(B) PARTIAL DEFEASANCE. Borrowers shall, as a condition to and only in
connection with a Partial Release of an Individual Property, have the right to
defease a portion of the Loan (a "Partial Defeasance") with respect to (i) one
(1) Individual Property prior to the Release Date as and if permitted as
provided in Section 2.10 below and (ii) after the Release Date and prior to the
First Open Payment Date, with respect to a Partial Release of Individual
Property(ies) as and if permitted as provided in Section 2.10 below, in each
case equal to the Partial Defeasance Amount for such Individual Property subject
to such Partial Release (determined as provided in Section 2.10 with respect to
such Partial Release) upon satisfaction of the following conditions:
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(a) Borrowers shall provide Lender at least thirty (30) days' prior
written notice (or such shorter period of time if permitted by Lender in
its sole discretion) specifying a date (the "Partial Defeasance Date") on
which Borrowers shall have satisfied the conditions in this Section 2.3(B)
and on which it shall effect the Partial Defeasance;
(b) Borrowers shall pay to Lender (A) all payments of interest due on
the Loan to and including the Partial Defeasance Date and (B) all other
sums, then due under the Note, this Loan Agreement, the Mortgage and the
other Loan Documents;
(c) Borrowers shall irrevocably deposit the Partial Defeasance
Collateral into the Defeasance Collateral Account and otherwise comply with
the provisions of Sections 2.3(C) and (D) hereof;
(d) Lender shall prepare (at Borrowers' expense) all necessary
documents to modify this Loan Agreement and to amend and restate the Note
and issue two substitute notes, one note having a principal balance equal
to the Partial Defeasance Amount (the "Defeased Note"), and the other note
having a principal balance equal to the excess of (A) the then-outstanding
principal amount of the Loan, over (B) the amount of the Defeased Note (the
"Undefeased Note"). The Defeased Note and Undefeased Note shall have
identical terms as the Note except for the principal balance and monthly
payments. The Defeased Note and the Undefeased Note shall be cross
defaulted and cross collateralized unless the Rating Agencies shall require
otherwise or unless a Successor Borrower that is not an Affiliate of
Borrower is established pursuant to Section 2.3(D). A Defeased Note may not
be the subject of any further defeasance.
(e) Borrowers shall execute and deliver to Lender a Security Agreement
in respect of the Defeasance Collateral Account and the Partial Defeasance
Collateral;
(f) Borrowers shall deliver to Lender an opinion of counsel for
Borrowers that is customary in commercial lending transactions and subject
only to normal qualifications, assumptions and exceptions opining, among
other things, that (v) Lender has a legal and valid perfected first
priority security interest in the Defeasance Collateral Account and the
Partial Defeasance Collateral, (w) if a Securitization has occurred, the
REMIC Trust formed pursuant to such Securitization will not fail to
maintain its status as a "real estate mortgage investment conduit" within
the meaning of Section 860D of the Code as a result of the defeasance
pursuant to this Section 2.3(B), (x) a defeasance pursuant to this Section
2.3(B) will not result in a deemed exchange for purposes of the Code and
will not adversely affect the status of the Defeased Note and the
Undefeased Note as indebtedness for federal income tax purposes, (y)
delivery of the Partial Defeasance Collateral and the grant of a security
interest therein to Lender shall not constitute an avoidable preference
under Section 547 of the Bankruptcy Code or applicable state law and (z) if
and to the extent required by the Rating Agencies, a non-consolidation
opinion with respect to the Successor Borrower;
(g) In the event Certificates have been issued in connection with the
Securitization of the Loan, Borrowers shall deliver to Lender a
confirmation in writing from the applicable Rating Agencies to the effect
that the Partial Defeasance and the substitution
26
of the Partial Defeasance Collateral will not result in a downgrading,
withdrawal or qualification of the respective ratings in effect immediately
prior to such defeasance for the Certificates issued in connection with the
Securitization which are then outstanding;
(h) Borrowers shall deliver an officer's certificate certifying that
the requirements set forth in this Section 2.3(B) have been satisfied;
(i) Borrowers shall deliver a certificate of a nationally recognized
public accounting firm reasonably acceptable to Lender certifying that the
Partial Defeasance Collateral will generate monthly amounts equal to or
greater than the Scheduled Defeasance Payments;
(j) Borrowers shall deliver such other certificates, opinions,
documents and instruments as Lender may reasonably request; and
(k) Borrowers shall pay all costs and expenses of Lender incurred in
connection with the defeasance, including Lender's reasonable attorneys'
fees and expenses and Rating Agency fees and expenses.
(C) DEFEASANCE COLLATERAL ACCOUNT. On or before the date on which Borrowers
deliver the Total Defeasance Collateral or Partial Defeasance Collateral, as
applicable (the "Defeasance Collateral"), Borrowers or Successor Borrower (as
applicable) shall open at any Eligible Bank the defeasance collateral account
(the "Defeasance Collateral Account") which shall at all times be an Eligible
Account. The Defeasance Collateral Account shall contain only (i) Defeasance
Collateral, and (ii) cash from interest and principal paid on the Defeasance
Collateral. All cash from interest and principal payments paid on the Total
Defeasance Collateral shall be paid over to Lender on each Payment Date and
applied to the monthly installments of principal and interest on the Loan and,
on the Maturity Date, to accrued interest and the principal balance of the Loan.
All cash from interest and principal payments paid on the Partial Defeasance
Collateral shall be paid over to Lender on each Payment Date and applied to the
monthly installments of principal and interest on the Defeased Note and, on the
Maturity Date, to accrued interest and the principal balance of the Defeased
Note. Borrowers shall cause the Eligible Bank at which the Defeasance Collateral
is deposited to enter an agreement with Borrower and Lender, satisfactory to
Lender in its sole discretion, pursuant to which such Eligible Bank shall agree
to hold and distribute the Defeasance Collateral in accordance with this Loan
Agreement. Borrowers (or Successor Borrower, as applicable) shall be the owner
of the Defeasance Collateral Account and shall report all income accrued on
Defeasance Collateral for federal, state and local income tax purposes in its
income tax return. Borrowers shall prepay all costs and expenses associated with
opening and maintaining the Defeasance Collateral Account. Lender shall not in
any way be liable by reason of any insufficiency in the Defeasance Collateral
Account.
(D) SUCCESSOR BORROWER. In connection with a Total Defeasance or Partial
Defeasance under this Section 2.3, Borrowers shall, if required by the Rating
Agencies or if Borrowers so elect or Lender requires, establish or designate a
successor entity (the "Successor Borrower") which shall be a single purpose
bankruptcy remote entity and which shall be approved by the Rating Agencies (if
a Securitization has occurred) or reasonably approved by
27
Lender, if requested by Lender. Any such Successor Borrower may, at Borrowers'
option, be an Affiliate of Borrowers unless the Rating Agencies or Lender shall
require otherwise. Borrowers shall transfer and assign all obligations, rights
and duties under and to the Note or Defeased Note, as applicable, together with
the Total Defeasance Collateral or Partial Defeasance Collateral, as applicable,
to such Successor Borrower. Such Successor Borrower shall assume the obligations
under the Note or the Defeased Note, as applicable, and the Security Agreement
and Borrowers shall be relieved of its obligations under such documents except
to the extent of any cross-collateralization required hereunder and except for
property-related obligations which survive the payment of the Obligations.
Borrowers shall pay $1,000 to any such Successor Borrower as consideration for
assuming the obligations under the Note or the Defeased Note, as applicable, and
the Security Agreement. Borrowers shall pay all reasonable costs and expenses
incurred by Lender, including Lender's reasonable attorney's fees and expenses
incurred in connection therewith, and all fees, expenses and other charges of
the Rating Agencies.
SECTION 2.4 PAYMENTS.
(A) PAYMENTS OF INTEREST AND PRINCIPAL. Borrowers shall make a payment to
Lender of interest only on the Closing Date for the period from the Closing Date
through December 5, 2004. Commencing on January 6, 2005 (the "First Payment
Date") and on the sixth day of each calendar month thereafter (each, with the
First Payment Date, a "Payment Date"), Borrowers shall make monthly payments of
interest accrued on the Principal Balance of the Loan through and including the
date one calendar day prior to such Payment Date (each, a "Monthly Debt Service
Payment"). After an Event of Default, Borrowers irrevocably waive the right to
direct the application of any and all payments at any time hereafter received by
Lender from or on behalf of Borrowers, and Borrowers irrevocably agree that
Lender shall have the continuing exclusive right to apply any and all such
payments against the then due and owing obligations of Borrowers in such order
of priority as Lender may deem advisable. Notwithstanding anything contained
herein to the contrary, Lender shall have the right, to be exercised not more
than once during the term of the Loan, to change the Payment Date to a date
other than the sixth (6th) day of each month, provided such date is later than
the 6th day of each month (a "New Payment Date"), on twenty (20) days prior
written notice to Borrowers, in which case (i) interest shall be paid on the
date the New Payment Date first occurs for the period beginning on sixth (6th)
day of the calendar month in which the New Payment Date first occurs to the New
Payment Date, and on each New Payment Date thereafter for a monthly equivalent
period from the last New Payment Date to the current New Payment Date designated
by Lender at the time the New Payment Date is designated, and (ii) Lender may
designate, at the time the New Payment Date is designated, an extension of the
Scheduled Maturity Date to the New Payment Date occurring in the month in which
the original Scheduled Maturity Date occurs.
(B) DATE AND TIME OF PAYMENT. Borrowers shall receive credit for payments
on the Loan which are transferred to the account of Lender as provided below (i)
on the day that such funds are received by Lender if such receipt occurs by 1:00
p.m. (New York time) on such day, or (ii) on the next succeeding Business Day
after such funds are received by Lender if such receipt occurs after 1:00 p.m.
(New York time). Whenever any payment to be made hereunder shall be stated to be
due on a day that is not a Business Day, the payment may be made on the next
succeeding Business Day.
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(C) MANNER OF PAYMENT. Borrowers promise to pay all of the Obligations
relating to the Loan as such amounts become due or are declared due pursuant to
the terms of this Loan Agreement. All payments by Borrowers on the Loan shall be
made without deduction, defense, set off or counterclaim and in immediately
available funds delivered to Lender by wire transfer (unless otherwise directed
by Lender in writing) to such accounts at such banks as Lender may from time to
time designate.
SECTION 2.5 MATURITY. To the extent not sooner due and payable in accordance
with the Loan Documents, the then outstanding principal balance of the Loan, all
accrued and unpaid interest thereon, and all other sums then owing to Lender
hereunder and under the Note, the Mortgage and the other Loan Documents, shall
be due and payable on the Maturity Date, which shall, subject to earlier
acceleration upon the occurrence of an Event of Default, be the Scheduled
Maturity Date.
SECTION 2.6 PREPAYMENT.
(A) LIMITATION ON PREPAYMENT; PREPAYMENT CONSIDERATION; DUE ON
ACCELERATION. Borrowers shall have no right to prepay the Loan in whole or part
at any time, except as expressly set forth in this provision. Commencing on and
after the First Open Payment Date, Borrower may prepay the Loan in whole, but
not in part, without payment of Prepayment Consideration, provided that (i)
Borrowers shall provide to Lender not less than thirty (30) days' prior written
notice of such prepayment, (ii) together with such prepayment Borrowers also
shall pay all accrued and unpaid interest and all other Obligations and (iii) if
such prepayment occurs on any day other than a Payment Date, then together
therewith Borrowers also shall pay to Lender the amount of interest that would
have accrued on the amount being prepaid from and including the date of such
prepayment to the Payment Date next following the date of prepayment. Borrowers
shall not be required to pay any Prepayment Consideration with respect to an
application of insurance proceeds or condemnation awards by Lender pursuant to
the Loan Agreement or Mortgage in the absence of an Event of Default.
(B) Prepayment Consideration Due. If the Maturity Date shall be accelerated
to a date prior to the Scheduled Maturity Date, or if any prepayment of all or
any portion of the Principal Balance hereunder occurs, whether in connection
with Lender's acceleration of the unpaid Principal Balance of the Loan or in any
other circumstances whatsoever, or if 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, then the Prepayment Consideration shall
become immediately due and owing and Borrowers shall forthwith pay the
Prepayment Consideration to Lender. The foregoing shall not create any right of
prepayment. Borrowers shall have no right whatsoever to prepay all or any
portion of the principal balance of the Note, except as set forth in Section
2.6(A).
(C) Definitions. The following terms shall have the meanings indicated:
The "Prepayment Consideration" shall be the amount equal to the sum of two
percent of the Loan balance at the time of prepayment or the earlier date upon
which the Prepayment Consideration becomes due and owing, plus the excess, if
any, of (A) the amount of the monthly interest which would otherwise be payable
on the principal balance being prepaid from the
29
Payment Date next following the date of prepayment (unless prepayment is
tendered on a Payment Date, in which case from the date of prepayment) or the
earlier date upon which the Prepayment Consideration becomes due and owing; over
(B) the amount of the monthly interest Lender would earn if the principal
balance being prepaid were reinvested for the period from the Payment Date next
following the date of prepayment (unless prepayment is tendered on a Payment
Date, in which case from the date of prepayment) or the earlier date upon which
the Prepayment Consideration becomes due and owing to and including the
Scheduled Maturity Date at the Treasury Rate (as hereinafter defined), such
difference to be discounted to present value at the Treasury Rate.
The "Treasury Rate" shall be the annualized yield on securities issued by
the United States Treasury having a maturity corresponding to the remaining term
to the Scheduled Maturity Date of this Loan Agreement, as quoted in Federal
Reserve Statistical Release [H. 15(519)] under the heading "U.S. Government
Securities - Treasury Constant Maturities" for the Treasury Rate Determination
Date (as defined below), converted to a monthly equivalent yield. If yields for
such securities of such maturity are not shown in such publication, then the
Treasury Rate shall be determined by Lender by linear interpolation between the
yields of securities of the next longer and next shorter maturities. If said
Federal Reserve Statistical Release or any other information necessary for
determination of the Treasury Rate in accordance with the foregoing is no longer
published or is otherwise unavailable, then the Treasury Rate shall be
reasonably determined by Lender based on comparable data.
The term "Treasury Rate Determination Date" shall mean the date which is
five (5) Business Days prior to the scheduled prepayment date or the earlier
date upon which the Prepayment Consideration becomes due and owing. Lender shall
notify Borrowers of the amount and the basis of determination of the required
Prepayment Consideration.
SECTION 2.7 OUTSTANDING BALANCE. The balance on Lender's books and records shall
be presumptive evidence (absent manifest error) of the amounts owing to Lender
by Borrowers; provided that any failure to record any transaction affecting such
balance or any error in so recording shall not limit or otherwise affect
Borrowers' obligation to pay the Obligations.
SECTION 2.8 TAXES. Any and all payments or reimbursements made hereunder or
under the Note shall be made free and clear of and without deduction for any and
all taxes, levies, imposts, deductions, charges or withholdings, and all
liabilities with respect thereto arising out of or in connection with the
transactions contemplated by the Loan Documents (all such taxes, levies,
imposts, deductions, charges or withholdings and all liabilities with respect
thereto excluding taxes imposed on net income in accordance with the following
sentence are referred to herein as "Tax Liabilities"). Notwithstanding the
foregoing, Borrowers shall not be liable for taxes imposed on the net income of
Lender by the jurisdiction under the laws of which Lender is organized or doing
business or any political subdivision thereof and taxes imposed on its net
income by the jurisdiction of Lender's applicable lending office or any
political subdivision thereof or federal income taxes imposed on Lender's net
income. If Borrowers shall be required by law to deduct any such Tax Liabilities
(or amounts in estimation or reimbursement for the same) from or in respect of
any sum payable hereunder to Lender, then the sum payable hereunder shall be
increased as may be necessary so that, after making all required deductions,
30
Lender receives an amount equal to the sum it would have received had no such
deductions been made.
SECTION 2.9 REASONABLENESS OF CHARGES. Borrower Parties agree that (i) the
actual costs and damages that Lender would suffer by reason of an Event of
Default (exclusive of the attorneys' fees and other costs incurred in connection
with enforcement of Lender's rights under the Loan Documents) or a prepayment
would be difficult and needlessly expensive to calculate and establish, and (ii)
the amounts of the Default Rate, the late charges, and the Prepayment
Consideration are reasonable, taking into consideration the circumstances known
to the parties at this time, and (iii) such Default Rate and late charges and
Lender's reasonable attorneys' fees and other costs and expenses incurred in
connection with enforcement of Lender's rights under the Loan Documents shall be
due and payable as provided herein, and (iv) such Default Rate, late charges,
Prepayment Consideration, and the obligation to pay Lender's reasonable
attorneys' fees and other enforcement costs do not, individually or
collectively, constitute a penalty.
SECTION 2.10 PARTIAL RELEASES. At any time after the Release Date (except as
otherwise set forth in Section 2.10(B) below) and prior to the First Open
Payment Date, and provided no Event of Default exists, Borrower may from time to
time obtain a partial release from the lien of the Mortgage and the Loan
Documents of one or more Individual Properties, and a release of the individual
Borrower which owns such Individual Property from the Loan Documents (the
"Partial Release Borrower"), provided that all of the following conditions
precedent have been satisfied with respect to any such Partial Release of any
such Individual Property:
(A) No Partial Release will be permitted if any Event of Default has
occurred and is continuing.
(B) No Partial Release will be permitted until after the Release Date,
provided, if no Event of Default exists and is continuing, Borrowers may request
the Partial Release of one (1) Individual Property (excluding the Clayton Place
Property) prior to the Release Date (but after the one hundred eightieth (180th)
day after the Closing Date) so long as Borrowers comply with all other terms and
provisions of this Section 2.10. No Partial Release will be permitted on or
after the First Open Payment Date.
(C) A Partial Release of no more than two (2) Individual Properties will be
permitted in any twelve (12) month period. A Partial Release of no more than
five (5) Individual Properties in the aggregate shall be permitted during the
term of the Loan. For purposes of determining the number of Partial Releases in
any given time period, Borrowers acknowledge that a Partial Release involving
the Clayton Place Property shall constitute two (2) Individual Properties.
(D) No Partial Release of an Individual Property will be permitted unless
the Debt Service Coverage Ratio for the remainder of the Individual Properties
is equal to or greater than 1.25:1.00;
(E) Following such Partial Release, the Borrowers (other than the Partial
Release Borrower) and the Sole Member shall not have any ownership interest in,
and shall have no obligations or liabilities with respect to the Individual
Property subject to the Partial Release, and
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the Borrowers shall execute an amendment to the Contribution Agreement in form
and substance satisfactory to Lender which excludes the Partial Release Borrower
from such agreement and the application thereof; '
(F) Borrowers will on the date of the Partial Release (the "Partial Release
Date") complete a Partial Defeasance, pursuant to Section 2.3 hereof, of a
portion of the Loan (the "Partial Defeasance Amount" for the Individual Property
subject to the Partial Release) equal to 115% of the Allocated Senior Loan
Amount for the Individual Property subject to the Partial Release;
(G) Borrowers will execute (and Guarantor and Environmental Indemnitor will
consent in writing thereto and reaffirm their obligations under the Loan
Documents to which they are a party notwithstanding the Partial Release) and
deliver all such amendments to the Loan Documents and other instruments or
documents as may be reasonably required by Lender (using commercial standards
customarily applied with respect to mortgage loans such as the Loan) in order to
accomplish the Partial Release and continue to fully protect Lender's rights and
remedies under the Loan Documents with respect to the remaining Borrower and
Lender's lien and security interest in the remainder of the Properties.
(H) Intentionally Omitted.
(I) Borrowers shall pay for the costs of preparing and recording partial
releases, UCC-3 releases, and any loan modification documents, easements,
declarations, and/or restrictive covenants required by Lender, Lender's
reasonable attorneys' fees and costs, all survey charges and costs, all title
premiums and costs, documentary stamps incurred in connection with the release
of the Release Parcel in accordance with the requirements contained herein, and
all other reasonable out-of-pocket costs, fees, and expenses incurred by Lender
in connection with the requested release of the Release Parcel.
(J) If requested by Lender, Borrowers shall have provided Lender with a
Rating Confirmation with respect to the Partial Release if a Securitization has
occurred or is reasonably anticipated to occur within four (4) months of such
Partial Release.
(K) All conditions for a Partial Release under the Mezzanine Loan Documents
have been satisfied (or waived by Mezzanine Lender) and the release price
required under the Mezzanine Loan Documents for the Individual Property subject
to the Partial Release shall have been simultaneously paid to Mezzanine Lender.
(L) Borrowers shall pay Lender's reasonable costs and expenses in
connection with the Partial Release, as set forth below.
(M) Notwithstanding anything contained in this Loan Agreement to the
contrary, upon the occurrence of a Partial Release in accordance with the terms
and provisions of this Section 2.10, the term Borrowers shall be modified to
exclude the Partial Release Borrower, Individual Property and/or other Person(s)
subject to the Partial Release.
All reasonable costs and expenses incurred by Lender in connection
with such request for a Partial Release, including, but not limited to, the
preparation, negotiation and
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review of any and all materials required to be provided in connection therewith
(including Lender's reasonable attorneys' fees and expenses) shall be reimbursed
by Borrowers upon demand, regardless of whether a Partial Release occurs.
ARTICLE III
CONDITIONS TO LOAN
SECTION 3.1 CONDITIONS TO FUNDING OF THE LOAN ON THE CLOSING DATE. The
obligations of Lender to fund the Loan are subject to the prior or concurrent
satisfaction or waiver of the conditions set forth below, and to satisfaction of
any other conditions specified herein or elsewhere in the Loan Documents. Where
in this Section any documents, instruments or information are to be delivered to
Lender, then the condition shall not be satisfied unless the same shall be in
form and substance satisfactory to Lender.
(A) LOAN Documents. On or before the Closing Date, Borrowers shall execute
and deliver and cause to be executed and delivered to Lender all of the Loan
Documents, each, unless otherwise noted, of even date herewith, duly executed,
in form and substance satisfactory to Lender and in quantities designated by
Lender (except for the Note, of which only one shall be signed), which Loan
Documents shall become effective upon the Closing.
(B) ORIGINATION FEES AND DEPOSITS. At the Closing and retained from the
proceeds of the Loan, Lender shall have received all of the deposits required
herein, including without limitation, the initial deposits into the Reserves and
Accounts (and at Borrowers' option, the same may be made from the proceeds of
the Loan).
(C) PERFORMANCE OF AGREEMENTS, TRUTH OF REPRESENTATIONS AND WARRANTIES.
Each Borrower Party and all other Persons executing any agreement on behalf of
any Borrower Party shall have performed in all material respects all agreements
which this Loan Agreement provides shall be performed on or before the Closing
Date. The representations and warranties contained herein and in the other Loan
Documents shall be true, correct and complete in all material respects on and as
of the Closing Date.
(D) CLOSING CERTIFICATE. On or before the Closing Date, Lender shall have
received certificates of even date herewith executed on behalf of Borrowers by
the chief financial officer (or similar officer of each Borrower) truly and
correctly stating that, to such Person's knowledge: (i) on such date, no Default
or Event of Default has occurred and is continuing; (ii) no material adverse
change in the financial condition or operations of the business of any Borrower,
Guarantor, Environmental Indemnitor, any principal of any Borrower, the
Properties and no material adverse change in the projected cash flow of any
Borrower or any Individual Property has occurred since the delivery to Lender of
any financial statements, budgets, proformas, or similar materials (or if there
has been any change, specifying such change in detail), and that such materials
delivered to Lender are true and materially complete and fairly represent the
financial condition of Borrowers, Guarantor, Environmental Indemnitor and any
principal of any Borrower and the cash flow of the Properties; (iii) the
representations and warranties set forth in this Loan Agreement are true and
correct in all material respects on and as of such date with the
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same effect as though made on and as of such date (or if any such
representations or warranties require qualification, specifying such
qualification in detail); and (iv) there are no material adverse facts or
conditions concerning the Properties, Guarantor, Environmental Indemnitor and
any principal, of any Borrower or any Borrower Party that have not been
disclosed to Lender.
(E) OPINIONS OF COUNSEL. On or before the Closing Date, Lender shall have
received from legal counsel for Borrowers, Sole Member, Guarantor and
Environmental Indemnitor reasonably satisfactory to Lender, such counsel's
written opinion as to such matters as Lender shall reasonably request, including
opinions to the effect that (i) each of the Borrower Parties is duly formed,
validly existing, and in good standing in its state of organization and, in the
case of Borrowers, in the state where the Properties are located, (ii) this Loan
Agreement and the Loan Documents have been duly authorized, executed and
delivered and are enforceable in accordance with their terms subject to
customary qualifications for bankruptcy and general equitable principles; and
(iii) Borrowers would not be consolidated in bankruptcies of its Sole Member,
Manager or certain other Affiliates of Borrowers specified by Lender. Also on or
before the Closing Date, Lender shall have received an opinion of Borrowers'
local counsel in the state where the Properties are located as to the
enforceability of the Mortgage and such other matters as Lender may reasonably
request.
(F) TITLE POLICY. On or before the Closing Date, Lender shall have received
and approved the pro forma Title Policy for each of the Properties, and as of
the Closing, the Title Company shall be irrevocably committed and prepared
immediately to issue the Title Policy. The Title Policy shall be in form and
substance satisfactory to Lender. Without limitation, Lender may reasonably
require that the Title Policy be issued on the 1970 ALTA form by the Title
Company, together with such reinsurance and direct access agreements as Lender
may require, insuring that each Mortgage is a valid first and prior enforceable
lien on the applicable Individual Property encumbered thereby (including any
easements appurtenant thereto) subject only to such exceptions to coverage as
are acceptable to Lender. The Title Policy shall contain such endorsements as
Lender may require (to the extent available in the state where such Properties
are located) in form reasonably acceptable to Lender, including deletion of the
creditors' rights exception and affirmative endorsement coverage for creditors'
rights risks.
(G) SURVEY. Lender shall have received a survey for each of the Properties,
certified to Lender and its successors, assigns and designees and to the Title
Company by a surveyor reasonably satisfactory to Lender (the "Survey"). The
Survey shall contain the minimum detail for land surveys as most recently
adopted by ALTA/ASCM, shall comply with Lender's survey requirements and shall
contain Lender's standard form certification. The Survey shall show no state of
facts or conditions reasonably objectionable to Lender.
(H) ZONING. On or before the Closing Date, Lender shall have received
evidence reasonably satisfactory to Lender as to the zoning and subdivision
compliance of each of the Properties.
(I) CERTIFICATES OF FORMATION AND GOOD STANDING. On or before the Closing
Date, Lender shall have received copies of the organizational documents and
filings of each Borrower Party, together with good standing certificates (or
similar documentation) (including verification of tax status if available) from
the state of its formation, from the state in which its principal
34
place of business is located, and from all states in which the laws thereof
require such Person to be qualified and/or licensed to do business (including
without limitation, the state in which the Individual Property is located for
each Borrower). Each such certificate shall be dated not more than thirty (30)
days prior to the Closing Date, as applicable, and certified by the applicable
Secretary of State or other authorized governmental entity. In addition, on or
before the Closing Date the secretary or corresponding officer of each Borrower
Party, or the secretary or corresponding officer of the partner, trustee, or
other Person as required by such Borrower Party's organizational documents (as
the case may be, the "Borrower Party Secretary") shall have delivered to Lender
a certificate stating that the copies of the organizational documents as
delivered to Lender are true and complete and are in full force and effect, and
that the same have not been amended except by such amendments as have been so
delivered to Lender.
(J) CERTIFICATES OF INCUMBENCY AND RESOLUTIONS. On or before the Closing
Date, Lender shall have received certificates of incumbency and resolutions of
each Borrower Party and its constituents as requested by Lender, approving and
authorizing the Loan and the execution, delivery and performance of the Loan
Documents, certified as of the Closing Date by the Borrower Party Secretary as
being in full force and effect without modification or amendment.
(K) FINANCIAL STATEMENTS. On or before the Closing Date, Lender shall have
received such financial statements and other financial information as shall be
satisfactory to Lender for each Borrower Party and for each of the Properties.
All such financial statements shall be certified to Lender by the applicable
Borrower Party (through its chief financial officer), which certification shall
be in form and substance reasonably satisfactory to Lender.
(L) AGREEMENTS. On or before the Closing Date, Lender shall have received
copies of all material operating agreements, service contracts and equipment
leases, if any, relating to Borrowers' ownership and operation of the
Properties.
(M) MANAGEMENT AGREEMENT. On or before the Closing Date, Lender shall have
received copies of the existing Management Agreement and any leasing brokerage
agreements pertaining to the Properties and the Assignment of Management
Agreement, duly executed by current Manager and Borrowers.
(N) OPERATING AND CAPITAL EXPENDITURE BUDGETS. On or before the Closing
Date, Lender shall have received and reasonably approved the Operating Budget
and Capital Expenditure Budget for each Individual Property for the remainder of
the current calendar year. The budgets for the calendar year 2004, copies of
which are attached hereto as Schedule 3.1(N), are hereby approved.
(O) RENT ROLLS, LEASES, ESTOPPELS. Prior to the Closing, Lender shall have
received from the Borrowers a certified copy of the current rent roll (the "Rent
Roll") for each of the Properties in form and substance satisfactory to Lender.
The Rent Roll shall constitute a true, correct, and complete list of each and
every Lease for the Properties, together with all extensions and amendments
thereof, and shall accurately and completely disclose all annual and monthly
rents payable by all tenants, including expiration dates of the Leases, and the
amount of any Security Deposit being held by any Borrower under each Lease, if
any.
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(P) LICENSES, PERMITS AND APPROVALS. On or before Closing Date, Lender
shall have received copies of the final, unconditional certificates of occupancy
issued with respect to each of the Properties, together with all other
applicable licenses, permits and approvals required for the Borrowers to own,
use, occupy, operate and maintain the Properties.
(Q) INSURANCE POLICIES AND ENDORSEMENTS. On or before the Closing Date,
Lender shall have received copies of insurance policies required to be
maintained under this Loan Agreement and the other Loan Documents and
certificates of insurance dated not more than twenty (20) days prior to the
Closing Date evidencing such insurance coverages, together with endorsements
reasonably satisfactory to Lender naming Lender as an additional insured and
loss payee, as required by Lender, under such policies. In addition, as to any
insurance matters arising under Environmental Laws or pertaining to any
environmental insurance that Borrowers maintain with respect to the Properties,
the same shall be endorsed to Lender as required by Lender.
(R) ENVIRONMENTAL ASSESSMENT. Lender shall have received and approved an
Environmental Report prepared or updated not later than sixty (60) days prior to
the Closing Date, relating to each of the Properties, together with a letter
from the preparer thereof entitling Lender and its successors and assigns to
rely upon said Environmental Report (if same is not addressed to Lender).
(S) PROPERTY CONDITION REPORTS. On or before the Closing Date, Lender shall
have received property condition report(s) for each of the Properties addressed
to Lender and its successors and assigns, which shall be prepared by an engineer
or other consultant reasonably satisfactory to Lender and otherwise shall be in
form and substance satisfactory to Lender in its sole discretion (the "Property
Condition Report(s)"). Such reports shall set forth any items of deferred
maintenance at any of the Properties.
(T) APPRAISALS. On or before the Closing Date, Lender shall have received
an independent appraisal of each of the Properties from a state certified
appraiser engaged by Lender, dated not more than sixty (60) days prior to the
Closing Date, which indicates a fair market value of such Individual Property
which would reflect a loan-to-value ratio for the Loan acceptable to Lender, and
is otherwise satisfactory to Lender in its sole discretion in all respects. Each
such appraisal shall conform in all respects to the criteria for appraisals set
forth in the Financial Institutions Reform and Recovery Act of 1989 and the
regulations promulgated thereunder (as if Lender were an institution under the
jurisdiction thereof) and the Uniform Standards of Professional Appraisal
Practices of the Appraisal Foundation.
(U) SEARCHES. Prior to the Closing Date Lender shall have received
certified copies of Uniform Commercial Code, judgment, tax lien, bankruptcy and
litigation search reports with respect to all Borrower Parties satisfactory to
Lender, all dated not more than thirty (30) days prior to the Closing Date.
(V) DOCUMENTATION REGARDING APPLICATION OF PROCEEDS. Prior to the Closing
Date, Lender shall have received payoff demand letters and wiring instructions
from each lender or other obligee of any existing indebtedness which is required
to be repaid pursuant to this Loan
36
Agreement and by Borrowers regarding the application of any remaining available
proceeds of the Loan.
(W) LEGAL FEES; CLOSING EXPENSES. Borrowers shall have paid any and all
reasonable legal fees and expenses of counsel to Lender, together with all
recording fees and taxes, title insurance premiums, appraisal reports,
environmental inspection reports, Property Condition Report(s), Lender's site
inspection and processing fee, and other reasonable costs and expenses related
to the Closing.
(X) OTHER REVIEW. Lender shall have completed all other review of
Borrowers, the Borrower Parties, the Properties, and such other items as it
reasonably determines relevant, and shall have determined based upon such review
to fund the Loan. Borrower Parties shall have satisfied such other reasonable
criteria as Lender may reasonably specify.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
In order to induce Lender to enter into this Loan Agreement and to make the
Loan, Borrowers represent and warrant to Lender that the statements set forth in
this Article IV, after giving effect to the Closing, will be, true, correct and
complete in all material respects as of the Closing Date.
SECTION 4.1 ORGANIZATION, POWERS, CAPITALIZATION, GOOD STANDING, BUSINESS.
(A) ORGANIZATION AND POWERS. Borrowers are each a limited liability
company, duly organized, validly existing and in good standing under the laws of
the State of Delaware. Sole Member is a limited liability company, duly
organized, validly existing and in good standing under the laws of the State of
Delaware. Borrowers have all requisite power and authority to own and operate
its properties, to carry on their business as now conducted and proposed to be
conducted, and to enter into each Loan Document to which it is a party and to
perform the terms thereof.
(B) QUALIFICATION. Each Borrower is duly qualified and in good standing in
the state of its formation and in the state where the Individual Property owned
by it is located.
(C) ORGANIZATION. The organizational chart set forth as Schedule 4.1(C)
accurately sets forth the direct and indirect ownership structure of the
Borrowers.
SECTION 4.2 AUTHORIZATION OF BORROWING, ETC.
(A) AUTHORIZATION OF BORROWING. Borrowers have the power and authority to
incur the Indebtedness evidenced by the Note. The execution, delivery and
performance by each Borrower Party of each of the Loan Documents to which it is
a party and the consummation of the transactions contemplated thereby have been
duly authorized by all necessary limited liability company, partnership, trust,
corporate or other action, as the case may be.
(B) NO CONFLICT. The execution, delivery and performance by each Borrower
Party of the Loan Documents to which it is a party and the consummation of the
transactions
37
contemplated thereby do not and will not: (1) violate (x) any provision of law
applicable to any Borrower Party; (y) the partnership agreement, certificate of
limited partnership, certificate of incorporation, bylaws, declaration of trust,
certificate of organization, operating agreement or other organizational
documents, as the case may be, of each Borrower Party; or (z) any order,
judgment or decree of any court or other agency of government binding on any
Borrower Party or any of its Affiliates; (2) conflict with, result in a breach
of or constitute (with due notice or lapse of time or both) a default under any
Contractual Obligation of any Borrower Party or any of its Affiliates; (3)
result in or require the creation or imposition of any material Lien (other than
the Lien of the Loan Documents) upon any Individual Property or assets of any
Borrower Party or any of its Affiliates; or (4) require any approval or consent
of any Person under any Contractual Obligation of any Borrower Party.
(C) GOVERNMENTAL CONSENTS. The execution, delivery and performance by each
Borrower Party of the Loan Documents to which it is a party, and the
consummation of the transactions contemplated thereby do not and will not
require any registration with, consent or approval of, or notice to, or other
action to, with or by, any federal, state or other governmental authority or
regulatory body except for the recording of the Mortgage and filings and
recordings required in connection with the creation or perfection of any other
security interests with respect to the Collateral granted under this Loan
Agreement or any of the other Loan Documents.
(D) BINDING OBLIGATIONS. This Loan Agreement is, and the Loan Documents,
including the Note, when executed and delivered will be, the legally valid and
binding obligations of each Borrower Party, as applicable, enforceable against
the Borrower Parties, as applicable, in accordance with their respective terms,
subject to bankruptcy, insolvency, moratorium, reorganization and other similar
laws affecting creditor's rights generally. No Borrower Party has any defense or
offset to any of its obligations under the Loan Documents. No Borrower Party has
any claim against Lender or any Affiliate of Lender.
SECTION 4.3 FINANCIAL STATEMENTS. All financial statements concerning the
Borrowers, Sole Member, their respective Affiliates, Guarantor, Environmental
Indemnitor and the Properties which have been or will hereafter be furnished by
or on behalf of Borrowers to Lender pursuant to this Loan Agreement have been or
will be prepared in accordance with GAAP consistently applied (except as
disclosed therein) and do (or will, as to those statements that are not yet due)
present fairly the financial condition of the Persons covered thereby as at the
dates thereof and the results of their operations for the periods then ended.
Since the date of the most recent financial statements of Borrowers, Sole
Member, their respective Affiliates, Guarantor, Environmental Indemnitor and the
Properties delivered to Lender, there has been no material adverse change in the
financial condition, operations or business of the Borrower Parties or the
Properties from that set forth in said financial statements.
SECTION 4.4 INDEBTEDNESS AND CONTINGENT OBLIGATIONS. As of the Closing,
Borrowers have no Indebtedness or Contingent Obligations other than the
Obligations and any other Indebtedness expressly permitted under Section 5.17 of
this Loan Agreement.
SECTION 4.5 TITLE TO PROPERTY. Each Borrower has good marketable and insurable
fee simple title to the Individual Property owned by such Borrower, free and
clear of all Liens except for Permitted Encumbrances. Each Borrower owns and
will own at all times all personal property
38
relating to the Individual Property owned by such Borrower other than personal
property which is leased by such Borrower (as to which such Borrower has valid
leasehold title) or owned by tenants of such Individual Property and not used or
necessary for the operation of such Individual Property), subject only to
Permitted Encumbrances. There are no pending proceedings in condemnation or
eminent domain affecting any of the Properties, and to the knowledge of
Borrowers, none is threatened. No Person has any option or other right to
purchase all or any portion of any of the Properties or any interest therein.
There are no mechanic's, materialman's or other similar liens or claims which
have been filed for work, labor or materials affecting any of the Properties
which are or may be liens prior to, or equal or coordinate with, the lien of the
Mortgage. None of the Permitted Encumbrances, individually or in the aggregate,
materially interfere with the benefits of the security intended to be provided
by the Mortgage and this Loan Agreement, materially and adversely affect the
value of the Properties, impair the use or operations of the Properties or
impair Borrowers' ability to pay its obligations in a timely manner.
SECTION 4.6 ZONING; COMPLIANCE WITH LAWS. The Properties are zoned for use as
student housing and residential facilities and all related uses consistent with
the current use of the Properties, which zoning designation is in full force and
effect, and is beyond all applicable appeal periods. The Properties and the use
thereof complies in all material respects with all applicable zoning,
subdivision and land use laws, regulations and ordinances, all applicable
health, fire, building codes, parking laws and all other laws, statutes, codes,
ordinances, rules and regulations applicable to the Properties, including
without limitation the Americans with Disabilities Act. To the knowledge of
Borrowers, there are no illegal activities relating to controlled substances on
the Properties. All certificates of occupancy or the equivalent, and all other
required permits, licenses and certificates for the lawful use and operation of
the Properties have been obtained and are current and in full force and effect.
In the event that all or any part of the Improvements located on any of the
Properties are destroyed or damaged, said Improvements can be legally
reconstructed to their condition prior to such damage or destruction, and
thereafter exist for the same use without violating any zoning or other
ordinances applicable thereto and without the necessity of obtaining any
variances or special permits, other than customary demolition, building and
other construction related permits. No legal proceedings are pending or, to the
knowledge of Borrowers, threatened with respect to the zoning of the Properties.
Neither the zoning nor any other right to construct, use or operate the
Properties is in any way dependent upon or related to any real estate other than
the Properties. No tract map, parcel map, condominium plan, condominium
declaration, or plat of subdivision will be recorded by Borrowers with respect
to any of the Properties without Lender's prior written consent
SECTION 4.7 LEASES; AGREEMENTS.
(A) LEASES; AGREEMENTS. Borrowers have delivered and/or made available to
Lender true, complete and fully executed copies of all (i) Leases and (ii)
material contracts and agreements affecting the operation and management of the
Properties, including, without limitation, the existing Management Agreement,
any leasing brokerage agreement and any service and maintenance contracts and
such Leases, contracts and agreements have not been modified or amended except
pursuant to amendments or modifications delivered to Lender. Except for the
rights of the current Manager pursuant to the existing Management Agreement, no
Person has any right or obligation to manage the Properties or to receive
compensation in
39
connection with such management. Except for the parties to any leasing brokerage
agreement that has been delivered to Lender, no Person has any right or
obligation to lease or solicit tenants for the Properties, or to receive
compensation in connection with such leasing.
(B) RENT ROLL; DISCLOSURE. A true and correct copy of the Rent Roll has
been provided to Lender and except for the Leases described in the Rent Roll the
Properties are not subject to any Leases. Except as specified in the Rent Roll:
(i) the Leases are in full force and effect; (ii) neither Borrowers nor any
Affiliate of any Borrower, has given any notice of default to any tenant under
any Lease which remains uncured; (iii) no tenant has asserted in writing any
rights of set off or defenses or material claims under any Lease and no tenant
has any such rights of set off, claim or defense to the enforcement of any Lease
except as expressly set forth in the Leases; (iv) other than delinquencies and
non-payments of less than 30 days, no tenant is in arrears in the payment of
rent, additional rent or any other material charges due under any Lease, or, to
the knowledge of Borrowers, is in default in the performance of any other
obligations under the applicable Lease; (v) Borrowers have completed all work or
alterations required to be completed by the landlord or lessor under each Lease
as of the date hereof, and all of the other obligations of landlord or lessor
under the Leases required to be completed as of the date hereof, have been
performed; (vi) there are no rent concessions (whether in form of cash
contributions, work agreements, assumption of an existing tenant's other
obligations, or otherwise) or extensions of time whatsoever not reflected in the
Rent Roll, excluding student referral fees, move-in discounts or promotional
discounts provided by Borrowers in the ordinary course of business which are not
material in amount or frequency; (vii) no tenant has an option to terminate its
respective Lease and (viii) to the best of Borrowers' knowledge, no bankruptcy
or insolvency proceeding has been commenced (and is continuing) by or against
any tenant under any Lease. The Security Deposits held by Lender with respect to
each Lease is as set forth on the Rent Roll.
(C) LEASE ISSUES. There are no legal proceedings commenced (or, to the
knowledge of the Borrowers, threatened) against Borrowers or any Affiliate
thereof by any tenant or former tenant. No rental in excess of twelve month's
rent has been prepaid under any of the Leases (except for Security Deposits and
estimated additional rent amounts paid on account of operating expenses, taxes
and other expense escalations or pass-throughs), and Prepaid Rents are not in
excess of 10% of the total annual rents at the Properties. The Prepaid Rents set
forth on Schedule 6.8 are true, accurate and complete. Each of the Leases is
valid and binding on the parties thereto in accordance with its terms.
SECTION 4.8 CONDITION OF PROPERTY. Except for those matters identified as
immediate repairs in the Property Condition Report(s) for the Properties
delivered to Lender, all Improvements at the Properties including, without
limitation, the roof and all structural components, plumbing systems, HVAC
systems, fire protection systems, electrical systems, equipment, elevators,
exterior doors, parking facilities, sidewalks and landscaping are in good
condition and repair, normal wear and tear excepted. To Borrowers' knowledge,
there is no latent or, except as identified on the Property Condition Reports as
immediate repairs, patent structural or other material defect or deficiency in
the Properties. City water supply, storm and sanitary sewers, and electrical,
gas (to the extent applicable) and telephone facilities are available to the
Properties within the boundary lines (or through valid irrevocable easements) of
such Individual Property, are fully connected to the Improvements and are fully
operational, are sufficient to meet the
40
reasonable needs of such Individual Property as now used or presently
contemplated to be used, and no other utility facilities are necessary to meet
the reasonable needs of such Individual Property as now used or presently
contemplated. The design and as-built conditions of each of the Properties are
such that surface and storm water does not accumulate on any of the Properties
(except in facilities specifically designed for the same) and does not drain
from the Properties across land of adjacent property owners except pursuant to
easements benefiting such affected Individual Property which are specified in
and insured under the Title Policy. Except as shown on the Surveys delivered to
the Lender prior to the Closing, no part of any of the Properties is within a
flood plain and, with the exception of Permitted Encumbrances which are insured
by endorsement to the Title Policy, none of the Improvements create encroachment
over, across or upon the Properties' boundary lines, rights of way or easements,
and no building or other improvements on adjoining land create such an
encroachment. Access to the Properties for the current and contemplated uses
thereof is provided by means of dedicated, all weather public roads and streets
which are physically and legally open for use by the public. Any liquid or solid
waste disposal, septic or sewer system located at the Properties is in good and
safe condition and repair and in compliance with all applicable law. The
Properties are in compliance in all material respects with all laws,
governmental regulations and requirements including, but not limited to, matters
of sanitation, health, fire and other hazards.
SECTION 4.9 LITIGATION; ADVERSE FACTS. There are no judgments outstanding
against any Borrower Party, or affecting any of the Properties or any property
of any Borrower Party, nor is there any action, charge, claim, demand, suit,
proceeding, petition, governmental investigation or arbitration now pending or,
to Borrowers' knowledge after due inquiry, threatened against any Borrower Party
or affecting the Properties.
SECTION 4.10 PAYMENT OF TAXES. All federal, state and local tax returns and
reports of each Borrower Party required to be filed have been timely filed, and
all taxes, assessments, fees and other governmental charges (including any
payments in lieu of taxes) upon such Person and upon its properties, assets,
income and franchises which are due and payable have been paid when due and
payable, except for those taxes which are being contested in good faith by
appropriate proceedings and for which adequate reserves have been established.
Except as otherwise disclosed in writing to Lender, there is not presently
pending (and to the Borrowers' knowledge, there is not contemplated) any special
assessment against any Individual Property or any part thereof. No tax liens
have been filed and to the knowledge of Borrower Parties, no claims are being
asserted with respect to any such taxes. The charges, accruals and reserves on
the books of Borrower Parties in respect of any taxes or other governmental
charges are in accordance with GAAP.
SECTION 4.11 ADVERSE CONTRACTS. Except for the Loan Documents, none of the
Borrower Parties is a party to or bound by, nor is any property of such Person
subject to or bound by, any contract or other agreement which restricts such
Person's ability to conduct its business in the ordinary course or, either
individually or in the aggregate, has a Material Adverse Effect or could
reasonably be expected to have a Material Adverse Effect.
SECTION 4.12 PERFORMANCE OF AGREEMENTS. No Borrower Party is in default in the
performance, observance or fulfillment of any of the material obligations,
covenants or conditions contained in any Contractual Obligation of any such
Person beyond any applicable
41
notice and cure period, and no condition exists that, with the giving of notice
or the lapse of time or both, would constitute such a default.
SECTION 4.13 GOVERNMENTAL REGULATION. No Borrower Party is subject to regulation
under the Public Utility Holding Company Act of 1935, the Federal Power Act or
the Investment Company Act of 1940 or to any federal or state statute or
regulation limiting its ability to incur indebtedness for borrowed money.
SECTION 4.14 EMPLOYEE BENEFIT PLANS. Neither any Borrower nor Sole Member
maintains or contributes to, or has any obligation (including a contingent
obligation) under, any Employee Benefit Plans.
SECTION 4.15 BROKER'S FEES. Except for the fee paid to Blue Vista Capital on or
before the date hereof, no broker's or finder's fee, commission or similar
compensation will be payable by or pursuant to any contract or other obligation
of any Borrower Party with respect to the making of the Loan or any of the other
transactions contemplated hereby or by any of the Loan Documents. Borrowers
shall indemnify, save harmless and defend Lender from and against all claims for
brokers' or finders' fees and commissions by, through or against Borrowers or
any Borrower Party in connection with the Loan, with such indemnity to include
Lender's cost for reasonable attorneys' fees.
SECTION 4.16 ENVIRONMENTAL COMPLIANCE.
(A) NO ENVIRONMENTAL CLAIMS. There are no claims, liabilities,
investigations, litigation, administrative proceedings, pending or, to
Borrowers' knowledge, threatened, or judgments, liens or orders relating to any
Hazardous Materials (collectively, "Environmental 'Claims") asserted or, to
Borrowers' knowledge, threatened against any Borrower or relating to any of the
Properties. Except as disclosed in the Environmental Reports delivered to Lender
prior to Closing, none of the Borrower Parties nor, to Borrowers' knowledge
after due inquiry, any other Person has caused or permitted any Hazardous
Material to be used, generated, reclaimed, transported, released, treated,
stored or disposed of in a manner which could form the basis for an
Environmental Claim against Borrowers or relating to any of the Properties.
Additionally, but without limitation of the foregoing, no liens are presently
recorded with the appropriate land records under or pursuant to any
Environmental Law with respect to the Properties and no Governmental Authority
has been taking or is in the process of taking any action that could subject any
of the Properties to Liens under any Environmental Law. There have been no
environmental investigations, studies, audits, reviews or other analyses
conducted by or that are in the possession of Borrowers or their Affiliates in
relation to any of the Properties which have not been made available to Lender.
(B) STORAGE OF HAZARDOUS MATERIALS. Except as disclosed in the
Environmental Report delivered to Lender prior to Closing, and except for
materials customarily used or stored in connection with operation and management
of properties similar to the Properties, which materials at the Properties exist
only in reasonable quantities and are stored, contained, transported, used,
released, and disposed of reasonably and without violation of any Environmental
Laws, to Borrowers' knowledge after due inquiry, no Hazardous Materials are or
were stored or otherwise located, and no underground storage tanks or surface
impoundments are
42
or were located, on the Properties, or to the knowledge of Borrowers after due
inquiry, on adjacent parcels of real property, and no part of the property, or
to Borrowers' knowledge no part of such adjacent parcels of real property,
including the groundwater located therein or thereunder, is presently
contaminated by Hazardous Materials. Except as disclosed in the Environmental
Report, to the knowledge of the Borrowers, none of the Properties is listed by
any Governmental Authority as containing any Hazardous Materials. Without
limiting the generality of the foregoing, there is not present at, on, in or
under any of the Properties, PCB-containing equipment, asbestos or asbestos
containing materials, underground storage tanks or surface impoundments for
Hazardous Substances, lead in drinking water (except in concentrations that
comply with all Environmental Laws), or lead based paint.
(C) COMPLIANCE WITH ENVIRONMENTAL LAWS. Except as may be set forth in the
Environmental Report, Borrowers have been and are currently in compliance in all
material respects with all applicable Environmental Laws, including obtaining
and maintaining in effect all permits, licenses or other authorizations required
by applicable Environmental Laws.
SECTION 4.17 SOLVENCY. Borrowers (a) have not entered into the transaction or
any Loan Document with the actual intent to hinder, delay, or defraud any
creditor and (b) have received reasonably equivalent value in exchange for its
obligations under the Loan Documents. Giving effect to the Loan, the fair
saleable value of Borrowers' assets exceeds and will, immediately following the
making of the Loan, exceed Borrowers' total liabilities, including, without
limitation, subordinated, unliquidated, disputed and Contingent Obligations. The
fair saleable value of Borrowers' assets is and will, immediately following the
making of the Loan, be greater than Borrowers' probable liabilities, including
the maximum amount of its Contingent Obligations on its debts as such debts
become absolute and matured. Borrowers' assets do not and, immediately
following the making of the Loan will not, constitute unreasonably small capital
to carry out its business as conducted or as proposed to be conducted. Borrowers
do not intend to, and do not believe that it will, incur Indebtedness and
liabilities (including Contingent Obligations and other commitments) beyond its
ability to pay such Indebtedness and liabilities as they mature (taking into
account the timing and amounts of cash to be received by Borrowers and the
amounts to be payable on or in respect of obligations of Borrowers).
SECTION 4.18 DISCLOSURE. No financial statements, Loan Document or any other
document, certificate or written statement furnished to Lender by any Borrower
Party and, to the knowledge of Borrowers, no document or statement furnished by
any third party on behalf of any Borrower Party, for use in connection with the
Loan contains any untrue representation, warranty or statement of a material
fact, and none omits or will omit to state a material fact necessary in order to
make the statements contained herein or therein not misleading. There is no
material fact known to Borrowers that has had or will have a Material Adverse
Effect and that has not been disclosed in writing to Lender by Borrowers.
SECTION 4.19 USE OF PROCEEDS AND MARGIN SECURITY. Borrowers shall use the
proceeds of the Loan only for the purposes set forth herein and consistent with
all applicable laws, statutes, rules and regulations. No portion of the proceeds
of the Loan shall be used by Borrowers or any Person in any manner that might
cause the borrowing or the application of such proceeds to violate Regulation T,
Regulation U or Regulation X or any other regulation of the Board of Governors
of the Federal Reserve System.
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SECTION 4.20 INSURANCE. Borrowers have in effect all of the policies of
insurance required in Section 5.4 hereof, and no notice of cancellation has been
received with respect to such policies, and, to Borrowers' knowledge after due
inquiry, Borrowers are in compliance with all conditions contained in such
policies.
SECTION 4.21 SEPARATE TAX LOTS. Each of the Properties are comprised of one (1)
or more parcels which constitute separate tax lots. No part of any of the
Properties is included or assessed under or as part of another tax lot or
parcel, and no part of any other Individual Property is included or assessed
under or as part of the tax lots or parcels comprising any of the Properties.
SECTION 4.22 INVESTMENTS. Borrowers have no (i) direct or indirect interest in,
including without limitation stock, partnership interest or other securities of,
any other Person, or (ii) direct or indirect loan, advance or capital
contribution made to any other Person, including all indebtedness and accounts
receivable from that other Person.
SECTION 4.23 BANKRUPTCY. No Borrower Party is or has been a debtor, and no
property of any of them (including the Properties) is property of the estate, in
any voluntary or involuntary case under the Bankruptcy Code or under any
applicable bankruptcy, insolvency or other similar law now or hereafter in
effect. No Borrower Party and no property of any of them is or has been under
the possession or control of a receiver, trustee or other custodian. No Borrower
Party has made any assignment for the benefit of creditors. No such assignment
or bankruptcy or similar case or proceeding is now contemplated.
SECTION 4.24 DEFAULTS. No Default or Event of Default exists and no event has
occurred which with the passage of time or the giving of notice, or both, would
be or become a Default or Event of Default.
SECTION 4.25 NO PLAN ASSETS. Borrowers are not and will not be (i) an employee
benefit plan as defined in Section 3(3) of ERISA which is subject to ERISA, (ii)
a plan as defined in Section 4975(e)(l) of the IRC which is subject to Section
4975 of the IRC, or (iii) an entity whose underlying assets constitute "plan
assets" of any such employee benefit plan or plan for purposes of Title I of
ERISA or Section 4975 of the IRC.
SECTION 4.26 GOVERNMENTAL PLAN. Borrowers are not and will not be a
"governmental plan" within the meaning of Section 3(32) of ERISA and
transactions by or with Borrower are not and will not be subject to state
statutes applicable to Borrowers regulating investments of and fiduciary
obligations with obligations with respect to governmental plans.
SECTION 4.27 NOT FOREIGN PERSON. No Borrower Party is a "foreign person" within
the meaning of Section 1445(f)(3) of the IRC.
SECTION 4.28 NO COLLECTIVE BARGAINING AGREEMENTS. No Borrower Party is a party
to any collective bargaining agreement.
SECTION 4.29 COMPLIANCE. Borrowers are in compliance with all applicable Legal
Requirements. Borrowers are not in default or violation of any order, writ,
injunction, decree or demand of any Governmental Authority.
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SECTION 4.30 INTELLECTUAL PROPERTY. All material Intellectual Property that
Borrowers own or have pending, or under which it is licensed, are in good
standing and uncontested. There is no right under any Intellectual Property
necessary to the business of Borrowers as presently conducted or as Borrowers
contemplate conducting its business. Borrowers have not infringed, are not
infringing, and have not received notice of infringement with respect to
asserted Intellectual Property of others. There is no infringement by others of
material Intellectual Property of Borrowers.
SECTION 4.31 PRE-CLOSING DATE ACTIVITIES. Borrowers have not conducted any
business or other activity on or prior to the Closing Date, other than in
connection with the acquisition and operation of the Properties.
SECTION 4.32 MORTGAGE AND OTHER LIENS. Each Mortgage creates a valid and
enforceable first priority Lien on the Individual Property described therein, as
security for the repayment of the Obligations, subject only to the Permitted
Encumbrances applicable to such Individual Property. Each Loan Document
purporting to grant, transfer, assign or otherwise create a Lien as security for
the Loan establishes and creates a valid, subsisting and enforceable Lien on and
a security interest in, or claim to, the rights and property described therein.
All property covered by any Loan Document purporting to grant, transfer, assign
or otherwise create a Lien as security for the Loan is subject to a UCC
financing statement filed and/or recorded, as appropriate (or irrevocably
delivered to an agent for such recordation or filing) in all places necessary to
perfect a valid first priority Lien with respect to the rights and property that
are the subject of such Loan Document to the extent governed by the UCC.
SECTION 4.33 MANAGEMENT AGREEMENT. The Management Agreement is in full force and
effect. There is no default, breach or violation existing thereunder by any
party thereto and no event (other than payments due but not yet delinquent)
which, with the passage of time or with notice and the expiration of any grace
or cure period, would constitute a default, breach or violation by any party
thereunder. The Management Agreement represents an arms-length agreement as to
market fees and terms.
SECTION 4.34 NO PROHIBITED PERSONS. Neither Borrowers, Sole Member, Guarantor,
Environmental Indemnitor nor any of their respective offices, directors,
partners, members, Affiliates or, to the knowledge of Borrowers, shareholders in
an entity or person: (i) that is listed in the Annex to, or is otherwise subject
to the provisions of Executive Order 13224 issued on September 24, 2001
("EO13224"); (ii) whose name appears on the United States Treasury Department's
Office of Foreign Assets Control ("OFAC") most current list of "Specifically
Designated National and Blocked Persons" (which list may be published from
time to time in various mediums including, but not limited to, the OFAC website,
http:www.treas.gov/ofac/tllsdn.pdf); (iii) who commits, threatens to commit or
supports "terrorism", as that term is defined in EO13224; or (iv) who is
otherwise affiliated with any entity or person listed above (any and all parties
or persons described in clauses (i) through (iv) above are herein referred to as
a "Prohibited Person").
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ARTICLE V
COVENANTS OF BORROWER PARTIES
Borrowers covenant and agree that until payment in full of the Loan, all
accrued and unpaid interest and all other Obligations, unless Lender shall
otherwise give its prior written consent, such Person shall perform and comply
with, or cause the performance and compliance of the applicable Borrower Parties
with, all covenants in this Article V.
SECTION 5.1 FINANCIAL STATEMENTS AND OTHER REPORTS.
(A) FINANCIAL STATEMENTS.
(i) ANNUAL REPORTING. Within one hundred twenty (120) days after the
end of each calendar year, Borrowers shall provide true and complete copies of
Place Properties consolidated Financial Statements for such year to Lender,
which consolidated Financial Statement shall include the financial reporting and
condition of Borrowers and Sole Member. All Financial Statements of Place
Properties shall be audited by a "Big Four" accounting firm or by other
independent certified public accountants reasonably acceptable to Lender, and
accompanied by a certificate of such audit executed by such accounting firm in
customary form, subject only to such exceptions as shall be reasonably approved
in writing by Lender. Lender acknowledges that Duggan & Massey, which is Place
Properties' current auditor is an acceptable accounting firm for purposes
hereunder so long as such firm maintains the same financial condition and rating
which exists as of the date hereof. The annual Financial Statements for
Borrowers and Sole Member, to the extent not included in the consolidated
Financial Statement of Place Properties, shall each be accompanied by a
certification executed by the entity's chief executive officer or chief
financial officer satisfying the criteria set forth below. The annual Financial
Statements of Borrowers shall also be accompanied by a Compliance Certificate
(as defined below).
(ii) QUARTERLY REPORTING - BORROWERS. Within forty-five (45) days
after the end of each Calendar Quarter (other than each Calendar Quarter ending
December 31), Borrowers shall provide true and complete copies of its Financial
Statements for such quarter to Lender, together with a certification executed on
behalf of Borrowers by its respective chief executive officer or chief financial
officer in accordance with the criteria set forth below. The quarterly Financial
Statements of Borrowers also shall be accompanied by a Compliance Certificate
(as defined below).
(iii) ANNUAL FINANCIAL STATEMENT GUARANTOR. Within 120 days after the
end of each calendar year, Borrowers shall provide a statement of Guarantor's
income and net worth in a form prepared in accordance with reasonable accounting
principles consistently applied and otherwise in form and substance reasonably
acceptable to Lender.
(iv) DEBT SERVICE COVERAGE RATIO. Within forty-five (45) days after
the end of each Calendar Quarter, Borrowers shall provide to Lender, Borrowers'
calculation of the Debt Service Coverage Ratio for the twelve month period
ending at the end of such Calendar Quarter, together with the Borrowers' method
of calculation and such detail and background information
46
as Lender shall reasonably require and a Compliance Certificate, subject to
Borrowers' right to notice and cure as set forth in Section 8.1(C).
(v) LEASING REPORTS. Within forty-five (45) days after the end of each
calendar month, Borrower shall provide to Lender for each of the Properties a
certified Rent Roll and occupancy report, including a schedule of Prepaid Rents
and Security Deposits, in form and substance reasonably acceptable to Lender.
(vi) MONTHLY REPORTING. Within forty-five (45) days after the end of
each calendar month, Borrowers shall provide to Lender (a) accrual basis
operating statements, together with a statement of cash flow, for each of the
Properties, each in a form reasonably satisfactory to Lender, (a) for such
month, (b) for the year to date with a comparison and reconciliation with the
Approved Operating Budget and the Approved Capital Expenditures Budget
indicating all variances on a line item basis and (c) with the monthly report
for the months of March, June, September and December, the 12 month period ended
as of the end of such calendar month, together with (b) a certification executed
on behalf of Borrowers by its respective chief financial officer (or other
responsible officer or representative reasonably acceptable to Lender) in
accordance with the criteria set forth below.
(vii) ADDITIONAL REPORTING. In addition to the foregoing, each
Borrower Party shall promptly provide to Lender such further documents and
information concerning its operations, properties, ownership, and finances as
Lender shall from time to time reasonably request.
(viii) GAAP. Borrower Parties (except Cecil Phillips) will maintain
systems of accounting established and administered in accordance with sound
business practices and sufficient in all respects to permit preparation of
Financial Statements in conformity with GAAP. All Financial Statements (except
those of Cecil Phillips) shall be prepared in accordance with GAAP. All income
and net worth statements for Cecil Phillips shall be prepared using reasonable
accounting principles consistently applied.
(ix) CERTIFICATIONS OF FINANCIAL STATEMENTS AND OTHER DOCUMENTS,
COMPLIANCE CERTIFICATE. Together with the Financial Statements and other
documents and information provided to Lender by or on behalf of any Borrower
Party under this Section, such Borrower Party also shall deliver to Lender a
certification in form and substance reasonably satisfactory to Lender, executed
on behalf of such Borrower Party by its chief executive officer or chief
financial officer (or by the individual, if the Guarantor or Environmental
Indemnitor is an individual) stating that, to such officer's or individual's
knowledge, such Financial Statements, documents, and information are true and
complete in all material respects and do not omit to state any material
information without which the same might reasonably be misleading. In addition,
where this Loan Agreement requires a "Compliance Certificate", the Borrower
Party required to submit the same shall deliver a certificate duly executed on
behalf of such Borrower Party by its chief executive officer or chief financial
officer, in form and substance reasonably satisfactory to Lender, stating that
it is not aware of any Default or Event of Default under the Loan Documents (or
if any exists, specifying the same in detail).
47
(x) FISCAL YEAR. Borrowers represent that their respective fiscal
years end on December 31, and agree that they shall not make any change in their
respective fiscal year.
(B) ACCOUNTANTS' REPORTS. Promptly upon receipt thereof, each Borrower
Party will deliver copies of all significant reports submitted by independent
public accountants in connection with each annual, interim or special audit of
the Financial Statements or other affairs of such Borrower Party made by such
accountants, including the comment letter submitted by such accountants to
management in connection with the annual audit.
(C) TAX RETURNS. Within thirty (30) days after filing the same, Borrowers
shall deliver to Lender a copy of its Federal income tax returns (or the return
of the applicable Person into which Borrowers' Federal income tax return is
consolidated) certified on its behalf by its chief financial officer (or similar
position) to be true and correct.
(D) MATERIAL NOTICES.
(i) Borrowers shall promptly deliver, or cause to be delivered to
Lender, copies of all notices of default given or received with respect to
noncompliance related to any material Indebtedness of any Borrower Party.
(ii) Borrowers shall promptly deliver to Lender copies of any and all
material notices (including without limitation any notice alleging any default
or breach) received from any manager, franchisors, licensors, or tenant
(excluding routine tenant complaints but only to the extent such complaints are
not material or indicative of a recurring problem at any Individual Property)
for or pertaining to the Properties.
(E) EVENTS OF DEFAULT, ETC. Promptly upon Borrowers obtaining knowledge of
any of the following events or conditions, Borrowers shall deliver a certificate
executed on its behalf by its respective chief financial officer or similar
officer specifying the nature and period of existence of such condition or event
and what action such Borrower or any Affiliate thereof has taken, is taking and
proposes to take with respect thereto: (i) any condition or event that
constitutes an Event of Default or Default; (ii) any Material Adverse Effect; or
(iii) any actual or alleged breach or default or assertion of (or written threat
to assert) remedies under any Management Agreement.
(F) LITIGATION. Promptly upon Borrowers obtaining knowledge of (1) the
institution, or threat thereof, of any action, suit, proceeding, governmental
investigation or arbitration against or affecting any Borrower or any Individual
Property not previously disclosed in writing by Borrowers to Lender (excluding
routine tenant/landlord disputes or dispossessory proceedings but only to the
extent such complaints are not material or indicative of a recurring problem at
any Individual Property), or (2) any material development in any action, suit,
proceeding, governmental investigation or arbitration at any time pending
against or affecting any Borrower or any Individual Property, Borrowers will
give notice thereof to Lender and provide such other information as may be
reasonably available to enable Lender and its counsel to evaluate such matter.
(G) INSURANCE. Within the ten (10) day period prior to the end of each
insurance policy period of Borrowers, Borrowers will deliver binders or
certificates of insurance
48
evidencing renewal of any existing coverages (or copies of any new insurance
policies not previously delivered to Lender), reports, and/or other information
(all in form and substance reasonably satisfactory to Lender), (i) outlining
all material insurance coverage maintained as of the date thereof by Borrowers
and all material insurance coverage planned to be maintained by Borrowers in the
subsequent insurance policy period, and (ii) evidencing payment in full of the
premiums for such insurance policies.
(H) OTHER INFORMATION. With reasonable promptness, Borrowers will deliver
(or cause to be delivered) such other information and data with respect to any
Borrower Party or the Properties as from time to time may be reasonably
requested by Lender.
SECTION 5.2 EXISTENCE; QUALIFICATION. Borrowers will at all times preserve and
keep in full force and effect its existence as a limited liability company and
all rights and franchises material to its business, including its qualification
to do business in each state where it is required by law to so qualify. Without
limitation of the foregoing, each Borrower shall at all times be qualified to do
business in the state where the Individual Property owned by it is located.
SECTION 5.3 PAYMENT OF IMPOSITIONS AND CLAIMS.
(A) Subject to Borrowers' contest rights set forth in subsection (B) below,
Borrowers will pay when due (i) all Impositions; (ii) all claims (including
claims for labor, services, materials and supplies) for sums that have become
due and payable and that by law have or may become a Lien upon any of its
properties or assets (hereinafter referred to as the "Claims"); and (iii) all
federal, state and local income taxes, sales taxes, excise taxes and all other
taxes and assessments of Borrowers on its business, income or assets; in each
instance before any penalty or fine is incurred with respect thereto.
(B) Borrowers shall not be required to pay, discharge or remove any
Imposition or Claim so long as the Borrowers contest in good faith such
Imposition or Claim or the validity, applicability or amount thereof by an
appropriate legal proceeding which operates to prevent the collection of such
amounts and the sale of the applicable Individual Property or any portion
thereof, so long as: (i) no Event of Default shall have occurred and be
continuing; (ii) prior to the date on which such Imposition or Claim would
otherwise have become delinquent, Borrowers shall have given Lender prior
written notice of its intent to contest said Imposition or Claim; (iii) prior to
the date on which such Imposition or Claim would otherwise have become
delinquent, Borrowers shall have deposited with Lender (or with a court of
competent jurisdiction or other appropriate body approved by Lender) such
additional amounts as are necessary to keep on deposit at all times; an amount
(hereinafter referred to as the "Required Imposition Deposit") equal to at least
(1) one hundred percent (100%) of any Imposition then remaining unpaid together
with all interest, penalties, costs and charges accrued or accumulated thereon,
together with such other security as may be required in the proceeding, or as
may be required by Lender, to insure the payment of any such Imposition and all
interest and penalties thereon and (2) one hundred twenty-five percent (125%)
(or such higher amount as may be required by applicable law) of the total of (x)
the balance of such Claim then remaining unpaid, and (y) all interest,
penalties, costs and charges accrued or accumulated thereon, together with such
other security as may be required in the proceeding, or as may be required by
Lender, to insure the payment of any such Claim and all interest and penalties
thereon; provided, for purposes of calculating the
49
Required Imposition Deposit, amounts on deposit in an escrow account established
hereunder may be counted toward satisfaction of the Required Imposition Deposit
so long as such amounts are specifically and exclusively designated for the
Imposition or Claim subject to Borrowers' challenge and for no other purpose
whatsoever; (iv) no risk of sale, forfeiture or loss of any interest in the
affected Individual Property or any part thereof arises, in Lender's judgment,
during the pendency of such contest; (v) such contest does not, in Lender's
determination, have a Material Adverse Effect; (vi) such contest is based on
bona fide, material, and reasonable claims or defenses; (vii) such proceeding
shall be permitted under and be conducted in accordance with the provisions of
any other instrument to which Borrowers are subject and shall not constitute a
default thereunder and such proceeding shall be conducted in accordance with all
applicable statutes, laws and ordinances; and (viii) Borrowers shall have
obtained such endorsements to the Title Policy with respect to such Imposition
or Claim as Lender may reasonably require. Any such contest shall be prosecuted
with due diligence, and Borrowers shall promptly pay the amount of such
Imposition or Claim as finally determined, together with all interest and
penalties payable in connection therewith. Lender shall have full power and
authority, but no obligation, to apply any amount deposited with Lender under
this subsection to the payment of any unpaid Imposition or Claim to prevent the
sale or forfeiture of the affected Individual Property for non-payment thereof,
if Lender reasonably believes that such sale or forfeiture is threatened. Any
surplus retained by Lender after payment of the Imposition or Claim for which a
deposit was made shall be promptly repaid to such related Borrower unless an
Event of Default shall have occurred, in which case said surplus may be retained
by Lender to be applied to the Obligations. Notwithstanding any provision of
this Section to the contrary, Borrowers shall pay any Imposition or Claim which
it might otherwise be entitled to contest if an Event of Default shall occur, or
if, in the reasonable determination of Lender, the affected Individual Property
is in jeopardy or in danger of being forfeited or foreclosed. If Borrowers
refuse to pay any such Imposition or Claim, upon five (5) Business Days' prior
written notice, Lender may (but shall not be obligated to) make such payment and
Borrowers shall reimburse Lender on demand for all such advances.
SECTION 5.4 MAINTENANCE OF INSURANCE. Borrowers will maintain or cause to be
maintained, with financially sound and reputable insurers, public liability,
fire and extended coverage and property damage, rent loss or business
interruption and other types of insurance with respect to its business and the
Properties (including all Improvements now existing or hereafter erected
thereon) against all losses, hazards, casualties, liabilities and contingencies
as customarily carried or maintained by Persons of established reputation
engaged in similar businesses and as Lender shall require and in such amounts
and for such periods as Lender shall require. Without limitation of the
foregoing, Borrowers shall maintain or cause to be maintained policies of
insurance with respect to the Properties in the following amounts and covering
the following risks:
(i) Property damage insurance covering loss or damage to the
Properties caused by fire, lightning, hail, hurricane, windstorm, tidal wave,
explosion, "acts of terrorism" as defined in the TRIA, vandalism, malicious
mischief, and such other losses, hazards, casualties, liabilities and
contingencies as are normally and usually covered by fire, extended coverage and
all risk policies in effect where the Properties are located endorsed to include
all of the extended coverage perils and other broad form perils, including the
standard "all risks" clauses, with such endorsements as Lender may from time to
time reasonably require including, without limitation,
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building ordinance and law (including demolition costs and increased cost of
construction coverage), lightning, hurricane, windstorm, tidal wave, civil
commotion, "acts of terrorism" as defined in the TRIA, hail, riot, strike, water
damage, sprinkler leakage, collapse and malicious mischief. Such policy shall be
in an amount not less than that necessary to comply with any coinsurance
percentage stipulated in the policy, but not less than 100% of the full
replacement cost of all Improvements at the Properties (without any deduction
for depreciation), and shall contain a replacement cost and "no-coinsurance"
endorsement in an amount not less than the outstanding principal amount of the
Loan. The deductible under such policy shall not exceed an amount customarily
required by institutional lenders for similar properties in the general vicinity
of each of the Properties, but in no event in excess of $25,000, or such other
amount as is approved by Lender from time to time. In addition to and without
limiting the foregoing, the property insurance required under this Section
5.4(i), and the property insurance and business interruption and rent loss
insurance required under Sections 5.4(v) and (vi) below shall be required to
cover perils of terrorism and "acts of terrorism" as defined in the TRIA.
(ii) Broad form boiler and machinery insurance in an amount equal to
the full replacement cost of the Improvements at each Individual Property
(without any deduction for depreciation) in which the boiler or similar vessel
is located, and including coverage against loss or damage from (1) leakage of
sprinkler systems and (2) damage, breakdown or explosion of steam boilers,
electrical machinery and equipment, air conditioning, refrigeration, pressure
vessels or similar apparatus and mechanical objects now or hereafter installed
at the Properties.
(iii) If any Individual Property is located in area prone to
geological phenomena, including, but not limited to, sinkholes, mine subsidence,
tidal waves or earthquakes, insurance for such Individual Property covering such
risks in an amount not less than 100% of the full replacement cost of the
Improvements at such Individual Property without any deduction for depreciation,
with a maximum permissible deductible of $25,000, or such other amount as is
approved by Lender from time to time.
(iv) Flood insurance for any Individual Property which is located, in
whole or in part, in an area now or hereafter designated as "flood prone" or a
"special flood hazard area" (as defined 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, or any successor law,
collectively, the "Flood Insurance Acts")). Such policy shall be in an amount
equal to 100% of the full replacement cost of the Improvements at such
Individual Property, or such other amount as is approved by Lender from time to
time, and shall have a maximum permissible deductible equal to an amount
customarily required by institutional lenders for similar properties in the
general vicinity of such Individual Property, but in no event in excess of
$5,000, or such other amount as is approved by Lender from time to time.
(v) Business interruption or rent loss insurance in an amount equal to
the gross income or rentals from the Properties for an indemnity period of
eighteen (18) months, such amount being adjusted annually. Lender shall be named
as loss payee under such insurance.
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(vi) During any period of reconstruction, renovation or alteration of
any of the Properties, a complete value, "All Risks" Builders Risk form or
"Course of Construction" insurance policy in non-reporting form and in an amount
reasonably satisfactory to Lender.
(vii) Commercial General Liability insurance covering claims for
bodily injury, death or property damage occurring upon, in or about the
Properties in an amount not less than $1,000,000 per occurrence and $2,000,000
in the aggregate with a deductible or self insurance retention no greater than
$25,000, and an umbrella liability policy in the amount of $25,000,000.
(viii) If required by applicable state laws, worker's compensation or
employer's liability insurance in accordance with such laws.
(ix) Such other insurance and endorsements, if any, with respect to
the Properties and the operation thereof as Lender may reasonably require from
time to time, provided same are customarily required by institutional lenders
for similar properties in the general vicinity of the Properties, or which are
otherwise required by the Loan Documents.
Each carrier providing any insurance, or portion thereof, required by
this Section shall be licensed to do business in the jurisdiction in which the
applicable Individual Property is located, and shall have a claims paying
ability rating by S&P of not less than "AA," by Moody's of not less than "Aa2"
and by Fitch of not less than "AA," and an A.M. Best Company, Inc. rating of not
less than A and financial size category of not less than XIII. Notwithstanding
the preceding sentence, Lender hereby approves Borrowers existing insurance
carrier so long as such carrier maintains the same financial condition and
claims paying rating as exists as of the date hereof. Borrowers acknowledge and
agree that any replacement insurance carrier (including any replacement of
Borrowers' existing insurance carrier as a result of a rating downgrade) shall
meet the ratings criteria set forth in the first sentence of this paragraph.
Except as otherwise expressly set forth in this Loan Agreement, Borrowers shall
cause all insurance (except general public liability and excess liability, as to
which Lender shall be named as additional insured, and workers' compensation
insurance) carried in accordance with this Section to be payable to Lender as a
mortgagee and loss payee and not as a coinsured.
All insurance policies and renewals thereof (i) shall be in a form
reasonably acceptable to Lender, (ii) shall provide for a term of not less than
one year, (iii) shall provide by way of endorsement, rider or otherwise that
such insurance policy shall not be canceled, endorsed, altered, or reissued to
effect a change in coverage unless such, insurer shall have first given Lender
thirty (30) days prior written notice thereof, (iv) shall include a standard
non-contributory mortgagee endorsement or its equivalent in favor of and in form
acceptable to Lender, (v) shall provide for claims to be made on an occurrence
basis, (vi) shall contain a statement of values to be updated annually (if the
amount of coverage under such policy is based upon the replacement cost of the
applicable Individual Property) and (vii) shall designate Lender as "mortgagee
and loss payee" (except general public liability and excess liability, as to
which Lender shall be named as additional insured). All property damage
insurance policies (except for flood and earthquake policies) must automatically
reinstate after each loss.
Any insurance required by this Loan Agreement may, at the option of
Borrowers, be effected by blanket and/or umbrella policies issued to Borrowers
covering the Properties and
52
other properties of Borrowers' Affiliates provided that, in each case, the
policies otherwise comply with the provisions of this Loan Agreement and
allocate to the Properties, from time to time, the coverage required under this
Loan Agreement, without possibility of reduction or coinsurance by reason of, or
damage to, any other property (real or personal) named therein. If the insurance
required by this Loan Agreement shall be effected by any such blanket or
umbrella policies, Borrowers shall furnish to Lender certificates or insurance
evidencing same, with schedules attached thereto showing the amount of the
insurance provided under such policies which is applicable to each of the
Properties.
SECTION 5.5 MAINTENANCE OF THE PROPERTIES; ALTERATIONS; CASUALTY OR TAKING.
(A) Maintenance of the Properties; Alterations. Borrowers will maintain
each of the Properties or cause each of the Properties to be maintained in good
repair, working order and condition, and will make or cause to be made all
appropriate repairs, renewals and replacements thereof. Without limitation of
the foregoing, Borrowers will operate and maintain each of the Properties
consistent with the applicable Approved Operating Budget and Approved Capital
Expenditure Budget, provided, Lender agrees that with respect to the 2004
Capital Expenditure Budget, to the extent Borrowers do not complete all of the
capital improvement items set forth on the 2004 Capital Expenditure Budget prior
to December 31, 2004, such items shall be completed in calendar year 2005 in
accordance with the 2005 Capital Expenditure Budget. Unless Lender agrees
otherwise, Borrowers shall cause all items in the Capital Expenditure Budget to
be performed and completed in substantially in accordance with such plan,
subject to the following permitted variance (varianees other than or in excess
of such permitted variance shall be subject to the Lender's prior written
approval of an amendment to such budget): variances of up to an aggregate of
$10,000 per Individual Property for capital, deferred maintenance,
rehabilitation or other projects at such Individual Property. All work required
or permitted under this Loan Agreement shall be performed in a good and
workmanlike manner and in compliance with all applicable laws. So long as no
Event of Default has occurred and is continuing, Borrowers may, without Lender's
consent, perform alterations to any of the Properties which (i) do not
constitute a Material Alteration, (ii) do not adversely affect Borrowers'
financial condition or the value or net operating income of the Properties, and
(iii) are in the ordinary course of Borrowers' business. Borrowers shall not
perform any Material Alteration without Lender's prior written consent, which
consent shall not be unreasonably withheld or delayed for Material Alterations
which are required by Legal Requirements or which are required to satisfy tenant
improvement obligations of the Borrowers under Leases (regardless of whether the
tenant improvements are performed by the landlord or the tenant thereunder);
provided, however, that Lender may, in its sole and absolute discretion,
withhold consent to any Material Alteration which Lender determines may result
in a decrease of net operating income from the Properties (provided, Lender
agrees not to unreasonably withhold its consent in the event such a decrease of
net operating income is temporary (i.e., less than 3 months) and otherwise has
an immaterial affect on the operation and financial performance of the
Properties). Lender may, as a condition to giving its consent to a Material
Alteration, require that Borrowers deposit cash with Lender for payment of the
cost of such Material Alteration in an amount equal to 110% of the cost of the
Material Alteration as reasonably estimated by Lender to the extent such funds
are not contained in a Reserve Sub-Account. Upon substantial completion of the
Material Alteration, Borrowers shall provide evidence reasonably satisfactory to
Lender that (i) the Material Alteration was constructed in accordance with all
applicable laws and
53
substantially in accordance with plans and specifications approved by Lender
(which approval shall not be unreasonably withheld or delayed), (ii) all
contractors, subcontractors, materialmen and professionals who provided work,
materials or services in connection with the Material Alteration have been paid
in full and have delivered unconditional releases of lien and (iii) all material
licenses necessary for the use, operation and occupancy of the Material
Alteration (other than those which depend on the performance of tenant
improvement work) have been issued. Borrowers shall reimburse Lender upon demand
for all reasonable out-of-pocket costs and expenses (including the reasonable
fees of any architect, engineer or other professional engaged by Lender)
incurred by Lender in reviewing plans and specifications or in making any
determinations necessary to implement the provisions of this Section 5.5(A)
related to any Material Alteration.
(B) Casualty or Taking. In the event of casualty or loss or a Taking at any
Individual Property, Borrowers shall give immediate written notice of the same
to the insurance carrier and to Lender and shall promptly commence and
diligently prosecute to completion, in accordance with the terms hereof, all
Legal Requirements, the repair and restoration of such Individual Property as
nearly as possible to the Pre-Existing Condition (hereinafter defined) (a
"Restoration"), unless Lender is obligated under this Loan Agreement to make
insurance proceeds or Condemnation Proceeds available to Borrowers for
Restoration and fails to do so in accordance with the terms and conditions of
this Loan Agreement. Borrowers shall pay all costs of such Restoration whether
or not such costs are covered by insurance or Condemnation Proceeds, unless
Lender is obligated under this Loan Agreement to make insurance proceeds or
Condemnation Proceeds available to Borrowers for Restoration and fails to do so
in accordance with the terms and conditions of this Loan Agreement. Borrowers
hereby authorize and empower Lender (a) to make proof of loss, to adjust and
compromise or settle any claim under insurance policies, including without
limitation business interruption or rent loss insurance, or in connection with a
Taking, (b) to appear in and prosecute any action arising from any insurance
policies or Taking, (c) to collect and receive insurance proceeds and
Condemnation Proceeds, and (d) to deduct therefrom Lender's reasonable expenses
incurred in the collection of such proceeds; provided however, that nothing
contained in this Section shall require Lender to incur any expense or take any
action hereunder. Borrowers further authorize Lender, at Lender's option, (i) to
hold the balance of such proceeds to be used to pay for the cost of Restoration
of such Individual Property or (ii) subject to Section 5.5(C), to apply such
proceeds to payment of the Obligations whether or not then due, in any order,
and, provided that no Event of Default has occurred and is continuing, upon any
such application of insurance proceeds or Condemnation Proceeds to the
Obligations pursuant to the foregoing, no Prepayment Consideration shall be due
and payable. Notwithstanding the foregoing, in the event of a casualty or Taking
where the loss does not exceed the Restoration Threshold for such Individual
Property and the Taking, in Lender's reasonable judgment, has no material impact
on the remainder of such individual Property, Borrowers may settle and adjust
such claim; provided that (a) no Event of Default has occurred and is continuing
and (b) such adjustment and the Restoration are carried out in a commercially
reasonable and timely manner, and further provided that Lender's reasonable
consent shall be required for the adjustment or settlement by Borrowers of any
claim the settlement or adjustment of which may reasonably be anticipated to
result in proceeds in excess of $500,000.00.
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(C) Proceeds Application to Restoration. Lender shall not exercise Lender's
option to apply insurance proceeds or Condemnation Proceeds to payment of the
Obligations and Lender shall make the proceeds available for Restoration if all
of the following conditions are met: (i) no Event of Default then exists; (ii)
Lender reasonably determines that there will be sufficient funds to complete the
Restoration of such Individual Property to at least the Pre-Existing Condition
and to timely make all payments due under the Loan Documents during the
Restoration of such Individual Property; (iii) Lender reasonably determines that
the rental income of the Properties (and including the proceeds of rental loss
insurance), after the Restoration thereof to the Pre-Existing Condition, will
be sufficient to meet all Operating Expenses, payments for Reserves and payments
of principal and interest under the Loan and the Mezzanine Loan and maintain a
Debt Service Coverage Ratio at least equal to 1.10 to 1.0; and (iv) Lender
reasonably determines that the Restoration of such Individual Property to the
Pre-Existing Condition will be completed within one (1) year of the date of the
loss or casualty to such Individual Property or the Taking, but in no event
later than six (6) months prior to the Maturity Date; (v) less than fifty
percent (50%) of the total floor area of the Improvements at the affected
Individual Property has been damaged, destroyed or rendered unusable as a result
of such fire or other casualty; and (vi) Lender is reasonably satisfied that
such Individual Property can be restored and repaired as nearly as possible to
the condition it was in immediately prior to such casualty and in compliance
with all applicable zoning, building and other laws and codes (the "Pre-Existing
Condition"), and in the case of a Taking Lender is reasonably satisfied that the
Taking will have no Material Adverse Effect on the use, operation or value of
the affected Individual Property or the Properties taken as a whole.
Notwithstanding anything to the contrary set forth in this Section 5.5, to the
extent the insurance proceeds paid or payable with respect to any casualty to
any Individual Property (either singly or when aggregated with all other then
unapplied proceeds with respect to such affected Individual Property) do not
exceed the Restoration Threshold and the estimated cost of completing the
applicable Restoration shall not be greater than the Restoration Threshold, and
provided that no Event of Default shall have occurred and be continuing, such
proceeds (other than business interruption and rent loss insurance proceeds) are
to be paid directly to Borrowers to be applied to Restoration of such Individual
Property in accordance with the terms hereof. Lender may retain business
interruption or rent loss insurance proceeds as a reserve, and disburse the same
on a monthly basis into the Central Account for application to debt service on
the Loan until such time as Restoration is complete.
(D) Disbursement for Restoration. If Lender elects to make the insurance
proceeds or Condemnation Proceeds available for Restoration of a Individual
Property (or is required to make such proceeds available pursuant to Section
5.5(C) above), the proceeds shall be disbursed by Lender to, or as directed by,
the related Borrower from time to time during the course of the Restoration, but
not more frequently than once a month and in requested amounts of not less than
$50,000.00, upon receipt of evidence satisfactory to Lender that (i) all
materials installed and work and labor performed in connection with the
Restoration have been (or will be with the requested disbursement) paid for in
full, and (ii) there exist no notices of pendency, mechanic's or materialman's
liens or notices of intention to file same, or any other liens or encumbrances
of any nature whatsoever on such affected Individual Property, subject to
Borrowers' right to contest under Section 5.3(B) or which have been bonded or
insured over to Lender's satisfaction. Borrowers agree that, if at any time
during the Restoration, the cost of completing such Restoration, as reasonably
determined by Lender, exceeds the undisbursed insurance proceeds, Borrowers
shall, promptly upon demand by Lender, deposit the amount of such excess with
55
Lender, and Lender shall first disburse such deposit to pay for the costs of
such Restoration on the same terms and conditions as the insurance proceeds are
disbursed. If Borrowers deposit such excess with Lender and if, after completion
of the Restoration, any funds remain from the combination of insurance proceeds
or Condemnation Proceeds and the funds so deposited with Lender by Borrowers,
and if no Event of Default shall have occurred and be continuing, then Lender
shall disburse into the Central Account, for application pursuant to Article VII
hereof, such remaining funds (together with any interest earned thereon).
(E) Disbursement Conditions. With respect to any casualty or condemnation
above the Restoration Threshold, Lender may, at Lender's option, condition
disbursement of any insurance proceeds or Condemnation Proceeds on Lender's
approval of plans and specifications of an independent architect licensed in the
state in which the affected Individual Property is located, having at least five
(5) years of experience as an architect and reasonably satisfactory to Lender
(an "Approved Architect"), any and all material contractors, subcontractors and
materialmen engaged in the Restoration and the contracts and subcontracts under
which they have been engaged, contractor's cost estimates, architect's
certificates, waivers of liens, sworn statements of mechanics and materialmen
and such other evidence of costs, percentage completion of construction,
application of payments, and satisfaction of liens as Lender may reasonably
require. Lender shall not be obligated to disburse insurance proceeds or
Condemnation Proceeds more frequently than once every calendar month. If
insurance proceeds or Condemnation Proceeds are applied to the payment of the
Obligations, any such application of proceeds to principal shall not extend or
postpone the due dates of the monthly payments due under the Note or otherwise
under the Loan Documents, or change the amounts of such payments. Any amount of
insurance proceeds remaining in Lender's possession after full and final payment
and discharge of all Obligations shall be refunded to Borrowers or otherwise
paid in accordance with applicable law. If any Individual Property is sold at
foreclosure or if Lender acquires title to any such Individual Property, Lender
shall have all of the right, title and interest of the related Borrower in and
to any insurance policies and unearned premiums thereon and in and to the
proceeds resulting from any damage to such Individual Property prior to such
sale or acquisition, and to any Condemnation Proceeds.
(F) Retainage. In no event shall Lender be obligated to make disbursements
of insurance proceeds or Condemnation 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 Approved Architect (if applicable), less a
retainage equal to ten percent (10%) of such costs incurred until the
Restoration has been completed. The retainage shall in no event be less than the
amount actually held back by Borrowers from contractors, subcontractors and
materialmen engaged in the Restoration. The retainage shall not be released
until the Borrowers or, if applicable, the Approved Architect certifies to
Lender that the Restoration has been completed substantially in accordance with
the provisions of this Section 5.5 and that all material approvals necessary for
the re-occupancy and use of such Individual Property have been obtained from all
appropriate Governmental Authorities, and Lender receives evidence reasonably
satisfactory to Lender that the costs of the Restoration have been paid in full
or will be paid in full out of the retainage.
SECTION 5.6 INSPECTION. Borrowers shall permit any authorized representatives
designated by Lender to visit and inspect during normal business hours any
Individual Property (subject to the
56
rights of tenants under valid Leases) and its business, including its financial
and accounting records, and to make copies and take extracts therefrom, and to
discuss its affairs, finances and business with its officers and independent
public accountants, at such reasonable times during normal business hours and as
often as may be reasonably requested. Unless an Event of Default has occurred
and is continuing, Lender shall provide advance written notice of at least two
(2) Business Days prior to visiting or inspecting any Individual Property or
Borrowers' offices.
SECTION 5.7 ENVIRONMENTAL COMPLIANCE.
(A) ENVIRONMENTAL LAWS. Borrowers shall at all times comply in all material
respects with all applicable Environmental Laws. Borrowers shall not: (i)
violate any applicable Environmental Law; or (ii) generate, use, transport,
handle, store, release or dispose of any Hazardous Material in or into, on or
onto, or from any of the Properties (except in accordance with applicable law);
or (iii) permit any Lien imposed pursuant to any Environmental Law to be imposed
or to remain on any of the Properties.
(B) REMEDIAL ACTION. (i) Borrowers shall promptly take and diligently
prosecute any and all necessary remedial actions upon obtaining knowledge of the
presence, storage, use, disposal, transportation, active or passive migration,
release or discharge of any Hazardous Materials on, under or about any
Individual Property in violation of any Environmental Laws; provided, however,
that whether or not such action is required under applicable Environmental Laws,
Borrowers shall be required to take all remedial action necessary to clean up
and remove mold and microbial matter from any such Individual Property in the
event that any action, suit or proceeding shall be commenced or threatened (in
writing) by any Governmental Authority with respect thereto or any investigation
related to mold or microbial matter is commenced by any Governmental Authority,
which action, suit, proceeding or investigation, if adversely determined, could
reasonably be expected to have a Material Adverse Effect. In the event
Borrowers undertake or cause to be undertaken any remedial action with respect
to any Hazardous Materials on, under or about any of the Properties, Borrowers
shall conduct and complete such remedial action in compliance with all
applicable Environmental Laws and in accordance with the applicable policies,
orders and directives of all federal, state and local governmental authorities.
(ii) If requested by Lender, all remedial actions under clause (i)
above shall be performed by contractors, and under the supervision of a
consulting engineer, which shall not be an Affiliate of any Borrower, each
approved in advance by Lender which approval shall not be unreasonably withheld
or delayed. All costs and expenses reasonably incurred in connection with such
remedial actions shall be paid by Borrowers. If Borrowers do not timely commence
and diligently prosecute to completion the remedial actions, Lender may (but
shall not be obligated to), upon 30 days prior written notice to Borrowers of
its intention to do so, cause such remedial actions to be performed. Borrowers
shall pay or reimburse Lender on demand for all expenses (including reasonable
attorneys' fees and disbursements, but excluding internal overhead,
administrative and similar costs of Lender) reasonably relating to or incurred
by Lender in connection with monitoring, reviewing or performing any remedial
actions in accordance herewith.
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(iii) Borrowers shall not commence any remedial actions under clause
(i) above without Lender's prior written approval which approval shall not be
unreasonably withheld or delayed. Notwithstanding the foregoing, if the presence
or threatened presence of Hazardous Material on, under or about any of the
Properties poses an immediate threat to the health, safety or welfare of any
Person or the environment, or is of such a nature that an immediate response is
necessary or required under applicable Environmental Law, then Borrowers may
commence all necessary remedial actions without Lender's prior written approval.
In such events, Borrowers shall notify Lender as soon as practicable and, in any
event, within three (3) Business Days, of any action taken. Borrowers shall not
enter into any settlement agreement, consent decree or other compromise relating
to Hazardous Materials or Environmental Laws unless and until Lender has
provided its prior written consent thereto, which consent shall not be
unreasonably withheld or delayed.
(C) FURTHER ASSURANCE. If Lender at any time has a reasonable basis to
believe that a violation of any Environmental Law related to any Individual
Property has occurred and is continuing or that any basis for a material
Environmental Claim affecting any Borrower or related to any Individual Property
exists, then Borrowers agree, promptly after written request from Lender, to
provide Lender with such reports, certificates, engineering studies or other
written material or data as Lender may reasonably require so as to satisfy
Lender that Borrowers and such Individual Property or Properties are in material
compliance with all applicable Environmental Laws.
(D) O & M PROGRAM. In the event the Environmental Report recommends the
development of an operation and maintenance program for any of the Properties
(including, without limitation, with respect to the presence of asbestos and/or
lead-based paint) ("O & M Program"), Borrowers shall develop an O & M Program,
as approved by Lender, in Lender's sole discretion, and shall, during the term
of the Loan, including any extension or renewal thereof, comply in all respects
with the terms and conditions of the O & M Program.
SECTION 5.8 ENVIRONMENTAL DISCLOSURE.
(A) Borrowers shall promptly upon becoming aware thereof advise Lender in
writing and in reasonable detail of: (1) any release, disposal or discharge of
any Hazardous Material on, under, or about any of the Properties required to be
reported to any federal, state or local governmental or regulatory agency under
the applicable Environmental Laws except such releases, disposals or discharges
pursuant to and in compliance with valid permits, authorizations or
registrations under said Environmental Laws; (2) any and all written
communications sent or received by Borrowers with respect to any Environmental
Claims or any release, disposal or discharge of Hazardous Material required to
be reported to any federal, state or local governmental or regulatory agency;
(3) any remedial action taken by Borrowers or any other Person in response to
any Hazardous Material on, under or about any Individual Property; (4) the
discovery by Borrower of any occurrence or condition on any real property
adjoining or in the vicinity of any Individual Property that could cause such
Individual Property or any part thereof to be classified as "border-zone
property" or to be otherwise subject to any restrictions on the ownership,
occupancy, transferability or use thereof under any Environmental Laws the
existence of which could result in an Environmental Claim with respect to such
Individual Property; and (5) any request for information from any governmental
agency that indicates such
58
agency is investigating whether Borrowers may be potentially responsible for a
release, disposal or discharge of Hazardous Materials.
(B) Borrowers shall promptly notify Lender of any proposed action to be
taken pertaining in any way to any of the Properties to commence any operations
that could reasonably be expected to subject any Borrower or any Individual
Property to additional laws, rules or regulations, including laws, rules and
regulations requiring additional or amended environmental permits or licenses
which could reasonably be expected to subject any Borrower to any material
obligations or requirements under any Environmental Laws. Borrowers shall, at
its own expense, provide copies of such documents or information as Lender may
reasonably request in relation to any matters disclosed pursuant to this
Section.
SECTION 5.9 COMPLIANCE WITH LAWS AND CONTRACTUAL OBLIGATIONS. Borrowers will (A)
comply with the requirements of all present and future applicable laws, rules,
regulations and orders of any governmental authority in all jurisdictions in
which it is now doing business or may hereafter be doing business, (B) maintain
all licenses and permits now held or hereafter acquired by Borrowers, and (C)
perform, observe, comply and fulfill all of its obligations, covenants and
conditions contained in any Contractual Obligation.
SECTION 5.10 FURTHER ASSURANCES. Borrower Parties and their Affiliates shall,
from time to time, execute and/or deliver such documents, instruments,
agreements, financing statements, and perform such acts as Lender at any time
may reasonably request to evidence, preserve and/or protect the Collateral at
any time securing or intended to secure the Obligations and/or to better and
more effectively carry out the purposes of this Loan Agreement and the other
Loan Documents.
SECTION 5.11 PERFORMANCE OF AGREEMENTS AND LEASES. Each Borrower Party shall
duly and punctually perform, observe and comply in all material respects with
all of the terms, provisions, conditions, covenants and agreements on its part
to be performed, observed and complied with (i) hereunder and under the other
Loan Documents to which it is a party, and (ii) agreements entered into or
assumed by such Person in connection with the Properties, and will not suffer or
permit any default or event of default (giving effect to any applicable notice
requirements and cure periods) to exist under any of the foregoing. Borrowers
shall comply in all material respects with, observe and perform all of
Borrowers' material obligations as landlord under the Leases and shall enforce
the material terms, covenants and conditions contained in the Leases upon the
part of the tenants thereunder to be observed or performed.
SECTION 5.12 LEASES.
(A) All Leases entered into by Borrowers shall provide for rental rates
comparable to then-existing local market rates and terms and conditions
commercially reasonable and consistent with then-prevailing local market terms
and conditions for similar type properties, and in no event shall Borrowers,
absent Lender's prior written consent, (i) enter into any Leases other than (1)
residential student housing leases with individual student housing residents (or
their family members), (2) leases with companies or other Persons which would
use the Units for non-student residential purposes, provided the same are
permissible under the applicable zoning classification for such Individual
Property and (3) any master lease or multiple Unit leases or
59
groups of single Unit leases to the applicable university or other reputable
entity which sublets or licenses Units to individual resident users or
individual resident user groups), or (ii) enter into any Leases with Affiliates
of Borrowers.
(B) All Leases entered into after the Closing Date with new tenants (i.e.
not renewals of existing tenants as of the Closing Date) shall be written on
Borrowers; standard lease form currently in use which has been approved by
Lender or such other form of Lease reasonably approved in writing by Lender;
provided that notwithstanding the foregoing, the Borrowers may modify any
standard lease form without such approval to the extent necessary to conform
such form to any applicable Legal Requirements. Borrowers shall not materially
change the standard lease form without Lender's prior written consent, which
consent shall not be unreasonably withheld or delayed, or except as necessary to
comply with applicable Legal Requirements.
(C) Borrowers shall enforce all of the material terms, covenants and
conditions contained in the Leases upon the part of the lessee thereunder to be
observed or performed and shall effect a termination or diminution of the
obligations of tenants under leases, only in a manner that a prudent owner of a
similar property to the Properties would enforce such terms covenants and
conditions or effect such termination or diminution in the ordinary course of
business.
(D) Borrowers shall not collect any of the Rents more than twelve (12)
months in advance, and the total amount of Prepaid Rents under the Leases at any
Property shall not in any event exceed 10% of the annual Rents for the
Properties.
(E) Borrowers shall make all Leases available to Lender or, at Lender's
request upon the occurrence and during the continuance of an Event of Default,
shall furnish Lender with executed copies of all Leases hereafter made (to the
extent not theretofore provided to Lender). Each Lease shall specifically
provide that such Lease is subordinate to the Mortgage; and that in no event
shall Lender, as holder of the Mortgage or as successor landlord, be liable to
the tenant for any act or omission of any prior landlord or for any liability or
obligation of any prior landlord occurring prior to the date that Lender or any
subsequent owner acquire title to such Individual Property. Each Lease entered
into after the date hereof, shall specifically provide that the tenant attorns
to Lender, such attornment to be effective upon Lender's acquisition of title to
such Individual Property; that the tenant agrees to execute such further
evidences of attornment as Lender may from time to time reasonably request; and
that the attornment of the tenant shall not be terminated by foreclosure.
SECTION 5.13 MANAGEMENT AND LEASING.
(A) Borrowers shall cause Manager to manage the Properties in accordance
with the Management Agreement. Borrowers shall (i) diligently perform and
observe all of the material terms, covenants and conditions of the Management
Agreement on the part of Borrowers to be performed and observed and (ii)
promptly notify Lender of any notice to Borrowers of any default under the
Management Agreement of which it is aware. If Borrowers shall default in the
performance or observance of any material term, covenant or condition of the
Management Agreement on the part of Borrowers to be performed or observed beyond
applicable notice and cure periods, then, without limiting Lender's other rights
or remedies under this Agreement or
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the other Loan Documents, and without waiving or releasing Borrowers from any of
its obligations hereunder or under the Management Agreement upon five (5)
Business Days' notice to Borrowers, Lender shall have the right, but shall be
under no obligation, to pay any sums and to perform any act as may be
appropriate to cause all the material terms, covenants and conditions of the
Management Agreement on the part of Borrowers to be performed or observed.
Borrowers shall use its best reasonable efforts to cause any new Manager to
execute and deliver a subordination agreement reasonably satisfactory to Lender
at the time of execution and delivery of any Management Agreement.
(B) Borrowers shall not surrender, terminate, cancel, materially modify,
renew or extend such Management Agreement, or enter into any other Management
Agreement with Manager or any other Person (except that Borrowers may continue
to renew the existing Management Agreement unless the Manager thereunder is
replaced pursuant to Section 5.13 (C) below provided such Manager acknowledges
the continued validity of the Assignment of Management Agreement), or consent to
the assignment by the Manager of its interest under the Management Agreement, in
each case without the express consent of Lender, which consent may be
conditioned upon Borrowers delivering a Rating Confirmation if required under
any pooling and servicing agreement relating to any Securitization involving the
Loan (or any portion thereof) or otherwise to the extent such Rating
Confirmation is required for similar transactions. If at any time Lender
consents to the appointment of a new Manager (which consent shall not be
unreasonably withheld in the absence of an Event of Default if a Rating
Confirmation is obtained, or if Lender does not require a Rating Confirmation),
such new Manager and Borrowers shall, as a condition of Lender's consent,
execute a subordination of management agreement in the form delivered in
connection with the closing of the Loan.
(C) Lender shall have the right to require Borrowers to replace the Manager
with a Person chosen by Lender, following any one or more of the following
events: (i) the occurrence and continuance of an Event of Default; (ii) thirty
(30) days after notice from Lender to Borrowers that Manager has engaged in
fraud, gross negligence, malfeasance or willful misconduct arising from or in
connection with its performance under the Management Agreement, or Manager's
default under the Management Agreement which is not cured within any applicable
cure period provided under the Management Agreement; (iii) a change in control
of Manager, or (iv) if the Debt Service Coverage Ratio shall be less than the
Minimum DSCR Threshold for any two (2) consecutive Calendar Quarters.
SECTION 5.14 MATERIAL AGREEMENTS. Except for Leases complying with the Loan
Documents, that certain web services agreements between Borrowers and WebRoomz
dated as of December 1, 2003, and any Management Agreement complying with the
foregoing, Borrowers shall not enter into or become obligated under any material
agreement pertaining to any of the Properties, including without limitation
brokerage agreements, unless the same may be terminated without cause and
without payment of a penalty or premium, on not more than thirty (30) days'
prior written notice.
SECTION 5.15 DEPOSITS; APPLICATION OF RECEIPTS. Borrowers will deposit (or cause
to be deposited) all Receipts from the Properties into the Local Collection
Account. Subject to the allocation of funds in accordance with Article VII
hereof, Borrowers shall promptly apply all distributions from the Central
Account received by Borrowers (or such other funds of Borrowers
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as shall be necessary) to the payment of all current and past due Operating
Expenses, and Borrowers shall deposit such additional funds of Borrowers into
the Accounts as are necessary to cause the repayment of all sums currently due
or past due under the Loan Documents, including all payments into the Reserves.
SECTION 5.16 ESTOPPEL CERTIFICATES. Within ten (10) Business Days following a
request by Lender, Borrowers shall provide to Lender a duly acknowledged written
statement confirming (i) the amount of the outstanding principal balance of the
Loan, (ii) the terms of payment and maturity date of the Note, (iii) the date to
which interest has been paid, (iv) to the knowledge of Borrowers, whether any
offsets or defenses exist against the Obligations, and if any such offsets or
defenses are alleged to exist, the nature thereof shall be set forth in detail,
(v) that this Loan Agreement, the Note, the Mortgage and the other Loan
Documents are valid, legal and binding obligations of Borrowers and have not
been modified or amended, or, if modified or amended, giving particulars of any
such modification or amendment, and (vi) such other factual matters as Lender
shall reasonably request.
SECTION 5.17 INDEBTEDNESS. So long as the Loan is outstanding, Borrowers will
not directly or indirectly create, incur, assume, guaranty, or otherwise become
or remain directly or indirectly liable with respect to any Indebtedness except:
(A) the Obligations;
(B) (i) unsecured trade payables not evidenced by a note and arising out of
purchases of goods or services in the ordinary course of business and operation
of the Properties and (ii) Indebtedness incurred in the financing of equipment
or other personal property used at the Properties in the ordinary course of
business, in a combined aggregate amount not to exceed $50,000 per Individual
Property; provided that (a) each such trade payable is payable not later than
sixty (60) days after the original invoice date and is paid on or before the
date when due and (b) the aggregate amount of such trade payables and
Indebtedness relating to financing of equipment and personal property referred
to in clause (ii) above outstanding does not, at any time, exceed $200,000 per
Individual Property. In no event shall any Indebtedness other than the Loan be
secured, in whole or in part, by the Properties or any portion thereof or
interest therein; and
(C) the Sole Member (but not the Borrowers) may obtain on the Closing Date
a loan in the amount of $21,040,000.00 (the "Mezzanine Loan"; the documents and
agreements evidencing and securing the Mezzanine Loan are herein referred to as
the "Mezzanine Loan Documents") initially from Greenwich Capital Financial
Products, Inc. (together with its successors or permitted assigns, the
"Mezzanine Lender"), secured by a pledge of the Sole Member's membership
interests in the Borrowers.
SECTION 5.18 LIENS AND RELATED MATTERS. The obligations of Borrower Parties
under this Section are in addition to and not in limitation of their obligations
under Article XI herein. So long as the Loan is outstanding:
(A) NO LIENS. Borrowers will not directly or indirectly create, incur,
assume, suffer, or permit to exist any Lien on or with respect to any of the
Properties, any other Collateral or any
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direct or indirect ownership interest in Borrowers, except Permitted
Encumbrances and the liens created under the Mezzanine Loan Documents.
(B) NO NEGATIVE PLEDGES. Borrowers will not enter into or assume any
agreement (other than the Loan Documents) prohibiting the creation or assumption
of any Lien upon its properties or assets, whether now owned or hereafter
acquired.
SECTION 5.19 CONTINGENT OBLIGATIONS. Borrowers will not directly or indirectly
create or become or be liable with respect to any Contingent Obligation
SECTION 5.20 RESTRICTION ON FUNDAMENTAL CHANGES. Except as otherwise expressly
permitted under this Loan Agreement (or with the prior written consent of
Lender):
(A) Borrowers will not, and will not permit any other Person to, (i) amend,
modify or waive any term or provision of Borrowers' partnership agreement,
certificate of limited partnership, articles of incorporation, by-laws, articles
of organization, operating agreement, or other organizational documents relating
to any of the representations, warranties or covenants of Article IX of this
Loan Agreement or this Section 5.20 or any other material term or provision of
Borrowers' organizational documents unless required by law; or (ii) liquidate,
terminate, wind-up or dissolve any Borrower; or (iii) merge with or consolidate
any Borrower into another Person.
(B) Borrowers will not cancel or otherwise forgive or release any material
claim or debt owed to Borrowers by any Person, except for adequate consideration
or in the ordinary course of Borrowers' business.
(C) Borrowers will not enter into any agreement which expressly restricts
the ability of any Borrower to enter into amendments, modifications or waivers
of any of the Loan Documents.
(D) Borrowers will not assign or transfer any of its interest in any
licenses, permits, variances and certificates obtained by any Borrower and used
in connection with the ownership, operation, use or occupancy of any Individual
Property (including, without limitation, business licenses, state health
department licenses, licenses to conduct business and all such other permits,
licenses and rights, obtained from any Governmental Authority or private Person
concerning ownership, operation, use or occupancy of such Individual Property).
(E) Borrowers will not, and will not permit or suffer any other Person on
its behalf, to (i) issue, sell, assign, pledge, convey, dispose or otherwise
encumber any stock, membership interest, partnership interest, or other equity
or beneficial interest in Borrowers or (ii) grant any options, warrants,
purchase rights or other similar agreements or understandings with respect
thereto.
(F) Borrowers will not acquire by purchase or otherwise all or any part of
the business or assets of, or stock or other evidence of beneficial ownership
of, any Person.
SECTION 5.21 TRANSACTIONS WITH RELATED PERSONS. Except for fees payable to
Manager under the Management Agreement and the fees payable under the WebRoomz
Contract, the Borrowers
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shall not pay any management, consulting, director or similar fees to any
Related Person of any Borrower or to any director or manager (other than any
customary fees of the Independent Director), officer or employee of any
Borrower. Borrowers shall not directly or indirectly enter into or permit to
exist any transaction (including the purchase, sale, lease or exchange of any
property or the rendering of any service) with any Related Person of any
Borrower or with any director, officer or employee of any Borrower Party, except
transactions in the ordinary course of and pursuant to the reasonable
requirements of the business of Borrowers and upon fair and reasonable terms
which are no less favorable to Borrowers than would be obtained in a comparable
arm's length transaction with a Person that is not a Related Person of any
Borrower. Borrowers shall not make any payment or permit any payment to be made
to any Related Person of any Borrower when or as to any time when any Event of
Default shall exist and be continuing.
SECTION 5.22 ERISA.
(A) NO ERISA PLANS. Borrowers will not establish any Employee Benefit Plan,
Pension Plan or Multiemployer Plan, or will commence making contributions to (or
become obligated to make contributions to) any Employee Benefit Plan, Pension
Plan or Multiemployer Plan.
(B) COMPLIANCE WITH ERISA. Borrowers shall not: (i) engage in any
prohibited transaction under Section 406 of ERISA or Section 4975 of the IRC; or
(ii) permit the establishment of any Employee Benefit Plan providing
post-retirement welfare benefits or establish or amend any Employee Benefit Plan
which establishment or amendment could result in liability to any Borrower or
any ERISA Affiliate or increase the obligation of any Borrower.
(C) NO PLAN ASSETS. Borrowers shall not at any time during the term of this
Loan Agreement become (1) an employee benefit plan defined in Section 3(3) of
ERISA which is subject to ERISA, (2) a plan as defined in Section 4975(e)(l) of
the IRC which is subject to Section 4975 of the IRC, (3) a "governmental plan"
within the meaning of Section 3(32) of ERISA or (4) an entity any of whose
underlying assets constitute "plan assets" of any such employee benefit plan,
plan or governmental plan for purposes of Title I or ERISA, Section 4975 of the
IRC or any state statutes applicable to Borrowers regulating investments of
governmental plans.
SECTION 5.23 BRITTANY DECLARATION. Borrowers acknowledge that one building (of
the ten buildings) at the Property known as Murray Place (the "Potentially
Affected Portion" of such Murray Place Property) is, pursuant to the Title
Policy for such Property, subject to that certain Master Deed of Student Housing
Associates, recorded on July 19, 1990 in Cabinet 2, Drawer 28, Book 176, Slide
1115, in the Office of the Clerk of Calloway County, Kentucky (the "Brittany
Declaration"), which also affects an adjoining multifamily project of
approximately 16 units ("Brittany Place"). Borrowers represent and warrant to
Lender that the Brittany Declaration does not relate to or affect any portion of
the Murray Place Property other than the Potentially Affected Portion, and that
neither the Borrower owning the Murray Place Property nor such Borrower's
predecessor in title, which owned the Murray Place Property since 1999, nor the
affiliate of such Borrower's predecessor in title which acquired Brittany Place
in 1999 (and has since disposed of it), have ever given or received any notice
of assessment, or levied any assessment or been assessed, under the Brittany
Declaration, and have no knowledge of any
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assessment ever being made under the Brittany Declaration at any time prior to
or after 1999, and have neither given effect to the Brittany Declaration nor
ever received any indication that the Brittany Declaration is operative or that
any association has ever been established under the Brittany Declaration, or
that the Brittany Declaration is intended to affect the Potentially Affected
Portion. It is the Borrowers' view that the Brittany Declaration is of no force
or effect, and is not intended to affect the Potentially Affected Portion. The
Borrower owning the Murray Place Property undertakes, at Borrowers' cost and
expense, (i) to use best efforts to obtain a release of record of the
Potentially Affected Portion from the Brittany Declaration (or a termination of
record of the Brittany Declaration), and to obtain and provide to Lender an
endorsement to the Title Policy for the Murray Place Property removing the
Brittany Declaration as an exception to title, and (ii) if such release or
termination has not occurred by January 31, 2005, such Borrower shall upon
Lender's request commence and diligently pursue an appropriate quiet title or
declaratory judgment action in order to obtain, and use its best efforts to
thereby obtain, the release of the Potentially Affected Portion from the
Brittany Declaration or a termination of the Brittany Declaration and obtain and
provide to Lender an endorsement to the Title Policy for the Murray Place
Property removing the Brittany Declaration as an exception to title. Borrowers
agree to indemnify and hold the Lender and Lender's successors and assigns
(including without limitation any purchaser at a foreclosure sale or by deed in
lieu of foreclosure, or its successors and assigns) harmless from and against
any loss, cost or expense relating to or associated with the Brittany
Declaration, including without limitation reasonable attorney's fees, and any
cost or expense relating to any requirement to pay assessments under or comply,
or cause the Potentially Affect Portion or the remainder of the Murray Place
Property to comply, with any of the provisions of the Brittany Declaration.
SECTION 5.24 ENVIRONMENTAL MATTERS; INSPECTION.
(A) Borrowers shall not permit any Hazardous Materials to be present on,
under or to emanate from any Individual Property, or migrate from adjoining
property controlled by any Borrower onto or into any Individual Property, except
under conditions permitted by applicable Environmental Laws and, in the event
that such Hazardous Materials are present on, under or emanate from any
Individual Property, or migrate onto or into any Individual Property, Borrowers
shall cause the removal or remediation of such Hazardous Materials, in
accordance with this Loan Agreement and Environmental Laws (including, where
applicable, the National Contingency Plan promulgated pursuant to the
Comprehensive Environmental Response, Compensation and Liability Act). Borrowers
shall use best efforts to prevent, and to seek the remediation of, any migration
of Hazardous Materials onto or into any Individual Property from any adjoining
Individual Property.
(B) Upon reasonable prior written notice, Lender shall have the right at
all reasonable times to enter upon and inspect all or any portion of any
Property, provided that such inspections shall not unreasonably interfere with
the operation or the tenants, residents or occupants of such Individual
Property. If Lender has reasonable grounds to suspect that remedial actions may
be required, Lender shall notify Borrowers and, thereafter, may select a
consulting engineer to conduct and prepare reports of such inspections (with
notice to Borrowers prior to the commencement of such inspection). Provided no
Event of Default exists, Borrowers shall be given a reasonable opportunity to
review any reports, data and other documents or materials reviewed or prepared
by the engineer, and to submit comments and suggested revisions or
65
rebuttals to same. The inspection rights granted to Lender in this Section 5.24
shall be in addition to, and not in limitation of, any other inspection rights
granted to Lender in this Loan Agreement, and shall expressly include the right
(if Lender reasonably suspects that remedial actions may be required) to conduct
soil borings, establish ground water monitoring wells and conduct other
customary environmental tests, assessments and audits.
(C) Borrowers agree to bear and shall pay or reimburse Lender on demand for
all sums advanced and expenses incurred (including reasonable attorneys' fees
and disbursements, but excluding internal overhead, administrative and similar
costs of Lender) reasonably relating to, or incurred by Lender in connection
with, the inspections and reports described in this Section 5.24 (to the extent
such inspections and reports relate to the Properties) in the following
situations:
(i) If Lender has reasonable grounds to believe, at the time any such
inspection is ordered, that there exists an occurrence or condition that could
lead to an Environmental Claim;
(ii) If any such inspection reveals an occurrence or condition that is
reasonably likely to lead to an Environmental Claim; or
(iii) If an Event of Default with respect to any Individual Property
exists and is continuing at the time any such inspection is ordered, and such
Event of Default relates to any representation, covenant or other obligation
pertaining to Hazardous Materials, Environmental Laws or any other environmental
matter.
SECTION 5.25 ENVIRONMENTAL CLAIMS. Lender may join and participate in, as a
party if Lender so determines, any legal or administrative proceeding or action
concerning any Individual Property or any portion thereof under any
Environmental Law, if, in Lender's reasonable judgment, the interests of Lender
shall not be adequately protected by Borrowers; provided, however, that Lender
shall not participate in day-to-day decision making with respect to
environmental compliance. Borrowers shall pay or reimburse Lender on demand for
all reasonable sums advanced and expenses incurred (including reasonable
attorneys' fees and disbursements, but excluding internal overhead,
administrative and similar costs of Lender) incurred by Lender in connection
with any such action or proceeding.
SECTION 5.26 ENVIRONMENTAL INDEMNIFICATION. Borrowers shall, jointly and
severally, indemnify, reimburse, defend, and hold harmless Lender and its
parent, subsidiaries, Affiliates, shareholders, directors, officers, employees,
representatives, agents, successors, assigns and attorneys (collectively, the
"Indemnified Parties") for, from, and against all demands, claims, actions or
causes of action, assessments, losses, damages, liabilities, costs and expenses
(including, without limitation, interest, penalties, reasonable attorneys' fees,
disbursements and expenses, and reasonable consultants' fees, disbursements and
expenses (but excluding internal overhead, administrative and similar costs of
Lender)), asserted against, resulting to, imposed on, or incurred by any
Indemnified Party, directly or indirectly, in connection with any of the
following (except to the extent same are directly and solely caused by the
fraud, bad faith, gross negligence or willful misconduct of any Indemnified
Party):
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(i) events, circumstances, or conditions which are alleged to, or do,
form the basis for an Environmental Claim;
(ii) any pollution or threat to human health or the environment that
is related in any way to Borrowers' or any previous owner's or operator's
management, use, control, ownership or operation of the Properties (including,
without limitation, all on-site and off-site activities involving Hazardous
Materials), and whether occurring, existing or arising prior to or from and
after the date hereof, and whether or not the pollution or threat to human
health or the environment is described in the Environmental Reports;
(iii) any Environmental Claim against any Person whose liability for
such Environmental Claim Borrowers have or may have assumed or retained either
contractually or by operation of law; or
(iv) the breach of any representation, warranty or covenant set forth
in Section 5.7 or any of Sections 5.24 through 5.26, inclusive.
The provisions of and undertakings and indemnification set forth in this Section
5.26 shall survive the satisfaction and payment of the Indebtedness and
termination of this Loan Agreement.
SECTION 5.27 OPERATION OF THE PROPERTIES. Borrowers shall cause the operation of
each of the Properties to be conducted at all times in a manner consistent with
at least the level of operation of the Properties as of the Closing Date for the
Loan, including, without limitation, the following:
(i) to maintain or cause to be maintained the standard of the
Properties at all times at a level not lower than that maintained by prudent
managers of similar facilities or land in the region where each Individual
Property is located;
(ii) to operate or cause to be operated the Properties in a prudent
manner in compliance in all material respects with applicable Legal Requirements
and Insurance Requirements relating thereto and maintain or cause to be
maintained all licenses, permits and any other agreements necessary for the
continued use and operation of each Individual Property; and
(iii) to maintain or cause to be maintained sufficient inventory,
equipment and other personal property of types and quantities at each Individual
Property, if any, and to the extent required under Leases for such Property, to
enable Borrowers to operate each Individual Property and to comply with all
Leases affecting the Properties.
SECTION 5.28 TAXES ON SECURITY. Borrowers shall pay all taxes, charges, filing,
registration and recording fees, excises and levies payable with respect to the
Note or the Lien created or secured by the Loan Documents, other than income,
franchise, doing business and other analogous taxes imposed on Lender. If there
shall be enacted any law (1) deducting the Loan from the value of the Collateral
for the purpose of taxation, (2) affecting Lender's Lien on the Collateral or
(3) changing existing laws of taxation of mortgages, deeds of trust, security
deeds, or debts secured by realty, or changing the manner of collecting any such
taxes, the Borrowers shall promptly pay
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to Lender, on demand, all taxes, costs and charges for which Lender is or may be
liable as a result thereof; provided, however, if such payment would be
prohibited by law or would render the Loan usurious, then instead of collecting
such payment, Lender may declare all amounts owing under the Loan Documents to
be immediately due and payable.
SECTION 5.29 COOPERATE IN LEGAL PROCEEDINGS. Borrowers shall reasonably
cooperate with Lender with respect to any proceedings before any Governmental
Authority which may in any way materially affect the rights of Lender hereunder
or any rights obtained by Lender under any of the Loan Documents and, in
connection therewith, shall not prohibit Lender, at its election, from
participating in any such proceedings.
SECTION 5.30 INSURANCE BENEFITS. Borrowers shall reasonably cooperate with
Lender in obtaining for Lender the benefits of any insurance proceeds lawfully
or equitably payable to Lender in connection with the Properties as required
hereunder. Lender shall be reimbursed for any expenses reasonably incurred in
connection therewith (including reasonable attorneys' fees and disbursements and
the payment by the Borrowers of the expense of an appraisal on behalf of Lender
in case of a fire or other casualty affecting any Individual Property or any
part thereof, but excluding internal overhead, administrative and similar costs
of Lender) out of such insurance proceeds, all as more specifically provided in
this Loan Agreement.
SECTION 5.31 PROHIBITED PERSONS. Borrowers covenant and agree that neither
Borrowers, Guarantor, Environmental Indemnitor nor any of their respective
Affiliates, officers, directors, partners or members will knowingly: (i) conduct
any business, nor engage in any transaction or dealing, with any Prohibited
Person, including, but not limited to, the making or receiving of any
contribution of funds, goods, or services, to or for the benefit of a Prohibited
Person; or (ii) engage in or conspire to engage in any transaction that evades
or avoids, or has the purpose of evading or avoiding, or attempts to violate,
any of the prohibitions set forth in EO13224. Borrowers further covenant and
agree to deliver (from time to time) to Lender any such certification or other
evidence as may be requested by Lender in its sole and absolute discretion,
confirming that: (i) none of the Borrowers, Sole Member, Guarantor,
Environmental Indemnitor nor their respective officers, directors, partners,
members or Affiliates is a Prohibited Person:; and (ii) none of the Borrowers,
Sole Member, Guarantor, Environmental Indemnitor nor their respective officers,
directors, partners, members or Affiliates has to its knowledge engaged in any
business transaction or dealings with a Prohibited Person, including, but not
limited to, the making or receiving of any contribution of funds, goods, or
services, to or for the benefit of a Prohibited Person.
ARTICLE VI
RESERVES
SECTION 6.1 SECURITY INTEREST IN RESERVES; OTHER MATTERS PERTAINING TO RESERVES.
(A) Borrowers hereby pledge, assign and grant to Lender a security interest
in and to all of Borrowers' right, title and interest in and to the Reserves, as
security for payment and performance of all of the Obligations hereunder and
under the Note and the other Loan Documents. The Reserves constitute Account
Collateral and are subject to the security interest
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in favor of Lender created herein and all provisions of this Loan Agreement and
the other Loan Documents pertaining to Account Collateral.
(B) In addition to the rights and remedies provided in Article VII and
elsewhere herein, upon the occurrence and continuation of any Event of Default,
Lender shall have all rights and remedies pertaining to the Reserves as are
provided for in any of the Loan Documents or under any applicable law. Without
limiting the foregoing, upon and at all times after the occurrence and during
the continuance of any Event of Default, Lender in its sole and absolute
discretion, may use the Reserves (or any portion thereof) for any purpose
provided herein, including but not limited to any combination of the following:
(i) payment of any of the Obligations including the Prepayment Consideration
applicable upon such payment in such order as Lender may determine in its sole
discretion; provided, however, that such application of funds shall not cure or
be deemed to cure any default; (ii) reimbursement of Lender for any losses or
expenses (including, without limitation, reasonable legal fees) suffered or
incurred as a result of such Event of Default; (iii) payment for the work or
obligation for which such Reserves were reserved or were required to be
reserved; and (iv) application of the Reserves in connection with the exercise
of any and all rights and remedies available to Lender at law or in equity or
under this Loan Agreement or pursuant to any of the other Loan Documents.
SECTION 6.2 FUNDS DEPOSITED WITH LENDER.
(A) INTEREST, OFFSETS. Except only as expressly provided otherwise herein,
all funds of Borrowers which are deposited with Lender as Reserves hereunder
shall be held by Lender in one or more Permitted Investments. Lender is
authorized to commingle any of the Reserves with each other and with any other
funds held by Lender. All interest which accrues on the Reserves shall be
taxable to Borrowers and shall be added to and disbursed in the same manner and
under the same conditions as the principal sum on which said interest accrued.
Additional provisions pertaining to investments are set forth in Article VII.
(B) FUNDING AT CLOSING. To the extent not funded pursuant to Section 5.15
hereof, Borrowers shall deposit with Lender the amounts necessary to fund each
of the Reserves as set forth below. Deposits into the Reserves at Closing may
occur by deduction from the amount of the Loan that otherwise would be disbursed
to Borrowers, followed by prompt deposit of the same into the applicable
Sub-Account of the Central Account in accordance with the terms hereof.
Notwithstanding such deductions, the Loan shall be deemed for all purposes to be
fully disbursed at Closing.
SECTION 6.3 IMPOSITIONS AND INSURANCE RESERVE. On the Closing Date, Borrowers
shall deposit with Lender (or such agent of Lender as Lender may designate in
writing to Borrowers from time to time) $393,637.42, and thereafter Borrowers
shall deposit with Lender monthly, on each Payment Date commencing with the
First Payment Date, l/12th of the annual charges (as reasonably estimated by
Lender) for all Impositions and Insurance Premiums payable with respect to the
Properties hereunder (said funds, together with any interest, thereon and any
additions thereto, the "Impositions and Insurance Reserve"). Borrowers shall
also deposit with Lender on demand, to be added to and included within such
reserve, a sum of money which Lender reasonably estimates, together with such
monthly deposits, will be sufficient to make the payment of each such charge at
least thirty (30) days prior to the date initially due. Borrowers
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shall provide Lender with bills and all other documents necessary for the
payment of the foregoing charges at least thirty (30) days prior to the date on
which each payment shall first become due. So long as (i) no Event of Default
has occurred and is continuing, (ii) Borrowers have provided Lender with the
foregoing bills and other documents in a timely manner, and (iii) sufficient
funds are held by Lender for the payment of the Impositions and Insurance
Premiums (if applicable) relating to the Properties, Lender shall pay said items
or disburse to Borrowers from such Reserve amounts sufficient to pay said items.
SECTION 6.4 REPLACEMENT RESERVE. On the Closing Date, Borrowers shall deposit
with Lender (or such agent of Lender as Lender may designate in writing to
Borrowers from time to time) $1,073,000.00 (the "Initial Replacement Reserve
Deposit"), and thereafter Borrowers shall deposit with Lender monthly, on each
Payment Date commencing with the First Payment Date, $19,135.17 (subject to
adjustment as provided below, the "Monthly Replacement Reserve Amount") for the
purpose of creating a reserve for Capital Expenditures (said funds, together
with any interest thereon and additions thereto, the "Replacement Reserve"). In
the event of a Partial Release permitted under this Loan Agreement, Lender
agrees, upon written request from Borrowers, to adjust the Monthly Replacement
Reserve Amount to account for the release of such Individual Property(ies),
which adjustment shall be in the amount such that the Monthly Replacement
Reserve Amount equals the product of $214 multiplied by the number of Units in
the remaining Properties divided by twelve (12). Lender's determination of such
adjusted amount shall be sent to Borrowers within forty-five (45) days after
Lender's receipt of Borrowers' written request therefor, and absent manifest
error, Lender's determination shall be deemed reasonable and final, and shall
constitute the Monthly Replacement Reserve Amount required to be deposited into
the Replacement Reserve on each Payment Date thereafter. In no event shall the
balance in the Replacement Reserve be reduced as a consequence of a Partial
Release. The funds contained in the Replacement Reserve shall be utilized solely
to pay for or reimburse Borrowers for the actual bona fide out-of-pocket cost of
Capital Expenditures performed during the term of the Loan in accordance with
the schedule of permitted capital expenditures attached hereto as Schedule 6.4,
or for such other Capital Expenditures as are approved by Lender for
disbursements from the Replacement Reserve (collectively, "Approved Capital
Expenditures"), and shall not be used by Borrowers for purposes for which any
other Reserve is established. Upon Borrowers' written request for disbursement,
Lender shall disburse funds from the Replacement Reserve to or for the account
of Borrowers, to pay for or to reimburse Borrowers for such Approved Capital
Expenditures, on the Payment Date following such request, upon satisfaction of
each of the conditions listed on Schedule 6.6 and each of the conditions set
forth in Section 6.6, provided, in no event shall Lender be obligated to
disburse to Borrowers more than the aggregate of (i) the Annualized Disbursement
Amount (as defined below) plus (ii) twenty percent (20%) of the Initial
Replacement Reserve Deposit in any calendar year. The "Annualized Disbursement
Amount" shall be equal to zero for purposes of determining disbursements from
the Replacement Reserve prior to January, 2005, and shall be $229,622.00
thereafter, less, if a Partial Release of any Individual Property(ies) occurs,
an amount equal to the product of $214 multiplied by the number of Units in the
Individual Property(ies) subject to such Partial Release divided by twelve (12).
SECTION 6.5 SECURITY DEPOSITS. To the extent Borrowers elect to collect Security
Deposits, such Security Deposits shall be held by Borrowers in a segregated
account at the Local
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Collection Bank and disbursed by Borrowers in accordance with the terms of the
applicable Lease and all Legal Requirements.
SECTION 6.6 CONDITIONS TO DISBURSEMENTS FROM THE REPLACEMENT RESERVE;
PERFORMANCE OF WORK.
(A) DISBURSEMENTS FROM THE REPLACEMENT RESERVE. Subject to the limitation
on disbursements set forth in Section 6.4, upon any Borrower's request for
disbursement, Lender shall disburse funds from the Replacement Reserve (such
Reserves, the "Work Reserves'") to or for the account of Borrowers, to pay for
or reimburse Borrowers for Approved Capital Expenditures (collectively,
"Approved Expenditures"; and the related Capital Expenditures to which any such
request for disbursement relates shall be referred to as the "Work"), on the
Payment Date following such request, upon satisfaction of each of the conditions
listed on Schedule 6.6 and each of the conditions set forth below:
(i) Except as provided in this Section 6.6, each request for
disbursement from the Work Reserves shall be made only after completion of the
Work for which disbursement is requested.
(ii) If (1) the cost of a particular item of the Approved Expenditures
exceeds $40,000, (2) the contractor performing such item of the Approved
Expenditures requires periodic payments pursuant to the terms of a written
contract, and (3) Lender has approved in writing in advance such periodic
payments (such approval not to be unreasonably withheld or delayed), a request
for disbursement from the Work Reserves may be made after completion of a
portion of the work under such contract, provided (v) such contract requires
payment upon completion of such portion of the work, (w) the materials for which
the request is made are on site at the applicable Individual Property and are
properly secured or have been installed in the applicable Individual Property,
(x) all other conditions in this Section 6.6 for disbursement have been
satisfied, (y) funds remaining in the applicable Work Reserve together with the
amounts that are scheduled to be deposited therein by Borrowers are, in Lender's
reasonable judgment, sufficient to complete such item of Approved Capital
Expenditures, and (z) if required by Lender, each contractor or subcontractor
receiving payments under such contract shall provide a waiver of lien with
respect to amounts which have been paid to that contractor or subcontractor.
(iii) Each disbursement from a Work Reserve, except for a final
disbursement, shall be in the amount of actual costs incurred for completed Work
(as certified by an Approved Architect, if applicable) less a retainage equal to
ten percent (10%) of such costs incurred until such Work has been completed. The
retainage shall in no event be less than the percentage of such costs that the
contract with the relevant contractor or supplier specifies to be retained and
advanced as part of the final disbursement. No funds will be advanced for
materials stored at any Individual Property unless such materials are properly
stored and secured at such Individual Property in accordance with the Borrowers'
customary procedures and sound construction practices as reasonably determined
by Lender. The retainage shall not be released until the applicable Borrower or,
if applicable, an Approved Architect certifies to Lender that the Work has been
completed substantially in accordance with the provisions of this Section 6.6
and that all material approvals necessary at such Individual Property have been
obtained from all appropriate Governmental Authorities, and Lender receives
evidence reasonably satisfactory to
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Lender that the costs of the Work have been paid in full or will be paid in full
out of the retainage.
(iv) The amount of all invoices in connection with the Work with
respect to which a disbursement is requested and which has been approved by
Lender shall be disbursed by Lender either directly to the related Borrower (in
which event, such Borrower covenants and agrees to promptly pay such invoices)
or, if an Event of Default has occurred and is continuing, at Lender's option
and in Lender's sole and absolute discretion, directly to the contractor,
supplier, materialman, mechanic or subcontractor indicated on said invoices
unless already paid by such Borrower and Lender has received satisfactory
evidence of such payment in which case Lender shall reimburse the related
Borrower. In the event that any Borrower requests that any amounts be disbursed
directly to a Borrower pursuant to the foregoing sentence, Borrowers shall be
required to deliver evidence reasonably acceptable to Lender of payment of all
invoices for which disbursements were previously made to Borrowers as a
condition to such requested disbursement.
(v) No more than one disbursement will be made by Lender from a Work
Reserve in any calendar month, and no disbursement will be made on any day other
than a Payment Date. Lender shall not be required to make any disbursement from
a Work Reserve with respect to any Individual Property unless such requested
disbursement is in an amount equal to or greater than $5,000.
(vi) Except to the extent such item is already contained in an
Approved Capital Expenditures Budget, Lender reserves the right, at its option
and as a condition to any disbursement from a Work Reserve, to approve (1) all
drawings and plans and specifications, if any, for any Work which require
aggregate payments in amounts exceeding $100,000, and (2) all contracts and work
orders with materialmen, mechanics, suppliers, subcontractors, contractors and
other parties providing labor or materials in connection with any Work which
require aggregate payments in amounts exceeding $100,000. Any such approval
shall not be unreasonably withheld, conditioned or delayed and shall be deemed
given if Lender fails to respond within ten (10) Business Days after Lender
receives all information reasonably required to adequately review such drawings,
plans and specifications, contracts or work orders.
(vii) For any Work which requires aggregate payments in amounts
exceeding $100,000 or is structural in nature or relates to the fire life safety
systems at any Individual Property, Lender may require an inspection of such
Individual Property prior to making a monthly disbursement from the applicable
Work Reserve in order to verify completion of the work for which disbursement
is sought. Lender may require that such inspection be conducted by an
appropriate independent qualified architect or engineer selected by Lender
and/or may require a copy of a certificate of completion by an independent
qualified architect or engineer licensed in the state where the applicable
Individual Property is located and otherwise acceptable to Lender prior to the
disbursement of any amounts from the applicable Work Reserve. Borrowers shall
pay the reasonable, out-of-pocket expense of such inspections as required
hereunder, whether such inspections are conducted by Lender or by an independent
qualified professional, up to a maximum of four (4) such inspections during any
calendar year. If Lender should require more than four (4) such inspections
during any calendar year, unless an Event of
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Default has occurred and is continuing during such calendar year, the expense of
each additional inspection in any calendar year (over the four maximum) shall be
borne by Lender.
(B) PERFORMANCE OF WORK.
(i) Borrowers shall cause all Work to be performed in a good and
workmanlike manner as soon as practicable following the commencement thereof in
accordance with all Legal Requirements. The insufficiency of the balance in the
applicable Work Reserve shall not relieve Borrowers from their obligation to
perform and complete the related Work as herein provided or to fulfill all other
preservation and maintenance covenants in the Loan Documents.
(ii) In the event Lender determines in its reasonable discretion that
any Work is not being performed in a workmanlike or timely manner or that any
Work has not been completed in a workmanlike manner, Lender shall have the
option to withhold disbursement for such unsatisfactory work and so notify
Borrowers with reasonable detail regarding the basis for Lender's
dissatisfaction and, after the expiration of thirty (30) days from the giving of
such notice by Lender to Borrowers of such unsatisfactory work without the cure
thereof (or, if such unsatisfactory work is susceptible of a cure but cannot
reasonably be cured within said thirty (30) day period and provided that
Borrowers shall have commenced to cure such unsatisfactory work within said
thirty (30) day period and thereafter diligently and expeditiously proceeds to
cure the same, after the expiration of such longer period as is reasonably
necessary for Borrowers in the exercise of due diligence to cure such
unsatisfactory work, up to a maximum of an additional sixty (60) days, without
the cure thereof), Lender may proceed under existing contracts or contract with
third parties to complete such Work, as the case may be, and apply amounts
contained in the applicable Work Reserve toward the labor and materials
necessary to complete the same, without providing any additional prior notice to
Borrowers, and exercise any and all other remedies available to Lender upon and
during the continuance of an Event of Default hereunder.
(iii) In order to facilitate Lender's completion or making of any Work
pursuant to Section 6.6(B)(ii) above, Borrowers grant Lender the right to enter
onto any Individual Property after the expiration of the notice specified above
and perform any and all work and labor necessary to complete the applicable Work
and/or employ watchmen to protect any such Individual Property from damage. All
sums so expended by Lender (other than funds received from the Borrowers and
deposited into and disbursed from the Replacement Reserve Sub-Account) shall be
deemed to have been advanced under the Loan to Borrowers and secured by the
Mortgage. For this purpose, Borrowers constitute and appoint Lender its true and
lawful attorney-in-fact with full power of substitution to complete or undertake
the applicable Work in the name of Borrowers pursuant to Section 6.6(B)(ii)
above. Such power of attorney shall be deemed to be a power coupled with an
interest and cannot be revoked. Borrowers empower said attorney-in-fact as
follows: (1) to use any funds in the applicable Work Reserve for the purpose of
making or completing any Work; (2) to make such additions, changes and
corrections to any Work as shall be reasonably necessary or desirable to
complete the same; (3) to employ such contractors, subcontractors, agents,
architects and inspectors as shall be required for such purposes; (4) to pay,
settle or compromise all existing bills and claims which are or may become Liens
against any such Individual Property, or as may be necessary or desirable for
the
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completion of any Work, or for clearance of title; (5) to execute all
applications and certificates in the name of Borrowers (or any of them) which
may be required by any of the contract documents; (6) in its reasonable
discretion, to prosecute and defend all actions or proceedings in connection
with any such Individual Property or the rehabilitation and repair of any such
Individual Property; and (7) to do any and every act which Borrowers might do in
its own behalf to fulfill the terms of this Loan Agreement.
(iv) Nothing in this Section shall: (1) make Lender responsible for
making or completing any Work; (2) require Lender to expend funds in addition to
the amounts on deposit in the applicable Work Reserve to make or complete any
Work; (3) obligate Lender to proceed with any Work; or (4) obligate Lender to
demand from Borrowers additional sums to make or complete any Work.
(v) Borrowers shall permit Lender and Lender's agents and
representatives (including, without limitation, Lender's engineer, architect or
inspector) or third parties performing any Work pursuant to this Section 6.6 to
enter onto any Individual Property during normal business hours upon reasonable
prior notice (subject to the rights of tenants under their Leases) to inspect
the progress of any Work and all materials being used in connection therewith,
to examine all plans and shop drawings relating thereto which are or may be kept
at the Properties, and to complete any Work made pursuant to Section 6.6(B)(ii).
Borrowers shall cause all contractors and subcontractors to cooperate with
Lender or Lender's representatives or such other persons described above in
connection with inspections described in this Section 6.6(B) or the completion
of the Work pursuant to this Section 6.6(B).
(vi) All Work and all materials, equipment, fixtures and any other
item comprising a part thereof shall be constructed, installed or completed, as
applicable, free and clear of all mechanic's, materialman's or other liens
(except for the Permitted Encumbrances).
(vii) All Work shall comply with all applicable legal requirements of
all Governmental Authorities having jurisdiction over any of the Properties and
applicable insurance requirements, including, without limitation, applicable
building codes, special use permits, environmental regulations and requirements
of insurance underwriters.
(C) INDEMNIFICATION. Borrowers shall, jointly and severally, indemnify
Lender and hold Lender harmless from and against any and all actions, suits,
claims, demands, liabilities, losses, damages, obligations, costs and expenses
(including, without limitation, litigation costs and reasonable attorneys fees
and expenses) arising from or in any way connected with the performance of the
Work, except to the extent caused by the bad faith, willful misconduct or gross
negligence of Lender. Borrowers shall assign to Lender all rights and claims
Borrowers may have against all Persons supplying labor or materials in
connection with the Work; provided, however, that Lender may not pursue any such
right or claim unless an Event of Default has occurred and remains uncured.
SECTION 6.7 COMPLETION/REPAIR RESERVE. At Closing, Borrowers shall reserve from
the proceeds of the Loan and shall deposit with Lender (or such agent of Lender
as Lender may designate in writing from time to time), an amount equal to
$1,025,125.00 (said funds, together with any interest thereon and additions
thereto, the "Completion/Repair Reserve") for certain
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work related to immediate physical repairs required on the Properties as
indicated in the Property Condition Report(s) for the Properties prepared and
delivered prior to the Closing and as such work is more particularly described
on Schedule 6.7 (the "Immediate Repairs"). No later than July 31, 2005,
Borrowers shall complete all Immediate Repairs and shall provide to Lender such
documentation, and other evidence of compliance with law as Lender may
reasonably require. The funds contained in the Completion/Repair Reserve shall
be utilized by Borrowers solely for performance of the Immediate Repairs in
accordance with the Property Condition Report(s), and shall not be used by
Borrowers for purposes for which any other Reserve is established. If (1) the
cost of a particular item of the Immediate Repairs exceeds $5,000, (2) the
contractor performing such Immediate Repair requires periodic payments pursuant
to the terms of a written contract, and (3) Lender has approved in writing in
advance such periodic payments (such approval not to be unreasonably withheld or
delayed), a request for disbursement from the Completion/Repair Reserve may be
made after completion of a portion of the work under such contract, provided (v)
such contract requires payment upon completion of such portion of the work, (w)
the materials for which the request is made are on site at the applicable
Individual Property and are properly secured or have been installed in the
applicable Individual Property, (x) funds remaining in the Completion/Repair
Reserve together with the amounts that are scheduled to be deposited therein by
Borrowers are, in Lender's reasonable judgment, sufficient to complete such item
of Immediate Repair, and (y) Borrowers satisfy all of the conditions for
disbursement set forth in this Section 6.7. Upon written application of
Borrowers, Borrowers shall be entitled to draw upon the Completion/Repair
Reserve to pay for costs that have been incurred by Borrowers for such Immediate
Repairs upon written request made by Borrowers made not more than once every
thirty (30) days (commencing as of the date of Closing) in an amount not less
than $5,000, provided that (i) no Event of Default has occurred and is
continuing, (ii) Borrowers shall provide to Lender such documentation and
certifications as Lender may reasonably request to substantiate the requirement
for and entitlement to such disbursement, (iii) Borrowers shall provide Lender
with all invoices, receipts, lien waivers and other documentation of lawful and
workmanlike progress or completion, lien-free status, and availability of
sufficient funds, all as may be reasonably requested by Lender, and (iv)
Borrowers shall provide Lender such evidence as may be reasonably satisfactory
to Lender that after payment of any draw for Immediate Repairs, the funds
remaining in the Completion/Repair Reserve shall be sufficient to pay for the
remainder of such Immediate Repairs. Subject to the foregoing conditions,
Borrowers shall be entitled to draw any remaining balance in the
Completion/Repair Reserve when all such Immediate Repairs have been completed to
Lender's reasonable satisfaction and have been paid for.
SECTION 6.8 PREPAID RENT RESERVE. On the Closing Date, Borrowers shall deposit
with Lender (or such agent of Lender as Lender may designate in writing to
Borrowers from time to time) an amount equal to $450,000.00 for deposit into the
Prepaid Rent Reserve Sub-Account ("Initial Prepaid Rent Reserve Deposit"). In
the event Lender determines that the maximum amount of Prepaid Rents at any time
in the preceding twelve month period exceeds an amount equal to two (2) times
the Initial Prepaid Rent Reserve Deposit (subject to adjustment as provided
below, the "Prepaid Rent Threshold"), by an amount equal to or greater than 20%
of the Prepaid Rent Threshold, then a "Prepaid Rent Condition" shall exist. Upon
the occurrence of a Prepaid Rent Condition, Lender shall provide a written
notice of such occurrence to Borrower, in which event on each Payment Date after
such occurrence, so long as no Cash Trap Condition exists, Net Available Cash
(as defined below) shall be applied to additionally fund the Prepaid
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Rent Reserve Sub-Account until the balance in the Prepaid Rent Reserve
Sub-Account equals 50% of the adjusted Prepaid Rent Threshold (i.e., 50% of the
maximum amount of Prepaid Rents received by Borrowers at any time during any
applicable twelve month period), in which event the Prepaid Rent Condition shall
end (and no further additional funding into the Prepaid Rent Sub-Account shall
be required) unless and until Lender determines that the maximum amount of
Prepaid Rents at any time in the preceding twelve month period has again
increased over the adjusted Prepaid Rent Threshold, in which event the Prepaid
Rent Condition may be re-instituted and additional funding will again be
required as provided above. In no event shall the amount on deposit in the
Prepaid Rent Reserve Sub-Account be available for disbursement to the Borrowers
or subject to reduction, unless
(i) a Partial Release of an Individual Property occurs and as a result
thereof Lender determines that the maximum amount of Prepaid Rents at any
time in the preceding twelve month period for the remaining Properties
(excluding any Individual Property which is the subject of a Partial
Release), is less than 80% of the Prepaid Rent Threshold (the amount by
which such maximum amount of Prepaid Rents for such Remaining Properties is
less than the Prepaid Rent Threshold is herein referred to as the "Prepaid
Rent Reduction"), in which event the Prepaid Rent Threshold shall be
reduced by an amount equal to the Prepaid Rent Reduction and Lender shall,
so long as no Event of Default exists, disburse an amount equal to 50% of
the Prepaid Rent Reduction either (a) into the Supplemental Debt Reserve
Sub-Account if a Cash Trap Condition exists, or (b) to Borrowers if no Cash
Trap Condition exists, or
(ii) no Event of Default exists and is continuing, and Borrowers
demonstrate to Lender's satisfaction that the Debt Service Coverage Ratio
for the preceding four Calendar Quarters is in excess of 1.50:1.00 and
shall continue to remain above 1.50:1.00, in which event the balance in the
Prepaid Rent Reserve Sub-Account shall be disbursed to Borrower; provided,
that if Lender thereafter determines that the Debt Service Coverage Ratio
is less than 1.50:1.00, Lender may declare that a Prepaid Rent Condition
exists and, so long as no Cash Trap Condition exists, Net Available Cash
shall be deposited into the Prepaid Rent Reserve Sub-Account on each
Payment Date until the balance in the Prepaid Rent Reserve Sub-Account
equals 50% of the Prepaid Rent Threshold (as from time to time adjusted by
Lender on account of any Excess Prepaid Rent Amount as provided above).
SECTION 6.9 HOLDBACK RESERVE. Borrowers hereby represent and warrant that
certain punchlist completion items, not exceeding $500,000 in costs, remain to
be completed and/or paid for in connection with the completion of construction
of Phase II of the Clayton Place Property (the "Remaining Work"), and while a
temporary certificate(s) of occupancy for Phase II is in effect, the permanent
certificate of occupancy has not yet been issued, but will be as certain
immaterial conditions of the issuing authority to the issuance of the permanent
certificate(s) of occupancy have been satisfied. Borrowers shall within 60 days
hereafter obtain and provide to Lender the permanent certificate(s) of occupancy
for Phase II of the Clayton Place Property. Borrowers shall in the ordinary
course promptly and diligently complete and pay for, on a lien free basis, the
Remaining Work, and as such Remaining Work is completed and paid for provide to
Lender lien waivers and other evidence of payment and completion reasonably
satisfactory to Lender. In no event shall any funds in the Replacement Reserve
or Completion/Repair Reserve
76
be available for payments for Remaining Work, as determined by Lender,
notwithstanding anything contrary or inconsistent provision set forth herein. At
Closing, Borrowers shall reserve from the proceeds of the Loan and shall deposit
with Lender (or such agent of Lender as Lender may designate in writing from
time to time), an amount equal to $3,000,000 (said funds, together with any
interest thereon and additions thereto, the "Holdback Reserve") for deposit into
the Holdback Reserve Sub-Account, relating to certain leasing and performance
requirements with respect to the Clayton Place Properties. Provided that the
Remaining Work has been fully completed and paid for and the provisions and
requirements above relating to the Remaining Work have been satisfied and the
permanent certificate(s) of occupancy for Phase II of the Clayton Place Property
have been issued and provided to Lender, and so long as no Event of Default or
Cash Trap Condition exists and is continuing, if at any time after the date
hereof but prior to November 30, 2006 (the "Holdback Reserve Release Deadline"),
Borrowers provide Lender with written documentation and certifications in a form
reasonably acceptable to Lender that (i) there are firm, valid Leases in place
at the Clayton Place Property in the aggregate amount of at least 80% of the
total number of Bedroom Units at the Clayton Place Property (excluding any
Bedroom Units used by Borrowers for model, office, management or other
non-revenue producing uses) and (ii) actual base rents received by Borrowers
with respect to all Leases at the Clayton Place Property (excluding any rents
from tenants who are more than sixty (60) days delinquent or who are not in
actual occupancy of such Bedroom Unit(s)) equal or exceed, and will in Lender's
reasonable determination continue to equal or exceed, the amount of $3,350,000
per annum, Lender shall direct the Central Account Bank to disburse the amount
of the Holdback Reserve to Borrower. In addition, so long as no Event of Default
or Cash Trap Condition exists and is continuing, Borrowers may, prior to the
Holdback Reserve Release Deadline, obtain a partial release of the Holdback
Reserve if Borrowers meet one of the two performance requirements below, but not
both, and Borrowers provide Lender with written documentation and certifications
in a form reasonably acceptable to Lender that (A)(i) there are firm, valid
Leases in place at the Clayton Place Property in the aggregate amount of at
least 75% of the total number of Bedroom Units at the Clayton Place Property
(excluding any Bedroom Units used by Borrowers for model, office, management or
other non-revenue producing uses) and (ii) actual annual base rents received by
Borrowers with respect to such Leases at the Clayton Place Property (excluding
any rents from tenants who are more than sixty (60) days delinquent or who are
not in actual occupancy of such Bedroom Unit(s)) equal or exceed, and will in
Lender's reasonable determination continue to equal or exceed, the amount of
$3,140,000 per annum (hereinafter, the "75% Occupancy") and (B)(i) there are
firm, valid Leases in place at the Clayton Place Property in the aggregate
amount of at least 78% of the total number of Bedroom Units at the Clayton Place
Property (excluding any Bedroom Units used by Borrowers for model, office,
management or other non-revenue producing uses) and (ii) actual annual base
rents received by Borrowers with respect to such Leases at the Clayton Place
Property (excluding any rents from tenants who are more than sixty (60) days
delinquent or who are not in actual occupancy of such Bedroom Unit(s)) equal or
exceed, and will in Lender's reasonable determination continue to equal or
exceed, the amount of $3,270,000 per annum (hereinafter, the "78% Occupancy").
In the event Borrowers satisfy all of the conditions of a 75% Occupancy, Lender
shall direct the Central Account Bank to remit to Borrowers the sum of
$1,000,000 as a partial release from the Holdback Reserve. In the event
Borrowers satisfy all of the conditions of a 78% Occupancy, Lender shall direct
the Central Account Bank to remit to Borrowers the sum of $2,000,000 as a
partial release from the Holdback Reserve. In the event Borrowers obtain a
77
partial release of the Holdback Reserve as a result of Borrowers' satisfaction
of the conditions for a 75% Occupancy or 78% Occupancy, as applicable, Borrowers
rights to obtain a partial release of the Holdback Reserve under the other
occupancy test set forth in item (A) or (B) above, as applicable, shall
terminate and be null and void. Notwithstanding the foregoing, if Borrowers fail
to satisfy the requirements set forth above for the release (or partial release)
of the Holdback Reserve by the expiration of the Holdback Reserve Release
Deadline, all funds held in the Holdback Reserve shall be held by Lender as
additional collateral for the Loan and applied against the Obligations upon the
Scheduled Maturity Date or, if an Event of Default exists, may be applied as
otherwise permitted in this Loan Agreement.
ARTICLE VII
CENTRAL ACCOUNT; CASH MANAGEMENT
SECTION 7.1 ESTABLISHMENT OF LOCAL COLLECTION ACCOUNT AND CENTRAL ACCOUNT.
(A) LOCAL COLLECTION ACCOUNT/CENTRAL ACCOUNT. Borrowers acknowledge and
confirm that, on or before the Closing Date and pursuant to the terms hereof,
Borrowers have established and will maintain an Eligible Account for the benefit
of the Lender, as secured party hereunder, to serve as the (i) a local
collection account for each Individual Property (said account(s), and any
account(s) replacing the same in accordance with this Loan Agreement, are
individually and collectively, as the context may require, referred to as the
"Local Collection Account"; and the depositary institution(s) in which the Local
Collection Account(s) is/are maintained, are individually and collectively, as
the context may require, referred to as the "Local Collection Account Bank") and
(ii) a "Central Account" (said account, and any account replacing the same in
accordance with this Loan Agreement, the "Central Account"; and the depositary
institution in which the Central Account is maintained, the "Central Account
Bank"). The Local Collection Account and the Central Account shall be under the
sole dominion and control of Lender (which dominion and control may be exercised
by Servicer); and except as expressly provided hereunder, Borrowers shall have
no rights to control or direct the investment or payment of funds therein.
Lender may elect to change any financial institution in which the Local
Collection Account and/or the Central Account shall be maintained. The Central
Account shall be deemed to contain such sub-accounts as Lender may designate
("Sub-Accounts"), which may be maintained as separate ledger accounts and need
not be separate Eligible Accounts. The Sub-Accounts shall include the following:
(i) "DEBT SERVICE SUB-ACCOUNT" shall mean the Sub-Account of the
Central Account established for the purposes of reserving for payments of the
Monthly Debt Service Payments and other amounts due Lender under the Loan
Documents.
(ii) "RESERVE SUB-ACCOUNTS" shall mean the Sub-Accounts of the Central
Account established for the purpose of holding funds in the Reserves including:
(a) the "Impositions and Insurance Reserve Sub-Account"; (b) the "Replacement
Reserve Sub-Account"; (c) the "Completion/Repair Reserve Sub-Account"; (d)
"Supplemental Debt Reserve Sub-Account"; (e) "Prepaid Rent Reserve Sub-Account",
and (f) "Holdback Reserve Sub-Account".
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(iii) "OPERATING EXPENSES SUB-ACCOUNT" shall mean the Sub-Account of
the Central Account established for the purposes of reserving for payments for
Operating Expenses.
(B) ACCOUNT NAME. The Accounts shall each be in the name of Lender, as
secured party, or, at Lender's option, in the name of the Borrowers for the
benefit of Lender, as secured party; provided, however, that in the event Lender
transfers or assigns the Loan, Central Account Bank, at Lender's request, shall
change the name of each Account or the beneficiary thereof to the name of the
transferee or assignee. In the event Lender retains a Servicer to service the
Loan, Central Account Bank, at Lender's request, shall change the name of each
Account or the beneficiary thereof to the name of Servicer, as agent for Lender.
(C) ELIGIBLE ACCOUNTS/CHARACTERIZATION OF ACCOUNTS. Borrowers, Local
Collection Account Bank and Central Account Bank, respectively, shall maintain
each Account as an Eligible Account. Each Account is and shall be treated as a
"securities account" as such term is defined in Section 8-501(a) of the UCC or a
"deposit account" as such term is defined in Section 9-102(a)(29) of the UCC, as
the context may require. Each item of property (whether investment property,
financial asset, securities, instrument, cash or other property) credited to
each Account shall be treated as a "financial asset" within the meaning of
Section 8-102(a)(9) of the UCC. Borrowers agree that Local Collection Account
Bank and Central Account Bank shall, subject to the terms of this Agreement,
treat Lender as entitled to exercise the rights that comprise any financial
asset credited to each Account. All securities or other property underlying any
financial assets credited to each Account (other than cash) shall be registered
in the name of Local Collection Account Bank or Central Account Bank, as
applicable, indorsed to Local Collection Account Bank or Central Account Bank,
as applicable, or in blank or credited to another securities account maintained
in the name of Local Collection Account Bank or Central Account Bank, as
applicable, and in no case will any financial asset credited to any Account be
registered in the name of any Borrower, payable to the order of any Borrower or
specially indorsed to any Borrower.
(D) PERMITTED INVESTMENTS. Sums on deposit in the Accounts shall not be
invested except in Permitted Investments. Except during the existence of any
Event of Default, Borrowers shall have the right to direct Local Collection
Account Bank and Central Account Bank to invest sums on deposit in the Accounts
in Permitted Investments; provided, however, in no event shall Borrowers direct
Local Collection Account Bank or Central Account Bank to make a Permitted
Investment if the maturity date of that Permitted Investment is later than the
date on which the invested sums are required for disbursement or payment of an
obligation for which the Account was created. After an Event of Default and
during the continuance thereof, Lender may direct Local Collection Account Bank
and Central Account Bank to invest sums on deposit in the Accounts in Permitted
Investments as Lender shall determine in its sole discretion. Borrowers hereby
irrevocably authorize and direct Local Collection Account Bank and Central
Account Bank to apply any income earned from Permitted Investments to the
respective Accounts. The amount of actual losses sustained on a liquidation of a
Permitted Investment shall be deposited into the Local Collection Account or the
Central Account, as applicable, by Borrowers no later than one (1) Business Day
following such liquidation to the extent required to meet current obligations.
Borrowers shall be responsible for payment of any federal, state or local income
or other tax applicable to income earned from Permitted Investments. The
Accounts shall be assigned the federal tax identification number of Borrowers,
with such allocation of
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funds as Borrowers shall reasonably determine in accordance with all Legal
Requirements. Any interest, dividends or other earnings which may accrue on the
Accounts shall be added to the balance in the applicable Account and allocated
and/or disbursed in accordance with the terms hereof.
SECTION 7.2 DEPOSIT OF RECEIPTS INTO THE LOCAL COLLECTION ACCOUNT AND THE
CENTRAL ACCOUNT.
(A) Borrowers shall and shall cause Manager to direct any and all other
Receipts to be deposited promptly into the Local Collection Account and in no
event later than two (2) Business Days after the same are paid to or for the
benefit of Borrowers. To the extent that Borrowers or any Person on any
Borrower's behalf holds any Receipts or Security Deposits, whether in accordance
with this Loan Agreement or otherwise, (i) such amounts shall be deemed to be
Collateral and shall be held in trust for the benefit, and as the property, of
Lender, (ii) such amounts shall not be commingled with any other funds or
property of Borrowers or Manager, and (iii) Borrowers or Manager shall deposit
such amounts in the Local Collection Account within two (2) Business Days of
receipt. So long as the Loan shall be outstanding, neither Borrowers nor Manager
shall open any other property accounts other than the Operating Account and the
other Accounts for the deposit of Rent, Security Deposits or revenues from the
Properties. Borrowers represent, warrant and covenant that there are no other
accounts maintained by Borrowers or Manager into which revenues from the
ownership and operation of the Properties are deposited.
(B) On or prior to the Closing, Borrowers, Lender and Local Collection Bank
shall enter into an account agreement(s) with respect to the Local Collection
Account, in form and substance acceptable to Lender, acknowledging Lender's
security interest in and sole dominion and control over the Local Collection
Account (the "Local Collection Account Agreement"). The Local Collection Account
Agreement shall provide, among other things, that funds on deposit in the Local
Collection Account shall automatically be transferred to the Central Account as
follows: (i) on each Business Day during the first week of each calendar month,
(ii) on each Tuesday and Thursday occurring in the second, third and fourth week
of each calendar month and (iii) on the last Business Day of each calendar
month.
SECTION 7.3 APPLICATION OF FUNDS IN CENTRAL ACCOUNT.
(A) ALLOCATIONS. If any Event of Default shall occur and be continuing,
then notwithstanding anything to the contrary in this Section or elsewhere,
Lender shall have all rights and remedies available under applicable law and
under the Loan Documents. So long as no Event of Default shall exist and be
continuing (and after an Event of Default at Lender's sole option and
discretion), Lender shall direct the Central Account Bank on or before the
Payment Date to allocate and distribute all available funds on deposit in the
Central Account (other than those previously allocated to Sub-Accounts) in the
following amounts and order of priority:
(i) First, to the Impositions and Insurance Reserve Sub-Account, until
such Sub-Account contains funds required monthly to pay the Impositions and
Insurance Amount for the next Payment Date;
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(ii) Second, to the Debt Service Sub-Account, until such Sub-Account
contains funds necessary to pay the Monthly Debt Service Payment for the next
Payment Date;
(iii) Third, to the Debt Service Sub-Account, to pay any other
amounts, if any, then due Lender under the Loan Documents;
(iv) Fourth, to the Replacement Reserve Sub-Account in the amount of
the monthly deposit required to be made into the Replacement Reserve for the
next Payment Date;
(v) Fifth, an amount equal to the applicable monthly operating
expenses (other than replacements and capital expenditures, unless specifically
approved by Lender for purposes of disbursements or otherwise contained in an
Approved Operating Budget) provided in the Approved Operating Budget (or such
other amount as shall be approved by Lender) shall be transferred to the
Operating Expenses Sub-Account under the control of Lender;
(vi) Sixth, to the Mezzanine Collection Account, in an amount equal to
the Monthly Mezzanine Debt Service Payment Amount for the next Payment Date,
unless Lender shall have received evidence satisfactory to it that the Mezzanine
Loan shall no longer be outstanding;
(vii) Seventh, if a Cash Trap Condition exists, then until a Cash Trap
Cure occurs all available amounts on each Payment Date after allocation for
items (i) through (vi) above shall be deposited into the Supplemental Debt
Reserve Sub-Account and held as additional collateral for the Obligations; and
(viii) Eighth, if a Cash Trap Condition does not exist, and provided
no Event of Default has occurred and remains uncured, all available amounts on
each Payment Date after allocation for items (i) through (vi) above ("Net
Available Cash", shall on such Payment Date be disbursed first, if and for so
long as a Prepaid Rent Condition exists, be deposited in the Prepaid Rent
Reserve Sub-Account, and second, the remaining funds, if any, shall be disbursed
to the Mezzanine Collection Account, unless Lender shall have received evidence
satisfactory to it that the Mezzanine Loan shall no longer be outstanding, in
which case Lender shall direct the Central Account Bank to disburse such
remaining funds to Borrowers.
(B) CURE OF CASH TRAP CONDITION. So long as no Event of Default exists, a
Cash Trap Condition shall be deemed to be cured (a "Cash Trap Cure") in the
event the Properties achieve a Debt Service Coverage Ratio of not less than the
Minimum DSCR Threshold for two consecutive Calendar Quarters after the
occurrence of the Cash Trap Condition, measured at the end of each such two
consecutive Calendar Quarters. From and after a Cash Trap Cure and until the
occurrence of a subsequent Cash Trap Condition, if any, Lender shall direct the
Central Account Bank to disburse any balance in the Supplemental Debt Reserve
Sub-Account into the Central Account and direct the Central Account Bank to
allocate all available funds on deposit in the Central Account as set forth in
Section 7.3(A).
(C) REQUIRED DEPOSITS. If there are insufficient funds in the Central
Account for the deposits required by Sections 7.3(A)(i)-(v) or Section
7.3(A)(i)-(vi), as applicable, on or before the Payment Date when due, Borrowers
shall deposit such deficiency into the Central Account on or before such Payment
Date. Borrowers shall in all events be required to pay when due
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hereunder the Monthly Debt Service Payments, any required monthly deposits into
Reserves and all other amounts due under this Loan Agreement and the other Loan
Documents. Borrowers shall not be liable or obligated hereunder or under the
other Loan Documents to make deposits into the Mezzanine Collection Account in
the event of any insufficiency of funds in the Central Account, and while a
failure by the Sole Member to fund amounts into the Mezzanine Collection Account
may constitute a default under the Mezzanine Loan Documents, such failure shall
not in and of itself constitute a Default by Borrowers under this Loan
Agreement.
(D) OPERATING EXPENSES DISBURSEMENTS. So long as no Event of Default shall
exist and be continuing, Lender shall direct the Central Account Bank to
disburse funds deposited into the Operating Expenses Sub-Account on or prior to
any Payment Date to Borrowers on or promptly following such Payment Date, and
Borrowers shall use such funds for the payment of Operating Expenses in
accordance with the Approved Operating Budget.
(E) EVENT OF DEFAULT. Notwithstanding anything herein to the contrary, upon
the occurrence and during the continuance of an Event of Default, all funds on
deposit in the Central Account and/or the Sub-Accounts shall be disbursed to or
as directed by Lender. Without in any way limiting the foregoing or Lender's
rights and remedies upon an Event of Default, and subject to Lender's direction
otherwise from time to time, in whole or in part, in Lender's sole and absolute
discretion, during the continuance of an Event of Default Lender may direct the
Central Account Bank to allocate all available funds on deposit in the Central
Account to: (a) any debt service or other Obligation due under this Loan
Agreement or the other Loan Documents; (b) any reserve account or sub-account
established under this Loan Agreement for, or otherwise as a reserve for,
operating expenses, taxes, insurance, capital expenses, costs and expenses of
maintenance, repairs and restoration, and other expenditures relating to the
use, management, operation or leasing of any of the Properties; and/or (c) any
costs and expenses incurred by Lender in connection with such Event of Default,
or expended by Lender to protect or preserve the value of all or any of the
Properties.
(F) BUDGET APPROVALS. No later than forty-five (45) days prior to the
expiration of each calendar year, Borrowers shall deliver to Lender the proposed
Operating Budget and the Capital Expenditure Budget (in each case presented on a
monthly and annual basis) for each of the Properties for the following calendar
year, provided, the proposed Operating Budget and the Capital Expenditure Budget
for calendar year 2005 shall be delivered to Lender no later than December 15,
2004. Each such proposed Operating Budget shall identify and set forth
Borrowers' best estimate, after due consideration, of all revenue, costs, and
expenses for each of the Properties, and shall specify gross revenues and
Operating Expenses. The Capital Expenditure Budget shall identify and set forth
Borrowers' best estimate, after due consideration, of all costs and expenses
contemplated to be necessary in the related budget year (and, as to projects
initiated or to be initiated in or prior to the budget year but not completed in
the budget year, the estimated cost and completion schedule) for capital
improvements and leasehold improvements, and other leasing costs not included in
the Operating Budget, and the contemplated sources of payment of the same. The
Operating Budget and the Capital Expenditures Budget shall be subject to
Lender's reasonable approval, and upon such approval shall, with any amendments
thereto approved by Lender from time to time, constitute the "Approved Operating
Budget" and "Approved Capital Expenditures Budget" hereunder. If a proposed
Operating Budget or Capital Expenditures Budget is not in form and substance
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reasonably satisfactory to Lender, Lender may disapprove the same and specify
the reasons therefor, and Borrowers shall promptly amend and resubmit for
approval a revised budget, making such changes as are necessary to comply with
the reasonable requirements of Lender; provided that until such time as
Borrowers have resubmitted the revised budget and Lender has approved such
revised budget, the parties shall operate under the provisions of this Article
VII using the budget submitted to Lender as proposed to be revised by Lender,
except that (i) actual amounts shall be used for real estate taxes, insurance
premiums for insurance required hereunder and utilities expenses and (ii) 105%
of the last Approved Operating Budget shall be used for operating expenses at
the Properties for such succeeding budget period. Capital Expenditures shall not
be included in the Approved Operating Budget unless Lender shall approve the
same in writing in its sole and absolute discretion. Borrowers agree to
incorporate all reasonable revisions required to the proposed Operating Budget
and/or a proposed Capital Expenditure Budget by Lender. So long as Borrowers
submit a proposed Operating Budget and/or proposed Capital Expenditures Budget
to Lender for approval and Borrowers' correspondence requesting such approval
contains a bold-faced conspicuous legend at the top of the first page thereof
stating that "IF YOU FAIL TO RESPOND TO OR TO EXPRESSLY DENY THIS REQUEST FOR
APPROVAL IN WRITING WITHIN THIRTY (30) DAYS, YOUR APPROVAL SHALL BE DEEMED
GIVEN," then if Lender shall fail to respond to or expressly deny such request
for approval in writing within such 30 day period, then Lender shall be deemed
to have approved such proposed Operating Budget and/or proposed Capital
Expenditures Budget and any revisions thereto.
SECTION 7.4 PAYMENT OF FUNDS FROM CERTAIN SUB-ACCOUNTS
(A) PAYMENTS FROM DEBT SERVICE SUB-ACCOUNT. To the extent funds are
available and provided no Event of Default exists, Lender shall (and Lender
otherwise may at Lender's option from time to time) withdraw amounts from the
Debt Service Sub-Account to pay: (i) default interest and late charges, if any,
(ii) the Monthly Debt Service Payment on each Payment Date on which same is due
and payable hereunder and under the Note and (iii) from and after the Maturity
Date, amounts to be applied against the outstanding principal amount of the Loan
and other amounts due under the Loan Documents.
(B) PAYMENTS FROM SUPPLEMENTAL DEBT RESERVE SUB-ACCOUNT. Funds deposited in
the Supplemental Debt Reserve Sub-Account shall be subject to disbursement by
the Central Account Bank in the event of a Cash Trap Cure at the direction of
Lender pursuant to Section 7.3(B).
(C) PAYMENTS FROM HOLDBACK RESERVE SUB-ACCOUNT. Funds deposited in the
Holdback Reserve Sub-Account shall be subject to disbursement by the Central
Account Bank at the direction of Lender pursuant to Section 6.9.
SECTION 7.5 SOLE DOMINION AND CONTROL. Borrowers acknowledge and agree that the
Accounts are subject to the sole dominion, control and discretion of Lender, its
authorized agents or designees, including the Local Collection Account Bank and
the Central Account Bank, subject to the terms hereof. Notwithstanding anything
set forth herein to the contrary (subject to Borrowers' rights to such accounts
upon the payment in full of all principal, interest and other amounts due
hereunder as set forth in Section 7.6(D) hereof) neither Borrowers nor Manager
nor
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any other person or entity, through or under Borrowers, shall have any control
over the use of, or any right to withdraw any amount from, any Account, and
Borrowers acknowledge that the Local Collection Account Bank and the Central
Account Bank shall comply with all instructions originated by Lender without
further consent by Borrowers. Borrowers acknowledge and agree that the Local
Collection Account Bank and the Central Account Bank shall comply with the
instructions of Lender with respect to the Accounts without the further consent
of Borrowers or Manager. Borrowers acknowledge and agree that the Local
Collection Account Bank and the Central Account Bank shall comply with all
"entitlement orders" (as defined in Section 8-102(a)(8) of the UCC) and
instructions originated by Lender without further consent by Borrowers or any
other Person.
SECTION 7.6 PLEDGE OF ACCOUNTS.
(A) SECURITY FOR OBLIGATIONS. To secure the full and punctual payment and
performance of all Obligations of Borrowers under this Loan Agreement, the Note,
the Mortgage, and all other Loan Documents, Borrowers hereby grant to Lender a
first priority continuing security interest in and to the following property of
Borrowers, whether now owned or existing or hereafter acquired or arising and
regardless of where located (all of the same constituting part of the Account
Collateral hereunder:
(i) the Local Collection Account, the Central Account and each of the
Sub-Accounts, and the Operating Account, and all cash, checks, drafts,
certificates and instruments, if any, from time to time deposited or held in the
Accounts, including, without limitation, all deposits or wire transfers made to
the Accounts; and any and all Account Collateral;
(ii) any and all amounts invested in Permitted Investments;
(iii) all interest, dividends, cash, instruments and other property
from time to time received, receivable or otherwise payable in respect of, or in
exchange for, any or all of the foregoing; and
(iv) to the extent not covered by clauses (i), (ii) or (iii) above,
all "proceeds" (as defined under the UCC) of any or all of the foregoing.
Lender and Local Collection Account Bank and Central Account Bank, as
agents for Lender, shall have with respect to the foregoing collateral, in
addition to the rights and remedies herein set forth, all of the rights and
remedies available to a secured party under the UCC, as if such rights and
remedies were fully set forth herein.
(B) RIGHTS ON DEFAULT. Upon the occurrence and during the continuance of an
Event of Default, Lender may notify Local Collection Account Bank and Central
Account Bank of such Event of Default and, without notice from Local Collection
Account Bank, Central Account Bank or Lender, (a) Borrowers shall have no
further right in respect of (including, without limitation, the right to
instruct Lender or Local Collection Account Bank or Central Account Bank to
transfer from) the Accounts, (b) Lender may direct Local Collection Account Bank
and Central Account Bank to liquidate and transfer any amounts then invested in
Permitted Investments to the Accounts or reinvest such amounts in other
Permitted Investments as Lender may reasonably determine is necessary to perfect
or protect any security interest granted or
84
purported to be granted hereby or to enable Local Collection Account Bank and
Central Account Bank, as agents for Lender, or Lender to exercise and enforce
Lender's rights and remedies hereunder with respect to any Account Collateral,
and (c) Lender may apply any Account Collateral to any Obligations in such order
of priority as Lender may determine. The proceeds of any disposition of the
Account Collateral, or any part thereof, may be applied by Lender to the payment
of the Obligations in such priority and proportions as Lender in its discretion
shall deem proper.
(C) FINANCING STATEMENT; FURTHER ASSURANCES. Borrowers hereby irrevocably
authorize Lender at any time and from time to time to file in any filing office
in any jurisdiction any initial financing statements and amendments thereto that
(1) indicate the Account Collateral and other Collateral (i) as all assets of
the Borrowers or words of similar effect, regardless of whether any particular
asset comprised in the Account Collateral or other Collateral falls within the
scope of Article 9 of the UCC or such jurisdiction, or (ii) as being of an equal
or lesser scope or with greater detail, and (2) contain any other information
required by part 5 of Article 9 of the UCC for the sufficiency or filing office
acceptance of any financing statement or amendment, including (i) whether
Borrowers are an organization, the type of organization and any organization
identification number issued to such Borrower, and (ii) a sufficient description
of real property to which the Collateral relates. Borrowers agree to furnish any
such information to Lender promptly upon request. Borrowers also ratify its
authorization for Lender to have filed in any jurisdiction any initial financing
statements or amendments thereto if filed prior to the date hereof. Borrowers
agree that at any time and from time to time, at the expense of Borrowers,
Borrowers will promptly execute and deliver all further instruments and
documents, and take all further action, that may be reasonably necessary or
desirable, or that Local Collection Account Bank, Central Account Bank or 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 Local
Collection Account Bank, Central Account Bank or Lender to exercise and enforce
its rights and remedies hereunder with respect to any Account Collateral. In the
event of any change in name, identity or structure of any Borrower, such
Borrower shall notify Lender thereof and promptly after Lender's request shall
execute, file and record such UCC financing statements as are necessary to
maintain the priority of Lender's lien upon and security interest in the Account
Collateral, and shall pay all expenses and fees in connection with the filing
and recording thereof. If Lender shall require the filing or recording of
additional UCC financing or continuation statements, Borrowers shall, promptly
after request, execute, file and record such UCC financing or continuation
statements as Lender shall deem necessary, and shall pay all expenses and fees
in connection with the filing and recording thereof.
(D) TERMINATION OF AGREEMENT. This Loan Agreement shall create a continuing
security interest in the Account Collateral and shall remain in full force and
effect until payment in full of all principal, interest and other amounts due to
Lender hereunder. Upon payment and performance in full of the Obligations, this
Loan Agreement shall terminate and Borrowers shall be entitled to the return,
upon its request and at its expense, of such of the Account Collateral as shall
not have been sold or otherwise applied pursuant to the terms hereof, and Local
Collection Account Bank and Central Account Bank and/or Lender shall execute
such instruments and documents as may be reasonably requested by Borrowers to
evidence such termination and the release of the lien hereof including, without
limitation, UCC-3 termination statements.
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SECTION 7.7 LENDER APPOINTED ATTORNEY-IN-FACT. Borrowers hereby irrevocably
constitute and appoint Lender as Borrowers' true and lawful attorney-in-fact,
coupled with an interest and with full power of substitution, to execute,
acknowledge and deliver during the continuation of an Event of Default any
instruments and to exercise and enforce every right, power, remedy, option and
privilege of Borrowers with respect to the Account Collateral, and do in the
name, place and stead of Borrowers, all such acts, things and deeds for and on
behalf of and in the name of Borrowers, which Borrowers are required to do
hereunder or under the other Loan Documents or which Lender may deem necessary
or desirable to more fully vest in Lender the rights and remedies provided for
herein and to accomplish the purposes of this Loan Agreement including, without
limitation, the filing of any UCC financing statements or continuation
statements in appropriate public filing offices on behalf of Borrowers, in any
of the foregoing cases, upon Borrowers' failure to take any of the foregoing
actions within five (5) Business Days after notice from Lender. The foregoing
powers of attorney are irrevocable and coupled with an interest. If any Borrower
fails to perform any agreement herein contained and such failure shall continue
for five (5) Business Days after notice of such failure is given to such
Borrower, Lender may perform or cause performance of any such agreement, and any
reasonable expenses of Lender, Local Collection Account Bank and Central Account
Bank in connection therewith shall be paid by Borrowers.
ARTICLE VIII
DEFAULT, RIGHTS AND REMEDIES
SECTION 8.1 EVENT OF DEFAULT.
"EVENT OF DEFAULT" shall mean the occurrence or existence of any one or
more of the following:
(A) SCHEDULED PAYMENTS. Failure of Borrowers to pay any scheduled payment
amount when the same is due under this Loan Agreement, the Note, or any other
Loan Documents (whether such amount is interest, principal, Reserves, or
otherwise), including without limitation the failure to pay all outstanding
Obligations on the Maturity Date; provided, that if Borrowers are satisfying
their obligations under Section 7.2 of this Loan Agreement and on a Payment Date
prior to the Maturity Date no other Event of Default exists and funds sufficient
to pay any such scheduled payments on such Payment Date are as of 11:00 am,
Eastern Standard Time on such Payment Date on deposit in the Central Account (or
any Sub-Accounts), a delay in payment of such scheduled payment on the Payment
Date due to a failure by Lender to direct the Central Account Bank to disburse
such funds to Lender or a failure of the Central Account Bank to disburse such
funds in accordance with Lender's directions shall not in and of itself
constitute a default hereunder, so long as Lender's access to such funds has not
been and is not constrained or constricted in any manner by the actions or
inactions of any Borrower Party or any Affiliate thereof (or any Person
controlling, controlled by or under the control of any Borrower Party or any
such Affiliate), such that Lender may continue to cause such payment to be made
upon Lender's authorization and direction to the Central Account Bank; or
(B) OTHER PAYMENTS. Failure of Borrowers to pay any amount from time to
time owing under this Loan Agreement, the Note, or any other Loan Documents
(other than amounts
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subject to the preceding paragraph) within ten (10) days after written notice
from Lender to Borrowers that same is due; or
(C) BREACH OF REPORTING PROVISIONS. Failure of any Borrower Party to
perform or comply with any term or condition contained in Section 5.1 which
continues for a period of thirty (30) days after written notice; provided,
Borrowers shall not be entitled to receive more than two (2) such notices in any
twelve (12) month period; or
(D) BREACH OF PROVISIONS REGARDING INSURANCE, TRANSFERS, LIENS, SINGLE
PURPOSE. (i) Failure to keep in force the insurance required by Section 5.4
hereof, (ii) the failure to comply with any other covenant of Section 5.4 which
failure under this clause (ii) continues for five (5) Business Days after notice
from Lender, (iii) breach of Article IX or Article XI hereof, (iv) breach or
default under any of Sections 5.13(B), 5.17, 5.18 or 5.19 hereof; or (v) breach
or default under Section 7.2 hereof; or
(E) BREACH OF WARRANTY. Any representation, warranty, certification or
other statement made by any Borrower Party or Affiliate thereof in any Loan
Document or in any statement or certificate at any time given in writing
pursuant to or in connection with any Loan Document is false or misleading in
any material respect as of the date made; or
(F) OTHER DEFAULTS UNDER LOAN DOCUMENTS. A default shall occur in the
performance of or compliance with any term contained in this Loan Agreement or
the other Loan Documents and such default is not fully cured within thirty (30)
days after receipt by Borrowers of notice from Lender of such default (other
than occurrences described in other provisions of this Section 8.1 or the Loan
Documents for which a different grace or cure period is specified or which
constitute immediate Events of Default); provided however that if (i) the
default is capable of cure but with diligence cannot be cured within such period
of thirty (30) days, (ii) Borrowers have commenced the cure of same within such
thirty (30)-day period and at all times after such commencement has pursued such
cure diligently, and (iii) Borrowers deliver to Lender promptly following demand
(which demand may be made from time to time by Lender) evidence satisfactory to
Lender of the foregoing, then such period shall be extended for so long as is
reasonably necessary for Borrowers in the exercise of due diligence to cure such
default, but in no event beyond the ninetieth (90th) day after the original
notice of default; or
(G) INVOLUNTARY BANKRUPTCY; APPOINTMENT OF RECEIVER, ETC. (i) A court
enters a decree or order for relief with respect to any Borrower Party in an
Involuntary Borrower Party Bankruptcy, which decree or order is not stayed or
other similar relief is not granted under any applicable federal or state law;
(ii) the occurrence and continuance of any of the following events for sixty
(60) days unless dismissed or discharged within such time: (x) an Involuntary
Borrower Party Bankruptcy is commenced, (y) a decree or order of a court for the
appointment of a receiver, liquidator, sequestrator, trustee, custodian or other
officer having similar powers over any Borrower Party or over all or a
substantial part of its property, is entered, or (z) an interim receiver,
trustee or other custodian is appointed without the consent of any Borrower
Party, for all or a substantial part of the property of such Person; or
(H) VOLUNTARY BANKRUPTCY; APPOINTMENT OF RECEIVER, ETC. (i) An order for
relief is entered with respect to any Borrower Party, or any such Person
commences a voluntary case
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under the Bankruptcy Code or any applicable bankruptcy, insolvency or other
similar law now or hereafter in effect, or consents to the entry of an order for
relief in an involuntary case or to the conversion of an involuntary case to a
voluntary case under any such law or consents to the appointment of or taking
possession by a receiver, trustee or other custodian for any Borrower Party or
for all or a substantial part of the property of any Borrower Party; (ii) any
Borrower Party makes any assignment for the benefit of creditors; or (iii) the
Board of Directors or other governing body of any Borrower Party adopts any
resolution or otherwise authorizes action to approve any of the actions referred
to in this Section 8.1(H); or
(I) BANKRUPTCY INVOLVING OWNERSHIP INTERESTS OR PROPERTY. Other than as
described in either of Sections 8.1(G) or (H), all or any portion of the
Collateral becomes property of the estate or subject to the automatic stay in
any case or proceeding under the Bankruptcy Code or any applicable bankruptcy,
insolvency or other similar law now or hereafter in effect (provided that if the
same occurs in the context of an involuntary proceeding, it shall not constitute
an Event of Default if it is dismissed or discharged within sixty (60) days
following its occurrence); or
(J) SOLVENCY. Any Borrower Party ceases to be solvent (a Borrower Party may
be kept solvent by means of capital contributions to it by its members derived
from distributions to it of excess cash flow from other Properties permitted
hereunder, or from other sources permitted hereunder) or admits in writing its
inability to pay its debts as they become due; or
(K) JUDGMENT AND ATTACHMENTS. Any lien, money judgment, writ or warrant of
attachment, or similar process is entered or filed against any Borrower Party or
any of its assets, which claim is not fully covered by insurance (other than
with respect to the amount of commercially reasonable deductibles permitted
hereunder), or is in an amount in excess of $100,000 or could (when aggregated
with all other such matters) otherwise reasonably be expected to have a Material
Adverse Effect and remains undischarged, unvacated, unbonded or unstayed for a
period of thirty (30) days; or
(L) INJUNCTION. Any Borrower Party is enjoined, restrained or in any way
prevented by the order of any court or any administrative or regulatory agency
from conducting all or any material part of its business and such action shall
have a Material Adverse Effect on such Person's ability to perform its
obligations under this Loan Agreement; or
(M) INVALIDITY OF LOAN DOCUMENTS. This Loan Agreement, the Mortgage or any
Loan Document for any reason ceases to be in full force and effect or ceases to
be a legally valid, binding and enforceable obligation of Borrowers (or any of
them) or any Lien securing the Obligations shall, in whole or in part, cease to
be a perfected first priority Lien, subject to the Permitted Encumbrances
(except in any of the foregoing cases in accordance with the terms hereof or
under any other Loan Document), or any Person who is a party thereto, other than
Lender, denies that it has any further liability (as distinguished from a
dispute over amounts due or a denial of the existence of a Default or Event of
Default) under any Loan Documents to which it is party, or gives notice to such
effect; or
(N) CROSS-DEFAULT WITH OTHER LOAN DOCUMENTS. A default beyond any
applicable grace periods shall occur under any of the other Loan Documents; or
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(O) DEFAULT UNDER MANAGEMENT AGREEMENT. Any event of default on the part of
Borrowers shall occur and be continuing under the Management Agreement.
If more than one of the foregoing paragraphs shall describe the same condition
or event, then Lender shall have the right to select which paragraph or
paragraphs shall apply. In any such case, Lender shall have the right (but not
the obligation) to designate the paragraph or paragraphs which provide for
non-written notice (or for no notice) or for a shorter time to cure (or for no
time to cure).
SECTION 8.2 ACCELERATION AND REMEDIES.
(A) Upon the occurrence of any Event of Default described in any of
Sections 8.1(G), (H), or (I) and during the continuance thereof, the unpaid
principal amount of and accrued interest and fees on the Loan and all other
Obligations shall automatically become immediately due and payable, without
presentment, demand, protest, notice of intent to accelerate, notice of
acceleration or other requirements of any kind, all of which are hereby
expressly waived by each Borrower Party. Upon and at any time after the
occurrence of and during the continuation of any other Event of Default, at the
option of Lender, which may be exercised without further notice or demand to
anyone, all or any portion of the Loan and other Obligations shall immediately
become due and payable.
(B) Upon the occurrence of and during the continuation of an Event of
Default, all or any one or more of the rights, powers, privileges and other
remedies available to Lender against Borrowers under this Loan Agreement or any
of the other Loan Documents, 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 Obligations
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 any of the
Properties. Any such actions taken by Lender shall be cumulative and concurrent
and may be pursued independently, singly, successively, together or otherwise,
at such time and in such order as Lender may 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. Without limiting the
generality of the foregoing, if an Event of Default is continuing (i) to the
fullest extent permitted by law, Lender shall not be subject to any "one action"
or "election of remedies" law or rule, and (ii) all liens and other rights,
remedies or privileges provided to Lender shall remain in full force and effect
until Lender has exhausted all of its remedies against the Properties and the
Mortgage has been foreclosed, sold and/or otherwise realized upon in
satisfaction of the Obligations or the Obligations have been paid in full.
(C) Lender shall have the right from time to time to partially foreclose
any of the Mortgages in any manner and for any amounts secured by such Mortgage
then due and payable as determined by Lender in its sole discretion including,
without limitation, the following circumstances: (i) in the event Borrowers
defaults beyond any applicable grace period in the payment of one or more
scheduled payments of principal and interest, Lender may foreclose all or any of
the Mortgages to recover such delinquent payments, or (ii) in the event Lender
elects to accelerate less than the entire outstanding principal balance of the
Loan, Lender may foreclose
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all or any of the Mortgages to recover so much of the principal balance of the
Loan as Lender may accelerate and such other sums secured by such Mortgage(s) as
Lender may elect. Notwithstanding one or more partial foreclosures, the
Properties shall remain subject to the applicable Mortgage to secure payment of
sums secured by such Mortgage and not previously recovered.
(D) Any amounts recovered from the Properties or any other collateral for
the Loan after an Event of Default may be applied by Lender toward the payment
of any interest and/or principal of the Loan and/or any other amounts due under
the Loan Documents in such order, priority and proportions as Lender in its sole
discretion shall determine.
(E) 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 Borrowers pursuant to this Loan Agreement or the other Loan
Documents, or existing at law or in equity or otherwise. Lender's rights, powers
and remedies may be pursued singly, 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 Borrowers shall not be construed to be a waiver
of any subsequent Default or Event of Default by Borrowers or to impair any
remedy, right or power consequent thereon.
SECTION 8.3 PERFORMANCE BY LENDER. If any Borrower Party shall fail to perform,
or cause to be performed, any covenant, duty or agreement contained in any of
the Loan Documents beyond any applicable notice and cure period, Lender may (but
shall have no obligation to) perform or attempt to perform such covenant, duty
or agreement on behalf of such Borrower Party. In such event, Borrowers shall,
at the request of Lender, promptly pay to Lender any amount reasonably expended
by Lender in such performance or attempted performance, together with interest
thereon at the Default Rate, from the date of such expenditure until paid. Any
amounts advanced or expended by Lender to perform or attempt to perform any such
matter shall be added to and included within the indebtedness evidenced by the
applicable Note and shall be secured by all of the Collateral securing the
applicable Loan. Notwithstanding the foregoing, IT is expressly agreed that
Lender shall not have any liability or responsibility for the performance of any
obligation of any Borrower Party under this Loan Agreement or any other Loan
Document.
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ARTICLE IX
SINGLE-PURPOSE, BANKRUPTCY-REMOTE REPRESENTATIONS, WARRANTIES AND COVENANTS
SECTION 9.1 APPLICABLE TO EACH BORROWER. Each Borrower hereby represents,
warrants and covenants as of the Closing Date and until such time as all
Obligations are paid in full (exclusive of indemnification and other obligations
which are expressly stated in this Loan Agreement to survive payment of all
principal, interest and other amounts due under the Note), that absent express
advance written waiver from Lender, which may be withheld in Lender's sole
discretion, each Borrower:
(A) was organized solely for purpose of owning and operating the Individual
Property owned by such Borrower;
(B) has not owned, does not own and will not own any assets other than the
Individual Property owned by such Borrower (including incidental personal
property necessary for the operation thereof and proceeds therefrom);
(C) is not engaged and will not engage in any business, directly or
indirectly, other than the ownership, management and operation of the Individual
Property owned by such Borrower;
(D) has not entered into and will not enter into any contract or agreement
with any partner, member, shareholder, trustee, beneficiary, principal, joint
venturer or Affiliate of any Borrower except in the ordinary course of its
business pursuant to written agreements upon terms and conditions that are
intrinsically fair and substantially similar to those that would be available on
an arms-length basis with third parties other than such Affiliate;
(E) has not incurred and will not incur any debt, secured or unsecured,
direct or contingent (including guaranteeing any obligation), other than (i) the
Obligations, and (ii) subject to the terms and conditions of Section 5.17,
unsecured trade payables incurred in the ordinary course of business of
operating the Properties and Indebtedness relating to financing of equipment and
personal property in the ordinary course of business of operating the
Properties;
(F) has not made and will not make any loan or advances to any Person
(including any of its Affiliates);
(G) has remained and as of the Closing Date reasonably expects to remain,
solvent, and has maintained, and as of the Closing Date reasonably expects 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;
(H) has not acquired and will not acquire obligations or securities of any
Person;
(I) has not failed and will not fail to correct any known misunderstanding
regarding its separate identity;
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(J) has done or caused to be done and will do all things necessary to
preserve its existence;
(K) shall continuously maintain its existence and be qualified to do
business in all states necessary to carry on its business, including the state
in which the Individual Property owned by such Borrower is located;
(L) will conduct and operate its business as presently conducted and
operated and in its own name and will not purport to operate as an integrated,
single economic unit with respect to any Person, including Sole Member, Place
Properties, Manger or Cecil Phillips;
(M) has maintained and will maintain books, records, bank accounts,
accounting records and other entity documents separate from those of its
partners, members, shareholders, trustees, beneficiaries, principals,
Affiliates, and any other Person;
(N) has been and will be, and at all times has held and will hold itself
out to the public as, a legal entity separate and distinct from any other Person
(including any of its partners, members, shareholders, trustees, beneficiaries,
principals and Affiliates, and any Affiliates of any of the same), and not as a
department or division of any Person;
(O) will file such tax returns with respect to itself as may be required
under applicable law and has prepared and will prepare separate tax returns and
financial statements separately identifying its own assets, liabilities and
financial affairs and not suggesting that their respective assets are available
to pay the claims of creditors of any other Person, including, Sole Member,
Place Properties, Manager or Cecil Phillips, or if part of a consolidated group,
is shown as a separate member of such group;
(P) has paid and shall pay its own liabilities, indebtedness, and
obligations of any kind, as the same shall become due, from its own separate
assets, rather than from those of other Persons;
(Q) will not consolidate or merge Borrower into any Person, or enter into
any transaction of merger or consolidation, or acquire by purchase or otherwise
all or substantially all of the business or assets of, or any stock or
beneficial ownership of, any Person;
(R) except for the Local Collection Account and the Central Account, has
not commingled and will not commingle or permit to be commingled its funds or
other assets with those of any other Person; and has held and will hold its
assets in its own name;
(S) has maintained and will maintain its assets in such a manner that they
are readily distinguishable from those of any other Person and it is not costly
or difficult to segregate, ascertain or identify its individual assets from
those of any other Person;
(T) except for the Loan, has not, does not and will not hold itself out to
be responsible for the debts or obligations of any other Person;
(U) except for the Loan, has not and will not guarantee or otherwise become
liable on or in connection with any obligation of any other Person and, except
for the Loan, has not and
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will not seek or obtain credit or incur any obligation to any third party based
upon the assets of any other Person and has not or will not induce any third
party to reasonably rely on the creditworthiness of any other Person;
(V) except for funds deposited into the Accounts in accordance with the
Loan Documents, shall not hold title to its assets other than in its name;
(W) complies and shall at all times hereafter comply with all of the
assumptions, statements, certifications, representations, warranties and
covenants regarding or made by it contained in or appended to the
nonconsolidation opinion delivered pursuant hereto;
(X) except for funds disbursed from the Local Collection Account and the
Central Account, has paid and will pay its own liabilities and expenses, out of
its own funds;
(Y) has held and will hold regular meetings, as appropriate to conduct its
business and has observed and will observe all limited liability company
formalities and record keeping;
(Z) has allocated and will allocate fairly and reasonably the costs
associated with common employees and any overhead for shared office space and
has used and will use separate stationary, invoices, applications, purchase
orders, contracts and checks (to the extent Borrowers use checks);
(AA) has not and will not identify the Sole Member or any Affiliate of any
Borrower or any member of any other Borrower, or any other Person, as a division
or part of it;
(BB) has paid and will pay the salaries of its own employees and has
maintained and will maintain a sufficient number of employees in light of its
contemplated business operations;
(CC) maintains, and will continue to maintain its books and records and
financial statements separate from those of any other Person, or if part of a
consolidated group, is shown as a separate member of such group;
(DD) except for the Local Collection Account and the Central Account,
maintains, and will continue to maintain, its own bank accounts separate from
any other Person;
(EE) except for the Local Collection Account and the Central Account, does
not and will not commingle its funds or assets with those of any other Person,
and holds and will hold its assets in its own name;
(FF) shall not (i) liquidate or dissolve, in whole or in part; (ii)
consolidate, merge or enter into any form of consolidation with or into any
other Person, nor convey, transfer or lease its assets substantially as an
entirety to any Person nor permit any Person to consolidate, merge or enter into
any form of consolidation with or into itself, nor convey, transfer or lease its
assets substantially as an entirety to any Person; or (iii) amend any provisions
of its organizational documents containing provisions similar to those contained
in this Article IX;
(GG) is a Delaware limited liability company (i) with one (1) member (the
"Single Member") in addition to the Independent Director (as defined below),
(ii) which shall have an
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operating agreement (the "Borrower Organizational Documents") containing each of
the representations, covenants and warranties set forth in this Article IX, and
(iii) which shall require (and the Borrower Organizational Documents of which
shall require) such Borrower to at all times cause there, to be at least one (1)
duly appointed independent manager of such Borrower who is a natural person
(each a "Independent Director") whose affirmative vote will be required in order
for a voluntary filing for protection under the Bankruptcy Code or similar
action or other Material Action (as defined below by such Borrower and who is
not at the time of such individual's initial appointment an Independent
Director, and shall not be during such individual's tenure as Independent
Director, and may not have been at any time during the preceding five years, (i)
a shareholder, member or partner of, or an officer, director, except in his or
her capacity as Independent Director of any Borrower, paid consultant or
employee of, customer of or supplier to or a member of the immediate family of
any Borrower (except in his or her capacity as Independent Direct of any
Borrower) or any of its shareholders, members, partners, subsidiaries or
affiliates or any person or other entity controlling or under common control
with any such shareholder, member, partner, supplier or customer or any member
of the immediate family of any of them. As used herein, the term "control" means
the possession, directly or indirectly, of the power to direct or cause the
direction of the management and policies of a person or entity, whether through
ownership of voting securities, by contract or otherwise;
(HH) The Borrower Organizational Documents of each Borrower provide and
shall at all times continue to provide that upon the occurrence of any event
that causes the Single Member to cease to be a member of such Borrower, the
Independent Director shall, without action of any person and simultaneously with
the Single Member ceasing to be a member of such Borrower, automatically become
and continue as a member of such Borrower and shall continue such Borrower
without dissolution;
(II) Each Borrower shall cause reputable counsel acceptable to Lender to
deliver to Lender an opinion letter satisfactory to Lender, whereby the firm
opines, among other requirements of Lender, that under Delaware law: (1) the
unanimous consent of the Single Member and the Independent Director is required
in order for each such Borrower to file a voluntary bankruptcy petition; (2) the
provision in such Borrower's Borrower Organizational Documents that require
unanimous consent and consent of the Independent Director as a condition to
filing a voluntary bankruptcy petition is enforceable against the Single Member;
(3) the bankruptcy, dissolution, liquidation or death of the Single Member will
not cause such Borrower to be dissolved; (4) no creditor of the Single Member
shall have the right to obtain possession of, or otherwise exercise legal or
equitable remedies with respect to, such Borrower's property; and (5) Delaware
law, not federal law, governs the determination of what persons or entities have
the authority to file a voluntary bankruptcy petition on behalf of such
Borrower; and
(JJ) Each Borrower's Borrower Organizational Documents provide and shall at
all times continue to provide that each Borrower shall not cause, permit, or
empower the members, board of managers, or any other person to vote on,
authorize or take any Material Action (as defined below) without the unanimous
written consent of the members and the Independent Director. As used herein,
"Material Action" shall mean to institute proceedings to have any such Borrower
adjudicated bankrupt or insolvent, or consent to the institution of bankruptcy
or
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insolvency proceedings against any such Borrower or file a petition seeking or
consent to, reorganization or relief with respect to any such Borrower under any
applicable federal or state law relating to bankruptcy, or consent to the
appointment of a receiver, liquidator, assignee, trustee, sequestrator (or other
similar official) of any such Borrower or a substantial part of any such
Borrower's property, or make any assignment for the benefit of creditors of any
such Borrower, or admit in writing any such Borrower's inability to pay its
debts generally as they become due, or take action in furtherance of any such
action.
ARTICLE X
RESTRUCTURING LOAN, SECONDARY MARKET TRANSACTIONS
SECTION 10.1 SECONDARY MARKET TRANSACTIONS GENERALLY. Lender shall have the
right to engage in one or more Secondary Market Transactions with respect to the
Loan, and to structure and restructure all or any part of the Loan, including
without limitation in multiple tranches, as a wraparound loan, or for inclusion
in a Securitization. Without limitation, Lender shall have the right to cause
the Note and the Mortgage to be split into a first and a second mortgage loan,
or into a one or more loans secured by mortgages and by ownership interests in
Borrowers in whatever proportion Lender determines, and/or to increase or
decrease the principal amounts of the Loan (with a commensurate increase or
decrease in the principal amount of the Mezzanine Loan) in an amount which does
not result in an increase or decrease in the Loan (and corresponding increase or
decrease in the Mezzanine Loan) in excess of $10,000,000.00 (upon any such
increase or decrease, Lender shall adjust the Allocated Mezzanine Loan Amount
and the Allocated Senior Loan Amount accordingly), and thereafter to engage in
Secondary Market Transactions with respect to all or any part of the
indebtedness and loan documentation. Borrowers acknowledge that it is the
intention of the parties that all or a portion of the Loan will be securitized
and that all or a portion of the Loan will be rated by one or more Rating
Agencies. Borrowers further acknowledge that additional structural modifications
may be required to satisfy issues raised by any Rating Agencies. As used herein,
"Secondary Market Transaction" means any of (i) the sale, assignment, or other
transfer of all or any portion of the Obligations or the Loan Documents or any
interest therein to one or more investors, (ii) the sale, assignment, or other
transfer of one or more participation interests in the Obligations or Loan
Documents to one or more investors, (iii) the transfer or deposit of all or any
portion of the Obligations or Loan Documents to or with one or more trusts or
other entities which may sell certificates or other instruments to investors
evidencing an ownership interest in the assets of such trust or the right to
receive income or proceeds therefrom or (iv) any other Securitization backed in
whole or in part by the Loan or any interest therein.
SECTION 10.2 COOPERATION; LIMITATIONS. Borrowers shall use all reasonable
efforts and cooperate in good faith with Lender in effecting any such
restructuring, reallocation or Secondary Market Transaction. Such cooperation
shall include without limitation, executing and delivering such amendments to
the Loan Documents and the organizational documents of any Borrower Parties as
Lender may request, provided however that no such amendment shall modify (i) the
aggregate weighted average of the interest rate payable under the Loan, (ii) the
stated maturity date of the Loan, (iii) the amortization of the principal amount
of the Loan, (iv) the non-recourse provisions of the Loan or (v) any provision,
the effect of which would materially and substantively increase any Borrower's
obligations or materially and substantively decrease any Borrower's rights under
the Loan Documents. Such cooperation also shall include
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using reasonable efforts to obtain such certificates and assurances from
governmental entities and others as Lender may reasonably request.
Notwithstanding anything contained in this Article X to the contrary, if Lender
requires Borrowers to take cooperative actions in connection with a Secondary
Market Transaction or any other transaction contemplated by this Article X,
Lender agrees to reimburse Borrowers for all reasonable out-of-pocket third
party costs actually incurred by Borrowers in connection with such cooperative
actions promptly upon written request thereof together with reasonable written
evidence of such costs and expenses.
SECTION 10.3 INFORMATION. Borrowers shall provide such access to the Properties,
personnel of the Manager and of Borrowers' constituent members and such
information, reports, copies of notices and documents relating to Borrower
Parties, Manager, the Properties and Collateral and the business and operations
of all of the foregoing and such opinions of counsel (including, without
limitation, nonconsolidation opinions) as Lender may reasonably request or as
any Rating Agency may reasonably request in connection with any such Secondary
Market Transaction including, without limitation, updated financial information,
appraisals, market studies, environmental reviews (Phase I's and, if
appropriate, Phase II's), property condition reports and other due diligence
investigations together with appropriate verification of such updated
information and reports through letters of auditors and consultants and, as of
the closing date of the Secondary Market Transaction, updated representations
and warranties made in the Loan Documents and such additional customary
representations and warranties to Borrowers' actual knowledge that any Rating
Agency may reasonably request or Lender or any purchaser, transferee, assignee,
trustee, servicer or potential investor (the Rating Agencies and all of the
foregoing parties, collectively, "Interested Parties") may reasonably request.
Within ten (10) Business Days after request by Lender, the Borrowers shall
provide an opinion of counsel reasonably satisfactory to Lender to the effect
that the description of the Loan and the terms of the Loan Documents contained
in the Disclosure Documents (hereinafter defined) and such other legal matters
contained therein as Lender may reasonably require do not contain any untrue
statement of any material fact or omit to state any material fact necessary to
make the statements therein not misleading (or if such is not the case,
identifying such untrue statement) and if reasonably required by any Rating
Agency or reasonably required by Lender, shall provide revisions or "bringdowns"
to the opinions delivered at Closing (including nonconsolidation opinions), or
if required new versions of such opinions, addressed to Lender, any trustee
under any Securitization backed in whole or in part by the Loan, any Rating
Agency that assigns a rating to any securities in connection therewith and any
investor purchasing securities therein. Lender shall be permitted to share all
such information with the investment banking firms, Rating Agencies, accounting
firms, law firms, other third party advisory firms, potential investors,
servicers and other service providers and other parties involved in any proposed
Secondary Market Transaction. Borrowers understand that any such information may
be incorporated into any offering circular, prospectus, prospectus supplement,
private placement memorandum or other offering documents for any Secondary
Market Transaction. Lender and all of the aforesaid third-party advisors and
professional firms and investors shall be entitled to rely upon such
information. Without limiting the foregoing, Borrowers, Guarantor and
Environmental Indemnitor shall provide in connection with each of (i) a
preliminary and a final private placement memorandum or (ii) a preliminary and
final prospectus or prospectus supplement, as applicable (the documents referred
to in the foregoing clauses (i) and (ii), collectively, the "Disclosure
Documents"), an agreement certifying to the actual knowledge of Borrowers that
Borrowers have examined such Disclosure Documents specified by Lender and
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that each such Disclosure Document, as it relates to Borrowers, Guarantor,
Environmental Indemnitor, any Affiliates, the Properties, Manager and, to their
actual knowledge, all other aspects of the Loan, does not, and as to information
provided in third party reports of engineers and environmental consultants, to
Borrowers', Guarantor's or Environmental Indemnitor's actual knowledge after due
inquiry, does 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 (or if
there are such facts, disclosing the same) (a "Disclosure Certificate").
Borrowers shall indemnify, defend, protect and hold harmless Lender, its
Affiliates, directors, employees, agents and each Person, if any, who controls
Lender or any such Affiliate within the meaning of Section 15 of the Securities
Act of 1933 or Section 20 of the Securities Exchange Act of 1934, and any other
placement agent or underwriter with respect to any Securitization or Secondary
Market Transaction from and against any losses, claims, damages, liabilities,
costs and expenses (including, without limitation, reasonable attorneys' fees
and disbursements) that arise out of or are based upon any untrue statement of
any material fact provided by Borrowers, Guarantor or Environmental Indemnitor
contained in any Disclosure Certificate or other information or documents
furnished by Borrowers, Guarantor, Environmental Indemnitor or their Affiliates
or in any representation or warranty of any Borrower Party contained herein or
in the other Loan Documents 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
information or necessary in order to make the statements in such information not
materially misleading. Lender and its Affiliates may publicize the existence of
the Obligations in connection with Lender's Secondary Market Transaction
activities or otherwise in accordance with this Article 10.
SECTION 10.4 ADDITIONAL PROVISIONS. In any Secondary Market Transaction, Lender
may transfer its obligations under this Loan Agreement and under the other Loan
Documents (or may transfer the portion thereof corresponding to the transferred
portion of the Obligations), and thereafter Lender shall be relieved of any
obligations hereunder and under the other Loan Documents arising after the date
of said transfer with respect to the transferred interest. Each transferee
investor shall become a "Lender" hereunder and shall be subject to all terms,
conditions and obligations under this Loan Agreement and under the other Loan
Documents. The holders from time to time of the Loan and/or any other interest
of the "Lender" under this Loan Agreement and the other Loan Documents may from
time to time enter into one or more co-lender or similar agreements in their
discretion. Borrowers acknowledge and agree that such agreements, as the same
may from time to time be amended, modified or restated, may govern the exercise
of the powers and discretionary authority of the Lender hereunder and under the
other Loan Documents, but Borrowers shall be entitled to rely upon any actions
taken by Lender or the designated servicer(s) or agent(s) for Lender, whether or
not within the scope of its power and authority under such other agreements and
provided such agreements shall not materially and adversely diminish Borrowers'
rights, obligations or liabilities under the Loan Documents,
ARTICLE XI
RESTRICTIONS ON LIENS, TRANSFERS; RELEASE OF PROPERTIES
SECTION 11.1 RESTRICTIONS ON TRANSFER AND ENCUMBRANCE. Except as expressly
permitted in this Article XI or in connection with a release of any Individual
Property permitted under Section 2.10 hereof, Borrowers shall not cause or
suffer to occur or exist, directly or indirectly,
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voluntarily or involuntarily, by operation of law or otherwise, any sale,
transfer, mortgage, pledge, Lien or encumbrance (other than Permitted
Encumbrances) of (i) all or any part of any Individual Property or any interest
therein, or (ii) any direct or indirect ownership or beneficial interest in any
Borrower or Sole Member, irrespective of the number of tiers of ownership or any
profits or proceeds of any such direct or indirect ownership interest, or (iii)
any change of control of any Borrower or Sole Member (any of the foregoing, a
"Transfer") without the prior written consent of Lender, which Lender may
withhold in its sole and absolute discretion.
SECTION 11.2 PERMITTED TRANSFERS OF BENEFICIAL INTERESTS IN BORROWERS.
(A) Notwithstanding anything to the contrary contained in this Article XI,
the provisions of Section 11.1 shall not be deemed applicable to the pledge of
the Sole Member's ownership interest in Borrowers to the Mezzanine Lender as
security for the Mezzanine Loan.
(B) Notwithstanding anything to the contrary contained in this Article XI,
transfers (but not pledges or encumbrances) of direct or indirect ownership
interests in the Sole Member shall be permitted without Lender's consent
provided that (i) no Event of Default then exists; (ii) such transfer is
permitted under the terms of the Mezzanine Loan Documents, or the Mezzanine
Lender otherwise consents in writing to such transfer; (iii) Borrowers shall
give Lender written notice of such transfer together with copies of all
instruments effecting such transfer not less than ten (10) Business Days prior
to the date of such transfer; (iv) such transfer does not and will not result in
the termination or dissolution of any Borrower or Sole Member, by operation of
law or otherwise, and no change occurs in the single purpose nature and
bankruptcy remoteness of each Borrower; (v) the Sole Member shall continue to be
the sole member of such Borrower; (vi) except in the case of Cecil Phillips, or
in the case of a New Investor Transfer approved in writing by Lender under the
provisions of Section 11.2(C) below, no Person not currently owning, directly or
indirectly, more than 49% of the beneficial ownership interests in the Sole
Member acquires more than 49% of the beneficial direct or indirect ownership
interests in such Sole Member; (vii) Cecil Phillips continues to directly or
indirectly control the Sole Member and Borrowers and Cecil Phillips retains not
less than 33% of the beneficial direct or indirect ownership interests in the
Sole Member and Borrowers, and (viii) no change in the control of the Sole
Member or Place Properties or Borrowers occurs, except in the case of a New
Investor Transfer approved in writing by Lender under the provisions of Section
11.2(C) below.
(C) Lender's prior written consent (which may be given or withheld in the
Lender's sole discretion, except as indicated in the next sentence hereof) shall
be required to any proposed transfer of direct or indirect ownership interests
in the Sole Member or Place Properties which results in any of the following
(such transfer, a "New Investor Transfer"; the transferee under a New Investor
Transfer is herein referred to as a "New Investor"): (i) a Person not currently
owning, directly or indirectly, more than 49% of the beneficial ownership
interests in the Sole Member acquiring more than 49% of the beneficial direct or
indirect ownership interests in such Sole Member, provided, this prohibition
shall not apply to Cecil Phillips' acquisition of more than 49% of the
beneficial direct or indirect ownership interests in Sole Member; or (ii) the
New Investor acquiring direct or indirect control of the Sole Member or Place
Properties or Borrower (a "New Investor Change of Control"), or acquiring a
right to assume direct or indirect control of the Sole Member or Place
Properties or any Borrower (a "New Investor Control Election"), or Cecil
Phillips retaining less than the current direct or indirect ownership interest
which he holds
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in the Sole Member. If the New Investor is a Qualified Investor, Lender shall
not unreasonably withhold, delay or condition its consent to such New Investor
Transfer, provided that (1) such transfer does not involve a pledge or
encumbrance of any direct or indirect beneficial ownership interest in
Borrowers, Sole Member or Place Properties), (2) the conditions to transfer set
forth in Section 11.2(B)(i)-(v) above are satisfied, and (3) the following
additional conditions are satisfied:
(i) Borrowers shall have submitted to Lender true, correct and
complete copies of information and documents reasonably requested by Lender
concerning the New Investor;
(ii) the Borrower Parties and the New Investor shall enter into
agreements in form and substance reasonably required by Lender which provide for
the New Investor to execute and deliver (a) a substitute guaranty and
environmental indemnity (at the time of the New Investor Transfer if a New
Investor Change of Control occurs at such time, and otherwise upon, and as a
condition to, a New Investor Control Election after a New Investor Transfer),
which shall have the same substantive terms and scope of coverage as the
existing Guaranty and Environmental Indemnity, whereupon the New Investor shall
constitute the Guarantor and Environmental Indemnitor hereunder, and Cecil
Phillips and Place Properties shall be released from liability under the
existing Guaranty and Environmental Indemnity accruing from and after the
completion of the New Investor Transfer, but not from any liabilities for acts
and occurrences taking place prior to such New Investor Transfer;
(iii) Borrowers shall have obtained (and delivered to Lender) a Rating
Confirmation with respect to the New Investor Transfer if a Securitization has
occurred or is reasonably anticipated to occur within four (4) months of the
date of such New Investor Transfer;
(iv) in the event a New Investor Transfer acquires greater than a 49%
direct or indirect interest in any Borrower or Sole Member, Borrowers shall
deliver to Lender at the closing of such New Investor Transfer an assumption fee
in the amount of one-half of one percent (0.5%) of the then unpaid principal
balance of the Loan;
(v) the Borrower Parties and New Investor shall execute and deliver
such documents as Lender may reasonably require, in form and substance
reasonably satisfactory to Lender, to evidence the New Investor Transfer;
(vi) counsel to the Borrower Parties and New Investor and replacement
guarantor and indemnitor shall deliver to Lender opinions in form and substance
satisfactory to Lender as to substantially the same matters for which opinions
were required in connection with the origination of the Loan (and as to such
additional matters as the Lender and Rating Agencies may require), including,
without limitation, a bankruptcy non-consolidation opinion; and
(vii) Borrowers shall deliver to Lender a payment in the amount of all
reasonable costs and expenses incurred by Lender in connection with the Transfer
and Assumption, including but not limited to, Lender's reasonable attorneys'
fees and expenses, all recording fees, Rating Agency fees and expenses, and all
fees payable to the title company in
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connection with the New Investor Transfer. Borrowers shall be obligated to pay
such costs and expenses upon Lender's demand regardless of whether a New
Investor Transfer is approved or occurs.
For purposes of this Section 11.2, "control" shall have the meaning given
thereto in the definition of "Affiliate" in Section 1.1 and a "change of
control" of any Person shall include the Transfer of legal or equitable
ownership interests in such Person which after giving effect to such Transfer
results in any transferee or pledgee of such interests holding more than a 49%
legal or equitable ownership interest or security interest in such Person.
SECTION 11.3 ASSUMABILITY.
(A) In the event that the Borrowers desire to transfer all of the
Properties (it being understood and agreed that no transfer of any Individual
Property less than all of the Properties shall be permitted pursuant to this
Section 11.3) to another party (the "Transferee Borrower") and have the
Transferee Borrower assume all Borrowers' obligations under the Loan Documents,
and have replacement guarantors and indemnitors assume all of the obligations of
Guarantor under the Loan Documents from and after such transfer (collectively, a
"Transfer and Assumption"), such Borrower may make a written application to
Lender for Lender's consent to the Transfer and Assumption, subject to the
conditions set forth in this Section; provided that no more than one Transfer
and Assumption shall be permitted during the term of the Loan. Together with
such written application, Borrowers shall pay to Lender the reasonable review
fee, not to exceed $5,000.00, then required by Lender. Borrowers also shall pay
on demand all of the reasonable costs and expenses incurred by Lender, including
reasonable attorneys' fees and expenses, and including the reasonable fees and
expenses of Rating Agencies and other outside entities, in connection with
considering any proposed Transfer and Assumption, whether or not the same is
permitted or occurs. Lender may grant or withhold its consent to a Transfer and
Assumption in its sole and absolute discretion. Completion of any Transfer and
Assumption shall be subject to such conditions as Lender may determine to
impose, and shall in any event be subject to satisfaction of the following
conditions:
(i) No Default or Event of Default shall have occurred and be
continuing;
(ii) Borrowers shall have submitted to Lender true, correct and
complete copies of information and documents reasonably requested by Lender
concerning the Properties, the Transferee Borrower and any replacement
guarantors and indemnitors;
(iii) Evidence satisfactory to Lender shall have been provided showing
that the Transferee Borrower and such of its Affiliates as shall be designated
by Lender comply with Article IX, as those provisions may be modified by Lender
taking into account the ownership structure of Transferee Borrower and its
Affiliates;
(iv) Borrowers shall have obtained (and delivered to Lender) a Rating
Confirmation with respect to the Transfer and Assumption and all related
transactions if a Securitization has occurred or is reasonably anticipated to
occur within four (4) months of the date of such Transfer and Assumption;
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(v) The identity, experience, and financial condition of the
Transferee Borrower and the replacement guarantors and indemnitors shall be
acceptable to Lender in its sole and absolute discretion;
(vi) Borrowers shall deliver to Lender at the closing of the Transfer
and Assumption an assumption fee in the amount of one-half of one percent
(0.50%) of the then unpaid principal balance of the Loan;
(vii) the Borrower Parties, Transferee Borrower, the original and
replacement guarantors and indemnitors shall execute and deliver such documents
as Lender may reasonably require, in form and substance reasonably satisfactory
to Lender, to evidence the Transfer and Assumption, including replacement
guaranties and indemnities and Loan Document modifications;
(viii) Counsel to the Borrower Parties, Transferee Borrower and
replacement guarantors and indemnitors shall deliver to Lender opinions in form
and substance satisfactory to Lender as to substantially the same matters for
which opinions were required in connection with the origination of the Loan (and
as to such additional matters as the Lender and Rating Agencies may require),
including, without limitation, a bankruptcy non-consolidation opinion;
(ix) Borrowers shall cause to be delivered to Lender, an endorsement
to Lender's policy of title insurance in form and substance acceptable to
Lender, in Lender's reasonable discretion, relating to, among other things, the
change in the identity of the vestee and execution and delivery of the Transfer
and Assumption documents and the continuing priority of the Lender's Mortgage
and the continuing effect of the title insurance and all endorsements thereto;
and
(x) Borrowers shall deliver to Lender a payment in the amount of all
reasonable costs and expenses incurred by Lender in connection with the Transfer
and Assumption, including but not limited to, Lender's reasonable attorneys'
fees and expenses, all recording fees, Rating Agency fees and expenses, and all
fees payable to the title company in connection with the Transfer and Assumption
(subject to Borrowers credit for any review fee actually paid to Lender as set
forth in the beginning of this Section 11.3). Borrowers shall be obligated to
pay such costs and expenses upon Lender's demand regardless of whether a
Transfer and Assumption is approved or occurs.
(B) Upon completion of a Transfer and Assumption approved in writing by
Lender and permitted hereunder and execution of a replacement guaranty by a
replacement guarantor as provided above, and provided that Lender has approved
the replacement guarantor and replacement environmental indemnitor as a
substitute for the original Guarantor and Environmental Indemnitor in Lender's
sole and absolute discretion, Borrower and any original Guarantor and
Environmental Indemnitor shall, as part of the documentation executed at the
closing of the Transfer and Assumption, be released from liability under the
Loan Documents accruing from and after the completion of the Transfer and
Assumption, but not from any liabilities for acts and occurrences taking place
prior to such Transfer and Assumption.
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SECTION 11.4 PERMITTED TRANSFERS UPON THE DEATH OR INCAPACITY OF CECIL PHILLIPS.
Notwithstanding anything to the contrary contained in this Article XI, this Loan
Agreement or the other Loan Documents, (i) involuntary transfers (but not
pledges or encumbrances) of direct or indirect ownership interests in the Sole
Member as a result of the death or incapacity of Cecil Phillips shall not
constitute a default hereunder so long as Place Properties remains as a
Guarantor and (ii) transfers by Cecil Phillips of direct or indirect ownership
interests in Sole Member, Place Properties or any Borrower for estate and tax
planning purposes to any trust for the benefit of any child, spouse, sibling,
parent or grandchild of Cecil Phillips shall not constitute a default hereunder
so long as Cecil Phillips remains as a Guarantor and so long as no change in
control of Sole Member, Place Properties or any Borrower occurs after such
transfer.
ARTICLE XII
RECOURSE; LIMITATIONS ON RECOURSE
SECTION 12.1 LIMITATIONS ON RECOURSE. Subject to the provisions and
qualifications of this Article, Lender shall not enforce the liability and
obligation of the Borrowers to perform and observe any of their obligations that
may be contained in the Note, this Loan Agreement, the Mortgage or any other
Loan Document by any action or proceeding wherein a money judgment shall be
sought against Borrowers, except that Lender may bring a foreclosure action, an
action for specific performance or any other appropriate action or proceeding to
enable Lender to enforce and realize upon its interest under the Note, this
Agreement, the Mortgage and the other Loan Documents, or in the Properties, the
Rents, or any other Collateral pursuant to the Loan Documents; provided,
however, that, except as specifically provided herein, any judgment in any such
action or proceeding shall be enforceable against Borrowers only to the extent
of Borrowers' interest in the Properties, in the Rents and in any other
Collateral. Lender, by accepting the Note, this Loan Agreement, the Mortgage and
the other Loan Documents, shall not sue for, seek or demand any monetary
judgment against any Borrower in any such action or proceeding under or by
reason of or under or in connection with the Note, this Loan Agreement, the
Mortgage or the other Loan Documents. Notwithstanding anything to the contrary
in this Loan Agreement, the Mortgage or any of the Loan Documents, the
provisions of this Section 12.1 and the other provisions of the Loan Documents
shall not, however: (a) constitute a waiver of any right which Lender may have
under Sections 506(a), 506(b), 1111 (b) or any other provisions of the
Bankruptcy Code to file a claim for the full amount of the Obligations secured
by the Mortgage or to require that all Collateral shall continue to secure all
of the Obligations owing to Lender in accordance with the Loan Documents; (b)
constitute a waiver, release or impairment of any obligation evidenced or
secured by any of the Loan Documents; (c) impair the right of Lender to name any
Borrower (or each of them) as a party defendant in any action or suit for
foreclosure and sale under the Mortgage or other Loan Documents; (d) impair the
right of Lender to obtain the appointment of a receiver; (e) impair the
enforcement of the Assignment of Leases; or (f) constitute a prohibition against
Lender to seek a deficiency judgment against Borrowers in order to fully realize
the collateral granted under the Mortgage and other Loan Documents or to
commence any other appropriate action or proceeding in order for Lender to
exercise its remedies against the Properties or any other Collateral.
SECTION 12.2 RECOURSE TO BORROWERS AND GUARANTOR AND ENVIRONMENTAL INDEMNITOR.
Notwithstanding the provisions of Section 12.1 or anything contained herein to
the contrary, (1) Borrowers and Environmental Indemnitor shall be personally
liable for, and the provisions of
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Section 12.1 shall not in any way limit or constitute a waiver of the right of
Lender to enforce the liability and obligation of Borrowers and Environmental
Indemnitor, by money judgment or otherwise, for any failure by Borrowers or by
Environmental Indemnitor to comply with the covenants, obligations, liabilities,
warranties and representations contained in the Environmental Indemnity or
Sections 4.16, 5.7, 5.8, 5.24, 5.25 and 5.26 hereof and (2) Borrowers and
Guarantor shall be personally liable for, and the provisions of Section 12.1
shall not in any way limit or constitute a waiver of the right of Lender to
enforce the liability and obligation of Borrowers and Guarantor, by money
judgment or otherwise, for the following, all of which shall be the personal
obligation and liability of Borrowers under this Loan Agreement and of Guarantor
under the Guaranty: (A) the entire Loan and all the other Obligations in the
event (i) any Borrower shall file or commence any voluntary bankruptcy,
insolvency or similar proceeding, including any petition for bankruptcy,
reorganization or arrangement pursuant to federal bankruptcy law, or any similar
federal or state law, or any Borrower shall make an assignment for the benefit
of creditors or institute receivership proceedings or similar proceedings with
respect to any Individual Property, any Borrower or any Borrower's assets, or
any such proceedings or petition shall be filed or commenced against any
Borrower by Guarantor, Environmental Indemnitor or their respective Affiliates,
or any of Borrowers (or any of them), Sole Member, Guarantor or Environmental
Indemnitor aid, solicit, support or otherwise cooperate or collude to bring
about, or acquiesce in or fail to contest, any such proceedings or petition to
bring about the filing or commencement of any such proceedings or petition
against any Borrower; or (ii) any Borrower shall breach Article XI hereof; (B)
without limiting the provisions of clause (A) above, (i) the obligations of
Borrowers under Section 5.23 hereof, and (ii) the amount of all reasonable costs
and expenses, including attorneys' fees and expenses, incurred in collecting any
amount due under the Loan Documents which, as to Borrowers, is a recourse
obligation of Borrowers as described in this Section 12.2 or, as to Guarantor,
is a recourse obligation of Guarantor under the Guaranty; and (C) without
limiting the provisions of clauses (A) and (B) above, any liability, loss,
damage, cost or expense (including, without limitation, attorneys' fees and
expenses) suffered or incurred by Lender resulting from any and all of the
following: (i) the occurrence of any of the events described in the foregoing
clauses (A) and (B); (ii) fraud or intentional misrepresentation by any Borrower
Party or any Affiliate thereof in this Loan Agreement or any other Loan Document
or otherwise in connection with the Loan; (iii) any removal or disposal of any
personal property located on any Individual Property by any Borrower Party, its
agents, Affiliates, officers, employees or property manager to the extent such
personal property is not replaced by the Borrower Parties with like property of
equivalent value; (iv) waste of any Individual Property; (v) any Borrower Party
or any Affiliate of any of them contests or in any way interferes with, directly
or indirectly, any foreclosure action or sale commenced by Lender or with any
other enforcement of Lender's rights, powers or remedies under any of the Loan
Documents or under any document evidencing, securing or otherwise relating to
the Properties or any other collateral for the Obligations (whether by making
any motion, bringing any counterclaim, claiming any defense, seeking any
injunction or other restraint, commencing any action seeking to consolidate any
such foreclosure or other enforcement with any other action, or otherwise),
other than contests brought in good faith by Borrowers upon which Borrowers
ultimately prevail pursuant to a final, non-appealable judgment entered against
Lender; (vi) any Borrower's failure to pay transfer fees and charges due in
connection with any transfer of all or any part of any Individual Property, or
any interest therein, or any beneficial interest in any Borrower; (vii) failure
by Borrowers to provide Lender with the financial statements and reports
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required under Section 5.1 (A) hereof within the time periods prescribed in
Section 5.1 (A) hereof, if such failure is not cured within the applicable
notice and cure periods for remedying any such failure; (viii) any Borrower
shall breach Article IX hereof; (ix) in the event Lender has waived (or
Borrowers have failed to pay) the monthly collection for real and personal
property taxes, assessments, insurance premiums, or ground rents, then failure
by Borrowers to pay any or all such taxes, assessments, premiums and rents; (x)
any insurance proceeds, condemnation awards or other sums or payments relating
to the Properties or the insurance required hereunder not being applied by any
Borrower Party or any Affiliate thereof in accordance with the provisions of the
Loan Documents, or are being misappropriated by any Borrower Party or any
Affiliate thereof; (xi) any rents, profits, issues, products and income of the
Properties (including, without limitation, Prepaid Rents), Security Deposits,
Lease termination payments or recoveries upon Leases, rents collected in advance
or any other funds received or collected by or on behalf of Borrowers or any
Borrower Party or any Affiliate thereof are not being deposited by Borrowers or
Manager pursuant to Section 5.15 and Section 7.2 hereof, or are being misapplied
or misappropriated by any Borrower Party or any Affiliate thereof, including
without limitation any failure or refusal to deliver any Prepaid Rents and
Security Deposits to Lender upon the occurrence and during the continuance of an
Event of Default; and (xii) any payments made by any Borrower Party to any
Affiliate thereof in violation of the Loan Documents after the occurrence and
during the continuance of an Event of Default.
SECTION 12.3 MISCELLANEOUS. No provision of this Article shall (i) affect the
enforcement of, or, subject to Section 12.1 and 12.2 above, the personal
liability of and recourse against Guarantor under the Guaranty and against the
assets of Guarantor for all liabilities and obligations under the Guaranty, (ii)
affect the enforcement of, or, subject to Section 12.1 and 12.2 above, the
personal liability of and recourse against Environmental Indemnitor under the
Environmental Indemnity and against the assets of Environmental Indemnitor for
all liabilities and obligations under the Environmental Indemnity, (iii) release
or reduce the debt evidenced by the Note, (iv) impair the lien of the Mortgage,
this Loan Agreement or any other Loan Document, (v) impair the rights of Lender
to enforce any provisions of the Loan Documents (subject to the limitation on
liability of the Guarantor as set forth in Sections 12.1 and 12.2), or (vi)
limit Lender's ability to obtain a deficiency judgment or judgment on the Loan
or otherwise against any Borrower Party to the extent necessary to obtain any
amount for which such Borrower Party may be personally liable in accordance with
this Article or any other Loan Document. '
ARTICLE XIII
MISCELLANEOUS
SECTION 13.1 EXPENSES AND ATTORNEYS' FEES. Whether or not the transactions
contemplated hereby shall be consummated, Borrowers agree to promptly pay all
reasonable fees, costs and expenses incurred by Lender in connection with any
matters contemplated by or arising out of this Loan Agreement, including the
following, and all such fees, costs and expenses shall be part of the
Obligations, payable on demand: (A) reasonable fees, costs and expenses
(including reasonable attorneys' fees, and other professionals retained by
Lender) incurred in connection with the examination, review, due diligence
investigation, documentation and closing of the financing arrangements evidenced
by the Loan Documents; (B) reasonable fees, costs and expenses (including
reasonable attorneys' fees and other professionals retained by Lender)
104
incurred in connection with any amendments, modifications and waivers relating
thereto; (C) reasonable fees, costs and expenses (including reasonable
attorneys' fees) incurred in connection with the review, documentation,
negotiation and closing of the Loan or in connection with response to a
Borrower-initiated request under or in connection with the Loan Documents; and
(D) reasonable fees, costs and expenses (including attorneys' fees and fees of
other professionals retained by Lender) incurred in any action to enforce this
Loan Agreement or the other Loan Documents, to collect any payments due from
Borrowers under this Loan Agreement, the Note or any other Loan Document or
incurred in connection with any refinancing or restructuring of the credit
arrangements provided under this Loan Agreement (excluding in connection with a
Secondary Market Transaction which costs shall be paid in accordance with
Section 10.2) or incurred in the preservation and protection of Lender's rights
hereunder or under any of the other Loan Documents, whether in the nature of a
"workout" or in connection with any insolvency or bankruptcy proceedings or
otherwise. At the Closing, Lender is authorized to pay directly from the
proceeds of the Loan any and all of the foregoing expenses then or theretofore
incurred. Any costs and expenses due and payable to Lender after the Closing
Date may be paid to Lender pursuant to the terms hereof.
SECTION 13.2 INDEMNITY. In addition to the payment of expenses as required
elsewhere herein, Borrowers agree, jointly and severally, to indemnify, defend,
protect, pay and hold Lender, its successors and assigns (including, without
limitation, the trustee and/or the trust under any trust agreement executed in
connection with any Securitization backed in whole or in part by the Loan and
any other Person which may hereafter be the holder of the Note or any interest
therein), and the officers, directors, stockholders, partners, members,
employees, agents and Affiliates of Lender and such successors and assigns
(collectively called the "Indemnitees") harmless from and against any and all
liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
claims, Tax Liabilities, broker's or finders fees, reasonable costs, expenses
and disbursements of any kind or nature whatsoever (including the reasonable
fees and disbursements of counsel for such Indemnitees in connection with any
investigative, administrative or judicial proceeding commenced or threatened,
whether or not such Indemnitee shall be designated a party thereto) that may be
imposed on, incurred by, or asserted against that Indemnitee, in any manner
relating to or arising out of any of the following (to the extent that insurance
proceeds paid on account of same shall be inadequate) (A) the enforcement of any
of the Loan Documents; (B) any breach by any Borrower of any representation,
warranty, covenant, or other agreement contained in any of the Loan Documents;
(C) any claim brought by any third party arising out of any condition or
occurrence at or pertaining to any Individual Property; (D) any design,
construction, operation, repair, maintenance, use, non-use or condition of any
Individual Property or Improvements, including claims or penalties arising from
violation of any applicable laws or insurance requirements, as well as any claim
based on any patent or latent defect, whether or not discoverable by Lender; (E)
any performance of any labor or services or the furnishing of any materials or
other property in respect of any Individual Property or any part thereof; (F)
any contest referred to in Section 5.3(B) hereof; (G) any obligation or
undertaking relating to the performance or discharge of any of the terms,
covenants and conditions of the landlord contained in the Leases; or (H) the use
or intended use of the proceeds of any of the Loan (the foregoing liabilities
herein collectively referred to as the "Indemnified Liabilities"). Any amounts
payable to any Indemnitee by reason of the application of this Section 13.2
shall be payable on demand and shall bear interest at the Default Rate from the
date such loss or damage is sustained by any Indemnitee until paid.
Notwithstanding the foregoing, Borrowers shall have
105
no liability hereunder for any Indemnified Liabilities caused by the gross
negligence or willful misconduct of any Indemnitee. The obligations and
liabilities of Borrowers under this Section 13.2 shall survive the term of the
Loan and the exercise by Lender of any of its rights or remedies under the Loan
Documents, including the acquisition of any or all of the Properties by
foreclosure or a conveyance in lieu of foreclosure.
SECTION 13.3 AMENDMENTS AND WAIVERS. Except as otherwise provided herein, no
amendment, modification, termination or waiver of any provision of this Loan
Agreement, the Note or any other Loan Document, or consent to any departure
therefrom, shall in any event be effective unless the same shall be in writing
and signed by Lender and any other party to be charged. Each amendment,
modification, termination or waiver shall be effective only in the specific
instance and for the specific purpose for which it was given. No notice to or
demand on any Borrower in any case shall entitle any Borrower or other Person to
any other or further notice or demand in similar or other circumstances (except
for any notices as expressly required herein or under the other Loan Documents).
SECTION 13.4 RETENTION OF BORROWER'S DOCUMENTS. Lender may, in accordance with
Lender's customary practices, destroy or otherwise dispose of all documents,
schedules, invoices or other papers, delivered by Borrowers to Lender unless
Borrowers request in writing that same be returned. Upon such request and at
such Borrowers' expense, Lender shall return such papers when Lender's actual or
anticipated need for same has terminated.
SECTION 13.5 NOTICES. Unless otherwise specifically provided herein, any notice
or other communication required or permitted to be given shall be in writing and
addressed to the respective party as set forth below. Notices shall be effective
(i) on the next Business Day if sent by a nationally recognized overnight
courier service, (ii) on the date of delivery by personal delivery and (iii) on
the date of transmission if sent by telefax during business hours on a Business
Day (otherwise on the next Business Day) (with receipt of confirmation),
provided a copy is also sent by nationally recognized overnight courier service
for next Business Day delivery.
Notices shall be addressed as follows:
If to any Borrower or any Borrower Party:
c/o Place Properties, L.P.
Two Live Oak - Suite 1400
3445 Peachtree Road NE
Atlanta, Georgia 30326
Attn: Cecil M. Phillips
Facsimile: (404) 495-7501
With copies to:
Place Properties, L.P.
Two Live Oak - Suite 1400
3445 Peachtree Road NE
Atlanta, Georgia 30326
106
Attn: Robert Clark
Facsimile: (404) 495-7501
Smith, Gambrell & Russell, LLP
Suite 3100, Promenade II
1230 Peachtree Street, N.E.
Atlanta, Georgia 30309-3592
Attn: Malcolm D. Young, Jr.
Facsimile: (404) 685-7074
If to Lender:
Greenwich Financial Products, Inc.
600 Steamboat Road
Greenwich, Connecticut 06830
Attn: Commercial Mortgage Loan Department
Facsimile: (203) 629-8363
With a copy to:
Greenwich Financial Products, Inc.
600 Steamboat Road
Greenwich, Connecticut 06830
Attn: Legal Department
Facsimile: (203) 629-5718
Any party may change the address at which it is to receive notices to another
address in the United States at which business is conducted (and not a
post-office box or other similar receptacle), by giving notice of such change of
address in accordance with the foregoing. This provision shall not invalidate or
impose additional requirements for the delivery or effectiveness of any notice
(i) given in accordance with applicable statutes or rules of court, or (ii) by
service of process in accordance with applicable law. If there is any assignment
or transfer of Lender interest in the Loan, then the new Lender may give notice
to the parties in accordance with this Section, specifying the addresses at
which the new Lender shall receive notice, such new Lender shall be entitled to
notice at such address in accordance with this Section.
SECTION 13.6 SURVIVAL OF WARRANTIES AND CERTAIN AGREEMENTS. All agreements,
representations and warranties made herein shall survive the execution and
delivery of this Loan Agreement, the making of the Loan hereunder and the
execution and delivery of the Note. Notwithstanding anything in this Loan
Agreement or implied by law to the contrary, the agreements of Borrower Parties
to indemnify or release Lender or Persons related to Lender, or to pay Lender's
costs, expenses, or taxes shall survive the payment of the Loan and the
termination of this Loan Agreement.
SECTION 13.7 FAILURE OR INDULGENCE NOT WAIVER; REMEDIES CUMULATIVE. No failure
or delay on the part of Lender in the exercise of any power, right or privilege
hereunder or under the Note or any other Loan Document shall impair such power,
right or privilege or be construed to be a
107
waiver of any default or acquiescence therein, nor shall any single or partial
exercise of any such power, right or privilege preclude other or further
exercise thereof or of any other right, power or privilege. All rights and
remedies existing under this Loan Agreement, the Note and the other Loan
Documents are cumulative to, and not exclusive of, any rights or remedies
otherwise available.
SECTION 13.8 MARSHALING; PAYMENTS SET ASIDE. Lender shall not be under any
obligation to marshal any assets in favor of any Person or against or in payment
of any or all of the Obligations. To the extent that any Person makes a payment
or payments to Lender, or Lender enforces its remedies or exercises its rights
of set off, and such payment or payments or the proceeds of such enforcement or
set off or any part thereof are subsequently invalidated, declared to be
fraudulent or preferential, set aside and/or required to be repaid to a trustee,
receiver or any other party under any bankruptcy law, state or federal law,
common law or equitable cause, then to the extent of such recovery, the
Obligations or part thereof originally intended to be satisfied, and all Liens,
if any, and rights and remedies therefor, shall be revived and continued in full
force and effect as if such payment had not been made or such enforcement or set
off had not occurred.
SECTION 13.9 SEVERABILITY. The invalidity, illegality or unenforceability in any
jurisdiction of any provision in or obligation under this Loan Agreement, the
Note or other Loan Documents shall not affect or impair the validity, legality
or enforceability of the remaining provisions or obligations under this Loan
Agreement, the Note or other Loan Documents or of such provision or obligation
in any other jurisdiction.
SECTION 13.10 HEADINGS. Section and subsection headings in this Loan Agreement
are included herein for convenience of reference only and shall not constitute a
part of this Loan Agreement for any other purpose or be given any substantive
effect.
SECTION 13.11 APPLICABLE LAW. THIS LOAN AGREEMENT AND THE OTHER LOAN DOCUMENTS
AND THE OBLIGATIONS ARISING HEREUNDER AND THEREUNDER SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK APPLICABLE TO
CONTRACTS MADE AND PERFORMED IN THE STATE OF NEW YORK AND ANY APPLICABLE LAWS OF
THE UNITED STATES OF AMERICA EXCEPT THAT AT ALL TIMES THE PROVISIONS FOR THE
CREATION, PERFECTION AND ENFORCEMENT OF THE LIENS AND SECURITY INTERESTS CREATED
PURSUANT TO THE MORTGAGE AND THE ASSIGNMENT OF LEASES SHALL BE GOVERNED BY THE
LAWS OF THE STATE WHERE SUCH INDIVIDUAL PROPERTY IS LOCATED, EXCEPT THAT THE
SECURITY INTERESTS IN ACCOUNT COLLATERAL SHALL BE GOVERNED BY THE LAWS OF THE
STATE OF NEW YORK OR THE STATE WHERE THE SAME IS HELD, AT THE OPTION OF LENDER.
SECTION 13.12 SUCCESSORS AND ASSIGNS. This Loan Agreement shall be binding upon
and inure to the benefit of the parties hereto and their respective successors
and assigns except that no Borrower Party may assign its rights or obligations
hereunder or under any of the other Loan Documents except as expressly provided
in Article XI.
108
SECTION 13.13 SOPHISTICATED PARTIES, REASONABLE TERMS, NO FIDUCIARY
RELATIONSHIP. Borrowers represent, warrant and acknowledge that (i) they are
sophisticated real estate investors, familiar with transactions of this kind,
and (ii) have entered into this Loan Agreement and the other Loan Documents
after conducting its own assessment of the alternatives available to them in the
market, and after lengthy negotiations in which they have been represented by
competent legal counsel of their choice. Borrowers also acknowledge and agree
that the rights of Lender under this Loan Agreement and the other Loan Documents
are reasonable and appropriate, taking into consideration all of the facts and
circumstances including without limitation the quantity of the Loan, the nature
of the Properties, and the risks incurred by Lender in this transaction. No
provision in this Loan Agreement or in any of the other Loan Documents and no
course of dealing between the parties shall be deemed to create (i) any
partnership or joint venture between Lender and Borrowers or any other Person,
or (ii) any fiduciary or similar duty by Lender to Borrowers or any other
Person. The relationship between Lender and Borrowers is exclusively the
relationship of a creditor and a debtor, and all relationships between Lender
and any other Borrower Party are ancillary to such creditor/debtor relationship.
SECTION 13.14 REASONABLENESS OF DETERMINATIONS. In any instance where any
consent, approval, determination or other action by Lender is, pursuant to the
Loan Documents or applicable law, required to be done reasonably or required not
to be unreasonably withheld, Borrowers shall bear the burden of proof of showing
that the same was not reasonable. In all cases Lender shall conclusively be
deemed to be acting reasonably when implementing any requirement of any
applicable Rating Agency for any matter for which a Rating Confirmation is
required, or in refusing or delaying any consent due to the existence of any
Event of Default. In no event shall references herein or in the other Loan
Documents to the "existence" or "continuance" of an Event of Default imply that
any Event of Default, or any Default, once maturing into an Event of Default due
to the expiration of any applicable cure period or by operation of this Loan
Agreement in the event no cure period is provided hereunder, shall be further
susceptible of cure by Borrowers or otherwise cease to be an Event of Default in
the absence of a written waiver of such Event of Default by the Lender.
SECTION 13.15 NO DUTY. All attorneys, accountants, appraisers, and other
professional Persons and consultants retained by Lender shall have the right to
act exclusively in the interest of Lender and shall have no duty of disclosure,
duty of loyalty, duty of care, or other duty or obligation of any type or nature
whatsoever to any Borrower Party or Affiliates thereof, or any other Person.
SECTION 13.16 ENTIRE AGREEMENT. This Loan Agreement, the Note, and the other
Loan Documents referred to herein embody the final, entire agreement among the
parties hereto and supersede any and all prior commitments, agreements,
representations, and understandings, whether written or oral, relating to the
subject matter hereof and may not be contradicted or varied by evidence of
prior, contemporaneous, or subsequent oral agreements or discussions of the
parties hereto. There are no oral agreements among the parties to the Loan
Documents.
SECTION 13.17 CONSTRUCTION; SUPREMACY OF LOAN AGREEMENT. Borrowers and Lender
acknowledge that each of them has had the benefit of legal counsel of its own
choice and has been afforded an opportunity to review this Loan Agreement and
the other Loan Documents with its legal counsel and that this Loan Agreement and
the other Loan Documents shall be construed as if jointly drafted by Borrowers
and Lender. If any term, condition or provision of this Loan
109
Agreement shall be inconsistent with any term, condition or provision of any
other Loan Document, then this Loan Agreement shall control.
SECTION 13.18 CONSENT TO JURISDICTION. BORROWERS HEREBY CONSENT TO THE
JURISDICTION OF ANY STATE OR FEDERAL COURT LOCATED WITHIN THE COUNTY OF NEW
YORK, STATE OF NEW YORK OR WITHIN THE COUNTY AND STATE IN WHICH ANY INDIVIDUAL
PROPERTY IS LOCATED AND IRREVOCABLY AGREES THAT, SUBJECT TO LENDER'S ELECTION,
ALL ACTIONS OR PROCEEDINGS ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE
OTHER LOAN DOCUMENTS SHALL BE LITIGATED IN SUCH COURTS. BORROWERS ACCEPT FOR
ITSELF AND IN CONNECTION WITH THE PROPERTIES, GENERALLY AND UNCONDITIONALLY, THE
NONEXCLUSIVE JURISDICTION OF THE AFORESAID COURTS AND WAIVES ANY DEFENSE OF
FORUM NON CONVENIENS, AND IRREVOCABLY AGREES TO BE BOUND BY ANY JUDGMENT
RENDERED THEREBY IN CONNECTION WITH THIS AGREEMENT, THE NOTE, SUCH OTHER LOAN
DOCUMENTS OR SUCH OBLIGATION. NOTHING HEREIN SHALL AFFECT THE RIGHT TO SERVE
PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR SHALL LIMIT THE RIGHT OF LENDER
TO BRING PROCEEDINGS AGAINST ANY BORROWER PARTY IN THE COURTS OF ANY OTHER
JURISDICTION.
SECTION 13.19 WAIVER OF JURY TRIAL. EACH OF BORROWERS AND LENDER HEREBY WAIVES
ITS RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON
OR ARISING OUT OF THIS LOAN AGREEMENT, ANY OF THE LOAN DOCUMENTS, OR ANY
DEALINGS BETWEEN ANY BORROWER PARTY AND LENDER RELATING TO THE SUBJECT MATTER OF
THIS LOAN TRANSACTION AND THE LENDER/BORROWER RELATIONSHIP THAT IS BEING
ESTABLISHED. EACH OF BORROWERS AND LENDER ALSO WAIVES ANY BOND OR SURETY OR
SECURITY UPON SUCH BOND WHICH MIGHT, BUT FOR THIS WAIVER, BE REQUIRED OF IT. THE
SCOPE OF THIS WAIVER IS INTENDED TO BE ALL-ENCOMPASSING OF ANY AND ALL DISPUTES
THAT MAY BE FILED IN ANY COURT AND THAT RELATE TO THE SUBJECT MATTER OF THIS
TRANSACTION, INCLUDING WITHOUT LIMITATION, CONTRACT CLAIMS, TORT CLAIMS, BREACH
OF DUTY CLAIMS, AND ALL OTHER COMMON LAW AND STATUTORY CLAIMS. EACH OF BORROWERS
AND LENDER ACKNOWLEDGES THAT THIS WAIVER IS A MATERIAL INDUCEMENT TO ENTER INTO
THIS LOAN AGREEMENT, THAT EACH HAS ALREADY RELIED ON THE WAIVER IN ENTERING INTO
THIS LOAN AGREEMENT AND THAT EACH WILL CONTINUE TO RELY ON THE WAIVER IN THE
FUTURE. EACH OF BORROWERS AND LENDER FURTHER WARRANTS AND REPRESENTS THAT IT HAS
REVIEWED THIS WAIVER WITH ITS LEGAL COUNSEL, AND THAT IT KNOWINGLY AND
VOLUNTARILY WAIVES ITS JURY TRIAL RIGHTS FOLLOWING CONSULTATION WITH LEGAL
COUNSEL. THIS WAIVER IS IRREVOCABLE, MEANING THAT IT MAY NOT BE MODIFIED EITHER
ORALLY OR IN WRITING (OTHER THAN BY A MUTUAL WRITTEN WAIVER SPECIFICALLY
REFERRING TO THIS SECTION 13.19 AND EXECUTED BY EACH OF THE PARTIES HERETO), AND
THE WAIVER SHALL APPLY TO ANY
110
SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO THIS LOAN
AGREEMENT, THE LOAN DOCUMENTS, OR TO ANY OTHER DOCUMENTS OR AGREEMENTS RELATING
TO THE LOAN. IN THE EVENT OF LITIGATION, THIS LOAN AGREEMENT MAY BE FILED AS A
WRITTEN CONSENT TO A TRIAL BY THE COURT.
SECTION 13.20 COUNTERPARTS; EFFECTIVENESS. This Loan Agreement and other Loan
Documents and any amendments or supplements thereto may be executed in any
number of counterparts and by different parties hereto in separate counterparts,
each of which when so executed and delivered shall be deemed an original, but
all of which counterparts together shall constitute but one and the same
instrument. This Loan Agreement shall become effective upon the execution of a
counterpart hereof by each of the parties hereto.
SECTION 13.21 SERVICER. Lender shall have the right from time to time to
designate and appoint one or more Servicers, and to change or replace any
Servicer. All rights of the Lender hereunder may exercised by Servicer. Servicer
shall be entitled to the benefit of all obligations of any of Borrower Party in
favor of Lender.
SECTION 13.22 WAIVER OF NOTICE. Borrowers shall not be entitled to any notices
of any nature whatsoever from Lender except with respect to matters for which
this Agreement or another Loan Document specifically and expressly provides for
the giving of notice by Lender to Borrowers and except with respect to matters
for which Borrowers are not, pursuant to applicable Legal Requirements,
permitted to waive the giving of notice. Borrowers hereby expressly waive the
right to receive any notice from Lender with respect to any matter for which the
Loan Document or other Loan Documents does not specifically and expressly
provide for the giving of notice by Lender to Borrowers.
SECTION 13.23 OFFSETS, COUNTERCLAIMS AND DEFENSES. Any assignee of Lender's
interest in and to this Loan Agreement and the other Loan Documents shall take
the same free and clear of all offsets, counterclaims or defenses which are
unrelated to this Loan Agreement and the other Loan Documents which Borrowers
may otherwise have against any assignor or this Loan Agreement and the other
Loan Documents. No such unrelated counterclaim or defense shall be interposed or
asserted by Borrowers in any action or proceeding brought by any such assignee
upon this Loan Agreement or upon any other Loan Document. 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 Borrowers.
SECTION 13.24 WAIVER OF COUNTERCLAIM. Borrowers hereby waive the right to assert
a counterclaim, other than compulsory counterclaim, in any action or proceeding
brought against it by Lender or its agents.
SECTION 13.25 BROKERS AND FINANCIAL ADVISORS. Each Borrower hereby represents
that neither it nor any of its Affiliates has dealt with any financial advisors,
brokers, underwriters, placement agents, agents or finders in connection with
the transactions contemplated by this Loan Agreement, except for Blue Vista
Capital which shall be paid prior to the date hereof. Borrowers hereby agree to
indemnify and hold Lender harmless from and against any and all claims,
liabilities, costs and expenses of any kind in any way relating to or arising
from a claim by any
111
Person that such Person acted on behalf of the indemnifying party in connection
with Borrowers or its Affiliates transactions contemplated herein. The
provisions of this Section 13.25 shall survive the expiration and termination of
this Agreement and the repayment of the Obligations.
SECTION 13.26 JOINT AND SEVERAL LIABILITY. All representations, warranties,
covenants (both affirmative and negative) and all other obligations hereunder
shall be the joint and several obligation of each Borrower and a default or
Event of Default by any Borrower shall be deemed a default or Event of Default
by all of the Borrowers. The representations, covenants and warranties contained
herein or in any other Loan Document shall be read to apply to each Borrower
when the context so requires but a breach of any such representation, covenant
or warranty or a breach of any obligation under the Loan Documents shall be
deemed a breach by all the Borrowers, entitling Lender to exercise all of its
rights and remedies under all the Loan Documents and under applicable law.
SECTION 13.27 RATING AGENCY APPROVAL. At any time this Loan Agreement requires
that Borrowers obtain a Rating Agency approval, consent or other finding, Lender
shall, at the request of Borrowers, make a formal request therefor and shall use
reasonable efforts, without any cost or expense to Lender, to assist Borrowers
in obtaining such approval, consent or other finding.
[SIGNATURE PAGES FOLLOW]
112
IN WITNESS WHEREOF, the parties hereto have duly executed and
delivered this Loan Agreement as of the date first written above.
BORROWERS:
CAPE PLACE (DE), LLC,
a Delaware limited liability company
By: /s/ Cecil M. Phillips
------------------------------------
Name: Cecil M. Phillips
Title: President
CLAYTON PLACE (DE), LLC,
a Delaware limited liability company
By: /s/ Cecil M. Phillips
------------------------------------
Name: Cecil M. Phillips
Title: President
CLEMSON PLACE (DE), LLC,
a Delaware limited liability company
By: /s/ Cecil M. Phillips
------------------------------------
Name: Cecil M. Phillips
Title: President
JACKSONVILLE PLACE (DE), LLC,
a Delaware limited liability company
By: /s/ Cecil M. Phillips
------------------------------------
Name: Cecil M. Phillips
Title: President
MACON PLACE (DE), LLC,
a Delaware limited liability company
By: /s/ Cecil M. Phillips
------------------------------------
Name: Cecil M. Phillips
Title: President
[ADDITIONAL SIGNATURE PAGES FOLLOW]
MARTIN PLACE (DE), LLC,
a Delaware limited liability company
By: /s/ Cecil M. Phillips
------------------------------------
Name: Cecil M. Phillips
Title: President
MURRAY PLACE (DE), LLC,
a Delaware limited liability company
By: /s/ Cecil M. Phillips
------------------------------------
Name: Cecil M. Phillips
Title: President
RIVER PLACE (DE), LLC,
a Delaware limited liability company
By: /s/ Cecil M. Phillips
------------------------------------
Name: Cecil M. Phillips
Title: President
TROY PLACE (DE), LLC,
a Delaware limited liability company
By: /s/ Cecil M. Phillips
------------------------------------
Name: Cecil M. Phillips
Title: President
LENDER:
GREENWICH CAPITAL FINANCIAL PRODUCTS,
INC., A DELAWARE CORPORATION
By: /s/ DAVID M MURDOCH
------------------------------------
Name: DAVID M MURDOCH
Title: MANAGING DIRECTOR
LIST OF SCHEDULES
Schedule A Legal Descriptions for the Properties
Schedule B Intentionally Omitted
Schedule C Environmental Reports
Schedule 3.1(N) Calendar Year 2004 Budgets
Schedule 4.1(C) Organizational Chart for Borrower Parties
Schedule 6.4 Approved Capital Expenditures
Schedule 6.6 Certain Reserve Funding Conditions
Schedule 6.7 Immediate Repairs
List of Schedules
SCHEDULE A-l
[SEE ATTACHED]
Schedule A
Cape Place
1710 N. Sprigg St.
Cape Girardeau, MO
(Cape Girardeau County)
EXHIBIT A
LEGAL DESCRIPTION
THAT PART OF FRACTIONAL SECTION 29, TOWNSHIP 31 NORTH, RANGE 14 EAST OF THE
FIFTH PRINCIPAL MERIDIAN, CITY AND COUNTY OF CAPE GIRADEAU, STATE OF MISSOURI,
DESCRIBED AS FOLLOWS:
Commence at the Southwest corner of U.S.P. Survey No. 3091, said point being on
the centerline of Bertling Street; thence leaving said centerline, North 0
degrees 36' 15" West, 30.20 feet, to a point on the North Right of Way line of
said Bertling Street; thence along said North Right of Way line of Bertling
Street, North 81 degrees 02" 15' West, 12.70 feet to the POINT OF BEGINNING;
thence continuing along said North Right of Way line of Bertling Street, a North
83 degrees 08' 32" West, 115.49 feet; thence North 78 degrees 51" 18" West,
200.56 feet; thence 83 degrees 08' 39" West, 135.00 feet to the intersection of
the North Right of Way line of Bertling Street and the East Right of Way line of
Sprigg Street; thence North 49 degrees 01' 24" West, 99.70 feet along the said
East Right of Way line of Sprigg Street; thence North 0 degrees 39' 10" East,
80.00 feet; thence North 65 degrees 38' 09" East, 82.76 feet; thence North 7
degrees 46' 40" East, 120.93 feet; thence North 89 degrees 20' 50" West, 9.00
feet; thence North 24 degrees 26' 20" West, 27.69 feet; thence North 65 degrees
58' 57" West, 75.44 feet; thence North 0 degrees 39' 10" East, 415.00 feet;
thence North 10 degrees 06' 55" East, 145.27 feet; thence leaving said East
Right of Way line of Sprigg Street, North 89 degrees 18' 37" East, 476.82 feet
to a point on the West Right of Way line of Scott's Lane; thence along said West
Right of Way line of Scott's Lane, South 0 degrees 36' 15" East, 987.81 feet to
the POINT OF BEGINNING.
SCHEDULE A-2
[SEE ATTACHED]
Schedule A
Clayton Place (Phases I & II)
5809 North Lake Drive
Morrow/Lake City, GA
(Clayton County)
EXHIBIT A
LEGAL DESCRIPTION
ALL AND SINGULAR THAT CERTAIN TRACT of land lying and being in Land Lot 146,
12th District of Clayton County, Georgia, being more particularly described as
follows:
COMMENCING at a concrete monument on the northerly mitered right-of-way line of
Clayton State Boulevard (variable r/w) and the westerly right-of-way line of
North Lake Drive (variable r/w), said point being the POINT OF BEGINNING; thence
continuing along the northerly right-of-way line of Clayton State Boulevard
along the arc of a curve to the left, 609.38 feet said curve having a radius of
1522.39 feet and a chord of South 88 degrees 05' 03" West, 605.32 feet to a
point; thence leaving said right-of-way, North 00 degrees 03' 09" West, a
distance of 131.77 feet to a point; thence North 89 degrees 00' 14" East, a
distance of 81.46 feet to a point; thence North 01 degrees 02' 10" West, a
distance of 441.95 feet to a point; thence North 88 degrees 56' 38" East, a
distance of 36.19 feet to a point; thence North 01 degrees 20' 22" West, a
distance of 130.00 feet to a point; thence South 88 degrees 56' 38" West, a
distance of 97.64 feet to a point; thence North 24 degrees 29' 58" East, a
distance of 132.27 feet to a point; thence North 00 degrees 24' 56" West, a
distance of 276.46 feet to a point on the southerly right-of-way line of Harper
Road (variable r/w); thence continuing along said southerly right-of-way line,
North 89 degrees 23' 18" East, a distance of 738.08 feet to a point at the
intersection of the southerly right-of-way line of Harper Road and the westerly
right-of-way line of North Lake Drive (variable r/w); thence continuing along
said westerly right-of-way line, South 02 degrees 53' 38" West, a distance of
390.97 feet to a point; thence along the arc of a curve to the right a distance
of 220.73 feet, said curve having a radius of 4865.18 feet and a chord bearing
of South 06 degrees 32' 09" West, a distance of 220.71 feet to a point; thence
along the arc of a curve to the right a distance of 21.07 feet, said curve
having a radius of 5160.11 feet and a chord bearing of South 07 degrees 45' 25"
West, 21.07 feet to a point; thence along the arc of a curve to the right a
distance of 119.78 feet, said curve having a radius of 4712.00 feet and a chord
bearing of South 11 degrees 24' 37" West, 119.77 feet, to a point; thence South
13 degrees 36' 51" West, a distance of 95.72 feet to a point; thence along the
arc of a curve to the right a distance of 188.81 feet, said curve having a
radius of 1195.70 feet and a chord bearing of South 18 degrees 13' 38" West,
188.61 feet to a point; thence South 22 degrees 48' 58" West, a distance of
66.20 feet to a point on the northerly mitered right-of-way line of Clayton
State Boulevard; thence continuing along said mitered right-of-way line, South
66 degrees 13' 29" West, a distance of 17.66 feet to a concrete monument, said
point being the POINT OF BEGINNING. Containing 731,467 square feet or 16.792
acres, more or less.
TOGETHER WITH those certain easements benefiting the above fee parcel created by
that certain Easement Agreement by and among Tuff Archives LLC, a Georgia
limited liability company and Clayton Place, LLC, a Georgia limited liability
company, dated February 4, 2003, filed of record February 7, 2003, recorded in
Deed Book 6267, Page 219, aforesaid records.
TOGETHER WITH those certain easements benefiting the above fee parcel created by
that certain Declaration of Easements by Clayton Place, LLC, a Georgia limited
liability company, dated September 30, 2003, filed of record October 3, 2003,
recorded in Deed Book 6950, Page 91, aforesaid records; and filed of record
October 10, 2003, recorded in Deed Book 6978, Page 154, aforesaid records.
SCHEDULE A-3
[SEE ATTACHED]
Schedule A
Clemson Place
133 Clemson Place-Circle
(Calhoun Street Extension)
Clemson, SC
(Pickens County)
EXHIBIT A
LEGAL DESCRIPTION
All those certain pieces, parcels or lots of land situate, lying and being in
the State of South Carolina, County of Pickens, within the City limits of the
Town of Clemson being known and designated as Lot Numbers 1-48, and also the 50'
road right of way for Calhoun Street (now known as Clemson Place Circle, private
road, as shown on Clemson Engineering Services plat dated April 8, 2003) as
shown on a plat entitled Providence Place Subdivision, dated December 28, 1992,
by Perry G. Davis, Jr., LS #14802 of B.P. Barber and Associates, Inc., recorded
in Plat Book 55, Page 97, records Pickens County, South Carolina, to which plat
reference is hereby made for a more complete metes and bounds description
thereof." Said land is more particularly described as follows:
Beginning at an iron pin (.5" rebar) at the Southeast corner of said property
(Clemson Place Apartments in Clemson, S.C.) adjacent to Calhoun Street and the
Bradley Complex proceed N 20 51 48 E for 355.52 feet to a 3 inch diameter
concrete monument; thence N 45 54 01 E for 54.69 feet to a .5" rebar pin; thence
N 25 35 48 W for 138.41 feet to a .5" rebar pin; thence N 71 06 56 W for 200.07
feet to a 1" pipe; thence N 71 07 13 W for 145.09 feet to a 1" pipe, thence N 71
06 27 W for 887.04 feet to a 3 inch diameter concrete monument; thence S 64 59
27 W for 565.75 feet to a 3 inch diameter concrete monument; thence N 39 03 24 W
for 64.36 feet to a .5" rebar pin; thence S 05 35 22 W for 159.18 feet to a 1"
pipe; thence S 71 26 17 E 124.51 feet to a .5" rebar pin; thence S 71 26 41 E
918.96 feet to a 1.25" pipe; thence S 71 27 57 E for 674.25 feet to the
beginning corner.
TOGETHER with a perpetual non-exclusive right of way and easement, twenty (20)
feet in width, to construct, install, maintain, repair, replace and extend
sanitary sewer and storm drainage lines over and across the Riverpoint property,
as granted in certain Agreement and Easement made by and between Frederick L.
Russell, Trustee under three agreements with S., W. Helschman, dated April 1,
1968, Riverpoint Associates, and the City of Clemson, South Carolina, dated July
9, 1992 and recorded in Book 180 at Page 77.
This property is bounded on the East by Marion Bledsoe, James D. Burton and Edna
Moore, on the North side separated by a 20 foot buffer, James C. Dozier, John M.
Geer, Jr., John R. Hambrick and Dr. B.R. Myers and also by Hazelwood Drive (five
foot buffer between road right of way). On the West Aileen P. Moore and
Riverpoint Associates (20 foot buffer between Riverpoint Associates and this
property) and on the South by Riverbank Commons (Regime 1) and the Bradley
Company (University Place).
Being the identical property conveyed to Clemson Place (DE), LLC, a Delaware
limited liability company, by deed from Clemson Place, LLC, a South Carolina
limited liability company, dated ______________, 2004, and recorded in Deed Book
__________, Page _______.
Pickens County Tax Map Parcel #4044-11-66-9178
SCHEDULE A-4
[SEE ATTACHED]
Schedule A
Jacksonville Place
331 Nisbet Street, NW
Jacksonville, AL
(Calhoun County)
EXHIBIT A
LEGAL DESCRIPTION
Being a parcel of property lying in the City of Jacksonville, County of Calhoun,
State of Alabama, and being more fully described as follows:
Commence at the Northeast corner of Block 113-1/2 of the Jacksonville Mining and
Manufacturing Company as recorded in the Calhoun County Probate Office and run
North 88 degrees ll'05" East a distance of 24.84 feet to an existing pinch top
pipe and the point of beginning. From said paint of beginning run North 88
degrees 05'28" East a distance of 50.28 feet to an existing 1" pipe; thence run
North 88 degrees 16'06" East a distance of 285.04 feet to an existing iron with
cap stamped L.S. 12160 on the Westerly right-of-way line of Southern Railway
(Abandoned) now known as Chief Ladiga Trail; thence run North 19 degrees 11'07"
East along said line a distance of 1024.74 feet to on existing iron with cap
stamped L.S. 20353; thence leaving said line run South 88 degrees 15'06" West a
distance of 699.89 feet to an existing iron with cap stamped L.S. 20353; thence
run South 19 degrees 10'53" West a distance of 945.12 feet to an iron pin set
(1/2" rebar with cap stamped JBW&T INC. CA0046LS); thence run South 88 degrees
12'22" West a distance of 58.37 feet to an existing iron with cap stamped L.S.
20353; thence run South 01 degrees 45'25" East a distance of 440.23 feet to a 4"
pipe on the Northerly right-of-way line of Alabama Highway 204; thence run North
87 degrees 56'02" East along said right-of-way line a distance of 59.78 feet to
an iron pin set; thence leaving said right-of-way line run North 01 degrees
44'43" West a distance of 365.15 feet to an existing 4" pipe; thence run North
88 degrees 11'O5" East a distance of 334.59 feet to the point of beginning.
Said parcel of land being portion of the NE 1/4 and the NW 1/4, Section
11-T-14-S, R-8-E, also being a portion of Lot 1 of Jacksonville Place
Subdivision as recorded in Plat Book DO, Page 48, Calhoun County Probate Office,
being subject to any easement rights for utilities on or over said property,
lying and being in the City of Jacksonville, Calhoun County, Alabama and
containing 15.96 acres, more or less.
Parcel #: 11-12-01-11-1-001-012.001
11-12-01-11-2-001-003.005
SCHEDULE A-5
[SEE ATTACHED]
Schedule A
Macon Place
5091 Ivey Dr.
Macon, GA
(Bibb County)
EXHIBIT A
LEGAL DESCRIPTION
All that tract or parcel of land situate, lying and being in Land Lot 43 of the
Fourth Land District of Bibb County, Georgia, and being more particularity
described as follows:
Commencing at the intersection of the westerly right-of-way of Ivey Drive and
the southerly right-of-way of Columbus Road;
THENCE South 60 degrees 24 minutes 00 seconds West for a distance of 497.45 feet
along the southerly right-of-way of Columbus Road to an iron pin, said point
being THE POINT OF BEGINNING;
THENCE South 29 degrees 36 minutes 00 seconds East for a distance of 220.00 feet
to an iron pin;
THENCE North 60 degrees 24 minutes 00 seconds East for a distance of 142.18 feet
to an iron pin;
THENCE South 00 degrees 02 minutes 15 seconds West for a distance of 311.11 feet
to an iron pin;
THENCE South 89 degrees 57 minutes 45 seconds East for a distance of 200.00 feet
to an iron pin located on the westerly right-of-way of Ivey Drive;
THENCE South 00 degrees 02 minutes 15 seconds West for a distance of 484.59 feet
along the westerly right-of-way of Ivey Drive to an iron pin;
THENCE South 76 degrees 19 minutes 33 seconds West for a distance of 181.00 feet
to an iron pin;
THENCE South 74 degrees 31 minutes 40 seconds West for a distance of 214.06 feet
to a point;
THENCE North 04 degrees 49 minutes 13 seconds West for a distance of 75.85 feet
to a point;
THENCE North 48 degrees 44 minutes 44 seconds West for a distance of 55.60 feet
to a point;
THENCE North 44 degrees 34 minutes 32 seconds West for a distance of 95.82 feet
to a point;
THENCE North 16 degrees 49 minutes 48 seconds West for a distance of 200.00 feet
to a point;
THENCE North 06 degrees 36 minutes 02 seconds West for a distance of 97.30 feet
to a point;
THENCE North 19 degrees 53 minutes 23 seconds West for a distance of 70.00 feet
to a point;
THENCE North 37 degrees 37 minutes 48 seconds West for a distance of 87.93 feet
to a point;
THENCE North 18 degrees 17 minutes 27 seconds West for a distance of 105.91 feet
to a point;
THENCE North 06 degrees 15 minutes 31 seconds West for a distance of 163.46 feet
to a point located on the southerly right-of-way of Columbus Road;
THENCE North 60 degrees 24 minutes 00 seconds East for a distance of 303.04 feet
along the southerly right-of-way of Columbus Road to an iron pin, said point
being THE POINT OF BEGINNING.
Said property contains 10.07045 acres or 438.669 square feet.
Together with those easement rights arising under that Sewer Easement Agreement
between Place Properties, LLC and Macon Place, LLC dated February 11, 2000 and
recorded on February 25, 2000 in Deed Book 4618, page 330, Clerk's Office, Bibb
Superior Court.
2
SCHEDULE A-6
[SEE ATTACHED]
Schedule A
Martin Place
232 West Peach Street
Martin, TN
(Weakley County)
EXHIBIT A
LEGAL DESCRIPTION
PARCEL 1
BEING a 16.061 acre tract of and located on the south side of Hannings Lane and
the north side of Peach Street in the City of Martin, Tennessee, and lying in
the 2nd Civil District of Weakley County, and being part of Parcel 8 Group A Tax
Map 78-D and being that conveyed to Martin Place LLC, a Georgia Limited
Liability Company, by Special Warranty Deed in Book 374 Page 549 as recorded in
the Register's Office of Weakley County, Tennessee as more particularly
described as follows:
BEGINNING at a point in the centerline of Peach Street at the southeast corner
of a tract belonging to the University of Tennessee (Deed from Valda Dodd to the
University of Tennessee Book 113 page 490 and Affidavit of Heirship of T.M. and
Bonnie Todd, Book 113 Page 489), said point lies 32.26 feet south of a found
iron pin on the University of Tennessee's east line and also lies South 89
degrees 24 minutes 05 seconds East, a distance of 204.77 feet, from the
centerline intersection of Peach Street with Scateswood Drive, said point of
beginning is the southwest corner of the tract being described herein:
Thence, North 00 degrees 33 minutes 31 seconds East, a distance of 798.82 feet,
along the east line of the University of Tennessee, passing a found iron pin on
line at 32.26 feet, to a wood post in a fence;
Thence, North 00 degrees 00 minutes 16 seconds East, a distance of 396.03 feet,
continuing along the east line of the University of Tennessee, to a found iron
pin at the northeast corner of the University of Tennessee, said pin lies in the
south line of another tract belonging to the University of Tennessee (DB. 137
PG. 222);
Thence, North 88 degrees 23 minutes 07 seconds East, a distance of 164.24 feet,
along the south line of the University of Tennessee, to a found iron pin at
their southeast corner, said pin lies at the southwest corner of a 22 foot wide
strip belonging to Martin Place, LLC (DB. 374 PG. 553);
Thence, North 88 degrees 23 minutes 07 seconds East, a distance of 22.00 feet
along the south line of said 22 foot wide strip belonging to Marlin Place, LLC,
to a found iron pin at the southwest corner of the Catholic Diocese of Memphis
Property (Plat Book 3 Page 79 Slide 58);
Thence, North 88 degrees 23 minutes 07 seconds East, a distance of 577.45 feet,
along the south line of said Catholic Diocese property, to a found iron pin at
the southeast corner of said Church property, said pin lies in the west line of
a tract belonging to Margie Taylor (Margie M. Taylor
Revocable Trust, Deed Book 336 Page 473; Book 106 Page 455; Book 115 Page 417;
Book 109 Page 539);
Thence, South 01 degree 45 minutes 25 seconds East, a distance of 588.85 feet,
along the west line of Taylor and continuing with the west line of a tract
belonging to C & J Enterprises (DB. 319 PG. 248), to a found iron pin in an 18
inch locust tree at an inside corner of C & J Enterprises;
Thence, South 36 degrees 01 minute 52 seconds West, a distance of 182.00 feet,
along the west line of C & J Enterprises, to a found iron pin;
Thence, South 89 degrees 40 minutes 28 seconds West a distance of 290.00 feet
along an inside line of C & J Enterprises to a found iron pin;
Thence, South 20 degrees 11 minutes 26 seconds West, a distance of 512.00 feet,
along the west line of C & J Enterprises, passing a found iron pin on line at
469.87 feet, to a point in the centerline of Peach Street at the southwest
corner of C & J Enterprises;
Thence, North 89 degrees 34 minutes 18 seconds West, a distance of 215.50 feet,
along the centerline of Peach Street to the point of beginning, containing
16.061 acres or 699,617.1600 square feet.
PARCEL 2
BEING a 0.214 acre strip of land located on the south side of Hanning Lane in
the City of Martin, Tennessee and lying in the 2nd Civil District of Weakley
County, and being part of Parcel 8 Group A Tax Map 78-D and being that conveyed
to Martin Place, LLC, a Georgia Limited Liability Company, by Quitclaim Deed in
Book 374 Page 553 as recorded in the Registers Office of Weakley County,
Tennessee as more particularly described as follows:
BEGINNING at a found iron pin in the south right of way of Hannings Lane, said
right of way is 50 feet in width, said pin lies at the northwest corner of a
tract belonging to Branstetter (DB. 310 PG. 119), and is the northeast corner of
the strip of land being described herein;
Thence, South 02 degrees l3 minutes 09 seconds West, a distance of 424.45 feet
along the west line of Branstetter, passing a found iron pin on line at
Branstetter's southwest corner at 200.13 feet, said pin also being an inside
northwest corner of the Catholic Diocese of Memphis (Plat Book 3 Page 79 Slide
58), and continuing along the west line of said Catholic Diocese property, to a
found iron pin at the southwest corner, said pin lies on the north line of a
tract belonging to Martin Place, LLC (DB. 374 PG. 549);
Thence, South 88 degrees 23 minutes 07 seconds West, a distance of 22.00 feet,
along the north line of Martin Place, LLC, to a found iron pin at the southeast
corner of the University of Tennessee property (DB. 137 PG. 222);
2
Thence, North 02 degrees 13 minutes 00 seconds East, a distance of 424.78 feet,
along the east line of said University of Tennessee property, to a found iron
pin in the south right of way of Hannings Lane, being the northeast corner of
said University of Tennessee property;
Thence, North 89 degrees 14 minutes 08 seconds East, a distance of 22.00 feet
along the south right of way of Hannings Lane, to the point of beginning,
containing 0.214 acres or 9,324.7450 square feet.
3
SCHEDULE A-7
[SEE ATTACHED]
Schedule A
Murray Place
1700 Lowes Drive
Murray, KY
(Calloway County)
EXHIBIT A
LEGAL DESCRIPTION
Located in Calloway County, Kentucky and being described as follows:
PARCEL I:
Being all of Parcel 3 as shown on approved Minor Subdivision Plat recorded in
Plat Book 28, Card 14, Slide 2630 in the office of the Clerk of Court of
Calloway County, Kentucky.
THERE IS NO PARCEL II.
PARCEL III:
Non-exclusive easement rights for drainage purposes across Parcel 6 and on
Parcel 5 of that certain Minor Subdivision Plat recorded in Plat Book 28, Card
14, Slide 2630, said records, as granted in that certain Drainage Easement
Agreement dated November 22, 1999, recorded in Deed Book 334, page 117, said
records.
PARCEL IV:
Temporary easements for installation and maintenance of a certain sign on Parcel
7 of that certain Minor Subdivision Plat recorded in Plat Book 28, Card 14,
Slide 2630, said records, as granted in that certain Sign Lease and Easement
Agreement dated November 22, 1999, recorded in Deed Book 334, page 102, said
records.
SCHEDULE A-8
[SEE ATTACHED]
Schedule A
River Place
915 Loworn Road
Carrollton, GA
(Carroll County)
EXHIBIT A
LEGAL DESCRIPTION
ALL THAT TRACT OR PARCEL OF LAND lying and being in Land Lots 125 Block 126 of
the 10th District of Carroll County, Georgia, and being more particularly
described as follows:
TO FIND THE POINT OF BEGINNING, commence at a point located at the intersection
of the western margin of the right-of-way of Chappell Road and the northern
margin of the right-of-way of Lovvorn Road (right-of-way varies);
THENCE RUN in an easterly direction along the northern margin of the
right-of-way of Lovvorn Road a distance of 779.17 feet to a point marked by a
1/2 inch re-rod found. Said point being the POINT OF BEGINNING of the land
herein described;
WITH THE POINT OF BEGINNING THUS ESTABLISHED, THENCE LEAVING the northern margin
of the right-of-way of Lovvorn Road and running North 00 degrees ll'OO" East, a
distance of 1103.49 feet to the center of the Little Tallapoosa River; thence
following the center line of the Little Tallapoosa River the following courses:
South 25 degrees 58'30" East, a distance of 18.72 feet to a point; thence South
23 degrees 43'18" East, a distance of 39.04 feet to a point; thence South
27 degrees 49'11" East, a distance of 37.71 feet to a point; thence North
50 degrees 54'48" West, a distance of 28.13 feet to a point; thence South
64 degrees 42'51 "East, a distance of 33.15 feet to a point; thence North
81 degrees 54'42" East, a distance of 77.13 feet to a point; thence North
58 degrees 39'48" East, a distance of 19.16 feet to a point; thence North
30 degrees 14'19" East, a distance of 56.13 feet to a point; thence North
32 degrees 49'06" East, a distance of 118.20 feet to a point; thence North
43 degrees 35'11" East, a distance of 63.52 feet to a point; thence North
64 degrees 57'14" East, a distance of 53.41 feet to a point; thence North
79 degrees 06'27" East, a distance of 90.49 feet to a point; thence North
89 degrees 50'51" East, a distance of 139.87 feet to a point; thence South
75 degrees 55'57" East, a distance of 68.06 feet to a point; thence South
57 degrees 14'13" East, a distance of 36.20 feet to a point; thence South
50 degrees 47'45" East, a distance of 101.95 feet to a point; thence South
25 degrees 26'55" East, a distance of 48.83 feet to a point; thence South
36 degrees 33'24" East, a distance of 62.88 feet to a point; thence South
15 degrees 18'39" East, a distance of 93.60 feet to a point; thence South
09 degrees 51'25" West, a distance of 93.79 feet to a point; thence South
02 degrees 50'35" West, a distance of 116.29 to a point; thence South
04 degrees 45'37" East, a distance of 80.44 feet to a point; thence South
19 degrees 01'44" West, a distance of 128.61 feet to a point; thence South
00 degrees 13'57" West, a distance of 63.60 feet to a point; thence South
45 degrees 13'48" East, a distance of 38.03 feet to a point; thence South
58 degrees 55'14" East, a distance of 147.12 feet to a point; thence South
30 degrees 42'36" East, a distance of 143.40 feet to a point; thence South
69 degrees 56'55" East, a distance of 96.88 feet to a point; thence South
53 degrees 08'42" East, a distance of 114.51 feet to a point; thence South
36 degrees 12'36" East, a distance of 22.17 feet to a point; thence South
05 degrees 03'39" East, a distance of 43.13 feet to a point; thence South
16 degrees 35'18" West, a distance of 64.78 feet to a point; thence South
06 degrees 27'21" West, a distance of 176.84 feet to a point; thence South
07 degrees 39'51" East, a distance of 39.28 feet to a point being the
intersection of the Centerline
of the Little Tallapoosa River and the northern right-of-way of Lovvorn Road;
thence running in a westerly direction along the northern right-of-way of
Lovvorn Road North 78 degrees 21'46" West, a distance of 492.28 feet to a point;
thence South 10 degrees 14'42" West, a distance of 10.00 feet to a point; thence
North 79 degrees 07'07" West, a distance of 196.25 feet to a point; thence North
80 degrees 40'29" West, a distance of 119.87 feet to a point; thence North
82 degrees 22'48" West, a distance of 135.65 feet to a point; thence North
84 degrees 34'41" West, a distance of 121.09 feet to a point; thence North
86 degrees 27'21" West, a distance of 147.07 feet to a 1/2 inch re-rod found and
the POINT OF BEGINNING.
Said tract or parcel of land containing 26.688 acres.
2
SCHEDULES A-9
[SEE ATTACHED]
Schedule A
Troy Place
l00 Gibbs St.
Troy, AL
(Pike County)
EXHIBIT A
LEGAL DESCRIPTION
A parcel of land lying on the west side of Gibbs Street and on the south side of
Henderson Avenue and being a portion of the South 1/2 of Section 28, Township 10
North, Range 21 East, Pike County, Alabama and being more particularly described
as follows:
Commencing at the point of intersection of the South right-of-way of Henderson
Avenue and the West right-of-way of Gibbs Street, said point being a 4" x 4"
concrete monument; thence along the West right-of-way Gibbs Street (30 feet from
centerline) South 03 degrees 45 minutes 00 seconds West 299.83 feet to a 4" x 4"
concrete monument at the POINT OF BEGINNING of the parcel herein described;
thence continuing along said right-of-way South 03 degrees 45 minutes 00 seconds
West 739.37 feet to a 1/2" rebar (CAP CA 0537-LS); thence leaving said
right-of-way line North 63 degrees 04 minutes 37 seconds West 338.45 feet to a
1/2" rebar (CAP CA 0537-LS); thence North 47 degrees 02 minutes 22 West 517.56
feet to a 1/2" rebar (CAP CA 0537-LS); thence North 01 degrees 54 minutes 24
seconds East 261.57 feet to a 4" x 6" concrete monument; thence North 87 degrees
30 minutes 21 seconds West 234.36 feet to a 5/8" rebar (CAP CA 00050-LS); thence
North 02 degrees 35 minutes 18 seconds West 324.52 feet to a 5/8" rebar (CAP CA
00050-LS); said point lying on the South right-of-way of Henderson Avenue;
thence along said right-of-way South 86 degrees 14 minutes 56 seconds East
591.20 feet to a 4" x 4" concrete monument; thence leaving said right-of-way
South 03 degrees 49 minutes 03 seconds West 299.62 feet to a 4" x 4" concrete
monument; thence South 86 degrees 13 minutes 14 seconds East 399.86 feet to the
POINT OF BEGINNING. Said parcel containing 12.97 acres more or less.
Together with the easement rights as granted in that certain Sewer Easement
Agreement, dated October 29, 1999, by and between Troy Place LLC, a Georgia
Limited Liability Company, and Carol Crow Amos, W. Roy Crow, and John C. Crow,
recorded in the Office of the Judge of Probate of Pike County, Alabama, In Deed
Book 190, at page 322.
Tax ID#: 55-10-08-28-3-001-002.000
SCHEDULE B
Intentionally Omitted
Schedule B
SCHEDULE C
ENVIRONMENTAL REPORTS
Property Name: Report
- -------------- ------
1. Cape Place ATC Associates Inc.
Phase I Environmental Site Assessment
Project No. 86.75308.0001
Dated November 18, 2004
2. Clayton Place I ATC Associates Inc.
Phase I Environmental Site Assessment
Project No. 86.75308.0001
Dated November 15, 2004
3. Clayton Place II ATC Associates Inc.
Phase I Environmental Site Assessment
Project No. 86.75308.0001
Dated November 15, 2004
4. Clemson Place ATC Associates Inc.
Phase I Environmental Site Assessment
Project No. 86.75308.0001
dated October 14,2004
5. Jacksonville Place ATC Associates Inc.
Phase I Environmental Site Assessment
Project No. 86.75308.0001
Dated October 14,2004
6. Macon Place ATC Associates Inc.
Phase I Environmental Site Assessment
Project No. 86.75308.0001
Dated November 15, 2004
7. Martin Place ATC Associates Inc.
Phase I Environmental Site Assessment
Project No. 86.75308.0001
Dated October 14,2004
8. Murray Place ATC Associates Inc.
Phase I Environmental Site Assessment
Project No. 86.75308.0001
Dated October 14,2004
9. River Place ATC Associates Inc.
Phase I Environmental Site Assessment
Project No. 86.75308.0001
Dated November 16, 2004
10. Troy Place ATC Associates Inc.
Phase I Environmental Site Assessment
Project No. 86.75308.0001
Dated October 14,2004
Schedule C
SCHEDULE 3.1(N)
2004 BUDGETS
[See attached]
[Intentionally Omitted]
SCHEDULE 4.1(C)
ORGANIZATIONAL CHART FOR BORROWER PARTIES
[See attached]
Schedule 4.1(C)
Revised Ownership Structure
Place Properties
(REVISED OWNERSHIP STRUCTURE PLACE PROPERTIES FLOW CHART)
(1) Mezz Loan Collateral only
(2) Mortgage Loan Collateral & (indirectly) Mezz Loan Collateral
(3) New Delaware LLCs
SCHEDULE 6.4
APPROVED CAPITAL EXPENDITURES
[Intentionally Ommitted]
SCHEDULE 6.6
REPLACEMENT RESERVE FUNDING CONDITIONS
1. Borrowers shall have submitted to Lender a written request for
disbursement at least ten (10) days prior to the Payment Date on which Borrowers
request such disbursement be made, specifying the specific Capital Expenditures
for which the disbursement is requested and such other information (such as the
price of materials and the cost of contracted labor or other services) as Lender
may reasonably require, which request must be on a form specified or approved by
Lender;
2. On the date such request is received by Lender and on the Payment Date
such payment is to be made, no Event of Default shall exist and remain uncured;
3. Lender shall have received a certificate from the Borrowers stating that
all Capital Expenditures at the affected Individual Property to be funded by the
requested disbursement have been completed in a good and workmanlike manner and
in accordance with any plans and specifications approved by Lender and all Legal
Requirements of any Governmental Authority having jurisdiction over the affected
Individual Property, such certificate to be accompanied, in either case, by a
copy of any license, permit or other approvals by any Governmental Authority
required to commence (only for the first advance with respect to each distinct
item of work) and/or complete (only for the final advance with respect to each
distinct item of work) such Capital Expenditures;
4. Lender shall have received a certificate from the Borrowers stating that
each Person that supplied materials or labor in connection with the Capital
Expenditures to be funded by the requested disbursement has been paid in full or
will be paid in full upon such disbursement, such certificate to be accompanied
by copies of invoices for all items or materials purchased and all contracted
labor or services provided;
5. Lender shall have received appropriate lien waivers from each
contractor, supplier, materialman, mechanic or subcontractor who receives
payment in an amount equal to or greater than $5,000 for completion of its work
or delivery of its materials, which lien waivers shall conform to the
requirements of applicable law and shall cover all work performed and materials
supplied (including equipment and fixtures) for the affected Individual Property
by that contractor, supplier, subcontractor, mechanic or materialman through the
date covered by the current disbursement request; and
6. Borrowers shall have complied with all other disbursement requirements
set forth in Section 6.6, including any conditions required for periodic
disbursement requests.
SCHEDULE 6.7
SCHEDULE OF IMMEDIATE REPAIRS
Schedule 6.7
PROPERTY CONDITION ASSESSMENT
Cape Place
1710 North Sprigg Street
Cape Glrardeau, Missouri 63701
Immediate Repair Needs
Report
No. Section Description Quantity Unit Unit Cost Total Cost
- --- ------- -------------------------------------------- -------- ---- --------- ----------
1 3.3.2 Repair deteriorated wood trim on balconies. 77 EA $500.00 $38,500
-------
TOTAL: $38,500
=======
EA - Each
LS - Lump Sum
SF - Square Feet
LF - Linear Feet
DM - Deferred Maintenance
PROPERTY CONDITION ASSESSMENT
Clayton Place
5809 and 5751 North Lake Drive
Morrow, Georgia 30260
Immediate Repair Needs
Report
No. Section Description Quantity Unit Unit Cost Total Cost
- --- ------- -------------------------------------------- -------- ---- --------- ----------
None Identified ---
TOTAL: $0
===
EA - Each
LS - Lump Sum
SF - Square Feet
LF - Linear Feet
DM - Deferred Maintenance
PROPERTY CONDITION ASSESSMENT
Clemson Place Apartments
133 Clemson Place Drive
Clemson, South Carolina 29631
Immediate Repair Needs
Report
No. Section Description Quantity Unit Unit Cost Total Cost
- --- ------- -------------------------------------------- -------- ---- ---------- ----------
1 3.2.2 Replace damaged downspouts at various areas
throughout the Property. 1 LS $ 5,000.00 $ 5,000
2 3.2.6.1 Fill sidewalk shoulders with soil to
eliminate trip hazards. 1 LS $10,000.00 $10,000
3 3.2.6.1 Reseed exposed soil areas with grass. 1 LS $ 1,000.00 $ 1,000
-------
TOTAL: $16,000
=======
EA - Each
LS - Lump Sum
SF - Square Feet
LF - Linear Feet
DM - Deferred Maintenance
PROPERTY CONDITION ASSESSMENT
Jacksonville Place
331 Nisbet Street NW #50
Jacksonville, Alabama 36265
Immediate Repair Needs
Report
No. Section Description Quantity Unit Unit Cost Total Cost
- --- ------- -------------------------------------------- -------- ---- ----------- ----------
1 3.3.3 Replace damaged balconies 1 LS $ 72,000.00 $ 72,000
1 3.3.3 Replace damaged stair towers 1 LS $240,000.00 $240,000
1 3.3.3 Replace removed or damaged siding 1 LS $ 30,000.00 $ 30,000
1 4.2 Install ADA accessible parking spaces 1 LS $ 1,500.00 $ 1,500
--------
TOTAL: $343,500
========
EA - Each
LS - Lump Sum
SF - Square Feet
LF - Linear Feet
DM - Deferred Maintenance
Project No. 86.75308.0001 ATC Associates Inc.
PROPERTY CONDITION ASSESSMENT
Macon Place
5091 Ivey Drive
Macon, Georgia 31206
Immediate Repair Needs
Report
No. Section Description Quantity Unit Unit Cost Total Cost
- --- ------- -------------------------------------------- -------- ---- --------- ----------
None Identified
---
TOTAL: $0
===
EA - Each
LS - Lump Sum
SF - Square Feet
LF - Linear Feet
DM - Deferred Maintenance
PROPERTY CONDITION ASSESSMENT
Martin Place
237 West Peach Street
Martin, Tennessee 38237
Immediate Repair Needs
Report
No. Section Description Quantity Unit Unit Cost Total Cost
- --- ------- -------------------------------------------- -------- ---- --------- ----------
No immediate repair needs identified $0
---
TOTAL: $0
===
EA - Each
LS - Lump Sum
SF - Square Feet
LF - Linear Feet
DM - Deferred Maintenance
PROPERTY CONDITION ASSESSMENT
Murray Place
1700 Lowe's Drive
Murray, Kentucky 42071
Immediate Repair Needs
Report
No. Section Description Quantity Unit Unit Cost Total Cost
- --- ------- -------------------------------------------- -------- ---- --------- ----------
1 3.3.2 Correct flashing detail and repair archways. 36 Each $800.00 $18,000
2 3.3.3 Repair existing damaged treads on stair
landings. 5 Each $500.00 $ 2,500
3 3.3.3 Repair and correct flashing on balcony
framing columns. 72 Each $800.00 $57,600
-------
TOTAL: $78,100
=======
EA - Each
LS - Lump Sum
SF - Square Feet
LF - Linear Feet
DM - Deferred Maintenance
PROPERTY CONDITION ASSESSMENT
River Place
915 Lovvorn Road
Carrollton, Georgia 30117
Immediate Repair Needs
Report
No. Section Description Quantity Unit Unit Cost Total Cost
- --- ------- -------------------------------------------- -------- ---- --------- ----------
1 3.3.3 Repair damaged railing at Building 400 1 LS $500.00 $500
----
TOTAL: $500
====
EA - Each
LS - Lump Sum
SF - Square Feet
LF - Linear Feet
DM - Deferred Maintenance
PROPERTY CONDITION ASSESSMENT
Troy Place
100 Gibbs Street
Troy, ALabama 36081
Immediate Repair Needs
Report
No. Section Description Quantity Unit Unit Cost Total Cost
- --- ------- -------------------------------------------- -------- ---- ----------- ----------
1 3.3.3 Replace damaged balconies 1 LS $ 72,000.00 $ 72,000
1 3.3.3 Replace damaged stair towers 1 LS $240,000.00 $240,000
1 3.3.3 Replace removed or damaged siding 1 LS $ 30,000.00 $ 30,000
1 4.2 Install ADA accessible parking spaces 1 LS $ 1,500.00 $ 1,500
--------
TOTAL: $343,500
========
EA - Each
LS - Lump Sum
SF - Square Feet
LF - Linear Feet
DM - Deferred Maintenance