EXHIBIT 10.1
LOAN AGREEMENT
Dated as of June 9, 2004
Between
SUN CANDLEWICK LLC,
SUN SILVER STAR LLC,
ASPEN-HOLLAND ESTATES, LLC,
as Borrower
and
BANK OF AMERICA, N.A.,
as Lender
TABLE OF CONTENTS
Page
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ARTICLE I
DEFINITIONS; PRINCIPLES OF CONSTRUCTION
Section 1.1 Definitions ...................................................................... 1
Section 1.2 Principles of Construction ....................................................... 17
ARTICLE II
GENERAL TERMS
Section 2.1 Loan Commitment; Disbursement to Borrower ........................................ 17
Section 2.2 Loan Payments .................................................................... 18
Section 2.3 Late Payment Charge .............................................................. 19
Section 2.4 Prepayment; Defeasance ........................................................... 19
Section 2.5 Payments after Default ........................................................... 29
Section 2.6 Usury Savings .................................................................... 29
ARTICLE III
CONDITIONS PRECEDENT
Section 3.1 Representations and Warranties; Compliance with
Conditions ....................................................................... 30
Section 3.2 Delivery of Loan Documents; Title Insurance;
Reports; Leases .................................................................. 30
Section 3.3 Related Documents ................................................................ 31
Section 3.4 Organizational Documents ......................................................... 31
Section 3.5 Opinions of Borrower's Counsel ................................................... 32
Section 3.6 Annual Budget .................................................................... 32
Section 3.7 Taxes and Other Charges .......................................................... 32
Section 3.8 Completion of Proceedings ........................................................ 32
Section 3.9 Payments ......................................................................... 32
Section 3.10 Transaction Costs ................................................................ 32
Section 3.11 No Material Adverse Change ....................................................... 33
Section 3.12 Leases and Rent Roll ............................................................. 33
Section 3.13 Intentionally Reserved ........................................................... 33
Section 3.14 Intentionally Reserved ........................................................... 33
Section 3.15 Intentionally Reserved ........................................................... 33
Section 3.16 Tax Lot .......................................................................... 33
Section 3.17 Physical Conditions Report ....................................................... 33
Section 3.18 Intentionally Reserved ........................................................... 33
Section 3.19 Appraisal ........................................................................ 33
Section 3.20 Financial Statements ............................................................. 33
Section 3.21 Intentionally Reserved ........................................................... 34
Section 3.22 Further Documents ................................................................ 34
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ARTICLE IV
REPRESENTATIONS AND WARRANTIES
Section 4.1 Organization ..................................................................... 34
Section 4.2 Status of Borrower ............................................................... 34
Section 4.3 Validity of Documents ............................................................ 35
Section 4.4 No Conflicts ..................................................................... 35
Section 4.5 Litigation ....................................................................... 35
Section 4.6 Agreements ....................................................................... 35
Section 4.7 Solvency ......................................................................... 36
Section 4.8 Full and Accurate Disclosure ..................................................... 36
Section 4.9 No Plan Assets ................................................................... 36
Section 4.10 Not a Foreign Person ............................................................. 37
Section 4.11 Enforceability ................................................................... 37
Section 4.12 Business Purposes ................................................................ 37
Section 4.13 Compliance ....................................................................... 37
Section 4.14 Financial Information ............................................................ 37
Section 4.15 Condemnation ..................................................................... 38
Section 4.16 Utilities and Public Access; Parking ............................................. 38
Section 4.17 Separate Lots .................................................................... 38
Section 4.18 Assessments ...................................................................... 38
Section 4.19 Insurance ........................................................................ 38
Section 4.20 Use of Property .................................................................. 39
Section 4.21 Certificate of Occupancy; Licenses ............................................... 39
Section 4.22 Flood Zone ....................................................................... 39
Section 4.23 Physical Condition ............................................................... 39
Section 4.24 Boundaries ....................................................................... 39
Section 4.25 Leases and Rent Roll ............................................................. 40
Section 4.26 Filing and Recording Taxes ....................................................... 40
Section 4.27 Intentionally Reserved ........................................................... 41
Section 4.28 Illegal Activity ................................................................. 41
Section 4.29 Construction Expenses ............................................................ 41
Section 4.30 Personal Property ................................................................ 41
Section 4.31 Taxes ............................................................................ 41
Section 4.32 Permitted Encumbrances ........................................................... 41
Section 4.33 Federal Reserve Regulations ...................................................... 41
Section 4.34 Investment Company Act ........................................................... 42
Section 4.35 Reciprocal Easement Agreements ................................................... 42
Section 4.36 No Change in Facts or Circumstances; Disclosure .................................. 42
Section 4.37 Intellectual Property ............................................................ 42
Section 4.38 Survey ........................................................................... 42
Section 4.39 Embargoed Person ................................................................. 43
Section 4.40 Patriot Act ...................................................................... 43
Section 4.41 Assumptions ...................................................................... 44
Section 4.42 Survival ......................................................................... 44
Section 4.43 Representations, Warranties and Covenants ........................................ 44
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ARTICLE V
BORROWER COVENANTS
Section 5.1 Existence; Compliance with Legal Requirements .................................... 45
Section 5.2 Maintenance and Use of Property .................................................. 45
Section 5.3 Waste ............................................................................ 46
Section 5.4 Taxes and Other Charges .......................................................... 46
Section 5.5 Litigation ....................................................................... 47
Section 5.6 Access to Property ............................................................... 47
Section 5.7 Notice of Default ................................................................ 47
Section 5.8 Cooperate in Legal Proceedings ................................................... 47
Section 5.9 Performance by Borrower .......................................................... 47
Section 5.10 Awards; Insurance Proceeds ....................................................... 47
Section 5.11 Financial Reporting .............................................................. 48
Section 5.12 Estoppel Statement ............................................................... 49
Section 5.13 Leasing Matters .................................................................. 49
Section 5.14 Property Management .............................................................. 50
Section 5.15 Liens ............................................................................ 51
Section 5.16 Debt Cancellation ................................................................ 51
Section 5.17 Zoning ........................................................................... 52
Section 5.18 ERISA ............................................................................ 52
Section 5.19 No Joint Assessment .............................................................. 52
Section 5.20 Reciprocal Easement Agreements ................................................... 52
Section 5.21 Alterations ...................................................................... 53
Section 5.22 Trade Indebtedness ............................................................... 53
Section 5.23 Tax Credits ...................................................................... 53
Section 5.24 Reassessment of Separate Tax Parcels ........................ ERROR! BOOKMARK NOT DEFINED
ARTICLE VI
ENTITY COVENANTS
Section 6.1 Single Purpose Entity/Separateness ............................................... 53
Section 6.2 Change of Name, Identity or Structure ............................................ 57
Section 6.3 Business and Operations .......................................................... 58
Section 6.4 Independent Director ............................................................. 58
Section 6.5 Borrower Entity and Separateness Representations
and Warranties ................................................................... 58
ARTICLE VII
NO SALE OR ENCUMBRANCE
Section 7.1 Transfer Definitions ............................................................. 61
Section 7.2 No Sale/Encumbrance .............................................................. 61
Section 7.3 Permitted Transfers .............................................................. 62
Section 7.4 Lender's Rights .................................................................. 62
Section 7.5 Assumption ....................................................................... 63
Section 7.6 Partial Assumption [FOR MULTIPLE PROPERTY LOANS] ................................. 65
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Section 7.7 Easements; Licenses .............................................................. 66
ARTICLE VIII
INSURANCE; CASUALTY; CONDEMNATION; RESTORATION
Section 8.1 Insurance ........................................................................ 66
Section 8.2 Casualty ......................................................................... 70
Section 8.3 Condemnation ..................................................................... 70
Section 8.4 Restoration ...................................................................... 71
ARTICLE IX
RESERVE FUNDS
Section 9.1 Required Repairs ................................................................. 74
Section 9.2 Replacements ..................................................................... 75
Section 9.3 Intentionally Reserved ........................................................... 75
Section 9.4 Required Work .................................................................... 75
Section 9.5 Release of Reserve Funds ......................................................... 77
Section 9.6 Tax and Insurance Reserve Funds .................................................. 80
Section 9.7 Intentionally Reserved ........................................................... 81
Section 9.8 Intentionally Reserved ........................................................... 81
Section 9.9 Letters of Credit ................................................................ 81
Section 9.10 Reserve Funds Generally .......................................................... 82
ARTICLE X
CASH MANAGEMENT
Section 10.1 Property Operating Account ....................................................... 85
Section 10.2 Deposits and Withdrawals ......................................................... 86
ARTICLE XI
EVENTS OF DEFAULT; REMEDIES
Section 11.1 Event of Default ................................................................. 86
Section 11.2 Remedies ......................................................................... 88
ARTICLE XII
ENVIRONMENTAL PROVISIONS
Section 12.1 Environmental Representations and Warranties ..................................... 89
Section 12.2 Environmental Covenants .......................................................... 90
Section 12.3 Lender's Rights .................................................................. 90
Section 12.4 Operations and Maintenance Programs .............................................. 91
Section 12.5 Environmental Definitions ........................................................ 91
Section 12.6 Indemnification .................................................................. 92
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ARTICLE XIII
SECONDARY MARKET
Section 13.1 Transfer of Loan ................................................................. 93
Section 13.2 Delegation of Servicing .......................................................... 93
Section 13.3 Dissemination of Information ..................................................... 93
Section 13.4 Cooperation ...................................................................... 94
Section 13.5 Securitization Indemnification ................................................... 96
ARTICLE XIV
INDEMNIFICATIONS
Section 14.1 General Indemnification .......................................................... 99
Section 14.2 Mortgage and Intangible Tax Indemnification ...................................... 99
Section 14.3 ERISA Indemnification ............................................................ 99
Section 14.4 Survival ......................................................................... 100
ARTICLE XV
EXCULPATION
Section 15.1 Exculpation ...................................................................... 100
ARTICLE XVI
NOTICES
Section 16.1 Notices .......................................................................... 102
ARTICLE XVII
FURTHER ASSURANCES
Section 17.1 Replacement Documents ............................................................ 104
Section 17.2 Recording of Mortgage, Etc ....................................................... 104
Section 17.3 Further Acts, Etc ................................................................ 104
Section 17.4 Changes in Tax, Debt, Credit and Documentary
Stamp Laws ....................................................................... 105
Section 17.5 Expenses ......................................................................... 105
ARTICLE XVIII
WAIVERS
Section 18.1 Remedies Cumulative; Waivers ..................................................... 106
Section 18.2 Modification, Waiver in Writing .................................................. 107
Section 18.3 Delay Not a Waiver ............................................................... 107
Section 18.4 Trial by Jury .................................................................... 107
Section 18.5 Waiver of Notice ................................................................. 107
Section 18.6 Remedies of Borrower ............................................................. 108
Section 18.7 Waiver of Marshalling of Assets .................................................. 108
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Section 18.8 Waiver of Statute of Limitations ................................................. 108
Section 18.9 Waiver of Counterclaim ........................................................... 108
ARTICLE XIX
GOVERNING LAW
Section 19.1 Choice of Law .................................................................... 109
Section 19.2 Severability ..................................................................... 109
Section 19.3 Preferences ...................................................................... 109
ARTICLE XX
MISCELLANEOUS
Section 20.1 Survival ......................................................................... 109
Section 20.2 Lender's Discretion .............................................................. 110
Section 20.3 Headings ......................................................................... 110
Section 20.4 Cost of Enforcement .............................................................. 110
Section 20.5 Schedules Incorporated ........................................................... 110
Section 20.6 Offsets, Counterclaims and Defenses .............................................. 110
Section 20.7 No Joint Venture or Partnership; No Third Party
Beneficiaries .................................................................... 110
Section 20.8 Publicity ........................................................................ 111
Section 20.9 Conflict; Construction of Documents; Reliance .................................... 112
Section 20.10 Entire Agreement ................................................................. 112
Section 20.11 Tax Disclosure ................................................................... 112
EXHIBIT A Borrower Equity Ownership Structure
SCHEDULE I Required Repairs
SCHEDULE II Allocated Loan Amounts
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LOAN AGREEMENT
THIS LOAN AGREEMENT, dated as of June 9, 2004 (as amended, restated,
replaced, supplemented or otherwise modified from time to time, this
"AGREEMENT"), between BANK OF AMERICA, N.A., a national banking association,
having an address at Bank of America Corporate Center, ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ (together with its successors and/or assigns,
"LENDER") and SUN CANDLEWICK LLC, a Michigan limited liability company, SUN
SILVER STAR LLC, a Michigan limited liability company, and ASPEN-HOLLAND
ESTATES, LLC, a Michigan limited liability company, each having an address at
The American Center, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
(individually and/or collectively, as the case may be, together with its
successors and/or assigns, "BORROWER").
RECITALS:
Borrower desires to obtain the Loan (defined below) from Lender.
Lender is willing to make the Loan to Borrower, subject to and in
accordance with the terms of this Agreement and the other Loan Documents
(defined below).
In consideration of the making of the Loan by Lender and the
covenants, agreements, representations and warranties set forth in this
Agreement, the parties hereto hereby covenant, agree, represent and warrant as
follows:
ARTICLE I
DEFINITIONS; PRINCIPLES OF CONSTRUCTION
SECTION 1.1. DEFINITIONS
For all purposes of this Agreement, except as otherwise expressly
required or unless the context clearly indicates a contrary intent:
"ACCEPTABLE ACCOUNTANT" shall mean a "Big Four" accounting firm or
other independent certified public accountant reasonably acceptable to Lender
(it being agreed that for purposes herein ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ LLP and any other
accounting firm similar in size, expertise and reputation as ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ LLP
are each deemed an Acceptable Accountant).
"ACQUIRED PROPERTY" shall have the meaning set forth in Section
5.11(c)(i)(A) hereof.
"ACQUIRED PROPERTY STATEMENTS" shall have the meaning set forth in
Section 5.11(c)(i)(A) hereof.
"ACT" shall have the meaning set forth in Section 6.1(c).
"ADDITIONAL REPLACEMENT" shall have the meaning set forth in Section
9.5(g) hereof.
"ADDITIONAL REQUIRED REPAIR" shall have the meaning set forth in
Section 9.5(f) hereof.
"AFFILIATE" shall mean, as to any Person, any other Person that,
directly or indirectly, is in control of, is controlled by or is under common
control with such Person or is a director or officer of such Person or of an
Affiliate of such Person.
"AFFILIATED MANAGER" shall have the meaning set forth in Section 7.1
hereof.
"ALLOCATED LOAN AMOUNT" shall mean the portion of the amount of the
Loan allocated to each Parcel, as set forth in Schedule II attached hereto and
made a part hereof.
"ALTA" shall mean American Land Title Association, or any successor
thereto.
"ALTERATION THRESHOLD" means $250,000.00.
"ANNEX" shall have the meaning set forth in Section 4.40 hereof.
"ANNUAL BUDGET" shall mean the operating budget consistent with the
annual operating statements described in Section 5.11 of this Agreement for each
Parcel, including all planned capital expenditures, for each Parcel, for the
applicable calendar year or other period.
"APPRAISAL" shall mean an "as is" appraisal of the Property
conforming to FIRREA and USPAP requirements and prepared at the Borrower's
expense by a qualified appraiser designated by and reasonably satisfactory to
the Lender, in accordance with written instructions from the Lender, dated as of
a date reasonably acceptable to the Lender and otherwise reasonably satisfactory
in form and substance to the Lender.
"ASSIGNMENT OF MANAGEMENT AGREEMENT" shall mean any Assignment and
Subordination of Management Agreement entered into among Lender, Borrower and
any Qualified Manager, as the same may be amended, restated, replaced,
supplemented or otherwise modified from time to time.
"ASSUMED NOTE" shall have the meaning set forth in Section 7.6(b)
hereof.
"AWARD" shall mean any compensation paid by any Governmental
Authority in connection with a Condemnation in respect of all or any part of the
Property.
"BORROWER PRINCIPAL" shall mean SCOLP and, solely with respect to
the recourse carveouts set forth in Section 15.1(b)(viii) and (ix), SCI.
"BUSINESS DAY" shall mean a day on which Lender is open for the
conduct of substantially all of its banking business at its office in the city
in which the Note is payable (excluding Saturdays and Sundays).
"CASUALTY" shall have the meaning set forth in Section 8.2.
"CLOSING DATE" shall mean the date of the funding of the Loan.
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"CONTROL" shall have the meaning set forth in Section 7.1 hereof.
"CONDEMNATION" shall mean a temporary or permanent taking by any
Governmental Authority as the result, in lieu or in anticipation, of the
exercise of the right of condemnation or eminent domain, of all or any part of
the Property, or any interest therein or right accruing thereto, including any
right of access thereto or any change of grade affecting the Property or any
part thereof.
"CONDEMNATION PROCEEDS" shall have the meaning set forth in Section
8.4(b)
"CREDITORS RIGHTS LAWS" shall mean with respect to any Person any
existing or future law of any jurisdiction, domestic or foreign, relating to
bankruptcy, insolvency, reorganization, conservatorship, arrangement,
adjustment, winding-up, liquidation, dissolution, composition or other relief
with respect to its debts or debtors.
"DEBT" shall mean the outstanding principal amount set forth in, and
evidenced by, this Agreement and the Note together with all interest accrued and
unpaid thereon and all other sums due to Lender in respect of the Loan under the
Note, this Agreement, the Mortgage or any other Loan Document.
"DEBT SERVICE" shall mean, with respect to any particular period of
time, scheduled principal and/or interest payments under the Note.
"DEBT SERVICE COVERAGE RATIO" shall mean, as of any date of
determination, for the applicable period of calculation, the ratio, as
reasonably determined by Lender using the same standards and criteria used by
Lender in underwriting the Loan, of (i) Net Operating Income to (ii) the
aggregate amount of Debt Service which would be due for the same period based on
the outstanding principal amount of the Loan. Unless otherwise expressly
specified herein, the Debt Service Coverage Ratio shall be computed with respect
to the Property and/or Remaining Property, as applicable, and not any individual
Parcel.
"DEFAULT" shall mean the occurrence of any event hereunder or under
any other Loan Document which, but for the giving of notice or passage of time,
or both, would be an Event of Default.
"DEFAULT RATE" shall mean, with respect to the Loan, a rate per
annum equal to the lesser of (a) the maximum rate permitted by applicable law,
or (b) four percent (4%) above the Note Rate.
"DEFEASANCE COLLATERAL" shall have the meaning set forth in Section
2.4(b)(i)(D)(2) hereof.
"DEFEASANCE COLLATERAL ACCOUNT" shall have the meaning set forth in
Section 2.4(h) hereof.
"DEFEASANCE SECURITY AGREEMENT" shall have the meaning set forth in
Section 2.4(b)(i)(D)(2) hereof.
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"DEFEASED NOTE" shall have the meaning set forth in Section
2.4(g)(i)(D) hereof.
"DISCLOSURE DOCUMENT" shall have the meaning set forth in Section
13.5 hereof.
"ELIGIBLE ACCOUNT" shall mean a separate and identifiable account
from all other funds held by the holding institution that is either (a) an
account or accounts maintained with a federal or state chartered depository
institution or trust company which complies with the definition of Eligible
Institution or (b) a segregated trust account or accounts maintained with a
federal or state chartered depository institution or trust company acting in its
fiduciary capacity which, in the case of a state chartered depository
institution or trust company, is subject to regulations substantially similar to
12 C.F.R. Section 9.10(b), having in either case a combined capital and surplus
of at least $50,000,000 and subject to supervision or examination by federal and
state authority. An Eligible Account will not be evidenced by a certificate of
deposit, passbook or other instrument.
"ELIGIBLE INSTITUTION" shall mean either Bank of America, N.A. or a
depository institution or trust company insured by the Federal Deposit Insurance
Corporation, the short term unsecured debt obligations or commercial paper of
which are rated at least "A-1+" by S&P, "P-1" by ▇▇▇▇▇'▇ and "F-1+" by Fitch in
the case of accounts in which funds are held for thirty (30) days or less (or,
in the case of accounts in which funds are held for more than thirty (30) days,
the long term unsecured debt obligations of which are rated at least "AA" by
Fitch and S&P and "Aa2" by ▇▇▇▇▇'▇).
"EMBARGOED PERSON" shall the meaning set forth in Section 4.39.
"ENVIRONMENTAL LAW" shall have the meaning set forth in Section 12.5
hereof.
"ENVIRONMENTAL LIENS" shall have the meaning set forth in Section
12.5 hereof.
"ENVIRONMENTAL REPORT" shall have the meaning set forth in Section
12.5 hereof.
"ERISA" shall mean the Employee Retirement Income Security Act of
1974, as amended from time to time and any successor statutes thereto and
applicable regulations issued pursuant thereto in temporary or final form.
"EVENT OF DEFAULT" shall have the meaning set forth in Section 11.1
hereof.
"EXCHANGE ACT" shall mean the Securities and Exchange Act of 1934,
as amended.
"EXCHANGE ACT FILING" shall have the meaning set forth in Section
5.11(c) hereof.
"FITCH" shall mean Fitch, Inc.
"GAAP" shall mean generally accepted accounting principles in the
United States of America as of the date of the applicable financial report.
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"GOVERNMENTAL AUTHORITY" shall mean any court, board, agency,
department, commission, office or other authority of any nature whatsoever for
any governmental unit (federal, state, county, municipal, city, town, special
district or otherwise) whether now or hereafter in existence.
"HAZARDOUS MATERIALS" shall have the meaning set forth in Section
12.5 hereof.
"IMPROVEMENTS" shall have the meaning set forth in the granting
clause of the Mortgage.
"INDEMNIFIED PARTIES" shall mean (a) Lender, (b) any prior owner or
holder of the Loan or Participations in the Loan, (c) any servicer or prior
servicer of the Loan, (d) any Investor or any prior Investor in any Securities,
(e) any trustees, custodians or other fiduciaries who hold or who have held a
full or partial interest in the Loan for the benefit of any Investor or other
third party, (f) any receiver or other fiduciary appointed in a foreclosure or
other Creditors Rights Laws proceeding, (g) any officers, directors,
shareholders, partners, members, employees, agents, servants, representatives,
contractors, subcontractors, affiliates or subsidiaries of any and all of the
foregoing, and (h) the heirs, legal representatives, successors and assigns of
any and all of the foregoing (including, without limitation, any successors by
merger, consolidation or acquisition of all or a substantial portion of the
Indemnified Parties' assets and business), in all cases whether during the term
of the Loan or as part of or following a foreclosure of the Mortgage.
"INDEPENDENT DIRECTOR" shall mean a director of the SPE Component
Entity who is not at the time of such individual's initial appointment, and
shall not have been at any time during the preceding five (5) years, and shall
not be at any time while serving as a director of such SPE Component Entity,
either (a) a shareholder (or other equity owner) of, or an officer, director
(with the exception of serving as the Independent Director of such SPE Component
Entity), partner, manager, member (other than as a Special Member in the case of
single member Delaware limited liability companies), employee, attorney or
counsel of, Borrower, such SPE Component Entity or any Affiliate of either of
them (other than a holder of interests in a mutual fund or other professionally
managed fund of stocks, bonds, options, commodities, money market securities or
other investments that pools the assets of individuals and/or organizations and
is registered (if required) with the SEC, which may hold shares in SCI); (b) a
customer or creditor of, or supplier to, Borrower who derives any of its
purchases or revenue from its activities with Borrower or such SPE Component
Entity or any Affiliate of any of them; (c) a Person who Controls or is under
common Control with any such shareholder, officer, director, partner, manager,
member, employee, supplier, creditor or customer; or (d) a member of the
immediate family (by blood or marriage) of any such shareholder, officer,
director, partner, manager, member, employee, supplier, creditor or customer.
A natural person who satisfies the foregoing definition of
Independent Director other than clause (b) shall not be disqualified from
serving as an Independent Director of such SPE Component Entity if such
individual is an independent director provided by a nationally recognized
company that provides professional independent directors and that also provides
other corporate services in the ordinary course of its business.
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A natural person who otherwise satisfies the foregoing definition
other than clause (a) by reason of being the Independent Director of a "special
purpose entity" Affiliated with the SPE Component Entity, the Borrower, or
SCOLP, shall not be disqualified form serving as an Independent Director of the
SPE Component Entity if either (i) such individual is a professional Independent
Director, or (ii) the fees that such individual earns from serving as an
Independent Director of the Affiliate of the SPE Component Entity or the
Borrower constitute in the aggregate less than five percent (5%) of such
individual's annual income. For purposes of this definition, "special purpose
entity" means an entity whose organizational documents contain restrictions on
its activities similar to those set forth in Section 6.1 hereof.
"INSURANCE PREMIUMS" shall have the meaning set forth in 8.1(b)
hereof.
"INSURANCE PROCEEDS" shall have the meaning set forth in Section
8.4(b) hereof.
"INTERNAL REVENUE CODE" shall mean the Internal Revenue Code of
1986, as amended, as it may be further amended from time to time, and any
successor statutes thereto, and applicable U.S. Department of Treasury
regulations issued pursuant thereto in temporary or final form.
"INVESTOR" shall have the meaning set forth in Section 13.3 hereof.
"IO MONTHLY PAYMENT AMOUNT" shall mean the monthly payment of
interest due on each IO Scheduled Payment Date as set forth in Section 2.2(b)
hereof.
"IO SCHEDULED PAYMENT DATE" shall have the meaning set forth in
Section 2.2(b) hereof.
"ISSUER GROUP" shall have the meaning set forth in Section 13.5(b)
hereof.
"ISSUER PERSON" shall have the meaning set forth in Section 13.5(b)
hereof.
"LEASE" shall have the meaning set forth in the Mortgage.
"LEGAL REQUIREMENTS" shall mean all statutes, laws, rules, orders,
regulations, ordinances, judgments, decrees and injunctions of Governmental
Authorities affecting the Property or any part thereof, or the construction,
use, alteration or operation thereof, whether now or hereafter enacted and in
force, and all permits, licenses, authorizations and regulations relating
thereto, and all covenants, agreements, restrictions and encumbrances contained
in any instruments, either of record or known to Borrower, at any time in force
affecting the Property or any part thereof, including, without limitation, any
which may (a) require repairs, modifications or alterations in or to the
Property or any part thereof, or (b) in any way limit the use and enjoyment
thereof.
"LETTER OF CREDIT" shall mean an irrevocable, unconditional,
transferable, clean sight draft letter of credit acceptable to Lender and the
Rating Agencies (either an evergreen letter of credit or one which does not
expire until at least thirty (30) Business Days after the Maturity Date) in
favor of Lender and entitling Lender to draw thereon in New York, New York,
issued by a domestic Eligible Institution or the U.S. agency or branch of a
foreign Eligible
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Institution and providing for no reimbursement or other obligations by Borrower
or any SPE Component Entity. If at any time the bank issuing any such Letter of
Credit shall cease to be an Eligible Institution, Lender shall have the right
immediately to draw down the same in full and hold the proceeds of such draw in
accordance with the applicable provisions hereof.
"LIEN" shall mean, with respect to any Parcel, any mortgage, deed of
trust, lien, pledge, hypothecation, assignment, security interest, or any other
encumbrance, charge or transfer of, on or affecting Borrower, the Property, any
portion thereof or any interest therein, including, without limitation, any
conditional sale or other title retention agreement, any financing lease having
substantially the same economic effect as any of the foregoing, the filing of
any financing statement, and mechanic's, materialmen's and other similar liens
and encumbrances.
"LLC AGREEMENT" shall have the meaning set forth in Section 6.1(c).
"LOAN" shall mean the loan made by Lender to Borrower pursuant to
this Agreement.
"LOAN DOCUMENTS" shall mean, collectively, this Agreement, the Note,
the Mortgage, the Assignment of Management Agreement, if any, and any and all
other documents, agreements and certificates executed and/or delivered in
connection with the Loan, as the same may be amended, restated, replaced,
supplemented or otherwise modified from time to time.
"LOCKOUT PERIOD" shall mean the period commencing on the date hereof
and ending on the date which is six (6) months prior to the Maturity Date.
"LOSSES" shall mean any and all claims, suits, liabilities
(including, without limitation, strict liabilities), actions, proceedings,
obligations, debts, damages, losses, costs, expenses, fines, penalties, charges,
fees, judgments, awards, amounts paid in settlement of whatever kind or nature
(including but not limited to legal fees and other costs of defense).
"MAJOR LEASE" shall mean as to the Property (i) any Lease which,
individually or when aggregated with all other leases at the Property with the
same Tenant or its Affiliate, either (A) accounts for five percent (5%) or more
of the Property's aggregate Net Operating Income, or (B) demises 5,000 square
feet or more of the Property's gross leasable area, (ii) any Lease which
contains any option, offer, right of first refusal or other similar entitlement
to acquire all or any portion of the Property, or (iii) any instrument
guaranteeing or providing credit support for any Lease meeting the requirements
of (i) or (ii) above.
"MANAGEMENT AGREEMENT" shall mean any management agreement entered
into by and between Borrower and any Manager, pursuant to which such Manager is
to provide management and other services with respect to the Property, as the
same may be amended, restated, replaced, supplemented or otherwise modified in
accordance with the terms of this Agreement.
"MANAGER" shall mean any entity selected as the manager of the
Property in accordance with the terms of this Agreement, which in all cases
shall be required to be a Qualified Manager.
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"MATERIAL ADVERSE EFFECT" shall mean any event, change, circumstance
or effect that is, or that may, reasonably be expected to be, materially adverse
to the operations, condition (financial or otherwise), assets, results of
operations or liabilities of Borrower or the Property.
"MATURITY DATE" shall mean July 1, 2016.
"MAXIMUM LEGAL RATE" shall mean the maximum nonusurious interest
rate, if any, that at any time or from time to time may be contracted for,
taken, reserved, charged or received on the indebtedness evidenced by the Note
and as provided for herein or the other Loan Documents, under the laws of such
state or states whose laws are held by any court of competent jurisdiction to
govern the interest rate provisions of the Loan.
"MEMBER" shall have the meaning set forth in Section 6.1(c).
"MONTHLY PAYMENT AMOUNT" shall mean the monthly payment of interest
and/or principal due on each Scheduled Payment Date as set forth in Section
2.2(b) hereof.
"MOODY'S" shall mean ▇▇▇▇▇'▇ Investor Services, Inc.
"MORTGAGE" shall mean, individually, each of, and collectively, all
of (i) that certain first priority Mortgage, dated the date hereof, executed and
delivered by the related Borrower and encumbering the Candlewick Court Parcel,
(ii) that certain first priority Mortgage, dated the date hereof, executed and
delivered by the related Borrower and encumbering the Hawaiian Gardens/▇▇▇▇▇
Village Parcel, (iii) that certain first priority Mortgage, dated the date
hereof, executed and delivered by the related Borrower and encumbering the
Lincoln Estates Parcel, and (iv) that certain first priority Mortgage,
Assignment of Leases and Rents, Security Agreement and Fixture Filing, dated the
date hereof, executed and delivered by the related Borrower and encumbering the
Silver Star Parcel, each as security for the Loan and encumbering such Parcel,
as the same may be amended, restated, replaced, supplemented or otherwise
modified from time to time.
"NET OPERATING INCOME" shall mean, with respect to any period of
time, the amount obtained by subtracting Operating Expenses from Operating
Income, as such amount may be adjusted by Lender in its good faith discretion
based on Lender's underwriting standards and consistent with the standards and
criteria used by Lender in underwriting the Loan, including without limitation,
adjustments for vacancy allowance not to exceed the greater of (x) actual
vacancy or (y) five percent (5%).
"NET PROCEEDS" shall have the meaning set forth in Section 8.4(b)
hereof.
"NET PROCEEDS DEFICIENCY" shall have the meaning set forth in
Section 8.4(b)(vi) hereof.
"NOTE" shall mean that certain promissory note of even date herewith
in the principal amount of $37,351,472.00, made by Borrower in favor of Lender,
together with any Assumed Note, Defeased Note, Unassumed Note and Undefeased
Note as may exist from time to time, as the same may be amended, restated,
replaced, supplemented or otherwise modified from time to time.
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"NOTE RATE" shall mean an interest rate equal to 5.32% per annum.
"OFFERING DOCUMENT DATE" shall have the meaning set forth in Section
5.11(c)(i)(D) hereof.
"OPERATING EXPENSES" shall mean, with respect to any period of time
and any Parcel or the Property, as applicable, the total of all expenses
actually paid or payable, computed in accordance with GAAP, of whatever kind
relating to the operation, maintenance and management of the Property, including
without limitation, utilities, ordinary repairs and maintenance, Insurance
Premiums, license fees, Taxes and Other Charges, advertising expenses, payroll
and related taxes, computer processing charges, management fees equal to the
greater of 4% of the Operating Income and the management fees actually paid
under the Management Agreement, operational equipment or other lease payments as
approved by Lender, normalized capital expenditures equal to $50.00 per homesite
per annum, but specifically excluding depreciation and amortization, income
taxes (or other payments due in lieu thereof), Debt Service, any incentive fees
due under the Management Agreement, any item of expense that in accordance with
GAAP should be capitalized but only to the extent the same would qualify for
funding from the Reserve Accounts, any item of expense that would otherwise be
covered by the provisions hereof but which is paid by any Tenant under such
Tenant's Lease or other agreement, and deposits into the Reserve Accounts.
"OPERATING INCOME" shall mean, with respect to any period of time
and any Parcel or the Property, as applicable, all income, computed in
accordance with GAAP, derived from the ownership and operation of the Property
from whatever source, including, but not limited to, Rents, utility charges,
escalations, forfeited security deposits, interest on credit accounts, service
fees or charges, license fees, parking fees, rent concessions or credits, and
other required pass-throughs but excluding sales, use and occupancy or other
taxes on receipts required to be accounted for by Borrower to any Governmental
Authority, refunds and uncollectible accounts, sales of furniture, fixtures and
equipment, interest income from any source other than the escrow accounts,
Reserve Accounts or other accounts required pursuant to the Loan Documents,
Insurance Proceeds (other than business interruption or other loss of income
insurance), Awards, percentage rents, unforfeited security deposits, utility and
other similar deposits, non-recurring or extraordinary income, including,
without limitation lease termination payments, and any disbursements to Borrower
from the Reserve Funds.
"OTHER CHARGES" shall mean all ground rents, maintenance charges,
impositions other than Taxes, and any other charges, including, without
limitation, vault charges and license fees for the use of vaults, chutes and
similar areas adjoining the Property, now or hereafter levied or assessed or
imposed against the Property or any part thereof.
"PARTIAL ASSUMPTION" shall have the meaning set forth in Section 7.6
hereof.
"PARTIAL ASSUMPTION AMOUNT" shall mean with respect to a Parcel, the
Allocated Loan Amount for such Parcel, less the pro rata portion (calculated
based on (x) the Allocated Loan Amount for such Parcel and (y) the original
principal balance of the Loan) to the of any amortization payments made with
respect to the Loan.
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"PARTICIPATIONS" shall have the meaning set forth in Section 13.1
hereof.
"PARCEL" shall mean any of the parcels of real property, including
the Improvements thereon and all Personal Property owned by Borrower thereon
together with all rights pertaining to such property and Improvements, more
particularly known as (i) Candlewick Court (the "CANDLEWICK COURT HILL PARCEL"),
(ii) Hawaiian Gardens/▇▇▇▇▇ Village (the "HAWAIIAN GARDENS/▇▇▇▇▇ VILLAGE
PARCEL"), (iii) Lincoln Estates (the "LINCOLN ESTATES PARCEL"), and (iv) Silver
Star (the "SILVER STAR PARCEL").
"PARTIAL DEFEASANCE COLLATERAL" shall mean direct non-callable
obligations of the United States of America (or any agency thereof to the extent
acceptable to the applicable Rating Agencies) or, to the extent acceptable to
the applicable Rating Agencies, other obligations which are "government
securities" within the meaning of Section 2(a)(16) of the Investment Company Act
of 1940 that provide for payments prior and as close as possible to (but in no
event later than) all successive Scheduled Payment Dates occurring after the
Partial Defeasance Date, with each such payment being equal to or greater than
the amount of the corresponding Monthly Payment Amount required to be paid under
the Defeased Note for the balance of the Lockout Period (including the amount
necessary to pay the outstanding principal balance on the Loan on the first
Scheduled Payment Date occurring after the expiration of the Lockout Period).
"PARTIAL DEFEASANCE DATE" shall have the meaning set forth in
Section 2.4(g)(i)(A) hereof.
"PARTIAL DEFEASANCE EVENT" shall have the meaning set forth in
Section 2.4(g)(i) hereof.
"PARTICIPATIONS" shall have the meaning set forth in Section 13.1
hereof.
"PATRIOT ACT" shall have the meaning set forth in Section 4.40
hereof.
"PERMITTED ENCUMBRANCES" shall mean collectively, (a) the Lien and
security interests created by the Loan Documents, (b) all Liens, encumbrances
and other matters disclosed in the Title Insurance Policy, (c) Liens, if any,
for Taxes imposed by any Governmental Authority not yet due or delinquent, and
(d) such other title and survey exceptions as Lender has approved or may approve
in writing in Lender's sole discretion.
"PERMITTED INVESTMENTS" shall mean to the extent available from
Lender or Lender's servicer for deposits in the Reserve Accounts, any one or
more of the following obligations or securities acquired at a purchase price of
not greater than par, including those issued by a servicer of the Loan, the
trustee under any securitization or any of their respective Affiliates, payable
on demand or having a maturity date not later than the Business Day immediately
prior to the date on which the funds used to acquire such investment are
required to be used under this Agreement and meeting one of the appropriate
standards set forth below:
(a) obligations of, or obligations fully guaranteed as to payment of
principal and interest by, the United States or any agency or
instrumentality thereof provided such obligations are backed by the full
faith and credit of the United States of America including, without
limitation, obligations of: the U.S. Treasury (all direct or fully
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guaranteed obligations), the Farmers Home Administration (certificates of
beneficial ownership), the General Services Administration (participation
certificates), the U.S. Maritime Administration (guaranteed Title XI
financing), the Small Business Administration (guaranteed participation
certificates and guaranteed pool certificates), the U.S. Department of
Housing and Urban Development (local authority bonds) and the Washington
Metropolitan Area Transit Authority (guaranteed transit bonds); provided,
however, that the investments described in this clause must (i) have a
predetermined fixed dollar of principal due at maturity that cannot vary
or change, (ii) be rated "AAA" or the equivalent by each of the Rating
Agencies, (iii) if rated by S&P, must not have an "r" highlighter affixed
to their rating, (iv) if such investments have a variable rate of
interest, such interest rate must be tied to a single interest rate index
plus a fixed spread (if any) and must move proportionately with that
index, and (v) such investments must not be subject to liquidation prior
to their maturity;
(b) Federal Housing Administration debentures;
(c) obligations of the following United States government sponsored
agencies: Federal Home Loan Mortgage Corp. (debt obligations), the Farm
Credit System (consolidated systemwide bonds and notes), the Federal Home
Loan Banks (consolidated debt obligations), the Federal National Mortgage
Association (debt obligations), the Financing Corp. (debt obligations),
and the Resolution Funding Corp. (debt obligations); provided, however,
that the investments described in this clause must (i) have a
predetermined fixed dollar of principal due at maturity that cannot vary
or change, (ii) if rated by S&P, must not have an "r" highlighter affixed
to their rating, (iii) if such investments have a variable rate of
interest, such interest rate must be tied to a single interest rate index
plus a fixed spread (if any) and must move proportionately with that
index, and (iv) such investments must not be subject to liquidation prior
to their maturity;
(d) federal funds, unsecured certificates of deposit, time deposits,
bankers' acceptances and repurchase agreements with maturities of not more
than 365 days of any bank, the short term obligations of which at all
times are rated in the highest short term rating category by each Rating
Agency (or, if not rated by all Rating Agencies, rated by at least one
Rating Agency in the highest short term rating category and otherwise
acceptable to each other Rating Agency, as confirmed in writing that such
investment would not, in and of itself, result in a downgrade,
qualification or withdrawal of the initial, or, if higher, then current
ratings assigned to the Securities); provided, however, that the
investments described in this clause must (i) have a predetermined fixed
dollar of principal due at maturity that cannot vary or change, (ii) if
rated by S&P, must not have an "r" highlighter affixed to their rating,
(iii) if such investments have a variable rate of interest, such interest
rate must be tied to a single interest rate index plus a fixed spread (if
any) and must move proportionately with that index, and (iv) such
investments must not be subject to liquidation prior to their maturity;
(e) fully Federal Deposit Insurance Corporation-insured demand and
time deposits in, or certificates of deposit of, or bankers' acceptances
with maturities of not more than 365 days and issued by, any bank or trust
company, savings and loan association or savings bank, the short term
obligations of which at all times are rated in
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the highest short term rating category by each Rating Agency (or, if not
rated by all Rating Agencies, rated by at least one Rating Agency in the
highest short term rating category and otherwise acceptable to each other
Rating Agency, as confirmed in writing that such investment would not, in
and of itself, result in a downgrade, qualification or withdrawal of the
initial, or, if higher, then current ratings assigned to the Securities);
provided, however, that the investments described in this clause must (i)
have a predetermined fixed dollar of principal due at maturity that cannot
vary or change, (ii) if rated by S&P, must not have an "r" highlighter
affixed to their rating, (iii) if such investments have a variable rate of
interest, such interest rate must be tied to a single interest rate index
plus a fixed spread (if any) and must move proportionately with that
index, and (iv) such investments must not be subject to liquidation prior
to their maturity;
(f) debt obligations with maturities of not more than 365 days and
at all times rated by each Rating Agency (or, if not rated by all Rating
Agencies, rated by at least one Rating Agency and otherwise acceptable to
each other Rating Agency, as confirmed in writing that such investment
would not, in and of itself, result in a downgrade, qualification or
withdrawal of the initial, or, if higher, then current ratings assigned to
the Securities) in its highest long-term unsecured rating category;
provided, however, that the investments described in this clause must (i)
have a predetermined fixed dollar of principal due at maturity that cannot
vary or change, (ii) if rated by S&P, must not have an "r" highlighter
affixed to their rating, (iii) if such investments have a variable rate of
interest, such interest rate must be tied to a single interest rate index
plus a fixed spread (if any) and must move proportionately with that
index, and (iv) such investments must not be subject to liquidation prior
to their maturity;
(g) commercial paper (including both non-interest-bearing discount
obligations and interest-bearing obligations payable on demand or on a
specified date not more than one year after the date of issuance thereof)
with maturities of not more than 365 days and that at all times is rated
by each Rating Agency (or, if not rated by all Rating Agencies, rated by
at least one Rating Agency and otherwise acceptable to each other Rating
Agency, as confirmed in writing that such investment would not, in and of
itself, result in a downgrade, qualification or withdrawal of the initial,
or, if higher, then current ratings assigned to the Securities) in its
highest short-term unsecured debt rating; provided, however, that the
investments described in this clause must (i) have a predetermined fixed
dollar of principal due at maturity that cannot vary or change, (ii) if
rated by S&P, must not have an "r" highlighter affixed to their rating,
(iii) if such investments have a variable rate of interest, such interest
rate must be tied to a single interest rate index plus a fixed spread (if
any) and must move proportionately with that index, and (iv) such
investments must not be subject to liquidation prior to their maturity;
(h) units of taxable money market funds, with maturities of not more
than 365 days and which funds are regulated investment companies, seek to
maintain a constant net asset value per share and invest solely in
obligations backed by the full faith and credit of the United States,
which funds have the highest rating available from each Rating Agency (or,
if not rated by all Rating Agencies, rated by at least one Rating Agency
and otherwise acceptable to each other Rating Agency, as confirmed in
writing that such investment would not, in and of itself, result in a
downgrade, qualification or
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withdrawal of the initial, or, if higher, then current ratings assigned to
the Securities) for money market funds; and
(i) any other security, obligation or investment which has been
approved as a Permitted Investment in writing by (i) Lender and (ii) each
Rating Agency, as evidenced by a written confirmation that the designation
of such security, obligation or investment as a Permitted Investment will
not, in and of itself, result in a downgrade, qualification or withdrawal
of the initial, or, if higher, then current ratings assigned to the
Securities by such Rating Agency;
provided, however, that no obligation or security shall be a
Permitted Investment if (A) such obligation or security evidences a right to
receive only interest payments, (B) the right to receive principal and interest
payments on such obligation or security are derived from an underlying
investment that provides a yield to maturity in excess of one hundred twenty
percent (120%) of the yield to maturity at par of such underlying investment or
(C) such obligation or security has a remaining term to maturity in excess of
one (1) year.
"PERSON" shall mean any individual, corporation, partnership, joint
venture, limited liability company, estate, trust, unincorporated association,
any federal, state, county or municipal government or any bureau, department or
agency thereof and any fiduciary acting in such capacity on behalf of any of the
foregoing.
"PERSONAL PROPERTY" shall have the meaning set forth in the granting
clause of the Mortgage.
"PHYSICAL CONDITIONS REPORT" shall mean a report prepared by a
company satisfactory to Lender regarding the physical condition of the Property,
satisfactory in form and substance to Lender in its sole discretion.
"POLICIES" shall have the meaning set forth in Section 8.1 hereof.
"PROHIBITED TRANSFER" shall have the meaning set forth in Section
7.2 hereof.
"PROPERTY" shall mean, collectively, all Parcels of real property,
the Improvements thereon and all Personal Property owned by Borrower and
encumbered by the Mortgage, together with all rights pertaining to such property
and Improvements, as more particularly described in the granting clause of the
Mortgage and referred to therein as the "Property".
"PROPERTY OPERATING ACCOUNT" shall have the meaning set forth in
Section 10.1 hereof.
"PROPERTY OPERATING ACCOUNT BANK" shall have the meaning set forth
in Section 10.1 hereof.
"PROVIDED INFORMATION" shall have the meaning set forth in Section
13.4(a) hereof.
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"P&I MONTHLY PAYMENT AMOUNT" shall mean the monthly payment of
interest and principal due on each P&I Scheduled Payment Date as set forth in
Section 2.2(b) hereof.
"P&I SCHEDULED PAYMENT DATE" shall have the meaning set forth in
Section 2.2(b) hereof.
"QUALIFIED MANAGER" shall mean Manager or a reputable and
experienced professional management organization (a) which manages, together
with its affiliates, manufactured home communities of a type, quality and size
similar to the Property, totaling in the aggregate no less than 1,000 home
sites, exclusive of the Property and (b) approved by Lender, which approval
shall not have been unreasonably withheld and for which Lender shall have
received (i) written confirmation from the Rating Agencies that the employment
of such manager will not result in a downgrade, withdrawal or qualification of
the initial, or if higher, then current ratings issued in connection with a
Securitization, or if a Securitization has not occurred, any ratings to be
assigned in connection with a Securitization, and (ii) with respect to any
Affiliated Manager, a revised substantive non-consolidation opinion if one was
delivered in connection with the closing of the Loan. For purposes hereof,
Borrower Principal and any Affiliate of Borrower Principal which is Controlled
by Borrower Principal or an Affiliate of Borrower Principal, shall be deemed a
Qualified Manager.
"RATING AGENCIES" shall mean each of S&P, ▇▇▇▇▇'▇ and Fitch, or any
other nationally-recognized statistical rating agency which has been approved by
Lender.
"REA" shall mean any construction, operation and reciprocal easement
agreement or similar agreement (including any separate agreement or other
agreement between Borrower and one or more other parties to an REA with respect
to such REA) affecting the Property or portion thereof.
"RELEASE" shall have the meaning set forth in Section 12.5 hereof.
"RELEASE AMOUNT" shall mean the greater of (a) with respect to any
Parcel, 110% of the Allocated Loan Amount for such Parcel, or (b) an amount
which, if applied to the outstanding principal balance of the Loan, would cause
the Remaining Properties to have a Debt Service Coverage Ratio of not less than
1.275 to 1.00 at the time of such calculation.
"REMAINING PROPERTY" each Parcel remaining subject to the Lien of
the Mortgage after a Partial Defeasance Event or Partial Assumption (each
Remaining Property being collectively referred to as the "REMAINING
PROPERTIES").
"REMIC PROHIBITION PERIOD" shall have the meaning set forth in
Section 2.4(b)(iv) hereof.
"REMIC TRUST" shall mean a "real estate mortgage investment conduit"
(within the meaning of Section 860D, or applicable successor provisions, of the
Code) that holds the Note.
"RENT ROLL" shall have the meaning set forth in Section 4.25 hereof.
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"RENTS" shall have the meaning set forth in the Mortgage.
"REPLACEMENT RESERVE ACCOUNT" shall have the meaning set forth in
Section 9.2(b) hereof.
"REPLACEMENT RESERVE FUNDS" shall have the meaning set forth in
Section 9.2(b) hereof.
"REPLACEMENT RESERVE MONTHLY DEPOSIT" shall have the meaning set
forth in Section 9.2(b) hereof.
"REPLACEMENTS" shall have the meaning set forth in Section 9.2(a)
hereof.
"REQUIRED REPAIR ACCOUNT" shall have the meaning set forth in
Section 9.1(b) hereof.
"REQUIRED REPAIR FUNDS" shall have the meaning set forth in Section
9.1(b) hereof.
"REQUIRED REPAIRS" shall have the meaning set forth in Section
9.1(a) hereof.
"REQUIRED WORK" shall have the meaning set forth in Section 9.4
hereof.
"RESERVE ACCOUNTS" shall mean the following accounts: the Tax and
Insurance Reserve Account, the Replacement Reserve Account, and the Required
Repair Account, or any other escrow account established by the Loan Documents.
"RESERVE DSCR PERIOD" shall mean the period commencing upon the date
that Lender determines that the Debt Service Coverage Ratio for the immediately
preceding three (3) month period is less than 1.10 to 1.00, and continuing
through the date that Lender determines that the Debt Service Coverage Ratio for
the immediately preceding six (6) month period is not less than 1.10 to 1.00.
"RESERVE FUNDS" shall mean the Tax and Insurance Reserve Funds, the
Replacement Reserve Funds, and the Required Repair Funds, or any other escrow
funds established by the Loan Documents.
"RESTORATION" shall mean, following the occurrence of a Casualty or
a Condemnation which is of a type necessitating the repair of the Property, the
completion of the repair and restoration of the Property as nearly as possible
to the condition the Property was in immediately prior to such Casualty or
Condemnation, with such alterations as may be reasonably approved by Lender.
"RESTORATION CONSULTANT" shall have the meaning set forth in Section
8.4(b)(iii) hereof.
"RESTORATION RETAINAGE" shall have the meaning set forth in Section
8.4(b)(iv) hereof.
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"RESTRICTED PARTY" shall have the meaning set forth in Section 7.1
hereof.
"SALE OR PLEDGE" shall have the meaning set forth in Section 7.1
hereof.
"SCHEDULED DEFEASANCE PAYMENTS" shall mean scheduled payments of
interest and/or principal under the under the Defeased Note in the case of a
Partial Defeasance Event for all Scheduled Payment Dates occurring after the
Partial Defeasance Date and up to and including the expiration of the Lockout
Period (including the amount necessary to pay the outstanding principal balance
on the Defeased Note on the first Scheduled Payment Date occurring after the
expiration of the Lockout Period), and all payments required after the Partial
Defeasance Date, if any, under the Loan Documents for servicing fees, any
charges for rating surveillance services on any certificates issued in a
Securitization and other similar charges.
"SCHEDULED PAYMENT DATE" shall have the meaning set forth in Section
2.2(b) hereof.
"SCI" shall mean Sun Communities, Inc., a Maryland corporation.
"SCOLP" shall mean Sun Communities Operating Limited Partnership, a
Michigan limited partnership.
"SECURITIES" shall have the meaning set forth in Section 13.1
hereof.
"SECURITIES ACT" shall mean the Securities Act of 1933, as amended.
"SECURITIES LIABILITIES" shall have the meaning set forth in Section
13.5 hereof.
"SECURITIZATION" shall have the meaning set forth in Section 13.1
hereof.
"SPECIAL MEMBER" shall have the meaning set forth in Section 6.1(c).
"SPE COMPONENT ENTITY" shall have the meaning set forth in Section
6.1(b) hereof.
"STANDARD STATEMENTS" shall have the meaning set forth in Section
5.11(c)(i)(A) hereof.
"S&P" shall mean Standard & Poor's Ratings Services, a division of
The ▇▇▇▇▇▇-▇▇▇▇ Companies, Inc.
"STATE" shall mean the state in which the Property or any part
thereof is located.
"SUCCESSOR BORROWER" shall have the meaning set forth in Section
2.4(b)(iii) hereof.
"TAX AND INSURANCE RESERVE FUNDS" shall have the meaning set forth
in Section 9.6 hereof.
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"TAX AND INSURANCE RESERVE ACCOUNT" shall have the meaning set forth
in Section 9.6 hereof.
"TAXES" shall mean all real estate and personal property taxes,
assessments, water rates or sewer rents, now or hereafter levied or assessed or
imposed against the Property or part thereof.
"TENANT" shall mean any Person leasing, subleasing or otherwise
occupying any portion of the Property under a Lease or other occupancy agreement
with Borrower.
"TITLE INSURANCE POLICY" shall mean that certain ALTA mortgagee
title insurance policy issued with respect to the Property and insuring the lien
of the Mortgage.
"TRANSFEREE" shall have the meaning set forth in Section 7.5 hereof.
"TRIBUNAL" shall mean any state, commonwealth, federal, foreign,
territorial or other court or governmental department, commission, board,
bureau, district, authority, agency, central bank, or instrumentality, or any
arbitration authority.
"UCC" or "UNIFORM COMMERCIAL CODE" shall mean the Uniform Commercial
Code as in effect in the State where the applicable Property is located.
"UNASSUMED NOTE" shall have the meaning set forth in Section 7.6(b)
hereof.
"UNDEFEASED NOTE" shall have the meaning set forth in Section
2.4(g)(i)(D) hereof.
"UNDERWRITER GROUP" shall have the meaning set forth in Section
13.5(b) hereof.
SECTION 1.2. PRINCIPLES OF CONSTRUCTION.
All references to sections and schedules are to sections and
schedules in or to this Agreement unless otherwise specified. All uses of the
word "including" shall mean "including, without limitation" unless the context
shall indicate otherwise. Unless otherwise specified, the words "hereof,"
"herein" and "hereunder" and words of similar import when used in this Agreement
shall refer to this Agreement as a whole and not to any particular provision of
this Agreement. Unless otherwise specified, all meanings attributed to defined
terms herein shall be equally applicable to both the singular and plural forms
of the terms so defined.
ARTICLE II
GENERAL TERMS
SECTION 2.1. LOAN COMMITMENT; DISBURSEMENT TO BORROWER
(a) Subject to and upon the terms and conditions set forth herein,
Lender hereby agrees to make and Borrower hereby agrees to accept the Loan on
the Closing Date.
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(b) Borrower may request and receive only one borrowing in respect
of the Loan and any amount borrowed and repaid in respect of the Loan may not be
reborrowed.
(c) The Loan shall be evidenced by the Note and secured by the
Mortgage and the other Loan Documents.
(d) Borrower shall use the proceeds of the Loan to (i) pay certain
costs in connection with the financing of the Property, (ii) make deposits into
the Reserve Funds on the Closing Date in the amounts provided herein, (iii) pay
costs and expenses incurred in connection with the closing of the Loan, as
approved by Lender, (iv) fund any working capital requirements of the Property,
and (v) distribute the balance, if any, to its members.
SECTION 2.2. LOAN PAYMENTS
(a) The Loan shall bear interest at a fixed rate per annum equal to
the Note Rate. Interest shall be computed based on the daily rate produced
assuming a three hundred sixty (360) day year, multiplied by the actual number
of days elapsed. Except as otherwise set forth in this Agreement, interest shall
be paid in arrears.
(b) Borrower hereby agrees to pay sums due under the Note as
follows: An initial payment of $119,927.28 is due on the Closing Date for
interest from the Closing Date through and including June 30, 2004. Thereafter,
consecutive monthly installments of interest only computed in accordance with
Section 2.2(a) shall be payable (the "IO MONTHLY PAYMENT AMOUNT") on the first
(1st) day of each month beginning on August 1, 2004 through an including the
first (1st) day of January, 2007 (each an "IO SCHEDULED PAYMENT DATE").
Thereafter, except as may be adjusted in accordance with the last sentence of
Section 2.2(c), consecutive monthly installments of principal and interest in an
amount equal $207,878.61 shall be payable (the "P&I MONTHLY PAYMENT AMOUNT";
collectively with the IO Monthly Payment Amount, the "MONTHLY PAYMENT AMOUNT")
on the first (1st) day of each month beginning on February 1, 2007 (each a "P&I
SCHEDULED PAYMENT DATE"; collectively with the IO Scheduled Payment Date, each a
"SCHEDULED PAYMENT DATE") until the entire indebtedness evidenced hereby is
fully paid, except that any remaining indebtedness, if not sooner paid, shall be
due and payable on the Maturity Date.
(c) The P&I Monthly Payment Amount shall mean the amount of interest
and principal which would be due in order to fully amortize the principal amount
of the Loan, over an amortization term of thirty (30) years assuming an annual
interest rate equal to the Note Rate, computed on the basis of a three hundred
sixty (360) day year consisting of twelve (12) months of thirty (30) days each.
Borrower expressly understands and agrees that such computation of interest
based on a three hundred sixty (360) day year consisting of twelve (12) months
of thirty (30) days each is solely for the purpose of determining the P&I
Monthly Payment Amount, and, notwithstanding such computation, interest shall
accrue on the outstanding principal amount of the Loan as provided in Section
2.2(a) above. Borrower understands and acknowledges that such interest accrual
requirement results in more interest accruing on the Loan than if either a
thirty (30) day month and a three hundred sixty (360) day year or the actual
number of days and a three hundred sixty-five (365) day year were used to
compute the accrual of interest on the Loan. Borrower recognizes that such
interest accrual requirement will not fully amortize the Loan
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within the amortization period set forth above. Following any partial prepayment
occurring solely as a result of the application of Insurance Proceeds or Awards
pursuant to the terms of this Agreement, Lender may, in its sole and absolute
discretion, adjust the P&I Monthly Payment Amount to give effect to any such
partial prepayment, provided, however, that in no event will any such adjustment
result in any such installment becoming due and payable on any date after the
Maturity Date.
(d) Each payment by Borrower hereunder or under the Note shall be
payable at P. O. Box 515228, ▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇, Attn:
Commercial Mortgage Loan Servicing #1777, or at such other place as the Lender
may designate from time to time in writing, on the date such payment is due, to
Lender by deposit to such account as Lender may designate by written notice to
Borrower. Whenever any payment hereunder or under the Note shall be stated to be
due on a day which is not a Business Day, such payment shall be made on the
first Business Day preceding such scheduled due date.
(e) Prior to the occurrence of an Event of Default, all monthly
payments made as scheduled under this Agreement and the Note shall be applied
first to the payment of interest computed at the Note Rate, and the balance
toward the reduction of the principal amount of the Note. All voluntary and
involuntary prepayments on the Note shall be applied, to the extent thereof, to
accrued but unpaid interest on the amount prepaid, to the remaining principal
amount, and any other sums due and unpaid to Lender in connection with the Loan,
in such manner and order as Lender may elect in its sole and absolute
discretion, including, but not limited to, application to principal installments
in inverse order of maturity. Following the occurrence of an Event of Default,
any payment made on the Note shall be applied to accrued but unpaid interest,
late charges, accrued fees, the unpaid principal amount of the Note, and any
other sums due and unpaid to Lender in connection with the Loan, in such manner
and order as Lender may elect in its sole and absolute discretion.
(f) All payments made by Borrower hereunder or under the Note or the
other Loan Documents shall be made irrespective of, and without any deduction
for, any setoff, defense or counterclaims.
SECTION 2.3. LATE PAYMENT CHARGE
If any regularly scheduled monthly principal or interest payment is
not paid by Borrower within five (5) days after the date the same is due,
Borrower shall pay to Lender upon demand an amount equal to the lesser of four
percent (4%) of such unpaid sum or the maximum amount permitted by applicable
law in order to defray the expense incurred by Lender in handling and processing
such delinquent payment and to compensate Lender for the loss of the use of such
delinquent payment. Any such amount shall be secured by the Mortgage and the
other Loan Documents to the extent permitted by applicable law.
SECTION 2.4. PREPAYMENT; DEFEASANCE
Except as otherwise expressly permitted by this Section 2.4 no
voluntary prepayments, whether in whole or in part, of the Loan or any other
amount at any time due and
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owing under the Note can be made by Borrower or any other Person without the
express written consent of Lender.
(a) Lockout Period. Borrower has no right to make, and Lender shall
have no obligation to accept, any voluntary prepayment, whether in whole or in
part, of the Loan during the Lockout Period. Notwithstanding the foregoing, if
either (i) Lender, in its sole and absolute discretion, accepts a full or
partial voluntary prepayment during the Lockout Period or (ii) there is an
involuntary prepayment during the Lockout Period, then, in either case, Borrower
shall, in addition to any portion of the Loan prepaid (together with all
interest accrued and unpaid thereon), pay to Lender a prepayment premium in an
amount calculated in accordance with Section 2.4(c) hereof.
(b) Defeasance.
(i) Notwithstanding any provisions of this Section 2.4 to the
contrary, including, without limitation, subsection (a) of this Section
2.4, at any time other than during a REMIC Prohibition Period, Borrower
may cause the release of the Property from the lien of the Mortgage and
the other Loan Documents upon the satisfaction of the following
conditions:
(A) no default shall exist under any of the Loan Documents;
(B) not less than thirty (30) (but not more than ninety (90))
days prior written notice shall be given to Lender specifying a date
on which the Defeasance Collateral (as hereinafter defined) is to be
delivered (the "RELEASE DATE"), such date being on a Scheduled
Payment Date; provided, however, that Borrower shall have the right
(i) to cancel such notice by providing Lender with notice of
cancellation not less than five (5) days prior to the scheduled
Release Date, or (ii) to extend the scheduled Release Date until the
next Scheduled Payment Date; provided that in each case, Borrower
shall pay all of Lender's costs and expenses incurred as a result of
such cancellation or extension;
(C) all accrued and unpaid interest and all other sums due
under the Note, this Agreement and under the other Loan Documents up
to the Release Date, including, without limitation, all fees, costs
and expenses incurred by Lender and its agents in connection with
such release (including, without limitation, legal fees and expenses
for the review and preparation of the Defeasance Security Agreement
(as hereinafter defined) and of the other materials described in
Section 2.4(b)(i)(D) below and any related documentation, and any
servicing fees, Rating Agency fees or other costs related to such
release), shall be paid in full on or prior to the Release Date;
(D) Borrower shall deliver to Lender on or prior to the
Release Date:
(1) a pledge and security agreement, in form and
substance satisfactory to a prudent lender, creating a first
priority security interest in favor of Lender in the
Defeasance Collateral and the Defeasance Collateral Account,
each as defined herein (the "DEFEASANCE SECURITY
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AGREEMENT"), which shall provide, among other things, that any
excess amounts received by Lender from the Defeasance
Collateral over the amounts payable by Borrower on a given
Scheduled Payment Date, which excess amounts are not required
to cover all or any portion of amounts payable on a future
Scheduled Payment Date, shall be refunded to Borrower promptly
after each such Scheduled Payment Date;
(2) direct non-callable obligations of the United States
of America (or any agency thereof to the extent acceptable to
the applicable Rating Agencies) or other obligations which are
"government securities" within the meaning of Section 2(a)(16)
of the Investment Company Act of 1940, to the extent the
applicable Rating Agencies rating the Securities have
confirmed in writing will not cause a downgrade, withdrawal or
qualification of the initial, or, if higher, then applicable
ratings of the Securities, that provide for payments prior and
as close as possible to (but in no event later than) all
successive Scheduled Payment Dates occurring after the Release
Date, with each such payment being equal to or greater than
the amount of the corresponding Monthly Payment Amount
required to be paid under this Agreement and the Note
(including the amount necessary to pay the outstanding
principal balance of the Loan on the first Scheduled Payment
Date occurring after the expiration of the Lockout Period) for
the balance of the Lockout Period (the "DEFEASANCE
COLLATERAL"), each of which shall be duly endorsed by the
holder thereof as directed by Lender or accompanied by a
written instrument of transfer in form and substance wholly
satisfactory to Lender in its sole discretion (including,
without limitation, such certificates, documents and
instruments as may be required by the depository institution
holding such securities or the issuer thereof, as the case may
be, to effectuate book-entry transfers and pledges through the
book-entry facilities of such institution) in order to perfect
upon the delivery of the Defeasance Security Agreement the
first priority security interest therein in favor of Lender in
conformity with all applicable state and federal laws
governing granting of such security interests;
(3) a certificate of Borrower certifying that all of the
requirements set forth in this Section 2.4(b)(i) have been
satisfied;
(4) one or more opinions of counsel for Borrower in form
and substance that is standard in commercial mortgage lending
transactions and subject only to customary qualifications,
assumptions and exceptions opining, among other things, that
(i) Lender has a perfected first priority security interest in
the Defeasance Collateral and the Defeasance Collateral
Account and that the Defeasance Security Agreement is
enforceable against Borrower in accordance with its terms,
(ii) in the event of a bankruptcy proceeding or similar
occurrence with respect to Borrower, none of the Defeasance
Collateral nor any proceeds thereof will be property of
Borrower's estate under Section 541 of the U.S.
-21-
Bankruptcy Code or any similar statute and the grant of
security interest therein to Lender shall not constitute an
avoidable preference under Section 547 of the U.S. Bankruptcy
Code or applicable state law, (iii) the release of the lien of
the Mortgage and the pledge of Defeasance Collateral will not
directly or indirectly result in or cause any REMIC Trust that
then holds the Note to fail to maintain its status as a REMIC
Trust and (iv) the defeasance will not cause any REMIC Trust
to be an "investment company" under the Investment Company Act
of 1940;
(5) a certificate in form and scope acceptable to Lender
in its sole discretion from an Acceptable Accountant or such
other accountant whose certification is customarily acceptable
by lenders in defeasance transactions certifying that the
Defeasance Collateral will generate amounts sufficient to make
all payments of principal and interest due under the Note
(including the scheduled outstanding principal balance of the
Loan due on the Maturity Date); and
(6) such other certificates, documents and instruments
customarily delivered in connection with similar defeasance
transactions as Lender may in its sole and reasonable
discretion require; and
(E) in the event the Loan is held by a REMIC Trust, Lender has
received written confirmation from any Rating Agency rating any
Securities that substitution of the Defeasance Collateral will not
result in a downgrade, withdrawal, or qualification of the ratings
then assigned to any of the Securities.
(ii) Upon compliance with the requirements of Section 2.4(b)(i), the
Property shall be released from the lien of the Mortgage and the other
Loan Documents, and the Defeasance Collateral shall constitute collateral
which shall secure the Note and all other obligations under the Loan
Documents. Lender will, at Borrower's expense, execute and deliver any
agreements reasonably requested by Borrower to release the lien of the
Mortgage and the other Loan Documents from the Property.
(iii) Upon the release of the Property in accordance with this
Section 2.4(b), Borrower shall (at Lender's sole and absolute discretion)
assign all its obligations and rights under the Note, together with the
pledged Defeasance Collateral, to a successor entity designated and
approved by Lender in its sole and reasonable discretion ("SUCCESSOR
BORROWER"). Successor Borrower shall execute an assignment and assumption
agreement in form and substance satisfactory to Lender in its sole and
reasonable discretion pursuant to which it shall assume Borrower's
obligations under the Note and the Defeasance Security Agreement. As
conditions to such assignment and assumption, Borrower shall (A) deliver
to Lender one or more opinions of counsel in form and substance that is
standard in commercial mortgage lending transactions and subject only to
customary qualifications, assumptions and exceptions opining, among other
things, that such assignment and assumption agreement is enforceable
against Borrower and the Successor Borrower in accordance with its terms
and that the Note, the Defeasance Security Agreement and the other Loan
Documents, as so assigned and
-22-
assumed, are enforceable against the Successor Borrower in accordance with
their respective terms, and opining to such other matters relating to
Successor Borrower and its organizational structure as Lender may
reasonably require, and (B) pay all reasonable fees, costs and expenses
incurred by Lender or its agents in connection with such assignment and
assumption (including, without limitation, legal fees and expenses and for
the review of the proposed transferee and the preparation of the
assignment and assumption agreement and related certificates, documents
and instruments and any fees payable to any Rating Agencies and their
counsel in connection with the issuance of the confirmation referred to in
subsection (b)(i)(E) above). Upon such assignment and assumption, Borrower
shall be relieved of its obligations hereunder, under the Note, under the
other Loan Documents and under the Defeasance Security Agreement, except
as expressly set forth in the assignment and assumption agreement.
(iv) For purposes of this Section 2.4, "REMIC PROHIBITION PERIOD"
means the earlier of (x) the period commencing on the date hereof and
ending on the date which is four (4) years after the first Scheduled
Payment Date following the date hereof or (y) the two-year period
commencing with the "startup day" within the meaning of Section 860G(a)(9)
of the Code of any REMIC Trust that holds the Note. In no event shall
Lender have any obligation to notify Borrower that a REMIC Prohibition
Period is in effect with respect to the Loan, except that Lender shall
notify Borrower if any REMIC Prohibition Period is in effect with respect
to the Loan after receiving any notice described in Section 2.4(b)(i)(B);
provided, however, that the failure of Lender to so notify Borrower shall
not impose any liability on Lender or grant Borrower any right to defease
the Loan during any such REMIC Prohibition Period.
(v) At Borrower's request, Lender shall assign the Security
Instrument and the Note, each without recourse, covenant or warranty of
any nature, express or implied, except that Lender is the holder of the
Note and the outstanding amount owed under the Note by Borrower to such
new mortgagee designated by Borrower (other than Borrower or a nominee of
Borrower) provided that Borrower or Successor Borrower, as applicable (i)
has executed and delivered to such new mortgagee a new note to be secured
by the Defeasance Collateral pursuant to the Defeasance Security Agreement
between Borrower and such new mortgagee (such new note to have the same
term, interest rate, unpaid principal balance and all other material terms
and conditions of the Note), which new note, together with the Defeasance
Security Agreement and the rights of such new mortgagee in and to the
Defeasance Collateral, shall be assigned by such new mortgagee to Lender
simultaneously with the assignment of the Note and Security Instrument by
Lender and (ii) has complied with all other provisions of this Section
2.4(b) to the extent not inconsistent with this subparagraph (v). In
addition, any such assignment shall be conditioned on the following: (A)
payment by Borrower of (I) Lender's then customary administrative fee for
processing assignments of mortgage; (II) the reasonable expenses of Lender
incurred in connection therewith; and (III) Lender's reasonable attorney's
fees for the preparation, delivery and performance of such an assignment;
(B) such new mortgagee shall not substantially modify the Note such that
it shall be treated as a new loan for federal tax purposes; (C) such an
assignment is not then prohibited by any federal, state or local law,
rule, regulation, order or by any other governmental authority; (D) such
assignment and the actions described above do not constitute a prohibited
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transaction for any REMIC Trust formed in connection with a Securitization
and will not disqualify such REMIC Trust as a "real estate mortgage
investment conduit" within the meaning of Section 860D of the Code as a
result of such assignment and the Defeasance, and an opinion of counsel to
Borrower that is standard in commercial mortgage lending transactions and
subject only to customary qualifications, assumptions and exceptions; and
(E) Borrower shall provide such other opinions, items, information and
documents which a prudent lender would require to effectuate such
assignment. Borrower shall be responsible for all mortgage recording
taxes, recording fees and other charges payable in connection with any
such assignment. Lender agrees that the assignment of the Note and
Security Instrument to the new mortgagee and the assignment of the new
note, the Defeasance Collateral and the Defeasance Security Agreement by
the new mortgagee to Lender shall be accomplished by an escrow closing
conducted through an escrow agent satisfactory to Lender and pursuant to
an escrow agreement satisfactory to Lender in form and substance.
(c) Involuntary Prepayment During the Lockout Period. During the
Lockout Period, in the event of any involuntary prepayment of the Loan or any
other amount under the Note, whether in whole or in part, in connection with or
following Lender's acceleration of the Note or otherwise, and whether the
Mortgage is satisfied or released by foreclosure (whether by power of sale or
judicial proceeding), deed in lieu of foreclosure or by any other means,
including, without limitation, repayment of the Loan by Borrower or any other
Person pursuant to any statutory or common law right of redemption, Borrower
shall, in addition to any portion of the principal balance of the Loan prepaid
(together with all interest accrued and unpaid thereon and in the event the
prepayment is made on a date other than a Scheduled Payment Date, a sum equal to
the amount of interest which would have accrued under the Note on the amount of
such prepayment if such prepayment had occurred on the next Scheduled Payment
Date), pay to Lender a prepayment premium in an amount calculated in accordance
with this Section 2.4(c). Such prepayment premium shall be in an amount equal to
the greater of:
(i) 1% of the portion of the Loan being prepaid; or
(ii) the product obtained by multiplying:
(A) the portion of the Loan being prepaid, times;
(B) the difference obtained by subtracting (I) the Yield Rate
from (II) the Note Rate, times;
(C) the present value factor calculated using the following
formula:
1-(1+r)(-n)
-----------
r
r = Yield Rate
n = the number of years and any fraction thereof,
remaining between the date the prepayment is made
and first
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Scheduled Payment Date occurring after the
expiration of the Lockout Period.
As used herein, "YIELD RATE" means the yield calculated by the
linear interpolation of the yields, as reported in the Federal Reserve
Statistical Release H.15-Selected Interest Rates under the heading "U.S.
government securities" and the sub-heading "Treasury constant maturities" for
the week ending prior to the Prepayment Calculation Date, of the U.S. Treasury
constant maturities with maturity dates (one longer and one equal to or shorter)
most nearly approximating the Maturity Date, and converted to a monthly
compounded nominal yield. In the event Release H.15 is no longer published,
Lender shall select a comparable publication to determine the Yield Rate. The
"PREPAYMENT CALCULATION DATE" shall mean, as applicable, the date on which (i)
Lender applies any partial prepayment to the reduction of the outstanding
principal amount the Note, in the case of a voluntary partial prepayment which
is accepted by Lender, (ii) Lender accelerates the Loan, in the case of a
prepayment resulting from acceleration, or (iii) Lender applies funds held under
any Reserve Account, in the case of a prepayment resulting from such an
application (other than in connection with acceleration of the Loan).
(d) Insurance and Condemnation Proceeds; Excess Interest.
Notwithstanding any other provision herein to the contrary, and provided no
Event of Default exists, Borrower shall not be required to pay any prepayment
premium in connection with any prepayment occurring solely as a result of (i)
the application of Insurance Proceeds or Condemnation Proceeds pursuant to the
terms of the Loan Documents, or (ii) the application of any interest in excess
of the maximum rate permitted by applicable law to the reduction of the Loan.
(e) After the Lockout Period. Commencing on the day after the
expiration of the Lockout Period, and upon giving Lender at least thirty (30)
days (but not more than ninety (90) days) prior written notice, Borrower may
voluntarily prepay (without premium) the Note in whole (but not in part) on a
Scheduled Payment Date. Lender shall accept a prepayment pursuant to this
Section 2.4(e) on a day other than a Scheduled Payment Date provided that, in
addition to payment of the full outstanding principal balance of the Note,
Borrower pays to Lender a sum equal to the amount of interest which would have
accrued on the Note if such prepayment occurred on the next Scheduled Payment
Date.
(f) Limitation on Partial Prepayments. In no event shall Lender have
any obligation to accept a partial prepayment.
(g) Partial Defeasance. (i) Provided no Event of Default shall have
occurred and remain uncured, Borrower shall have the right at any time after the
REMIC Prohibition Period to voluntarily defease a portion of the Loan and obtain
a release of the lien of the Mortgage as to any Parcel by providing Lender with
the Partial Defeasance Collateral (hereinafter, a "PARTIAL DEFEASANCE EVENT")
upon satisfaction of the following conditions precedent:
(A) Borrower shall provide Lender not less than thirty (30)
(but not more than ninety (90)) days notice (or a shorter period of
time if permitted by Lender in its sole discretion) specifying (1) a
date (the "PARTIAL DEFEASANCE DATE") on which the Partial Defeasance
Event is to occur, (2) the principal
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amount of the Loan subject to the Partial Defeasance Event, and (3)
the Parcel to be released from the lien of the Mortgage;
(B) Borrower shall pay to Lender (A) all payments of principal
and interest due on the Loan to and including the Partial Defeasance
Date and (B) all other sums then due under the Note, this Agreement,
the Mortgage and the other Loan Documents;
(C) Borrower shall deposit the Partial Defeasance Collateral
into the Defeasance Collateral Account and otherwise comply with the
provisions of Sections 2.4(h) hereof;
(D) Lender shall prepare, at Borrower's sole cost and expense,
all necessary documents to modify this Agreement and to amend and
restate the Note and issue two substitute notes, one note having a
principal balance equal to the Release Amount for the subject Parcel
(the "DEFEASED NOTE"), and the other note having a principal balance
equal to the excess of (A) the original 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, in
connection therewith, the P&I Monthly Payment Amount and the amount
of each such payment applied to principal thereafter shall be
divided between the Defeased Note and the Undefeased Note in the
same proportion as the unpaid principal balance (in each case
immediately after the Partial Defeasance Event) of the Defeased Note
and the Undefeased Note, as the case may be, bears to the aggregate
principal balance due under the Defeased Note and the Undefeased
Note immediately after the Partial Defeasance Event. 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 2.4(b)(iii) hereof. A Defeased Note
may not be the subject of any further defeasance;
(E) Borrower shall execute and deliver to Lender a Defeasance
Security Agreement in respect of the Defeasance Collateral Account
and the Partial Defeasance Collateral;
(F) Borrower shall deliver to Lender an opinion of counsel for
Borrower that is standard in commercial lending transactions and
subject only to customary qualifications, assumptions and exceptions
opining, among other things, that (1) Lender has a perfected first
priority security interest in the Defeasance Collateral and the
Defeasance Collateral Account and that the Defeasance Security
Agreement is enforceable against Borrower in accordance with its
terms, (2) in the event of a bankruptcy proceeding or similar
occurrence with respect to Borrower, none of the Partial Defeasance
Collateral nor any proceeds thereof will be property of Borrower's
estate under Section 541 of the U.S. Bankruptcy Code or any similar
statute and the grant of security interest therein to Lender shall
not constitute an avoidable preference under Section 547
-26-
of the U.S. Bankruptcy Code or applicable state law, (3) the release
of the lien of the Mortgage on the Parcel and the pledge of the
Partial Defeasance Collateral will not directly or indirectly result
in or cause any REMIC Trust that then holds the Note to fail to
maintain its status as a REMIC Trust, (4) the defeasance will not
cause any REMIC Trust to be an "investment company" under the
Investment Company Act of 1940 and (5) a non-consolidation opinion
with respect to the Successor Borrower;
(G) Borrower shall deliver to Lender a written confirmation
from any Rating Agency rating any Securities that the Partial
Defeasance Event will not result in a downgrade, withdrawal, or
qualification of the ratings then assigned to any of the Securities;
(H) Borrower shall have delivered to Lender a certificate in
form and scope acceptable to Lender in its sole discretion from an
Acceptable Accountant or such other accountant whose certification
is customarily acceptable by lenders in defeasance transactions
certifying that the certifying that the Partial Defeasance
Collateral will generate monthly amounts equal to or greater than
the Scheduled Defeasance Payments;
(I) Borrower shall deliver to Lender evidence, satisfactory to
a reasonably prudent lender, that the Undefeased Note will continue
to be secured by the Mortgage;
(J) Lender shall have received, at Borrower's sole cost and
expense, one or more endorsements to the Title Insurance Policy
insuring that, after giving effect to the subject release, the Liens
of the Mortgage insured thereunder continue to be first priority
Liens on the Remaining Properties, subject only to Permitted
Encumbrances; and
(K) Borrower shall pay all costs and expenses of Lender
incurred in connection with the Partial Defeasance Event, including
due diligence review and Lender's reasonable attorneys' fees and
expenses.
(ii) If Borrower has elected to make a partial defeasance and the
requirements of this Section 2.4 have been satisfied, the applicable
Parcel shall be released from the lien of the Mortgage. In connection with
the release of the Lien, Borrower shall submit to Lender, not less than
ten (10) days prior to the Partial Defeasance Date (or such shorter time
as is acceptable to 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 jurisdiction in which the Property is located
and that contains standard provisions protecting the rights of the
releasing lender. In addition, Borrower shall provide all other
documentation Lender reasonably requires to be delivered by Borrower in
connection with such release, together with an officer's certificate
certifying that such documentation (i) is in substantive compliance with
all Legal Requirements, and (ii) will effect such release in accordance
with the terms of this Agreement. Borrower shall pay all costs, taxes and
expenses associated with the release of the lien of the Mortgage,
including
-27-
Lender's reasonable attorneys' fees. Borrower shall cause title to the
applicable Parcel so released from the lien of the Mortgage to be
transferred to and held by a Person other than Borrower. Except as set
forth in this Section 2.4, 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 from the
Property.
(iii) Upon compliance with the requirements of this Section 2.4(g),
the applicable Parcel shall be released from the lien of the Mortgage and
the other Loan Documents, and the Partial Defeasance Collateral shall
constitute collateral which shall secure the Defeased Note and all other
obligations under the Loan Documents. Lender will, at Borrower's expense,
execute and deliver any agreements reasonably requested by Borrower to
release the lien of the Mortgage and the other Loan Documents from the
applicable Parcel.
(iv) Upon the release of a Parcel in accordance with this Section
2.4(g), Borrower shall (at Lender's sole and absolute discretion) assign
all its obligations and rights under the Defeased Note, together with the
pledged Partial Defeasance Collateral, to a Successor Borrower. Successor
Borrower shall execute an assignment and assumption agreement in form and
substance which would be satisfactory to a prudent lender pursuant to
which it shall assume Borrower's obligations under the Defeased Note and
the Defeasance Security Agreement. As conditions to such assignment and
assumption, Borrower shall (A) deliver to Lender one or more opinions of
counsel in form and substance that is standard in commercial mortgage
lending transactions and subject only to customary qualifications,
assumptions and exceptions opining, among other things, that such
assignment and assumption agreement is enforceable against Borrower and
the Successor Borrower in accordance with its terms and that the Defeased
Note, the Defeasance Security Agreement and the other Loan Documents, as
so assigned and assumed, are enforceable against the Successor Borrower,
and the Undefeased Note Remains enforceable against Borrower, each in
accordance with their respective terms, and opining to such other matters
relating to Successor Borrower and its organizational structure as Lender
may reasonably require, and (B) pay all reasonable fees, costs and
expenses incurred by Lender or its agents in connection with such
assignment and assumption (including, without limitation, legal fees and
expenses and for the review of the proposed transferee and the preparation
of the assignment and assumption agreement and related certificates,
documents and instruments). Upon such assignment and assumption, Borrower
shall be relieved of its obligations hereunder, under the Defeased Note,
under the other Loan Documents and under the Defeasance Security
Agreement, except as expressly set forth in the assignment and assumption
agreement.
(h) Defeasance Collateral Account. On or before the date on which
Borrower delivers the Defeasance Collateral or Partial Defeasance Collateral,
Borrower shall open at any Eligible Institution 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 or Partial Defeasance Collateral, and (ii) cash from
interest and principal paid on the Defeasance Collateral or Partial Defeasance
Collateral. All cash from interest and principal payments paid on the Defeasance
Collateral or Partial Defeasance Collateral shall be paid over to Lender on each
Scheduled Payment Date and applied first to
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accrued and unpaid interest and then to principal. Any cash from interest and
principal paid on the Defeasance Collateral or Partial Defeasance Collateral not
needed to pay the Scheduled Defeasance Payments shall be paid to Borrower.
Borrower shall cause the Eligible Institution at which the Defeasance Collateral
or Partial Defeasance Collateral is deposited to enter an agreement with
Borrower and Lender, satisfactory to Lender in its sole discretion, pursuant to
which such Eligible Institution shall agree to hold and distribute the
Defeasance Collateral or Partial Defeasance Collateral in accordance with this
Agreement. The Borrower or Successor Borrower, as applicable, shall be the owner
of the Defeasance Collateral Account and shall report all income accrued on the
Defeasance Collateral or Partial Defeasance Collateral for federal, state and
local income tax purposes in its income tax return. Borrower shall prepay all
cost 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.
SECTION 2.5. PAYMENTS AFTER DEFAULT
Upon the occurrence and during the continuance of an Event of
Default, interest on the outstanding principal balance of the Loan and, to the
extent permitted by law, other amounts due in respect of the Loan, (a) shall
accrue at the Default Rate, and (b) Lender shall be entitled to receive and
Borrower shall pay to Lender all cash flow from the Property in accordance with
the terms of Article 10 hereof, such amount to be applied by Lender to the
payment of the Debt in such order as Lender shall determine in its sole
discretion, including, without limitation, alternating applications thereof
between interest and principal. Interest at the Default Rate shall be computed
from the occurrence of the Event of Default until the earlier of (i) the actual
receipt and collection of the Debt (or that portion thereof that is then due)
and (ii) the cure of such Event of Default. This paragraph shall not be
construed as an agreement or privilege to extend the date of the payment of the
Debt, nor as a waiver of any other right or remedy accruing to Lender by reason
of the occurrence of any Event of Default; the acceptance of any payment from
Borrower shall not be deemed to cure or constitute a waiver of any Event of
Default; and Lender retains its rights under this Agreement to accelerate and to
continue to demand payment of the Debt upon the happening of and during the
continuance any Event of Default, despite any payment by Borrower to Lender.
SECTION 2.6. USURY SAVINGS
This Agreement and the Note are subject to the express condition
that at no time shall Borrower be obligated or required to pay interest on the
principal balance of the Loan at a rate which could subject Lender to either
civil or criminal liability as a result of being in excess of the Maximum Legal
Rate. If, by the terms of this Agreement or the other Loan Documents, Borrower
is at any time required or obligated to pay interest on the principal balance
due hereunder at a rate in excess of the Maximum Legal Rate, the Note Rate or
the Default Rate, as the case may be, shall be deemed to be immediately reduced
to the Maximum Legal Rate and all previous payments in excess of the Maximum
Legal Rate shall be deemed to have been payments in reduction of principal and
not on account of the interest due hereunder. All sums paid or agreed to be paid
to Lender for the use, forbearance, or detention of the sums due under the Loan,
shall, to the extent permitted by applicable law, be amortized, prorated,
allocated, and spread throughout the full stated term of the Loan until payment
in full so that the rate or amount
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of interest on account of the Loan does not exceed the Maximum Legal Rate of
interest from time to time in effect and applicable to the Loan for so long as
the Loan is outstanding.
ARTICLE III
CONDITIONS PRECEDENT
The obligation of Lender to make the Loan hereunder is subject to
the fulfillment by Borrower or waiver by Lender of the following conditions
precedent no later than the Closing Date.
SECTION 3.1. REPRESENTATIONS AND WARRANTIES; COMPLIANCE WITH
CONDITIONS
The representations and warranties of Borrower contained in this
Agreement and the other Loan Documents shall be true and correct in all material
respects on and as of the Closing Date with the same effect as if made on and as
of such date, and Lender shall have determined that no Default or an Event of
Default shall have occurred and be continuing nor will any Default or Event of
Default occur immediately following the Closing Date; and Borrower shall be in
compliance in all material respects with all terms and conditions set forth in
this Agreement and in each other Loan Document on its part to be observed or
performed.
SECTION 3.2. DELIVERY OF LOAN DOCUMENTS; TITLE INSURANCE; REPORTS;
LEASES
(a) Mortgage, Loan Agreement and Note. Lender shall have received
from Borrower a fully executed and acknowledged counterpart of the Mortgage and
evidence that counterparts of the Mortgage and Uniform Commercial Code financing
statements have been delivered to the title company for recording, in the
reasonable judgment of Lender, so as to effectively create upon such recording
valid and enforceable Liens upon the Property, of the requisite priority, in
favor of Lender (or such other trustee as may be required or desired under local
law), subject only to the Permitted Encumbrances and such other Liens as are
permitted pursuant to the Loan Documents. Lender shall have also received from
Borrower fully executed counterparts of this Agreement, the Note and all other
Loan Documents.
(b) Title Insurance. Lender shall have received a Title Insurance
Policy issued by a title company acceptable to Lender and dated as of the
Closing Date, with reinsurance and direct access agreements acceptable to
Lender. Such Title Insurance Policy shall (i) provide coverage in the amount of
the Loan, (ii) insure Lender that the Mortgage creates a valid lien on the
Property of the requisite priority, free and clear of all exceptions from
coverage other than Permitted Encumbrances and standard exceptions and
exclusions from coverage (as modified by the terms of any endorsements), (iii)
contain such endorsements and affirmative coverages as Lender may reasonably
request, and (iv) name Lender as the insured. The Title Insurance Policy shall
be assignable. Lender also shall have received evidence that all premiums in
respect of such Title Insurance Policy have been paid.
(c) Survey. Lender shall have received a current title survey for
each Parcel, certified to the title company and Lender and their successors and
assigns, in form and content satisfactory to Lender and prepared by a
professional and properly licensed land surveyor satisfactory to Lender in
accordance with the 1999 Minimum Standard Detail Requirements for
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ALTA/ACSM Land Title Surveys. The survey shall meet the classification of an
"Urban Survey" and the following additional items from the list of "Optional
Survey Responsibilities and Specifications" (Table A) should be added to each
survey: 2, 3, 4, 6, 8, 9, 10, 11 and 13. Such survey shall reflect the same
legal description contained in the Title Insurance Policy referred to in
subsection (b) above and shall include, among other things, a metes and bounds
description of the real property comprising part of the Property reasonably
satisfactory to Lender. The surveyor's seal shall be affixed to the survey and
the surveyor shall provide a certification for each survey in form and substance
acceptable to Lender.
(d) Insurance. Lender shall have received copies of the Policies
required hereunder, satisfactory to Lender in its sole discretion, and evidence
of the payment of all Insurance Premiums payable for the existing policy period.
(e) Environmental Reports. Lender shall have received an
Environmental Report in respect of the Property satisfactory to Lender.
(f) Zoning/Building Code. Lender shall have received evidence of
compliance with zoning and building ordinances and codes, including, without
limitation, required certificates of occupancy, reasonably acceptable to Lender.
(g) Encumbrances. Borrower shall have taken or caused to be taken
such actions in such a manner so that Lender has a valid and perfected first
Lien as of the Closing Date on the Property, subject only to applicable
Permitted Encumbrances and such other Liens as are permitted pursuant to the
Loan Documents, and Lender shall have received satisfactory evidence thereof.
(h) Lien Searches. Borrower shall have delivered to Lender certified
search results pertaining to the Borrower, Borrower Principal and such other
Persons or any SPE Component Entity as reasonably required by Lender for state
and federal tax liens, bankruptcy, judgment, litigation and state and local UCC
filings
SECTION 3.3. RELATED DOCUMENTS
Each additional document not specifically referenced herein, but
relating to the transactions contemplated herein, shall have been duly
authorized, executed and delivered by all parties thereto and at Lender's
written request, Lender shall have received and approved certified copies
thereof.
SECTION 3.4. ORGANIZATIONAL DOCUMENTS
On or before the Closing Date, Borrower shall deliver or cause to be
delivered to Lender (a) copies certified by Borrower of all organizational
documentation related to Borrower, each SPE Component Entity and Borrower
Principal which must be acceptable to Lender in its sole and reasonable
discretion, and (b) such other evidence of the formation, structure, existence,
good standing and/or qualification to do business of the Borrower, each SPE
Component Entity and Borrower Principal, as Lender may request in its sole and
reasonable discretion, including, without limitation, good standing or existence
certificates, qualifications to do business in the
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appropriate jurisdictions, resolutions authorizing the entering into of the Loan
and incumbency certificates as may be requested by Lender.
SECTION 3.5. OPINIONS OF BORROWER'S COUNSEL
Lender shall have received opinions of Borrower's counsel (a) with
respect to non-consolidation issues and (b) with respect to due execution,
authority, enforceability of the Loan Documents and such other matters as Lender
may require, all such opinions in form, scope and substance satisfactory to
Lender and Lender's counsel in their sole discretion.
SECTION 3.6. ANNUAL BUDGET
Borrower shall have delivered, and Lender shall have approved, the
Annual Budget for the current fiscal year, a copy of which has been delivered to
Lender prior to the date hereof.
SECTION 3.7. TAXES AND OTHER CHARGES
Borrower shall have paid all Taxes and Other Charges (including any
in arrears) relating to the Property, which amounts may be funded with proceeds
of the Loan.
SECTION 3.8. COMPLETION OF PROCEEDINGS
All corporate and other proceedings taken or to be taken in
connection with the transactions contemplated by this Agreement and other Loan
Documents and all documents incidental thereto shall be satisfactory in form and
substance to Lender, and Lender shall have received all such counterpart
originals or certified copies of such documents as Lender may reasonably
request.
SECTION 3.9. PAYMENTS
All payments, deposits or escrows required to be made or established
by Borrower under this Agreement, the Note and the other Loan Documents on or
before the Closing Date shall have been paid.
SECTION 3.10. TRANSACTION COSTS
Except as otherwise expressly provided herein, Borrower shall have
paid or reimbursed Lender for all out of pocket expenses in connection with the
underwriting, negotiation, Securitization and closing of the Loan, including
title insurance premiums and other title company charges; recording,
registration, filing and similar fees, taxes and charges; transfer, mortgage,
deed, stamp or documentary taxes or similar fees or charges; costs of
third-party reports, including without limitation, environmental studies, credit
reports, seismic reports, engineer's reports, appraisals and surveys;
underwriting and origination expenses; Securitization expenses; and all actual,
reasonable legal fees and expenses charged by counsel to Lender.
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SECTION 3.11. NO MATERIAL ADVERSE CHANGE
There shall have been no material adverse change in the financial
condition or business condition of the Property, Borrower, Borrower Principal,
any SPE Component Entity, Manager or any other person or party contributing to
the operating income and operations of the Property since the date of the most
recent financial statements and/or other information delivered to Lender. The
income and expenses of the Property, the occupancy and leases thereof, and all
other features of the transaction shall be as represented to Lender without
material adverse change. Neither Borrower nor Borrower Principal, any SPE
Component Entity or Affiliated Manager shall be the subject of any bankruptcy,
reorganization, or insolvency proceeding.
SECTION 3.12. LEASES AND RENT ROLL
Lender shall have received a current certified rent roll of the
Property, reasonably satisfactory in form and substance to Lender.
SECTION 3.13. INTENTIONALLY RESERVED
SECTION 3.14. INTENTIONALLY RESERVED
SECTION 3.15. INTENTIONALLY RESERVED
SECTION 3.16. TAX LOT
Lender shall have received evidence that each Parcel constitutes one
(1) or more separate tax lots, which evidence shall be reasonably satisfactory
in form and substance to Lender.
SECTION 3.17. PHYSICAL CONDITIONS REPORT
Lender shall have received a Physical Conditions Report with respect
to the Property, which report shall be reasonably satisfactory in form and
substance to Lender.
SECTION 3.18. INTENTIONALLY RESERVED
SECTION 3.19. APPRAISAL
Lender shall have received an appraisal of the Property, which shall
be satisfactory in form and substance to Lender.
SECTION 3.20. FINANCIAL STATEMENTS
Lender shall have received financial statements and related
information in form and substance satisfactory to Lender and in compliance with
any Legal Requirements promulgated by the Securities and Exchange Commission,
including, without limitation, a balance sheet, income and expense statement
with respect to Borrower and an operating statement with respect to the Property
for the year-to-date 2004, 2003, and 2002.
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SECTION 3.21. INTENTIONALLY RESERVED
SECTION 3.22. FURTHER DOCUMENTS
Lender or its counsel shall have received such other and further
approvals, opinions, documents and information as Lender or its counsel may have
reasonably requested including the Loan Documents in form and substance
satisfactory to Lender and its counsel.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
Borrower and, where specifically indicated, Borrower Principal
(subject to Section 4.43 below) represents and warrants to Lender as of the
Closing Date that:
SECTION 4.1. ORGANIZATION
Borrower and each Borrower Principal (when not an individual) (a)
has been duly organized and is validly existing and in good standing with
requisite power and authority to own its properties and to transact the
businesses in which it is now engaged, (b) is duly qualified to do business and
is in good standing in each jurisdiction where it is required to be so qualified
in connection with its properties, businesses and operations, (c) possesses all
rights, licenses, permits and authorizations, governmental or otherwise,
necessary to entitle it to own its properties and to transact the businesses in
which it is now engaged (except for any such rights, licenses, permits and
authorization for which the failure to obtain would not have a Material Adverse
Effect), and the sole business of Borrower is the ownership, management and
operation of the Property, and (d) in the case of Borrower, has full power,
authority and legal right to mortgage, grant, bargain, sell, pledge, assign,
warrant, transfer and convey the Property pursuant to the terms of the Loan
Documents, and in the case of Borrower and each Borrower Principal, has full
power, authority and legal right to keep and observe all of the terms of the
Loan Documents to which it is a party. The chart attached hereto as Exhibit A
sets forth an accurate listing of the direct and indirect owners of the equity
interests in Borrower and each SPE Component Entity (if any).
SECTION 4.2. STATUS OF BORROWER
Borrower's exact legal name is correctly set forth on the first page
of this Agreement, on the Mortgage and on any UCC-1 Financing Statements filed
in connection with the Loan. Borrower is an organization of the type specified
on the first page of this Agreement. Borrower is incorporated in or organized
under the laws of the State of Michigan. Borrower's principal place of business
and chief executive office, and the place where Borrower keeps its books and
records, including recorded data of any kind or nature, regardless of the medium
of recording, including software, writings, plans, specifications and
schematics, has been for the preceding four months (or, if less, the entire
period of the existence of Borrower) the address of Borrower set forth on the
first page of this Agreement. Borrower's organizational identification number,
if any, assigned by the state of incorporation or organization is as set forth
on the Lender's closing statement executed by Borrower in connection with the
Loan.
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SECTION 4.3. VALIDITY OF DOCUMENTS
Borrower and each Borrower Principal have taken all necessary action
to authorize the execution, delivery and performance of this Agreement and the
other Loan Documents to which they are parties. This Agreement and such other
Loan Documents have been duly executed and delivered by or on behalf of Borrower
and each Borrower Principal and constitute the legal, valid and binding
obligations of Borrower and each Borrower Principal enforceable against Borrower
and each Borrower Principal in accordance with their respective terms, subject
only to applicable bankruptcy, insolvency and similar laws affecting rights of
creditors generally, and subject, as to enforceability, to general principles of
equity (regardless of whether enforcement is sought in a proceeding in equity or
at law).
SECTION 4.4. NO CONFLICTS
The execution, delivery and performance of this Agreement and the
other Loan Documents by Borrower and each Borrower Principal will not conflict
with or result in a breach of any of the terms or provisions of, or constitute a
default under, or result in the creation or imposition of any lien, charge or
encumbrance (other than pursuant to the Loan Documents) which would have a
Material Adverse Effect upon any of the property or assets of Borrower or any
Borrower Principal pursuant to the terms of any agreement or instrument to which
Borrower or any Borrower Principal is a party or by which any of Borrower's or
Borrower Principal's property or assets is subject, nor will such action result
in any violation of the provisions of any statute or any order, rule or
regulation of any Governmental Authority having jurisdiction over Borrower or
any Borrower Principal or any of Borrower's or Borrower Principal's properties
or assets which would have a Material Adverse Effect, and any consent, approval,
authorization, order, registration or qualification of or with any Governmental
Authority required for the execution, delivery and performance by Borrower or
Borrower Principal of this Agreement or any of the other Loan Documents has been
obtained and is in full force and effect.
SECTION 4.5. LITIGATION
There are no actions, suits or proceedings at law or in equity by or
before any Governmental Authority or other agency now pending or, to Borrower's
or Borrower Principal's knowledge, threatened against or affecting Borrower, any
Borrower Principal, Manager or the Property, which actions, suits or
proceedings, if determined against Borrower, any Borrower Principal, Manager or
the Property, would materially adversely affect the condition (financial or
otherwise) or business of Borrower or any Borrower Principal or the condition or
ownership of the Property.
SECTION 4.6. AGREEMENTS
Borrower is not a party to any agreement or instrument or subject to
any restriction which would materially and adversely affect Borrower or the
Property, or Borrower's business, properties or assets, operations or condition,
financial or otherwise. Borrower is not in default in any material respect in
the performance, observance or fulfillment of any of the obligations, covenants
or conditions contained in any agreement or instrument to which it is a party or
by which Borrower or the Property is bound. Borrower has no material financial
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obligation under any agreement or instrument to which Borrower is a party or by
which Borrower or the Property is otherwise bound, other than (a) obligations
incurred in the ordinary course of the operation of the Property (b) obligations
under the Loan Documents, (c) obligations reflected in the financial statements
delivered to Lender, (d) the Permitted Encumbrances, and (e) as previously
disclosed in writing to Lender.
SECTION 4.7. SOLVENCY
Borrower and each Borrower Principal have (a) not entered into the
transaction or executed the Note, this Agreement or any other Loan Documents
with the actual intent to hinder, delay or defraud any creditor and (b) received
reasonably equivalent value in exchange for their obligations under such Loan
Documents. Giving effect to the Loan, the fair saleable value of the assets of
Borrower and each Borrower Principal exceeds and will, immediately following the
making of the Loan, exceed the total liabilities of Borrower and each Borrower
Principal, including, without limitation, subordinated, unliquidated, disputed
and contingent liabilities. No petition in bankruptcy has been filed against
Borrower, any Borrower Principal, any SPE Component Entity (if any) or
Affiliated Manager in the last ten (10) years, and neither Borrower nor any
Borrower Principal, any SPE Component Entity (if any) or Affiliated Manager in
the last ten (10) years has made an assignment for the benefit of creditors or
taken advantage of any Creditors Rights Laws. Neither Borrower nor any Borrower
Principal, any SPE Component Entity (if any) or Affiliated Manager is
contemplating either the filing of a petition by it under any Creditors Rights
Laws or the liquidation of all or a major portion of Borrower's assets or
property, and Borrower has no knowledge of any Person contemplating the filing
of any such petition against Borrower or any Borrower Principal, any SPE
Component Entity (if any) or Affiliated Manager.
SECTION 4.8. FULL AND ACCURATE DISCLOSURE
No statement of fact made by or on behalf of Borrower or any
Borrower Principal in this Agreement or in any of the other Loan Documents or in
any other document or certificate delivered by or on behalf of Borrower or any
Borrower Principal contains any untrue statement of a material fact or omits to
state any material fact necessary to make statements contained herein or therein
not misleading. There is no material fact presently known to Borrower or any
Borrower Principal which has not been disclosed to Lender which materially and
adversely affects, nor as far as Borrower or any Borrower Principal can
reasonably foresee, might materially and adversely affect, the Property or the
business, operations or condition (financial or otherwise) of Borrower or any
Borrower Principal.
SECTION 4.9. NO PLAN ASSETS
Borrower is not an "employee benefit plan," as defined in Section
3(3) of ERISA, subject to Title I of ERISA, and none of the assets of Borrower
constitutes or will constitute "plan assets" of one or more such plans within
the meaning of 29 C.F.R. Section 2510.3-101. In addition, (a) Borrower is not a
"governmental plan" within the meaning of Section 3(32) of ERISA and (b)
transactions by or with Borrower are not subject to state statutes regulating
investment of, and fiduciary obligations with respect to, governmental plans
similar to the
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provisions of Section 406 of ERISA or Section 4975 of the Internal Revenue Code
currently in effect, which prohibit or otherwise restrict the transactions
contemplated by this Agreement.
SECTION 4.10. NOT A FOREIGN PERSON
Neither Borrower nor Borrower Principal is a "foreign person" within
the meaning of Section 1445(f)(3) of the Internal Revenue Code.
SECTION 4.11. ENFORCEABILITY
The Loan Documents are not subject to any right of rescission,
set-off, counterclaim or defense by Borrower, including the defense of usury,
nor would the operation of any of the terms of the Loan Documents, or the
exercise of any right thereunder, render the Loan Documents unenforceable, and
neither Borrower nor Borrower Principal has asserted any right of rescission,
set-off, counterclaim or defense with respect thereto. No Default or Event of
Default exists under or with respect to any Loan Document.
SECTION 4.12. BUSINESS PURPOSES
The Loan is solely for the business purpose of Borrower, and is not
for personal, family, household, or agricultural purposes.
SECTION 4.13. COMPLIANCE
Borrower and the Property, and the use and operation thereof, comply
in all material respects with all Legal Requirements, including, without
limitation, building and zoning ordinances and codes and the Americans with
Disabilities Act, except for any noncompliance which would not have a Material
Adverse Effect. To Borrower's knowledge, Borrower is not in default or violation
of any order, writ, injunction, decree or demand of any Governmental Authority
and Borrower has received no written notice of any such default or violation
which would have a Material Adverse Effect. There has not been committed by
Borrower or, to Borrower's knowledge, any other Person in occupancy of or
involved with the operation or use of the Property any act or omission affording
any Governmental Authority the right of forfeiture as against the Property or
any part thereof or any monies paid in performance of Borrower's obligations
under any of the Loan Documents.
SECTION 4.14. FINANCIAL INFORMATION
All financial data, including, without limitation, the balance
sheets, statements of income and operating expense and rent rolls, that have
been delivered to Lender by or on behalf of Borrower and/or Borrower Principal
in respect of Borrower, any Borrower Principal and/or the Property (a) are true,
complete and correct in all material respects, (b) accurately represent the
financial condition of Borrower, Borrower Principal or the Property, as
applicable, as of the date of such reports, and (c) to the extent prepared or
audited by an independent certified public accounting firm, have been prepared
in accordance with GAAP throughout the periods covered, except as disclosed
therein. Borrower does not have any contingent liabilities, liabilities for
taxes, unusual forward or long-term commitments or unrealized or anticipated
losses from any unfavorable commitments that are known to Borrower and
reasonably likely to have a material
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adverse effect on the Property or the current and/or intended operation thereof,
except as referred to or reflected in said financial statements, the Permitted
Encumbrances or otherwise disclosed in writing to Lender. Since the date of such
financial statements, there has been no materially adverse change in the
financial condition, operations or business of Borrower or Borrower Principal
from that set forth in said financial statements. Lender acknowledges that
Lender has not received any of the foregoing statements from the Borrower, but
only with respect to the Borrower Principal and the Property.
SECTION 4.15. CONDEMNATION
No Condemnation or other proceeding has been commenced or, to
Borrower's best knowledge, is threatened or contemplated with respect to all or
any portion of the Property or for the relocation of roadways providing access
to the Property.
SECTION 4.16. UTILITIES AND PUBLIC ACCESS; PARKING
The Property has adequate rights of access to public ways and is
served by water, sewer, sanitary sewer and storm drain facilities (public or
private) adequate to service the Property as currently operated. All public
utilities necessary to the full use and enjoyment of the Property as currently
used and enjoyed are, to Borrower's knowledge, located either in the public
right-of-way abutting the Property (which are connected so as to serve the
Property without passing over other property) or in recorded easements serving
the Property. All roads necessary for the use of the Property for its current
purposes (i) have been completed and dedicated to public use and accepted by all
Governmental Authorities or (ii) are provided by means of private ingress and
egress easements benefiting the Property. The Property has, or is served by,
parking to the extent required to comply with all Legal Requirements.
SECTION 4.17. SEPARATE LOTS
Each Parcel is assessed for real estate tax purposes as one or more
wholly independent tax lot or lots, separate from any adjoining land or
improvements not constituting a part of such lot or lots, and no other land or
improvements is assessed and taxed together with the Property or any portion
thereof.
SECTION 4.18. ASSESSMENTS
To Borrower's knowledge after due inquiry, there are no pending or
proposed special or other assessments for public improvements or otherwise
affecting the Property, nor are there any contemplated improvements to the
Property that may result in such special or other assessments which, in either
case, would have a Material Adverse Effect.
SECTION 4.19. INSURANCE
Borrower has obtained and has delivered to Lender certified copies
of all Policies or, to the extent such Policies are not available as of the
Closing Date, certificates of insurance with respect to all such Policies
reflecting the insurance coverages, amounts and other requirements set forth in
this Agreement. To Borrower's knowledge, no Person, including
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Borrower, has done, by act or omission, anything which would impair the coverage
of any of the Policies.
SECTION 4.20. USE OF PROPERTY
The Property is used exclusively for a manufactured home community
and other appurtenant and related uses.
SECTION 4.21. CERTIFICATE OF OCCUPANCY; LICENSES
All certifications, permits, licenses and approvals, including,
without limitation, certificates of completion or occupancy, if any, and any
applicable liquor license required for the legal use, occupancy and operation of
the Property for the purpose intended herein, have been obtained and are valid
and in full force and effect, except for those which, if not obtained, would not
have a Material Adverse Affect. Borrower shall keep and maintain all licenses
necessary for the operation of the Property for the purpose intended herein. The
use being made of the Property is in conformity with the certificate of
occupancy, if any, and any permits or licenses issued for the Property, except
for those which, if not obtained, would not have a Material Adverse Affect.
SECTION 4.22. FLOOD ZONE
None of the Improvements on the Property are located in an area
identified by the Federal Emergency Management Agency as an area having special
flood hazards, or, if any portion of the Improvements (it being understood that
for purposes of this representation only, Improvements shall only mean that
portion of the Improvements consisting of a clubhouse or community center) is
located within such area, Borrower has obtained the insurance prescribed in
Section 8.1(a)(i).
SECTION 4.23. PHYSICAL CONDITION
To Borrower's knowledge after due inquiry, and except as set forth
in the Property Conditions Report and the Appraisal delivered to Lender in
connection with the Loan, the Property, including, without limitation, all
buildings, improvements, parking facilities, sidewalks, storm drainage systems,
roofs, electrical systems, equipment, landscaping, irrigation systems and all
structural components, are in good condition, order and repair in all material
respects in light of the age, design and utility. To Borrower's knowledge after
due inquiry, there exists no structural or other material defects or damages in
the Property, as a result of a Casualty or otherwise, and whether latent or
otherwise. Borrower has not received notice from any insurance company or
bonding company of any defects or inadequacies in the Property, or any part
thereof, which would adversely affect the insurability of the same or cause the
imposition of extraordinary premiums or charges thereon or of any termination or
threatened termination of any policy of insurance or bond.
SECTION 4.24. BOUNDARIES
Except as shown in the Title Insurance Policy or as shown on the
Survey, (a) none of the Improvements which were included in determining the
appraised value of the Property lie
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outside the boundaries and building restriction lines of the Property to any
material extent, and (b) no improvements on adjoining properties encroach upon
the Property and no easements or other encumbrances upon the Property encroach
upon any of the Improvements so as to materially affect the value or
marketability of the Property.
SECTION 4.25. LEASES AND RENT ROLL
Borrower has delivered to Lender a true, correct and complete rent
roll for the Property (a "RENT ROLL") which includes all Leases affecting the
Property. Except as set forth in the Rent Roll (as same has been updated by
written notice thereof to Lender) and estoppel certificates delivered to Lender
on or prior to the Closing Date: (a) each Lease is in full force and effect; (b)
the premises demised under the Leases have been completed and the Tenants under
the Leases have accepted possession of their respective demised premises; (c)
the Tenants under the Leases have commenced the payment of rent under the
Leases, there are no offsets, claims or defenses to the enforcement thereof, and
Borrower has no monetary obligations to any Tenant under any Lease; (d) all
Rents due and payable under the Leases have been paid and no substantial portion
thereof has been paid for any period more than thirty (30) days in advance; (e)
the rent payable under each Lease is the amount of fixed rent set forth in the
Rent Roll, and, to Borrower's knowledge, there is no claim or basis for a claim
by the Tenant thereunder for an offset or adjustment to the rent; (f) no Tenant
has made any written claim of a material default against the landlord under any
Lease which remains outstanding nor has Borrower or Manager received, by
telephonic, in-person, e-mail or other communication, any notice of a material
default under any Lease; (g) to Borrower's knowledge there is no present
material default by the Tenant under any Lease; (h) all security deposits under
the Leases have been collected by Borrower; (i) Borrower is the sole owner of
the entire landlord's interest in each Lease; (j) to Borrower's knowledge, each
Lease is the valid, binding and enforceable obligation of Borrower and the
applicable Tenant thereunder and there are no agreements between the Borrower
and Tenants under the Leases other than as expressly set forth in the Leases;
(k) no Person has any possessory interest in, or right to occupy, the Property
or any portion thereof except under the terms of a Lease or the Permitted
Encumbrances; (l) none of the Leases contains any option or offer to purchase or
right of first refusal to purchase the Property or any part thereof (except as
may be required by any applicable Legal Requirements); and (m) neither the
Leases nor the Rents have been assigned, pledged or hypothecated except to
Lender, and, to Borrower's knowledge, no other Person has any interest therein
except the Tenants thereunder. Lender hereby recognizes that in addition to the
Leases, the relationship between the Borrower and the Tenants of a Parcel may be
governed by the terms of an agreement between the Borrower (or its predecessor
in interest) and the homeowners association established by the Tenants of such
Parcel and the prospectus for such Parcel filed with the State where such Parcel
is located.
SECTION 4.26. FILING AND RECORDING TAXES
All mortgage, mortgage recording, stamp, intangible or other similar
tax required to be paid by any Person under applicable Legal Requirements
currently in effect in connection with the execution, delivery, recordation,
filing, registration, perfection or enforcement of any of the Loan Documents,
including, without limitation, the Mortgage, have been paid or will be paid,
and, under current Legal Requirements, the Mortgage is enforceable in accordance
with its terms by Lender (or any subsequent holder thereof).
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SECTION 4.27. INTENTIONALLY RESERVED.
SECTION 4.28. ILLEGAL ACTIVITY
No portion of the Property has been or will be purchased with
proceeds of any illegal activity, and no part of the proceeds of the Loan will
be used in connection with any illegal activity.
SECTION 4.29. CONSTRUCTION EXPENSES
All costs and expenses of any and all labor, materials, supplies and
equipment used in the construction maintenance or repair of the Improvements
have been paid in full or will be paid in the ordinary course of business. To
Borrower's knowledge after due inquiry, there are no claims for payment for
work, labor or materials affecting the Property which are or may become a lien
prior to, or of equal priority with, the Liens created by the Loan Documents.
SECTION 4.30. PERSONAL PROPERTY
Borrower has paid in full for, and is the owner of, all Personal
Property (other than tenants' property) used in connection with the operation of
the Property, free and clear of any and all security interests, liens or
encumbrances, except for Permitted Encumbrances and the Lien and security
interest created by the Loan Documents.
SECTION 4.31. TAXES
Borrower and Borrower Principal have filed all federal, state,
county, municipal, and city income, personal property and other tax returns
required to have been filed by them and have paid all taxes and related
liabilities which have become due pursuant to such returns or pursuant to any
assessments received by them. Neither Borrower nor Borrower Principal knows of
any basis for any additional assessment in respect of any such taxes and related
liabilities for prior years.
SECTION 4.32. PERMITTED ENCUMBRANCES
None of the Permitted Encumbrances, individually or in the
aggregate, materially interferes with the benefits of the security intended to
be provided by the Loan Documents, materially and adversely affects the value of
the Property, materially impairs the use or the operation of the Property or
materially impairs Borrower's ability to pay its obligations in a timely manner.
SECTION 4.33. FEDERAL RESERVE REGULATIONS
Borrower will use the proceeds of the Loan for the purposes set
forth in Section 2.1(d) hereof and not for any illegal activity. No part of the
proceeds of the Loan will be used for the purpose of purchasing or acquiring any
"margin stock" within the meaning of Regulation U of the Board of Governors of
the Federal Reserve System or for any other purpose which would be inconsistent
with such Regulation U or any other Regulations of such Board of
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Governors, or for any purposes prohibited by Legal Requirements or prohibited by
the terms and conditions of this Agreement or the other Loan Documents.
SECTION 4.34. INVESTMENT COMPANY ACT
Borrower is not (a) an "investment company" or a company
"controlled" by an "investment company," within the meaning of the Investment
Company Act of 1940, as amended; (b) a "holding company" or a "subsidiary
company" of a "holding company" or an "affiliate" of either a "holding company"
or a "subsidiary company" within the meaning of the Public Utility Holding
Company Act of 1935, as amended; or (c) subject to any other federal or state
law or regulation which purports to restrict or regulate its ability to borrow
money.
SECTION 4.35. RECIPROCAL EASEMENT AGREEMENTS
Except as set forth in the Title Insurance Policy, there is no REA
affecting any portion of the Property.
SECTION 4.36. NO CHANGE IN FACTS OR CIRCUMSTANCES; DISCLOSURE
All information submitted by Borrower or its agents to Lender and in
all financial statements, rent rolls, reports, certificates and other documents
submitted in connection with the Loan or in satisfaction of the terms thereof
and all statements of fact made by Borrower in this Agreement or in any other
Loan Document, are accurate, complete and correct in all material respects.
There has been no material adverse change in any condition, fact, circumstance
or event that would make any such information inaccurate, incomplete or
otherwise misleading in any material respect or that otherwise materially and
adversely affects or might materially and adversely affect the Property or the
business operations or the financial condition of Borrower. To Borrower's
knowledge, Borrower has disclosed to Lender all material facts relating to
Borrower, Borrower Principal and the Property and has not failed to disclose any
material fact relating to Borrower, Borrower Principal and the Property that
could cause any representation or warranty made herein to be materially
misleading.
SECTION 4.37. INTELLECTUAL PROPERTY
To Borrower's knowledge, all trademarks, trade names and service
marks necessary to the business of Borrower as presently conducted or as
Borrower contemplates conducting its business are in good standing, except any
such trademarks, trade names and service marks which, if not in good standing,
would not have a Material Adverse Effect, and, to the extent of Borrower's
actual knowledge, uncontested. Borrower has not infringed, is not infringing,
and has not received notice of infringement with respect to asserted trademarks,
trade names and service marks of others. To Borrower's knowledge, there is no
infringement by others of trademarks, trade names and service marks of Borrower.
SECTION 4.38. SURVEY
The Survey for the Property delivered to Lender in connection with
this Agreement does not, to the knowledge of Borrower, fail to reflect any
material matter affecting the Property or the title thereto.
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SECTION 4.39. EMBARGOED PERSON
As of the date hereof and at all times throughout the term of the
Loan, including after giving effect to any transfers of interests permitted
pursuant to the Loan Documents, (a) none of the funds or other assets of
Borrower and Borrower Principal constitute property of, or are beneficially
owned, directly or indirectly, by any person, entity or government subject to
trade restrictions under U.S. law, including but not limited to, the
International Emergency Economic Powers Act, 50 U.S.C. Sections 1701 et seq.,
The Trading with the Enemy Act, 50 U.S.C. App. 1 et seq., and any Executive
Orders or regulations promulgated thereunder with the result that the investment
in Borrower or Borrower Principal, as applicable (whether directly or
indirectly), is prohibited by law or the Loan made by Lender is in violation of
law ("EMBARGOED PERSON"); (b) no Embargoed Person has any interest of any nature
whatsoever in Borrower or Borrower Principal, as applicable, with the result
that the investment in Borrower or Borrower Principal, as applicable (whether
directly or indirectly), is prohibited by law or the Loan is in violation of
law; and (c) none of the funds of Borrower or Borrower Principal, as applicable,
have been derived from any unlawful activity with the result that the investment
in Borrower or Borrower Principal, as applicable (whether directly or
indirectly), is prohibited by law or the Loan is in violation of law.
Notwithstanding anything to the contrary set forth in this Section 4.39, neither
Borrower nor Borrower Principal is making any such representation or warranty
with respect to any shareholder of SCI.
SECTION 4.40. PATRIOT ACT
All capitalized words and phrases and all defined terms used in the
USA Patriot Act of 2001, 107 Public Law 56 (October 26, 2001) and in other
statutes and all orders, rules and regulations of the United States government
and its various executive departments, agencies and offices related to the
subject matter of the Patriot Act, including Executive Order 13224 effective
September 24, 2001 (collectively referred to in this Section only as the
"PATRIOT ACT") and are incorporated into this Section. Each of Borrower and
Borrower Principal hereby represents and warrants that Borrower and Borrower
Principal and each and every Person affiliated with Borrower or Borrower
Principal or that to Borrower's knowledge has an economic interest in Borrower,
or, to Borrower's knowledge, that has or will have an interest in the
transaction contemplated by this Agreement or in the Property or will
participate, in any manner whatsoever, in the Loan, is: (i) not a "blocked"
person listed in the Annex to Executive Order Nos. 12947, 13099 and 13224 and
all modifications thereto or thereof (as used in this Section only, the
"ANNEX"); (ii) in full compliance with the requirements of the Patriot Act and
all other requirements contained in the rules and regulations of the Office of
Foreign Assets Control, Department of the Treasury (as used in this Section
only, "OFAC"); (iii) operated under policies, procedures and practices, if any,
that are in compliance with the Patriot Act and available to Lender for Lender's
review and inspection during normal business hours and upon reasonable prior
notice; (iv) not in receipt of any notice from the Secretary of State or the
Attorney General of the United States or any other department, agency or office
of the United States claiming a violation or possible violation of the Patriot
Act; (v) not listed as a Specially Designated Terrorist or as a "blocked" person
on any lists maintained by the OFAC pursuant to the Patriot Act or any other
list of terrorists or terrorist organizations maintained pursuant to any of the
rules and regulations of the OFAC issued pursuant to the Patriot Act or on any
other list of terrorists or terrorist organizations maintained pursuant to the
Patriot Act; (vi) not a person who has been
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determined by competent authority to be subject to any of the prohibitions
contained in the Patriot Act; and (vii) not owned or controlled by or now acting
and or will in the future act for or on behalf of any person named in the Annex
or any other list promulgated under the Patriot Act or any other person who has
been determined to be subject to the prohibitions contained in the Patriot Act.
Borrower covenants and agrees that in the event Borrower receives any notice
that Borrower Principal or Borrower (or any of its beneficial owners or
affiliates or participants) become listed on the Annex or any other list
promulgated under the Patriot Act or is indicted, arraigned, or custodially
detained on charges involving money laundering or predicate crimes to money
laundering, Borrower shall immediately notify Lender. It shall be an Event of
Default hereunder if Borrower, Borrower Principal or any other party to any Loan
Document becomes listed on any list promulgated under the Patriot Act or is
indicted, arraigned or custodially detained on charges involving money
laundering or predicate crimes to money laundering. Notwithstanding anything to
the contrary set forth in this Section 4.40, neither Borrower nor Borrower
Principal is making any such representation or warranty with respect to any
shareholder of SCI.
SECTION 4.41. ASSUMPTIONS
Each of the assumptions contained in the opinion related to issues
of substantive consolidation delivered by Borrower to Lender on the date hereof
relating to the Borrower, SPE Component Entity and their operations are true and
accurate in all material respects.
SECTION 4.42. SURVIVAL
Borrower agrees that, unless expressly provided otherwise, all of
the representations and warranties of Borrower set forth in this Agreement and
elsewhere in this Agreement and in the other Loan Documents shall survive for so
long as any portion of the Debt remains owing to Lender. All representations,
warranties, covenants and agreements made in this Agreement or in the other Loan
Documents by Borrower shall be deemed to have been relied upon by Lender
notwithstanding any investigation heretofore or hereafter made by Lender or on
its behalf; provided, however, Lender shall not be entitled to rely upon such
representation or warranty if any employee of Lender who has been actively
involved with the making of the Loan has actual knowledge that such
representation or warranty is false as of the date made.
SECTION 4.43. REPRESENTATIONS, WARRANTIES AND COVENANTS
Notwithstanding any provision in this Agreement to the contrary, any
covenant, representation, warranty, undertaking or agreement made by Borrower
Principal hereunder is being made by Borrower Principal only with respect to
Borrower Principal and shall not be construed to mean that Borrower Principal is
making any covenant, representation, warranty, undertaking or agreement with
respect to the Borrower, the Property or any other matter herein; provided,
however, nothing in this Section shall in any way limit the liability and
obligations of Borrower or Borrower Principal if Borrower and/or Borrower
Principal breaches any covenant, representation, warranty, undertaking or
agreement which gives rise to recourse liability pursuant to Article 15 hereof.
Notwithstanding any provision in this Agreement to the contrary, any covenant,
representation or warranty made by a Borrower hereunder is being made by a
Borrower only with respect to such Borrower and the Parcel(s) owned by such
Borrower and
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shall not be construed to mean that such Borrower is making any covenant,
representation, warranty, undertaking or agreement with respect to another
Borrower or any Parcels owned by such other Borrower; provided, however, nothing
in this Section shall in any way limit (a) the liability and obligations of any
Borrower or Borrower Principal if Borrower and/or Borrower Principal breaches
any covenant, representation or warranty which gives rise to recourse liability
pursuant to Article 15 hereof, nor (b) the joint and several liability of each
Borrower pursuant to the Loan Documents.
ARTICLE V
BORROWER COVENANTS
From the date hereof and until repayment of the Debt in full and
performance in full of all obligations of Borrower under the Loan Documents or
the earlier release of the Lien of the Mortgage (and all related obligations) in
accordance with the terms of this Agreement and the other Loan Documents, each
Borrower, with respect to such Borrower and the Parcel owned by such Borrower,
hereby covenants and agrees with Lender that:
SECTION 5.1. EXISTENCE; COMPLIANCE WITH LEGAL REQUIREMENTS
(a) Borrower shall do or cause to be done all things necessary to
preserve, renew and keep in full force and effect its existence, rights,
licenses, permits and franchises and comply with all Legal Requirements
applicable to it and the Property. Borrower hereby covenants and agrees not to
commit, permit or suffer to exist any act or omission affording any Governmental
Authority the right of forfeiture as against the Property or any part thereof or
any monies paid in performance of Borrower's obligations under any of the Loan
Documents. Borrower shall at all times maintain, preserve and protect all
franchises and trade names used in connection with the operation of the
Property.
(b) Borrower, at its own expense, may contest by appropriate legal
proceeding, promptly initiated and conducted in good faith and with due
diligence, the Legal Requirements affecting the Property, provided that (i) no
Default or Event of Default has occurred and is continuing; (ii) such proceeding
shall be permitted under and be conducted in accordance with the provisions of
any other instrument to which Borrower or the Property is subject and shall not
constitute a default thereunder; (iii) neither the Property, any part thereof or
interest therein, any of the tenants or occupants thereof, nor Borrower shall be
affected in any material adverse way as a result of such proceeding; (iv)
non-compliance with the Legal Requirements shall not impose civil or criminal
liability on Borrower or Lender and (v) Borrower shall have furnished to Lender
all other items reasonably requested by Lender.
SECTION 5.2. MAINTENANCE AND USE OF PROPERTY
Borrower shall cause the Property to be maintained in a good and
safe condition and repair. The Improvements and the Personal Property shall not
be removed or demolished other than in accordance with the provisions of Section
5.21, materially altered (except for normal replacement of the Personal Property
or as otherwise permitted herein) without the prior written consent of Lender.
If under applicable zoning provisions the use of all or any portion of the
Property is or shall become a nonconforming use, Borrower will not cause or
permit the
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nonconforming use to be discontinued or the nonconforming Improvement to be
abandoned without the express written consent of Lender.
SECTION 5.3. WASTE
Borrower shall not commit or suffer any waste of the Property or
make any change in the use of the Property which will in any way materially
increase the risk of fire or other hazard arising out of the operation of the
Property, or take any action that is likely to invalidate or give cause for
cancellation of any Policy, or do or permit to be done thereon anything that is
likely to materially impair the value of the Property or the security for the
Loan. Borrower will not, without the prior written consent of Lender, and except
to the extent required under the Permitted Encumbrances, permit any drilling or
exploration for or extraction, removal, or production of any minerals from the
surface or the subsurface of the Property, regardless of the depth thereof or
the method of mining or extraction thereof.
SECTION 5.4. TAXES AND OTHER CHARGES
(a) Borrower shall pay all Taxes and Other Charges now or hereafter
levied or assessed or imposed against the Property or any part thereof before
the same become delinquent; provided, however, Borrower's obligation to directly
pay Taxes shall be suspended for so long as Borrower complies with the terms and
provisions of Section 9.6 hereof. Borrower shall furnish to Lender receipts for
the payment of the Taxes and the Other Charges prior to the date the same shall
become delinquent (provided, however, that Borrower is not required to furnish
such receipts for payment of Taxes in the event that such Taxes have been paid
by Lender pursuant to Section 9.6 hereof). Borrower shall not suffer and shall
promptly cause to be paid and discharged any Lien or charge whatsoever which may
be or become a Lien or charge against the Property, and shall promptly pay for
all utility services provided to the Property.
(b) After prior written notice to Lender, Borrower, at its own
expense, may contest by appropriate legal proceeding, promptly initiated and
conducted in good faith and with due diligence, the amount or validity or
application in whole or in part of any Taxes or Other Charges, provided that (i)
no Default or Event of Default has occurred and remains uncured; (ii) such
proceeding shall be permitted under and be conducted in accordance with the
provisions of any other instrument to which Borrower is subject and shall not
constitute a default thereunder and such proceeding shall be conducted in
accordance with all applicable Legal Requirements; (iii) neither the Property
nor any part thereof or interest therein will be in danger of being sold,
forfeited, terminated, canceled or lost; (iv) Borrower shall promptly upon final
determination thereof pay the amount of any such Taxes or Other Charges,
together with all costs, interest and penalties which may be payable in
connection therewith; (v) such proceeding shall suspend the collection of such
contested Taxes or Other Charges from the Property; and (vi) if Borrower is
required to make reserve deposits, or deliver a Letter of Credit, to Lender for
Taxes and Other Charges, then Borrower shall furnish such security as may be
required in the proceeding, or deliver to Lender such reserve deposits as may be
requested by Lender, to insure the payment of any such Taxes or Other Charges,
together with all interest and penalties thereon (unless Borrower has paid all
of the Taxes or Other Charges under protest). Lender may pay over any such cash
deposit or part thereof held by Lender to the claimant entitled thereto at any
time when, in the judgment of Lender, the entitlement of such claimant is
established or the Property
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(or part thereof or interest therein) shall be in danger of being sold,
forfeited, terminated, canceled or lost or there shall be any danger of the Lien
of the Mortgage being primed by any related Lien.
SECTION 5.5. LITIGATION
Borrower shall give prompt written notice to Lender of any
litigation or governmental proceedings pending or threatened in writing against
Borrower which, if adversely decided, would have a Material Adverse Effect.
SECTION 5.6. ACCESS TO PROPERTY
Borrower shall permit agents, representatives and employees of
Lender to inspect the Property or any part thereof at reasonable hours upon
reasonable advance notice.
SECTION 5.7. NOTICE OF DEFAULT
Borrower shall promptly advise Lender of any material adverse change
in the condition (financial or otherwise) of Borrower, any Borrower Principal or
the Property or of the occurrence of any Default or Event of Default of which
Borrower has knowledge.
SECTION 5.8. COOPERATE IN LEGAL PROCEEDINGS
Borrower shall at Borrower's expense cooperate fully with Lender
with respect to any proceedings before any court, board or other Governmental
Authority which may in any way affect the rights of Lender hereunder or any
rights obtained by Lender under any of the other Loan Documents and, in
connection therewith, permit Lender, at its election, to participate in any such
proceedings.
SECTION 5.9. PERFORMANCE BY BORROWER
Borrower shall in a timely manner observe, perform and fulfill in
all material respects each and every covenant, term and provision to be observed
and performed by Borrower under this Agreement and the other Loan Documents and
any other agreement or instrument affecting or pertaining to the Property and
any amendments, modifications or changes thereto.
SECTION 5.10. AWARDS; INSURANCE PROCEEDS
Borrower shall cooperate with Lender in obtaining the benefits of
any Awards or Insurance Proceeds lawfully or equitably payable in connection
with the Property (to be held and applied in accordance with Section 8.4
hereof), and Lender shall be reimbursed for any expenses incurred in connection
therewith (including reasonable, actual attorneys' fees and disbursements, and
the payment by Borrower of the expense of an appraisal on behalf of Lender in
case of a Casualty or Condemnation affecting the Property or any part thereof)
out of such Awards or Insurance Proceeds.
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SECTION 5.11. FINANCIAL REPORTING
(a) Borrower and Borrower Principal shall each keep separate
adequate books and records of account in accordance with GAAP, or in accordance
with other methods acceptable to Lender in its sole discretion, consistently
applied and shall furnish to Lender:
(i) prior to a Securitization, at the request of Lender, monthly,
and following a Securitization, quarterly and annual, certified rent rolls
with respect to each Parcel signed and dated by Borrower, detailing the
names of all Tenants, the home site occupied by each Tenant, the rent, and
any other charges payable under each Lease, and the term of each Lease,
including the commencement and expiration dates and any tenant extension,
expansion or renewal options, the extent to which any Tenant is in default
under any Lease, and any other information as is reasonably required by
Lender, within thirty (30) days after the end of each calendar month,
forty-five (45) days after the end of each fiscal quarter or ninety (90)
days after the close of each fiscal year of Borrower, as applicable;
(ii) prior to a Securitization, at the request of Lender, monthly,
and following a Securitization, quarterly and annual, operating
statements, profit and loss statements, and statements of the Property
Operating Account of each Parcel, prepared and certified by Borrower,
detailing, among other things, the revenues received, the expenses
incurred and the net operating income before and after debt service
(principal and interest) and major capital improvements for the period of
calculation and containing appropriate year-to-date information, within
thirty (30) days after the end of each calendar month, forty-five (45)
days after the end of each fiscal quarter or ninety (90) days after the
close of each fiscal year of Borrower, as applicable;
(iii) quarterly and annual balance sheets of Borrower (with respect
to each Parcel) and SCI, profit and loss statements and statements of cash
flows of SCI (with the annual financial statements of SCI prepared and
audited by an Acceptable Accountant), within forty-five (45) days after
the end of each fiscal quarter or ninety (90) days after the close of each
fiscal year of Borrower and SCI, as applicable, as the case may be; and
(iv) an Annual Budget not later than thirty (30) days after the
commencement of each fiscal year of Borrower.
(b) Upon request from Lender, Borrower shall promptly furnish to
Lender:
(i) a property management report for the Property, showing the
number of inquiries made and/or rental applications received from tenants
or prospective tenants and deposits received from tenants and any other
information requested by Lender, in reasonable detail and certified by
Borrower under penalty of perjury to be true and complete, but no more
frequently than quarterly; and
(ii) an accounting of all security deposits held in connection with
any Lease of any part of the Property, including the name and
identification number of the accounts in which such security deposits are
held, the name and address of the financial institutions in which such
security deposits are held and the name of the Person to contact at such
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financial institution, along with any authority or release necessary for
Lender to obtain information regarding such accounts directly from such
financial institutions.
(c) Intentionally reserved.
(d) Borrower and Borrower Principal shall furnish Lender with such
other additional financial or management information (including state and
federal tax returns) as may, from time to time, be reasonably required by Lender
in form and substance satisfactory to Lender and shall furnish to Lender and its
agents convenient facilities for the examination and audit of any such books and
records.
(e) All items requiring the certification of Borrower shall require
a certificate executed by the general partner, managing member or chief
executive officer of Borrower, as applicable (and the same rules shall apply to
any sole shareholder, general partner or managing member which is not an
individual).
SECTION 5.12. ESTOPPEL STATEMENT
(a) After request by Lender, Borrower shall within fifteen (15)
Business Days furnish Lender with a statement, duly acknowledged and certified,
setting forth (i) the amount of the original principal amount of the Note, (ii)
the rate of interest on the Note, (iii) the unpaid principal amount of the Note,
(iv) the date installments of interest and/or principal were last paid, (v) any
offsets or defenses to the payment of the Debt, if any, and (vi) that the Note,
this Agreement, the Mortgage and the other Loan Documents are valid, legal and
binding obligations and have not been modified or if modified, giving
particulars of such modification.
(b) Borrower shall use its best efforts to deliver to Lender,
promptly upon request, duly executed estoppel certificates from any one or more
Tenants as required by Lender attesting to such facts regarding the related
Lease as Lender may require, including, but not limited to attestations that
each Lease covered thereby is in full force and effect with no defaults
thereunder on the part of any party, that none of the Rents have been paid more
than one month in advance, except as security, and that the Tenant claims no
defense or offset against the full and timely performance of its obligations
under the Lease.
SECTION 5.13. LEASING MATTERS.
(a) Except as otherwise consented to by Lender in writing, all
Leases shall be written on the standard form of lease for such Parcel delivered
to Lender prior to the closing of the Loan. Upon request, Borrower shall furnish
Lender with executed copies of all Major Leases. No material changes (other than
changes which are in the ordinary course of the Borrower's business and/or are
required by applicable law, so long as such changes do not have a Material
Adverse Effect) may be made to the standard form of lease without the prior
written consent of Lender. In addition, all renewals of Leases and all proposed
leases shall provide for rental rates and terms comparable to existing local
market rates and terms and shall be arm's-length transactions with bona fide,
independent third party tenants. All proposed commercial Leases and renewals of
existing Leases for commercial space shall be subject to the prior approval of
Lender and its counsel, at Borrower's expense, such approval not to be
unreasonably withheld or delayed. All commercial Leases shall provide that they
are subordinate to the
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Mortgage and that the tenant agrees to attorn to Lender. Notwithstanding the
foregoing, Lender acknowledges that certain homesites are not leased to Tenants
pursuant to written instruments. From and after the date hereof, Borrower shall
agree to offer written Leases to new Tenants in accordance with its current
ordinary course of business practices.
(b) Borrower (i) shall observe and perform all the obligations
imposed upon the landlord under the Leases and shall not do or permit to be done
anything to impair the value of the Leases as security for the Debt; (ii) shall
enforce all of the material terms, covenants and conditions contained in the
Leases upon the part of the Tenant thereunder to be observed or performed, short
of termination thereof; provided however, with respect to mobile home or
recreational vehicle community residential property, a residential Lease may be
terminated in the event of a default by the tenant thereunder; (iii) shall not
collect any of the Rents more than one (1) month in advance, except for (A)
Rents aggregating in an amount equal to less than five percent (5.0%) of the
Operating Income of the Property and (B) Rents collected with respect to
recreational vehicle sites; and (iv) shall not execute any other assignment of
the landlord's interest in the Leases or the Rents.
(c) Notwithstanding the provisions of subsection (a) above, renewals
of existing commercial Leases and proposed Leases for commercial space shall not
be subject to the prior approval of Lender, provided all of the following
conditions are satisfied: (i) the rental income pursuant to the renewal or
proposed Lease is not more than five (5%) percent of the total rental income for
the Property (exclusive of any rental income from recreational vehicle sites),
(ii) the renewal or proposed Lease has a base term of less than six (6) years
including options to renew (other than leases for laundry facilities which may
include a 10-year term), (iii) the renewal or proposed Lease is subject and
subordinate to the Mortgage and the tenant thereunder shall have agreed to
attorn to Lender, (iv) the renewal or proposed Lease is on the standard form of
lease approved by Lender, (v) the renewal or proposed Lease does not contain any
option, offer, right of first refusal, or other similar right to acquire all or
any portion of the Property, and (vi) the renewal or proposed Lease provides for
rental rates and terms comparable to existing market rates and terms and is an
arm's-length transaction with a bona fide, independent third party tenant.
Borrower shall deliver to Lender copies of all Leases which are entered into
pursuant to the preceding sentence together with Borrower's certification that
it has satisfied all of the conditions of the preceding sentence within thirty
(30) days after the execution of the Lease.
SECTION 5.14. PROPERTY MANAGEMENT
(a) Borrower shall (i) promptly perform and observe in all material
respects all of the covenants required to be performed and observed by it under
the Management Agreement and do all things necessary to preserve and to keep
unimpaired its material rights thereunder; (ii) promptly notify Lender of any
material default under the Management Agreement of which it is aware; (iii)
promptly deliver to Lender a copy of any notice of default or other material
notice received by Borrower under the Management Agreement; (iv) promptly give
notice to Lender of any notice or information that Borrower receives which
indicates that Manager is terminating the Management Agreement or that Manager
is otherwise discontinuing its management of the Property; and (v) promptly
enforce the performance and observance of all
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of the covenants required to be performed and observed by Manager under the
Management Agreement.
(b) If at any time, (i) Manager shall become insolvent or a debtor
in a bankruptcy proceeding; (ii) an Event of Default has occurred and is
continuing; (iii) a default has occurred and is continuing under the Management
Agreement, or (iv) while the Manager is not an Affiliate of the Borrower, the
Debt Service Coverage Ratio for the preceding twelve (12) month period ending
with the most recently completed calendar quarter is less than 1.10 to 1.0,
Borrower shall, at the request of Lender, terminate the Management Agreement
upon thirty (30) days prior notice to Manager and replace Manager with a
Qualified Manager approved by Lender on terms and conditions satisfactory to
Lender, it being understood and agreed that the management fee for such
replacement manager shall not exceed then prevailing market rates.
(c) Intentionally reserved.
(d) Borrower shall not, without the prior written consent of Lender
(which consent shall not be unreasonably withheld, conditioned or delayed): (i)
surrender, terminate or cancel the Management Agreement or otherwise replace
Manager or enter into any other management agreement with respect to the
Property, unless the replacement Manager is a Qualified Manager; (ii) reduce or
consent to the reduction of the term of the Management Agreement; (iii) increase
or consent to the increase of the amount of any charges under the Management
Agreement; or (iv) otherwise modify, change, supplement, alter or amend, or
waive or release any of its rights and remedies under, the Management Agreement
in any material respect. In the event that Borrower replaces Manager at any time
during the term of Loan pursuant to this subsection, such Manager shall be a
Qualified Manager.
(e) If during the term of the Loan the Borrower engages or replaces
the Manager with a new property manager that is an Affiliated Manager, the
Borrower shall deliver to Lender an opinion as to non-consolidation issues
between the Borrower and such Affiliated Manager, such opinion to be acceptable
to the Lender and the Rating Agencies.
(f) Notwithstanding the foregoing, Lender and Borrower acknowledge
and agree that as of the date hereof the Property is self-managed by Borrower.
If during the term of the Loan Borrower engages a property manager, then the
provisions of the Management Agreement with such property manager shall be
subject to the provisions of this Section 5.14.
SECTION 5.15. LIENS
Borrower shall not, without the prior written consent of Lender,
create, incur, assume or suffer to exist any Lien on any portion of the Property
or permit any such action to be taken, except Permitted Encumbrances.
SECTION 5.16. DEBT CANCELLATION
Borrower shall not cancel or otherwise forgive or release any claim
or debt (other than termination of Leases in accordance herewith) owed to
Borrower by any Person, except for adequate consideration or in the ordinary
course of Borrower's business.
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SECTION 5.17. ZONING
Borrower shall not initiate or consent to any zoning
reclassification of any portion of the Property or seek any variance (other than
in the ordinary course of business) under any existing zoning ordinance or use
or permit the use of any portion of the Property in any manner that could result
in such use becoming a non-conforming use under any zoning ordinance or any
other applicable land use law, rule or regulation, without the prior written
consent of Lender.
SECTION 5.18. ERISA
(a) Borrower shall not engage in any transaction which would cause
any obligation, or action taken or to be taken, hereunder (or the exercise by
Lender of any of its rights under the Note, this Agreement or the other Loan
Documents) to be a non-exempt (under a statutory or administrative class
exemption) prohibited transaction under ERISA.
(b) Borrower further covenants and agrees to deliver to Lender such
certifications or other evidence from time to time throughout the term of the
Loan, as requested by Lender in its sole discretion, that (i) Borrower is not
and does not maintain an "employee benefit plan" as defined in Section 3(3) of
ERISA, which is subject to Title I of ERISA, or a "governmental plan" within the
meaning of Section 3(32) of ERISA; (ii) Borrower is not subject to state
statutes regulating investments and fiduciary obligations with respect to
governmental plans; and (iii) one or more of the following circumstances is
true:
(A) Equity interests in Borrower are publicly offered
securities, within the meaning of 29 C.F.R. Section
2510.3-101(b)(2);
(B) Less than twenty-five percent (25%) of each outstanding
class of equity interests in Borrower are held by "benefit plan
investors" within the meaning of 29 C.F.R. Section 2510.3-101(f)(2);
or
(C) Borrower qualifies as an "operating company" or a "real
estate operating company" within the meaning of 29 C.F.R. Section
2510.3-101(c) or (e).
SECTION 5.19. NO JOINT ASSESSMENT
Borrower shall not suffer, permit or initiate the joint assessment
of any Parcel with (a) any other real property constituting a tax lot separate
from such Parcel, or (b) any portion of such Parcel which may be deemed to
constitute personal property, or any other procedure whereby the Lien of any
taxes which may be levied against such personal property shall be assessed or
levied or charged to the Property.
SECTION 5.20. RECIPROCAL EASEMENT AGREEMENTS
Borrower shall not enter into, terminate or modify any REA without
Lender's prior written consent, which consent shall not be unreasonably
withheld, conditioned or delayed. Borrower shall enforce, comply with, and cause
each of the parties to the REA to comply with all of the material economic terms
and conditions contained in the REA.
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SECTION 5.21. ALTERATIONS
Lender's prior approval shall be required in connection with any
alterations to any Improvements (a) that will have a Material Adverse Effect on
the affected Parcel or (b) that, together with any other alterations undertaken
at the same time (including any related alterations, improvements or
replacements), are reasonably anticipated to have a cost in excess of the
Alteration Threshold.
SECTION 5.22. TRADE INDEBTEDNESS
Borrower shall pay its trade payables and operational debt upon the
earlier to occur of (a) sixty (60) days of the date invoiced, and (b) the date
the same is due and payable.
SECTION 5.23. TAX CREDITS
Borrower shall not claim a low income housing credit for the
Property under Section 42 of the Internal Revenue Code without Lender's prior
written consent.
ARTICLE VI
ENTITY COVENANTS
SECTION 6.1. SINGLE PURPOSE ENTITY/SEPARATENESS
Until the Debt has been paid in full, each Borrower represents,
warrants and covenants as follows:
(a) Each Borrower will not:
(i) engage in any business or activity other than the ownership,
operation and maintenance of the Property, and activities incidental
thereto;
(ii) acquire or own any assets other than (A) the Property, and (B)
such incidental Personal Property as may be necessary for the operation of
the Property;
(iii) except as otherwise expressly permitted hereunder, merge into
or consolidate with any Person, or dissolve, terminate, liquidate in whole
or in part, transfer or otherwise dispose of all or substantially all of
its assets or change its legal structure;
(iv) except as otherwise permitted therein, fail to observe all
organizational formalities, or fail to preserve its existence as an entity
duly organized, validly existing and in good standing (if applicable)
under the applicable Legal Requirements of the jurisdiction of its
organization or formation, or amend, modify, terminate or fail to comply
with the material provisions of its organizational documents;
(v) own any subsidiary, or make any investment in, any Person;
(vi) commingle its assets with the assets of any other Person;
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(vii) incur any debt, secured or unsecured, direct or contingent
(including guaranteeing any obligation), other than (A) the Debt, (B)
trade and operational indebtedness incurred in the ordinary course of
business with trade creditors, provided such indebtedness is (1)
unsecured, (2) not evidenced by a note, (3) on commercially reasonable
terms and conditions, and (4) due not more than sixty (60) days past the
date invoiced and paid on or prior to such date, and/or (C) financing
leases and purchase money indebtedness incurred in the ordinary course of
business relating to Personal Property on commercially reasonable terms
and conditions; provided however, the aggregate amount of the indebtedness
described in (B) and (C) shall not exceed at any time three percent (3%)
of the outstanding principal amount of the Note;
(viii) (A) fail to maintain its records, books of account, bank
accounts, financial statements, accounting records and other entity
documents for each Parcel separate and apart from those of any other
Person showing such Parcel's assets and liabilities separate and apart
from those of any other Person and (B) include it assets listed on any
financial statement of any other person; provided, however, that
Borrower's assets may be included in a consolidated operating or financial
statement of its Affiliate provided that an appropriate notation shall be
made on such consolidated operating or financial statements to indicate
the separateness of Borrower from such Affiliate and to indicate
Borrower's assets and credit are not available to satisfy the debts and
other obligations of such Affiliate or any other Person;
(ix) enter into any contract or agreement with any general partner,
member, shareholder, principal, guarantor of the obligations of Borrower,
or any Affiliate of the foregoing, except upon terms and conditions that
are intrinsically fair, commercially reasonable and substantially similar
to those that would be available on an arm's-length basis with
unaffiliated third parties;
(x) maintain its assets in such a manner that it will be costly or
difficult to segregate, ascertain or identify its individual assets from
those of any other Person;
(xi) assume or guaranty the debts of any other Person, hold itself
out to be responsible for the debts of any other Person, or otherwise
pledge its assets for the benefit of any other Person or hold out its
credit as being available to satisfy the obligations of any other Person,
except for the Debt;
(xii) make any loans or advances to any Person;
(xiii) fail to file its own tax returns or files a consolidated
federal income tax return with any Person (unless prohibited or required,
as the case may be, by applicable Legal Requirements);
(xiv) fail either to hold itself out to the public as a legal entity
separate and distinct from any other Person or to conduct its business
solely in its own name or fail to correct any known misunderstanding
regarding its separate identity;
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(xv) fail to maintain adequate capital for the normal obligations
reasonably foreseeable in a business of its size and character and in
light of its contemplated business operations;
(xvi) if it is a partnership or limited liability company, without
the unanimous written consent of all of its partners or members, as
applicable, and the written consent of 100% of the directors of each SPE
Component Entity (if any), including, without limitation, each Independent
Director, (a) file or consent to the filing of any petition, either
voluntary or involuntary, to take advantage of any Creditors Rights Laws,
(b) seek or consent to the appointment of a receiver, liquidator or any
similar official, (c) take any action that might cause such entity to
become insolvent, or (d) make an assignment for the benefit of creditors;
(xvii) fail to allocate shared expenses (including, without
limitation, shared office space and services performed by an employee of
an Affiliate) among the Persons sharing such expenses and to use separate
stationery, invoices and checks;
(xviii) fail to remain solvent or pay its own liabilities
(including, without limitation, salaries of its own employees) only from
its own funds;
(xix) acquire obligations or securities of its partners, members,
shareholders or other affiliates, as applicable;
(xx) violate or cause to be violated the assumptions made with
respect to Borrower and its principals in any opinion letter pertaining to
substantive consolidation delivered to Lender in connection with the Loan;
or
(xxi) fail to maintain a sufficient number of employees in light of
its contemplated business operations.
Notwithstanding anything contained in this Section 6.1(a) to the contrary,
whether express or implied, Lender and Borrower agree that the following
operations and activities of Borrower, SPE Component Entity (if any) and their
Affiliates shall not be considered a violation of any obligation set forth in
this Section 6.1(a): (i) offering services to residents of the Property through
Affiliates or other third parties for which fees and charges may be collected by
Borrower or the Affiliate and paid to such Affiliate or third party, which may
include, without limitation, cable and internet services, landscaping, snow
removal, lease or sale of manufactured homes, and child care; provided that such
Affiliates do not conduct their business in the name of the Borrower and that
any agreements between the Borrower and its Affiliates relating to such services
are on commercially reasonable terms similar to those of an arm's-length
transaction; (ii) depositing all gross revenue, whether cash, cash equivalents
or similar assets, in the Property Operating Account, after paying expenses of
the Borrower or causing SCOLP and/or SCI to pay such expenses in accordance with
Article 10 hereof, and subject to the provisions of the applicable Borrower's
organizational documents, distributing such remaining cash to SCI, SCOLP or at
the direction of SCI or SCOLP, as applicable, to any other Affiliate, and in any
case, distributing such remaining cash that does not belong to the Borrower
promptly to such entities; (iii) paying all payables, debts and other
liabilities arising from or in connection with the
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operation of the Property from the Property Operating Accounts, or causing SCOLP
and/or SCI to pay such liabilities pursuant to Article 10 hereof; (iv) subject
to the provisions of the applicable Borrower's organizational documents, using
ancillary assets in connection with the operation of the Property held in the
name of SCI, SCOLP or any Affiliates, such as vehicles and office and
maintenance equipment; (v) treating the Property for all purposes as part of and
within the portfolio of manufactured housing communities owned by the SCOLP or
any Affiliate, for marketing, promotion and providing information and reports to
the public or as required by any Legal Requirements; provided, however, that the
Borrower shall conduct business in its own name or its assumed or trade name;
and (vi) allocating general overhead and administrative costs incurred by SCI
and SCOLP and/or other Affiliates to the Borrower in a fair and equitable
manner.
(b) If Borrower is a partnership or limited liability company, each
general partner in the case of a general partnership, each general partner in
the case of a limited partnership, or the managing member in the case of a
limited liability company (each an "SPE COMPONENT ENTITY") of Borrower, as
applicable, shall be a corporation whose sole asset is its interest in Borrower.
Each SPE Component Entity (i) will at all times comply with each of the
covenants, terms and provisions contained in Section 6.1(a)(iii) - (vi) and
(viii) - (xxi), as if such representation, warranty or covenant was made
directly by such SPE Component Entity; (ii) will not engage in any business or
activity other than owning an interest in Borrower and acting as the managing
member or general partner of Borrower; (iii) will not acquire or own any assets
other than its partnership, membership, or other equity interest in Borrower;
(iv) will not incur any debt, secured or unsecured, direct or contingent
(including guaranteeing any obligation); and (v) will cause Borrower to comply
with the provisions of this Section 6.1 and Section 6.4. Prior to the withdrawal
or the disassociation of any SPE Component Entity from Borrower, Borrower shall
immediately appoint a new general partner or managing member whose articles of
incorporation are substantially similar to those of such SPE Component Entity
and, if an opinion letter pertaining to substantive consolidation was required
at closing, deliver a new opinion letter acceptable to Lender and the Rating
Agencies with respect to the new SPE Component Entity and its equity owners.
Notwithstanding the foregoing, to the extent Borrower is a single member
Delaware limited liability company, so long as Borrower maintains such formation
status, no SPE Component Entity shall be required.
(c) In the event Borrower is a single member Delaware limited
liability company, the limited liability company agreement of Borrower (the "LLC
AGREEMENT") shall provide that (i) upon the occurrence of any event that causes
the sole member of Borrower ("MEMBER") to cease to be the member of Borrower
(other than (A) upon an assignment by Member of all of its limited liability
company interest in Borrower and the admission of the transferee in accordance
with the Loan Documents and the LLC Agreement, or (B) the resignation of Member
and the admission of an additional member of Borrower in accordance with the
terms of the Loan Documents and the LLC Agreement), any person acting as
Independent Director of Borrower shall, without any action of any other Person
and simultaneously with the Member ceasing to be the member of Borrower,
automatically be admitted to Borrower ("SPECIAL MEMBER") and shall continue
Borrower without dissolution and (ii) Special Member may not resign from
Borrower or transfer its rights as Special Member unless (A) a successor Special
Member has been admitted to Borrower as Special Member in accordance with
requirements of Delaware law and (B) such successor Special Member has also
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accepted its appointment as an Independent Director. The LLC Agreement shall
further provide that (i) Special Member shall automatically cease to be a member
of Borrower upon the admission to Borrower of a substitute Member, (ii) Special
Member shall be a member of Borrower that has no interest in the profits, losses
and capital of Borrower and has no right to receive any distributions of
Borrower assets, (iii) pursuant to Section 18-301 of the Delaware Limited
Liability Company Act (the "ACT"), Special Member shall not be required to make
any capital contributions to Borrower and shall not receive a limited liability
company interest in Borrower, (iv) Special Member, in its capacity as Special
Member, may not bind Borrower and (v) except as required by any mandatory
provision of the Act, Special Member, in its capacity as Special Member, shall
have no right to vote on, approve or otherwise consent to any action by, or
matter relating to, Borrower, including, without limitation, the merger,
consolidation or conversion of Borrower; provided, however, such prohibition
shall not limit the obligations of Special Member, in its capacity as
Independent Director, to vote on such matters required by the Loan Documents or
the LLC Agreement. In order to implement the admission to Borrower of Special
Member, Special Member shall execute a counterpart to the LLC Agreement. Prior
to its admission to Borrower as Special Member, Special Member shall not be a
member of Borrower.
Upon the occurrence of any event that causes the Member to cease to
be a member of Borrower, to the fullest extent permitted by law, the personal
representative of Member shall, within ninety (90) days after the occurrence of
the event that terminated the continued membership of Member in Borrower, agree
in writing (i) to continue Borrower and (ii) to the admission of the personal
representative or its nominee or designee, as the case may be, as a substitute
member of Borrower, effective as of the occurrence of the event that terminated
the continued membership of Member of Borrower in Borrower. Any action initiated
by or brought against Member or Special Member under any Creditors Rights Laws
shall not cause Member or Special Member to cease to be a member of Borrower and
upon the occurrence of such an event, the business of Borrower shall continue
without dissolution. The LLC Agreement shall provide that each of Member and
Special Member waives any right it might have to agree in writing to dissolve
Borrower upon the occurrence of any action initiated by or brought against
Member or Special Member under any Creditors Rights Laws, or the occurrence of
an event that causes Member or Special Member to cease to be a member of
Borrower.
SECTION 6.2. CHANGE OF NAME, IDENTITY OR STRUCTURE
Borrower shall not change or permit to be changed (a) Borrower's
name, (b) Borrower's identity (including its trade name or names) although
Borrower may change the name of any Parcel without prior notice to, or the
consent of, Lender, (c) Borrower's principal place of business set forth on the
first page of this Agreement, (d) the corporate, partnership or other
organizational structure of Borrower, each SPE Component Entity (if any), or
Borrower Principal, (e) Borrower's state of organization, or (f) Borrower's
organizational identification number, without in each case notifying Lender of
such change in writing at least thirty (30) days prior to the effective date of
such change and, in the case of a change in Borrower's structure, without first
obtaining the prior written consent of Lender. In addition, Borrower shall not
change or permit to be changed any organizational documents of Borrower or any
SPE Component Entity (if any) if such change would adversely impact the
covenants set forth in Section 6.1 and Section 6.4 hereof. Borrower authorizes
Lender to file any financing statement or financing statement amendment required
by Lender to establish or maintain the validity,
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perfection and priority of the security interest granted herein. At the request
of Lender, Borrower shall execute a certificate in form satisfactory to Lender
listing the trade names under which Borrower intends to operate the Property,
and representing and warranting that Borrower does business under no other trade
name with respect to the Property. If Borrower does not now have an
organizational identification number and later obtains one, or if the
organizational identification number assigned to Borrower subsequently changes,
Borrower shall promptly notify Lender of such organizational identification
number or change.
SECTION 6.3. BUSINESS AND OPERATIONS
Borrower will qualify to do business and will remain in good
standing under the laws of the State as and to the extent the same are required
for the ownership, maintenance, management and operation of the Property.
SECTION 6.4. INDEPENDENT DIRECTOR
(a) The organizational documents of each SPE Component Entity (if
any) shall provide that at all times there shall be, and Borrower shall cause
there to be, at least two Independent Directors of such SPE Component Entity
reasonably satisfactory to Lender.
(b) The organizational documents of each SPE Component Entity (if
any) shall provide that the board of directors of such SPE Component Entity
shall not take any ID Action (defined below) unless at the time of such ID
Action there shall be at least two (2) members of the board of directors who are
Independent Directors. Such SPE Component Entity will not, without the unanimous
written consent of its board of directors including each Independent Director,
on behalf of itself or Borrower, (i) file or consent to the filing of any
petition, either voluntary or involuntary, to take advantage of any applicable
Creditors Rights Laws; (ii) seek or consent to the appointment of a receiver,
liquidator or any similar official; (iii) take any action that might cause such
entity to become insolvent; or (iv) make an assignment for the benefit of
creditors (individually and collectively, as the case may be, an "ID ACTION").
SECTION 6.5. BORROWER ENTITY AND SEPARATENESS REPRESENTATIONS AND
WARRANTIES.
With respect to the Borrower known as Aspen-Holland Estates, LLC
("ASPEN-ALPINE") and Sun Silver Star LLC ("SUN SILVER STAR") only, Borrower
hereby represents with respect to that (i) from the date of Borrower Principal's
acquisition (directly or indirectly) of substantially all of ownership interests
in Aspen-Alpine and Sun Silver Star, as applicable, to the date of this
Agreement, and (ii) to the Borrower's knowledge, from the date of such entity's
formation to the date of Borrower Principal's acquisition (directly or
indirectly) of substantially all of the ownership interests in Aspen-Alpine and
Sun Silver Star:
(a) Borrower is and always has been duly formed, validly existing,
and in good standing in the state of its incorporation and in all other
jurisdictions where it is qualified to do business;
(b) Borrower has no judgments or Liens of any nature against it
except for tax liens not yet due and Permitted Encumbrances;
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(c) Borrower is in material compliance with all laws, regulations,
and orders applicable to it and has received all permits necessary for it to
operate;
(d) Except for contesting or appealing real estate tax assessments,
Borrower is not now, nor, has ever been, involved in any dispute with any taxing
authority which would have a Material Adverse Effect;
(e) Borrower has paid all taxes which it owes;
(f) Borrower has never owned any real property other than the
Property and personal property necessary or incidental to its ownership or
operation of the Property and has never engaged in any business other than the
ownership and operation of the Property;
(g) Borrower is not now, nor, has ever been, party to any lawsuit,
arbitration, summons, or legal proceeding which would have a Material Adverse
Effect;
(h) Borrower has provided Lender with complete financial statements
that reflect a fair and accurate view of each Parcel;
(i) Borrower has provided Lender with a Phase One environmental
audit for each Property;
(j) Borrower has materially complied with the separateness covenants
referred to in the substantive non-consolidation opinion deliver to Lender in
connection with the Loan;
(k) Exclusive of any outstanding obligations due to Bank of America,
N.A. in connection with existing financing which is being satisfied
contemporaneously with the closing of the Loan, Borrower has no outstanding
material contingent or actual obligations not related to the Property;
(l) Borrower has not entered into any contract or agreement with any
of its Affiliates, constituents, or owners, or any guarantors of any of its
obligations or any Affiliate of any of the foregoing (individually, a "RELATED
PARTY" and collectively, the "RELATED PARTIES"), except upon terms and
conditions that are commercially reasonable and substantially similar to those
available in an arm's-length transaction with an unrelated party;
(m) Borrower has paid all of its debts and liabilities from its
assets;
(n) Borrower has done or caused to be done all things necessary to
observe all organizational formalities applicable to it and to preserve its
existence;
(o) Borrower has maintained all of its books, records, financial
statements and bank accounts separate from those of any other Person;
(p) Borrower has not had its assets listed as assets on the
financial statement of any other Person, other than the consolidated financial
statements of SCI and/or Borrower Principal;
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(q) Borrower has filed its own tax returns (except to the extent
that it has been a tax-disregarded entity not required to file tax returns under
applicable law) and, if it is a corporation, has not filed a consolidated
federal income tax return with any other Person;
(r) Borrower has been, and at all times has held itself out to the
public as, a legal entity separate and distinct from any other Person (including
any Affiliate or other Related Party);
(s) Borrower has corrected any known misunderstanding regarding its
status as a separate entity;
(t) Borrower has conducted all of its business and held all of its
assets in its own name;
(u) Borrower has not identified itself or any of its affiliates as a
division or part of the other;
(v) Borrower has not commingled its assets with those of any other
Person and has held all of its assets in its own name;
(w) Borrower does not have any outstanding guarantees or obligations
for the debts of any other Person;
(x) Borrower has not held itself out as being responsible for the
debts or obligations of any other Person;
(y) Borrower has allocated fairly and reasonably any overhead
expenses that have been shared with an Affiliate, including paying for office
space and services performed by any employee of an Affiliate or Related Party;
(z) Borrower has not pledged its assets for the benefit of any other
Person other than with respect to loans secured by the Property and no such
pledge remains outstanding except in connection with the Loan;
(aa) Borrower has maintained adequate capital in light of its
contemplated business operations;
(bb) Borrower has maintained a sufficient number of employees in
light of its contemplated business operations and has paid the salaries of its
own employees from its own funds;
(cc) Borrower has not owned any subsidiary or any equity interest in
any other entity;
(dd) Borrower has not incurred any indebtedness that is still
outstanding other than indebtedness that is permitted under the Loan Documents;
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(ee) Borrower has not had any of its obligations guaranteed by an
Affiliate, except for guarantees that have been either released or discharged
(or that will be discharged as a result of the closing of the Loan) or
guarantees that are expressly contemplated by the Loan Documents; and
(ff) none of the current owners of equity interests in the Borrower,
other than SCOLP and SCI, is affiliated with any of the former owners of equity
interests in the Borrower.
ARTICLE VII
NO SALE OR ENCUMBRANCE
SECTION 7.1. TRANSFER DEFINITIONS
For purposes of this Article 7 an "AFFILIATED MANAGER" shall mean
any managing agent in which Borrower, Borrower Principal, any SPE Component
Entity (if any) or any affiliate of such entities has, directly or indirectly,
any legal, beneficial or economic interest; "CONTROL" shall mean the power to
direct the management and policies of a Restricted Party, directly or
indirectly, whether through the ownership of voting securities or other
beneficial interests, by contract or otherwise; provided, however, any change in
the members of the board of directors of SCI, or SPE Component Entity shall not,
in and of itself, constitute a change in control; "RESTRICTED PARTY" shall mean
Borrower, Borrower Principal, any SPE Component Entity (if any), any Affiliated
Manager, or any shareholder, partner, member or non-member manager, or any
direct or indirect legal or beneficial owner of Borrower, Borrower Principal,
any SPE Component Entity (if any), any Affiliated Manager or any non-member
manager; and a "SALE OR PLEDGE" shall mean a voluntary or involuntary sale,
conveyance, mortgage, grant, bargain, encumbrance, pledge, assignment, grant of
any options with respect to, or any other transfer or disposition of (directly
or indirectly, voluntarily or involuntarily, by operation of law or otherwise,
and whether or not for consideration or of record) of a legal or beneficial
interest.
SECTION 7.2. NO SALE/ENCUMBRANCE
(a) Borrower shall not cause or permit a Sale or Pledge of the
Property or any part thereof or any legal or beneficial interest therein nor
permit a Sale or Pledge of an interest in any Restricted Party (in each case, a
"PROHIBITED TRANSFER"), other than pursuant to Leases of space in the
Improvements to Tenants in accordance with the provisions of Section 5.13,
without the prior written consent of Lender.
(b) A Prohibited Transfer shall include, but not be limited to, (i)
an installment sales agreement wherein Borrower agrees to sell the Property or
any part thereof for a price to be paid in installments; (ii) an agreement by
Borrower leasing all or a substantial part of the Property for other than actual
occupancy by a space tenant thereunder or a sale, assignment or other transfer
of, or the grant of a security interest in, Borrower's right, title and interest
in and to any Leases or any Rents; (iii) if a Restricted Party (other than SCI)
is a corporation, any merger, consolidation or Sale or Pledge of such
corporation's stock or the creation or issuance of new stock in one or a series
of transactions; (iv) if a Restricted Party is a limited or general partnership
or joint venture, any merger or consolidation or the change, removal,
resignation or addition of a general partner or the Sale or Pledge of the
partnership
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interest of any general or limited partner or any profits or proceeds relating
to such partnership interests or the creation or issuance of new partnership
interests; provided, however, the foregoing shall not apply to interests in
SCOLP other than those owned by SCI, provided, further, that SCI's ownership
interest in SCOLP shall be permitted to decrease so long as after any such
decrease SCI shall continue to Control SCOLP and own not less than twenty-five
percent (25%) of the equity partnership interests in SCOLP; (v) if a Restricted
Party is a limited liability company, any merger or consolidation or the change,
removal, resignation or addition of a managing member or non-member manager (or
if no managing member, any member) or the Sale or Pledge of the membership
interest of any member or any profits or proceeds relating to such membership
interest other than transfers by or among SCOLP, SCI or their Affiliates and
transfers within SCOLP and SCI as permitted under clause (iv) above; (vi) if a
Restricted Party is a trust or nominee trust, any merger, consolidation or the
Sale or Pledge of the legal or beneficial interest in a Restricted Party or the
creation or issuance of new legal or beneficial interests; or (vii) the removal
or the resignation of Manager (including, without limitation, an Affiliated
Manager) other than in accordance with Section 5.14.
SECTION 7.3. PERMITTED TRANSFERS
Notwithstanding the provisions of Section 7.2, the following
transfers shall not be deemed to be a Prohibited Transfer: (a) a transfer by
devise or descent or by operation of law upon the death of a member, partner or
shareholder of a Restricted Party; (b) the Sale or Pledge, in one or a series of
transactions, of not more than forty-nine percent (49%) of the stock, limited
partnership interests or non-managing membership interests (as the case may be)
in a Restricted Party; provided, however, no such transfers shall result in a
change in Control in the Restricted Party, or change in control of the Property,
or the Property to be managed by a Person who is not a Qualified Manager, and as
a condition to each such transfer, Lender shall receive not less than thirty
(30) days prior written notice of such proposed transfer (c) the sale or
transfer of stock in SCI provided such stock is listed on a nationally
recognized stock exchange, (d) subject to providing prior notice to Lender,
transfers of the direct or indirect interest in Borrower by and among SCI, SCOLP
and their Affiliates, provided that no such transfers shall result in a change
in Control of the Borrower or a change in control of the Property, (e) transfers
of the limited partnership interests in SCOLP or reductions of SCI's ownership
interest in SCOLP, provided that after such transfer (or reduction of ownership
interests in the case of SCI) SCI shall continue to Control SCOLP and own not
less than twenty-five percent (25%) of the equity partnership interests in
SCOLP, or (f) the issuance of additional stock in, or redemption of stock in,
SCI, the issuance of additional limited partnership interests in, or redemption
of limited partnership interests in, SCOLP, and the issuance of additional
ownership interests in, or the redemption of the ownership interests in, the
Affiliates of SCI and SCOLP (other than Borrower and the SPE Component Entity,
if any). Notwithstanding the foregoing, any transfer that results in any Person
owning in excess of forty-nine percent (49%) of the ownership interest in a
Restricted Party shall comply with the requirements of Section 7.4 hereof.
SECTION 7.4. LENDER'S RIGHTS
Lender reserves the right to condition the consent to a Prohibited
Transfer requested hereunder upon (a) a modification of the terms hereof (other
than the economic terms) and an assumption of the Note and the other Loan
Documents as so modified by the proposed
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Prohibited Transfer, (b) receipt of payment of a transfer fee equal to one
percent (1%) of the outstanding principal balance of the Loan and all of
Lender's expenses incurred in connection with such Prohibited Transfer, (c)
receipt of written confirmation from the Rating Agencies that the Prohibited
Transfer will not result in a downgrade, withdrawal or qualification of the
initial, or if higher, then current ratings issued in connection with a
Securitization, or if a Securitization has not occurred, any ratings to be
assigned in connection with a Securitization, (d) the proposed transferee's
continued compliance with the covenants set forth in this Agreement (including,
without limitation, the covenants in Article 6) and the other Loan Documents,
(e) the Property being managed by a Qualified Manager and a new management
agreement satisfactory to Lender, and (f) the satisfaction of such other
conditions and/or legal opinions as Lender shall determine in its sole
discretion to be in the interest of Lender. All expenses incurred by Lender
shall be payable by Borrower whether or not Lender consents to the Prohibited
Transfer. Lender shall not be required to demonstrate any actual impairment of
its security or any increased risk of default hereunder in order to declare the
Debt immediately due and payable upon a Prohibited Transfer made without
Lender's consent. This provision shall apply to each and every Prohibited
Transfer, whether or not Lender has consented to any previous Prohibited
Transfer. Notwithstanding anything to the contrary contained in this Section
7.4, in the event a substantive non-consolidation opinion was delivered to
Lender and the Rating Agencies in connection with the closing of the Loan, and
if any Sale or Pledge permitted under this Article 7 results in any Person and
its Affiliates owning in excess of forty-nine percent (49%) of the ownership
interests in a Restricted Party, Borrower shall, prior to such transfer, and in
addition to any other requirement for Lender consent contained herein, deliver a
revised substantive non-consolidation opinion to Lender reflecting such
Prohibited Transfer, which opinion shall be in form, scope and substance
acceptable in all respects to Lender and the Rating Agencies.
SECTION 7.5. ASSUMPTION
Notwithstanding the foregoing provisions of this Article 7,
following the date which is six (6) months from the Closing Date, Lender shall
not unreasonably withhold, delay or condition consent to a transfer of the
Property in its entirety to or of one hundred percent (100%) of the ownership
interests in the Borrower, and the related assumption of the Loan by, any Person
(a "TRANSFEREE") provided that each of the following terms and conditions are
satisfied:
(a) no Default or Event of Default has occurred;
(b) Borrower shall have (i) delivered written notice to Lender of
the terms of such prospective transfer not less than thirty (30) days before the
date on which such transfer is scheduled to close and, concurrently therewith,
all such information concerning the proposed Transferee as Lender shall
reasonably require and (ii) paid to Lender a non-refundable processing fee in
the amount of $10,000. Lender shall have the right to approve or disapprove the
proposed transfer based on its then current underwriting and credit requirements
for similar loans secured by similar properties which loans are sold in the
secondary market, such approval not to be unreasonably withheld, conditioned or
delayed. In determining whether to give or withhold its approval of the proposed
transfer, Lender shall consider the experience and track record of Transferee
and its principals in owning and operating facilities similar to the Property,
the financial strength of Transferee and its principals, the general business
standing of Transferee and its principals and Transferee's and its principals'
relationships and experience with
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contractors, vendors, tenants, lenders and other business entities; provided,
however, that, notwithstanding Lender's agreement to consider the foregoing
factors in determining whether to give or withhold such approval, such approval
shall be given or withheld based on what Lender determines to be commercially
reasonable and, if given, may be given subject to such conditions as Lender may
deem reasonably appropriate. In no event shall Lender consent to a proposed
transfer prior to a Securitization if the consideration to be paid by the
Transferee for the Property, as determined by Lender in its sole discretion, is
less than the appraised value of the Property as determined by Lender based upon
the Appraisal delivered to Lender in connection with Lender's underwriting of
the Loan;
(c) Borrower shall have paid to Lender, concurrently with the
closing of such transfer, (i) a non-refundable assumption fee in an amount equal
to one percent (1.0%) of the then outstanding principal balance of the Note, and
(ii) all out-of-pocket costs and expenses, including reasonable attorneys' fees,
incurred by Lender in connection with the transfer;
(d) Transferee assumes and agrees to pay the Debt as and when due
subject to the provisions of Article 15 hereof and, prior to or concurrently
with the closing of such transfer, Transferee and its constituent partners,
members or shareholders as Lender may require, shall execute, without any cost
or expense to Lender, such documents and agreements as Lender shall reasonably
require to evidence and effectuate said assumption;
(e) Borrower and Transferee, without any cost to Lender, shall
furnish any information requested by Lender for the preparation of, and shall
authorize Lender to file, new financing statements and financing statement
amendments and other documents to the fullest extent permitted by applicable
law, and shall execute any additional documents reasonably requested by Lender;
(f) Borrower shall have delivered to Lender, without any cost or
expense to Lender, such endorsements to Lender's Title Insurance Policy insuring
that fee simple or leasehold title to the Property, as applicable, is vested in
Transferee (subject to Permitted Encumbrances), hazard insurance endorsements or
certificates and other similar materials as Lender may deem necessary at the
time of the transfer, all in form and substance satisfactory to Lender;
(g) Transferee shall have furnished to Lender, if Transferee is a
corporation, partnership, limited liability company or other entity, all
appropriate papers evidencing Transferee's organization and good standing, and
the qualification of the signers to execute the assumption of the Debt, which
papers shall include certified copies of all documents relating to the
organization and formation of Transferee and of the entities, if any, which are
partners or members of Transferee. Transferee and such constituent partners,
members or shareholders of Transferee (as the case may be), as Lender shall
require, shall comply with the covenants set forth in Article 6 hereof;
(h) Transferee shall assume the obligations of Borrower under any
Management Agreement or provide a new management agreement with a new Qualified
Manager which meets with the requirements of Section 5.14 hereof and assign to
Lender as additional security such new management agreement;
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(i) Transferee shall furnish an opinion of counsel satisfactory to
Lender and its counsel (A) that Transferee's formation documents provide for the
matters described in subparagraph (g) above, (B) that the assumption of the Debt
has been duly authorized, executed and delivered, and that the Note, the
Mortgage, this Agreement, the assumption agreement and the other Loan Documents
are valid, binding and enforceable against Transferee in accordance with their
terms, (C) that Transferee and any entity which is a controlling stockholder,
member or general partner of Transferee, have been duly organized, and are in
existence and good standing, and (D) with respect to such other matters as
Lender may reasonably request;
(j) if required by Lender, Lender shall have received confirmation
in writing from the Rating Agencies that rate the Securities to the effect that
the transfer will not result in a qualification, downgrade or withdrawal of any
rating initially assigned or to be assigned to the Securities;
(k) Borrower's obligations under the contract of sale pursuant to
which the transfer is proposed to occur shall expressly be subject to the
satisfaction of the terms and conditions of this Section 7.5; and
(l) Transferee shall, prior to such transfer, deliver a substantive
non-consolidation opinion to Lender, which opinion shall be in form, scope and
substance acceptable in all respects to Lender and the Rating Agencies.
A consent by Lender with respect to a transfer of the Property in
its entirety or one hundred percent (100%) of the ownership interests in
Borrower to, and the related assumption of the Loan by, a Transferee pursuant to
this Section 7.5 shall not be construed to be a waiver of the right of Lender to
consent to any subsequent Sale of Pledge of the Property.
SECTION 7.6. PARTIAL ASSUMPTION
Notwithstanding the foregoing provisions of this Article 7,
following the date which is six (6) months from the Closing Date, Lender shall
not unreasonably withhold, delay or condition its consent to a transfer of any
Parcel in its entirety (a "PARTIAL ASSUMPTION") to, and the related assumption
of the Loan by, a Transferee provided that each of the following terms and
conditions are satisfied:
(a) Borrower complies with each of the conditions set forth in
Section 7.5 above (it being understood that the fee payable pursuant to Section
7.5(c) shall be calculated based on the outstanding principal balance of the
Allocated Loan Amount for each of the Parcels which are part of the Partial
Asssumption);
(b) The aggregate Allocated Loan Amount for each of the Parcels
which are, or have been, subject to a Partial Assumption shall not exceed forty
percent (40%) of the aggregate Allocated Loan Amount of each of the Parcels as
of the date hereof.
(c) Lender shall have determined that the Debt Service Coverage
Ratio with respect to each of (i) the Parcel which is subject to the Partial
Assumption and (b) the Remaining Properties after giving effect to the
assumption (assuming a loan amount equal to the principal balance of the Note
which is not being assumed immediately following the subject assumption)
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shall be at least equal to 1.275 to 1.0 for the twelve (12) full calendar months
immediately preceding the assumption of the portion of the Loan pursuant to this
Section 7.6.
(d) Borrower shall prepare all necessary documents to modify this
Agreement and to amend and restate the Note and issue two substitute notes, one
note having a principal balance equal to Partial Assumption Amount for the
subject Parcel (the "ASSUMED Note"), and the other note having a principal
balance equal to the excess of (A) the original principal amount of the Loan,
over (B) the amount of the Assumed Note (the "UNASSUMED NOTE"). The Assumed Note
and Unassumed Note shall have identical terms as the Note except for the
principal balance; and, in connection therewith, the Monthly Payment Amount and
the amount of each such payment applied to principal thereafter shall be divided
between the Assumed Note and the Unassumed Note in the same proportion as the
unpaid principal balance (in each case immediately after a Partial Assumption)
of the Assumed Note and the Unassumed Note, as the case may be, bears to the
aggregate principal balance due under the Assumed Note and the Unassumed Note
immediately after the Partial Assumption. An Assumed Note may not be the subject
of any further assumption.
In connection with a Partial Assumption, Lender may condition its
consent upon the related transferee agreeing to (a) make additional deposits
into the Reserve Accounts, and/or (b) the related transferee establishing such
additional reserves with Lender as Lender may required in its reasonable
discretion; provided, however, the such deposits or additional reserves shall be
determined by Lender based upon its standard underwriting criteria and the
amounts shall be computed in accordance with the provisions set forth in Article
IX hereof. Upon Borrower's compliance with the provisions of this Section 7.6,
Lender shall release the Parcel subject to the Partial Assumption from the cross
collateralization and cross default provisions contained in this Agreement and
the other Loan Documents.
SECTION 7.7. EASEMENTS; LICENSES.
Notwithstanding anything contained to the contrary herein, Borrower
may grant easements, covenants, reservations and rights of way with respect to
the Property in the ordinary course of business for utilities, ingress and
egress and other similar purposes provided such grants, transfers, conveyances
or easements (i) do not impair the utility or operation of the affected Parcel,
materially adversely effect the value of such Parcel or adversely affect
Borrower's ability to repay the Loan and (ii) shall be in form reasonably
acceptable to Lender, and, in such case, Lender shall subordinate the Lien of
the Security Instrument to such grant, easement, transfer or conveyance.
ARTICLE VIII
INSURANCE; CASUALTY; CONDEMNATION; RESTORATION
SECTION 8.1. INSURANCE
(a) Borrower shall obtain and maintain, or cause to be maintained,
at all times insurance for Borrower and the Property providing at least the
following coverages:
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(i) comprehensive "all risk" insurance on the Improvements and the
Personal Property, in each case (A) in an amount equal to one hundred
percent (100%) of the "Full Replacement Cost," which for purposes of this
Agreement shall mean actual replacement value (exclusive of costs of
excavations, foundations, underground utilities and footings) with a
waiver of depreciation; (B) containing an agreed amount endorsement with
respect to the Improvements and Personal Property waiving all co-insurance
provisions; (C) providing for no deductible in excess of $100,000 for all
such insurance coverage; and (D) if any of the Improvements or the use of
the Property shall at any time constitute legal non-conforming structures
or uses, providing coverage for contingent liability from Operation of
Building Laws, Demolition Costs and Increased Cost of Construction
Endorsements and containing an "Ordinance or Law Coverage" or
"Enforcement" endorsement. In addition, Borrower shall obtain: (y) if any
portion of the Improvements (it being understood that for purposes of this
clause (y) only, Improvements shall only mean that portion of the
Improvements consisting of a clubhouse or community center) is currently
or at any time in the future located in a "special flood hazard area"
designated by the Federal Emergency Management Agency, flood hazard
insurance in an amount equal to the maximum amount of such insurance
available under the National Flood Insurance Act of 1968, the Flood
Disaster Protection Act of 1973 or the National Flood Insurance Reform Act
of 1994, as each may be amended; and (z) earthquake insurance in amounts
and in form and substance reasonably satisfactory to Lender in the event
the Property is located in an area with a high degree of seismic risk,
provided that the insurance pursuant to clauses (y) and (z) hereof shall
be on terms consistent with the comprehensive all risk insurance policy
required under this subsection (i);
(ii) Commercial General Liability insurance against claims for
personal injury, bodily injury, death or property damage occurring upon,
in or about the Property, with such insurance (A) to be on the so-called
"occurrence" form with a general aggregate limit of not less than
$2,000,000 and a per occurrence limit of not less than $1,000,000; and (B)
to cover at least the following hazards: (1) premises and operations; (2)
products and completed operations; (3) independent contractors; (4)
blanket contractual liability; and (5) contractual liability covering the
indemnities contained in Article 12 and Article 14 hereof to the extent
the same is available;
(iii) loss of rents insurance or business income insurance, as
applicable, (A) with loss payable to Lender; (B) covering all risks
required to be covered by the insurance provided for in subsection (i)
above; and (C) which provides that after the physical loss to the
Improvements and Personal Property occurs, the loss of rents or income, as
applicable, will be insured until completion of Restoration or the
expiration of twelve (12) months, whichever first occurs, and
notwithstanding that the policy may expire prior to the end of such
period; and (D) which contains an extended period of indemnity endorsement
which provides that after the physical loss to the Improvements and
Personal Property has been repaired, the continued loss of income will be
insured until such income either returns to the same level it was at prior
to the loss, or the expiration of six (6) months from the date that the
Property is repaired or replaced and operations are resumed, whichever
first occurs, and notwithstanding that the policy may expire prior to the
end of such period. The amount of such loss of rents or business income
insurance, as applicable, shall be determined prior to the date hereof and
at least
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once each year thereafter based on Borrower's reasonable estimate of the
gross income from the Property for the succeeding period of coverage
required above. All proceeds payable to Lender pursuant to this subsection
shall be held by Lender and shall be applied to the obligations secured by
the Loan Documents from time to time due and payable hereunder and under
the Note; provided, however, that nothing herein contained shall be deemed
to relieve Borrower of its obligations to pay the obligations secured by
the Loan Documents on the respective dates of payment provided for in the
Note, this Agreement and the other Loan Documents except to the extent
such amounts are actually paid out of the proceeds of such loss of rents
or business income insurance, as applicable;
(iv) at all times during which structural construction, repairs or
alterations are being made with respect to the Improvements, and only if
the Property coverage form does not otherwise apply, (A) owner's
contingent or protective liability insurance covering claims not covered
by or under the terms or provisions of the above mentioned commercial
general liability insurance policy; and (B) the insurance provided for in
subsection (i) above written in a so-called Builder's Risk Completed Value
form (1) on a non-reporting basis, (2) against "all risks" insured against
pursuant to subsection (i) above, (3) including permission to occupy the
Property, and (4) with an agreed amount endorsement waiving co-insurance
provisions;
(v) workers' compensation, subject to the statutory limits of the
State, and employer's liability insurance in respect of any work or
operations on or about the Property, or in connection with the Property or
its operation (if applicable);
(vi) comprehensive equipment breakdown insurance, if applicable, in
amounts as shall be reasonably required by Lender on terms consistent with
the commercial property insurance policy required under subsection (i)
above;
(vii) excess liability insurance in an amount not less than
$50,000,000 per occurrence on terms consistent with the commercial general
liability insurance required under subsection (ii) above; and
(viii) insurance against damage resulting from acts of terrorism, on
terms consistent with the commercial property insurance policy required
under subsection (i) above and on terms consistent with the business
income policy required under subsection (iii) above; provided such
coverage shall not be in an amount less than $5,000,000.00; provided,
further, Borrower shall only be required to maintain such terrorism
insurance (and in no way limiting the coverage for the all risk insurance
except as such coverage relates to perils resulting from terrorism) equal
to the lesser of (A) the amount of coverage Borrower is required to
maintain pursuant to this clause (viii) or (B) in the event that terrorism
coverage is not available at commercially reasonable rates at any time,
then the maximum amount of coverage that Borrower can obtain by paying an
annual premium in the amount of 200% of the portion of the Borrower's
insurance premiums allocable to terrorism insurance coverage as of the
date hereof.
(ix) upon sixty (60) days' written notice, such other reasonable
insurance and in such reasonable amounts as Lender from time to time may
reasonably request against
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such other insurable hazards which at the time are commonly insured
against for property similar to the Property located in or around the
region in which the Property is located.
(b) All insurance provided for in Section 8.1(a) shall be obtained
under valid and enforceable policies (collectively, the "POLICIES" or in the
singular, the "POLICY"), and shall be subject to the reasonable approval of
Lender as to insurance companies, amounts, deductibles, loss payees and
insureds. The Policies shall be issued by financially sound and responsible
insurance companies authorized to do business in the State and having (i) with
respect to the primary layer(s) of coverage (which shall not be less than
$5,000,000.00) a claims paying ability rating of "A" or better by S&P or such
other Rating Agency approved by Lender, and (ii) with respect to additional
layers of coverage, a claims paying ability rating of "A" or better by S&P or
such other Rating Agency approved by Lender. To the extent such Policies are not
available as of the Closing Date, Borrower shall deliver certified copies of all
Policies to Lender not later than thirty (30) days after the Closing Date. Not
less than ten (10) days prior to the expiration dates of the Policies
theretofore furnished to Lender, renewal Policies accompanied by evidence
satisfactory to Lender of payment of the premiums due thereunder (the "INSURANCE
PREMIUMS") shall be delivered by Borrower to Lender.
(c) Any blanket insurance Policy shall specifically allocate to the
Property the amount of coverage from time to time required hereunder and shall
otherwise provide the same protection as would a separate Policy insuring only
the Property in compliance with the provisions of Section 8.1(a).
(d) All Policies provided for or contemplated by Section 8.1(a),
except for the Policy referenced in Section 8.1(a)(v), shall name Borrower as
the insured and Lender as the additional insured, as its interests may appear,
and in the case of property damage, equipment breakdown, flood and earthquake
insurance, shall contain a so-called New York standard non-contributing
mortgagee clause in favor of Lender providing that the loss thereunder shall be
payable to Lender.
(e) All Policies provided for in Section 8.1(a) shall contain
clauses or endorsements to the effect that:
(i) no act or negligence of Borrower, or anyone acting for Borrower,
or of any Tenant or other occupant, or failure to comply with the
provisions of any Policy, which might otherwise result in a forfeiture of
the insurance or any part thereof, shall in any way affect the validity or
enforceability of the insurance insofar as Lender is concerned;
(ii) the Policies shall not be materially changed (other than to
increase the coverage provided thereby) or canceled without at least
thirty (30) days' prior written notice to Lender and any other party named
therein as an additional insured;
(iii) the issuers thereof shall give written notice to Lender if the
Policies have not been renewed thirty (30) days prior to its expiration;
and
(iv) Lender shall not be liable for any Insurance Premiums thereon
or subject to any assessments thereunder.
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(f) If at any time Lender is not in receipt of written evidence that
all insurance required hereunder is in full force and effect, Lender shall have
the right, without notice to Borrower, to take such action as Lender deems
necessary to protect its interest in the Property, including, without
limitation, obtaining such insurance coverage as Lender in its sole discretion
deems appropriate. All premiums incurred by Lender in connection with such
action or in obtaining such insurance and keeping it in effect shall be paid by
Borrower to Lender upon demand and, until paid, shall be secured by the Mortgage
and shall bear interest at the Default Rate.
SECTION 8.2. CASUALTY
If any Parcel shall be damaged or destroyed, in whole or in part, by
fire or other casualty (a "CASUALTY"), Borrower shall give prompt notice of such
damage to Lender and shall promptly commence and diligently prosecute the
Restoration of such Parcel in accordance with Section 8.4, provided Lender makes
the Net Proceeds available pursuant to Section 8.4. Borrower shall pay all costs
of such Restoration to the extent such costs are not covered by insurance.
Lender may, but shall not be obligated to make proof of loss if not made timely
by Borrower. Borrower shall adjust all claims for Insurance Proceeds in
consultation with, and approval of, Lender; provided, however, if an Event of
Default has occurred and is continuing, Lender shall have the exclusive right to
participate in the adjustment of all claims for Insurance Proceeds.
SECTION 8.3. CONDEMNATION
Borrower shall promptly give Lender notice of the actual or
threatened commencement of any proceeding for the Condemnation of any Parcel of
which Borrower has knowledge and shall deliver to Lender copies of any and all
papers served in connection with such proceedings. Lender may participate in any
such proceedings, and Borrower shall from time to time deliver to Lender all
instruments requested by it to permit such participation. Borrower shall, at its
expense, diligently prosecute any such proceedings, and shall consult with
Lender, its attorneys and experts, and cooperate with them in the carrying on or
defense of any such proceedings. Notwithstanding any taking by any public or
quasi-public authority through Condemnation or otherwise (including but not
limited to any transfer made in lieu of or in anticipation of the exercise of
such taking), Borrower shall continue to pay the Debt at the time and in the
manner provided for its payment in the Note and in this Agreement and the Debt
shall not be reduced until any Award shall have been actually received and
applied by Lender, after the deduction of expenses of collection, to the
reduction or discharge of the Debt. Lender shall not be limited to the interest
paid on the Award by the condemning authority but shall be entitled to receive
out of the Award interest at the rate or rates provided herein or in the Note.
If any Parcel or any portion thereof is taken by a condemning authority,
Borrower shall promptly commence and diligently prosecute the Restoration of
such Parcel and otherwise comply with the provisions of Section 8.4, provided
Lender makes the Net Proceeds available pursuant to Section 8.4. If such Parcel
is sold, through foreclosure or otherwise, prior to the receipt by Lender of the
Award, Lender shall have the right, whether or not a deficiency judgment on the
Note shall have been sought, recovered or denied, to receive the Award, or a
portion thereof sufficient to pay the Debt.
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SECTION 8.4. RESTORATION
The following provisions shall apply in connection with the
Restoration of any Parcel:
(a) If the Net Proceeds shall be less than $250,000 and the costs of
completing the Restoration shall be less than $250,000, the Net Proceeds will be
disbursed by Lender to Borrower upon receipt, provided that all of the
conditions set forth in Section 8.4(b)(i) are met (except for Section
8.1(b)(i)(J)) and Borrower delivers to Lender a written undertaking to
expeditiously commence and to satisfactorily complete with due diligence the
Restoration in accordance with the terms of this Agreement; provided, however,
with respect to the budget delivered to Lender pursuant to Section 8.4(b)(i)(I),
such budget is not subject to the prior approval of Lender.
(b) If the Net Proceeds are equal to or greater than $250,000 or the
costs of completing the Restoration are equal to or greater than $250,000,
Lender shall make the Net Proceeds available for the Restoration in accordance
with the provisions of this Section 8.4. The term "NET PROCEEDS" for purposes of
this Section 8.4 shall mean: (i) the net amount of all insurance proceeds
received by Lender pursuant to Section 8.1(a)(i), (iv), (vi) and (viii) as a
result of a Casualty, after deduction of its reasonable costs and expenses
(including, but not limited to, reasonable counsel fees), if any, in collecting
the same ("INSURANCE PROCEEDS"), or (ii) the net amount of the Award as a result
of a Condemnation, after deduction of its reasonable costs and expenses
(including, but not limited to, reasonable counsel fees), if any, in collecting
the same ("CONDEMNATION PROCEEDS"), whichever the case may be.
(i) The Net Proceeds shall be made available to Borrower for
Restoration provided that each of the following conditions are met:
(A) no Event of Default shall have occurred and be continuing;
(B) No later than the date the insurance described in Section
8.1(a)(iii) hereof expires or would expire, Tenants under Leases
covering in the aggregate at least fifty percent (50%) of the total
rentable space in the Parcel which has been demised under executed
and delivered Leases in effect as of the date of the occurrence of
such Casualty or Condemnation, whichever the case may be shall
remain in full force and effect during and after the completion of
the Restoration;
(C) Borrower shall commence the Restoration as soon as
reasonably practicable (but in no event later than sixty (60) days
after such Casualty or Condemnation or thirty (30) days after
adjustment of the Net Proceeds, whichever is later, whichever the
case may be, occurs) and shall diligently pursue the same to
satisfactory completion;
(D) Lender shall be satisfied that any operating deficits,
including all scheduled payments of principal and interest under the
Note, which will be incurred with respect to the Parcel as a result
of the occurrence of any such Casualty or Condemnation, whichever
the case may be, will be covered out of the
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insurance coverage referred to in Section 8.1(a)(iii) above or funds
provided by the Borrower;
(E) Lender shall be satisfied that the Restoration will be
completed on or before the earliest to occur of (1) six (6) months
prior to the Maturity Date, (2) such time as may be required under
applicable zoning law, ordinance, rule or regulation, or (3) the
expiration of the insurance coverage referred to in Section
8.1(a)(iii) unless Borrower Principal agrees to make capital
contributions to Borrower which are sufficient to make any payments
to Lender pursuant to the terms hereof;
(F) the Parcel and the use thereof after the Restoration will
be in compliance with and permitted under all Legal Requirements;
(G) the Restoration shall be done and completed by Borrower in
an expeditious and diligent fashion and in substantial compliance
with all applicable Legal Requirements;
(H) such Casualty or Condemnation, as applicable, does not
result in the loss of access to the Parcel or the Improvements;
(I) Borrower shall deliver, or cause to be delivered, to
Lender a signed detailed budget approved in writing by Borrower's
architect or engineer stating the entire cost of completing the
Restoration, which budget shall be reasonably acceptable to Lender;
and
(J) the Net Proceeds together with any cash or cash equivalent
deposited by Borrower with Lender are sufficient in Lender's
reasonable judgment to cover the cost of the Restoration.
(ii) The Net Proceeds shall be held by Lender until disbursements
commence, and, until disbursed in accordance with the provisions of this
Section 8.4, shall constitute additional security for the Debt and other
obligations under the Loan Documents. The Net Proceeds shall be disbursed
by Lender to, or as directed by, Borrower from time to time during the
course of the Restoration, upon receipt of evidence satisfactory to Lender
that (A) all the conditions precedent to such advance, including those set
forth in Section 8.4(b)(i), have been satisfied, (B) all materials
installed and work and labor performed (except to the extent that they are
to be paid for out of the requested disbursement) in connection with the
related Restoration item have been paid for in full, and (C) there exist
no notices of pendency, stop orders, mechanic's or materialman's liens or
notices of intention to file same, or any other liens or encumbrances of
any nature whatsoever on the Parcel which have not either been fully
bonded to the satisfaction of Lender and discharged of record or in the
alternative fully insured to the satisfaction of Lender by the title
company issuing the Title Insurance Policy. Notwithstanding the foregoing,
Insurance Proceeds from the Policies required to be maintained by Borrower
pursuant to Section 8.1(a)(iii) shall be controlled by Lender at all
times, shall not be subject to the
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provisions of this Section 8.4 and shall be used solely for the payment of
the obligations under the Loan Documents and Operating Expenses.
(iii) All plans and specifications required in connection with a
Restoration in excess of $250,000 shall be subject to prior review and
reasonable acceptance in all respects by Lender and by an independent
consulting engineer selected by Lender (the "RESTORATION CONSULTANT").
Lender shall have the use of the plans and specifications and all permits,
licenses and approvals required or obtained in connection with the
Restoration. The identity of the contractors, subcontractors and
materialmen engaged in the Restoration, as well as the contracts in excess
of $50,000 under which they have been engaged, shall be subject to prior
review and reasonable acceptance by Lender and the Restoration Consultant.
All costs and expenses incurred by Lender in connection with making the
Net Proceeds available for the Restoration, including, without limitation,
reasonable counsel fees and disbursements and the Restoration Consultant's
fees, shall be paid by Borrower.
(iv) In no event shall Lender be obligated to make disbursements of
the Net Proceeds in excess of an amount equal to the costs actually
incurred from time to time for work in place as part of the Restoration,
as certified by the Restoration Consultant, minus the Restoration
Retainage. The term "RESTORATION RETAINAGE" shall mean an amount equal to
ten percent (10%) of the costs actually incurred for work in place as part
of the Restoration, as certified by the Restoration Consultant, until the
Restoration has been completed. The Restoration Retainage shall be reduced
to five percent (5%) of the costs incurred upon receipt by Lender of
satisfactory evidence that fifty percent (50%) of the Restoration has been
completed. The Restoration Retainage shall in no event, and
notwithstanding anything to the contrary set forth above in this Section
8.4(b), be less than the amount actually held back by Borrower from
contractors, subcontractors and materialmen engaged in the Restoration.
The Restoration Retainage shall not be released until the Restoration
Consultant certifies to Lender that the Restoration has been completed in
accordance with the provisions of this Section 8.4(b) and that all
approvals necessary for the re-occupancy and use of the Parcel have been
obtained from all appropriate Governmental Authorities, and Lender
receives evidence satisfactory to Lender that the costs of the Restoration
have been paid in full or will be paid in full out of the Restoration
Retainage; provided, however, that Lender will release the portion of the
Restoration Retainage being held with respect to any contractor,
subcontractor or materialman engaged in the Restoration as of the date
upon which the Restoration Consultant certifies to Lender that the
contractor, subcontractor or materialman has satisfactorily completed all
work and has supplied all materials in accordance with the provisions of
the contractor's, subcontractor's or materialman's contract, the
contractor, subcontractor or materialman delivers the lien waivers and
evidence of payment in full of all sums due to the contractor,
subcontractor or materialman as may be reasonably requested by Lender or
by the title company issuing the Title Insurance Policy, and Lender
receives an endorsement to the Title Insurance Policy insuring the
continued priority of the lien of the Mortgage and evidence of payment of
any premium payable for such endorsement. If required by Lender, the
release of any such portion of the Restoration Retainage shall be approved
by the surety company, if any, which has issued
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a payment or performance bond with respect to the contractor,
subcontractor or materialman.
(v) Lender shall not be obligated to make disbursements of the Net
Proceeds more frequently than once every calendar month.
(vi) If at any time the Net Proceeds or the undisbursed balance
thereof shall not, in the reasonable opinion of Lender in consultation
with the Restoration Consultant, be sufficient to pay in full the balance
of the costs which are estimated by the Restoration Consultant to be
incurred in connection with the completion of the Restoration, Borrower
shall deposit the deficiency (the "NET PROCEEDS DEFICIENCY") with Lender
before any further disbursement of the Net Proceeds shall be made. The Net
Proceeds Deficiency deposited with Lender shall be held by Lender and
shall be disbursed for costs actually incurred in connection with the
Restoration on the same conditions applicable to the disbursement of the
Net Proceeds, and until so disbursed pursuant to this Section 8.4(b) shall
constitute additional security for the Debt and other obligations under
the Loan Documents.
(vii) The excess, if any, of the Net Proceeds and the remaining
balance, if any, of the Net Proceeds Deficiency deposited with Lender
after the Restoration Consultant certifies to Lender that the Restoration
has been completed in accordance with the provisions of this Section
8.4(b), and the receipt by Lender of evidence satisfactory to Lender that
all costs incurred in connection with the Restoration have been paid in
full, shall be remitted by Lender to Borrower, provided no Event of
Default shall have occurred and shall be continuing under the Note, this
Agreement or any of the other Loan Documents.
(c) All Net Proceeds not required (i) to be made available for the
Restoration or (ii) to be returned to Borrower as excess Net Proceeds pursuant
to Section 8.4(b)(vii) may (x) be retained and applied by Lender toward the
payment of the Debt whether or not then due and payable in such order, priority
and proportions as Lender in its sole discretion shall deem proper, or, (y) at
the sole discretion of Lender, the same may be paid, either in whole or in part,
to Borrower for such purposes and upon such conditions as Lender shall
designate.
(d) In the event of foreclosure of the Mortgage, or other transfer
of title to the Parcel in extinguishment in whole or in part of the Debt, all
right, title and interest of Borrower in and to the Policies then in force
concerning the Parcel and all proceeds payable thereunder shall thereupon vest
in the purchaser at such foreclosure, Lender or other transferee in the event of
such other transfer of title.
ARTICLE IX
RESERVE FUNDS
SECTION 9.1. REQUIRED REPAIRS
(a) Borrower shall make the repairs and improvements to the Property
set forth on Schedule I and as more particularly described in the Physical
Conditions Report
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prepared in connection with the closing of the Loan (such repairs hereinafter
referred to as "REQUIRED REPAIRS"). Borrower shall complete the Required Repairs
in a good and workmanlike manner on or before the date that is twelve (12)
months from the date hereof or within such other time frame for completion
specifically set forth on Schedule I.
(b) Borrower shall establish on the date hereof an account with
Lender or Lender's agent to fund the Required Repairs (the "REQUIRED REPAIR
ACCOUNT") into which Borrower shall deposit on the date hereof the amount of
$0.00. Amounts so deposited shall hereinafter be referred to as the "REQUIRED
REPAIR FUNDS".
SECTION 9.2. REPLACEMENTS
(a) On an ongoing basis throughout the term of the Loan, Borrower
shall make capital repairs, replacements and improvements necessary to keep the
Property in good order and repair and in a good marketable condition or prevent
deterioration of the Property (collectively, the "REPLACEMENTS"). Borrower shall
complete all Replacements in a good and workmanlike manner as soon as
commercially reasonable after commencing to make each such Replacement.
(b) Upon the commencement of a Reserve DSCR Period Borrower shall
establish an Eligible Account with Lender or Lender's agent to fund the
Replacements (the "REPLACEMENT RESERVE ACCOUNT"). Borrower shall deposit, during
the continuance of a Reserve DSCR Period, one-twelfth (1/12) of the sum $50.00
per pad site on each Parcel (the "Replacement Reserve Monthly Deposit") into the
Replacement Reserve Account on each Scheduled Payment Date. Amounts so deposited
shall hereinafter be referred to as "Replacement Reserve Funds".
SECTION 9.3. INTENTIONALLY RESERVED
SECTION 9.4. REQUIRED WORK
Borrower shall diligently pursue all Required Repairs and
Replacements (collectively, the "Required Work") to completion in accordance
with the following requirements:
(a) Lender reserves the right, at its option, to approve all
contracts or work orders with materialmen, mechanics, suppliers, subcontractors,
contractors or other parties providing labor or materials in connection with the
Required Work to the extent such contracts or work orders exceed $50,000, which
approval shall not be unreasonably withheld, conditioned or delayed. Upon
Lender's request, Borrower shall assign any contract or subcontract to Lender.
(b) In the event Lender determines in its reasonable discretion that
any Required Repair is not being or has not been performed in a workmanlike or
timely manner (consistent with the time deadlines provided herein). Upon written
notice to Borrower and Borrower's failure to commence performance thereof within
thirty (30) days, weather permitting, Lender shall have the option to withhold
disbursement for such unsatisfactory Required Repairs and to proceed under
existing contracts or to contract with third parties to complete such Required
Repairs and to apply the Required Repair Funds, toward the labor and materials
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necessary to complete such Required Repairs and to exercise any and all other
remedies available to Lender upon an Event of Default hereunder.
(c) In order to facilitate Lender's completion of the Required
Repair, effective only when Lender has the right to exercise its rights under
Section 9.4(b), Borrower grants Lender the right to enter onto the Property and
perform any and all work and labor necessary to complete Required Work and/or
employ watchmen to protect the Property from damage. All sums so expended by
Lender, to the extent not from the Reserve Funds, shall be deemed to have been
advanced under the Loan to Borrower and secured by the Mortgage. For this
purpose and subject to the limitations contained in the first sentence of this
Section 9.4(c), Borrower constitutes and appoints Lender its true and lawful
attorney-in-fact with full power of substitution to complete or undertake the
Required Repair in the name of Borrower upon Borrower's failure to do so in a
workmanlike and timely manner. Such power of attorney shall be deemed to be a
power coupled with an interest and cannot be revoked. Borrower empowers said
attorney-in-fact as follows: (i) to use any of the Reserve Funds for the purpose
of making or completing the Required Repair; (ii) to make such additions,
changes and corrections to the Required Repair as shall be necessary or
desirable to complete the Required Repair as set forth herein and the schedules
hereto; (iii) to employ or retain such contractors, subcontractors, agents,
architects and inspectors as shall be required for such purposes at commercially
reasonable prices to the extent such work is not being performed by contractors
or subcontractors retained by Borrower; (iv) to pay, settle or compromise all
existing bills and claims which are or may become Liens against the Property, or
as may be necessary or desirable for the completion of the Required Repair, or
for clearance of title; (v) to execute all applications and certificates in the
name of Borrower which may be required by any of the contract documents; (vi) to
prosecute and defend all actions or proceedings in connection with the Property
or the rehabilitation and repair of the Property; and (vii) to do any and every
act which Borrower might do on its own behalf to fulfill the terms of this
Section 9.4.
(d) Nothing in this Section 9.4 shall: (i) make Lender responsible
for making or completing the Required Repair; (ii) require Lender to expend
funds in addition to the Reserve Funds to make or complete any Required Repair;
(iii) obligate Lender to proceed with the Required Repair; or (iv) obligate
Lender to demand from Borrower additional sums to make or complete any Required
Repair.
(e) Borrower shall permit Lender and Lender's agents and
representatives (including, without limitation, Lender's engineer, architect, or
inspector) or third parties performing Required Repair pursuant to this Section
9.4 to enter onto the Property upon reasonable advance notice during normal
business hours (subject to the rights of tenants under their Leases) to inspect
the progress of any Required Repair and all materials being used in connection
therewith, to examine all plans and shop drawings relating to such Required
Repair which are or may be kept at the Property, and to complete any Required
Repair made pursuant to this Section 9.4. Borrower shall cause all contractors
and subcontractors to cooperate with Lender and Lender's representatives or such
other persons described above in connection with inspections described in this
Section 9.4 or the completion of Required Repair pursuant to this Section 9.4.
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(f) Lender may, to the extent any Required Work would reasonably
require an inspection of the Property, inspect the Property at Borrower's
expense prior to making a disbursement of the Reserve Funds in order to verify
completion of the Required Work for which reimbursement is sought. If Borrower
has reserved any amounts for such Required Repair pursuant to Section 9.1
hereof, Borrower shall pay Lender a reasonable inspection fee not exceeding
$500.00 for each such inspection. Lender may require that such inspection be
conducted by an appropriate independent qualified professional selected by
Lender and/or may require a copy of a certificate of completion by an
independent qualified professional acceptable to Lender prior to the
disbursement of the Reserve Funds. Borrower shall pay the expense of the
inspection as required hereunder, whether such inspection is conducted by Lender
or by an independent qualified professional.
(g) The Required Work and all materials, equipment, fixtures, or any
other item comprising a part of any Required Work shall be constructed,
installed or completed, as applicable, free and clear of all mechanic's,
materialman's or other Liens (except for Permitted Encumbrances).
(h) Before each disbursement of the Reserve Funds in excess of
$50,000, Lender may require Borrower to provide Lender with a search of title to
the applicable Parcel effective to the date of the disbursement, which search
shows that no mechanic's or materialmen's or other Liens of any nature have been
placed against the Parcel since the date of recordation of the Mortgage and that
title to the Parcel is free and clear of all Liens (except for Permitted
Encumbrances).
(i) All Required Work shall comply with all Legal Requirements and
applicable insurance requirements including, without limitation, applicable
building codes, special use permits, environmental regulations, and requirements
of insurance underwriters.
(j) Borrower hereby assigns to Lender all rights and claims Borrower
may have against all Persons supplying labor or materials in connection with the
Required Work; provided, however, that Lender may not pursue any such rights or
claims unless an Event of Default has occurred and remains uncured.
SECTION 9.5. RELEASE OF RESERVE FUNDS
(a) Upon written request from Borrower and satisfaction of the
requirements set forth in this Agreement, Lender shall disburse to Borrower
amounts from (i) the Required Repair Account to the extent necessary to
reimburse Borrower for the actual costs of each Required Repair (but not
exceeding 125% of the original estimated cost of such Required Repair as set
forth on Schedule I, unless Lender has agreed to reimburse Borrower for such
excess cost pursuant to Section 9.5(f)) or (ii) the Replacement Reserve Account
to the extent necessary to reimburse Borrower for the actual costs of any
approved Replacements. Notwithstanding the preceding sentence, in no event shall
Lender be required to (x) disburse any amounts which would cause the amount of
funds remaining in the Required Repair Account after any disbursement (other
than with respect to the final disbursement) to be less than 125% of the then
current estimated cost of completing all remaining Required Repairs for the
Property, (y) disburse funds from any of the Reserve Accounts if an Event of
Default exists, or (z) disburse
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funds from the Replacement Reserve Account to reimburse Borrower for the costs
of routine repairs or maintenance to the Property or for costs which are to be
reimbursed from funds held in the Required Repair Account.
(b) Each request for disbursement from any of the Reserve Accounts
shall be on a form provided or approved by Lender and shall (i) include copies
of invoices for all items or materials purchased and all labor or services
provided and (ii) specify (A) the Required Work for which the disbursement is
requested, (B) the quantity and price of each item purchased, if the Required
Work includes the purchase or replacement of specific items, (C) the price of
all materials (grouped by type or category) used in any Required Work other than
the purchase or replacement of specific items, and (D) the cost of all
contracted labor or other services applicable to each Required Work for which
such request for disbursement is made. With each request Borrower shall certify
that all Required Work has been performed in accordance with all Legal
Requirements. Except as provided in Section 9.5(d), each request for
disbursement shall be made only after completion of the Required Repair or
Replacement (or the portion thereof completed in accordance with Section
9.5(d)), as applicable, for which disbursement is requested. Borrower shall
provide Lender evidence satisfactory to Lender in its reasonable judgment of
such completion or performance.
(c) Borrower shall pay all invoices in connection with the Required
Work with respect to which a disbursement is requested prior to submitting such
request for disbursement from the Reserve Accounts or, at the request of
Borrower, Lender will issue joint checks, payable to Borrower and the
contractor, supplier, materialman, mechanic, subcontractor or other party to
whom payment is due in connection with the Required Work. In the case of
payments made by joint check, Lender may require a waiver of lien from each
Person receiving payment prior to Lender's disbursement of the Reserve Funds. In
addition, as a condition to any disbursement, Lender may require Borrower to
obtain lien waivers from each contractor, supplier, materialman, mechanic or
subcontractor who receives payment in an amount equal to or greater than $50,000
for completion of its work or delivery of its materials. Any lien waiver
delivered hereunder shall conform to all Legal Requirements and shall cover all
work performed and materials supplied (including equipment and fixtures) for the
Property by that contractor, supplier, subcontractor, mechanic or materialman
through the date covered by the current disbursement request (or, in the event
that payment to such contractor, supplier, subcontractor, mechanic or
materialmen is to be made by a joint check, the release of lien shall be
effective through the date covered by the previous release of funds request).
(d) If (i) the cost of any item of Required Work exceeds $50,000,
(ii) the contractor performing such Required Work requires periodic payments
pursuant to terms of a written contract, and (iii) Lender has approved in
writing in advance such periodic payments (provided, Lender shall not be
entitled to approve the contract if Lender has already approved such contract
pursuant to the provisions of Section 9.4(a)), a request for disbursement from
the Reserve Accounts may be made after completion of a portion of the work under
such contract, provided (A) such contract requires payment upon completion of
such portion of work, (B) the materials for which the request is made are on
site at the Property and are properly secured or have been installed in the
Property, and (C) all other conditions in this Agreement for disbursement have
been satisfied.
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(e) Borrower shall not make a request for, nor shall Lender have any
obligation to make, any disbursement from any Reserve Account more frequently
than once in any calendar month and (except in connection with the final
disbursement) in any amount less than the lesser of (i) $10,000 or (ii) the
total cost of the Required Work for which the disbursement is requested.
(f) In the event any Borrower requests a disbursement from the
Required Repair Account to reimburse Borrower for the actual cost of labor or
materials used in connection with repairs or improvements other than the
Required Repairs specified on Schedule I, or for a Required Repair to the extent
the cost of such Required Repair exceeds 125% of the estimated cost of such
Required Repair as set forth on Schedule I (in either case, an "ADDITIONAL
REQUIRED REPAIR"), Borrower shall disclose in writing to Lender the reason why
funds in the Required Repair Account should be used to pay for such Additional
Required Repair. If Lender determines that (i) such Additional Required Repair
is of the type intended to be covered by the Required Repair Account, (ii) costs
for such Additional Required Repair are reasonable, (iii) the funds in the
Required Repair Account are sufficient to pay for such Additional Required
Repair and all other Required Repairs for the Property specified on Schedule I,
(iv) such Additional Required Repair is not covered or is not of the type
intended to be covered by the Replacement Reserve Account, and (v) all other
conditions for disbursement under this Agreement have been met, Lender may
disburse funds from the Required Repair Account.
(g) Intentionally reserved.
(h) Lender's disbursement of any Reserve Funds or other
acknowledgment of completion of any Required Work in a manner satisfactory to
Lender shall not be deemed a certification or warranty by Lender to any Person
that the Required Work has been completed in accordance with Legal Requirements.
(i) If the funds in any Reserve Account should exceed the amount of
payments actually applied by Lender for the purposes of the account, Lender
shall return any excess to Borrower, unless at the time Borrower is required to
make future payments to the Reserve Account, in which case Lender may, in its
discretion, credit such excess against future payments to be made to that
Reserve Account. In allocating any such excess, Lender may deal with the Person
shown on Lender's records as being the owner of the Property. If at any time
Lender reasonably determines that the Reserve Funds are not or will not be
sufficient to make the required payments, Lender shall notify Borrower of such
determination and Borrower shall pay to Lender any amount necessary to make up
the deficiency within ten (10) days after notice from Lender to Borrower
requesting payment thereof.
(j) The insufficiency of any balance in any of the Reserve Accounts
shall not relieve Borrower from its obligation to fulfill all preservation and
maintenance covenants in the Loan Documents.
(k) Upon the earlier to occur of (i) the timely completion of all
Required Repairs and any Additional Required Repairs, if any, in accordance with
the requirements of this Agreement, as verified by Lender in its reasonable
discretion, or (ii) the payment in full of the Debt, all amounts remaining on
deposit, if any, in the Required Repair Account shall be returned
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to Borrower or the Person shown on Lender's records as being the owner of the
Property and no other party shall have any right or claim thereto.
(l) Upon payment in full of the Debt, all amounts remaining on
deposit, if any, in the Replacement Reserve Account shall be returned to
Borrower or the Person shown on Lender's records as being the owner of the
Property and no other party shall have any right or claim thereto.
SECTION 9.6. TAX AND INSURANCE RESERVE FUNDS
Upon the commencement of a Reserve DSCR Period Borrower shall
establish an account with Lender or Lender's agent sufficient to discharge
Borrower's obligations for the payment of Taxes and Insurance Premiums pursuant
to Section 5.4 and Section 8.1 hereof (the "TAX AND INSURANCE RESERVE ACCOUNT"),
which amount, when added to the required monthly deposits set forth in the next
sentence, is sufficient to make the payments of Taxes and Insurance Premiums as
required herein. Borrower shall deposit into the Tax and Insurance Reserve
Account on each Scheduled Payment Date (a) one-twelfth of the Taxes that Lender
estimates will be payable during the next ensuing twelve (12) months or such
higher amount necessary to accumulate with Lender sufficient funds to pay all
such Taxes at least thirty (30) days prior to the earlier of (i) the date that
the same will become delinquent and (ii) the date that additional charges or
interest will accrue due to the non-payment thereof, and (b) except to the
extent Lender has waived the insurance escrow because the insurance required
hereunder is maintained under a blanket insurance Policy acceptable to Lender in
accordance with Section 8.1(c), one-twelfth of the Insurance Premiums that
Lender estimates will be payable during the next ensuing twelve (12) months for
the renewal of the coverage afforded by the Policies upon the expiration thereof
or such higher amount necessary to accumulate with Lender sufficient funds to
pay all such Insurance Premiums at least thirty (30) days prior to the
expiration of the Policies (said amounts in (a) and (b) above hereinafter called
the "TAX AND INSURANCE RESERVE FUNDS"). Lender will apply the Tax and Insurance
Reserve Funds to payments of Taxes and Insurance Premiums required to be made by
Borrower pursuant to Section 5.4 and Section 8.1 hereof. In making any
disbursement from the Tax and Insurance Reserve Account, Lender may do so
according to any ▇▇▇▇, statement or estimate procured from the appropriate
public office or tax lien service (with respect to Taxes) or insurer or agent
(with respect to Insurance Premiums), without inquiry into the accuracy of such
▇▇▇▇, statement or estimate or into the validity of any tax, assessment, sale,
forfeiture, tax lien or title or claim thereof. If the amount of the Tax and
Insurance Reserve Funds shall exceed the amounts due for Taxes and Insurance
Premiums pursuant to Section 5.4 and Section 8.1 hereof, Lender shall, in its
sole discretion, return any excess to Borrower or credit such excess against
future payments to be made to the Tax and Insurance Reserve Account. In
allocating any such excess, Lender may deal with the person shown on Lender's
records as being the owner of the Property. Any amount remaining in the Tax and
Insurance Reserve Account after the Debt has been paid in full shall be returned
to Borrower or the person shown on Lender's records as being the owner of the
Property and no other party shall have any right or claim thereto. If at any
time Lender reasonably determines that the Tax and Insurance Reserve Funds are
not or will not be sufficient to pay Taxes and Insurance Premiums by the dates
set forth in (a) and (b) above, Lender shall notify Borrower of such
determination and Borrower shall pay to Lender any amount necessary to make up
the deficiency within ten (10) days after notice from Lender to Borrower
requesting payment
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thereof. Notwithstanding the foregoing, so long as (x) Borrower is maintaining
all or a portion of the insurance required under Section 8.1 through a blanket
insurance policy in accordance with the terms and conditions hereof, including,
but not limited to, Section 8.1(c) hereof and such blanket policy is acceptable
to Lender, (y) no Event of Default exists and (z) Borrower provides Lender with
evidence in form and substance satisfactory to Lender of the annual renewal of
such blanket insurance policy, Borrower shall not be required to escrow for
Insurance Premiums as set forth in this Section 9.6 for that portion of the
insurance required under Section 8.1 which is covered by the blanket insurance
policy in accordance with the terms hereof. In the event that, at any time, a
blanket insurance policy is not in effect in accordance with the terms and
conditions hereof, Borrower shall immediately provide for either (i) an
individual policy for the Property complying with the terms and conditions set
forth herein and shall immediately commence making deposits for Insurance
Premiums in accordance with this Section 9.6 or (ii) a replacement blanket
policy complying with the terms and conditions set forth herein and acceptable
to Lender. Notwithstanding the foregoing, Borrower shall not be required to make
monthly deposits for Taxes pursuant to cause (a) above, unless a Reserve DSCR
Period is continuing; provided, however, in the event a Reserve DSCR Period is
continuing, in lieu of making the monthly deposits required pursuant to clause
(a) above, Borrower may elect to deliver to Lender, within ten (10) Business
Days after the commencement of a Reserve DSCR Period, a Letter of Credit in an
amount equal to the Taxes that Lender estimates will be payable during the next
ensuing twelve (12) months. Borrower shall give Lender no less than five (5)
Business days notice of Borrower's election to deliver a Letter of Credit
pursuant to this Section 9.6 and Borrower shall pay to Lender all of Lender's
reasonable out-of-pocket costs and expenses in connection therewith. Borrower
shall not be entitled to draw from any such Letter of Credit. Upon thirty (30)
days notice to Lender, Borrower may replace a Letter of Credit with a cash
deposit to the Tax and Insurance Reserve Fund if a Letter of Credit has been
outstanding for more than six (6) months. Prior to the return of a Letter of
Credit, Borrower shall deposit an amount equal to the amount that would have
accumulated in the Tax and Insurance Reserve Fund and not been disbursed in
accordance with this Agreement if such Letter of Credit had not been delivered.
Borrower shall provide Lender with notice of any increases in the annual
payments for Taxes thirty (30) days prior to the effective date of any such
increase and any applicable Letter of Credit shall be increased by such
increased amount at least ten (10) days prior to the effective date of such
increase. So long as no Event of Default has occurred and is continuing, upon
the discontinuance of a Reserve DSCR Period, Lender shall release to Borrower
any Letter of Credit delivered to Lender pursuant to this Section 9.6 or return
to Borrower all funds in the Tax and Insurance Reserve Account.
SECTION 9.7. INTENTIONALLY RESERVED
SECTION 9.8. INTENTIONALLY RESERVED
SECTION 9.9. LETTERS OF CREDIT
(a) Each Letter of Credit delivered under this Agreement shall be
additional security for the payment of the Debt. Upon the occurrence of an Event
of Default, Lender shall have the right, at its option, to draw on any Letter of
Credit and to apply all or any part thereof to the payment of the items for
which such Letter of Credit was established or to apply each such Letter of
Credit to payment of the Debt in such order, proportion or priority as Lender
may
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determine. Any such application to the Debt shall be subject to the prepayment
premium set forth in Section 2.4(c) hereof.
(b) In addition to any other right Lender may have to draw upon a
Letter of Credit pursuant to the terms and conditions of this Agreement, Lender
shall have the additional rights to draw in full any Letter of Credit: (i) with
respect to any evergreen Letter of Credit, if Lender has received a notice from
the issuing bank that the Letter of Credit will not be renewed and a substitute
Letter of Credit is not provided at least thirty (30) days prior to the date on
which the outstanding Letter of Credit is scheduled to expire; (ii) with respect
to any Letter of Credit with a stated expiration date, if Lender has not
received a notice from the issuing bank that it has renewed the Letter of Credit
at least thirty (30) days prior to the date on which such Letter of Credit is
scheduled to expire and a substitute Letter of Credit is not provided at least
thirty (30) days prior to the date on which the outstanding Letter of Credit is
scheduled to expire; (iii) upon receipt of notice from the issuing bank that the
Letter of Credit will be terminated (except if the termination of such Letter of
Credit is permitted pursuant to the terms and conditions of this Agreement or a
substitute Letter of Credit is provided); or (iv) if Lender has received notice
that the bank issuing the Letter of Credit shall cease to be an Eligible
Institution; provided, however, so long as no Event of Default is continuing,
any funds resulting from draw made by Lender pursuant to the provisions of
clauses (i) - (iv) above shall be deposited into the Reserve Account for which
Borrower delivered such Letter of Credit. Notwithstanding anything to the
contrary contained in the above, Lender is not obligated to draw any Letter of
Credit upon the happening of an event specified in (i), (ii), (iii) or (iv)
above and shall not be liable for any losses sustained by Borrower due to the
insolvency of the bank issuing the Letter of Credit if Lender has not drawn the
Letter of Credit.
SECTION 9.10. RESERVE FUNDS GENERALLY
(a) (i) Except for the Required Repair Account and the Replacement
Reserve Account, no earnings or interest on the Reserve Accounts shall be
payable to Borrower. Neither Lender nor any loan servicer that at any time holds
or maintains such non-interest-bearing Reserve Accounts such Reserve Accounts or
any funds deposited therein in interest-bearing accounts. If Lender or any such
loan servicer elects in its sole and absolute discretion to keep or maintain any
non-interest-bearing Reserve Account or any funds deposited therein in an
interest-bearing account, the account shall be an Eligible Account and (A) such
funds shall not be invested except in Permitted Investments, and (B) all
interest earned or accrued thereon shall be for the account of and be retained
by Lender or such loan servicer.
(ii) Funds deposited in the Required Repair Account and the
Replacement Reserve Account shall be held in an interest-bearing business
savings account and interest shall be credited to Borrower. In no event
shall Lender or any loan servicer that at any time holds or maintains the
Required Repair Account or Replacement Reserve Account, as applicable, be
required to select any particular interest-bearing account or the account
that yields the highest rate of interest, provided that selection of the
account shall be consistent with the general standards at the time being
utilized by Lender or the loan servicer, as applicable, in establishing
similar accounts for loans of comparable type. All such interest shall be
and become part of the Required Repair Account and the Replacement Reserve
Account, as applicable, and shall be disbursed in accordance with
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Section 9.5 above; provided, however, that Lender may, at its election,
retain any such interest for its own account during the occurrence and
continuance of an Event of Default. Borrower agrees that it shall include
all interest on Required Repair Funds and Replacement Reserve Funds as the
income of Borrower (and, if Borrower is a partnership or other
pass-through entity, the partners, members or beneficiaries of Borrower,
as the case may be), and shall be the owner of the Required Repair Funds
and Replacement Reserve Funds for federal and applicable state and local
tax purposes, except to the extent that Lender retains any interest for
its own account during the occurrence and continuance of an Event of
Default as provided herein.
(b) Borrower grants to Lender a first-priority perfected security
interest in, and assigns and pledges to Lender all Reserve Funds now or
hereafter deposited in the related Reserve Accounts as additional security for
payment of the Debt. Until expended or applied in accordance herewith, the
Reserve Accounts and the Reserve Funds shall constitute additional security for
the Debt. The provisions of this Section 9.10 are intended to give Lender or any
subsequent holder of the Loan "control" of the Reserve Accounts within the
meaning of the UCC.
(c) The Reserve Accounts and any and all Reserve Funds now or
hereafter deposited in the Reserve Accounts shall be subject to the exclusive
dominion and control of Lender, which shall hold the Reserve Accounts and any or
all Reserve Funds now or hereafter deposited in the Reserve Accounts subject to
the terms and conditions of this Agreement. Borrower shall have no right of
withdrawal from the Reserve Accounts or any other right or power with respect to
the Reserve Accounts or any or all of the Reserve Funds now or hereafter
deposited in the Reserve Accounts, except as expressly provided in this
Agreement.
(d) Lender shall furnish or cause to be furnished to Borrower,
without charge, a quarterly accounting of each Reserve Account in the normal
format of Lender or its loan servicer, showing credits and debits to such
Reserve Account, if any, and the purpose for which each debit to each Reserve
Account was made, if any.
(e) As long as no Event of Default has occurred, Lender shall make
disbursements from the Reserve Accounts in accordance with this Agreement. All
such disbursements shall be deemed to have been expressly pre-authorized by
Borrower, and shall not be deemed to constitute the exercise by Lender of any
remedies against Borrower unless an Event of Default has occurred and is
continuing and Lender has expressly stated in writing its intent to proceed to
exercise its remedies as a secured party, pledgee or lienholder with respect to
the Reserve Accounts.
(f) If any Event of Default occurs, Borrower shall immediately lose
all of its rights to receive disbursements from the Reserve Accounts until the
earlier to occur of (i) the date on which such Event of Default is cured to
Lender's satisfaction, or (ii) the payment in full of the Debt. In addition, at
Lender's election, Borrower shall lose all of its rights to receive interest on
the Required Repair Account and the Replacement Reserve Account during the
occurrence and continuance of an Event of Default. Upon the occurrence of any
Event of Default, Lender may exercise any or all of its rights and remedies as a
secured party, pledgee and lienholder with respect to the Reserve Accounts.
Without limitation of the foregoing, upon any
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Event of Default, Lender may use and disburse the Reserve Funds (or any portion
thereof) for any of the following purposes: (A) repayment of the Debt,
including, but not limited to, principal prepayments and the prepayment premium
applicable to such full or partial prepayment (as applicable); (B) reimbursement
of Lender for all losses, fees, costs and expenses (including, without
limitation, reasonable legal fees) suffered or incurred by Lender as a result of
such Event of Default; (C) payment of any amount expended in exercising any or
all rights and remedies available to Lender at law or in equity or under this
Agreement or under any of the other Loan Documents; (D) payment of any item from
any of the Reserve Accounts as required or permitted under this Agreement; or
(E) any other purpose permitted by applicable law; provided, however, that any
such application of funds shall not cure or be deemed to cure any Event of
Default. Without limiting any other provisions hereof, each of the remedial
actions described in the immediately preceding sentence shall be deemed to be a
commercially reasonable exercise of Lender's rights and remedies as a secured
party with respect to the Reserve Funds and shall not in any event be deemed to
constitute a setoff or a foreclosure of a statutory banker's lien. Nothing in
this Agreement shall obligate Lender to apply all or any portion of the Reserve
Funds to effect a cure of any Event of Default, or to pay the Debt, or in any
specific order of priority. The exercise of any or all of Lender's rights and
remedies under this Agreement or under any of the other Loan Documents shall not
in any way prejudice or affect Lender's right to initiate and complete a
foreclosure under the Mortgage.
(g) The Reserve Funds shall not constitute escrow or trust funds and
may be commingled with other monies held by Lender. Notwithstanding anything
else herein to the contrary, Lender may commingle in one or more Eligible
Accounts any and all funds controlled by Lender, including, without limitation,
funds pledged in favor of Lender by other borrowers, whether for the same
purposes as the Reserve Accounts or otherwise. Without limiting any other
provisions of this Agreement or any other Loan Document, the Reserve Accounts
may be established and held in such name or names as Lender or its loan
servicer, as agent for Lender, shall deem appropriate, including, without
limitation, in the name of Lender or such loan servicer as agent for Lender. In
the case of any Reserve Account which is held in a commingled account, Lender or
its loan servicer, as applicable, shall maintain records sufficient to enable it
to determine at all times which portion of such account is related to the Loan.
Upon assignment of the Loan by Lender, any Reserve Funds shall be turned over to
the assignee and any responsibility of Lender as assignor shall terminate. The
requirements of this Agreement concerning Reserve Accounts in no way supersede,
limit or waive any other rights or obligations of the parties under any of the
Loan Documents or under applicable law.
(h) Borrower shall not, without obtaining the prior written consent
of Lender, further pledge, assign or grant any security interest in the Reserve
Accounts or the Reserve Funds deposited therein or permit any Lien to attach
thereto, except for the security interest granted in this Section 9.10, or any
levy to be made thereon, or any UCC Financing Statements, except those naming
Lender as the secured party, to be filed with respect thereto.
(i) Borrower will maintain the security interest created by this
Section 9.10 as a first priority perfected security interest and will defend the
right, title and interest of Lender in and to the Reserve Accounts and the
Reserve Funds against the claims and demands of all Persons whomsoever. At any
time and from time to time, upon the written request of Lender, and at the sole
expense of Borrower, Borrower will promptly and duly execute and deliver such
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further instruments and documents and will take such further actions as Lender
reasonably may request for the purpose of obtaining or preserving the full
benefits of this Agreement and of the rights and powers herein granted.
(j) Lender shall be protected in acting upon any notice, resolution,
request, consent, order, certificate, report, opinion, bond or other paper,
document or signature believed by Lender to be genuine, and it may be assumed
conclusively that any Person purporting to give any of the foregoing in
connection with the Reserve Accounts has been duly authorized to do so. Lender
may consult with counsel, and the opinion of such counsel shall be full and
complete authorization and protection in respect of any action taken or suffered
by them hereunder and in good faith in accordance therewith. Lender shall not be
liable to Borrower for any act or omission done or omitted to be done by Lender
in reliance upon any instruction, direction or certification received by Lender
and without gross negligence or willful misconduct.
(k) Beyond the exercise of reasonable care in the custody thereof,
Lender shall have any duty as to any Reserve Funds in its possession or control
as agent therefor or bailee thereof or any income thereon or the preservation of
rights against any person or otherwise with respect thereto. In no event shall
Lender or its Affiliates, agents, employees or bailees, be liable or responsible
for any loss or damage to any of the Reserve Funds, or for any diminution in
value thereof, by reason of the act or omission of Lender, except to the extent
that such loss or damage results from Lender's gross negligence or willful
misconduct or intentional nonperformance by Lender of its obligations under this
Agreement.
ARTICLE X
CASH MANAGEMENT
SECTION 10.1. PROPERTY OPERATING ACCOUNT
(a) Borrower acknowledges and confirms that Borrower has
established, and Borrower covenants that it shall maintain a deposit account
with a federally insured financial institution (whether one or more,
individually and collectively, as the case may be, the "PROPERTY OPERATING
ACCOUNT BANK") with respect to each Parcel into which Borrower shall, and shall
cause Manager to, deposit or cause to be deposited, all Rents and other revenue
from the applicable Parcel (such account, all funds at any time on deposit
therein and any proceeds, replacements or substitutions of such account or funds
therein, are referred to herein as the "PROPERTY OPERATING ACCOUNT").
(b) Borrower agrees to pay the customary fees and expenses of
Property Operating Account Bank (incurred in connection with maintaining the
Property Operating Account) and any successors thereto in connection therewith,
as separately agreed by them from time to time.
(c) Lender shall not be under any obligation or duty to perform any
act which would involve it in expense or liability or to institute or defend any
suit in respect hereof, or to advance any of its own monies. Borrower shall
indemnify and hold Lender and its directors, employees, officers and agents
harmless from and against any loss, cost or damage (including, without
limitation, reasonable attorneys' fees and disbursements) incurred by such
parties in
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connection with the Property Operating Account other than such as result from
the gross negligence or willful misconduct of Lender.
SECTION 10.2. DEPOSITS AND WITHDRAWALS.
(a) Borrower represents, warrants and covenants that:
(i) Borrower shall, and shall cause Manager to, instruct all Persons
that maintain open accounts with Borrower or Manager with respect to the
applicable Parcel or with whom Borrower or Manager does business on an
"accounts receivable" basis with respect to the applicable Parcel to
deliver all payments due under such accounts to the Property Operating
Account. Neither Borrower nor Manager shall direct any such Person to make
payments due under such accounts in any other manner;
(ii) All Rents or other income from each Parcel shall (A) be deemed
additional security for payment of the Debt and shall be held in trust for
the benefit, and as the property, of Lender and (B) not be commingled with
any other funds or property of Borrower or Manager prior to being
deposited into the Property Operating Account;
(iii) So long as any portion of the Debt remains outstanding,
neither Borrower, Manager nor any other Person shall open or maintain any
accounts other than the Property Operating Account into which revenues
from the ownership and operation of the Property are initially deposited.
The foregoing shall not prohibit Borrower from utilizing one or more
separate accounts for the disbursement or retention of funds that have
been transferred to Borrower pursuant to the express terms of this
Agreement; and
(b) Upon the occurrence and during the continuance of an Event of
Default, (A) if requested by Lender, the Borrower shall direct all Tenants to
pay Rent to such account as may be required by Lender, and (B) the Borrower
shall and shall cause the Property Operating Account Bank to promptly execute
such documentation and otherwise cooperate in a prompt and timely manner with
such other requests of Lender in order to grant Lender (x) a first priority
perfected security interest in each Property Operating Account and (y) control
with respect to each Property Operating Account all funds on deposit or to be
deposited therein.
(c) If an Event of Default shall have occurred and be continuing,
Borrower hereby irrevocably authorizes Lender to make any and all withdrawals
from each Property Operating Account. Lender's right to withdraw and apply funds
as stated herein shall be in addition to all other rights and remedies provided
to Lender under this Agreement, the Note, the Mortgage and the other Loan
Documents.
ARTICLE XI
EVENTS OF DEFAULT; REMEDIES
SECTION 11.1. EVENT OF DEFAULT
The occurrence of any one or more of the following events shall
constitute an "EVENT OF DEFAULT":
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(a) if any portion of the Debt is not paid within five (5) days of
the date the same is due or if the entire Debt is not paid on or before the
Maturity Date;
(b) except as otherwise expressly provided in the Loan Documents, if
any of the Taxes or Other Charges are not paid in accordance with the terms
hereof, unless there is sufficient money in the Tax and Insurance Reserve
Account for payment of amounts then due and payable and Lender's access to such
money has not been constrained or restricted in any manner;
(c) if the Policies are not kept in full force and effect, or if
certified copies of the Policies are not delivered to Lender as provided in
Section 8.1;
(d) if Borrower breaches any covenant with respect to itself or any
SPE Component Entity (if any) contained in Article 6 or any covenant contained
in Article 7 hereof unless, with respect to the covenants set forth in Article 6
only, such breach is (i) immaterial, (ii) capable of cure and (iii) cured within
ten (10) days of the occurrence of such breach;
(e) if any representation or warranty of Borrower, Borrower
Principal, any SPE Component Entity, or any member, general partner, principal
or beneficial owner of any of the foregoing, made herein, in any other Loan
Document, or in any certificate, report, financial statement or other instrument
or document furnished to Lender at the time of the closing of the Loan or during
the term of the Loan shall have been false or misleading in any material respect
when made;
(f) if (i) Borrower, or any managing member or general partner of
Borrower, Borrower Principal, or any SPE Component Entity (if any) shall
commence any case, proceeding or other action (A) under any Creditors Rights
Laws, seeking to have an order for relief entered with respect to it, or seeking
to adjudicate it a bankrupt or insolvent, or seeking reorganization, or (B)
seeking appointment of a receiver, trustee, custodian, conservator or other
similar official for it or for all or any substantial part of its assets, or
Borrower, any managing member or general partner of Borrower, Borrower
Principal, or any SPE Component Entity (if any) shall make a general assignment
for the benefit of its creditors; or (ii) there shall be commenced against
Borrower, any managing member or general partner of Borrower, Borrower
Principal, or any SPE Component Entity (if any) any case, proceeding or other
action of a nature referred to in clause (i) above which (A) results in the
entry of an order for relief or any such adjudication or appointment or (B)
remains undismissed, undischarged or unbonded for a period of sixty (60) days;
or (iii) there shall be commenced against Borrower, any managing member or
general partner of Borrower, Borrower Principal, or any SPE Component Entity (if
any) any case, proceeding or other action seeking issuance of a warrant of
attachment, execution, distraint or similar process against all or any
substantial part of its assets which results in the entry of any order for any
such relief which shall not have been vacated, discharged, or stayed or bonded
pending appeal within sixty (60) days from the entry thereof; or (iv) Borrower,
any managing member or general partner of Borrower, Borrower Principal, or any
SPE Component Entity (if any) shall take any action in furtherance of, or
indicating its consent to, approval of, or acquiescence in, any of the acts set
forth in clause (i), (ii), or (iii) above; or (v) Borrower, any managing member
or general partner of Borrower, Borrower Principal, or any SPE Component
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Entity (if any) shall generally not, or shall be unable to, or shall admit in
writing its inability to, pay its debts as they become due;
(g) if Borrower shall be in default beyond applicable notice and
grace periods under any other mortgage, deed of trust, deed to secure debt or
other security agreement covering any part of the Property, whether it be
superior or junior in lien to the Mortgage;
(h) if the Property becomes subject to any mechanic's, materialman's
or other Lien in excess of $100,000 other than a Lien for any Taxes or Other
Charges not then due and payable and the Lien shall remain undischarged of
record (by payment, bonding or otherwise) for a period of thirty (30) days;
(i) if any federal tax lien in excess of $100,000 is filed against
Borrower, any member or general partner of Borrower, Borrower Principal, or any
SPE Component Entity (if any) or the Property and same is not discharged of
record within thirty (30) days after same is filed;
(j) if a judgment is filed against the Borrower in excess of the
lesser of (x) ten percent (10%) of the principal amount of the Loan and (y)
$500,000 which is not vacated or discharged or bonded over within 30 days unless
the claim(s) set forth in the judgment is covered by insurance;
(k) if any default occurs under any guaranty or indemnity executed
in connection herewith and such default continues after the expiration of
applicable grace periods, if any;
(l) intentionally reserved;
(m) if Borrower shall continue to be in default under any other
term, covenant or condition of this Agreement or any of the Loan Documents for
more than ten (10) days after notice from Lender in the case of any default
which can be cured by the payment of a sum of money or for thirty (30) days
after notice from Lender in the case of any other default, provided that if such
default cannot reasonably be cured within such thirty (30) day period and
Borrower shall have commenced to cure such default within such thirty (30) day
period and thereafter diligently and expeditiously proceeds to cure the same,
such thirty (30) day period shall be extended for so long as it shall require
Borrower in the exercise of due diligence to cure such default, it being agreed
that no such extension shall be for a period in excess of ninety (90) days; or
(n) if any of the assumptions contained in any opinion relating to
issues of substantive consolidation delivered to the Lender in connection with
the Loan, or in any other opinion relating to substantive consolidation
delivered subsequent to the closing of the Loan, is or shall become untrue in
any material respect.
SECTION 11.2. REMEDIES
(a) Upon the occurrence of an Event of Default (other than an Event
of Default described in Section 11.1(f) above) and at any time thereafter Lender
may, in addition to
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any other rights or remedies available to it pursuant to this Agreement and the
other Loan Documents or at law or in equity, take such action, without notice or
demand, that Lender deems advisable to protect and enforce its rights against
Borrower and in the Property, including, without limitation, declaring the Debt
to be immediately due and payable, and Lender may enforce or avail itself of any
or all rights or remedies provided in the Loan Documents against Borrower and
the Property, including, without limitation, all rights or remedies available at
law or in equity (subject to the terms of Article XV below); and upon any Event
of Default described in Section 11.1(f) above, the Debt and all other
obligations of Borrower hereunder and under the other Loan Documents shall
immediately and automatically become due and payable, without notice or demand,
and Borrower hereby expressly waives any such notice or demand, anything
contained herein or in any other Loan Document to the contrary notwithstanding.
(b) Upon the occurrence of an Event of Default, all or any one or
more of the rights, powers, privileges and other remedies available to Lender
against Borrower under this Agreement or any of the other Loan Documents
executed and delivered by, or applicable to, Borrower or at law or in equity may
be exercised by Lender at any time and from time to time (subject to the terms
of Article XV below), whether or not all or any of the Debt shall be declared
due and payable, and whether or not Lender shall have commenced any foreclosure
proceeding or other action for the enforcement of its rights and remedies under
any of the Loan Documents with respect to the Property. Any such actions taken
by Lender shall be cumulative and concurrent and may be pursued independently,
singularly, successively, together or otherwise, at such time and in such order
as Lender may determine in its sole discretion, to the fullest extent permitted
by law, without impairing or otherwise affecting the other rights and remedies
of Lender permitted by law, equity or contract or as set forth herein or in the
other Loan Documents.
ARTICLE XII
ENVIRONMENTAL PROVISIONS
SECTION 12.1. ENVIRONMENTAL REPRESENTATIONS AND WARRANTIES
Borrower represents and warrants, based upon, and except as
otherwise disclosed or described in an Environmental Report of the Property
(unless Borrower has actual knowledge that such information disclosed in an
Environmental Report is inaccurate in any material respect) and information that
Borrower knows or should reasonably have known, that: (a) there are no Hazardous
Materials or underground storage tanks in, on, or under the Property, except
those that are both (i) in compliance with Environmental Laws and with permits
issued pursuant thereto (if such permits are required), if any, and (ii) in the
case of Hazardous Materials, in amounts not in excess of that necessary to
operate the Property for the purposes set forth herein; (b) there are no past,
present or threatened Releases of Hazardous Materials in violation of any
Environmental Law or which would require remediation by a Governmental Authority
in, on, under or from the Property; (c) there is no threat of any Release of
Hazardous Materials migrating to the Property except as described in the
Environmental Report; (d) there is no past or present non-compliance with
Environmental Laws, or with permits issued pursuant thereto, in connection with
the Property; (e) Borrower does not know of, and has not received, any written
or oral notice or other communication from any Person relating to Hazardous
Materials in, on, under or from the Property which would cause a violation of
any Environmental Law; and (f) to
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the extent not included in the Environmental Report prepared for Lender in
connection with the Loan, Borrower has truthfully and fully provided to Lender,
in writing, any and all information relating to environmental conditions in, on,
under or from the Property known to Borrower or contained in Borrower's files
and records, including but not limited to any reports relating to Hazardous
Materials in, on, under or migrating to or from the Property and/or to the
environmental condition of the Property.
SECTION 12.2. ENVIRONMENTAL COVENANTS
Borrower covenants and agrees that so long as Borrower owns,
manages, is in possession of, or otherwise controls the operation of the
Property: (a) all uses and operations on or of the Property, whether by Borrower
or any other Person, shall be in compliance with all Environmental Laws and
permits issued pursuant thereto; (b) there shall be no Releases of Hazardous
Materials in, on, under or from the Property in violation of any Environmental
Law caused by Borrower, its agents or employees; (c) there shall be no Hazardous
Materials in, on, or under the Property, except those that are both (i) in
compliance with all Environmental Laws and with permits issued pursuant thereto,
if and to the extent required, and (ii) (A) in amounts not in excess of that
necessary to operate the Property for the purposes set forth herein or (B) fully
disclosed to and approved by Lender in writing; (d) Borrower shall keep the
Property free and clear of all Environmental Liens; (e) Borrower shall, at its
sole cost and expense, fully and expeditiously cooperate in all activities
pursuant to Section 12.4 below, including but not limited to providing all
relevant information and making knowledgeable persons available for interviews;
(f) Borrower shall, at its sole cost and expense, perform any environmental site
assessment or other investigation of environmental conditions in connection with
the Property, pursuant to any reasonable written request of Lender, upon
Lender's reasonable belief that the Property is not in full compliance with all
Environmental Laws, and share with Lender the reports and other results thereof,
and Lender and other Indemnified Parties shall be entitled to rely on such
reports and other results thereof; (g) Borrower shall, at its sole cost and
expense, comply with all reasonable written requests of Lender to (i) reasonably
effectuate remediation of any Hazardous Materials in, on, under or from the
Property; and (ii) comply with any Environmental Law; (h) Borrower shall not
allow any tenant or other user of the Property to violate any Environmental Law;
and (i) Borrower shall immediately notify Lender in writing after it has become
aware of (A) any presence or Release or threatened Release of Hazardous
Materials in, on, under, from or migrating towards the Property; (B) any
non-compliance with any Environmental Laws related in any way to the Property;
(C) any actual or potential Environmental Lien against the Property; (D) any
required or proposed remediation of environmental conditions relating to the
Property; and (E) any written notice or other communication of which Borrower
becomes aware from any source whatsoever (including but not limited to a
Governmental Authority) relating in any way to Hazardous Materials.
SECTION 12.3. LENDER'S RIGHTS
Lender and any other Person designated by Lender, including but not
limited to any representative of a Governmental Authority, and any environmental
consultant, and any receiver appointed by any court of competent jurisdiction,
shall have the right, but not the obligation, to enter upon the Property at all
reasonable times and upon reasonable advance notice to assess any and all
aspects of the environmental condition of the Property and its use, including
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but not limited to conducting any environmental assessment or audit (the scope
of which shall be determined in Lender's sole discretion) and taking samples of
soil, groundwater or other water, air, or building materials, and conducting
other invasive testing. Borrower shall cooperate with and provide access to
Lender and any such person or entity designated by Lender.
SECTION 12.4. OPERATIONS AND MAINTENANCE PROGRAMS
If recommended by the Environmental Report or any other
environmental assessment or audit of the Property, Borrower shall establish and
comply with an operations and maintenance program with respect to the Property,
in form and substance reasonably acceptable to Lender, prepared by an
environmental consultant reasonably acceptable to Lender, which program shall
address any asbestos-containing material or lead based paint that may now or in
the future be detected at or on the Property. Without limiting the generality of
the preceding sentence, Lender may require (a) periodic notices or reports to
Lender in form, substance and at such intervals as Lender may specify, (b) an
amendment to such operations and maintenance program to address changing
circumstances, laws or other matters, (c) at Borrower's sole expense,
supplemental examination of the Property by consultants specified by Lender, (d)
access to the Property by Lender, its agents or servicer, to review and assess
the environmental condition of the Property and Borrower's compliance with any
operations and maintenance program, and (e) variation of the operations and
maintenance program in response to the reports provided by any such consultants.
SECTION 12.5. ENVIRONMENTAL DEFINITIONS
"ENVIRONMENTAL LAW" means any present and future federal, state and
local laws, statutes, ordinances, rules, regulations, standards, policies and
other government directives or requirements, as well as common law, including
but not limited to the Comprehensive Environmental Response, Compensation and
Liability Act and the Resource Conservation and Recovery Act, that apply to
Borrower or the Property and relate to Hazardous Materials or protection of
human health or the environment. "ENVIRONMENTAL LIENS" means all Liens and other
encumbrances imposed pursuant to any Environmental Law, whether due to any act
or omission of Borrower or any other Person. "ENVIRONMENTAL REPORT" means the
written reports resulting from the environmental site assessments of the
Property delivered to Lender in connection with the Loan. "HAZARDOUS MATERIALS"
shall mean petroleum and petroleum products and compounds containing them,
including gasoline, diesel fuel and oil; explosives, flammable materials;
radioactive materials; polychlorinated biphenyls and compounds containing them;
lead and lead-based paint; asbestos or asbestos-containing materials in any form
that is or could become friable; underground or above-ground storage tanks,
whether empty or containing any substance; any substance the presence of which
on the Property is prohibited by any federal, state or local authority; any
substance that requires special handling; and any other material or substance
now or in the future defined as a "hazardous substance," "hazardous material",
"hazardous waste", "toxic substance", "toxic pollutant", "contaminant", or
"pollutant" within the meaning of any Environmental Law. "RELEASE" of any
Hazardous Materials includes but is not limited to any release, deposit,
discharge, emission, leaking, spilling, seeping, migrating, injecting, pumping,
pouring, emptying, escaping, dumping, disposing or other movement of Hazardous
Materials.
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SECTION 12.6. INDEMNIFICATION
(a) Borrower and Borrower Principal covenant and agree at their sole
cost and expense, to protect, defend, indemnify, release and hold Indemnified
Parties harmless from and against any and all Losses imposed upon or incurred by
or asserted against any Indemnified Parties and directly or indirectly arising
out of or in any way relating to any one or more of the following: (i) any
presence of any Hazardous Materials in, on, above, or under the Property in
violation of any Environmental Law; (ii) any past, present or threatened Release
of Hazardous Materials in, on, above, under or from the Property in violation of
any Environmental Law; (iii) any activity by Borrower, any Person affiliated
with Borrower, and any Tenant in connection with any actual, proposed or
threatened use, treatment, storage, holding, existence, disposition or other
Release, generation, production, manufacturing, processing, refining, control,
management, abatement, removal, handling, transfer or transportation to or from
the Property of any Hazardous Materials at any time located in, under, on or
above the Property or any actual or proposed remediation of any Hazardous
Materials at any time located in, under, on or above the Property, whether or
not such remediation is voluntary or pursuant to court or administrative order,
including but not limited to any removal, remedial or corrective action in each
case in violation of any Environmental Law; (iv) any past, present or threatened
non-compliance or violations of any Environmental Laws (or permits issued
pursuant to any Environmental Law) in connection with the Property or operations
thereon, including but not limited to any failure by Borrower, any person or
entity affiliated with Borrower, and any tenant or other user of the Property to
comply with any order of any Governmental Authority in connection with any
Environmental Laws; (v) the imposition, recording or filing or the threatened
imposition, recording or filing of any Environmental Lien encumbering the
Property; (vi) any acts of Borrower, any person or entity affiliated with
Borrower, and any tenant in (A) arranging for disposal or treatment, or
arranging with a transporter for transport for disposal or treatment, of
Hazardous Materials at any facility or incineration vessel containing such or
similar Hazardous Materials or (B) accepting any Hazardous Materials for
transport to disposal or treatment facilities, incineration vessels or sites
from which there is a Release, or a threatened Release of any Hazardous
Substance which causes the incurrence of costs for remediation; and (vii) any
material and intentional misrepresentation or inaccuracy in any representation
or warranty or material breach or failure to perform any covenants or other
obligations pursuant to this Agreement relating to environmental matters.
(b) Upon written request by any Indemnified Party, Borrower and
Borrower Principal shall defend same (if requested by any Indemnified Party, in
the name of the Indemnified Party) by attorneys and other professionals
reasonably approved by the Indemnified Parties. Notwithstanding the foregoing,
any Indemnified Parties may, in their sole discretion, engage their own
attorneys and other professionals to defend or assist them, and, at the option
of Indemnified Parties, their attorneys shall control the resolution of any
claim or proceeding, provided, with respect to such resolution, Lender agrees to
obtain Borrower's prior written approval (it being acknowledged and agreed that
Borrower shall not unreasonably withhold, condition of delay its approval and
any rejection of proposed resolution shall set forth the reasons for the same in
reasonable detail); provided, however, so long as there is not a conflict of
interest between any Indemnified Party and Borrower, as determined by an
Indemnified Party, no Indemnified Party shall engage additional attorneys nor
other professionals. Upon demand, Borrower and Borrower Principal shall pay or,
in the sole discretion of the Indemnified Parties,
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reimburse, the Indemnified Parties for the payment of reasonable fees and
disbursements of attorneys, engineers, environmental consultants, laboratories
and other professionals in connection therewith.
(c) Notwithstanding the foregoing, Borrower shall have no liability
for any Losses imposed upon or incurred by or asserted against any Indemnified
Parties and described in subsection (a) above to the extent that Borrower can
conclusively prove that such Losses were caused (i) solely by actions,
conditions or events that occurred after the date that Borrower was no longer in
possession or control of the Property, whether due to foreclosure, deed in lieu
of foreclosure or the appointment of a receiver and that such Losses were not
caused by the direct or indirect actions of Borrower, Borrower Principal, or any
partner, member, principal, officer, director, trustee or manager of Borrower or
Borrower Principal or any employee, agent, contractor or Affiliate of Borrower
or Borrower Principal or (ii) by the gross negligence or intentional misconduct
of any of the Indemnified Parties. The obligations and liabilities of Borrower
and Borrower Principal under this Section 12.6 shall fully survive indefinitely
notwithstanding any termination, satisfaction, assignment, entry of a judgment
of foreclosure, exercise of any power of sale, or delivery of a deed in lieu of
foreclosure of the Mortgage.
ARTICLE XIII
SECONDARY MARKET
SECTION 13.1. TRANSFER OF LOAN
Lender may, at any time, sell, transfer or assign the Loan
Documents, or grant participations therein ("PARTICIPATIONS") or syndicate the
Loan ("SYNDICATION") or issue mortgage pass-through certificates or other
securities evidencing a beneficial interest in a rated or unrated public
offering or private placement ("SECURITIES") (a Syndication or the issuance of
Participations and/or Securities, a "SECURITIZATION").
SECTION 13.2. DELEGATION OF SERVICING
At the option of Lender, the Loan may be serviced by a
servicer/trustee selected by Lender and Lender may delegate all or any portion
of its responsibilities under this Agreement and the other Loan Documents to
such servicer/trustee pursuant to a servicing agreement between Lender and such
servicer/trustee.
SECTION 13.3. DISSEMINATION OF INFORMATION
Lender may forward to each purchaser, transferee, assignee, or
servicer of, and each participant, or investor in, the Loan, or any
Participations and/or Securities or any of their respective successors
(collectively, the "INVESTOR") or any Rating Agency rating the Loan, or any
Participations and/or Securities, each prospective Investor, and any
organization maintaining databases on the underwriting and performance of
commercial mortgage loans, all documents and information which Lender now has or
may hereafter acquire relating to the Debt and to Borrower, any managing member
or general partner thereof, Borrower Principal, any SPE Component Entity (if
any) and the Property, including financial statements, whether furnished by
Borrower or otherwise, as Lender determines necessary or desirable. Borrower
irrevocably
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waives any and all rights it may have under applicable Legal Requirements to
prohibit such disclosure, including but not limited to any right of privacy so
long as the information is used in accordance with the requirements hereof.
SECTION 13.4. COOPERATION
Borrower and Borrower Principal agree to cooperate with Lender in
connection with any sale or transfer of the Loan or any Participation and/or
Securities created pursuant to this Article 13, including, without limitation,
the delivery of an estoppel certificate required in accordance with Section
5.12(a) and such other documents as may be reasonably requested by Lender.
Borrower shall also furnish and Borrower and Borrower Principal consent to
Lender furnishing to such Investors or such prospective Investors or such Rating
Agency and any and all information concerning the Property, the Leases, the
financial condition of Borrower or Borrower Principal as may be requested by
Lender, any Investor, any prospective Investor or any Rating Agency in
connection with any sale or transfer of the Loan or any Participations or
Securities. At the request of the holder of the Note and, to the extent not
already required to be provided by Borrower under this Agreement, Borrower and
Borrower Principal shall use reasonable efforts to provide information not in
the possession of the holder of the Note relating to the Property, the Leases,
the financial condition of Borrower or Borrower Principal in order to satisfy
the market standards to which the holder of the Note customarily adheres or
which may be reasonably required in the marketplace or by the Rating Agencies in
connection with such sales or transfers, including, without limitation, to:
(a) provide updated financial, budget and other information with
respect to the Property, Borrower, Borrower Principal and Manager and provide
modifications and/or updates to the appraisals, market studies, environmental
reviews and reports (Phase I reports and, if appropriate, Phase II reports) and
engineering reports of the Property obtained in connection with the making of
the Loan (all of the foregoing being referred to as the "PROVIDED INFORMATION"),
together, if customary, with appropriate verification and/or consents of the
Provided Information, at Lender's expense, through letters of auditors or
opinions of counsel of independent attorneys acceptable to Lender and the Rating
Agencies;
(b) make changes to the organizational documents of Borrower, any
SPE Component Entity and their respective principals which are consistent with
the provisions of Article 6;
(c) at Lender's expense, cause counsel to render or update existing
opinion letters as to enforceability and non-consolidation, which may be relied
upon by the holder of the Note, the Rating Agencies and their respective
counsel, which shall be dated as of the closing date of the Securitization;
(d) permit site inspections, appraisals, market studies and other
due diligence investigations of the Property, as may be reasonably requested by
the holder of the Note or the Rating Agencies or as may be necessary or
appropriate in connection with the Securitization all at Lender's expense;
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(e) make the representations and warranties with respect to the
Property, Borrower, Borrower Principal and the Loan Documents as are made in the
Loan Documents;
(f) execute such amendments to the Loan Documents as may be
reasonably requested by the holder of the Note or the Rating Agencies or
otherwise to effect the Securitization all at Lender's expense including,
without limitation, bifurcation of the Loan into two or more components and/or
separate notes and/or creating a senior/subordinate note structure; provided,
however, that Borrower shall not be required to modify or amend any Loan
Document if such modification or amendment would (i) change the interest rate,
the stated maturity or the amortization of principal set forth in the Note,
except in connection with a bifurcation of the Loan which may result in varying
fixed interest rates and amortization schedules, but which shall have the same
weighted average coupon of the original Note throughout the entire term of the
Loan, or (ii) in the reasonable judgment of Borrower, modify or amend any other
material economic term of the Loan, or (iii) in the reasonable judgment of
Borrower, materially increase Borrower's obligations and liabilities under the
Loan Documents;
(g) deliver to Lender and/or any Rating Agency, at Lender's expense,
(i) one or more certificates executed by an officer of the Borrower certifying
as to the accuracy in all material respects, as of the closing date of the
Securitization, of all representations made by Borrower in the Loan Documents as
of the Closing Date in all relevant jurisdictions or, if such representations
are no longer accurate, certifying as to what modifications to the
representations would be required to make such representations accurate in all
material respects as of the closing date of the Securitization, and (ii)
certificates of the relevant Governmental Authorities in all relevant
jurisdictions indicating the good standing and qualification of Borrower as of
the date of the closing date of the Securitization;
(h) have reasonably appropriate personnel participate in a bank
meeting and/or presentation for the Rating Agencies or Investors; and
(i) cooperate with and assist Lender in obtaining ratings of the
Securities from two (2) or more of the Rating Agencies.
Except as otherwise provided in this Section 13.4, all reasonable
third party costs and expenses incurred by Borrower in connection with
Borrower's complying with requests made under this Section 13.4 shall be paid by
Borrower, it being acknowledged and agreed that Borrower shall not be obligated
to pay Lender's costs and expenses and the costs and expenses of third parties
engaged by Lender in connection with requests by Lender pursuant to this Section
13.4, unless otherwise provided in this Section 13.4.
In the event that Borrower requests any consent or approval
hereunder and the provisions of this Agreement or any Loan Documents require the
receipt of written confirmation from each Rating Agency with respect to the
rating on the Securities, or, in accordance with the terms of the transaction
documents relating to a Securitization, such a rating confirmation is required
in order for the consent of Lender to be given, Borrower shall pay all of the
reasonable costs and expenses of Lender, Lender's servicer and each Rating
Agency in connection therewith, and, if applicable, shall pay any fees imposed
by any Rating Agency as a condition to the delivery of such confirmation.
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SECTION 13.5. SECURITIZATION INDEMNIFICATION
(a) Borrower and Borrower Principal understand that certain of the
Provided Information may be included in disclosure documents in connection with
the Securitization, including, without limitation, a prospectus, prospectus
supplement, offering memorandum or private placement memorandum (each, a
"DISCLOSURE DOCUMENT") and may also be included in filings with the Securities
and Exchange Commission pursuant to the Securities Act or the Exchange Act, or
provided or made available to investors or prospective investors in the
Securities, the Rating Agencies, and service providers relating to the
Securitization. In the event that the Disclosure Document is required to be
revised prior to the sale of all Securities, Borrower and Borrower Principal
will cooperate with the holder of the Note in updating the Disclosure Document
by providing all current information necessary to keep the Disclosure Document
accurate and complete in all material respects, subject to the terms and
conditions contained in Section 13.4.
(b) Borrower and Borrower Principal agree to provide in connection
with each of (i) a preliminary and a final offering memorandum or private
placement memorandum or similar document (including any Investor or Rating
Agency "term sheets" or presentations relating to the Property and/or the Loan)
or (ii) a preliminary and final prospectus or prospectus supplement, as
applicable, an indemnification certificate (A) certifying that Borrower and
Borrower Principal have carefully examined the specific sections of any
memorandum or prospectus describing or disclosing the Property Information
(which specific sections shall be provided by Lender) which shall only relate to
Borrower, Borrower Principal, Manager, their Affiliates, the Loan, the Loan
Documents and the Property, and that, to the best of Borrower's knowledge, such
sections (and any other sections reasonably requested) do not contain any untrue
statement of a material fact or omit to state a material fact necessary in order
to make the statements made, in the light of the circumstances under which they
were made, not misleading; provided, however, Borrower shall not make any
representations or warranties concerning the truth, accuracy or completeness of
any information or reports prepared by a third party, (B) indemnifying Lender
(and for purposes of this Section 13.5, Lender hereunder shall include its
officers and directors) and the Affiliate of Lender that (i) has filed the
registration statement, if any, relating to the Securitization and/or (ii) which
is acting as issuer, depositor, sponsor and/or a similar capacity with respect
to the Securitization (any Person described in (i) or (ii), an "ISSUER PERSON"),
and each director and officer of any Issuer Person, and each Person or entity
who controls any Issuer Person within the meaning of Section 15 of the
Securities Act or Section 20 of the Exchange Act (collectively, the "ISSUER
GROUP"), and each Person which is acting as an underwriter, manager, placement
agent, initial purchaser or similar capacity with respect to the Securitization,
each of its directors and officers and each Person who controls any such Person
within the meaning of Section 15 of the Securities Act and Section 20 of the
Exchange Act (collectively, the "UNDERWRITER GROUP") for any Losses to which
Lender, the Issuer Group or the Underwriter Group may become subject insofar as
the Losses directly arise out of or are based upon any untrue statement or
alleged untrue statement of any material fact contained in such sections or
arise out of or are based upon the omission or alleged omission to state therein
a material fact required to be stated in such sections or necessary in order to
make the statements in such sections or in light of the circumstances under
which they were made, not materially misleading (collectively the "SECURITIES
LIABILITIES") and (C) agreeing to reimburse Lender, the Issuer Group and the
Underwriter Group for any legal or other expenses reasonably incurred by
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Lender and Issuer Group in connection with investigating or defending the
Securities Liabilities; provided, however, that Borrower will be liable in any
such case under clauses (B) or (C) above only to the extent that any such
Securities Liabilities arise out of or is based upon any such untrue statement
or omission made therein in reliance upon and in conformity with information
furnished to Lender or any member of the Issuer Group or Underwriter Group by or
on behalf of Borrower or Borrower Principal in connection with the preparation
of the memorandum or prospectus or other document (including any Investor or
Rating Agency "term sheets" or presentations relating to the Property and/or the
Loan) or in connection with the underwriting of the Loan, including, without
limitation, financial statements of Borrower or Borrower Principal, operating
statements, rent rolls, environmental site assessment reports and Property
condition reports with respect to the Property. This indemnity agreement will be
in addition to any liability which Borrower and Borrower Principal may otherwise
have. Moreover, the indemnification provided for in Clauses (B) and (C) above
shall be effective whether or not an indemnification certificate described in
(A) above is provided and shall be applicable based on information previously
provided by Borrower and Borrower Principal or their Affiliates if Borrower or
Borrower Principal do not provide the indemnification certificate so long as
Lender provides Borrower with the disclosure thereof and prospectus as set forth
in this Section 13.5(b).
(c) In connection with the initial filings under the Exchange Act in
connection with a Securitization of the Loan, Borrower and Borrower Principal
agree to indemnify (i) Lender, the Issuer Group and the Underwriter Group for
Losses to which Lender, the Issuer Group or the Underwriter Group may become
subject insofar as the Securities Liabilities arise out of or are based solely
upon the omission or alleged omission to state in the Provided Information
delivered to Lender prior to the Securitization a material fact required to be
stated in the Provided Information in order to make the statements in the
Provided Information, in light of the circumstances under which they were made
not misleading and (ii) reimburse Lender, the Issuer Group or the Underwriter
Group for any legal or other expenses reasonably incurred by Lender, the Issuer
Group or the Underwriter Group in connection with defending or investigating the
Securities Liabilities; provided that in the event that such filings under the
Exchange Act contain information in a form not previously reviewed by Borrower,
then Lender shall provide Borrower with a copy of such filings for its approval
of the content thereof prior to submitting the same.
(d) Promptly after receipt by an indemnified party under this
Section 13.5 of notice of the commencement of any action, such indemnified party
will, if a claim in respect thereof is to be made against the indemnifying party
under this Section 13.5, notify the indemnifying party in writing of the
commencement thereof, but the omission to so notify the indemnifying party will
not relieve the indemnifying party from any liability which the indemnifying
party may have to any indemnified party hereunder except to the extent that
failure to notify causes prejudice to the indemnifying party. In the event that
any action is brought against any indemnified party, and it notifies the
indemnifying party of the commencement thereof, the indemnifying party will be
entitled, jointly with any other indemnifying party, to participate therein and,
to the extent that it (or they) may elect by written notice delivered to the
indemnified party promptly after receiving the aforesaid notice from such
indemnified party, to assume the defense thereof with counsel reasonably
satisfactory to such indemnified party; provided, however, so long as there is
not a conflict of interest between the indemnifying party and any indemnified
party or parties, as reasonably determined by counsel to such indemnified
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party or parties, the indemnified party or parties shall not engage additional
counsel to assume such defense on behalf of the related indemnifying party.
After notice from the indemnifying party to such indemnified party under this
Section 13.5 the indemnifying party shall be responsible for any legal or other
expenses subsequently incurred by such indemnified party in connection with the
defense thereof other than reasonable costs of investigation; provided, however,
if the defendants in any such action include both the indemnified party and the
indemnifying party and the indemnified party shall have reasonably concluded
that there are any legal defenses available to it and/or other indemnified
parties that are different from or additional to those available to the
indemnifying party, and that there is a conflict of interest between the
indemnified party or parties and the indemnifying party, as reasonably
determined by counsel to such indemnified party or parties, the indemnified
party or parties shall have the right to select separate counsel to assert such
legal defenses and to otherwise participate in the defense of such action on
behalf of such indemnified party or parties. The indemnifying party shall not be
liable for the expenses of more than one such separate counsel unless an
indemnified party shall have reasonably concluded that there may be legal
defenses available to it that are different from or additional to those
available to another indemnified party.
(e) In order to provide for just and equitable contribution in
circumstances in which the indemnity agreements provided for in Section 13.5(b)
or Section 13.5(c) is or are for any reason held to be unenforceable by an
indemnified party in respect of any losses, claims, damages or liabilities (or
action in respect thereof) referred to therein which would otherwise be
indemnifiable under Section 13.5(b) or Section 13.5(c), the indemnifying party
shall contribute to the amount paid or payable by the indemnified party as a
result of such losses, claims, damages or liabilities (or action in respect
thereof); provided, however, that no Person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities Act)
shall be entitled to contribution from any Person who was not guilty of such
fraudulent misrepresentation. In determining the amount of contribution to which
the respective parties are entitled, the following factors shall be considered:
(i) the indemnified party's, Borrower's and Borrower Principal's relative
knowledge and access to information concerning the matter with respect to which
claim was asserted; (ii) the opportunity to correct and prevent any statement or
omission; and (iii) any other equitable considerations appropriate in the
circumstances. Lender, Borrower and Borrower Principal hereby agree that it
would not be equitable if the amount of such contribution were determined by pro
rata or per capita allocation.
(f) The liabilities and obligations of Borrower and Lender under
this Section 13.5 shall survive the satisfaction of this Agreement and the
satisfaction and discharge of the Debt. The liabilities and obligations of
Borrower Principal under this Section 13.5 and any certificate provided pursuant
to the terms hereof shall only survive until November 30, 2006 and then shall
terminate and be of no further force and effect with respect to any matters for
which written claims have not been made against Borrower Principal prior to
November 30, 2006.
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ARTICLE XIV
INDEMNIFICATIONS
SECTION 14.1. GENERAL INDEMNIFICATION
Borrower shall indemnify, defend and hold harmless the Indemnified
Parties from and against any and all Losses imposed upon or incurred by or
asserted against any Indemnified Parties and directly or indirectly arising out
of or in any way relating to any one or more of the following: (a) any accident,
injury to or death of persons or loss of or damage to property occurring in, on
or about the Property or any part thereof or on the adjoining sidewalks, curbs,
adjacent property or adjacent parking areas, streets or ways; (b) any use,
nonuse or condition in, on or about the Property or any part thereof or on the
adjoining sidewalks, curbs, adjacent property or adjacent parking areas, streets
or ways; (c) performance of any labor or services or the furnishing of any
materials or other property in respect of the Property or any part thereof; (d)
any failure of the Property to be in compliance with any Applicable Legal
Requirements; (e) any and all claims and demands whatsoever which may be
asserted against Lender by reason of any alleged obligations or undertakings on
its part to perform or discharge any of the terms, covenants, or agreements
contained in any Lease; (f) the holding or investing of the Reserve Accounts or
the performance of the Required Work, or (g) the payment of any commission,
charge or brokerage fee to anyone which may be payable in connection with the
funding of the Loan (collectively, the "INDEMNIFIED LIABILITIES"); provided,
however, that Borrower shall not have any obligation to Lender hereunder (i) to
the extent that such Indemnified Liabilities arise from the gross negligence,
illegal acts, fraud or willful misconduct of Lender and (ii) with respect to any
Indemnified Liability (A) not caused by Borrower and (B) first arising after the
date Borrower is no longer in possession or control of the Property whether due
to foreclosure, deed in lieu of foreclosure or the appointment of a receiver. To
the extent that the undertaking to indemnify, defend and hold harmless set forth
in the preceding sentence may be unenforceable because it violates any law or
public policy, Borrower shall pay the maximum portion that it is permitted to
pay and satisfy under applicable law to the payment and satisfaction of all
Indemnified Liabilities incurred by Lender.
SECTION 14.2. MORTGAGE AND INTANGIBLE TAX INDEMNIFICATION
Borrower shall, at its sole cost and expense, protect, defend,
indemnify, release and hold harmless the Indemnified Parties from and against
any and all Losses imposed upon or incurred by or asserted against any
Indemnified Parties and directly or indirectly arising out of or in any way
relating to any tax on the making and/or recording of the Mortgage, the Note or
any of the other Loan Documents, but excluding any income, franchise or other
similar taxes.
SECTION 14.3. ERISA INDEMNIFICATION
Borrower shall, at its sole cost and expense, protect, defend,
indemnify, release and hold harmless the Indemnified Parties from and against
any and all Losses (including, without limitation, reasonable attorneys' fees
and costs incurred in the investigation, defense, and settlement of Losses
incurred in correcting any prohibited transaction or in the sale of a prohibited
loan, and in obtaining any individual prohibited transaction exemption under
ERISA
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that may be required, in Lender's sole discretion) that Lender may incur,
directly or indirectly, as a result of a default under Section 4.9 or Section
5.18 of this Agreement.
SECTION 14.4. SURVIVAL
The obligations and liabilities of Borrower under this Article 14
shall fully survive indefinitely notwithstanding any termination, satisfaction,
assignment, entry of a judgment of foreclosure, exercise of any power of sale,
or delivery of a deed in lieu of foreclosure of the Mortgage.
ARTICLE XV
EXCULPATION
SECTION 15.1. EXCULPATION
(a) Except as otherwise provided herein or in the other Loan
Documents, Lender shall not enforce the liability and obligation of Borrower or
Borrower Principal, as applicable, to pay, perform and/or observe the
obligations contained herein, in the Note, or in the other Loan Documents by any
action or proceeding against Borrower wherein a money judgment shall be sought
against Borrower, the members/partners of Borrower or Borrower Principal or its
respective members or partners, except that Lender may bring a foreclosure
action, action for specific performance or other appropriate action or
proceeding against Borrower to enable Lender to enforce and realize upon this
Agreement, the Note, the Mortgage and the other Loan Documents, and the interest
in the Property, the Rents and any other collateral given to Lender created by
this Agreement, the Note, the Mortgage and the other Loan Documents; provided,
however, that any judgment in any such action or proceeding shall be enforceable
against Borrower only to the extent of Borrower's interest in the Property, in
the Rents and in any other collateral given to Lender. Lender, by accepting this
Agreement, the Note, the Mortgage and the other Loan Documents, agrees that it
shall not, except as otherwise provided in Section 15.1(b) and (c), ▇▇▇ for,
seek or demand any deficiency judgment against Borrower or Borrower Principal in
any such action or proceeding, under or by reason of or under or in connection
with this Agreement, the Note, the Mortgage or the other Loan Documents. The
provisions of this Section 15.1 shall not, however, (i) constitute a waiver,
release or impairment of any obligation evidenced or secured by this Agreement,
the Note, the Mortgage or the other Loan Documents; (ii) impair the right of
Lender to name Borrower as a party defendant in any action or suit for judicial
foreclosure and sale under this Agreement and the Mortgage; (iii) affect the
validity or enforceability of any indemnity (including, without limitation,
those contained in Section 12.6, Section 13.5 and Article 14 of this Agreement),
made in connection with this Agreement, the Note, the Mortgage and the other
Loan Documents; (iv) impair the right of Lender to obtain the appointment of a
receiver; (v) impair the enforcement of the assignment of leases provisions
contained in the Mortgage; or (vi) impair the right of Lender to obtain a
deficiency judgment against Borrower or other judgment on the Note against
Borrower if necessary to obtain any Insurance Proceeds or Awards to which Lender
would otherwise be entitled under this Agreement; provided however, Lender shall
only enforce such judgment to the extent of the Insurance Proceeds and/or
Awards.
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(b) Notwithstanding the provisions of this Section 15.1 to the
contrary, Borrower and Borrower Principal shall be personally liable to Lender
on a joint and several basis for Losses due to:
(i) fraud, material intentional misrepresentation, gross negligence
or willful misconduct by Borrower, Borrower Principal or any other
Affiliate of Borrower or Borrower Principal in connection with the
execution and the delivery of this Agreement, the Note, the Mortgage, any
of the other Loan Documents, or any certificate, report, financial
statement or other instrument or document furnished to Lender at the time
of the closing of the Loan or during the term of the Loan;
(ii) Borrower's, Borrower Principal's or any of their Affiliates'
misapplication or misappropriation of Rents received by Borrower, to the
extent Borrower or any Affiliate has the ability to control the
distribution or application thereof, after the occurrence of an Event of
Default;
(iii) Borrower's, Borrower Principal's or any of their Affiliates'
misapplication or misappropriation of tenant security deposits or Rents
collected in advance, to the extent Borrower or any Affiliate has the
ability to control the distribution or application thereof;
(iv) Borrower's, Borrower Principal's or any of their Affiliates'
misapplication or the misappropriation of Insurance Proceeds or Awards, to
the extent Borrower or any Affiliate has the ability to control the
distribution or application thereof;
(v) Borrower's failure to pay Taxes or Other Charges (except to the
extent that sums sufficient to pay such amounts have been deposited in
escrow with Lender pursuant to the terms hereof and there exists no
impediment to Lender's utilization thereof (whether or not used by Lender
for such purpose) or the applicable Parcel is not generating sufficient
proceeds to pay such Taxes or Other Chartes);
(vi) intentionally reserved;
(vii) any act of actual physical waste or arson by Borrower, any
principal, Affiliate, member or general partner thereof or by Borrower
Principal, any principal, Affiliate, member or general partner thereof;
(viii) Borrower's failure following any Event of Default to deliver
to Lender upon demand all Rents collected by Borrower after such Event of
Default and books and records relating to the Property;
(ix) Borrower's withdrawal following an Event of Default of any
amounts from any Property Operating Account, except as directed by Lender;
or
(x) Borrower's failure to complete the Required Repairs within the
time frames set forth in Section 9.1 hereof, to the extent Lender has not
required Borrower to make a deposit into the Required Repair Account
pursuant to the provisions of Section 9.1 hereof.
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(c) Notwithstanding the foregoing, the agreement of Lender not to
pursue recourse liability as set forth in subsection (a) above SHALL BECOME NULL
AND VOID and shall be of no further force and effect and the Debt immediately
shall become fully recourse to Borrower and Borrower Principal, jointly and
severally, in the event of (i) a default by Borrower, Borrower Principal or any
SPE Component Entity (if any) of any of the covenants set forth in Article 6,
except the extent that such breach was inadvertent, immaterial and is promptly
cured, (ii) of a breach of any of the covenants set forth in Article 7 hereof,
or (iii) if (A) a voluntary bankruptcy or insolvency proceeding is commenced by
Borrower under the U.S. Bankruptcy Code or any similar federal or state law, or
(B) an involuntary bankruptcy or insolvency proceeding is commenced against
Borrower or Borrower Principal in connection with which Borrower, Borrower
Principal, SPE Component Entity or any Affiliate of any of the foregoing has or
have colluded in any way with the creditors commencing or filing such
proceeding.
(d) Nothing herein shall be deemed to be a waiver of any right which
Lender may have under Section 506(a), 506(b), 1111(b) or any other provision of
the U.S. Bankruptcy Code to file a claim for the full amount of the indebtedness
secured by the Mortgage or to require that all collateral shall continue to
secure all of the indebtedness owing to Lender in accordance with this
Agreement, the Note, the Mortgage or the other Loan Documents.
ARTICLE XVI
NOTICES
SECTION 16.1. NOTICES
All notices, consents, approvals and requests required or permitted
hereunder or under any other Loan Document shall be given in writing and shall
be effective for all purposes if hand delivered or sent by (a) certified or
registered United States mail, postage prepaid, return receipt requested, (b)
expedited prepaid overnight delivery service, either commercial or United States
Postal Service, with proof of attempted delivery, or by (c) telecopier (with
answer back acknowledged provided an additional notice is given pursuant to
subsection (b) above), addressed as follows (or at such other address and Person
as shall be designated from time to time by any party hereto, as the case may
be, in a written notice to the other parties hereto in the manner provided for
in this Section):
If to Lender: Bank of America, N.A.
Capital Markets Servicing Group
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, 6th Floor
CA9-706-06-42
▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Servicing Manager
Telephone No: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
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With a copy to: Bank of America Legal Department
GCIB/CMBS
NC1-007-20-01
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇ ▇▇▇▇▇▇▇, Esq.
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
Cadwalader, ▇▇▇▇▇▇▇▇▇▇ and ▇▇▇▇ LLP
▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq.
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
If to Borrower: c/o Sun Communities, Inc.
The American Center
▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Chief Executive Officer
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
With a copy to: Jaffe, Rait, Heuer & ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇, Esq.
Fax No.: (▇▇▇) ▇▇▇-▇▇▇▇
(On or after September 1, 2004)
The American Center
▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Fax No.: (▇▇▇) ▇▇▇-▇▇▇▇
If to Borrower
Principal: Sun Communities Operating Limited Partnership
The American Center
▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Chief Executive Officer
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
With a copy to: Jaffe, Rait, Heuer & ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇, Esq.
Fax No.: (▇▇▇) ▇▇▇-▇▇▇▇
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A notice shall be deemed to have been given: in the case of hand delivery, at
the time of delivery; in the case of registered or certified mail, when
delivered or the first attempted delivery on a Business Day; or in the case of
expedited prepaid delivery and telecopy, upon the first attempted delivery on a
Business Day.
ARTICLE XVII
FURTHER ASSURANCES
SECTION 17.1. REPLACEMENT DOCUMENTS
Upon receipt of an affidavit of an officer of Lender as to the loss,
theft, destruction or mutilation of the Note or any other Loan Document which is
not of public record, and, in the case of any such mutilation, upon surrender
and cancellation of such Note or other Loan Document, Borrower will issue, in
lieu thereof, a replacement Note or other Loan Document, dated the date of such
lost, stolen, destroyed or mutilated Note or other Loan Document in the same
principal amount thereof and otherwise of like tenor.
SECTION 17.2. RECORDING OF MORTGAGE, ETC.
Borrower forthwith upon the execution and delivery of the Mortgage
and thereafter, from time to time, will cause the Mortgage and any of the other
Loan Documents creating a lien or security interest or evidencing the lien
hereof upon the Property and each instrument of further assurance to be filed,
registered or recorded in such manner and in such places as may be required by
any present or future law in order to publish notice of and fully to protect and
perfect the lien or security interest hereof upon, and the interest of Lender
in, the Property. Borrower will pay all taxes, filing, registration or recording
fees, and all expenses incident to the preparation, execution, acknowledgment
and/or recording of the Note, the Mortgage, the other Loan Documents, any note,
deed of trust or mortgage supplemental hereto, any security instrument with
respect to the Property and any instrument of further assurance, and any
modification or amendment of the foregoing documents, and all federal, state,
county and municipal taxes, duties, imposts, assessments and charges arising out
of or in connection with the execution and delivery of the Mortgage, any deed of
trust or mortgage supplemental hereto, any security instrument with respect to
the Property or any instrument of further assurance, and any modification or
amendment of the foregoing documents, except where prohibited by law so to do.
Lender agrees to reasonably cooperate, at Borrower's expense, with reasonable
requests made by Borrower to assign this Agreement, or any of the other Loan
Documents to a new lender in connection with a refinance of the Loan in order to
minimize the tax obligations incurred by Borrower in connection with such
refinance
SECTION 17.3. FURTHER ACTS, ETC.
Borrower will, at the cost of Borrower, and without expense to
Lender, do, execute, acknowledge and deliver all and every further acts, deeds,
conveyances, deeds of trust, mortgages, assignments, security agreements,
control agreements, notices of assignments, transfers and assurances as Lender
shall, from time to time, reasonably require, for the better assuring,
conveying, assigning, transferring, and confirming unto Lender the property and
rights hereby mortgaged, deeded, granted, bargained, sold, conveyed, confirmed,
pledged, assigned,
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warranted and transferred or intended now or hereafter so to be, or which
Borrower may be or may hereafter become bound to convey or assign to Lender, or
for carrying out the intention or facilitating the performance of the terms of
this Agreement or for filing, registering or recording the Mortgage, or for
complying with all Legal Requirements; provided, however, none of the foregoing
shall materially increase the obligations or reduce the rights of Borrower
hereunder. Borrower, on demand, will execute and deliver, and in the event it
shall fail to so execute and deliver, hereby authorizes Lender to execute in the
name of Borrower or without the signature of Borrower to the extent Lender may
lawfully do so, one or more financing statements and financing statement
amendments to evidence more effectively, perfect and maintain the priority of
the security interest of Lender in the Property. Borrower grants to Lender an
irrevocable power of attorney coupled with an interest for the purpose of
exercising and perfecting any and all rights and remedies available to Lender at
law and in equity, including without limitation, such rights and remedies
available to Lender pursuant to this Section 17.3.
SECTION 17.4. CHANGES IN TAX, DEBT, CREDIT AND DOCUMENTARY STAMP
LAWS
(a) If any law is enacted or adopted or amended after the date of
this Agreement which deducts the Debt from the value of the Property for the
purpose of taxation or which imposes a tax, either directly or indirectly, on
the Debt or Lender's interest in the Property, Borrower will pay the tax, with
interest and penalties thereon, if any. If Lender is advised by counsel chosen
by it that the payment of tax by Borrower would be unlawful or taxable to Lender
or unenforceable or provide the basis for a defense of usury then Lender shall
have the option by written notice of not less than one hundred twenty (120) days
to declare the Debt immediately due and payable without imposing any prepayment
premium or charge thereon.
(b) Borrower will not claim or demand or be entitled to any credit
or credits on account of the Debt for any part of the Taxes or Other Charges
assessed against the Property, or any part thereof, and no deduction shall
otherwise be made or claimed from the assessed value of the Property, or any
part thereof, for real estate tax purposes by reason of the Mortgage or the
Debt. If such claim, credit or deduction shall be required by law, Lender shall
have the option, by written notice of not less than one hundred twenty (120)
days, to declare the Debt immediately due and payable without imposing any
prepayment premium or charge thereon.
If at any time the United States of America, any State thereof or
any subdivision of any such State shall require revenue or other stamps to be
affixed to the Note, the Mortgage, or any of the other Loan Documents or impose
any other tax or charge on the same, Borrower will pay for the same, with
interest and penalties thereon, if any.
SECTION 17.5. EXPENSES
Borrower covenants and agrees to pay or, if Borrower fails to pay,
to reimburse, Lender upon receipt of written notice from Lender for all
reasonable costs and expenses (including reasonable, actual attorneys' fees and
disbursements and the allocated costs of internal legal services and all actual
disbursements of internal counsel) reasonably incurred by Lender in accordance
with this Agreement in connection with (a) the preparation, negotiation,
execution and delivery of this Agreement and the other Loan Documents and the
consummation of the
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transactions contemplated hereby and thereby and all the costs of furnishing all
opinions by counsel for Borrower (including without limitation any opinions
requested by Lender as to any legal matters arising under this Agreement or the
other Loan Documents with respect to the Property); (b) Borrower's ongoing
performance of and compliance with Borrower's respective agreements and
covenants contained in this Agreement and the other Loan Documents on its part
to be performed or complied with after the Closing Date, including, without
limitation, confirming compliance with environmental and insurance requirements;
(c) following a request by Borrower, Lender's ongoing performance and compliance
with all agreements and conditions contained in this Agreement and the other
Loan Documents on its part to be performed or complied with after the Closing
Date; (d) the negotiation, preparation, execution, delivery and administration
of any consents, amendments, waivers or other modifications to this Agreement
and the other Loan Documents and any other documents or matters requested by
Lender (except as expressly limited by the provisions of the provisions of
Section 13.4 hereof); (e) securing Borrower's compliance with any requests made
pursuant to the provisions of this Agreement; (f) the filing and recording fees
and expenses, title insurance and reasonable fees and expenses of counsel for
providing to Lender all required legal opinions, and other similar expenses
incurred in creating and perfecting the Lien in favor of Lender pursuant to this
Agreement and the other Loan Documents; (g) enforcing or preserving any rights,
in response to third party claims or the prosecuting or defending of any action
or proceeding or other litigation, in each case against, under or affecting
Borrower, this Agreement, the other Loan Documents, the Property, or any other
security given for the Loan; and (h) enforcing any obligations of or collecting
any payments due from Borrower under this Agreement, the other Loan Documents or
with respect to the Property or in connection with any refinancing or
restructuring of the credit arrangements provided under this Agreement in the
nature of a "work-out" or of any insolvency or bankruptcy proceedings; provided,
however, that Borrower shall not be liable for the payment of any such costs and
expenses to the extent the same arise by reason of the gross negligence, illegal
acts, fraud or willful misconduct of Lender.
ARTICLE XVIII
WAIVERS
SECTION 18.1. REMEDIES CUMULATIVE; WAIVERS
The rights, powers and remedies of Lender under this Agreement shall
be cumulative and not exclusive of any other right, power or remedy which Lender
may have against Borrower or Borrower Principal pursuant to this Agreement or
the other Loan Documents, or existing at law or in equity or otherwise except as
limited by Article XV hereof. Lender's rights, powers and remedies may be
pursued singularly, concurrently or otherwise, at such time and in such order as
Lender may determine in Lender's sole discretion. No delay or omission to
exercise any remedy, right or power accruing upon an Event of Default shall
impair any such remedy, right or power or shall be construed as a waiver
thereof, but any such remedy, right or power may be exercised from time to time
and as often as may be deemed expedient. A waiver of one Default or Event of
Default with respect to Borrower shall not be construed to be a waiver of any
subsequent Default or Event of Default by Borrower or to impair any remedy,
right or power consequent thereon.
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SECTION 18.2. MODIFICATION, WAIVER IN WRITING
No modification, amendment, extension, discharge, termination or
waiver of any provision of this Agreement, or of the Note, or of any other Loan
Document, nor consent to any departure by Borrower therefrom, shall in any event
be effective unless the same shall be in a writing signed by the party against
whom enforcement is sought, and then such waiver or consent shall be effective
only in the specific instance, and for the purpose, for which given. Except as
otherwise expressly provided herein, no notice to, or demand on Borrower, shall
entitle Borrower to any other or future notice or demand in the same, similar or
other circumstances.
SECTION 18.3. DELAY NOT A WAIVER
Neither any failure nor any delay on the part of Lender in insisting
upon strict performance of any term, condition, covenant or agreement, or
exercising any right, power, remedy or privilege hereunder, or under the Note or
under any other Loan Document, or any other instrument given as security
therefor, shall operate as or constitute a waiver thereof, nor shall a single or
partial exercise thereof preclude any other future exercise, or the exercise of
any other right, power, remedy or privilege. In particular, and not by way of
limitation, by accepting payment after the due date of any amount payable under
this Agreement, the Note or any other Loan Document, Lender shall not be deemed
to have waived any right either to require prompt payment when due of all other
amounts due under this Agreement, the Note or the other Loan Documents, or to
declare a default for failure to effect prompt payment of any such other amount.
SECTION 18.4. TRIAL BY JURY
BORROWER, BORROWER PRINCIPAL AND LENDER EACH HEREBY AGREES NOT TO
ELECT A TRIAL BY JURY OF ANY ISSUE TRIABLE OF RIGHT BY JURY, AND WAIVES ANY
RIGHT TO TRIAL BY JURY FULLY TO THE EXTENT THAT ANY SUCH RIGHT SHALL NOW OR
HEREAFTER EXIST WITH REGARD TO THE LOAN DOCUMENTS, OR ANY CLAIM, COUNTERCLAIM OR
OTHER ACTION ARISING IN CONNECTION THEREWITH. THIS WAIVER OF RIGHT TO TRIAL BY
JURY IS GIVEN KNOWINGLY AND VOLUNTARILY BY BORROWER, BORROWER PRINCIPAL AND
LENDER, AND IS INTENDED TO ENCOMPASS INDIVIDUALLY EACH INSTANCE AND EACH ISSUE
AS TO WHICH THE RIGHT TO A TRIAL BY JURY WOULD OTHERWISE ACCRUE. EACH OF LENDER,
BORROWER PRINCIPAL AND BORROWER IS HEREBY AUTHORIZED TO FILE A COPY OF THIS
PARAGRAPH IN ANY PROCEEDING AS CONCLUSIVE EVIDENCE OF THIS WAIVER BY BORROWER,
BORROWER PRINCIPAL AND LENDER.
SECTION 18.5. WAIVER OF NOTICE
Borrower shall not be entitled to any notices of any nature
whatsoever from Lender except with respect to matters for which this Agreement
or the other Loan Documents specifically and expressly provide for the giving of
notice by Lender to Borrower and except
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with respect to matters for which Borrower is not, pursuant to applicable Legal
Requirements, permitted to waive the giving of notice. Borrower hereby expressly
waives the right to receive any notice from Lender with respect to any matter
for which this Agreement or the other Loan Documents do not specifically and
expressly provide for the giving of notice by Lender to Borrower.
SECTION 18.6. REMEDIES OF BORROWER
In the event that a claim or adjudication is made that Lender or its
agents have acted unreasonably or unreasonably delayed acting in any case where
by law or under this Agreement or the other Loan Documents, Lender or such
agent, as the case may be, has an obligation to act reasonably or promptly,
Borrower agrees that neither Lender nor its agents shall be liable for any
monetary damages, and Borrower's sole remedies shall be limited to commencing an
action seeking injunctive relief or declaratory judgment. The parties hereto
agree that any action or proceeding to determine whether Lender has acted
reasonably shall be determined by an action seeking declaratory judgment. Lender
agrees that, in such event, it shall cooperate in expediting any action seeking
injunctive relief or declaratory judgment.
SECTION 18.7. WAIVER OF MARSHALLING OF ASSETS
To the fullest extent permitted by law, Borrower, for itself and its
successors and assigns, waives all rights to a marshalling of the assets of
Borrower, Borrower's partners and others with interests in Borrower, and of the
Property, and agrees not to assert any right under any laws pertaining to the
marshalling of assets, the sale in inverse order of alienation, homestead
exemption, the administration of estates of decedents, or any other matters
whatsoever to defeat, reduce or affect the right of Lender under the Loan
Documents to a sale of the Property for the collection of the Debt without any
prior or different resort for collection or of the right of Lender to the
payment of the Debt out of the net proceeds of the Property in preference to
every other claimant whatsoever.
SECTION 18.8. WAIVER OF STATUTE OF LIMITATIONS
Borrower hereby expressly waives and releases, to the fullest extent
permitted by law, the pleading of any statute of limitations as a defense to
payment of the Debt or performance of its Other Obligations.
SECTION 18.9. WAIVER OF COUNTERCLAIM
Borrower hereby waives the right to assert a counterclaim, other
than a compulsory counterclaim, in any action or proceeding brought against it
by Lender or its agents; provided, however, nothing in this section shall
prevent Borrower from, subject to the provisions of Section 18.6 above,
asserting such claim or counterclaim in a separate action against Lender.
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ARTICLE XIX
GOVERNING LAW
SECTION 19.1. CHOICE OF LAW
This Agreement shall be deemed to be a contract entered into
pursuant to the laws of the State of New York and shall in all respects be
governed, construed, applied and enforced in accordance with the laws of the
State of New York, provided however, (a) that with respect to the creation,
perfection, priority and enforcement of any Lien created by the Loan Documents,
and the determination of deficiency judgments, the laws of the state where the
Property is located shall apply, and (b) with respect to the security interest
in each of the Reserve Accounts, the laws of the state where each such account
is located shall apply.
SECTION 19.2. SEVERABILITY
Wherever possible, each provision of this Agreement shall be
interpreted in such manner as to be effective and valid under applicable law,
but if any provision of this Agreement shall be prohibited by or invalid under
applicable law, such provision shall be ineffective to the extent of such
prohibition or invalidity, without invalidating the remainder of such provision
or the remaining provisions of this Agreement.
SECTION 19.3. PREFERENCES
During the continuance of an Event of Default, Lender shall have the
continuing and exclusive right to apply or reverse and reapply any and all
payments by Borrower to any portion of the obligations of Borrower hereunder. To
the extent Borrower makes a payment or payments to Lender, which payment or
proceeds or any part thereof are subsequently invalidated, declared to be
fraudulent or preferential, set aside or required to be repaid to a trustee,
receiver or any other party under any Creditors Rights Laws, state or federal
law, common law or equitable cause, then, to the extent of such payment or
proceeds received, the obligations hereunder or part thereof intended to be
satisfied shall be revived and continue in full force and effect, as if such
payment or proceeds had not been received by Lender.
ARTICLE XX
MISCELLANEOUS
SECTION 20.1. SURVIVAL
This Agreement and all covenants, agreements, representations and
warranties made herein and in the certificates delivered pursuant hereto shall
survive the making by Lender of the Loan and the execution and delivery to
Lender of the Note, and shall continue in full force and effect so long as all
or any of the Debt is outstanding and unpaid unless a longer period is expressly
set forth herein or in the other Loan Documents. Whenever in this Agreement any
of the parties hereto is referred to, such reference shall be deemed to include
the legal representatives, successors and assigns of such party. All covenants,
promises and agreements in this Agreement, by or on behalf of Borrower, shall
inure to the benefit of the legal representatives, successors and assigns of
Lender.
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SECTION 20.2. LENDER'S DISCRETION
Whenever pursuant to this Agreement, Lender exercises any right
given to it to approve or disapprove, or any arrangement or term is to be
satisfactory to Lender, the decision of Lender to approve or disapprove or to
decide whether arrangements or terms are satisfactory or not satisfactory shall
(except as is otherwise specifically herein provided) be in the sole discretion
of Lender and shall be final and conclusive absent manifest error.
SECTION 20.3. HEADINGS
The Article and/or Section headings and the Table of Contents in
this Agreement are included herein for convenience of reference only and shall
not constitute a part of this Agreement for any other purpose.
SECTION 20.4. COST OF ENFORCEMENT
In the event (a) that the Mortgage is foreclosed in whole or in
part, (b) of the bankruptcy, insolvency, rehabilitation or other similar
proceeding in respect of Borrower or any of its constituent Persons or an
assignment by Borrower or any of its constituent Persons for the benefit of its
creditors, or (c) Lender exercises any of its other remedies under this
Agreement or any of the other Loan Documents, Borrower shall be chargeable with
and agrees to pay all costs of collection and defense, including attorneys' fees
and costs, incurred by Lender or Borrower in connection therewith and in
connection with any appellate proceeding or post-judgment action involved
therein, together with all required service or use taxes.
SECTION 20.5. SCHEDULES INCORPORATED
The Schedules annexed hereto are hereby incorporated herein as a
part of this Agreement with the same effect as if set forth in the body hereof.
SECTION 20.6. OFFSETS, COUNTERCLAIMS AND DEFENSES
Any assignee of Lender's interest in and to this Agreement, the Note
and the other Loan Documents shall take the same free and clear of all offsets,
counterclaims or defenses which are unrelated to such documents which Borrower
may otherwise have against any assignor of such documents, and no such unrelated
counterclaim or defense shall be interposed or asserted by Borrower in any
action or proceeding brought by any such assignee upon such documents and any
such right to interpose or assert any such unrelated offset, counterclaim or
defense in any such action or proceeding is hereby expressly waived by Borrower.
SECTION 20.7. NO JOINT VENTURE OR PARTNERSHIP; NO THIRD PARTY
BENEFICIARIES
(a) Borrower and Lender intend that the relationships created
hereunder and under the other Loan Documents be solely that of borrower and
lender. Nothing herein or therein is intended to create a joint venture,
partnership, tenancy-in-common, or joint tenancy relationship between Borrower
and Lender nor to grant Lender any interest in the Property other than that of
mortgagee, beneficiary or lender.
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(b) This Agreement and the other Loan Documents are solely for the
benefit of Lender and Borrower and nothing contained in this Agreement or the
other Loan Documents shall be deemed to confer upon anyone other than Lender,
Borrower and Borrower Principal any right to insist upon or to enforce the
performance or observance of any of the obligations contained herein or therein.
All conditions to the obligations of Lender to make the Loan hereunder are
imposed solely and exclusively for the benefit of Lender and no other Person
shall have standing to require satisfaction of such conditions in accordance
with their terms or be entitled to assume that Lender will refuse to make the
Loan in the absence of strict compliance with any or all thereof and no other
Person shall under any circumstances be deemed to be a beneficiary of such
conditions, any or all of which may be freely waived in whole or in part by
Lender if, in Lender's sole discretion, Lender deems it advisable or desirable
to do so.
(c) The general partners, members, principals and (if Borrower is a
trust) beneficial owners of Borrower are experienced in the ownership and
operation of properties similar to the Property, and Borrower and Lender are
relying solely upon such expertise and business plan in connection with the
ownership and operation of the Property. Borrower is not relying on Lender's
expertise, business acumen or advice in connection with the Property.
(d) Notwithstanding anything to the contrary contained herein,
Lender is not undertaking the performance of (i) any obligations under the
Leases; or (ii) any obligations with respect to such agreements, contracts,
certificates, instruments, franchises, permits, trademarks, licenses and other
documents.
(e) By accepting or approving anything required to be observed,
performed or fulfilled or to be given to Lender pursuant to this Agreement, the
Mortgage, the Note or the other Loan Documents, including, without limitation,
any officer's certificate, balance sheet, statement of profit and loss or other
financial statement, survey, appraisal, or insurance policy, Lender shall not be
deemed to have warranted, consented to, or affirmed the sufficiency, the
legality or effectiveness of same, and such acceptance or approval thereof shall
not constitute any warranty or affirmation with respect thereto by Lender.
(f) Borrower recognizes and acknowledges that in accepting this
Agreement, the Note, the Mortgage and the other Loan Documents, Lender is
expressly and primarily relying on the truth and accuracy of the representations
and warranties set forth in Article 4 of this Agreement without any obligation
to investigate the Property and notwithstanding any investigation of the
Property by Lender; that such reliance existed on the part of Lender prior to
the date hereof, that the warranties and representations are a material
inducement to Lender in making the Loan; and that Lender would not be willing to
make the Loan and accept this Agreement, the Note, the Mortgage and the other
Loan Documents in the absence of the warranties and representations as set forth
in Article 4 of this Agreement.
SECTION 20.8. PUBLICITY
All news releases, publicity or advertising by Borrower or its
Affiliates through any media intended to reach the general public which refers
to the Loan, Lender, Banc of America Securities LLC, or any of their Affiliates
shall be subject to the prior written approval of Lender, not to be unreasonably
withheld. Lender shall be permitted to make any news,
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releases, publicity or advertising by Lender or its Affiliates through any media
intended to reach the general public which refers to the Loan, the Property,
Borrower, Borrower Principal and their respective Affiliates without the
approval of Borrower or any such Persons; provided, however, Lender agrees to
consult with the timing of any such publicity if Lender reasonably believes that
Lender's disclosure of such information would have an affect on SCI's compliance
with the Securities Act. Borrower also agrees that Lender may share any
information pertaining to the Loan with Bank of America Corporation, including
its bank subsidiaries, Banc of America Securities LLC and any other Affiliates
of the foregoing, in connection with the sale or transfer of the Loan or any
Participations and/or Securities created.
SECTION 20.9. CONFLICT; CONSTRUCTION OF DOCUMENTS; RELIANCE
In the event of any conflict between the provisions of this
Agreement and any of the other Loan Documents, the provisions of this Agreement
shall control. The parties hereto acknowledge that they were represented by
competent counsel in connection with the negotiation, drafting and execution of
the Loan Documents and that such Loan Documents shall not be subject to the
principle of construing their meaning against the party which drafted same.
Borrower acknowledges that, with respect to the Loan, Borrower shall rely solely
on its own judgment and advisors in entering into the Loan without relying in
any manner on any statements, representations or recommendations of Lender or
any parent, subsidiary or Affiliate of Lender. Lender shall not be subject to
any limitation whatsoever in the exercise of any rights or remedies available to
it under any of the Loan Documents or any other agreements or instruments which
govern the Loan by virtue of the ownership by it or any parent, subsidiary or
Affiliate of Lender of any equity interest any of them may acquire in Borrower,
and Borrower hereby irrevocably waives the right to raise any defense or take
any action on the basis of the foregoing with respect to Lender's exercise of
any such rights or remedies. Borrower acknowledges that Lender engages in the
business of real estate financings and other real estate transactions and
investments which may be viewed as adverse to or competitive with the business
of Borrower or its Affiliates.
SECTION 20.10. ENTIRE AGREEMENT
This Agreement and the other Loan Documents contain the entire
agreement of the parties hereto and thereto in respect of the transactions
contemplated hereby and thereby, and all prior agreements among or between such
parties, whether oral or written between Borrower and Lender are superseded by
the terms of this Agreement and the other Loan Documents.
SECTION 20.11. TAX DISCLOSURE
Notwithstanding anything herein to the contrary, except as
reasonably necessary to comply with applicable securities laws, each party (and
each employee, representative or other agent of each party) hereto may disclose
to any and all persons, without limitation of any kind, any information with
respect to the United States federal income "tax treatment" and "tax structure"
(in each case, within the meaning of Treasury Regulation Section 1.6011-4) of
the transactions contemplated hereby and all materials of any kind (including
opinions or other tax analyses) that are provided to such parties (or their
representatives) relating to such tax treatment and tax structure; provided that
with respect to any document or similar item that in either case
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contains information concerning the tax treatment or tax structure of the
transaction as well as other information, this sentence shall only apply to such
portions of the document or similar item that relate to the United States
federal income tax treatment or tax structure of the transactions contemplated
hereby.
[SIGNATURE PAGE IMMEDIATELY FOLLOWS]
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed by their duly authorized representatives, all as of the day and
year first above written.
BORROWER:
SUN CANDLEWICK LLC, a Michigan limited
liability company
By: Sun QRS Pool 9, Inc., a Michigan
corporation, its managing member
By: /s/ ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
------------------------------------
▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Executive Vice President -
Acquisitions
BORROWER:
SUN SILVER STAR LLC, a Michigan limited
liability company
By: Sun QRS Pool 9, Inc., a Michigan
corporation, its managing member
By: /s/ ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
------------------------------------
▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Executive Vice President -
Acquisitions
BORROWER:
ASPEN-HOLLAND ESTATES LLC, a Michigan
limited liability company
By: Sun QRS Pool 9, Inc., a Michigan
corporation, its managing member
By: /s/ ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
------------------------------------
▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Executive Vice President -
Acquisitions
BORROWER PRINCIPAL:
Acknowledged and agreed to with respect
to its obligations set forth in Article
4, Section 12.6, Article 13, Article 15
and Article 18 hereof:
SUN COMMUNITIES OPERATING LIMITED
PARTNERSHIP, a Michigan limited
partnership
By: Sun Communities, Inc., a Maryland
corporation, its general partner
By: /s/ ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
------------------------------------
▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Executive Vice President -
Acquisitions
LENDER:
BANK OF AMERICA, N.A., a national
banking association
By: /s/ ▇▇▇ ▇▇▇▇▇
------------------------------------
▇▇▇ ▇▇▇▇▇, Executive Vice President
