LINE OF CREDIT AGREEMENT
THIS LINE OF CREDIT AGREEMENT ("Agreement"), is made and entered into
as of the 7 day of April, 2000, by and between ASSET INVESTORS OPERATING
PARTNERSHIP, L.P., a Delaware limited partnership ("Borrower"), AIOP FLORIDA
PROPERTIES I, L.L.C., a Delaware limited liability company, AIOP FLORIDA
PROPERTIES II, L.L.C., a Delaware limited liability company, COMMUNITY SAVANNA
CLUB JOINT VENTURE, a Delaware general partnership, and AIOP LOST DUTCHMAN
NOTES, L.L.C., a Delaware limited liability company, and U.S. BANK NATIONAL
ASSOCIATION (the "Bank").
RECITALS
. Borrower applied to the Bank for the extension of a line of credit
for general business purposes.
B. The Bank is willing to extend credit for such purposes upon the
terms and conditions set forth in this Agreement.
NOW, THEREFORE, in consideration of the foregoing premises and the
mutual covenants herein contained and for other good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged, the parties hereto
hereby agree as follows:
ARTICLE 1.
DEFINITIONS
The following terms when used in this Agreement shall, except where the
context otherwise required, have the following meanings (such definitions to be
equally applicable to the singular and the plural forms thereof):
1.1 "Act of Bankruptcy" shall mean (i) if Borrower or any member of the
Affiliate Group shall fail to pay its debts as they become due, or (ii) shall
make an assignment for the benefit of its creditors, or (iii) shall admit in
writing its inability to pay its debts as they become due, or (iv) shall file a
petition under any chapter of the Federal Bankruptcy Code or similar law, state
or federal, now or hereafter existing, or (v) shall become "insolvent" as that
term is generally defined under the Federal Bankruptcy Code, or (vi) shall in
any involuntary bankruptcy case commenced against it file an answer admitting
insolvency or inability to pay its debts as they become due, or (vii) shall fail
to obtain a dismissal of such case within ninety (90) days after its
commencement or convert the case from one chapter of the Federal Bankruptcy Code
to another chapter, or (viii) be the subject of an order for relief in such
bankruptcy case, or (ix) be adjudged a bankrupt or insolvent, or (x) shall have
a custodian, trustee or receiver appointed for, or have any court take
jurisdiction of its property, or any part thereof, in any voluntary proceeding
for the purpose of reorganization, arrangement, dissolution or liquidation and
such custodian trustee or receiver shall not be discharged, or such jurisdiction
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shall not be relinquished, vacated or stayed within (90) days of the
appointment.
1.2 "Advance" shall mean a disbursement under the Loan.
1.3 "Advance Request" shall mean the written request for Advances made
by Borrower and more particularly described in Section 2.4 below.
1.4 "Affiliate" shall mean any of the Affiliate Group and any Person
that directly or indirectly through one or more intermediaries controls or is
controlled by or is under common control with such entities.
1.5 "Affiliate Group" shall mean Borrower; Asset Investors Corporation,
a Delaware corporation, Commercial Assets, Inc., a Delaware corporation, AIOP
FLORIDA PROPERTIES I, L.L.C., a Delaware limited liability company, AIOP FLORIDA
PROPERTIES II, L.L.C., a Delaware limited liability company, COMMUNITY SAVANNA
CLUB JOINT VENTURE, a Delaware general partnership, and AIOP LOST DUTCHMAN
NOTES, L.L.C., a Delaware limited liability company.
1.6 "Agreement" shall mean this Agreement as originally executed, as
amended, modified or supplemented from time to time.
1.7 "Appraisal" shall mean current appraisals of the Property prepared
by an appraiser, licensed by the state in which each Property is located,
engaged by and acceptable to Bank, which appraisal shall determine the market
value of the Property in its current as-is condition and shall comply with (1)
Title XI of the Federal Financial Institution Reform, Recovery and Enforcement
Act of 1989 (FIRREA); (2) the OCC Appraisal Standards of 12 CFR, part 34; and
(3) the Code of Professional Ethics and Standards of Professional Practice of
the American Institute of Real Estate Appraisers and the Guidelines for Real
Estate Appraisal Policies and Review Procedures adopted by the bank supervision
offices of the Federal Deposit Insurance Corporation, the Office of Thrift
Supervision (OTS), Board of Governors of the Federal Reserve System and the
Office of the Comptroller of the Currency as of December 14, 1987 and shall be
in form and substance satisfactory to the Bank.
1.8 "Appraised Value" shall mean the value for a Property arrived at
under an Appraisal and accepted by the Bank.
1.9 "Approvals and Permits" means each and all approvals,
authorizations, bonds, consents, certificates, franchises, licenses, permits,
registrations, qualifications, and other actions and rights granted by or
filings with any Persons necessary, appropriate, or desirable in connection with
the Property, or for the conduct of the business and operations of Borrower.
1.10 "Authorized Officer" shall mean any one of the following Senior
Officers of Asset Investors Corporation, the sole general partner of the
Borrower, Chief Executive Officer, Vice Chairman, President, or Chief Financial
Officer or any other authorized agent of Borrower certified by Borrower to the
Bank for the purpose of making certifications under this Agreement or making
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Advance Requests. Until otherwise certified by Borrower to the Bank in writing,
the Authorized Officers of the general partner of the Borrower are Xxxxx
Xxxxxxxxx, Xxxxxx X. Xxxxxx, Xxxxx X. Xxxxx and Xxxxx X. Xxxxxx.
1.11 "Business Day" shall mean every day except a Saturday, Sunday or
public holiday on which the Bank is required or permitted to be closed.
1.12 "Code" shall mean the Internal Revenue Code of 1986, as amended
from time to time.
1.13 "Closing Date" shall mean the date of recording of the Deed of
Trust on the Property.
1.14 "Collateral" shall mean any real property or personal property
(tangible or intangible), together with all improvements and appurtenances,
granted, pledged or encumbered to or for the benefit of the Bank in connection
with the Loan.
1.15 "Commitment Amount" shall mean Fifteen Million Dollars
($15,000,000.00), subject to the automatic reduction provisions of ARTICLE 9
below.
1.16 "Deed of Trust" shall mean a first lien deed or trust or mortgage,
security agreement, financing statement and assignment of rents and revenues,
creating a first lien on a Property, the improvements, and all rights and
easements appurtenant thereto, and assigning to the Bank all leases, contracts,
rents and revenues from the Property, if any, associated with the Property,
securing the Loan, all in form and substance customary for commercial loans made
by the Bank and satisfactory in all respects to the Bank, and intended to be
recorded in the real property records of the county in which the Property is
located, if required by the Bank.
1.17 "Default" shall mean any event which if continued uncured would,
with the passage of time or notice or both, constitute an Event of Default.
1.18 "Environmental Indemnity" shall mean the Environmental Indemnity
Agreement, executed by Borrower and each Property Subsidiary for the benefit of
Bank in connection with each Property, pursuant to which Borrower and each
Property Subsidiary agrees to indemnify, defend and hold harmless Bank from and
against environmental liabilities that Bank may incur relating to the Project.
1.19 "ERISA" shall mean the Employee Retirement Income Security Act of
1974, as the same may from time to time be amended, and the rules and
regulations promulgated thereunder by any governmental agency or authority, as
from time to time in effect.
1.20 "ERISA Affiliate" shall mean any trade or business (whether or not
incorporated) that is a member of a group of trades or business under common
control of which Borrower is a member and which is treated as a single employer
under Section 414 of the Code.
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1.21 "Event of Default" shall mean any Event of Default described in
Section 7.1 below.
1.22 "Financing Statements" shall mean any and all UCC-1 Financing
Statements necessary to be filed or recorded in the official records of a
Governmental Entity to perfect the security interests of the Bank in Personalty
associated with a Property.
1.23 "GAAP" shall mean generally accepted accounting principles set
forth in the opinions and pronouncements of the Accounting Principles Board of
the American Institute of Certified Public Accountants and statements and
pronouncements of the Financial Accounting Standards Board or in any other
statements by any other entity as may be approved by a significant segment of
the accounting profession, which are applicable to the circumstances as of any
date of determination. Whenever any accounting term is used herein which is not
otherwise defined, it shall be interpreted in accordance with GAAP.
1.24 "Governmental Entity" shall mean any federal, state, or local
governmental or quasi-governmental entity, agency, board, commission or
organization having jurisdiction over any Collateral or Person relevant to this
Agreement.
1.25 "Governmental Requirement" shall mean all laws, ordinances, rules,
regulations, codes, orders, writs, legal requirements, injunctions or decrees of
any Governmental Entities applicable to the Borrower or any member of the
Affiliate Group or a Property.
1.26 "Indebtedness" shall mean all principal and interest and all other
sums payable under the Note and all other Loan Documents.
1.27 "Lien" shall mean any mortgage or deed of trust (including any
mortgage, pledge, hypothecation, assignment, deposit arrangement, lien or
charge), including the lien of the Loan Documents that becomes a lien on real
property, claim, security interest, easement or encumbrance, or preference,
priority or other security agreement of any kind or nature whatsoever
(including, without limitation, any lease or title retention agreement, any
financing lease having substantially the same economic effect as any of the
foregoing, and the filing of, or agreement to give, any financing statement
perfecting a security interest under the code or comparable law of any
jurisdiction), and any option, right of first refusal, or other interest or
right.
1.28 "Loan" shall mean the revolving line of credit commitment in the
maximum principal amount of $15,000,000.00 made available to the Borrower by the
Bank under the terms of this Agreement and the Loan Documents.
1.29 "Loan Documents" shall mean any and all documents evidencing and
securing the Loan and shall include the Note, this Agreement, any Deed of Trust,
any Financing Statement, any Security Agreement, any Environmental Indemnity
Agreement and any other documents or instruments now or hereafter executed and
delivered to the Bank to further evidence or secure the Loan.
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1.30 "Loan Party" shall mean Borrower, each Subsidiary and each other
Person that from time to time is or becomes obligated to the Bank with respect
to the Loan.
1.31 "Material Adverse Occurrence" shall mean any occurrence of
whatsoever nature (including, without limitation, any adverse determination in
any litigation, arbitration or governmental investigation or proceeding) which
in Bank's reasonable judgment materially adversely affects (i) the present or
prospective financial condition or operations of a Loan Party or a member of the
Affiliate Group or (ii) the ability of a Loan Party or a member of the Affiliate
Group to perform its obligations under the Loan Documents, including without
limitation, the occurrence of any event of dissolution or termination of any
Loan Party or a member of the Affiliate Group, or (iii) the operations or value
of the Property, and remains unsatisfied or is not discharged or eliminated
after thirty (30) days following written notice from the Bank.
1.32 "Maturity Date" shall mean the earlier of (i) May 31, 2001, unless
extended in accordance with Section 2.2 below or (ii) the date on which the Loan
is accelerated as a consequence of an Event of Default.
1.33 "Multiemployer Plan" shall mean a multiemployer plan, as that term
is defined in Section 4001(a)(3) of ERISA, which is maintained (on the Closing
Date, within the five years preceding the Closing Date, or at any time after the
Closing Date) for employees of any Borrower and/or any ERISA Affiliate.
1.34 "Note" shall mean the Revolving Promissory Note of even date
herewith in the stated amount of $15,000,000.00 made by Borrower and Property
Subsidiaries to the order of the Bank, as the same may be modified, amended,
extended, replaced or restated.
1.35 "Obligations" shall mean the Indebtedness and all other
obligations of the Borrower in connection with the Loan made by the Bank
pursuant to this Agreement.
1.36 "Opinions of Counsel" shall have the meaning set forth in Section
3.3(c) below.
1.37 "PBGC" shall mean the Pension Benefit Guaranty Corporation,
established pursuant to Subtitle A of Title IV of ERISA, and any successor
thereto or to the functions thereof.
1.38 "Person" shall mean any natural person, corporation, limited
liability company, limited partnership, limited liability partnership,
association, trust, joint venture, government, governmental agency or any other
entity, whether acting in an individual, fiduciary or other capacity.
1.39 "Personalty" shall mean all personal property, tangible and
intangible, contained within improvements or used in connection with a Property
financed by this Loan (excluding personal property owned by any tenant under a
lease) now owned or hereafter acquired by the Borrower, except personal property
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owned by Borrower and used in the maintenance and operation of multiple
properties.
1.40 "Plan" shall mean each employee benefit plan (whether in existence
on the Closing Date or thereafter instituted), as that term is defined in
Section 3 of ERISA, maintained for the benefit of employees, officers or
directors of Borrower and/or of any ERISA Affiliate.
1.41 "Prohibited Transaction" shall mean the respective meanings
assigned to that term in Section 4975 of the Code and Section 406 of ERISA.
1.42 "Property" shall mean any real property and appurtenances securing
this Loan, as more particularly described on Exhibit A.
1.43 "Property Subsidiary" shall mean either or both of Community
Savanna Club Joint Venture and AIOP Lost Dutchman Notes, L.L.C., as the context
requires.
1.44 "Reference Rate" shall mean the rate of interest announced by the
Bank from time to time as its Reference Rate. The Bank may lend to its customers
at rates which are at, above or below the Reference Rate.
1.45 "Reportable Event" shall mean a reportable event as defined in
Section 4043 of ERISA and the regulations issued under such Section, with
respect to a Plan, excluding, however, the events as to which the PBGC by
regulation has waived the requirement of Section 4043(a) of ERISA that it be
notified within 30 days of the occurrence of such event, provided that a failure
to meet the minimum funding standards of Section 412 of the Code and of Section
302 of ERISA shall be a Reportable Event regardless of the issuance of any
waivers in accordance with Section 412(d) of the Code.
1.46 "Security Agreement" shall mean any security agreement executed
and delivered by the Borrower and the Property Subsidiaries to the Bank,
granting to the Bank a security interest in Personalty associated with a
Property.
1.47 "Subsidiary" shall mean any or all of AIOP Florida Properties I,
L.L.C.; AIOP Florida Properties II, L.L.C.; Community Savanna Club Joint
Venture; and AIOP Lost Dutchman Notes, L.L.C., as the context requires, each of
which is 100% wholly owned, directly or through other Subsidiaries by Borrower.
1.48 "Title Company" shall mean the title insurance company, which
company shall be satisfactory to Bank in its absolute and sole discretion,
insuring a Deed of Trust associated with a Property.
1.49 "Title Policy" shall mean, respectively, each and all title
insurance policies and endorsements thereto and reinsurance or coinsurance
agreements and endorsements as reasonably required by the Bank in connection
with a Deed of Trust.
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Other terms defined herein shall have the meaning ascribed to them
herein.
ARTICLE 2.
CREDIT FACILITY
2.1 Commitment. Subject to and in accordance with the provisions of
this Agreement, the Bank agrees to make Advances of the Loan, and Borrower may
draw upon and borrow, in the manner and upon the terms and conditions expressed
in this Agreement, amounts that shall not exceed in the aggregate, at any one
time outstanding, the Commitment Amount. All amounts hereafter advanced or
accruing, including, without limitation, any amounts (including principal
amounts) advanced or outstanding hereunder in excess of the Commitment Amount,
shall be outstanding under the Loan and shall be evidenced and secured by the
Loan Documents. Borrower shall, within two (2) Business Days after written
notice from the Bank, make principal and other payments required so that the
outstanding principal balance of the Loan does not exceed the Commitment Amount.
The Loan shall be a revolving credit, against which Advances may be made to
Borrower, repaid by Borrower and additional Advances made to Borrower, subject
to the limitations contained in this Agreement, provided that Bank shall have no
obligation to make any Advance that would cause the outstanding principal
balance of the Loan to exceed the Commitment Amount.
2.2 Annual Review; Extension. The Bank shall be committed to make
Advances under this Loan prior to the Maturity Date. Upon written request by the
Borrower to the Bank delivered not more than ninety (90) days or less than sixty
(60) days prior to the then-effective Maturity Date, the Bank shall conduct a
credit review of the Loan. Following the first annual credit review,
approximately eleven (11) months after the date of this Agreement and on each
twelve-month anniversary thereafter, if the Borrower has requested an extension
of the Maturity Date in the manner set forth above and if the Bank determines to
extend the Maturity Date of the Loan, in its sole and absolute discretion, the
Maturity Date shall be extended by a period of twelve (12) months from the
then-effective Maturity Date. If, in the course of any annual review, the Bank
determines that it shall not extend the Maturity Date beyond its then-effective
date, the Bank shall give notice of such decision to Borrower not later than
thirty (30) days prior to the then-effective Maturity Date and, in such event,
the Bank shall continue to make Advances under the Loan until the Maturity Date.
2.3 The Loan.
(a) The Note. The Borrower's obligation to pay the principal of and
interest on the Loan shall be evidenced by the Note which shall (i) be duly
executed and delivered by Borrower and each Property Subsidiary, as co-makers,
(ii) be dated as of the date hereof, (iii) be in the stated principal amount of
the Loan, (iv) mature on the Maturity Date unless extended under the provisions
of Section 2.2, (v) bear interest as provided in the Note, and (vi) be entitled
to the benefits of this Agreement and the Loan Documents.
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(b) Term. The Loan shall have a term which commences as of the date
hereof and expires on the Maturity Date, unless extended in accordance with the
terms of Section 2.2 above.
(c) Interest and Payment. The Loan shall bear interest on the
outstanding principal balance at the Bank's floating Reference Rate, adjusted
daily. Interest shall be payable monthly on or before the first (1st) day of
each month. If not sooner paid, all outstanding principal, accrued but unpaid
interest and other charges due and owing under the Loan Documents shall be paid
in full on the Maturity Date.
(d) Default Rate; Late Charges. Upon the occurrence of a Default
under the Loan, the Bank shall have the right to collect interest on the
outstanding indebtedness under the Loan at a rate of interest equal to the
greater of (i) eighteen percent (18%) per annum or (ii) five percent (5%) per
annum in excess of the Reference Rate ("Default Rate"); provided that any
interest at the Default Rate which has accrued shall be paid at the time of and
as a condition precedent to the curing of any Default under the Loan. In the
event any payment of principal, interest, or other sum due in connection with
the Loan is not made within five (5) days after the due date, the Bank may, at
its option, require the payment of a late charge in the amount of four percent
(4%) of the delinquent sum ("Late Charge").
(e) Prepayment. Borrower shall have the right to prepay the Loan, in
whole or in part, at any time and from time to time. All sums received by the
Bank under this Loan from whatever source shall be applied (i) when no Default
or Event of Default has occurred and is continuing, for the specific purpose for
which it was remitted under the Loan and otherwise to the principal balance of
the Loan, and (ii) after the occurrence of a Default or Event of Default, and
while such Default or Event of Default continues, to fees, charges, interest or
principal under the Loan, in such manner and order as the Bank may direct, in
its sole and absolute discretion.
(f) Payments Due on Days Other than Business Days. Whenever any
payment to be made under this Agreement or under the Note shall be stated to be
due on a day which is not a Business Day, the due date thereof shall be extended
to the next succeeding Business Day, and interest shall be payable at the
applicable rate during such extension.
2.4 Advances. Advances will be made by Bank daily upon receipt by Bank
of at least one (1) Business Day's advance written notice received on or before
10:00 a.m., Denver local time, accompanied by the items set forth below:
(a) an Advance Request in the form of Exhibit B.
(b) the certification by an Authorized Officer on behalf of
Borrower: (i) that neither a Default, except as specifically disclosed to Bank
in the Advance Request, or otherwise in writing, nor an Event of Default exists,
and (ii) that the outstanding principal balance of the Loan after the requested
Advance will not exceed the Commitment Amount.
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ARTICLE 3.
CONDITIONS PRECEDENT TO CLOSING
The Bank's obligation to make the Loan and to enter into and perform
its agreements under this Agreement shall be subject to the full and complete
satisfaction of the following conditions precedent, including receipt and
approval by the Bank of the following agreements, documents and instruments,
each in form and substance satisfactory to the Bank, in each case as determined
by the Bank in its sole and absolute discretion, on the Closing Date and
subsequently:
3.1 Representations and Warranties Accurate. The representations and
warranties by each Loan Party in the Loan Documents shall be correct on and as
of the Closing Date.
3.2 Documents. The Loan Documents described below shall be executed and
delivered to the Bank:
(a) this Agreement, duly executed by Bank, Borrower and each
Subsidiary;
(b) two Deeds of Trust, each duly executed by the appropriate
Property Subsidiary, encumbering each Property described on Exhibit A;
(c) the Note, duly executed by Borrower and each Property
Subsidiary, as co-maker;
(d) two Environmental Indemnity Agreements, each duly executed by
Borrower and the appropriate Property Subsidiary;
(e) the Security Agreement, duly executed by Borrower;
(f) UCC-1 financing statement(s) required to perfect the Bank's
security interest in the Personalty (the "Financing Statements"); and
(g) such other Collateral documents as Bank may reasonably require
to further evidence or perfect the Bank's security interests in the Collateral.
3.3 Review Items. The Bank shall have received and approved the
following:
(a) Resolutions. Resolutions of Borrower and each Subsidiary
authorizing the execution, delivery and performance of this Agreement and any
and all other documents related hereto or required hereby.
(b) Organizational Documents. Copies (certified to the Bank's
satisfaction) of the organizational documents of the Borrower and each
Subsidiary and current certificates of good standing issued by the appropriate
Governmental Entities.
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(c) Opinion of Counsel. Legal opinions ("Opinions of Counsel") of
independent counsel for Borrower and each Subsidiary with respect to this
Agreement and the Loan Documents, in form and substance satisfactory to the Bank
(i) that the Loan Party is duly organized and in good standing in the state of
its formation and in such other jurisdictions as may be necessary, (ii) that the
transaction described in the opinion and the execution and delivery of the
documentation evidencing such transaction and the performance of obligations
thereunder have been duly authorized by all necessary parties, (ii) that the
transaction documents are legal, valid and binding and enforceable in accordance
with their terms, subject to customary exceptions, (iii) concerning such other
legal matters as the Bank may require regarding the specific transaction and the
absence of conflicts with the governing documents of the entity or any other
agreement, instrument or governmental order or rule to which the entity is
subject and the absence of any material litigation against the entity which
would materially adversely affect the entity's ability to perform its legal
obligations under the transaction documents, and (iv) such other opinions
specific to the entity or the transaction as the Bank may reasonably require.
(d) Financial Statements. Certified financial statements of
Borrower, as specified in Section 5.1 below;
(e) Appraisal. A current Appraisal of the Property.
(f) Title Policy. The Bank shall have received a fully paid ALTA
mortgagee's Title Policy issued by a Title Company acceptable to the Bank, in
form and substance satisfactory to the Bank, naming the Bank as the insured and
insuring the Deed of Trust to be a valid first lien on a good and marketable fee
simple title to the Property, in an amount not less than the Commitment Amount,
subject only to such liens and encumbrances and such exceptions as are approved
in writing by the Bank, and, without limiting the generality of the foregoing,
specifically insuring against mechanics' liens, matters which would be disclosed
by a comprehensive survey, and the rights of parties in possession, and
containing judgment, tax lien, assessment and bankruptcy searches, a
comprehensive endorsement (if the Property is subject to prior restrictions of
record and in the judgment of the Bank, such an endorsement is necessary to
protect the Bank's interest), and such other endorsements as may reasonably be
requested by the Bank.
(g) Taxes. All delinquent taxes and all levied and pending
assessments relating to the Property shall have been paid in full (or, in lieu
thereof, payment in escrow of an amount determined by the Bank).
(h) Survey. Borrower shall have furnished to Bank, at Borrower's
expense, a current improvement survey plat ("survey"), in form and substance
satisfactory to the Bank and the Title Company, indicating, without limitation,
the legal description of the Property as it will be insured by the Title
Company, the courses and distances of the Property lot lines, all appurtenant
and servient easements, all dominant easements, location of nearest public roads
affording ingress and egress to and from the Property, location and dimensions
of all encroachments, buildings and other improvements (excluding manufactured
homes), locating all easements and rights-of-way appurtenant to or burdening the
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Property and showing any other matters of record, visible upon inspection of the
Property or otherwise known to the surveyor which affect title to or use of the
Property. The surveyor shall also certify whether or not any portion of the
Property is located within a Federal Emergency Management Agency identified
flood-prone area and if located thereon, state the map number and whether or not
the Property appears in the "Flood Hazard Area." The survey must be certified as
accurate by a licensed surveyor in the state in which each Property is located
and contain a certificate imprinted thereon in the form approved by the American
Land Title Association stating that the survey is made for the benefit of the
Bank and the Title Company and shall be sufficient to induce the Title Company
to deleted the standard exceptions from the Title Policy regarding matters that
would be shown by an ALTA survey. The survey for the Property located in Florida
shall meet the criteria set forth above or shall be otherwise satisfactory to
the Bank and sufficient to induce the Title Company to delete the standard
exceptions from the Title Policy regarding matters that would be shown by an
ALTA Survey.
(i) Hazardous Waste. The Bank shall have received evidence
(including, without limitation, a preliminary hazardous waste assessment or
report) acceptable to it in its sole discretion as to the presence of hazardous
waste or substances on, under or in the Property, together with such
documentation as may be necessary to permit the Bank to rely thereon, a copy of
which shall be provided to Borrower.
(j) Compliance with Governmental Requirements. The Bank shall have
received written evidence satisfactory to it that the Property and the use
thereof are permitted by and comply with all applicable restrictions and
requirements in prior conveyances, zoning ordinances, subdivision and platting
requirements and other laws and regulations, and have been duly approved by the
municipal or other governmental authorities having jurisdiction and that the
required building, zoning, environmental and other permits, approvals and
licenses have been duly obtained as required by law.
(k) Approvals. The Bank shall have received evidence acceptable to
it that the Borrower or appropriate Property Subsidiary has received all
necessary Approvals and Permits from, and given all necessary notices to, and
made all necessary filings with, any and all Governmental Entities with respect
to the Property, and the contemplated use and operation thereof.
(l) Insurance. The Bank shall have received the evidences of
insurance coverage required under Section 5.8 below.
(m) Soil Reports. If required by Bank, a soils report addressed to
Bank and prepared by a licensed soils engineer acceptable to Bank showing the
locations of, and containing boring logs for, all borings.
(n) Expenses. The Bank shall have been reimbursed by the Borrower
for all out-of-pocket costs and expenses incurred by the Bank to the date of
this Agreement in connection with the loan transactions contemplated herein,
including, without limitation, reasonable attorneys' fees, architect's fees,
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appraisal fees, survey fees, inspection fees, hazardous waste audits, closing
charges, documentary or tax stamps, recording and filing fees, and service
charges of the Bank. (This condition shall in no way limit the obligation of the
Borrower to reimburse the Bank for such costs and expenses paid or incurred by
the Bank during the term of the Loan.
ARTICLE 4.
REPRESENTATIONS, WARRANTIES AND COVENANTS
In order to induce Bank to make the Loan, Borrower, and, to the extent
applicable, each other Loan Party, for itself, represents, warrants and
covenants as follows, which representations, warranties and covenants shall be
true and correct as of the execution hereof and shall survive the execution and
delivery of the Loan Documents:
4.1 Organization of Loan Party; Authority to Enter into Agreement.
Borrower is a limited partnership, duly formed and validly in existence and in
good standing under the laws of the State of Delaware. Each Loan Party is duly
qualified to do business and is in good standing in each jurisdiction where the
nature of its business makes such qualification necessary and where the failure
to so qualify permanently precludes the Loan Party from enforcing its contracts.
Each Loan Party has full power and authority to enter into this Agreement, to
borrow money as contemplated herein and to execute and carry out the provisions
of the Loan Documents. The execution, delivery and performance of the Loan
Documents have been duly authorized by all necessary action of each Loan Party,
and no other action of the Loan Party is required for the execution, delivery
and performance of the Loan Documents. The Loan Documents which have been
executed and delivered pursuant to this Agreement constitute, or, if not yet
executed or delivered, will when so executed and delivered, constitute valid and
binding obligations of the Loan Party, each enforceable in accordance with its
respective terms. Each Loan Party holds all certificates of authority, licenses
and permits necessary to carry on its business as presently conducted in each
jurisdiction in which it is carrying on such business.
4.2 No Violation of Other Agreements; No Default. The execution,
delivery and performance by the Loan Party of the Loan Documents will not (a)
violate any provision of any Governmental Regulation or any order, writ,
judgment, injunction, decree, determination or award of any court, governmental
agency or arbitrator presently in effect having applicability to the Loan Party,
(b) violate or contravene any provision of the constituent documents of the Loan
Party, or (c) result in a breach of or constitute an event of default under any
indenture, deed of trust, mortgage, loan or credit agreement, note or, except as
specifically identified to the Bank in writing, any other agreement, lease or
instrument to which the Loan Party is a party or by which it or any of its
properties may be bound or result in the creation of any lien or security
interest thereunder. The Loan Party is not in default under or in violation of
any such Governmental Requirement, order, writ, judgment, injunction, decree,
determination or award or any such indenture, loan or credit agreement or other
agreement, lease or instrument in any case in which the consequences of such
12
default or violation could have a material adverse effect on the business,
operations, properties, assets or condition (financial or otherwise) of the Loan
Party.
4.3 Economic Benefit. The execution and delivery by Bank of this
Agreement and the extension of credit by the Bank hereunder constitutes an
economic benefit to each Loan Party at least equal to the amount of each of its
obligations hereunder and each Loan Party has received fair equivalent value by
the extension of the credit facility described in this Agreement in exchange for
the liens and security interest granted by the Loan Party to the Bank under the
Loan Documents.
4.4 Government Consents. No order, consent, approval, license,
authorization or validation of, or filing, recording or registration with, or
exemption by, any Governmental Entity is required on the part of any Loan Party
to authorize, or is required in connection with the execution, delivery and
performance of, or the legality, validity, binding effect or enforceability of,
the Loan Documents, except for any necessary filing or recordation of or with
respect to any of the Loan Documents.
4.5 Good Faith; Bankruptcy. This Agreement and the Loan Documents are
executed in good faith by each Loan Party and is not given or intended to
hinder, delay or defraud any creditor or to contravene any of the bankruptcy
laws of the Federal Bankruptcy Code, United States (11 U.S.C. Section 101, et
seq.), or any other applicable laws. As of the date of the execution of this
Agreement, no Loan Party is the subject of a pending bankruptcy case. No Loan
Party is aware of any threatened bankruptcy case, nor is any Loan Party
presently intending to file such a case.
4.6 Affiliate Bankruptcy; Insolvency. No member of the Affiliate Group
is insolvent (as such term is defined in Section 101(29) of the Federal
Bankruptcy Code of 1978, as amended) and will not be rendered insolvent by
execution of this Agreement or any Loan Document or consummation of the
transactions contemplated thereby. No member of the Affiliate Group is the
subject of a case or proceeding under the Federal Bankruptcy Code or any state
insolvency statutes.
4.7 Solvency.
(a) The fair salable value of the assets of the Borrower will,
immediately following the closing of this Loan and after the transaction
contemplated under the Loan Documents exceed the amount that will be required to
be paid by or in respect of the existing debts and other liabilities of such
Borrower (including contingent liabilities) as they mature.
(b) The Borrower does not have or will not have, immediately
following the closing of the Loan, unreasonably small capital to carry out its
business as conducted or as proposed to be conducted.
(c) The Borrower does not intend to, or believe that it will, incur
debts beyond its ability to pay such debts as they mature.
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4.8 Financial Statements. Any loan applications, financial statements,
supporting schedules, and financial reports heretofore delivered to the Bank in
connection with the Loan Documents by or on behalf of each Loan Party are true
and correct in all material respects, and, as to each Loan Party, have been
prepared in accordance with GAAP, consistently applied, and fairly represent the
respective financial conditions of the subjects thereof as of the dates thereof
and for the periods covered thereby, and no Material Adverse Occurrence has
occurred in the financial conditions presented therein since the respective
dates thereof. Each Loan Party agrees to promptly notify Bank in the event that
any such documentation or information is later discovered by the Loan Party to
be materially inaccurate.
4.9 No Litigation. There are no material actions, suits or proceedings
pending, or to the knowledge of the Loan Party threatened against or affecting
the Loan Party, or any of the property or assets of the Loan Party, in any court
at law or in equity, or before or by any governmental or municipal authority
which might materially adversely affect the ability of the Loan Party to perform
its respective obligations hereunder or under any of the Loan Documents to which
the Loan Party is a party.
4.10 Marketable Title. Each Loan Party has good and marketable title to
all of its assets which secure repayment of the Note, free and clear of all
liens securing or evidencing a monetary obligation or containing provisions by
which title could be divested by an event of default or the passage of time.
4.11 Secondary Financing. There shall be no additional financing by the
Borrower or a Subsidiary which is secured by a lien on the Property without the
prior written consent of the Bank, which may be withheld in Bank's sole
discretion.
4.12 Compliance With Documents. As of the date hereof and for so long
as the Loan Documents remain in effect, each Loan Party is and will remain in
full compliance with all of the terms and conditions of this Agreement and the
Loan Documents, and no Default has or shall have occurred or shall have occurred
and be continuing, which, with the lapse of time or the giving of notice, or
both, would constitute an Event of Default under the foregoing.
4.13 Responsible Parties. Each Loan Party acknowledges and agrees that
the acts of the Authorized Officer are the acts of each Loan Party and that the
representations, warranties, covenants and agreements of each Loan Party in this
Agreement and the Loan Documents shall be deemed to be those of the other Loan
Parties.
4.14 Use of Proceeds. Each Advance will be used by the Borrower solely
for the general business purposes permitted under this Agreement.
4.15 Margin Stock. No part of the Advances shall be used at any time by
Borrower to purchase or carry margin stock (within the meaning of Regulation U
promulgated by the Board of Governors of the Federal Reserve System) or to
extend credit to others for the purpose of purchasing or carrying any margin
stock. The Borrower is not engaged principally, or as one of its important
activities, in the business of extending credit for the purpose of purchasing or
carrying any such margin stock. No part of the Advances will be used by Borrower
14
for any purpose which violates, or which is inconsistent with, any regulations
promulgated by the Board of Governors of the Federal Reserve System.
4.16 Taxes. Each Loan Party has filed all federal, state and local tax
returns required to be filed and has paid or made provision (as required by
GAAP) for the payment of all taxes due and payable pursuant to such returns and
pursuant to any assessments made against it or any of its property and all other
taxes, fees and other charges imposed on it or any of its property by any
Governmental Entity (other than taxes, fees or charges the applicability, amount
or validity of which is currently being contested in good faith by appropriate
proceedings and with respect to which reserves in accordance with GAAP have been
provided on the books of each Loan Party). No tax liens have been filed and no
material claims are being asserted with respect to any such taxes, fees or
charges. The charges, accruals and reserves on the books of each Loan Party in
respect of taxes and other governmental charges are adequate, and each Loan
Party knows of no proposed material tax assessment against it or any basis
therefor.
4.17 Trademarks, Patents. Borrower possesses or has the right to use
all of the patents, trademarks, trade names, service marks and copyrights, and
applications therefor, and all technology, know-how, processes, methods and
designs used in or necessary for the conduct of its business, without known
conflict with the rights of others.
4.18 Covenants, Zoning and Codes. Each Loan Party has complied and will
continue to comply with all applicable statutes and regulations to be complied
with in connection with the Property, including, without limitation, all
statutes and regulations regarding environmental issues, the Americans with
Disabilities Act, and historical preservation acts and regulations. All permits,
consents, approvals or authorizations by, or registrations, declarations,
withholding of objections or filings with any governmental body or private
entity necessary in connection with the valid execution, delivery and
performance of this Agreement, the Loan Documents, and any and all other
documents executed in connection with any of the foregoing, have been obtained
and are valid, adequate and in full force and effect. The Property and the
intended use thereof will in all material respects conform to and comply with
all covenants, conditions, restrictions and reservations affecting the Property,
with all applicable zoning, including parking requirements, subdivision,
environmental protection, use and building codes, laws, regulations and
ordinances, including without limitation any covenants and restrictions recorded
in the official records of the applicable Governmental Entity (collectively, the
"Covenants").
4.19 Accuracy of Information. All factual information heretofore or
herewith furnished by or on behalf of each Loan Party to the Bank for purposes
of or in connection with this Agreement or any transaction contemplated hereby
is, and all other such factual information hereafter furnished by or on behalf
of each Loan Party to the Bank will be, true and accurate in every material
respect on the date as of which such information is dated or certified and no
such information contains any misstatement of fact or omits to state any fact
necessary to make the statements contained therein not misleading.
15
4.20 Representations and Warranties Upon Delivery of Financial
Statements, Documents and Other Information. Each delivery by a Loan Party to
Bank of financial statements, other documents, or information after the date of
this Agreement shall be a representation and warranty that such financial
statements, other documents, or information is correct and complete in all
material respects, that there are no omissions therefrom that result in such
financial statements, other documents, or information being incomplete,
incorrect, or misleading in any material respect as of the date thereof.
4.21 Survival of Representations. All representations, warranties and
covenants contained in this ARTICLE 4 shall survive the delivery of this
Agreement and the making of the Loan and each Advance contemplated hereunder and
any investigation at any time made by or on behalf of the Bank shall not
diminish its rights to rely on all of such representations and warranties.
4.22 Year 2000 Compliance. Borrower has reviewed and assessed its
business operations and computer systems and applications to address the "year
2000 problem" (that is, that computer applications and equipment used by
Borrower, directly or indirectly through third parties, may have been or may be
unable to properly perform date-sensitive functions before, during and after
January 1, 2000). Borrower represents and warrants that the year 2000 problem
has not resulted in and will not result in a material adverse change in
Borrower's business condition (financial or otherwise), operations, properties
or prospects or ability to repay Bank. Borrower agrees that this representation
and warranty will be true and correct on and shall be deemed made by Borrower on
each date Borrower requests any Advance under this Agreement or the Note or
delivers any information to Bank. Borrower will promptly deliver to Bank such
information relating to this representation and warranty as Bank requests from
time to time.
ARTICLE 5.
GENERAL COVENANTS
Each Loan Party agrees with the Bank that, so long as the Loan shall be
outstanding, unless the Bank shall otherwise consent in writing, each Loan Party
covenants and agrees as follows:
5.1 Financial Information. The Loan Parties will furnish to the Bank
copies of such of its financial statements, reports and information as may be
requested by the Bank, including, without limitation, the following financial
statements, reports and information, each of which shall be prepared on a
consolidated and consolidating basis for which no additional request shall be
required:
(a) As soon as available, and in any event within one hundred twenty
(120) calendar days after the end of each fiscal year of Borrower, a copy of its
audited annual financial reports, and, in any event within ninety (90) calendar
days after the end of each fiscal year of Asset Investors Corporation and
Commercial Assets, Inc., respectively, the Form 10K filing of both Asset
16
Investors Corporation and Commercial Assets, Inc. with the Securities and
Exchange Commission;
(b) As soon as available, and in any event within seventy-five (75)
calendar days after the end of each fiscal quarter of Borrower, a copy of its
unaudited financial statement and, within forty-five (45) calendar days after
the end of each fiscal quarter of Asset Investors Corporation and Commercial
Assets, Inc., respectively, the Form 10Q filings of both Asset Investors
Corporation 10Q report and Commercial Assets, Inc. filed with the Securities and
Exchange Commission;
(c) Within ten (10) days after filing, a copy of any filing
available to the public made by Asset Investors Corporation or Commercial
Assets, Inc. with the Securities and Exchange Commission.
(d) As soon as available, and in any event within forty-five (45)
days after the end of each fiscal quarter, a compliance certificate ("Compliance
Certificate") signed by an Authorized Officer. Each Compliance Certificate shall
be in the form and substance satisfactory to the Bank, shall contain detailed
calculations of the financial covenants referred to in ARTICLE 6, and shall
contain statements by the Authorized Officer to the effect that, except as
explained in reasonable detail in such Compliance Certificate, (i) the attached
financial statements are complete and correct in all material respects (subject,
in the case of financial statements other than annual, to normal year-end audit
adjustments) and have been prepared in accordance with GAAP and applied
consistently throughout the periods covered thereby and with prior periods
(except as disclosed therein), (ii) all of the representations and warranties of
the Loan Parties contained in this Agreement and other Loan Documents are true
and correct as of the date of such certification is given as if made on such
date, and (iii) there is no Default or Event of Default. If any Compliance
Certificate delivered to the Bank discloses that a representation or warranty is
not true and correct, or that there is a Default or Event of Default, such
Compliance Certificate shall state what action Borrower has taken or proposes to
take with respect thereto.
5.2 Accounting System. Borrower and its Affiliate Group shall maintain
a system of accounting established and administered in accordance with GAAP.
5.3 Security Interests. Neither Borrower nor any Subsidiary shall
create, incur, assume or allow to exist any Liens upon all or any part of the
Collateral, now owned or hereafter acquired, except the following:
(a) Liens for taxes not delinquent or being diligently contested in
good faith and by appropriate proceedings and for which adequate reserves in
accordance with GAAP are maintained on Borrower's books.
(b) Liens imposed by any law, such as mechanics', workers',
materialmen's, landlords', carriers', or other like Liens arising in the
ordinary course of business which secure payment of obligations which are not
past due or which are being contested in good faith by appropriate proceedings
17
and for which adequate reserves in accordance with GAAP are maintained on
Borrower's books.
(c) Liens securing the Obligations in favor of the Bank.
5.4 Transactions With Affiliates. Neither Borrower nor its Subsidiaries
shall enter into or be a party to any transactions or arrangement, including the
purchase, sale or exchange of property of any kind or the rendering of any
service, with any Affiliate, or make any loans or advance to any Affiliate
except as permitted under this Agreement. If there is no Default or Event of
Default, however, Borrower and its Subsidiaries may engage in such transactions
in the ordinary course of business and pursuant to the reasonable requirements
of its business and on fair and reasonable terms substantially as favorable to
it as those which it could obtain in a comparable arm's-length transaction with
a non-Affiliate.
5.5 Notices. Each Loan Party, each for itself, as soon as practicable,
shall give notice to the Bank of:
(a) The commencement of any uninsured litigation in excess of
$100,000.00 relating to any Loan Party or relating to the transactions
contemplated by this Agreement;
(b) The commencement of any material arbitration or governmental
investigation or proceeding not previously disclosed by the Loan Party to the
Bank in writing which has been instituted or, to the knowledge of the Loan
Party, threatened against any Loan Party or to which its properties or assets
are subject which, if determined adversely to the Loan Party would constitute a
Material Adverse Occurrence;
(c) Any adverse development which occurs in any litigation,
arbitration or governmental investigation or proceeding previously disclosed by
any Loan Party to the Bank which, if determined adversely to any Loan Party
would constitute a Material Adverse Occurrence;
(d) Any Event of Default under this Loan.
(e) The completion of the proposed merger between Asset Investors
Corporation and Commercial Assets, Inc., and a copy of the documentation
evidencing such merger and specifying the identity of the surviving corporation.
(f) Any notice of claimed default under any loans or credit
agreements executed by Borrower or any Loan Party pursuant to which Borrower or
any Loan Party has direct or contingent liability other than loans or credit
agreements which are non-recourse to Borrower or the Loan Party and are secured
by collateral other than the Bank's Collateral.
5.6 Books and Records, Periodic Audits. Borrower and each Subsidiary
shall maintain books and records reflecting all of its business affairs and
transactions in accordance with standard accounting practices reasonably
satisfactory to the Bank and permit the Bank, and its representatives and agents
at reasonable times and intervals and upon reasonable notice to the Borrower, to
18
visit all of its offices, discuss its financial matters with the Authorized
Officers of the Borrower and its independent public accountants (and by this
provision the Borrower authorizes its independent public accountants to
participate in such discussions) and examine any of its books and other
corporate records.
5.7 Legal Existence. Borrower and each Subsidiary shall maintain its
legal existence in good standing under the laws of its jurisdiction of
organization and its qualification to transact business in each jurisdiction
where failure to qualify would permanently preclude the Borrower or the
Subsidiary from enforcing its rights with respect to any material asset or would
expose Borrower or the Subsidiary to any material liability.
5.8 Insurance. Borrower shall obtain and maintain the following
insurance and pay all related premiums as they become due:
(a) Casualty. Borrower shall maintain insurance on each Property
consisting of real or personal property against damage or loss by fire,
lightning, and other perils, on an all-risks basis, extended coverage basis,
without co-insurance, if applicable, without contribution from the insured, such
coverage to be in an amount reasonably satisfactory to the Bank. Such policy
shall or certificates for such insurance to be furnished hereunder shall be in
forms, companies and amounts satisfactory to Bank, with mortgagee clauses
attached to all policies or certificates in favor of and in form satisfactory to
Bank, including a provision requiring that the coverage evidenced thereby shall
not be cancelled, terminated or materially modified without thirty (30) days'
prior written notice to the Bank.
(b) Commercial General Liability. Borrower shall maintain commercial
general liability insurance protecting Borrower and Bank against loss or losses
from liability imposed by law or assumed in any agreement, document, or
instrument and arising from bodily injury, death, or property damage with a
limit of liability satisfactory to the Bank per occurrence and general aggregate
and "umbrella" excess liability insurance in an amount reasonably satisfactory
to the Bank. Such policies must be written on an occurrence basis so as to
provide blanket contractual liability, broad form property damage coverage, and
coverage for products and completed operations. In addition, there shall be
obtained and maintained business motor vehicle liability insurance protecting
each Borrower and Bank against loss or losses from liability relating to motor
vehicles owned, non-owned, or hired used by each Borrower, any contractor, any
subcontractor, or any other Person in any manner related to the business of the
Borrower with a limit of liability satisfactory to the Bank (combined single
limit for personal injury (including bodily injury and death and property
damage).
(c) Worker's Compensation. Borrower shall maintain or cause to be
maintained worker's compensation insurance, disability benefits insurance, and
such other forms of insurance as required by law covering loss resulting from
injury, sickness, disability, or death of employees of each Borrower, any
contractor, and any subcontractor located on or assigned to any property owned
or operated by any Loan Party. Borrower shall cause each contractor and each
subcontractor having employees located on or assigned to any business owned or
19
operated by any Loan Party to obtain and maintain this same coverage for all
eligible employees.
(d) Other. All policies for required insurance shall be in form and
substance satisfactory to Bank in its reasonable discretion. Required insurance
may be provided under a blanket insurance policy. All required insurance shall
be procured and maintained in financially sound and generally recognized
responsible insurance companies selected by Borrower and approved by Bank. Such
companies must be authorized to write such insurance in the states in which the
Collateral is located. Each company shall be rated "A" or better and a financial
size category of VII, by A.M. Best Co., in Best's Key guide, or such other
rating acceptable to Bank in Bank's absolute and sole discretion. All property
policies evidencing required insurance shall name Bank as first mortgagee and
loss payee. All liability policies evidencing required insurance shall name Bank
as additional insured. Coverage under the policies for the benefit of the Bank
may not be limited due to the acts of Borrower. The policies shall provide for
at least thirty (30) days' prior written notice of the cancellation or
modification thereof to Bank.
(e) Evidence. A certificate of insurance evidencing that such
insurance is in full force and effect with respect to each Project shall be
delivered to Bank, together with proof of the payment of the premiums thereof,
or, at Bank's request, the original or a certified copy of each insurance
policy. Thirty (30) days prior to the expiration of each such policy, Borrower
shall furnish Bank evidence that such policy has been renewed or replaced in the
form of a certified copy of the renewal or replacement policy or, a certificate
reciting that there is in full force and effect, with a term covering at least
the next succeeding calendar years, insurance of the types and in the amount
required in this Section 5.8
5.9 Inconsistent Agreements. Neither Borrower nor any Subsidiary shall
enter into any agreement containing any provision which would be violated or
breached by the Borrower or Subsidiary in the performance of its obligations
under any Loan Document.
5.10 Compliance with Laws. Borrower and each Subsidiary shall carry on
its business activities and shall maintain the Property in substantial
compliance with all Governmental Regulations and all applicable rules,
regulations and orders of all Governmental Entities having power to regulate or
supervise its business activities or the Property.
5.11 Conduct of Business. Borrower and each Subsidiary shall maintain
and keep its assets, property and equipment in good repair, working order and
condition and from time to time make or cause to be made all needed renewals,
replacements and repairs.
5.12 Maintain Business. Borrower shall continue to engage primarily in
the business being conducted on the date of this Agreement.
5.13 Payment of Taxes and Claims. Borrower shall file or cause to be
filed all tax returns and reports which are required by law to be filed by it
and shall pay before they become delinquent all taxes, assessments and
governmental charges and levies imposed upon it or its property and all claims
or demands of any kind (including but not limited to those of suppliers,
20
mechanics, carriers, warehouses, landlords and other like Persons) which, if
unpaid, might result in the creation of a Lien upon its property; provided that
the foregoing items need not be paid if they are being contested in good faith
by appropriate proceedings, and as long as the title of Borrower and the
Property Subsidiaries to its respective property is not materially adversely
affected, its use of such property in the ordinary course of its business is not
materially interfered with and adequate reserves with respect thereto have been
set aside on its books in accordance with GAAP.
5.14 Sales, Mergers, and other Fundamental Changes. Except as may be
permitted by the Bank in its sole and absolute discretion, Borrower and its
Subsidiaries shall not cause, suffer or permit, voluntarily or involuntarily,
(i) Borrower to enter into or offer or agree to any change in the legal or
beneficial ownership of Borrower, or (ii) Borrower or its Subsidiaries to enter
into or offer or agree to any change in the legal or beneficial ownership of
Subsidiary such that Borrower ceases to own, directly or through another
Subsidiary, one hundred percent (100%) of the legal and beneficial interests in
each Subsidiary. For purposes of this Agreement, "change in the legal or
beneficial ownership" shall include any transfer, sale, assignment, conveyance,
exchange, transfer in connection with a pledge or hypothecation or the
foreclosure of a pledge or hypothecation, transfer in connection with a grant of
rights or warrants or options or proxies with respect to such ownership
interests, merger, consolidation, reorganization, dissolution, liquidation or
winding up of such entity, creation of additional classes of stock or equity
interests, change in the rights associated with classes of preferred stock to
permit conversion to common or voting stock or to grant voting rights, or any
other act that would have the effect of altering or diminishing the legal or
beneficial ownership or any rights or duties with respect thereto.
Notwithstanding the foregoing, Borrower shall be entitled to changes in its
legal or beneficial ownership provided that no such changes shall impair or
diminish the voting and managerial control by Asset Investors Corporation of
Borrower.
5.15 Returned Payments. Each Loan Party agrees that, in the event any
payment made by or on behalf of any Loan Party respecting any Obligations, or
any portion any such payment, shall at any time be returned by the recipient
thereof for any reason, including pursuant to any order (whether or not final)
by a court of competent jurisdiction, any provision of the United States
Bankruptcy Code as now existing or hereafter amended, or any other applicable
federal or state law or because of acts or omissions of any Loan Party, the
Obligations shall not be deemed to have been satisfied to the extent of the
returned payment, and the obligations of each Loan Party shall be deemed to be
reinstated automatically and to continue in full force and effect.
5.16 Consolidation, Merger, Sale or Disposal of Assets. A Loan Party
shall not without the prior written approval from the Bank:
(a) acquire, consolidate or merge into or with any other entity
(other than the proposed merger between Asset Investors Corporation and
Commercial Assets, Inc.); or
21
(b) sell, (other than sales of inventory in the ordinary course of
business) transfer, lease, or otherwise dispose of all, or substantially all, of
its assets during the term of this Agreement.
5.17 Indebtedness. Borrower shall not create, incur, assume, or allow
to exist any indebtedness of any kind or description, except the following:
(a) Indebtedness to trade creditors incurred in the ordinary course
of business, to the extent that it is not overdue past the original due date by
more than ninety (90) days or being contested in good faith by the Borrower with
the Bank's reasonable consent.
(b) The Indebtedness under the Loan.
(c) Indebtedness which is non-recourse to the Borrower or any Loan
Party and is secured by collateral other than the Bank's Collateral.
5.18 Platting. Bank acknowledges that Borrower is engaged in the
designing and platting of Phase V of the Savanna Club development which is the
Property located in Florida. Upon request by the Bank, Borrower shall provide
the Bank with copies of design documents and plats proposed for the Phase V,
prior to final approval by the applicable Governmental Entities.
5.19 Further Assurances. Borrower and each Subsidiary will at any time
and from time to time upon request of the Bank take or cause to be taken any
action, execute, acknowledge, deliver or record any further documents, opinions
or other instruments or obtain such additional insurance as Bank in its
discretion deems necessary or appropriate to carry out the purposes of this
Agreement.
ARTICLE 6.
FINANCIAL COVENANTS
6.1 Special Definitions. In this Article, the following terms shall
have the following meanings as to Borrower:
(a) "Free Cash Flow" shall mean Funds From Operations, plus Interest
Expense, less an annual capital replacement reserve of $50.00 per developed
homesite.
(b) "Capital Lease" shall mean any lease that has been or should be
capitalized under GAAP.
(c) "Funds From Operations" shall mean Net Income or loss,
calculated in accordance with GAAP (excluding gains and losses from debt
restructure and sales of property), plus real estate related depreciation and
amortization (excluding amortization of financing costs), and after adjustments
for unconsolidated partnerships and joint ventures, and including other
adjustments made by Borrower on a consistent basis.
22
(d) "Indebtedness" shall mean, as to any Person at any particular
date, any contractual obligation enforceable against such Person (i) to repay
borrowed money; (ii) to pay the deferred purchase price of property or services;
(iii) to make payments or reimbursements with respect to letters of credit
whether or not there have been drawings thereunder; (iv) with respect to which
there is any security interest in any property of such Person; (v) to make any
payment or contribution to a Multi-Employer Plan; (vi) that is evidenced by a
note, bond, debenture or similar instrument; and (vii) under any conditional
sale agreement or title retention agreement.
(e) "Indirect Obligation" shall mean, as to any Person, (a) any
guaranty by such Person of any obligation of another Person; (b) any security
interest in any property of such Person that secures any obligation of another
person; (c) any enforceable contractual requirement that such person (i)
purchase an obligation of another Person or any property that is security for
such obligation; (ii) advance or contribute funds to another Person for the
payment of an obligation of such other Person or to maintain the working
capital, net worth or solvency of such other Person as required in any documents
evidencing an obligation of such other Person; (iii) purchase property,
securities or services from another person for the purpose of assuring the
beneficiary of any obligation of such other Person that such other Person has
the ability to timely pay or discharge such obligation; (iv) grant a security
interest in any property of such Person to secure any obligation of another
Person; or (v) otherwise assure or hold harmless the beneficiary of any
obligation of another Person against loss in respect thereof; and (d) any other
contractual requirement enforceable against such person that has the same
substantive effect as any of the foregoing. The term "Indirect Obligation" does
not, however, include the endorsement by a Person of instruments for deposit or
collection in the ordinary course of business or the liability of a general
partner of a partnership for obligations of such partnership. The amount of any
Indirect Obligation of a Person shall be deemed to be the stated or determinable
amount of the obligation in respect to which such Indirect Obligation is made
or, if not stated or determinable, the maximum reasonable anticipated liability
in respect thereof as determined by such Person in good faith.
(f) "Intangible Assets" means: (a) patents, copyrights, trademarks,
tradenames, franchise, license agreements, goodwill, and other similar
intangibles; (b) unamortized debt discount and expenses; and (c) fixed assets to
the extent of any write-up in the book value thereof resulting from a
revaluation effective after the date of this Loan Agreement.
(g) "Interest Expense" means, for any period of calculation, the
amount reported by Borrower in its financial statements, calculated in
accordance with GAAP.
(h) "Liabilities" shall have the meaning given that term in
accordance with GAAP.
(i) "Mandatory Debt Retirement and Interest" shall mean, at any date
of determination, the sum of all mandatory payments of principal and interest
(including payments due in connection with any Capital Lease) due during the
period of twelve (12) months from the date of determination; provided, however,
23
that any amounts outstanding under the Loan and any "balloon" repayments due
within the 12-month period from the date of determination with respect to
Borrower's indebtedness which requires a lump-sum repayment of the balance of
the debt shall be deemed to have mandatory payments of principal and interest
equal to the principal and interest required to be paid during the 12-month
period if the outstanding principal balance of the Loan or the other debt were
fully amortized over a period of twenty (20) years from the date of
determination at an interest rate of eight percent (8%) per annum.
(j) "Minority Interests" shall mean the legal or beneficial
interests in any majority-owned subsidiaries of Borrower owned by Persons other
than Borrower.
(k) "Net Income" shall have the meaning given that term in
accordance with GAAP.
(l) "Tangible Net Worth" means as of any date, total assets of the
Borrower as determined in accordance with GAAP, minus the sum of (i) Liabilities
and (ii) Intangible Assets and (iii) Minority Interests.
6.2 Financial Covenants. As of the Closing Date and until the Loan and
all indebtedness hereunder has been paid in full and all Obligations hereunder
have been fully discharged, Borrower covenants and agrees as follows (each, a
"Financial Covenant"):
(a) Minimum Tangible Net Worth. The consolidated Tangible Net Worth
of Borrower shall not fall below $70,000,000.00, at any time.
(b) Ratio of Free Cash Flow to Interest Expense. The ratio of Free
Cash Flow of Borrower to Interest Expense of Borrower, in each case measured
over the prior four calendar quarters, shall not fall below 2.0 to 1, at any
time.
(c) Free Cash Flow Coverage. The ratio of Free Cash Flow of Borrower
to Mandatory Debt Retirement and Interest Payments of Borrower determined over
the prior four (4) quarters shall not fall below 1.5 to 1, at any time;
provided, however, that Free Cash Flow shall be adjusted to reflect acquisitions
and disposition of assets over the prior four (4) quarters.
6.3 Compliance Certificate. Within forty-five (45) days after the close
of each calendar quarter the Authorized Officer shall execute and deliver to
Bank a Compliance Certificate, in the form and substance satisfactory to the
Bank, confirming and certifying its continuing compliance with the financial
covenants set forth in this Section, as further described in Section 5.1 above.
ARTICLE 7.
DEFAULT AND REMEDIES
7.1 Event of Default. The occurrence of any of the following events
shall constitute an "Event of Default" hereunder:
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(a) Monetary. The Borrower shall default in the payment when due of
any Obligations owing to Bank under the terms of the Note and such failure to
make payment shall continue for a period of five (5) days or longer, except for
the payment in full of the Indebtedness on the Maturity Date, for which no grace
period is permitted.
(b) Covenant. A Default shall occur in the due performance and
observance of any of the covenants and conditions of this Agreement or the Loan
Documents, other than a monetary obligation, or an Event of Default specifically
set forth in this Section, which breach is not cured to Bank's satisfaction
within the applicable cure period for breach of such covenant or condition, and,
if no specific cure period is provided, within thirty (30) days of notice of
such Default being sent by the Bank to Borrower; provided, however, that if the
Default cannot by its nature reasonably be cured within thirty (30) days and
Borrower commences cure within thirty (30) days, Borrower shall be entitled to
an additional thirty (30) days to complete such cure.
(c) Financial Covenant. A breach by Borrower of the Financial
Covenant set forth in Section 6.2 shall occur which is not cured to the
satisfaction of the Bank within thirty (30) days after written notice from the
Bank of such Default.
(d) Representation and Warranties. Any written representation,
warranty or disclosure made by a Loan Party proves to be materially false or
misleading as of the date when made, whether or not such representation or
disclosure appears in this Agreement, the Loan Documents, or items submitted by
the Loan Party in connection therewith.
(e) Act of Bankruptcy. An Act of Bankruptcy shall occur.
(f) Material Adverse Occurrence. There occurs any Material Adverse
Occurrence.
Each Loan Party acknowledges and agrees that any Event of Default is
conclusively deemed to impair the security of the Loan Documents, and that Bank
shall be entitled to exercise any appropriate remedy, including without
limitation, foreclosure of any Deed of Trust or Security Agreement upon the
occurrence of any such Event of Default.
7.2 Remedies. Upon the occurrence of an Event of Default, Bank may, in
addition to any other remedies which Bank may have hereunder or under the Loan
Documents or by law, at its option and without prior demand or notice take any
or all of the following actions:
(a) Acceleration. Declare the Obligations under this Loan
immediately due and payable.
(b) Realization. Proceed to protect and enforce its rights and
remedies under the Loan Documents and avail itself of any other relief to which
the Bank may be legally or equitably entitled.
25
(c) Compelled Return of Payments or Proceeds. If Bank is for any
reason compelled to surrender any payment or any proceeds of the Collateral
because such payment or the application of such proceeds is for any reason
invalidated, declared fraudulent, set aside, or determined to be void or
voidable as a preference, an impermissible setoff, or a diversion of trust
funds, then this Agreement, the Loan Documents and the Obligations to which such
payment or proceeds was applied or intended to be applied shall be revived as if
such application were never made; and Borrower shall be liable to pay to Bank,
and shall indemnify Bank for and hold Bank harmless from any loss with respect
to the amount of such payment or proceeds surrendered. This Section shall be
effective notwithstanding any contrary action Bank may take in reliance upon its
receipt of any such payment or proceeds. Any such contrary action so taken by
Bank shall be without prejudice to Bank's right under this Agreement and shall
be deemed to have been conditioned upon the application of such payment or
proceeds having become final and irrevocable. The provisions of this Section
shall survive the payment and satisfaction of all the Obligations.
(d) Right of Set-off. Upon the occurrence of any Event of Default
and at any time and from time to time thereafter, Bank is hereby authorized,
without notice to Borrower or any Subsidiary (any such notice being expressly
waived by Borrower and each Subsidiary), to set off and apply against the
Obligations any and all deposits (general or special, time or demand,
provisional or final) at any time held, or any other Indebtedness at any time
owing by Bank to or for the credit or the account of Borrower or any Subsidiary,
irrespective of whether or not Bank has made any demand under the Loan Documents
and although such Obligations may be unmatured, but subject to the rights of any
Person for whom the Borrower or the Subsidiary is holding funds as escrow agent.
The right of Bank under this Section are in addition to other rights and
remedies (including, without limitation, other rights of set-off) which Bank may
otherwise have.
(e) Entry Upon Premises and Access to Information. Upon the
occurrence of an Event of Default and acceleration of the Obligations as
provided herein, and at any time and from time to time thereafter, the Bank may
(i) enter any premises leased or owned by Borrower or a Subsidiary where any
Collateral is located (or believed to be located) without any obligation to pay
rent to Borrower or the Subsidiary, or any other place or places where any
Collateral is believed to be located, (ii) render Collateral usable or saleable,
(iii) move movable Collateral to the premises of the Bank or any agent of the
Bank for such time as the Bank may desire in order effectively to collect or
liquidate such Collateral; (iv) take possession of, and make copies and
abstracts of, the original books and records of Borrower and the Subsidiaries,
obtain access to the data processing equipment, computer hardware and software
relating to any of the Collateral and, subject to any proprietary rights of
third parties, use all of the foregoing and the information contained therein in
any manner the Bank deems appropriate in connection with the exercise of the
Bank's rights.
All remedies of Bank provided for herein and in any other Loan Document
are cumulative and shall be in addition to all other rights and remedies
provided by law. The exercise of any right or remedy by Bank hereunder shall not
in any way constitute a cure or waiver of default hereunder or under any other
Loan Document or invalidate any act done pursuant to any notice of default, or
26
prejudice Bank in the exercise of any of its rights hereunder or under any other
Loan Documents unless, in the exercise of its rights, Bank realizes all amounts
owed to it under such Loan Documents.
7.3 Recertified Appraisal. If at any time (a) an Event of Default under
the Loan Documents has occurred, or (b) the Bank determines, in its sole
judgment, that the collateral position of the Bank in relation to the credit
extended for the benefit of the Borrower has adversely changed as a consequence
of material, physical or economic impairment of the Collateral, or (c) the Bank
is required by law or regulation to obtain a new Appraisal of the Properties, or
either of them, the Bank may require a new Appraisal of the Property in form and
content acceptable to the Bank to be prepared at Borrower's expense.
7.4 Limitation; Insolvency Laws. As used in this Section: (a) the term
"Applicable Insolvency Laws" means the laws of the United States of America or
of any state or other governmental unit relating to bankruptcy, reorganization,
arrangement, adjustment of debts, relief of debtors, dissolution, insolvency,
fraudulent transfers or conveyances or other similar laws (including, without
limitation, 11 U.S.C. ss. 548, ss. 550 and other "avoidance" provisions of Title
11 of the United States Code) as applicable in any proceeding in which the
validity and/or enforceability of the Loan Documents or any Specified Lien is in
issue; and (b) "Specified Lien" means any security interest, mortgage, lien or
encumbrance securing the Obligations, in whole or in part. Notwithstanding any
other provision of this Agreement, if, in any proceeding against Borrower and/or
a Subsidiary, a court of competent jurisdiction determines that the Obligations
or any Specified Lien would, but for the operation of this Section, be subject
to avoidance and/or recovery or be unenforceable against Borrower or the
Subsidiary by reason of Applicable Insolvency Laws, the Obligations and each
such Specified Lien shall be valid and enforceable only to the maximum extent
that would not cause the Obligations and such Specified Lien to be subject to
avoidance, recovery or unenforceability. To the extent that any payment to, or
realization by, the Bank on the Obligations exceeds the limitations of this
Section and is otherwise subject to avoidance and recovery in any such
proceeding, the amount subject to avoidance shall in all events be limited to
the amount by which such actual payment or realization exceeds such limitation,
and the Obligations as limited shall in all events remain in full force and
effect and be fully enforceable against the Borrower and each Subsidiary. This
Section is intended solely to reserve the rights of the Bank hereunder against
Borrower and each Subsidiary in such proceedings to the maximum extent permitted
by Applicable Insolvency Laws and none of the Borrower nor any Subsidiary nor
any Person shall have any right, claim or defense under this Section that would
not otherwise be available under Applicable Insolvency Laws in such proceedings.
If the Obligations or any Specified Lien are subject to avoidance or recovery,
or are unenforceable, with respect to Borrower or any Subsidiary by reason of
Applicable Insolvency Laws, or if the validity and enforceability of the
Obligations or any Specified Lien are limited with respect to Borrower or any
Subsidiary pursuant to this Section 7.3, such avoidance, recovery,
unenforceability or limitation shall not affect the validity or enforceability
of the Obligations or any Specified Lien with respect to any other Subsidiary.
27
ARTICLE 8.
RELATIONSHIP AMONG LOAN PARTIES
8.1 Joint and Several Liability. BY SIGNING THIS AGREEMENT, BORROWER
AND EACH OF THE SUBSIDIARIES AGREE THAT IT IS LIABLE, JOINTLY AND SEVERALLY WITH
EACH OTHER LOAN PARTY, FOR THE PAYMENT OF THE NOTE AND ALL OTHER OBLIGATIONS OF
THE BORROWER UNDER THIS AGREEMENT, AND THAT BANK CAN ENFORCE SUCH OBLIGATIONS
AGAINST ANY OF BORROWER OR EACH SUBSIDIARY, IN BANK'S SOLE AND UNLIMITED
DISCRETION.
8.2 Bank's Right to Administer Credit. Bank may at any time and from
time to time, without the consent of, or notice to, Borrower or Subsidiary,
without incurring responsibility to Borrower or Subsidiary, and without
affecting, impairing or releasing any of the obligations of Borrower hereunder:
(a) pursuant to the exercise of its rights and remedies under the
terms of the Loan Documents, sell, exchange, surrender, realize upon, release
(with or without consideration) or otherwise deal with in any manner and in any
order any property of any person or entity mortgaged to Bank or otherwise
securing the Borrower's and Subsidiaries' joint and several liability, or
otherwise providing recourse to Bank with respect thereto;
(b) exercise or refrain from exercising any rights against Borrower
or any Subsidiary or others with respect to the Borrower's or Subsidiaries'
joint and several liability, or otherwise act or refrain from acting;
(c) settle or compromise any of the Borrower's or Subsidiaries'
joint and several liability, any security therefor or other recourse with
respect thereto, or subordinate the payment or performance of all or any part
thereof to the payment of any liability (whether due or not) of Borrower or any
Subsidiary to any creditor of Borrower or any Subsidiary, as applicable,
including without limitation, Bank and Borrower or any Subsidiary;
(d) apply any sums received by Bank from any source in respect of
any liabilities of Borrower or any Subsidiary to Bank to any of such
liabilities, regardless of whether the Note remains unpaid;
(e) fail to set off and/or release, in whole or in part, any balance
of any account or any credit on its books in favor of Borrower or any
Subsidiary, or of any other person, and extend credit in any manner whatsoever
to Borrower or any Subsidiary, and generally deal with Borrower or any
Subsidiary and any security for the Borrower's or Subsidiaries' joint and
several liability of any recourse with respect thereto as Bank may see fit;
and/or
(f) consent to or waive any breach of, or any act, omission or
default under, this Agreement or any other Loan Document, including, without
limitation, any agreement providing collateral security for the payment of the
28
Borrower's and Subsidiaries' joint and several liability or any other
indebtedness of any Borrower to Bank.
8.3 Primary Obligation. No invalidity, irregularity or unenforceability
of all or any part of Borrower's or Subsidiaries' joint and several liability or
of any security therefor or other recourse with respect thereto shall affect,
impair or be a defense to any other Loan Party's joint and several liability,
and all obligations under the Note and this Agreement are primary obligations of
Borrower and each Subsidiary.
8.4 Payments Recovered From Bank. Notwithstanding any other term or
provision hereof, if claim is ever made upon Bank for repayment or recovery of
any amount or amounts received by Bank from Borrower, Subsidiary or any other
person or entity and applied in payment of or on account of any of the
Borrower's or Subsidiaries' joint and several liability and Bank is required to
repay all or any part of said amount or amounts by reason of (i) judgment,
decree or order of any court of administrative body having jurisdiction over
Bank or any of its property, or (ii) any settlement or compromise of any such
claim effected by Bank with any such claimant (including Borrower or
Subsidiary), then and in such event such judgment, decree, order, settlement or
compromise shall be binding upon Borrower and each Subsidiary and Borrower and
each Subsidiary shall be and remain liable to Bank hereunder for the amount so
repaid or recovered to the same extent as if such amount had never been received
by Bank.
8.5 No Release. Until the Note and all other obligations under this
Agreement have been paid in full and each and every one of the covenants and
agreements of this Agreement are fully performed, the obligations of Borrower
and each Subsidiary hereunder shall not be released, in whole or in part, by any
action or thing which might, but for this provision of this Agreement, be deemed
a legal or equitable discharge of a surety or Subsidiary, or by reason of any
waiver, extension, modification, forbearance or delay or other act or omission
of Bank or its failure to proceed promptly or otherwise, or by reason of any
action taken or omitted by Bank whether or not such action or failure to act
varies or increases the risk of, or affects the rights or remedies of Borrower
or Subsidiary, nor shall any modification of any of the Note or this Agreement
or release of any security therefor by operation law or by the action of any
third party affect in any way the obligations of Borrower or Subsidiary
hereunder, and Borrower or each Subsidiary hereby expressly waives and
surrenders any defense to its liability hereunder based upon any of the
foregoing acts, omissions, things, agreements or waivers of any of them, it
being the purpose and intent of the parties hereto that the Borrower's or
Subsidiaries' joint and several liability constitute the direct and primary
obligations of Borrower and each Subsidiary and that the covenants, agreements
and all obligations of Borrower and each Subsidiary hereunder be absolute,
unconditional and irrevocable.
8.6 No Marshalling. Borrower and each Subsidiary hereby waives any and
all right to cause a marshalling of any other Loan Party's assets or any other
action by any court or other governmental body with respect thereto insofar as
29
the rights of Bank hereunder are concerned or to cause Bank to proceed against
any security for the Loan Party's joint and several liability or any other
recourse which Bank may have with respect thereto, and further waives any and
all requirements that Bank institute any action or proceeding at law or in
equity against any other Loan Party or anyone else, or with respect to this
Agreement, the Loan Documents, or any collateral security for the Borrower's or
Subsidiaries' joint and several liability, as a condition precedent to making a
demand on, or bringing an action or obtaining and/or enforcing a judgment
against Borrower or any Subsidiary. Borrower and each Subsidiary further waives
any requirement that Bank seek performance by any other Loan Party or any other
person, of any obligation under this Agreement, the Loan Documents or any
collateral security for the Borrower's or Subsidiaries' joint and several
liability as a condition precedent to making a demand on, or bringing any action
or obtaining and/or enforcing a judgment against, Borrower or any Subsidiary.
Neither Borrower nor any Subsidiary shall have any right of setoff against Bank
with respect to any of its obligations hereunder. Any remedy or right hereby
granted which shall be found to be unenforceable as to any person or under any
circumstance, for any reason, shall in no way limit or prevent the enforcement
of such remedy or right as to any person or circumstance, nor shall such
unenforceability limit or prevent enforcement of any other remedy or right
hereby granted.
8.7 Deficiencies. Borrower and each Subsidiary specifically agrees that
in the event of a foreclosure under any security agreement or other similar
agreement held by Bank which secures any part or all of the Borrower's and
Subsidiaries' joint and several liability and in the event of a deficiency
resulting therefrom, Borrower and each Subsidiary shall be, and hereby is
expressly made, liable to Bank for the full amount of such deficiency
notwithstanding any other provision of this Agreement or provision of such
agreement, any document or documents evidencing the indebtedness secured by such
agreement or any other document or any provision of applicable law which might
otherwise prevent Bank from enforcing and/or collecting such deficiency.
Borrower and each Subsidiary hereby waives any right to notice of a foreclosure
under any security agreement or other similar agreement given to Bank by any
other Loan Party which secures any part or all of the Loan Parties' joint and
several liability.
8.8 Bankruptcy. Borrower and each Subsidiary expressly agrees that its
liability and obligations under the Note and this Agreement shall not in any way
be affected by the institution by or against any other Loan Party or any other
person or entity of any bankruptcy, reorganization, arrangement, insolvency or
liquidation proceedings, or any other similar proceedings for relief under any
bankruptcy law or similar law for the relief of debtors, or any action taken or
not taken by Bank in connection therewith, and that any discharge of Borrower's
or Subsidiaries' joint and several liability pursuant to any such bankruptcy or
similar law or other law shall not discharge or otherwise affect in any way the
obligations of any other Loan Party under the Note, the Guarantee and this
Agreement, and that upon or at any time after the institution of any of the
above actions, at Bank's sole discretion, the Borrower's and Subsidiaries' joint
and several obligations shall be enforceable against Borrower or any Subsidiary
that is not itself the subject of such proceedings. Borrower and each Subsidiary
expressly waives any right to argue that Bank's enforcement of any remedies
against Borrower or that Subsidiary is stayed by reason of the pendency of any
such proceeding against any other Loan Party.
30
ARTICLE 9.
RELEASES AND SUBSTITUTIONS
Borrower may sell either of the Property located in Florida ("Florida
Property") or the Property located in Arizona ("Arizona Property") pursuant to a
purchase contract and releases under the applicable Deed of Trust shall be
executed and delivered by the Bank for the Property so sold, upon the terms and
conditions set forth in this Article. In connection with such a sale, Borrower
may propose substitute collateral for the Florida Property or the Arizona
Property so sold, upon the terms and conditions set forth in this Article.
9.1 Release Procedure. The Bank's obligation to permit the release of
the lien of the Deed of Trust encumbering either the Florida Property or the
Arizona Property (either, a "Release Property") shall be contingent upon all of
the following: (i) no Event of Default shall have occurred and be continuing,
(ii) payment to the Bank of the release Price (defined below), (iii) payment of
any and all expenses, including reasonable attorneys' fees in respect of such
release incurred by the Bank, costs of recording releases, and incidental
release fees charged by the Bank, in connection with such release, (iv) the
Release Property shall be the entire Florida Property or the entire Arizona
Property, and (v) the Commitment Amount shall automatically be reduced to an
amount equal to the portion of the Commitment Amount allocated to the remaining
Property after release of the Release Property, except and to the extent that
the Borrower and the Bank agree to a substitution of Collateral on the terms
provided herein
9.2 Release Price. For the release of the Release Property, Borrower
shall pay to the Bank an amount (the "Release Price"), calculated as follows: an
amount equal to the quotient of the Allocated Amount for the Release Property as
described on Exhibit C ("Allocated Amount") divided by the Commitment Amount,
multiplied by the Advances outstanding under the Loan as of the date of release
of the Release Property (e.g.: $10,800,000 (Allocated Amount for Arizona
Property) divided by $15,000,000 (Commitment Amount) = .72 x $9,200,000 (assumed
amount of Advances) = $6,624,000 Release Price).
9.3 General Provisions Regarding Releases. With respect to each request
for release and payment of the Release Price:
(a) Not later than five (5) Business Days prior to closing of the
sale of a Release Property, Borrower shall provide to the Bank the
fully-prepared request for partial release, together with the items described in
this Article 9 which are conditions precedent to the Bank's obligation to grant
such release (other than payment of the Release Price and other costs and
expenses).
(b) Every payment of Release Price shall be credited first to costs
then due and unpaid with respect to the Loan, second to accrued interest due
under the Loan with respect to the Release Price, and, third, to the principal
balance of the Loan.
31
(c) The Commitment Amount shall automatically be reduced by an
amount equal to the Allocated Amount for the Release Property, except and to the
extent the Borrower and the Bank agree to a simultaneous substitution of
Collateral.
(d) Any payment of Release Price shall not release Borrower from the
payment of the Note according to its terms and conditions, and no such payment
shall in any way impair or affect the validity, priority or standing of the Deed
of Trust as to the remainder of the Property encumbered by a Deed of Trust.
9.4 Substitution of Collateral. In connection with the request for
release of a Release Property, the Borrower may also request that the Bank
accept substitute collateral for the Release Property in order to avoid the
reduction of the Commitment Amount by the Allocated Amount attributable to the
Release Parcel. The Bank shall have no obligation to accept the offered
substitute collateral and any acceptance by the Bank of substitute collateral
shall be in the Bank's sole and absolute discretion and upon such terms and
conditions satisfactory to the Bank, including without limitation the Allocated
Amount attributable to such substitute collateral. In order to permit the Bank
to review and evaluate such substitute collateral, the Borrower shall, not less
than sixty (60) days prior to Borrower's request for release of the Release
Property, provide to the Bank such due diligence items and information as may be
requested by the Bank. In the event the Bank shall determine to accept such
substitute collateral, Borrower shall execute and deliver to the Bank such
amendments to this Agreement and the Loan Documents and additional documents and
instruments and due diligence items in the nature of items described in Article
3 as the Bank may request.
ARTICLE 10.
MISCELLANEOUS
10.1 No Waiver. No waiver of any default or breach by a Loan Party
hereunder shall be implied from any failure by Bank to take action on account of
such default if such default persists or is repeated, and an express waiver
shall not affect any default other than the default specified in the waiver and
shall be operative only for the time and to the extent therein stated. Waivers
of any covenant, term or condition contained herein shall not be construed as a
waiver of any subsequent breach of the same covenant, term or condition. The
consent or approval by Bank to, or of, any act by a Loan Party requiring further
consent or approval shall not be deemed to waive or render unnecessary the
consent or approval to, or of, any subsequent similar act.
10.2 Successors and Assigns. This Agreement is made and entered into
for the sole protection and benefit of Bank and the Loan Parties, their
successors and assigns, and no other person or persons shall have any right of
action hereunder. The terms hereof shall be binding upon and shall inure to the
benefit of the parties hereto and the personal representatives, executors,
successors and assigns of the parties hereto; provided, however, that the
interests of a Loan Party hereunder cannot be assigned or otherwise transferred
without the prior consent of Bank.
32
10.3 Subrogation of Bank. Bank shall be subrogated to the lien of any
previous encumbrance discharged with funds advanced by Bank under the Loan
Documents, regardless of whether such previous encumbrance has been released of
record.
10.4 Notices. Any notice required or permitted to be given by Borrower
or Bank under this Agreement shall be in writing and will be deemed given (a)
upon personal delivery or upon confirmed transmission by telecopier or similar
facsimile transmission device, (b) on the first business day after receipted
delivery to a courier service which guarantees next-business-day delivery, or
(c) on the third business day after mailing, by registered or certified United
States mail, postage prepaid, in any case to the appropriate party at its
address set forth below:
If to Borrower or a Subsidiary:
Asset Investors Operating Partnership, L.P.
c/o Asset Investors Corporation
0000 X. Xxxxxx Xxxxxx, Xxxxx 000
Xxxxxx, XX 00000
Attn: Chief Financial Officer
Telecopy No.: 000-000-0000
With Copy to:
Xxxxxx Xxxxxx, Esq.
Brandywine Real Estate Management Services
Corporation
0000 XxXxxxxxx Xxxxx
Xxxxxxxxxx, Xxxxxxx 00000-0000
Telecopy No.: 000-000-0000
If to Bank:
U. S Bank National Association
000 00xx Xxxxxx, Xxxxx Xxxxx
Xxxxxx, Xxxxxxxx 00000
Attention: Xxx X. Xxxxx, Vice President
Telecopy #: (000) 000-0000
33
With a copy to:
Xxxxxxx Xxxxxx LLP
Tower I, Suite 1000
0000 Xxxxxxxx Xxxxxx
Xxxxxx, Xxxxxxxx 00000
Attention: Xxxxxx X. Xxxx, Esq.
Telecopy #: (000) 000-0000
10.5 Authority to File Notices. Borrower and each Subsidiary
irrevocably appoint, designate and authorize Bank as its agent (said agency
being coupled with an interest) to send to any third party any other notice or
documents or take any other action that Bank deems necessary or desirable to
protect its interest hereunder, or under the Loan Documents, and will upon
request by Bank, execute such additional documents as Bank may require to
further evidence the grant of the aforesaid right to Bank.
10.6 Time. Time is of the essence hereof.
10.7 Amendments, etc. No amendment, modification, termination or waiver
of any provisions of this Agreement or of any of the Loan Documents nor consent
to any departure by Borrower or a Subsidiary therefrom shall in any event be
effective unless the same shall be in writing and signed by Bank, and then such
waiver or consent shall be effective only in the specific instance and for the
specific purpose for which given.
10.8 Headings. The article and section headings in no way define,
limit, extend or interpret the scope of this Agreement or of any particular
article or section.
10.9 Number and Gender. When the context in which the words are used in
this Agreement indicate that such is the intent, words in the singular number
shall include the plural and vice-versa. References to any one gender shall also
include the other gender if applicable under the circumstances.
10.10 No Joint Venture; No Third Party Beneficiary. The Bank, on the
one hand, and the Loan Parties, on the other, each have separate and independent
rights and obligations under this Agreement. Nothing contained herein shall be
construed as creating, forming or constituting any partnership, joint venture,
merger or consolidation of the Loan Parties and the Bank for any purpose or in
any respect. Nothing in this Agreement, express or implied, is intended to
confer upon any Person other than the parties hereto and their respective
successors and assigns any rights and remedies under or by reason of this
Agreement.
10.11 Governing Law; Venue. THIS AGREEMENT AND THE LOAN DOCUMENTS AND
THE RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER AND THEREUNDER SHALL IN ALL
RESPECTS BE GOVERNED BY, AND CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE LAWS
OF THE STATE OF COLORADO (WITHOUT GIVING EFFECT TO COLORADO'S PRINCIPLES OF
34
CONFLICTS OF LAW), EXCEPT TO THE EXTENT (A) OF PROCEDURAL AND SUBSTANTIVE
MATTERS RELATING ONLY TO THE CREATION, PERFECTION, FORECLOSURE AND ENFORCEMENT
OF RIGHTS AND REMEDIES AGAINST SPECIFIC COLLATERAL, WHICH MATTERS SHALL BE
GOVERNED BY THE LAWS OF THE STATE IN WHICH THE COLLATERAL IS LOCATED (THE
"COLLATERAL STATE"), AND (B) THAT THE LAWS OF THE UNITED STATES OF AMERICA AND
ANY RULES REGULATIONS, OR ORDERS ISSUED OR PROMULGATED THEREUNDER, APPLICABLE TO
THE AFFAIRS AND TRANSACTIONS ENTERED INTO BY THE BANK, OTHERWISE PREEMPT
COLLATERAL STATE LAW OR COLORADO LAW; IN WHICH EVENT SUCH FEDERAL LAW SHALL
CONTROL. BORROWER, EACH SUBSIDIARY, HEREBY IRREVOCABLY SUBMITS TO THE
NON-EXCLUSIVE JURISDICTION OF ANY COLORADO OR FEDERAL COURT SITTING IN DENVER,
COLORADO (OR ANY STATE IN WHICH THE PROPERTY IS LOCATED) OVER ANY SUIT, ACTION
OR PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY OF THE LOAN
DOCUMENTS.
10.12 Survival of Warranties. All agreements, representations and
warranties made herein shall survive the execution and delivery of this
Agreement and of the Loan Documents and the extension of the Loan hereunder and
continue in full force and effect until the Obligations of Borrower hereunder
evidenced by the Note have been fully paid and satisfied.
10.13 Automatic Acceleration. Should there occur an Event of Default
which would, with the giving of notice, the passage of time, or both, constitute
an Event of Default hereunder and if a petition under the United States
Bankruptcy Code thereafter is filed by or against Borrower or any Subsidiary
while such event remains uncured, all obligations hereunder shall be
automatically accelerated and due and payable and the Default Rate of interest
provided for in the Note shall automatically apply as of the date of the first
occurrence of the event which would, with the giving of notice, the passage of
time, or both, constitute an Event of Default, without any notice, demand or
action of any type on the part of Bank (including any action evidencing the
acceleration or imposition of the default rate of interest). The fact that the
Bank has, prior to the filing of the voluntary petition under the United States
Bankruptcy Code, acted in a manner which is inconsistent with the acceleration
and imposition of the default rate of interest provided for in the Note, shall
not constitute a waiver of this Section 9.13 or estop Bank from asserting or
enforcing Bank's rights hereunder.
10.14 Costs and Expenses. The Loan Parties shall reimburse Bank for all
reasonable attorneys' fees and expenses incurred by Bank in connection with
negotiation, preparation, approval, review, execution, delivery, amendment, and
modification of the Loan and the enforcement of Bank's rights under this
Agreement and each of the other Loan Documents, including, without limitation,
reasonable attorneys' fees and reimbursements for trial, appellate proceedings,
out-of-court workouts and settlements and for enforcement of rights under any
state or federal statute, including, without limitation, reasonable attorneys'
fees incurred in bankruptcy and insolvency proceedings such as in connection
with seeking relief from stay in a bankruptcy proceeding or negotiating and
documenting any amendment or modification of the Loan or reviewing subsequent
submission items pertaining to the Loan. The Loan Parties shall pay all costs
35
incurred by the Bank in negotiation, preparation, approval, review, execution,
delivery, amendment, and modification of the Loan and the enforcing payment and
performance of the Loan, exercising rights and remedies of Bank under the Loan
Documents, or reviewing submission items pertaining to the Loan. The Loan
Parties' reimbursement obligation shall be part of the indebtedness evidenced by
the Loan Documents.
10.15 Severability; Titles. If any provision of this Agreement or of
any other Loan Document executed in connection with this Agreement is, for any
reason and to any extent, invalid or unenforceable, then neither the remainder
of the Loan Document in which such provision is contained, or the application of
the provision to other persons, entities or circumstances, nor any other
document referred to in this Agreement, shall be affected by such invalidity or
unenforceability, and there shall be deemed substituted for the invalid or
unenforceable provision the most similar provision which would be valid and
enforceable under applicable law.
10.16 Counterparts. This Agreement may be executed in counterparts,
each of which shall be deemed an original, but all of which shall constitute the
same document.
10.17 Participations. Bank, at any time, shall have the right to sell,
assign, transfer, negotiate or grant participation interests in the Loan and in
any documents and instruments executed in connection therewith. Each Loan Party
acknowledges and agrees that any such disposition shall give rise to a direct
obligation of Borrower to each such participant, so long as any enforcement
action shall be taken jointly among such participants. Bank is authorized to
furnish to any participant or prospective participant any information or
document that Bank may have or obtain regarding the Loan or the Loan Parties.
10.18 Waiver of Rights. In order to avoid delays in time and any
prejudice that may arise from trial by jury and in light of the complexities of
this transaction, in the event of litigation arising out of or relating to this
Loan Agreement, the Note and/or the other Loan Documents, and/or in any way
connected with or related or incidental to the dealings of the parties hereto or
any of them with respect to this Loan Agreement, the other Loan Documents and/or
any other instrument, document or agreement executed or delivered in connection
herewith, or the transaction related hereto or thereto, in each case, whether
sounding in contract, tort or otherwise, Bank, Borrower and each Subsidiary,
with the prior advice of counsel, knowingly, intelligently and as a bargained
for matter, waives its right to trial by jury and agree and consent that any
claim, demand, action or cause of action in respect to such litigation shall be
decided by a trial to the court without a jury.
THE REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK.
36
IN WITNESS WHEREOF, the parties hereto have made and entered into this
Agreement as of the day and year first above written.
BANK:
U.S. BANK NATIONAL ASSOCIATION
By: /s/Xxx Xxxxx
-----------------------
Xxx Xxxxx, Vice President
BORROWER:
ASSET INVESTORS OPERATING PARTNERSHIP,
L.P., a Delaware limited partnership
By: ASSET INVESTORS CORPORATION,
a Delaware corporation,
General Partner
By: /s/Xxxxx X. Xxxxxx
----------------------
Xxxxx X. Xxxxxx
Chief Financial Officer
SUBSIDIARIES:
AIOP FLORIDA PROPERTIES I, L.L.C., a
Delaware limited liability
company
By: ASSET INVESTORS OPERATING PARTNERSHIP,
L.P., a Delaware limited partnership,
Sole Member and Manager
By: ASSET INVESTORS CORPORATION,
a Delaware corporation, General
Partner
By: /s/Xxxxx X. Xxxxxx
-------------------------
Xxxxx X. Xxxxxx
Chief Financial Officer
37
AIOP FLORIDA PROPERTIES II, L.L.C., a
Delaware limited liability company
By: ASSET INVESTORS OPERATING PARTNERSHIP,
L.P., a Delaware limited partnership,
Sole Member and Manager
By: ASSET INVESTORS CORPORATION,
a Delaware corporation, General
Partner
By: /s/Xxxxx X. Xxxxxx
-------------------------
Xxxxx X. Xxxxxx
Chief Financial Officer
COMMUNITY SAVANNA CLUB JOINT VENTURE, a
Delaware general partnership
By: AIOP FLORIDA PROPERTIES I, L.L.C.,
a Delaware limited liability company,
Managing General Partner
By: ASSET INVESTORS OPERATING PARTNERSHIP,
L.P., a Delaware limited partnership,
Sole Member and Manager
By: ASSET INVESTORS CORPORATION,
a Delaware corporation, General
Partner
By: /s/Xxxxx X. Xxxxxx
-------------------------
Xxxxx X. Xxxxxx
Chief Financial Officer
38
AIOP LOST DUTCHMAN NOTES, L.L.C., a
Delaware limited liability company
By: ASSET INVESTORS OPERATING PARTNERSHIP,
L.P., a Delaware limited partnership,
Sole Member and Manager
By: ASSET INVESTORS CORPORATION,
a Delaware corporation, General
Partner
By: /s/Xxxxx X. Xxxxxx
-------------------------
Xxxxx X. Xxxxxx
Chief Financial Officer
39
STATE OF COLORADO )
) ss.
CITY AND COUNTY OF DENVER )
The foregoing instrument was acknowledged before me this 7 day of April,
2000, by Xxx Xxxxx as Vice President of U. S. BANK NATIONAL ASSOCIATION.
Witness my hand and official seal.
My Commission Expires: 12/7/2000
/s/Xxx X. Xxxxx
-------------------------
Notary Public
[ S E A L ]
STATE OF COLORADO )
) ss.
COUNTY OF DENVER )
The foregoing instrument was acknowledged before me this 7 day of
April, 2000, by Xxxxx X. Xxxxxx as Chief Financial Officer of Asset Investors
Corporation, a Delaware corporation, as general partner of Asset Investors
Operating Partnership, L.P., a Delaware limited partnership.
Witness my hand and official seal.
My commission expires: 12/7/3000
/s/Xxx X. Xxxxx
-------------------------
Notary Public
( S E A L )
40
STATE OF COLORADO )
) ss.
COUNTY OF DENVER )
The foregoing instrument was acknowledged before me this 7 day of
April, 2000, by Xxxxx X. Xxxxxx as Chief Financial Officer of Asset Investors
Corporation, a Delaware corporation, as general partner of Asset Investors
Operating Partnership, L.P., a Delaware limited partnership, as Sole Member and
Manager of AIOP Florida Properties I, L.L.C., a Delaware limited liability
company.
Witness my hand and official seal.
My commission expires: 12/7/2000
/s/Xxx X. Xxxxx
-------------------------
Notary Public
( S E A L )
STATE OF COLORADO )
) ss.
COUNTY OF DENVER )
The foregoing instrument was acknowledged before me this 7 day of
April, 2000, by Xxxxx X. Xxxxxx as Chief Financial Officer of Asset Investors
Corporation, a Delaware corporation, as general partner of Asset Investors
Operating Partnership, L.P., a Delaware limited partnership, as Sole Member and
Manager of AIOP Florida Properties II, L.L.C., a Delaware limited liability
company.
Witness my hand and official seal.
My commission expires: 12/7/2000
/s/Xxx X. Xxxxx
-------------------------
Notary Public
( S E A L )
41
STATE OF COLORADO )
) ss.
COUNTY OF DENVER )
The foregoing instrument was acknowledged before me this 7 day of
April, 2000, by Xxxxx X. Xxxxxx as Chief Financial Officer of Asset Investors
Corporation, a Delaware corporation, as general partner of Asset Investors
Operating Partnership, L.P., a Delaware limited partnership, as Sole Member and
Manager of AIOP Florida Properties I, L.L.C., as Managing General Partner of
Community Savanna Club Joint Venture, a Delaware general partnership.
Witness my hand and official seal.
My commission expires: 12/7/2000
/s/Xxx X. Xxxxx
-------------------------
Notary Public
( S E A L )
STATE OF COLORADO )
) ss.
COUNTY OF DENVER )
The foregoing instrument was acknowledged before me this 7 day of
April, 2000, by Xxxxx X. Xxxxxx as Chief Financial Officer of Asset Investors
Corporation, a Delaware corporation, as general partner of Asset Investors
Operating Partnership, L.P., a Delaware limited partnership, as Sole Member and
Manager of AIOP Lost Dutchman Notes, L.L.C., a Delaware limited liability
company.
Witness my hand and official seal.
My commission expires: 12/7/2000
/s/Xxx X. Xxxxx
-------------------------
Notary Public
( S E A L )
42
