$50,000,000
CREDIT AGREEMENT
AMONG
HOMESTEAD VILLAGE INCORPORATED,
THE LENDERS NAMED HEREIN,
AND
COMMERZBANK AG,
NEW YORK BRANCH, AS AGENT FOR THE LENDERS
DATED AS OF APRIL 24, 1998
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CREDIT AGREEMENT
CREDIT AGREEMENT (this "Agreement"), dated as of April 24, 1998, among
HOMESTEAD VILLAGE INCORPORATED, a Maryland corporation (the "Borrower"),
COMMERZBANK AG, LOS ANGELES BRANCH, and the other lenders listed on Exhibit A
attached hereto, as amended from time to time (each a "Lender" and collectively,
the "Lenders") and COMMERZBANK AG, NEW YORK BRANCH, as agent for the Lenders
(the "Agent").
W I T N E S S E T H:
WHEREAS, the Agent has agreed to arrange a revolving credit facility in the
amount of $50,000,000 on behalf of the Borrower;
WHEREAS, certain of the Borrower's obligations under this Agreement will be
secured by a lien on the Collateral;
WHEREAS, in consideration of the fees, representations, warranties,
covenants and agreements of the Borrower set forth herein and in the Loan
Documents, the Lenders are willing to establish such revolving credit facility
upon the terms and conditions set forth herein;
NOW, THEREFORE, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS; CONSTRUCTION
Section 1.1 Definitions. As used herein, the following terms shall have the
following meanings:
"Acquisition Costs" means the actual purchase price paid by Borrower to
acquire the property constituting a Mortgaged Property or that portion of a
Mortgaged Property (the portion of such actual purchase price allocable to such
portion of a Mortgaged Property to be determined in a manner reasonably
acceptable to Agent) upon which it shall construct an extended stay facility and
such ancillary facilities which are related to the purpose, and shall enhance
the value, of the extended stay facility (the "ancillary facilities"), as
evidenced by the documentation and certificate of Borrower furnished to Agent
pursuant to Section 3.2(g)(i)(1) and (2) hereof, excluding, without limitation,
all fees, costs and expenses incurred with regard to use, planning and zoning
rules and regulations relating to such Mortgaged Property, but including such
other expenses as the Agent approves in its sole discretion.
"Adjusted Eurodollar Rate" means, with respect to each Interest Period, the
rate obtained by dividing (i) the Eurodollar Rate for such Interest Period by
(ii) a percentage equal to one minus the actual rate (stated as a decimal) of
all reserves then actually required to be maintained by each Lender (provided
that reasonable evidence of the imposition of such requirement is furnished
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to Borrower) against "eurocurrency liabilities" as specified in Regulation D (or
against any other category of liabilities that includes deposits by reference to
which the interest rate on Eurodollar Advances is determined or any category of
extensions of credit or other assets that includes loans by a non-United States
office of the Agent to United States residents) or by any other Requirement of
Law relating to reserve or capital adequacy requirements.
"Advance" has the meaning provided in Section 2.1(a).
"Affiliate" means, with respect to any Person, any other Person directly or
indirectly controlling, controlled by, or under common control with such Person,
whether through the ownership of voting securities, by contract, or otherwise. A
Person shall be deemed to control a corporation if such Person possesses,
directly or indirectly, the power to (i) vote 50% or more of the securities
having ordinary voting power for the election of directors of such corporation
or (ii) direct or cause the direction of the management and policies of such
corporation, through the ownership of voting securities, by contract or
otherwise.
"Agent" shall mean Commerzbank AG, New York Branch, in its capacity as
agent for the Lenders hereunder, or such successor Agent as may be appointed
pursuant to Section 7.9 of this Agreement.
"Agreement" means this Agreement, as amended, supplemented, or modified
from time to time.
"Alternate Rate" means as of any date of determination a per annum rate
equal to the greater of (a) the Prime Lending Rate plus one hundred seventy-five
(175) basis points per annum, and (b) the Federal Funds Rate plus two hundred
twenty-five (225) basis points per annum.
"Applicable Margin" means two hundred seventy-five (275) basis
"Average Undrawn Balance" shall mean the average daily amount of the
Commitment which remained undrawn upon by the Borrower for the related period of
determination (on the basis of a year of 365/366 days for the actual number of
days which have elapsed during such period).
"Bankruptcy Code" has the meaning provided in Section 6.1(g).
"Borrower" has the meaning set forth in the introductor paragraph to this
Agreement.
"Borrower's Authorized Representative" means any duly elected officer
designated by the Borrower in a written notice to the Agent, as such officer may
be changed from time to time by written notice to the Agent.
"Budget" means, for any Mortgaged Property (i) until the Final Budget for
such Mortgaged Property is received by Agent, the Initial Budget for such
Mortgaged Property, and (ii) upon and after such time as the Final Budget for
such Mortgaged Property is received by Agent, the Final Budget for such
Mortgaged Property.
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"Business Day" means any day excluding Saturday, Sunday, and any other day
on which banks are required or authorized to close in New York City or on which
trading is not carried on by and between banks in Dollar deposits in the
applicable interbank Eurodollar market.
"Capital Stock" means any and all shares, interests, participation, or
other equivalents (however designated) of capital stock of a corporation, any
and all equivalent ownership interests, including but not limited to partnership
interests, in a Person (other than a corporation), and any and all warrants or
options to purchase any of the foregoing.
"Closing Date" means April 24, 1998, or such other Business Day selected by
the parties to be the first day on which funds under the Commitment under this
Agreement will be first made available, but in no event prior to the execution
hereof and satisfaction of all conditions precedent set forth in Section 3.1.
"Code" means the Internal Revenue Code of 1986, as amended from time to
time, or any successor thereto.
"Collateral" means, collectively, the Mortgaged Properties and all other
property and interests in property now owned or hereafter acquired and upon
which a Lien has been or is purported or intended to have been granted in favor
of the Agent.
"Central Business District" means the downtown section of a city, generally
consisting of retail, office, hotel, entertainment, and governmental land uses
with some high density housing.
"Commitment" has the meaning provided in Section 2.1(b).
"Construction Interest" means all interest expense of the Borrower and its
Subsidiaries for the construction of projects which is capitalized in accordance
with GAAP.
"Contractual Obligation" means as to any Person, any material provision of
any security issued by such Person or of any agreement, instrument, or other
undertaking to which such Person is a party or by which it or any of its
property is bound.
"Credit Exposure" has the meaning provided in Section 7.17.
"Debt Service" shall mean for any period the sum of (i) all interest
obligations required to be paid in respect of any Indebtedness of the Borrower
or its Subsidiaries, including Construction Interest, (ii) all payments of
principal required to be made with respect to any Indebtedness of the Borrower
or its Subsidiaries during such period, other than balloon payments or scheduled
amortizing payments on senior Indebtedness, and (iii) all other payments
required to be made in respect of any Indebtedness of the Borrower or its
Subsidiaries.
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"Decisions" has the meaning set forth in Section 7.14.
"Default" means any condition or event that, with the giving of notice or
the lapse of time or both, would constitute an "Event of Default" hereunder or
under the Promissory Notes or the other Loan Documents.
"Default Rate" has the meaning set forth in Section 2.6(b) hereof.
"Development Encumbrances" means all easements, restrictions and
encumbrances customary and appropriate for the development of property as an
extended stay facility with such ancillary facilities related thereto and which
do not and will not materially impair the use of the Mortgaged Property affected
thereby as an extended stay facility or such ancillary facilities related
thereto or the expected value of the Mortgaged Property affected thereby.
"Direct Costs" means, for each Mortgaged Property, the aggregate costs of
all items described under the categories entitled "Hard Costs-Contractor Costs",
"Hard Costs-Other Hard Costs", "Hard Costs-Hard Costs Contingency" and "Hard
Costs-Furniture, Fixtures & Equipment" in the Budget for such Mortgaged Property
actually paid which are necessary for the completion of construction of an
extended stay facility and such ancillary facilities related thereto on such
Mortgaged Property in accordance with the Plans and Specifications, as evidenced
by the documentation and certificate of Borrower furnished to Agent pursuant to
Sections 3.2(g)(i)(1) and (2) hereof.
"Dollar" and the sign "$" each mean lawful currency of the United States of
America.
"EBITDA" means, for any period and for any Person, the amount derived from
(i) net earnings plus (ii) depreciation, amortization, interest expense and
income taxes plus or minus (iii) any losses or gains resulting from sales,
write-downs, write-ups, write-offs or other valuation adjustments of assets or
liabilities of such Person, in each case as determined on a consolidated basis
in accordance with GAAP for such Person for such period.
"Eligible Acquisition Costs" means, for each Mortgaged Property, the lesser
of (i) the Acquisition Costs with respect to such Mortgaged Property, and (ii)
the amount budgeted, in the aggregate, for Acquisition Costs as shown on the
Budget for such Mortgaged Property (including any contingency for Acquisition
Costs shown on such Budget).
"Eligible Costs" means Eligible Acquisition Costs, Eligible Direct Costs
and Eligible Indirect Costs.
"Eligible Direct Costs" means, for each Mortgaged Property, the lesser of
(i) the Direct Costs with respect to such Mortgaged Property, and (ii) the
amount budgeted, in the aggregate, for Direct Costs as shown on the Budget for
such Mortgaged Property (including any contingency for Direct Costs shown on
such Budget).
"Eligible Indirect Costs" means, for each Mortgaged Property, the lesser of
(i) the Indirect Costs with respect to such Mortgaged Property, and (ii) the
amount budgeted, in the aggregate, for Indirect Costs as shown on the Budget
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for such Mortgaged Property (including any contingency for Indirect Costs shown
on such Budget).
"Environment" shall mean soil, surface waters, groundwaters, land, stream,
sediments, surface or subsurface strata and ambient air.
"Environmental Discharge" means any discharge of pollutants or effluent
into any aquifer or water source or system (whether naturally occurring
or man made), gaseous emissions (including, without limitation, air emissions),
particulate emissions and noise emissions, in each case, in violation of any
Relevant Environmental Law.
"Environmental Indemnity" means that certain Environmental Indemnity
to be executed by the Borrower in favor of the Agent, substantially in the form
attached hereto as Exhibit E.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended from time to time.
"ERISA Affiliate" means each trade or business (whether or not
incorporated) that together with the Borrower or a Subsidiary of the Borrower
would be deemed to be a "single employer" within the meaning of Section 4001 of
ERISA.
"Eurodollar Rate" means:
(a) the rate per annum appearing on the Telerate page 3750 (the "Telerate
Screen") at or about 11:00 a.m. (New York time), subject to corrections (if any)
made on the Telerate service, two Business Days prior to the commencement of the
Interest Period for which such Eurodollar Rate will apply (the "Rate Fixing
Day") for the offering of deposits in Dollars for a period comparable to the
Interest Period for which such Eurodollar Rate will apply; or
(b) if
(i) no relevant rate appears on the Telerate Screen for the purposes
of the foregoing subparagraph (a), or
(ii) the Agent determines that no rate for a period of comparable
duration to that Interest Period appears on the Telerate Screen at the
relevant time,
the arithmetic mean (rounded upwards, if necessary, to two decimal places) of
the respective rates, as supplied to the Agent at its request, quoted by the
Lenders to leading banks in the London Interbank Market at or about 11:00 a.m.
(New York time) on the Rate Fixing Day for the offering of deposits in Dollars
for a period comparable to the Interest Period for which such Eurodollar Rate
will apply. If any of the Lenders is unable or otherwise fails to supply an
offered rate by 11:30 a.m. (New York time) on the Rate Fixing Day, Eurodollar
Rate shall, subject to Section 2.12 hereof, be determined on the basis of the
quotations of the remaining Lenders.
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"Event of Default" has the meaning provided in Article VI.
"Exchange Act" shall mean the Securities and Exchange Act of 1934, as
amended.
"Federal Funds Rate" means, for any day of determination, the rate per
annum (rounded upwards, if necessary, to the nearest 1/100th of one percent)
equal to the weighted average of the rates on overnight Federal Funds transacted
with members of the Federal Reserve System arranged by Federal Funds brokers on
such date, as published by the Federal Reserve Bank of New York on the Business
Day next succeeding such day, provided that (i) if such day is not a Business
Day, the Federal Funds Rate for such day shall be such rate on such transactions
on the next preceding Business Day as so published on the next succeeding
Business Day, and (ii) if no such rate is so published on such next succeeding
Business Day, the Federal Funds Rate for such day shall be the average rate
quoted to the Agent on such day on such transactions as determined by the Agent.
"Financing Statements" means UCC-1 Financing Statements made by the
Borrower, as debtor, in favor of the Agent, as secured party, covering all
fixtures, equipment and personal property of the Borrower at the Mortgaged
Properties.
"Final Budget" means, for any Mortgaged Property, a final budget with
respect to such Mortgaged Property in the same form as the Initial Budget for
such Mortgaged Property (as the form of such final budget may be changed from
time to time by Borrower upon the prior written consent of Agent) showing the
amounts budgeted for the Total Costs (including contingencies) for such
Mortgaged Property, provided that Total Costs (including contingencies) as shown
on such final budget do not exceed, in the aggregate, the amount equal to 110%
of the Total Costs (including contingencies) as shown on such Initial Budget, in
the aggregate.
"GAAP" means generally accepted accounting principles as in effect at the
time of application applied on a consistent basis; provided, however, if any
change is adopted after the Closing Date in generally accepted accounting
principles which either Borrower or Agent determines to be adverse, and if
either such party notifies the other of such determination, then both Borrower
and Agent shall negotiate in good faith the extent to which such change shall be
adopted with respect to the matters to which the definition of "GAAP" is
applicable under the Loan Documents, and the term "GAAP" shall mean (i) in the
event a written agreement with respect to such change is executed and delivered
by both Borrower and Agent within 30 days following such notice, generally
accepted accounting principles applied on a consistent basis giving effect to
such agreement, or (ii) in any other event, generally accepted accounting
principles as in effect at the time immediately prior to the adoption of such
change applied on a consistent basis.
"Governmental Authority" means any nation and any state or other political
subdivision thereof, and any entity exercising executive, legislative, judicial,
regulatory, or administrative functions of or pertaining to government,
including, but not limited to, the Federal Reserve Board, any Federal Reserve
Bank, any other central banking authority, or any agency or subdivision thereof.
"Gross Asset Value" means the value of all cash, cash equivalents and the
value of all real property assets owned by Borrower valued at one hundred
percent (100%) of cost.
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"Guarantee Obligation" means, as to any Person (the "Guaranteeing Person"),
any obligation of (a) the Guaranteeing Person or (b) another Person (including,
without limitation, any bank under any letter of credit) to induce the creation
of which the Guaranteeing Person has issued a reimbursement, counterindemnity,
or similar obligation, in either case guaranteeing any Indebtedness, leases,
dividends, or other obligations (the "primary obligations") of any other third
Person (the "primary obligor") in any manner, whether directly or indirectly,
including, without limitation, any obligation of the Guaranteeing Person,
whether or not contingent, (i) to purchase any such primary obligation or any
property constituting direct or indirect security therefor, (ii) to advance or
supply funds (x) for the purchase or payment of any such primary obligation or
(y) to maintain working capital or equity capital of the primary obligor or
otherwise to maintain the net worth or solvency of the primary obligor, (iii) to
purchase property, securities, or services primarily for the purpose of assuring
the owner of any such primary obligation of the ability of the primary obligor
to make payment of such primary obligation or (iv) otherwise to assure or hold
harmless the owner of any such primary obligation against loss in respect
thereof; provided, however that the term Guarantee Obligation shall not include
endorsements of instruments for deposit or collection in the ordinary course of
business. The amount of any Guarantee Obligation of any Guaranteeing Person
shall be deemed to be the lower of (a) an amount equal to the stated or
determinable amount of the primary obligation in respect of which such Guarantee
Obligation is made and (b) the maximum amount for which such Guaranteeing Person
may be liable pursuant to the terms of the instrument embodying such Guarantee
Obligation, unless such primary obligation and the maximum amount for which such
Guaranteeing Person may be liable are not stated or determinable, in which case
the amount of such Guarantee Obligation shall be such Guaranteeing Person's
maximum reasonably anticipated liability in respect thereof as determined by the
Lenders in good faith.
"Hazardous Materials" shall mean any substance in quantities and/or form:
(a) the presence of which requires or shall hereafter require
notification, investigation or remediation under any Relevant Environmental
Law; or
(b) which is or becomes defined as a "hazardous waste", "hazardous
material" or "hazardous substance" or "controlled industrial waste" or
"Pollutant" or "contaminant" under any Relevant Environmental Law,
including without limitation, which contains gasoline, diesel fuel or other
petroleum hydrocarbons or volatile organic compounds, or which contains
polychlorinated biphenyls or asbestos or urea formaldehyde foam insulation,
or which contains or emits radioactive particles, waves or material,
including radon gas; or
(c) which is toxic, explosive, corrosive, flammable, infectious,
radioactive, carcinogenic, mutagenic or otherwise hazardous and is or
becomes regulated under any Relevant Environmental Law or by any
Governmental Authority; or
(d) pursuant to applicable Relevant Environmental Laws, the presence
of which on the Mortgaged Property causes or threatens to cause a nuisance
upon the Mortgaged Property or adjacent properties; or poses or threatens
to pose a hazard to the Mortgaged Property or to the health or safety of
persons or property on or about the Mortgaged Property.
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"Indebtedness" of any Person means as of the date of any determination
thereof:
(i) all obligations of such Person for borrowed money and for the
deferred purchase price of property or services, and obligations
evidenced by bonds, debentures, notes, or other similar instruments;
(ii) all rental or other obligations under leases required to be
capitalized under GAAP;
(iii) all Guarantee Obligations of such Person;
(iv) all liabilities in respect of currency or interest rate
swap, cap or collar arrangements or any similar derivative instrument;
provided that if such currency or interest rate swap, cap or collar
arrangements or any similar derivative instrument has been entered
into in order to hedge the currency or interest rate exposure of such
Person in respect of current or contemplated Indebtedness, the amount
of any liability in respect of such arrangement or instrument shall
not be included in the determination of Indebtedness; and
(v) Indebtedness of others secured by any Lien upon property
owned by such Person, whether or not assumed by such Person.
"Indirect Costs" means the aggregate costs of all items described in the
line items entitled "Title Insurance", "Commissions", "Closing Costs/Escrow
Fees", "Property Taxes", "Legal" and "Soft Costs Contingency" and under the
categories entitled "Soft Costs-Design Costs", "Soft Costs-Permits & Fees", and
"Soft Costs-Other Soft Costs" in the Budget for such Mortgaged Property actually
paid, in all cases as evidenced by the documentation and certificate of Borrower
furnished to Agent pursuant to Section 3.2(g)(i)(1) and (2) hereof, it being
understood that Indirect Costs shall in no event include, with respect to any
Mortgaged Property, any portion of the legal fees for zoning and planning board
approval and similar matters.
"Initial Budget" means, for any Mortgaged Property, a pro forma budget with
respect to such Mortgaged Property in the form of Exhibit G annexed hereto (as
the form of such pro forma budget may be changed from time to time by Borrower
upon the prior written consent of Agent) showing the amounts budgeted for the
Total Costs (including contingencies) for such Mortgaged Property, which pro
forma budget is acceptable in form and substance to the Agent in its sole
discretion.
"Intellectual Property" has the meaning set forth in Section 4.12.
"Interest Period" has the meaning set forth in Section 2.7.
"Leases" means all leases, licenses and other arrangements pursuant to
which any Person has the right or option to occupy or use any portion of any
Mortgaged Property, and shall include all right, title and interest to receive
all rent and other revenue thereunder, and shall include all guaranties of the
obligations of all such Persons.
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"Lender" or "Lenders" has the meaning set forth in the introductory
paragraph of this Agreement, and any successors and assigns.
"Lending Office" shall mean, with respect to any of the Lenders, the branch
or branches (or affiliate or affiliates) from which any of such Lender's
Advances are made or maintained and for the account of which all payments of
principal of, and interest on, such Lender's Advances are made, as designated in
writing from time to time to the Agent and the Borrower.
"Lien" means with respect to any asset: any mortgage, pledge, security
interest, encumbrance, lien, charge, or deposit arrangement or other arrangement
having the practical effect of the foregoing and shall include the interest of a
vendor or lessor under any conditional sale agreement, capitalized lease, or
other title retention agreement relating to such asset or the filing of any
financing statement under the UCC or comparable law.
"Loan" means, collectively, the loans made by the Lenders pursuant to the
Loan Documents.
"Loan Documents" means, collectively, this Agreement, the Promissory Notes,
all Mortgages, all Financing Statements, the Environmental Indemnity, all
Subsidiary Mortgagor Guaranties and all other documents, certificates,
affidavits and other instruments executed and delivered by the Borrower and its
Affiliates pursuant thereto or in connection therewith, as each of the same may
be amended, modified or otherwise supplemented from time to time.
"Loss" has the meaning provided in Section 7.16(c).
"Margin Stock" has the meaning provided in Regulation U.
"Market Studies" means, for any Mortgaged Property, all of the following
with respect to such Mortgaged Property in the form of the examples of the
following attached hereto as Exhibit H: (i) a target submarket overview, (ii) a
comparison with the Borrower's acquisition criteria, (iii) an area map, (iv) a
neighborhood map, (v) an aerial photograph, (vi) a contextual site plan, (vi) a
preliminary site plan, (vii) a map indicating retail and restaurant support,
(viii) the identity of and information respecting demand generators and area
employers, (ix) a demand location map, (x) a competitive survey, and (xi) a
competitive survey map.
"Material Adverse Change" means any change, event or circumstance which has
or is reasonably likely to have a material adverse effect on (i) the ability of
the Borrower and its Subsidiaries to perform their respective obligations under
this Agreement or any of the other Loan Documents, or (ii) the business,
condition (financial or otherwise) or results of operation of the Borrower and
its Subsidiaries when taken as a whole.
"Maturity Date" means April 23, 1999, and any extensions thereof.
"Maximum Availability Amount" means, as of any date of determination, the
sum of:
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(a) forty-five (45%) percent of the aggregate Eligible Acquisition
Costs for all of the Mortgaged Properties, and
(b) thirty-five (35%) percent of the sum of: (1) the aggregate
Eligible Direct Costs for all of the Mortgaged Properties, and (2) the
aggregate Eligible Indirect Costs for all of the Mortgaged Properties.
"Mortgaged Properties" means, collectively, each New Mortgage Property of
the Borrower or any Subsidiary Mortgagor which is located in a Central Business
District and which subsequent to the Closing Date is (and for so long as same
is) mortgaged to the Agent pursuant to the terms hereof, and shall include all
of the "Property", as such term is defined in the Mortgages.
"Mortgages" means those certain deeds of trust, deeds to secure debt,
mortgages and security agreements with assignments of rents and fixture filings
delivered by the Borrower or any Subsidiary Mortgagor in favor of the Agent and
covering the Mortgaged Properties (which such Mortgages are recorded or
unrecorded), substantially (i.e., with such modifications as may be required by,
or, in the Agent's reasonable judgment, appropriate for, the jurisdiction in
which a particular Mortgaged Property is located) in the form attached hereto as
Exhibit N, as the same may be amended, modified, or otherwise supplemented from
time to time.
"Net Operating Income" means, with respect to the most recent twelve (12)
months or, at the option of the Agent, the most recent fiscal quarter of the
Borrower calculated on a year to date basis, the gross revenues from the
Mortgaged Properties for such period less all direct operating expenses of the
Mortgaged Properties, including, without limitation, expenses for the following
to the extent same relate to the Mortgaged Properties: personnel, landscaping,
contracts, utilities, housekeeping, repairs and maintenance, marketing,
administrative duties, insurance and real estate taxes for such period (other
than interest expense, depreciation, amortization and expenditures capitalized
in accordance with GAAP).
"New Mortgaged Property" means any property and all rights, titles and
interests appurtenant thereto which the Borrower or any Subsidiary Mortgagor
proposes to encumber by a Mortgage at any time subsequent to the Closing Date.
"Non-public Information" means any information delivered by the Borrower to
the Agent or the Lenders (in their capacities as such) pursuant to this
Agreement which is not publicly disclosed or known, or which cannot be readily
derived from information which is publicly disclosed or known.
"Notice of Borrowing" has the meaning provided in Section 2.3.
"Notifying Lender" has the meaning provided in Section 2.13.
"Participant" has the meaning provided in Section 7.17.
"Payment Office" means the office of the Agent located at 0 Xxxxx Xxxxxxxxx
Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000-0000.
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"Percentage" shall mean each Lender's percentage share of the Commitment as
set forth on Exhibit A hereto.
"Period Fraction" means, with respect to any period of time, a fraction,
the numerator of which is the actual number of days in such period, and the
denominator of which is 360.
"Permissible Assumed Indebtedness" has the meaning provided in Section
5.3(a)(iv).
"Permitted Encumbrances" means, with respect to each of the Mortgaged
Properties, (i) all exceptions to title insurance coverage set forth in the
title insurance policies insuring the Mortgages covering such Mortgaged
Properties, other than standard printed exceptions, as of the date such policies
are issued, (ii) all liens for real estate taxes and assessments provided either
(x) that the last day by which such taxes or assessments may be paid without the
imposition of any interest, fine or penalty has not occurred, or (y) the amount
or validity of such taxes or assessments are being contested in good faith by
appropriate proceedings which have the effect of staying enforcement or
execution of such liens and with respect to which adequate reserves in
conformity with GAAP have been provided on the books of Borrower, (iii)
Development Encumbrances, (iv) mechanics' and materialmen's liens, the existence
of which do not constitute or create a Material Adverse Change, and which remain
unsatisfied, unbonded or unstayed for no more than 30 days other than those the
amount or validity of which are being contested in good faith by appropriate
proceedings which have the effect of staying enforcement or execution of such
liens and with respect to which adequate reserves in conformity with GAAP have
been provided on the books of Borrower, and (v) Leases which are subordinate to
the lien of the Mortgages.
"Permitted Purpose" shall mean reimbursement to the Borrower of a portion
of the Total Costs with respect to each Mortgaged Property, and in addition,
with respect only to Unsecured Advances, for Borrower's working capital
purposes.
"Person" means any individual, partnership, firm, corporation, association,
joint venture, joint stock company, trust, unincorporated organization or other
entity, or any governmental or political subdivision or agency, department, or
instrumentality thereof.
"Plan" means any multiemployer plan or single employer plan, as defined in
Section 4001 and subject to Title IV of ERISA, which is maintained, or at any
time during the five calendar years preceding the date of this Agreement was
maintained, for employees of the Borrower or a Subsidiary of the Borrower or an
ERISA Affiliate.
"Plans and Specifications" has the meaning specified in Section 3.2(g).
"Presence" means, when used in connection with Hazardous Materials,
treatment, use, storage, handling, repair, encapsulation, disposal,
transportation, spill, discharge and release.
"Prime Lending Rate" means the rate at which the Agent announces from time
to time as its prime lending rate, as in effect from time to time. The Prime
Lending Rate is a reference rate and does not necessarily represent the lowest
or best rate actually charged to any customer. The Agent and each Lender may
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make commercial loans or other loans at rates of interest at, above or below the
Prime Lending Rate.
"Proforma Operating Statement" means, for any Mortgaged Property, a
completed pro forma operating statement with respect to such Mortgaged Property
in the form of Exhibit I attached hereto, accurate as of the date of such
statement, and containing the information required to complete such schedule in
the manner and detail contemplated by such Exhibit, which shall be acceptable in
form and substance to the Agent in its sole discretion.
"Project Cost Report" means, for any Mortgaged Property, a completed
project cost report with respect to such Mortgaged Property in the form of
Exhibit J attached hereto, accurate as of the date of such form, and containing
the information required to complete such schedule in the manner and detail
contemplated by such Exhibit, and including, without limitation, the current
actual and projected Total Costs with respect to such Mortgaged Property and the
deviations of same (on line-item by line-item basis) from the Budget furnished
to Agent with respect to such Mortgaged Property.
"Promissory Notes" means the promissory notes made by the Borrower to each
Lender substantially in the form annexed hereto as Exhibit C.
"Purchasing Lender" has the meaning provided in Section 7.18.
"Regulation D" and "Regulation U" mean Regulation D and Regulation U,
respectively, of the Board of Governors of the Federal Reserve System as from
time to time in effect and any successor thereto.
"Realty" means SC Realty Incorporated, a Nevada corporation.
"Release" has the meaning provided in Section 8.11.
"Release Parcel" has the meaning provided in Section 8.11.
"Release Request" has the meaning provided in Section 8.11.
"Relevant Environmental Laws" means all Requirements of Law and all other
applicable Federal, state and local environmental statutes, regulations, rules,
ordinances, codes, licenses, permits, approvals, plans, authorizations,
guidelines, concessions, franchises, orders and similar items, and rules of
common law (whether now existing or hereafter enacted or promulgated and whether
now contemplated, anticipated or foreseeable or not) of all courts and
Governmental Authorities, and all applicable judicial and administrative and
regulatory decrees, judgments and orders, including common law rulings and
determinations, relating to injury to or the protection of the Environment,
including, without limitation, all requirements pertaining to reporting,
licensing, permitting, investigation, remediation and removal of emissions,
discharges, releases or threatened releases of Hazardous Materials into the
Environment, or relating to the manufacture, processing, distribution, use,
treatment, storage, disposal, transport or handling of Hazardous Materials.
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"Required Lenders" means the Lenders holding at least 66-2/3% of the
Commitment.
"Requirement of Law" means, as to any Person, the certificate of
incorporation and by-laws, certificate of partnership and partnership agreement
or other organizational or governing documents of such Person, and any law,
treaty, rule, or regulation or determination of an arbitrator or a court or
other Governmental Authority, in each case applicable to or binding upon such
Person or any of its property or to which such Person or any of its property is
subject.
"Stockholders' Equity" means stockholders' equity as reflected on the
balance sheet of the Borrower determined in accordance with GAAP.
"Studies" means environmental studies and investigations respecting (i) the
condition and circumstances of the Environment on, under, about or affecting any
Mortgaged Property, (ii) any actual or suspected Environmental Discharge or
Presence of any Hazardous Materials on, under, about or affecting any Mortgaged
Property, and (iii) any actual or suspected violation of any Relevant
Environmental Laws on, under, about or related to any Mortgaged Property.
"Subsidiary" of any Person means a corporation (or partnership) of which a
majority of the outstanding shares of stock (or beneficial interests) of each
class having ordinary voting power is owned by such Person, by one or more
Subsidiaries of such Person, or by such Person and one or more of its
Subsidiaries.
"Subsidiary Mortgagor" means any Subsidiary of Borrower or any other Person
which owns any portion of or interest in any New Mortgaged Property.
"Subsidiary Mortgagor Guaranty" has the meaning provided in Section 3.3(b).
"Taxes" has the meaning provided in Section 2.17.
"Total Costs" means, for each Mortgaged Property, the sum of (i) the
Acquisition Costs with respect to such Mortgaged Property, (ii) the Direct Costs
with respect to such Mortgaged Property, and (iii) the Indirect Costs with
respect to such Mortgaged Property.
"UCC" means the Uniform Commercial Code as from time to time in effect in
the relevant jurisdiction.
"Unsecured Advances" has the meaning provided in Section 3.4.
"Use Requirements" means any and all building codes or permits,
certificates of occupancy or compliance, restrictions of record, easements,
reciprocal easements or other agreements, subdivision, zoning, wetlands
protection, or land use laws or ordinances and any and all applicable rules or
regulations of any Governmental Authority affecting any part of any Mortgaged
Property.
Section 1.2 Accounting Terms and Determinations. Unless otherwise defined
or specified herein, all accounting terms shall be construed herein, all
accounting determinations hereunder shall be made, all financial statements
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required to be delivered hereunder shall be prepared, and all financial records
shall be maintained in accordance with GAAP.
Section 1.3 Other Definitional Terms. The words "hereof," "herein," and
"hereunder" and words of similar import when used in this Agreement shall refer
to this Agreement as a whole and not to any particular provision of this
Agreement, and Article, section, schedule, exhibit, and like references are to
this Agreement unless otherwise specified. References to agreements,
instruments, documents, statutes, and regulations include all amendments,
supplements, and modifications thereof as may be in effect from time to time.
ARTICLE II
AMOUNTS AND TERMS OF LOANS
Section 2.1 Commitment.
(a) Subject to and upon the terms and conditions herein set forth,
each Lender, severally and not jointly, agrees to make loans (each an "Advance"
and collectively, the "Advances") pro rata in accordance with such Lender's
Percentage to the Borrower from time to time on and/or after the Closing Date.
(b) The aggregate principal amount outstanding of all Advances made
pursuant hereto by the Lenders shall not exceed $50,000,000 (the "Commitment").
The aggregate principal amount outstanding of all Advances (other than Unsecured
Advances) shall not exceed the then Maximum Availability Amount. The aggregate
principal amount outstanding of all Unsecured Advances shall not exceed
$30,000,000. There may not be more than one Advance made on any day. Within the
foregoing limits and subject to the conditions set out in this Agreement, the
Borrower may borrow Advances under this Section 2.1, repay Advances under
Section 2.8, and reborrow Advances.
(c) The aggregate principal amount of each Advance hereunder shall
be not less than $500,000 and shall be in integral multiples of $100,000.
Section 2.2 Advances. (a) The Lenders will make Advances of the Loan for
(and only for) any Permitted Purpose subject to and in accordance with the terms
and conditions of this Agreement, including, without limitation, subject to
satisfaction of all conditions precedent to Advances set forth herein.
(b) The initial Advance of the loan proceeds will be made upon
satisfaction of the conditions set forth in Article III of this Agreement, and
all subsequent advances shall be made no more frequently than (i) twice during
any calendar month thereafter and (ii) once every 12 days, provided, that for
Unsecured Advances, such Advances can be made as frequently as once each week.
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Section 2.3 Notices of Borrowing. Whenever the Borrower desires to receive
an Advance hereunder, it shall give the Agent at least five Business Days' prior
written notice of the proposed Advance to be made hereunder, such notice to be
given prior to 12:00 noon (New York time) on the date specified. Each such
notice (each a "Notice of Borrowing") shall be in the form of Exhibit B, be
irrevocable, and specify the principal amount of the Advance to be made and the
date (which shall be a Business Day) of the Advance.
Section 2.4 Disbursement of Funds. The Agent shall promptly (but in no
event less than three Business Days prior to the date of the Advance) notify
each Lender of its Percentage of each Advance and the date of such Advance. On
the date so specified, each Lender shall make available to the Agent at the
Payment Office no later than 11:00 a.m. (New York time) in immediately available
funds an amount equal to such Lender's Percentage of such Advance. No later than
1:00 p.m. (New York time) on the date of each Advance, the Agent will make
available to the Borrower at the Payment Office the full amount of the Advance.
Section 2.5 Promissory Notes; Collateral.
(a) The Borrower's obligation to pay the principal of, and
interest on, the Advances made by each Lender shall be evidenced by one or more
Promissory Notes in the face amount of each such Lender's Percentage of the
Commitment, with blanks as to payee, date and principal amount appropriately
completed. The determination by the Agent of the amount of principal
outstanding hereunder or under any Promissory Note shall, except for patent
error, be final, conclusive and binding upon the Borrower for all purposes.
(b) Each borrowing, prepayment and reborrowing hereunder shall be
recorded by the Agent; provided, however, that no failure to make or error in
making a recordation of an Advance shall in any way limit, affect or modify the
obligation of the Borrower to repay any obligations, or the rights of the Agent
and the Lenders to any amounts due under this Agreement, the Loan Documents and
the Promissory Notes.
(c) Except as otherwise set forth in the Loan Documents, each
item of Collateral shall secure the payment and performance of all
indebtedness and obligations of the Borrower under this Agreement, including
without limitation, any increased cost under Section 2.14 hereof, and each other
Loan Document.
Section 2.6 Interest on Advances.
(a) The Borrower agrees to pay interest in respect of the unpaid
principal amount of each Advance from the date such Advance is made at a rate
per annum for each Interest Period equal to the Applicable Margin plus the
relevant Adjusted Eurodollar Rate. Interest on each Advance shall accrue
from and including the date of such Advance to but excluding the date of any
repayment thereof and shall be payable (i) (x) with respect to all Advances
other than Advances the Interest Period applicable to which is six months, in
arrears on the last day of the Interest Period for each such Advance, and (y)
with respect to all Advances the Interest Period applicable to which is six
months, in arrears on the 90th day following the first day of such Interest
Period and on the last day of such Interest Period, (ii) at maturity (whether by
acceleration or otherwise), and (iii) after maturity, on demand. Notwithstanding
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the foregoing, interest on each Advance bearing interest at the Alternate Rate
pursuant to the terms of this Agreement shall be payable in arrears on the last
day of each calendar month during the Interest Period applicable to such
Advance and on the last day of such Interest Period, (ii) at maturity (whether
by acceleration or otherwise), and (iii) after maturity, on demand.
(b) Overdue principal and, to the extent permitted by law, overdue
interest in respect of each Advance, and all other overdue amounts owing
hereunder, shall bear interest for each day that such amounts are overdue at a
rate (the "Default Rate") per annum equal to three percent per annum plus
the interest rate otherwise applicable thereto from the first day such amounts
are overdue to but excluding the date such overdue amounts are paid.
(c) The Agent, upon determining the Adjusted Eurodollar Rate for
any Interest Period, shall promptly notify by telephone (confirmed in writing)
or in writing the Borrower thereof.
(d) It is expressly stipulated and agreed to be the intent of the
Lenders and Borrower at all times to comply with the applicable law governing
the highest lawful interest rate. If the applicable law is ever judiciall
interpreted so as to render usurious any amount called for under this Agreement
or under any of the other Loan Documents, or contracted for, charged, taken,
reserved or received with respect to the Indebtedness evidenced thereby, or if
acceleration of the maturity of the obligations, or the rights of the Agent and
the Lenders to any amounts due, under this Agreement, the Loan Documents and the
Promissory Notes, any prepayment by Borrower, or any other circumstance
whatsoever, results in Borrower having paid any interest, penalty, fee or other
amount in excess of that permitted by applicable law, the it is the express
intent of Borrower and Lenders that all excess amounts theretofore collected by
Lenders be credited on the principal balance of the Advances (or, at Lenders'
option, paid over to Borrower), and the provisions of this Agreement and the
other Loan Documents immediately be deemed reformed and the amounts thereafter
collectible hereunder and thereunder reduced, without the necessity of the
execution of any new document, so as to comply with the applicable law, but
so as to permit the recovery of the fullest amount otherwise called for
hereunder and thereunder. The right to accelerate maturity of the obligations,
or the rights of the Agent and the Lenders to any amounts due, under this
Agreement, the Loan Documents and the Promissory Notes, does not include the
right to accelerate any interest which has not otherwise accrued on the date of
such acceleration, and Lenders do not intend to collect any unearned interest in
the event of acceleration. All sums paid or agreed to be paid to Lenders for
the use, forbearance or detention of the obligations, or the rights of the
Agent and the Lenders to any amounts due, under this Agreement, the Loan
Documents and the Promissory Notes shall, to the extent permitted by applicable
law, be amortized, prorated, allocated and spread throughout the full term of
such obligations and amounts until payment in full so that the rate or amount
of interest on account of such secured obligations does not exceed the maximum
rate or amount of interest permitted under applicable law.
Section 2.7 Interest Periods. In connection with each Advance bearing
interest at the rate described in Section 2.6(a) above, an interest period (each
an "Interest Period") shall be applicable thereto, which shall be a period of
one, two, three or six months as selected by the Borrower in the Notice of
Borrowing for such Advance, provided that:
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(i) the initial Interest Period for any Advance shall commence on the
date of such Advance;
(ii) subject to the provisions of Section 6.2 hereof and provided that
no Event of Default shall have occurred and be continuing, at the end of
the initial Interest Period, and each subsequent Interest Period for any
Advance, the Borrower shall be permitted to select an additional Interest
Period for such Advance by delivering a written notice thereof, in the form
of Exhibit B-1, to the Agent at any time prior to 12:00 noon (New York
time) on the third Business Day prior to the expiration of the then current
Interest Period applicable to such Advance, provided that if no Interest
Period selection is delivered to the Agent by such time, the Borrower shall
be deemed to have selected an Interest Period of one month and such
Interest Period selected or deemed to have been selected for such Advance
may not be changed without the consent of the Agent;
(iii) if any Interest Period would otherwise expire on a day which is
not a Business Day, such Interest Period shall expire on the next
succeeding Business Day, provided that if any Interest Period in respect of
an Advance (other than an Advance referred to in Section 2.13(b)(ii) or
Section 2.14(b)(ii)) would otherwise expire on a day that is not a Business
Day but is a day of the month after which no further Business Day occurs in
such month, such Interest Period shall expire on the next preceding
Business Day;
(iv) any Interest Period in respect of an Advance which begins on the
last Business Day of a calendar month (or on a day for which there is no
numerically corresponding day in the calendar month at the end of such
Interest Period) shall, subject to clause (v) below, end on the last
Business Day of a calendar month;
(v) no Interest Period shall extend beyond the Maturity Date; and
(vi) there shall be no more than six Interest Periods in effect at any
time.
Section 2.8 Repayment of Advances. The Borrower shall repay to the Agent,
for the account of the Lenders, the unpaid principal amount of each Advance made
by the Lenders hereunder, together with all accrued and unpaid interest thereon
and any other sums due and payable to the Lenders hereunder or under the other
Loan Documents on the Maturity Date.
Section 2.9 Prepayments of Advances.
(a) The Borrower may prepay all outstanding Advances, any one
Advance or portion thereof on any Business Day without penalty, premium or
additional charge, except as set forth in Section 2.16 hereof; provided such
prepayment shall be at least equal to the lesser of $100,000 or the outstanding
amount of such Advance. Upon three (3) days written notice to the Agent, the
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Borrower may terminate the Commitment by prepaying all outstanding Advances
and all other amounts and fees due to the Agent and the Lenders under this
Agreement and the other Loan Documents.
(b) The Borrower shall be liable for all amounts payable pursuant to
Section 2.16 with respect to a prepayment of an Advance on any date other than
the last day of the Interest Period related to such Advance where no new
Interest Period shall have been selected or deemed to have been selected
pursuant to Section 2.7(ii) for such Advance.
(c) The Borrower shall apply upon receipt (i) all net proceeds from
its equity offerings to repay on a pari passu basis the Loan and the
Indebtedness referred to in Section 5.3(a)(vii) of this Agreement, and (ii) all
other amounts and fees due to the Agent and the Lenders under this Agreement
and the other Loan Documents.
Section 2.10 Fees. The Borrower shall pay to the Agent for the account of
the Lenders a commitment fee (the "Commitment Fee") equal to 0.50% per annum of
the Average Undrawn Balance of the Commitment. Such Commitment Fee shall be due
and payable (i) quarterly in arrears on the last day of each calendar quarter,
and (ii) on the Maturity Date. Each payment on account of the Commitment Fee for
a period which is less than a full calendar quarter shall be prorated.
Section 2.11 Payments, Etc.
(a) All payments under this Agreement shall be pro rata among the
Lenders in accordance with their Percentages and shall be made by the Borrower,
without defense, setoff, or counterclaim, to the Agent not later than 12:00 noon
(New York time) on the date when due and shall be made in Dollars in immediately
available funds at the Payment Office and any funds received by the Agent after
such time shall, for all purposes of this Agreement, be deemed to have been paid
on the next succeeding Business Day. The Agent shall thereafter cause to be
distributed to the Lenders, on the Business Day when paid, in like funds their
Percentage of payments so received.
(b) Whenever any payment to be made hereunder or under the
Promissory Notes 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
(unless the relevant Interest Period expires on the next preceding Business Day
pursuant to Section 2.7(iii), in which case the due date shall be the next
preceding Business Day) and, with respect to payments of principal, interest
thereon shall be payable at the applicable rate during such extension.
(c) All computations of interest on the Advances shall be made on
the basis of a year of (x) in the case of Advances on which interest is computed
on the basis of the Eurodollar Rate, 360 days, and (y) in the case of Advances
on which interest is computed on the basis of the Alternate Rate, 365/366 days,
in either case for the actual number of days (including the first day but
excluding the last day) occurring in the period for which such interest is
payable.
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Section 2.12 Interest Rate Not Ascertainable, Etc. If the Agent shall have
determined (which determination shall be conclusive and binding upon the
Borrower) that on any date for determining the Eurodollar Rate for any Interest
Period, by reason of any circumstances affecting the interbank Eurodollar market
generally, adequate and fair means do not exist for ascertaining the applicable
interest rate on the basis provided for in the definition of Adjusted Eurodollar
Rate, then, and in any such event, the Agent shall forthwith give notice (by
telephone confirmed in writing) to the Borrower of such determination. Until the
Agent notifies the Borrower that the circumstances giving rise to the suspension
described herein no longer exist:
(i) any Advance made hereunder shall bear interest at the then
applicable Alternate Rate; and
(ii) if any Advance affected is then outstanding, each such Advance
shall immediately convert into an Advance bearing interest at the then
applicable Alternate Rate with an Interest Period ending on the date on
which the Interest Period applicable to the Advance affected expires.
Section 2.13 Illegality.
(a) If any Lender (a "Notifying Lender") shall have determined at
any time that the making or continuance of any Advance has become unlawful by
compliance by such Lender in good faith with any applicable Requirement of Law
adopted or becoming effective after the date hereof, then, in any such event,
the Notifying Lender shall give prompt notice (by telephone confirmed in
writing) to the Agent and the Borrower of such determination.
(b) Upon the giving of the notice to the Agent and the Borrower
referred to in subsection (a) above, (i) the Borrower's right to request
and the Notifying Lender's obligation to make Advances shall be immediately
suspended, and (ii) if any Advance of the Notifying Lender affected thereby
is then outstanding, each such Advance shall immediately convert into an Advance
bearing interest at the then applicable Alternate Rate with an Interest Period
ending on the date on which the Interest Period applicable to the Advance
affected expires.
Section 2.14 Increased Costs.
(a) If, by reason of (x) after the date hereof, the implemen-
tation of or any change (including, without limitation, any change by way of
imposition or increase of reserve or capital adequacy requirements) in, or in
the interpretation by any Governmental Authority or any other recognized
authority of, any law or regulation, or (y) the compliance with any guideline or
request from any central bank or other Governmental Authority or quasi-
Governmental Authority exercising control over banks or financial institutions
generally (whether or not having the force of law) adopted or becoming effective
after the date hereof:
(i) any Lender (or its Lending Office) shall be subject to any tax,
duty, or other charge, with respect to the Advances or its obligation to
make Advances, or shall change the basis of taxation of payments to any
Lender of the principal of or interest on the Advances or its obligation to
make Advances (except for changes in the rate of tax on the overall net
income
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of such Lender or its Lending Office imposed by the jurisdiction in which
such Lender's principal executive office or Lending Office is located); or
(ii) any reserve, special deposit, or similar requirement (including,
without limitation, any reserve, special deposit, or similar requirement
imposed by the Board of Governors of the Federal Reserve System) against
assets of, deposits with or for the account of, or credit extended by, any
Lender or its Lending Office shall be imposed or deemed applicable or any
other condition affecting the Advances shall be imposed on such Lender or
its Lending Office or the interbank Eurodollar market;
and as a result thereof there shall be any cost to such Lender of agreeing to
make or maintain the Advances, or there shall be a reduction in the amount
received or receivable by such Lender or its Lending Office, then the Borrower
shall from time to time, upon written notice and demand (including such Lender's
reasonable details with respect to such increased cost) promptly given by the
Agent, pay to the Agent for the account of such Lender, within five Business
Days after the date specified in such notice and demand, additional amounts
sufficient to indemnify such Lender against such increased cost. In the event
that a Lender becomes aware of the imposition of a cost to such Lender or a
reduction in the amount to be received or receivable by such Lender or its
Lending Office which is an additional cost pursuant to this Section 2.14, such
Lender shall promptly notify the Agent and the Borrower in writing of such
imposition or reduction, which notice shall include such Lender's reasonable
details with respect to such increased cost. With respect to costs or reductions
incurred by a Lender pursuant to this Section 2.14 relating to any period in
which the Commitment is in effect, the provisions of this Section 2.14 shall
survive the termination of this Agreement and the payment of the Promissory
Notes and all other amounts payable hereunder.
(b) If the Lenders shall notify the Borrower in writing that at
any time, because of the circumstances described in clause (x) or (y) in
Section 2.14(a) or any other circum stances arising after the Closing Date and
relating to any period in which the Commitment is in effect affecting the
interbank Eurodollar market generally, the then applicable Adjusted Eurodollar
Rate, as determined by the Agent, will not adequately and fairly reflect the
cost to the Lenders of funding the Advances, then, subject to Section 2.14(c),
thereafter:
(i) any Advance made hereunder shall bear interest at the Alternate
Rate; and
(ii) if the affected Advance is then outstanding, the Borrower shall
immediately, or if permitted by applicable law, no later than the date
permitted thereby, upon at least one Business Day's written notice to the
Lenders, convert each such Advance into an Advance bearing interest at the
Alternate Rate with an Interest Period ending on the date on which the
Interest Period applicable to the affected Advance expires.
(c) If the Lenders shall notify the Borrower in writing that
at any time, because of the circumstances described in clause (x) or (y) in
Section 2.14(a) or any other circumstances arising after the Closing Date and
relating to any period in which the Commitment is in effect affecting the
interbank Eurodollar market generally, then the Borrower shall be entitled to
require each Lender to which such circumstances apply to assign its Credit
Exposure at par to any Person selected by Borrower that is a financial
institution reasonably acceptable to the Agent, which assignment shall be
effected pursuant to Section 7.18 hereof.
Section 2.15 Change of Lending Office. Each Lender agrees that it will use
reasonable efforts to designate an alternate Lending Office with respect to its
Advances affected by the matters or circumstances described in Section 2.12,
2.13 or 2.14 to reduce the liability of the Borrower or avoid the results
provided thereunder, so long as such designation is not disadvantageous to such
Lender as determined by such Lender in its sole discretion.
Section 2.16 Funding Losses. The Borrower shall compensate each Lender,
upon such Lender's written request to the Agent and the Agent's delivery thereof
to the Borrower (which request shall set forth in reasonable detail the basis
for requesting such amounts), for all losses, expenses, and liabilities
(including, without limitation, any interest paid by such Lender to lenders of
funds borrowed by it to make or carry its Advances to the extent not recovered
by such Lender in connection with the re-employment of such funds but excluding
loss of anticipated profits), which such Lender may sustain: (i) if for any
reason (other than a default by such Lender) an Advance does not occur on the
date specified therefor in a Notice of Borrowing (whether or not withdrawn);
(ii) if any repayment of any Advance occurs on a date which is not the Maturity
Date or the last day of an Interest Period applicable to such Advance (subject
to Section 2.9(b)); (iii) if, for any reason, the Borrower defaults in its
obligation to repay any Advances when required by the terms of this Agreement;
or (iv) the occurrence of any of the events described in Sections 2.12, 2.13 or
2.15. With respect to losses, expenses and liabilities which a Lender may
sustain as described in this Section 2.16 relating to any period in which the
Commitment is in effect, the provisions of this Section 2.16 shall survive the
termination of this Agreement and the payment of the Promissory Notes and all
other amounts payable hereunder.
Section 2.17 Taxes. (a) All payments made by the Borrower under this
Agreement and the Promissory Notes shall be made free and clear of, and without
deduction or withholding for or on account of, any present or future income,
stamp, or other taxes, levies, imposts, duties, charges, fees, deductions,
reserves or withholdings, now or hereafter imposed, levied, collected, withheld
or assessed by any Governmental Authority, excluding in the case of each Lender,
net income taxes and franchise taxes (imposed in lieu of net income taxes)
imposed on such Lender as a result of a present or former connection between the
jurisdiction of the government or taxing authority imposing such tax and such
Lender (excluding a connection arising solely from such Lender having executed,
delivered, or performed its obligations or received a payment under, or
enforced, this Agreement or the Promissory Notes) or any political subdivision
or taxing authority thereof or therein (all such non-excluded taxes, levies,
imposts, duties, charges, fees, deductions and withholdings being hereinafter
called "Taxes"). If any Taxes are required to be withheld from any amounts
payable to any Lender hereunder or under the Promissory Notes, the amounts so
payable to such Lender shall be increased to the extent necessary to yield to
such Lender (after payment of all Taxes) interest or any such other amounts
payable hereunder at the rates or in the amounts specified in this Agreement and
the appropriate Promissory Note. Whenever any Taxes are payable by the Borrower
pursuant to applicable law, as promptly as possible thereafter the Borrower
shall send to the Agent a certified copy of an original official receipt
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received by the Borrower showing payment thereof. If any Borrower fails to pay
any Taxes when due to the appropriate taxing authority or fails to remit to the
Agent the required receipts or other required documentary evidence (other than
any such failure due to failure of any Lender to furnish the documents required
to be furnished by such Lender pursuant to Section 2.17(b)), the Borrower shall
indemnify, defend and hold harmless the Agent and each Lender for any
incremental taxes, interest, or penalties that may become payable by the Agent
or any Lender as a result of any such failure. With respect to any obligations
of the Borrower pursuant to this Section 2.17 relating to any period in which
the Commitment is in effect, the agreements in this Section 2.17, as they apply
to any Advance, shall survive the termination of this Agreement and the payment
of the Promissory Notes and all other amounts payable hereunder.
(b) Agent and each Lender shall furnish Borrower, at least 30
days prior to the date on which the first payment to each Lender (including each
Purchasing Lender) is due, and annually thereafter during the term of the Loan,
with United States Internal Revenue Service Form 1001, 4224, W-8 or W-9 (or any
other successor form) or any other document evidencing such Lender's exemption
from withholding of Taxes from any amounts payable to such Lender hereunder
under as of the Closing Date. If any Taxes are required to be withheld from any
amounts payable to any Lender hereunder or under the Promissory Notes, then the
Borrower shall be entitled to require such Lender to assign its Credit Exposure
at par to any Person selected by Borrower that is a financial institution
reasonably acceptable to the Agent, which assignment shall be effected pursuant
to Section 7.18 hereof.
Section 2.18 Extension of Maturity Date. At least sixty (60) days prior to
the first anniversary of the Closing Date, the Borrower may, by notice to Agent,
request that Agent and each Lender review whether or not it is willing to extend
the Maturity Date. In the event and to the extent that the Agent and all of the
Required Lenders agree, in their respective sole and absolute discretion, to
extend the Maturity Date on such terms and conditions as shall be acceptable to
the Agent and all of the Required Lenders, in their respective sole and absolute
discretion, then the Agent shall so advise the Borrower. If the terms and
conditions to such extension are acceptable to Borrower, in its sole and
absolute discretion, then the Borrower shall so notify the Agent within the time
period set forth in such notice to the Borrower and, provided that all of the
conditions to the effectiveness of such extension as set forth in such notice to
the Borrower are satisfied, the Maturity Date shall be extended pursuant to such
terms and conditions and the provisions of this Section. Notwithstanding the
foregoing or anything else to the contrary, the Agent and each Lender shall have
the right to refuse to extend the Maturity Date for any reason or for no reason
whatsoever. If the Maturity Date is extended pursuant to this Section but less
than all of the Lenders agree to such extension, then either (i) the Commitment,
for all purposes during the period of such extension, shall be equal to the
product of the Commitment times the aggregate Percentage of the Lenders agreeing
to such extension, or (ii) the Borrower shall be entitled to require each Lender
which does not agree to such extension to assign its Credit Exposure at par to
any Person selected by Borrower that is a financial institution reasonably
acceptable to the Agent, which assignment shall be effected pursuant to Section
7.18 hereof.
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ARTICLE III
CONDITIONS TO BORROWINGS
The obligation of the Lenders to make an Advance to the Borrower is subject
to the satisfaction of the following conditions:
Section 3.1 Conditions Precedent to Closing. On or prior to the Closing
Date, all obligations of the Borrower hereunder to the Agent and the Lenders
incurred prior to the Closing Date and any amounts payable to the Agent or the
Lenders on the Closing Date (other than legal fees payable pursuant to the last
paragraph of this Section 3.1), shall have been paid in full. In addition, the
following conditions shall be satisfied:
(a) Receipt of Documents. The Agent shall have received or
waived in writing the following, each dated as of or prior to the Closing Date,
in form and substance satisfactory to the Agent:
(i) an officer's certificate, dated the Closing Date, signed by any
Co-Chairman, the President, any Senior Vice President, any Vice President
or the Controller of the Borrower, and attested to by the Secretary or any
Assistant Secretary of the Borrower, in the form of Exhibit D with
appropriate insertions, together with copies of the Articles of
Incorporation of Borrower certified by the Secretary of State of the State
of the Borrower's incorporation and the By-Laws of Borrower and the
resolutions of the Borrower referred to in such certificate; and certified
copies of all other documents, if any, evidencing corporate action or
governmental authorization or approval with respect to this Agreement, the
Promissory Notes, the Advances and the Loan Documents;
(ii) duly executed and completed Promissory Notes payable to the order
of each Lender;
(iii) a duly executed and delivered Environmental Indemnity;
(iv) an opinion of counsel to the Borrower addressed to the Agent and
the Lenders as to the matters set forth in Exhibit F and F-1 and in form
reasonably acceptable to the Agent;
(v) financial statements in the forms prescribed by Sections
5.2(a)-(d) for the most recent fiscal year and fiscal quarter;
(vi) copies of all financial statements, reports, and proxy statements
mailed to the Borrower's shareholders within the last year, and copies of
all registration statements, periodic reports, and other documents filed by
the Borrower with the Securities and Exchange Commission (or any successor
thereto) and any national securities exchange within the last year;
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(vii) such consents or acknowledgements, with respect to such of the
transactions hereunder, from such Persons as the Agent or its counsel may
reasonably determine to be necessary or appropriate;
(viii) (A) a good standing certificate from the State of Maryland in
respect of the Borrower as of a recent date; and (B) a certificate of the
Secretary of State of each state in which the Borrower owns a Mortgaged
Property or is required to qualify to do business, as to due qualification
to do business as a foreign entity and good standing of Borrower as of a
recent date; and
(ix) a letter of comfort from Security Capital Group Incorporated
substantially in the form of Exhibit O attached hereto.
Execution and delivery of this Agreement by Borrower shall constitute Borrower's
agreement and covenant to pay to the Agent, promptly upon demand (together with
a reasonably detailed invoice(s) in respect thereof), all reasonable fees and
disbursements of counsel to the Agent and the Lenders incurred prior to or on
the Closing Date.
Section 3.2 Conditions Precedent to Each Advance. At the time of the making
by the Lenders of each Advance (before as well as after giving effect to such
Advance and to the proposed use of the proceeds thereof):
(a) The Agent shall have received a timely Notice of Borrowing
from the Borrower in accordance with Article II;
(b) No Default or Event of Default shall have occurred and be
continuing;
(c) Such Advance shall not cause (i) the aggregate principal
amount of all outstanding Advances to exceed the Commitment, (ii) the aggregate
principal amount of all outstanding Advances (other than Unsecured Advances) to
exceed the then Maximum Availability Amount, and (iii) the aggregate principal
amount of all outstanding Unsecured Advances to exceed $30,000,000;
(d) Subject to the provisions of Section 5.5 hereof, all
representations and warranties contained herein and incorporated herein by
reference (other than representations and warranties which are expressly
provided as being made only as of the Closing Date) shall be true and correct in
all material respects with the same effect as though such representations and
warranties had been made on and as of the date of such Advance and the Borrower
shall be in compliance in all material respects with all covenants and
agreements contained in Article V hereof and elsewhere in this Agreement;
(e) There shall have been no Material Adverse Change and no
Requirement of Law or Contractual Obligation of the Borrower or any Subsidiary
could reasonably be expected to result in a Material Adverse Change;
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(f) No litigation, investigation or proceeding before or by any
arbitrator or Governmental Authority shall be continuing or threatened against
the Borrower or any of the officers or directors of any Subsidiary thereof in
connection with this Agreement and the other Loan Documents which would result
in a Material Adverse Change;
(g) Agent shall have received:
(i) prior to any Advance (other than Unsecured Advances) with
respect to any Mortgaged Property (and, notwithstanding anything to
the contrary, no portion of the Total Costs with respect to such
Mortgaged Property shall be included in the computation of the Maximum
Availability Amount unless the Agent shall have received): (1) such
supporting documentation for Total Costs as Agent may require and such
supporting documentation evidencing that the Mortgaged Property is
located in a Central Business District as Agent may require, (2)
Borrower's certificate to the effect that it has actually incurred the
Total Costs for which it is seeking reimbursement with respect to the
requested Advance, that such costs have not been made the basis for
any other request for an Advance under this Agreement, that no
Material Adverse Change has occurred since the immediately preceding
Advance, and that the requested Advance will be used for (and only
for) the Permitted Purpose, (3) a notice of title continuation or an
endorsement to each title policy referred to in Section 3.3(a)(iii)
dated no more than seven (7) days prior to the date of any such
Advance, indicating that since the date of the last preceding Advance
there has been no change in the state of title not theretofore
approved by Agent, which endorsement shall have the effect of redating
the title policy to a date no more than seven (7) days prior to the
date of any such Advance, and increasing the coverage thereof by the
amount of the Advance then being made, together with Borrower's
certificate dated on the date of any such Advance to the effect that
there has been no change in the state of title since the date of such
title continuation or endorsement or title policy, as the case may be,
and the date of such Advance; or in the case of a New Mortgaged
Property, a title policy as referred to in Section 3.3(a)(iii) dated
the date on any such Advance, and (4) a Project Cost Report for such
Mortgaged Property, dated as of the date of the Notice of Borrowing;
(ii) prior to any Advance (other than Unsecured Advances) with
respect to any Acquisition Cost for any Mortgaged Property (and,
notwithstanding anything to the contrary, no portion of the Total
Costs with respect to such Mortgaged Property shall be included in the
computation of the Maximum Availability Amount unless the Agent shall
have received): (1) a Budget for such Mortgaged Property, together
with a full copy of the material agreement(s) (together with all
amendments thereto) pursuant to which such Mortgaged Property was
acquired, certified by the Borrower as being true, complete and
accurate; (2) Borrower's certification that, and evidence reasonably
satisfactory to Agent that, the zoning district in which the Mortgaged
Property is located permits the development, use and operation of the
Mortgaged Property as an extended stay facility with such ancillary
facilities related thereto, and that all zoning, planning board and
similar approvals required to be obtained under any Requirements of
Law or Use Requirements for the development, use and operation of an
extended stay facility with such ancillary facilities related thereto
on such Mortgaged Property have been obtained and are in full force
and effect; and (3) Borrower's certificate to the effect that the
building permit and all other permits, authorizations and approvals
required to be obtained
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under any Requirements of Law or Use Requirements for the construction
and operation of an extended stay facility with such ancillary
facilities related thereto on such Mortgaged Property will be promptly
and duly applied for, are capable of being obtained, and that Borrower
will pursue the obtainment of such permits, authorizations and
approvals with due diligence, and that the construction and operation
of an extended stay facility with such ancillary facilities related
thereto on such Mortgaged Property shall at all times comply in all
material respects with all applicable Requirements of Law and Use
Requirements; and
(iii) prior to any Advance (other than Unsecured Advances) with
respect to any Direct Cost for any Mortgaged Property (and,
notwithstanding anything to the contrary, no portion of the Direct
Costs with respect to such Mortgaged Property shall be included in the
computation of the Maximum Availability Amount unless the Agent shall
have received): (1) Borrower's certification that the building permit
and all other permits, authorizations and approvals then required to
be obtained under any Requirements of Law or Use Requirements for the
construction and operation of an extended stay facility with such
ancillary facilities related thereto on such Mortgaged Property (i.e.,
only to the extent such permits, authorizations and approvals are
required to have been obtained for an extended stay facility and such
ancillary facilities related thereto on such Mortgaged Property as
constructed and/or operated as of the date of such Advance) have been
obtained and are in full force and effect in all material respects;
(2) Borrower's certificate to the effect that final plans and
specifications (the "Plans and Specifications") for the construction
of an extended stay facility with such ancillary facilities related
thereto on such Mortgaged Property have been duly filed with all
Governmental Authorities having jurisdiction over the construction of
such facility; (3) a Final Budget for such Mortgaged Property; and (4)
prior to the first Advance with respect to any Direct Cost for any
particular Mortgaged Property, Borrower's certificate to the effect
that agreements with the general contractor and all major trade
contractors and subcontractors required for the construction of an
extended stay facility and such ancillary facilities related thereto
on such Mortgaged Property have been duly executed and delivered by
all parties thereto and are in full force and effect.
(iv) prior to the first Advance (other than Unsecured Advances)
with respect to the Indirect Cost for any Mortgaged Property (and,
notwithstanding anything to the contrary, no portion of the Indirect
Costs with respect to such Mortgaged Property shall be included in the
computation of the Maximum Availability Amount unless the Agent shall
have received): (1) Borrower's certification that construction shall
commence in accordance with the Plans and Specifications for such
Mortgaged Property not later than ninety (90) days of the first
advance for Indirect Costs for such Mortgaged Property, and (2) all
other documents required under clauses (i), (ii) and (iii) above.
(h) The Borrower shall have commenced construction of each
extended stay facility, including the ancillary facilities related thereto, to
be constructed on a Mortgaged Property in accordance with the Plans and
Specifications therefor not later than ninety (90) days from the date that
Borrower receives the first Advance with respect to Indirect Costs for such
Mortgaged Property; provided, however, notwithstanding the foregoing, if either
(x) despite the use of commercially reasonable efforts, such construction cannot
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be commenced within such 90-day period as a result of conditions or
circumstances outside of the Borrower's control (it being agreed that conditions
or circumstances which can be cured by the payment of money on commercially
reasonable terms shall not be deemed outside of the Borrower's control), or (y)
commencement of construction within such 90-day period shall or is reasonably
likely to result in the Direct Costs or Indirect Costs with respect to such
Mortgaged Property being materially greater than the amount thereof set forth in
the Budget for such Mortgaged Property, then, in either such event, Borrower
shall have an additional thirty days to commence construction on such Mortgaged
Property. In the event construction is not commenced with 120 days after the
first advance of Indirect Costs with respect to such Mortgaged Property, then no
additional Advances for such Mortgaged Property shall be made until construction
commences..
(i) The Agent shall have received such other documents or legal
opinions as the Agent or counsel to the Agent may reasonably request,
all in form and substance reasonably satisfactory to the Agent; and
(j) (1) The Agent shall have received payment of all costs and
expenses (other than the legal fees described in the following clause
(2) of this subparagraph) incurred by Agent in connection with
reviewing and evaluating the items furnished and the actions
purporting to satisfy the conditions and requirements to be satisfied
pursuant to this Section 3.2, and (2) receipt of a Notice of Borrowing
for each Advance shall constitute Borrower's agreement and covenant to
pay to the Agent, promptly upon demand (together with a reasonably
detailed invoice(s) in respect thereof), all reasonable legal fees and
expenses incurred in connection with preparing and/or reviewing all
documents relating to, and rendering at the request of Agent all
advice respecting, such items, actions, conditions and requirements.
Each request for an Advance by the Borrower, each selection or deemed
selection by the Borrower of an additional Interest Period for any Advance
pursuant to Section 2.7(ii), shall constitute a representation and warranty by
the Borrower, as of the date of the Advance, the selection or deemed selection
of such additional Interest Period, as the case may be, that the conditions
specified in subsections (a)-(j) of this Section 3.2 have been satisfied.
Borrower shall use reasonable efforts to furnish, with respect to each
request for an Advance, unless otherwise directed by Agent, all documents
referred to in Sections 3.2(g)(i)(3), 3.2(g)(ii)(2), 3.2(h), 3.3(a) (other than
those referred to in subsections (viii) and (ix) thereof) and 3.3(b), to the
extent applicable to such Advance, to Agent's counsel, Xxxxxxxx Xxxxxxxxx Xxxxxx
Xxxxxxxx & Xxxxxx LLP, 0000 Xxxxxx xx xxx Xxxxxxxx, Xxx Xxxx, Xxx Xxxx 00000,
Attention: Xxxxxxx X. Xxxx, Esq., or at such other address or to such other
counsel as Agent may from time to time designate by notice to Borrower.
Notwithstanding the foregoing: (i) the failure of any such documents to be
furnished to such counsel shall not constitute a Default or Event of Default
(provided, however, nothing herein shall negate or vitiate any requirement
hereunder to cause the Agent to receive any such documents), and (ii) copies of
all of the foregoing documents delivered to such counsel shall also be given to
Agent as provided herein.
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Section 3.3 Additional Conditions Precedent to an Advance in Respect of New
Mortgaged Property. Notwithstanding anything to the contrary, no portion of the
Total Costs with respect to a New Mortgaged Property shall be included in the
computation of the Maximum Availability Amount unless the following conditions
are satisfied with respect to each such New Mortgaged Property:
(a) Receipt of Documents. The Agent shall have received the
following in form and substance satisfactory to the Agent:
(i) a Mortgage for the New Mortgaged Property duly authorized,
executed, acknowledged and delivered in recordable form and (except as
otherwise expressly provided in Section 3.3(c)) evidence of the
recording of such instrument as may be necessary or, in the opinion of
the Agent, desirable to perfect and protect the Liens or rights
purported to be created thereby;
(ii) Financing Statements for the New Mortgaged Property
(including, without limitation, all furniture, fixtures and equipment
the cost of which is or has been included in Total Costs for purposes
of computing the Maximum Availability Amount), duly authorized and
executed and delivered in form suitable for recording and filing in
all necessary and appropriate recorders and filing offices, with
evidence of the recording and filing of each such Financing Statement
in such offices;
(iii) with respect to the New Mortgaged Property (i) a
mortgagee's policy of title insurance issued by a reputable national
title insurance company reasonably acceptable to the Agent, in form
and substance satisfactory to the Agent, (x) insuring the Agent and
the Lenders in an amount acceptable to the Agent with respect to the
New Mortgaged Property, that, except for unrecorded Mortgages pursuant
to Section 3.3(c), each Mortgage constitutes a valid first mortgage
lien on the Borrower's fee interest in the New Mortgaged Property, (y)
providing full coverage against all mechanics' and materialmen's
liens, and (z) containing the endorsements described on Schedule 5
attached hereto and such other endorsements and affirmative coverage
as reasonably required by the Agent to the extent available under
applicable law and with such reinsurance (with direct access
provisions) as the Agent may reasonably request; and the Agent shall
also have received evidence that the premiums in respect of such title
insurance policies have been paid; (ii) a survey by a licensed
surveyor reasonably satisfactory to the Agent and such title insurance
company, containing the certification set forth on Schedule 6 attached
hereto and certified to the Agent, the Lenders, the Borrower, and the
title insurance company, showing no state of facts reasonably
unacceptable to the Agent; and (iii) a copy of all recorded documents
referred to, or listed as exceptions to title in, the title policies
referred to in this Section 3.3(a)(iii), including copies of
appurtenant easements affecting or benefitting the New Mortgaged
Property;
(iv) studies, in each case reasonably satisfactory to the Agent
(and conducted by an experienced and reputable engineering firm as
demonstrated to Agent by evidence reasonably satisfactory
-27-
to Agent) confirming that there are no Hazardous Materials on or under
the New Mortgaged Property, except as set forth in such Studies and
acceptable to the Agent in its sole discretion;
(v) UCC lien searches with respect to the Borrower, whether filed
against the New Mortgaged Property or otherwise;
(vi) copies of each policy of insurance required hereunder and
under the other Loan Documents, and, with respect to policies of
insurance covering the New Mortgaged Property, to the extent such New
Mortgaged Property is not insured under existing policies of insurance
required hereunder and under the other Loan Documents, certificates or
binders naming the Agent and each Lender as an additional insured
thereunder, accompanied by a certification stating that all insurance
required hereunder and under the other Loan Documents has been
obtained, such insurance satisfies the requirements hereof and
thereof, and is in full force and effect and that all current due
premiums therefor have been paid in full;
(vii) an opinion of counsel to the Borrower addressed to the
Agent and the Lenders as to the matters set forth in Exhibit F and F-1
and in form reasonably acceptable to the Agent;
(viii) copies of Market Studies acceptable to the Agent in its
reasonable discretion with respect to the New Mortgaged Property;
(ix) a Proforma Operating Statement acceptable in form and
substance to the Agent in its sole discretion for each New Mortgaged
Property, dated as of a recent date;
(x) Intentionally omitted;
(xi) such consents or acknowledgements from such Persons as the
Agent or its counsel may reasonably determine to be necessary;
(xii) such other documents and instruments as the Agent or the
Lenders may deem reasonably necessary or appropriate as a condition to
its granting of the Borrower's request to add New Mortgaged Properties
to the Collateral; and
(xiii) (1) The Agent shall have received payment of all costs and
expenses (other than the legal fees described in the following clause
(2) of this subparagraph) incurred by Agent in connection with
reviewing and evaluating the items furnished and the actions
purporting to satisfy the conditions and requirements to be satisfied
pursuant to this Section 3.3, and (2) receipt of any of the documents
or instruments described in this Section 3.3 shall constitute
Borrower's agreement and covenant to pay to the Agent, promptly upon
demand (together with a reasonably detailed invoice(s) in respect
thereof), all reasonable legal fees and expenses incurred in
connection with preparing and/or reviewing all documents relating to,
and rendering at the request of rendering at the request of Agent all
advice respecting, such items, actions, conditions and requirements.
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(b) Subsidiary-Owned New Mortgaged Properties. With respect to
each Mortgaged Property any portion of or interest in which is owned by any
Subsidiary Mortgagor, the Agent shall have received the following in form and
substance satisfactory to the Agent: (x) a guaranty of the Indebtedness
hereunder in the form of Exhibit K attached hereto from such Subsidiary
Mortgagor (the "Subsidiary Mortgagor Guaranty"), (y) all of the documents and
instruments described in Section 3.3(a) hereof, and (z) the documents and
instruments described in Section 3.1(a)(i) with respect to the authority,
execution and delivery of documents and instruments by, and the performance of
the obligations thereunder by, such Subsidiary Mortgagor, and the documents and
instruments described in Section 3.1(a)(viii). For purposes of this Section
3.3(b) (and for no other purpose), all references to "Borrower" in Sections
3.1(a)(i), 3.1(a)(viii) and 3.3(a) (and in the definitions and other provisions
referred to in such Sections) shall be deemed to include such Subsidiary
Mortgagor.
(c) Unrecorded Mortgages of Subsidiary Mortgagor. Subject to and
in accordance with the terms of this Section 3.3(c), the Mortgage with respect
to any Mortgaged Property may remain unrecorded provided that all of the
following conditions are satisfied: (i) the mortgage recording tax that would be
payable by the mortgagor under such Mortgage with the jurisdiction in which such
Mortgaged Property is located as a condition precedent to the recordation in
such jurisdiction of such Mortgage, shall exceed 1.0% of the Eligible Costs with
respect to such Mortgaged Property, (ii) such Mortgaged Property is owned by a
Subsidiary Mortgagor that is and shall remain a single-purpose entity which,
among other things, (A) has the ability and capacity as determined in the sole
discretion of the Agent to pay the mortgage recording tax, (B) does not and
shall not engage in any business other than owning and operating such Mortgaged
Property, or acquire or own assets other than such Mortgaged Property and
incidental personal property without the prior written consent of the Agent,
which consent may be withheld for any reason or no reason, (C) has no debt as of
the date hereof and shall not incur or create any debt except such debt agreed
to in advance by the Agent in writing, (D) maintains its assets in a way which
segregates and identifies such assets separate and apart from the assets of any
other person or entity, (E) holds itself out to the public as a separate legal
entity from any other person or entity, and (F) conducts business solely in its
own name, (iii) the entire stock, partnership, membership and other ownership
interests and privileges in such Subsidiary Mortgagor and any other property
owned by such Subsidiary Mortgagor under clause (ii)(B) above are assigned and
pledged to the Lenders pursuant to a Pledge and Security Agreement in the form
of Exhibit P and appropriate Financing Statements are filed evidencing the
collateral under the Pledge and Security Agreement , (iv) the jurisdiction in
which such Mortgaged Property is located permits the immediate recordation of
such Mortgage at no cost or expense to the Agent or the Lenders other than
payment of such mortgage recording tax and nominal recording charges, (v) the
Borrower provides written evidence, accompanying the Initial Budget with respect
to such Mortgaged Property, satisfactory to the Agent that the conditions set
forth in clauses (i), (ii) and (iv) above are satisfied, (vi) the Agent shall
have received an opinion of counsel to the Borrower addressed to the Agent and
the Lenders as set forth in Exhibits F and F-1 in form and substance reasonably
acceptable to the Agent, (vii) the Agent shall have received payment of all
costs and expenses (other than the legal fees described in the following
subclause of this clause (vii)) incurred by Agent in connection with reviewing
and evaluating the items furnished and the actions purporting to satisfy the
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conditions and requirements to be satisfied pursuant to this Section 3.3(c), and
receipt of a Notice of Borrowing for the first Advance with respect to such
Mortgaged Property shall constitute Borrower's agreement and covenant to pay to
the Agent, promptly upon demand (together with a reasonably detailed invoice(s)
in respect thereof), all reasonable legal fees and expenses incurred in
connection with preparing and/or reviewing all documents relating to, and
rendering at the request of Agent all advice respecting, such items, actions,
conditions and requirements, (viii) all of the conditions set forth in Section
3.3(b) shall have been satisfied with respect to such Mortgaged Property (other
than the condition that such Mortgage be recorded and evidence thereof delivered
to the Agent), (ix) the Agent consents to such Mortgage not being recorded, and
(x) the form and substance of all of the foregoing evidence, opinion letters and
other documents are satisfactory to the Agent in all respects. Failure for any
reason of any of the foregoing conditions to be satisfied prior to or
contemporaneously with the giving of the Notice of Borrowing for the first
Advance, or with regard to clauses (vi), (vii) and (ix) above, by the date of
the first Advance, with respect to such Mortgaged Property shall constitute an
irrevocable waiver by Borrower of its right to request that such Mortgage not be
recorded. Notwithstanding anything to the contrary, the Borrower irrevocably
agrees that each and every unrecorded Mortgage may be recorded at any time (A)
immediately upon an Event of Default described in Section 6.1(a), (B) for any
insubstantial, immaterial, technical Default in the Agent's reasonable
discretion, at the earlier of ninety (90) days following such Default (unless
such Default has been cured) or immediately upon an Event of Default, and (C)
for any Default not covered in either (A) or (B) above, immediately, after such
Default (unless such Default has been cured) or after the Agent, in its sole
discretion, reasonably believes that a Default is likely to occur. Borrower
shall pay upon demand all mortgage recording taxes, charges, fees, cost and
expenses incurred by the Agent or any of the Lenders in connection with such
recordation.
Section 3.4 Additional Conditions Relating to Unsecured Advances. Subject
to and in accordance with the terms of this Section 3.4, Borrower may elect to
receive certain Advances without satisfying the conditions set forth in Section
3.2(g) with respect to such Advance. All such Advances made hereunder which do
not satisfy the conditions set forth in Section 3.2(g) are referred to in this
Agreement as "Unsecured Advances". No Unsecured Advance shall be made unless all
of the conditions and requirements set forth in Article III (other than the
conditions set forth in Section 3.2(g)) and all of the other provisions of this
Agreement and the other Loan Documents to be satisfied as a condition to any
Advance shall be satisfied as a condition to the making of any Unsecured Advance
(including, without limitation, that the aggregate principal amount of all
outstanding Unsecured Advances shall not exceed $30,000,000). Notwithstanding
anything to the contrary, no Unsecured Advance shall be made after September 30,
1998. The Borrower shall repay to the Agent, for the account of the Lenders, the
unpaid principal amount of all Unsecured Advances, together with all accrued and
unpaid interest thereon, on September 30, 1998, unless, on or before such date,
(i) the conditions set forth in Section 3.2(g) with respect to any Unsecured
Advances not so repaid are satisfied, and (ii) as of the date on which the
conditions set forth in Section 3.2(g) with respect to any Unsecured Advances
not so repaid are satisfied, all of the other conditions and requirements set
forth in Article III and all of the other provisions of this Agreement and the
other Loan Documents to be satisfied as a condition to any Advance shall be
satisfied.
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ARTICLE IV
REPRESENTATIONS AND WARRANTIES
Borrower represents and warrants the following as of the date hereof and,
except with respect to the representations and warranties expressly provided
herein as being made only as of the Closing Date, further represents and
warrants on the date of each Advance:
Section 4.1 Corporate Existence. Borrower is duly organized and validly
existing under the laws of the jurisdiction of its incorporation. In addition,
Borrower is in good standing under the laws of the jurisdiction of its
incorporation, is duly qualified to do business as a foreign corporation and is
in good standing in each jurisdiction where it owns property or where the
conduct of its business or the ownership of its property or assets (including,
without limitation, the Mortgaged Properties) requires such qualification
(unless the failure to be so qualified or in good standing would not constitute
a Material Adverse Change), and has all corporate powers and all governmental
licenses, authorizations, consents, and approvals required to carry on its
business as is now or is proposed to be conducted (unless the failure to have
same would not constitute a Material Adverse Change).
Section 4.2 Authorization of Agreement; No Violation. The execution,
delivery, and performance by Borrower of this Agreement and of the Loan
Documents (i) are within the Borrower's powers, (ii) have been duly authorized
by all necessary action, and (iii) do not violate or create a default under any
Requirement of Law, the Borrower's Certificate of Incorporation and By-Laws or
any Contractual Obligation binding on or affecting the Borrower or its property
(other than any violation or default that would not constitute a Material
Adverse Change).
Section 4.3 Governmental Approvals. No authorization or approval or other
action by, and no notice to or filing or registration with, any Governmental
Authority is required in connection with the execution, delivery, and
performance by Borrower of this Agreement or the other Loan Documents (unless
the failure to have obtained or made same would not constitute a Material
Adverse Change).
Section 4.4 Binding Effect. This Agreement and the other Loan Documents
have each been duly executed by Borrower and each constitutes a legal, valid,
and binding obligation of Borrower, enforceable against Borrower in accordance
with its terms, except as enforcement thereof may be subject to (i) the effect
of any applicable bankruptcy, insolvency, reorganization, moratorium, or similar
law affecting creditors, rights generally, and (ii) general principles of equity
(regardless of whether such enforcement is sought in a proceeding in equity or
at law).
Section 4.5 Financial Information and No Material Adverse Change.
(a) Each of the financial statements delivered pursuant to
Sections 3.1(a)(v) and 3.1(a)(vi) were prepared in accordance with GAAP and
fairly present the financial condition and results of operation of the Persons
and/or properties covered thereby on the dates and for the periods covered
thereby, except as disclosed in the notes thereto and, with respect to normally
recurring year-end adjustments. As of the date hereof Borrower does not have any
material liability, absolute or contingent, not reflected in such financial
statements, the notes thereto or Schedule 2 hereof.
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(b) Since December 31, 1997, there has been no Material
Adverse Change.
Section 4.6 Litigation. There is no action, suit, or proceeding, or any
governmental investigation or any arbitration, in each case pending or, to the
knowledge of the Borrower, threatened against Borrower, or any property of the
Borrower before any court or arbitrator or any governmental or administrative
body, agency, or official (i) which challenges the validity of this Agreement or
any of the other Loan Documents or (ii) which, as reasonably likely to be
determined, and taking into account any insurance with respect thereto, would
constitute a Material Adverse Change.
Section 4.7 Compliance with Law. The Borrower is in compliance with all
Requirements of Law, the Borrower's Certificate of Incorporation and By-Laws and
all Contractual Obligations binding on or affecting it or any of its properties
(other than where the failure to so comply would not constitute a Material
Adverse Change). The execution and delivery by Borrower of this Agreement, the
Promissory Notes and the Loan Documents do not, and the performance by Borrower
of this Agreement, the Promissory Notes and each of the Loan Documents will not,
(a) violate any Requirement of Law, (b) violate or contravene any provision of
the Borrower's Certifi cate of Incorporation and By-Laws, or any law, rule,
regulation, order, writ, judgment, decree, determination or award applicable to
the Borrower, (c) violate, contravene or result in a breach of or constitute a
default under any Contractual Obligation, or (d) result in, or require the
creation or imposition of, any Lien upon or with respect to any of its property
or assets (including, without limitation, the Mortgaged Properties) other than
the Liens created by the Loan Documents (other than, in any such case, where
such violation, contravention, default or result would not constitute a Material
Adverse Change).
Section 4.8 Labor Matters.
(a) There are no strikes, work stoppages, slowdowns or lockouts
pending, or reasonably likely to occur in the immediate future, against or
involving the Borrower or any of its Subsidiaries, other than those which in the
aggregate would not constitute or result in a Material Adverse Change.
(b) There are no arbitrations or grievances pending against or
involving the Borrower or any of its Subsidiaries, nor, to the best knowledge of
Borrower, are there any arbitrations or grievances threatened involving the
Borrower or any of its Subsidiaries, other than those which in the aggregate
would not constitute or result in a Material Adverse Change.
(c) Neither the Borrower nor any of its Subsidiaries are parties
to, or have any obligations under, any collective bargaining agreement, other
than collective bargaining agreement(s) copies of which (certified by the
Borrower as being true, correct and complete) have been furnished to the Agent.
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(d) There are no representation proceedings pending, or, to the
best knowledge of the Borrower, threatened with the National Labor Relations
Board, and no labor organization or group of employees of the Borrower or any of
its Subsidiaries have made a pending demand for recognition, other than those
which in the aggregate would not constitute or result in a Material Adverse
Change.
(e) There are no unfair labor practice charges, grievances or
complaints pending or in process or, to the best knowledge of Borrower,
threatened by or on behalf of any employee or group of employees of the Borrower
or any of its Subsidiaries other than those which in the aggregate would not
constitute or result in a Material Adverse Change.
(f) There are no complaints or charges against the Borrower or
any of its Subsidiaries pending or, to the best knowledge of Borrower,
threatened to be filed with any Governmental Authority or arbitrator based on,
arising out of, in connection with, or otherwise relating to the employment by
the Borrower or any of its Subsidiaries of any individual, other than those
which in the aggregate would not constitute or result in a Material Adverse
Change.
(g) The Borrower and each of its Subsidiaries is in compliance
with all laws, and all orders of any court, governmental agency or arbitrator,
relating to the employment of labor, including all such laws relating to wages,
hours, collective bargaining, discrimination, civil rights, and the payment of
withholding and/or social security and similar taxes, other than such non
compliances as in the aggregate would not constitute or result in a Material
Adverse Change.
Section 4.9 ERISA. As of the date of this Agreement and throughout the term
of this Agreement, (i) the Borrower is not and will not be an "employee benefit
plan" as defined in Section 3(3) of ERISA, which is subject to Title I of ERISA,
(ii) the assets of the Borrower do not and will not constitute "plan assets" of
one or more such plans within the meaning of 29 C.F.R. ss. 2510.3-101 and (iii)
the Borrower is not and will not be a "government plan" within the meaning of
Section 3(32) of ERISA.
Section 4.10 No Default. The Borrower is not in default under, or with
respect to, any of its Contractual Obligations in any respect which could
reasonably be expected to result in a Material Adverse Change and no Default or
Event of Default has occurred and is continuing.
Section 4.11 Improvements. Subject to the provisions of Section 5.5 hereof:
(a) Except for portions of the Mortgaged Property under
construction or which are to be demolished in the course of construction, all of
the improvements located on the Mortgaged Properties and the use of such
improvements are covered by existing valid certificates of occupancy and all
other certificates and permits required by applicable laws, rules, regulations,
and ordinances or in connection with the use, occupancy, and operation thereof.
(b) No material portion of any of the Mortgaged Properties, nor
any improvements located on such Mortgaged Properties that are material to the
operation, use, or value thereof, have been damaged in any respect as a result
of any fire, explosion, accident, flood, or other casualty, except to the extent
that the same have been or will with due diligence and in compliance with this
Agreement and all of the other Loan Documents be restored to their condition
prior thereto.
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(c) No written notices of violation of any federal, state, or
local law or ordinance or order or requirement have been received with respect
to any Mortgaged Properties.
Section 4.12 Intellectual Property. Borrower owns, or is licensed to use,
all trademarks, trade names, copyrights, technology, know-how, and processes
necessary for the conduct of its business as currently conducted (the
"Intellectual Property") except for those the failure to own or license which
could not reasonably be expected to have a Material Adverse Change. No claim has
been asserted and is pending by any Person challenging or questioning the use of
any such Intellectual Property or the validity or effectiveness of any such
Intellectual Property, nor does the Borrower know of any valid basis for any
such claim (other than claims which would not constitute a Material Adverse
Change). The use of such Intellectual Property by the Borrower does not infringe
on the rights of any Person, except for such claims and infringements that, in
the aggregate, could not reasonably be expected to have a Material Adverse
Change.
Section 4.13 Unrecorded Mortgages. Each Subsidiary Mortgagor which owns a
Mortgaged Property for which the Mortgage encumbering such Mortgaged Property
remains unrecorded pursuant to Section 3.3(c) is and shall remain a
single-purpose entity which, among other things, (i) has the ability and
capacity to pay the mortgage recording tax, (B) does not engage and has not
engaged in any business other than owning and operating such Mortgaged Property,
and has not acquired and does not own any assets other than such Mortgaged
Property, any incidental personal property, or such other property which has
been acquired without the prior written consent of the Agent, (C) has incurred
no debt as of the date hereof and shall not incur or create any debt except such
debt agreed to in advance by the Agent in writing, (D) maintains its assets in a
way which segregates and identifies such assets separate and apart from the
assets of any other person or entity, (E) holds itself out to the public as a
separate legal entity from any other person or entity, and (F) conducts business
solely in its own name.
Section 4.14 Taxes. Borrower has filed or caused to be filed all tax
returns that, to the knowledge of Borrower, are required to be filed and has
paid all taxes shown to be due and payable on such returns or on any assessments
made against it or any of its property and all other taxes, fees, or other
charges now due and payable imposed on it or any of its property by any
Governmental Authority (other than any the amount or validity of which are
currently being contested in good faith by appropriate proceedings and with
respect to which adequate reserves in conformity with GAAP have been provided on
the books of Borrower). No tax Lien has been filed which could constitute a Lien
senior in priority to the Lien of any of the Mortgages or Financing Statements
and which has not been (or will not be) removed or discharged of record within
10 days after Borrower's notice of such Lien (or the taxes to which such Lien
relates are being contested in good faith by appropriate proceedings which have
the effect of staying enforcement or execution of such Lien and with respect to
which adequate reserves in conformity with GAAP have been provided on the books
of Borrower).
Section 4.15 Investment Company Act; Other Regulations. Borrower is not an
"investment company," or a company "controlled" by an "investment company,"
within the meaning of the Investment Company Act of 1940, as amended. Borrower
is not subject to regulation under any Federal or state statute or regulation
which limits its ability to incur Indebtedness.
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Section 4.16 Intentionally omitted.
Section 4.17 Insurance. Subject in all events to the provisions of Section
5.5 hereof, notwithstanding anything to the contrary contained in the Mortgages
and subject to Section 4.17(b), the Borrower maintains upon or in connection
with each of the Mortgaged Properties:
(a) Property and casualty insurance coverage evidenced by
original or certified copies of insurance policies or binders for such
insurance, together with evidence that the premiums for such policies have been
paid current. Such insurance policies shall insure each of the Mortgaged
Properties for 100% of their full replacement cost (exclusive of footings and
foundations) in so-called "all risk" form and with coverage for floods,
earthquakes (except as provided in Section 4.17(b)) and such other hazards
(including "collapse" and "explosion") as the Lenders may require for each of
the Mortgaged Properties and as are consistent with reasonable and customary
requirements in the industry. Such insurance policies shall contain replacement
cost and agreed amount endorsements (with no reduction for depreciation), an
endorsement providing Building Ordinance Coverage and an endorsement covering
the costs of demolition and increased costs of construction due to the
enforcement of building codes or ordinances. To the extent there exists a boiler
on the premises of any of the Mortgaged Properties, Borrower shall also furnish
insurance providing boiler and machinery comprehensive coverage for all
mechanical and electrical equipment at each of such Mortgaged Properties
insuring against breakdown or explosion of such equipment on a replacement cost
value basis. Borrower shall also furnish business interruption or loss of rental
income insurance in connection with all policies covering property and boiler
and machinery insurance for a period of not less than one (1) year endorsed,
other than with respect to boiler and machinery insurance, to provide a 180 day
extended period of indemnity. All insurance required under Section 4.17 shall be
with companies and in amounts and with coverage and deductibles satisfactory to
the Lenders. All insurance required under this Section 4.17(a) with respect to
the Mortgaged Properties shall include endorsements naming the Lenders as loss
payees, and shall have endorsed thereon the standard mortgagee clause in favor
of the Lenders. All companies issuing policies required under Section 4.17 shall
have a current Best Insurance Reports rating no less favorable than "A-", and
all such companies shall be licensed to do business in the states where the
applicable Mortgaged Property is located. All policies required under Section
4.17 shall provide that (i) the insurance evidenced thereby shall not be
canceled or modified without, in the case of non-payment of premiums, at least
ten (10) days' prior written notice from the insurance carrier to the Agent, or,
in any other circumstance, at least thirty (30) days' prior written notice from
the insurance carrier to the Agent; and (ii) no act or thing done by the
Borrower, or any Affiliate of any of Borrower shall invalidate the policy as
against the Lenders. The Borrower shall deliver renewal certificates of all
policies of insurance required under Section 4.17, together with written
evidence that the premiums are paid current, at least ten (10) days prior to the
expiration of the then current policy.
(b) earthquake insurance provided for in Section 4.17(a)
only for the Mortgaged Properties and only to the extent (i) any Mortgaged
Property is located in an earthquake prone area and (ii) such insurance is
available at commercially reasonable rates.
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(c) Liability and worker's compensation insurance evidenced by
original or certified copies of insurance policies, binders for such insurance
policies, or certificates of insurance, together with evidence that the premiums
for such policies have been paid current. Such insurance shall provide for (i)
commercial general liability (including contractual liability) covering each of
the Mortgaged Properties and the Borrower's operations thereon in an amount not
less than $1,000,000 per occurrence and not less than $1,000,000 per occurrence
in the aggregate; (ii) commercial automobile liability with a limit not less
than $1,000,000 combined single limit and be endorsed to cover owned, hired and
non-owned automobiles; and (iii) worker's compensation insurance covering all of
the Borrower's employees and contracted parties (including their employees)
situated at the Mortgaged Properties in accordance with the statutory
requirements of the states where the applicable Mortgaged Property is located
and including an endorsement for employer's liability coverage. The Borrower
shall also furnish umbrella liability coverage in excess of the foregoing
liability coverage with a limit of not less than $9,000,000. The commercial
general liability and automobile policies and umbrella liability policy shall
name the Lenders as additional insureds. Such policies shall also contain a
so-called "products-completed operations endorsement."
(d) Insurance insuring against loss or damage by perils
customarily included under standard "builder's risk completed value
non-reporting form" and which include all insurance required to be carried by
Borrower, as "owner," under the provisions of all construction contracts let by
Borrower; provided that such insurance shall insure all construction on all of
the Mortgaged Properties, including, without limitation, the construction of an
extended stay facility and such ancillary facilities related thereto on each
Mortgaged Property, including all materials in storage and while in transit
during construction.
Section 4.18 Properties. Subject to the provisions of Section 5.5 hereof:
(a) Borrower and/or each Subsidiary Mortgagor has good and
marketable title to all of the Mortgaged Properties, subject to no mortgage,
security interest, pledge, lien, charge, encumbrance or title retention or other
security agreement or arrangement of any nature whatsoever, except Permitted
Encumbrances. Borrower shall, and shall cause each Subsidiary Mortgagor to,
forever warrant and defend the title of their respective Mortgaged Properties
against the lawful claims and demands of all persons whomsoever subject to the
Permitted Encumbrances.
(b) There are no pending or, to the best knowledge of Borrower,
threatened proceedings or actions to revoke, attack, invalidate, rescind, or
modify in any material respect (i) the zoning of any Mortgaged Property or any
part thereof, or (ii) any building or other permits heretofore issued with
respect to any Mortgaged Property or any part thereof, or asserting that any
such zoning or permits do not permit the operation of any Mortgaged Property or
any part thereof or that any improvements located on such Mortgaged Property
cannot be operated in accordance with its intended use or is in violation of
applicable Use Requirements.
(c) The Mortgage covering each such Mortgaged Property
creates a valid and, except for unrecorded Mortgages, enforceable first Lien, on
such property described therein, as security for the repayment of the
Indebtedness incurred by the Borrower hereunder and under the other Loan
Documents, subject only to the Permitted Encumbrances applicable to such
property.
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(d) The Collateral is now, and so long as the Commitment remains
in effect or any monetary obligation to the Agent or the Lenders hereunder or
under the Promissory Notes or the other Loan Documents shall remain unpaid, will
be owned solely by the Borrower, and said Collateral, including the proceeds
resulting from the sale or other disposition (other than Permitted Transfers of
the Mortgaged Property) thereof, is and will remain free and clear of any Liens
except the Liens granted pursuant to the Loan Documents to the Agent and the
Lenders, which Liens to the Agent and the Lenders shall, at all times, be first
and prior on the Collateral and all proceeds resulting from the sale or other
disposition thereof, and no further action need be taken to perfect said Liens.
(e) Neither the existence of any improvements upon a Mortgaged
Property nor the intended use or condition of any Mortgaged Property violates in
any material respect any Use Requirements. With respect to each Mortgaged
Property, neither the zoning nor any other right to carry on the use of such
Mortgaged Property as an extended stay facility, including such ancillary
facilities related thereto, is to any extent dependent upon or related to any
other real estate. Each Mortgaged Property may be operated as an extended stay
facility with such ancillary facilities related thereto and the Borrower has
received no written notices from any Governmental Authorities alleging any
violation by any Mortgaged Property of any Requirement of Law, including but not
limited to applicable Use Requirements.
(f) There are no pending or, to the knowledge of the Borrower,
threatened proceedings relating to any (i) taking by eminent domain or other
condemnation of any portion of any Mortgaged Property, (ii) condemnation or
relocation of any roadways abutting any Mortgaged Property and (iii) denial of
access to any Mortgaged Property from any point of access to such Mortgaged
Property, in any such case not accounted for in the Plans and Specifications.
(g) Each Mortgaged Property has adequate and permanent legal
access to water, gas, and electrical supply, storm, and sanitary sewerage
facilities, other required public utilities (with respect to each of the
aforementioned items by means of either a direct connection to the source of
such utilities or through connections available on publicly dedicated roadways
directly abutting such Mortgaged Property), and means of access between such
Mortgaged Property and public highways over recognized curb cuts, and all of the
foregoing comply with all applicable Use Requirements.
(h) Each Mortgaged Property constitutes a legally subdivided lot
under all applicable Use Requirements (or, if not subdivided, no subdivision or
platting of such Mortgaged Property is required under applicable Requirements of
Law), and for all material purposes each Mortgaged Property may be mortgaged,
conveyed, and otherwise dealt with as an independent parcel.
Section 4.19 Full and Accurate Disclosure. No statement of fact made by or
on behalf of the Borrower in this Agreement or in any of the other Loan
Documents (other than any Loan Documents to which neither the Borrower nor any
Affiliate is a party), or any certificate or financial statement furnished by
the Borrower to the Agent when made or deemed made or the date as of which such
certificate or statement speaks or is deemed to speak, as the case may be,
contains any untrue statement of a material fact or, to the best of Borrower's
knowledge, omits to state any material fact necessary to make statements
contained herein or therein not misleading.
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Section 4.20 Solvency. Within the meaning of Section 548 of the Bankruptcy
Code, the Uniform Fraudulent Transfer Act and the Uniform Fraudulent Conveyance
Act as in effect in any relevant jurisdiction, and any similar laws or statutes,
and after giving effect to the transactions contemplated hereby: the fair
saleable value of the Borrower's assets exceeds and will, immediately following
the making of the Advances, exceed the Borrower's total liabilities including,
without limitation, subordinated, unliquidated, disputed, and contingent
liabilities; the fair saleable value of the Borrower's assets is and will,
immediately following the making of each Advance, be greater than the Borrower's
probable liabilities, including the maximum amount of its contingent liabilities
on its debts as such debts become absolute and matured; the Borrower's assets do
not and, immediately following the making of the Advances will not, constitute
unreasonably small capital to carry out its business as conducted or as proposed
to be conducted; and the Borrower does not intend to, and does not believe that
it will, incur debts and liabilities (including without limitation contingent
liabilities and other commitments) beyond its ability to pay such debts as they
mature (taking into account the timing and amounts of cash to be received by the
Borrower and the amounts to be payable on or in respect of obligations of the
Borrower).
Section 4.21 Not Foreign Person. The Borrower is not a "foreign person"
within the meaning of Section 1445(f)(3) of the Code.
Section 4.22 Assessments. Subject to the provisions of Section 5.5 hereof,
except as set forth in the Budget with respect to the applicable Mortgaged
Property, there are no pending or, to the Borrower's knowledge, proposed special
or other assessments for public improvements or otherwise affecting any
Mortgaged Property, nor, to the Borrower's knowledge, are there any contemplated
improvements to any Mortgaged Property that may result in such special or other
assessments.
Section 4.23 Flood Zone. Except as disclosed by a survey delivered pursuant
to Section 3.3(a)(iii), no Mortgaged Property is located in a flood hazard area
as defined by the Federal Emergency Management Agency.
Section 4.24 Physical Condition. Subject to the provisions of Section 5.5
hereof, except for portions of any Mortgaged Property which are to be demolished
in the course of construction of an extended stay facility and such related
ancillary facilities thereon, each Mortgaged Property is free of material
structural defects and all building systems contained therein are in good
working order subject to ordinary wear and tear.
Section 4.25 Operation of Premises. Subject to the provisions of Section
5.5 hereof, except for portions of any Mortgaged Property which are to be
demolished in the course of construction of an extended stay facility and such
related ancillary facilities thereon, each Mortgaged Property is being operated
and maintained in accordance with the Borrower's usual and customary business
practices.
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Section 4.26 Margin Regulations. The Borrower is not engaged in the
business of extending credit for the purpose of purchasing or carrying any
margin stock or margin securities (within the meaning of Regulations G, T, U and
X issued by the Board of Governors of the Federal Reserve System), and no
proceeds of any Advance will be used, directly or indirectly, to purchase or
carry any margin stock or margin securities or to extend credit to others for
the purpose of purchasing or carrying any margin stock or margin securities.
None of the transactions contemplated by this Agreement will violate or result
in a violation of Section 7 of the Securities Exchange Act of 1934, as amended.
Section 4.27 Hazardous Materials. Subject to the provisions of Section 5.5
hereof, except as disclosed in the Studies, to the best of the Borrower's
knowledge, no Hazardous Materials are located on or about the Mortgaged
Properties, and the Mortgaged Properties do not contain any underground tanks
for the storage or disposal of Hazardous Materials. Further, subject to the
provisions of Section 5.5 hereof, except as disclosed in the Studies, (i) the
Borrower has not, and to the knowledge of the Borrower no other party has, (A)
stored or treated Hazardous Materials on the Mortgaged Properties, (B) disposed
of Hazardous Materials or incorporated Hazardous Materials on the Mortgaged
Properties, and (C) permitted any underground storage tanks to exist on the
Mortgaged Properties, (ii) no complaint, order, citation or notice with regard
to air emissions, water discharges, noise emissions, or Hazardous Materials, if
any, or any other environmental, health, or safety matters affecting the
Mortgaged Properties or any portion thereof, from any person, government or
entity, has been issued to the Borrower which has not been remedied or cured,
and (iii) the Borrower has complied with all Requirements of Law affecting the
Mortgaged Properties.
Section 4.28 Representations and Warranties in the Loan Documents. Subject
to the provisions of Section 5.5 hereof, the representations and warranties in
each of the Loan Documents (except with respect to the representations and
warranties expressly provided as being made only as of the Closing Date) are
true, complete and correct in all material respects, and the Borrower hereby
confirms each such representation and warranty as being true, complete and
correct in all material respects as of the relevant dates with the same effect
as if set forth in its entirety herein.
Section 4.29 Loan Documents. The provisions of the Loan Documents are each
effective to create, in favor of the Agent, a legal, valid and enforceable Lien
on or security interest in all of the collateral described therein, and when the
appropriate recordings and filings have been effected in the appropriate public
offices (or, in the case of collateral represented by certificates, when such
certificates have been pledged to and received by the Agent), the Loan Documents
will constitute a perfected first Lien on and security interest in all right,
title, estate and interest of the Borrower in the collateral described therein,
prior and superior to all other Liens except for Permitted Encumbrances and as
otherwise permitted under this Agreement.
Section 4.30 Balloon Payments. Except as reflected on Schedule 2 hereof, as
of the Closing Date, there are no balloon payments, scheduled balloon amortizing
payments or scheduled amortizing payments required to be paid at any time in
respect of any Indebtedness (other than Permissible Assumed Indebtedness) of the
Borrower or its Subsidiaries.
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Section 4.31 Subsidiary Mortgagors. Each Subsidiary Mortgagor is a
Subsidiary of Borrower.
Section 4.32 Nature of Business. Neither the Borrower nor any Subsidiary
Mortgagor is engaged in any business other than the ownership, construction,
development, operation and management of extended stay facilities (other than
businesses incidental to the development, operation and management of extended
stay facilities).
ARTICLE V
COVENANTS
Section 5.1 Certain Affirmative Covenants. So long as the Commitment
remains in effect or any amounts due to the Agent or the Lenders hereunder or
under the Promissory Notes or the other Loan Documents shall remain unpaid, the
Borrower will, and, to the extent any of the following relates to a Mortgaged
Property any portion of or interest in which is owned by any Subsidiary
Mortgagor, the Borrower will cause each such Subsidiary Mortgagor, with respect
to such Mortgaged Property, to (unless expressly waived by the Agent or the
Lenders as provided herein):
(a) Payment. Duly and punctually pay or reimburse when due or,
if there is no specified due date, when demanded, the principal and interest on
the Promissory Notes and all other amounts due under this Agreement and the
other Loan Documents.
(b) Existence, Etc. (i) Preserve and maintain its existence in
Maryland, and (ii) preserve and maintain its rights and franchises in each state
in which there exists a Mortgaged Property (unless the failure to so preserve
and maintain its rights and franchises would not constitute a Material Adverse
Change).
(c) Compliance With Laws, Etc. Subject to the provisions of
Section 5.5 hereof, comply with all applicable Requirements of Law, Use
Requirements and all agreements and grants of easements or rights-of-way,
permits, declarations of covenants, conditions and restrictions, disposition and
development agreements, planned unit development agreements, management or
parking agreements, party wall agreements or other instruments affecting the
Mortgaged Properties.
(d) Payment of Taxes and Claims, Etc. Pay (i) all taxes,
assessments and governmental charges imposed upon it or upon its property (other
than the Mortgaged Property), unless the failure to so pay would not constitute
or result in a Material Adverse Change, (ii) subject to the provisions of
Section 5.5 hereof and subparagraph (iii) of this Section, all taxes,
assessments and governmental charges imposed upon the Mortgaged Properties, and
all claims (including, without limitation, claims for labor, materials,
supplies, or services) which might, if unpaid, become a Lien upon the Mortgaged
Properties or any of them unless, in each case, the validity or amount thereof
is being contested in good faith by appropriate proceedings and the Borrower has
maintained adequate reserves with respect thereto, and (iii) all taxes,
assessments and governmental charges imposed upon the Mortgaged Properties which
would, if unpaid, become a Lien senior in priority to the Lien of any of the
Mortgages within 10 days after Borrower's notice of such Lien (unless the taxes,
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assessments or governmental charges to which such Lien relates are being
contested in good faith by appropriate proceedings which have the effect of
staying enforcement or execution of such Lien and with respect to which adequate
reserves in conformity with GAAP have been provided on the books of Borrower).
(e) Keeping of Books. Keep accurate records and books of account
in which full, accurate and correct entries shall be made of all dealings or
transactions in relation to its business and affairs in accordance with GAAP.
Upon reasonable prior notice and during normal business hours, the Borrower
shall permit representatives of any Lender to visit its offices and inspect,
examine and make abstracts from any of its books and records, and to discuss the
business, operations, and financial and other condition of the Borrower with
officers and employees of the Borrower and with its independent certified public
accountants, if any, in the presence of a representative of the Borrower.
(f) Visitation, Inspection, Etc. Permit any representative of the
Agent or the Lenders to visit and inspect any of the Mortgaged Properties, to
examine its books and records and to make copies and take extracts therefrom,
and to discuss its affairs, finances, and accounts with its officers,
accountants, and agents, all upon reasonable notice from the Agent during normal
business hours.
(g) Maintenance of Property. Keep all Mortgaged Properties in
good working order and condition and operate Mortgaged Properties in a manner
consistent with the operation thereof as an extended stay facility with such
ancillary facilities related thereto and otherwise consistent with prudent
business practices.
(h) Management of Properties. Subject to the provisions of
Section 5.5 hereof, Borrower shall directly or indirectly operate and manage the
business of the Borrower at each of the Mortgaged Properties; provided, however,
that with the prior written consent of the Agent, which consent shall not be
unreasonably withheld, the Borrower may hire another Person to operate and
manage any Mortgaged Property.
(i) Hazardous Materials Removal. Subject to the provisions of
Section 5.5 hereof, xxxxx and/or remove any Hazardous Materials present in, on
or under any of the Mortgaged Properties in violation of any applicable
Requirement of Law.
(j) Covenants in the Loan Documents. Subject to the provisions
of Section 5.5 hereof, perform all covenants (affirmative and negative)
contained in each of the Loan Documents with the same effect as if set forth in
their entirety herein.
(k) Insurance. Subject to the provisions of Section 5.5 hereof,
keep the Mortgaged Properties insured in the manner and in the amounts set forth
in Section 4.17.
(l) Further Assurances. The Borrower agrees upon demand of the
Agent (i) to do any act or execute any additional documents (including, but not
limited to, security agreements on any personalty included or to be included in
the Collateral) as may be reasonably required by the Agent to confirm the Lien
of the Loan Documents or to exercise or enforce its rights under this Agreement,
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the Promissory Notes or the Loan Documents and to realize thereon, and (ii) to
execute and deliver to the Agent and/or the Lenders such additional documents
and to provide such additional information as the Agent and/or the Lenders may
reasonably require to carry out or confirm the terms of this Agreement or the
other Loan Documents. This covenant shall survive the termination of this
Agreement until payment in full of all amounts due hereunder or under the
Promissory Notes and the Loan Documents, provided that the covenant shall be
reinstated if any payment of all amounts due hereunder or under the Promissory
Notes and the Loan Documents is required to be returned to the payor or any
other party under any applicable bankruptcy law.
(m) Application of Proceeds From Equity Offerings. Subject to the
provisions of Section 5.5 hereof, the Borrower shall apply upon receipt (i) all
net proceeds from its equity offerings to repay on a pari passu basis the Loan
and the Indebtedness referred to in Section 5.3(a)(vii) of this Agreement, and
(ii) all other amounts and fees due to the Agent and the Lenders under this
Agreement and the other Loan Documents.
Section 5.2 Reporting Covenants. So long as the Commitment remains in
effect or any monetary obligation to the Agent or the Lenders hereunder or under
the Promissory Notes or the other Loan Documents shall remain unpaid, the
Borrower will furnish to the Agent at the Borrower's sole cost and expense
(unless expressly waived by the Agent or the Lenders as provided herein):
(a) Annual Financial Statements With Respect to the Borrower.
As soon as available and in any event within 90 days after the end of each
fiscal year (unless the filing requirements have been extended by the Securities
and Exchange Commission ("SEC"), in which case the 90-day period shall be
extended until the earlier of the date of filing with the SEC or such extended
date granted by the SEC), a consolidated balance sheet of the Borrower and its
Subsidiaries as at the end of such year and the related consolidated statements
of income, retained earnings, and cash flow of the Borrower and its Subsidiaries
for such fiscal year, setting forth in each case in comparative form the figures
for the previous fiscal year, all in reasonable detail and accompanied by a
report thereon of Ernst & Young or other independent public accountants of
comparable recognized national standing acceptable to the Agent, which such
report shall be unqualified as to scope of audit and shall state that such
consolidated financial statements present fairly the consolidated financial
condition as at the end of such fiscal year, and the consolidated results of
operations and changes in cash flow for such fiscal year, of the Borrower and
its Subsidiaries in accordance with GAAP.
(b) Quarterly Financial Statements With Respect to the Borrower.
As soon as available and in any event within 60 days after the end of each
fiscal quarter other than the last fiscal quarter of a fiscal year (unless the
filing requirements have been extended by the SEC in which case the 60-day
period shall be extended until the earlier of the date of filing with the SEC or
such extended date granted by the SEC), a consolidated balance sheet of the
Borrower and its Subsidiaries as at the end of such quarter and the related
consolidated statements of income and cash flow of the Borrower and its
Subsidiaries for such fiscal quarter and/or for the portion of the Borrower's
fiscal year ended at the end of such quarter, setting forth in each case in
comparative form the figures for the corresponding quarter and the corresponding
portion of the Borrower's previous fiscal year, all in reasonable detail and
certified by the Controller or chief financial officer of the Borrower that they
are complete and correct and that they fairly present the consolidated financial
condition as at the end of such fiscal quarter, and the consolidated results of
operations and changes in cash flow for such fiscal quarter and/or such portion
of the Borrower's fiscal year, of the Borrower and its Subsidiaries in
accordance with GAAP (subject to normal, year-end audit adjustments).
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(c) Annual Financial Statements With Respect to Operating
Mortgaged Properties. As soon as available and in any event within 90 days after
the end of each fiscal year of the Borrower or at such time as the financial
statements described in Section 5.2(a) above are furnished to the Agent, a
statement with respect to each of the operating Mortgaged Properties for such
fiscal year, each of which statements shall (i) be in the form of Exhibit L
attached hereto, and contain in comparative form the information required to
complete such Exhibit in the manner and detail contemplated by such Exhibit,
(ii) set forth the Net Operating Income of each such Mortgaged Property in
comparative form, and (iii) be certified by the Controller or chief financial
officer of the Borrower that they are complete and correct and that they fairly
present the information required to complete such Exhibit for each such property
as at the end of such fiscal year, in accordance with GAAP and (iv) state that
such statement presents fairly the information required to complete such Exhibit
for each such property as at the end of such fiscal year, in accordance with
GAAP.
(d) Quarterly Financial Statements With Respect to the Operating
Mortgaged Properties. As soon as available and in any event within 45 days after
the end of each fiscal quarter of the Borrower or at such time as the financial
statements described in Section 5.2(b) are furnished to the Agent, a statement
with respect to each of the operating Mortgaged Properties as at the end of such
quarter, each of which statements shall (i) be in the form of Exhibit L attached
hereto, and contain in comparative form the information required to complete
such Exhibit in the manner and detail contemplated by such Exhibit, (ii) set
forth the Net Operating Income of each such Mortgaged Property in comparative
form, (iii) be certified by the Controller or chief financial officer of the
Borrower that they are complete and correct and that they fairly present the
information required to complete such Exhibit for each such property as at the
end of such fiscal quarter, in accordance with GAAP (subject to normal, year-end
audit adjustments).
(e) No Default/Compliance Certificate. Together with the
financial statements required pursuant to subsections (a), (b), (c) and (d)
above, a certificate of the President, the Controller or the chief financial
officer of the Borrower to the effect that, based upon a review of the
Borrower's activities and such financial statements during the period covered
thereby, there exists no Event of Default and no Default under this Agreement,
or if there exists an Event of Default or a Default hereunder, specifying the
nature thereof and the Borrower's actions taken or proposed to be taken in
response thereto. The President or the chief financial officer or the Controller
of the Borrower shall complete the form of certificate attached as Exhibit D to
this Agreement and shall certify thereon that the Borrower is in compliance with
all financial covenants under this Agreement.
(f) Notice of Default or Events of Default. Promptly after
acquiring knowledge of the occurrence of a Default or an Event of Default, a
certificate of the president or chief financial officer or the Controller of the
Borrower specifying the nature thereof and the Borrower's proposed response
thereto.
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(g) Litigation. Promptly after (i) the occurrence thereof, the
Borrower shall deliver notice of the institution of or any development in any
action, suit, or proceeding or any governmental investigation or any
arbitration, before any court or arbitrator or any governmental or
administrative body, agency, or official, against the Borrower or any Mortgaged
Property in writing, (ii) the Borrower receives actual knowledge thereof, the
Borrower shall deliver notice of the threat of any such action, suit,
proceeding, investigation, or arbitration, or (iii) receipt thereof, the
Borrower shall deliver notice of any claims relating to the Lenders' interests
or any proposal by a Governmental Authority to acquire any part of the Mortgaged
Properties (other than any such proceeding or development which, as reasonably
likely to be determined, would not constitute or result in a Material Adverse
Change).
(h) Adverse Change. Immediately after the Borrowe knows of the
occurrence of any Material Adverse Change, a certificate of any Co-Chairman, the
President, any Senior Vice President, any Vice President or the Controller or
chief financial officer of the Borrower specifying the nature of such change.
(i) Shareholder Communications, Filings, Etc. Promptly upon the
mailing or filing thereof, the Borrower shall deliver copies of all financial
statements, reports, and proxy statements mailed to the Borrower's shareholders
generally, and copies of all final registration statements and other final
documents filed with the Securities and Exchange Commission (or any successor
thereto) or any national securities exchange.
(j) Intentionally omitted.
(k) Other Information. With reasonable promptness, such other
information about the Borrower, Realty and the Mortgaged Properties as the Agent
or the Lenders may reasonably request from time to time.
Section 5.3 Certain Negative Covenants. So long as any portion of the
Commitment remains in effect or any monetary obligations to the Agent or the
Lenders hereunder or under the Promissory Notes or the other Loan Documents
shall remain unpaid, the Borrower will not:
(a) Indebtedness. Create, incur, assume, or suffer to exist,
any Indebtedness other than:
(i) the Indebtedness hereunder and under the other Loan
Documents; and
(ii) Indebtedness outstanding on the date hereof which is
reflected in the Borrower's financial statements referred to in
Section 4.5(a) and in Schedule 2;
(iii) unsecured liabilities (not the result of borrowing)
incurred in the ordinary course of business for current purposes and
not represented by any note or other evidence of Indebtedness and
which are not past due more than 90 days;
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(iv) non-recourse Indebtedness ("Permissible Assumed
Indebtedness");
(v) liability to a surety under performance bonds or similar
instruments incurred in connection with the Borrower's construction of
extended stay facilities on the Borrower's property;
(vi) Indebtedness due and payable solely to a Subsidiary of
Borrower; and
(vii) Indebtedness under that certain Credit Agreement dated as
of May 6, 1997, as amended, between Borrower, Agent and one or more
lenders with regard to a revolving credit facility of up to an
aggregate principal amount of $150,000,000.00.
(b) Total Debt. Permit there to be aggregate Indebtedness of the
Borrower of more than an amount equal to fifty-five percent (55%) of Gross Asset
Value, or permit there to be aggregate Indebtedness of the Borrower which is
secured by a Lien of more than an amount equal to fifty percent (50%) of Gross
Asset Value.
(c) Debt Service Ratios. Maintain a ratio of EBITDA to Debt
Service on a quarterly basis (i) for the first calendar quarter of 1998 of less
than 1.1:1.0, (ii) for the second calender quarter of 1998 of less than
1.25:1.0, and (iii) of less than 1.75:1.0 after the second calender quarter of
1998.
(d) Available Amount. Permit the aggregate principal amount of
all outstanding Advances at any time to exceed the lesser of (i) the Commitment,
and (ii) the Maximum Availability Amount at such time.
(e) Dividends. Make any dividend or distribution to the share-
holders of Borrower, without the prior written consent of the Agent, which
consent may be withheld in the Agent's sole discretion.
(f) Stockholders Equity. Permit Stockholders' Equity to be less
than $325,000,000.00.
(g) Sales, Transfers. Sell, transfer or enter into any agreement
for the sale or transfer, except for operating leases, of any of the Mortgaged
Properties without the prior written consent of the Agent, which consent may be
withheld in the Agent's sole discretion, other than a sale or transfer or an
agreement for the sale or transfer of a Release Parcel with respect to which all
conditions and requirements to the Release thereof pursuant to Section 8.11
hereof are (as of the date of such agreement) capable of being, and upon such
sale or transfer shall be, satisfied.
(h) Liens. Create, incur, assume, or suffer to exist any Lien on
any Mortgaged Property to secure any Indebtedness of the Borrower or any other
Person, other than Permitted Encumbrances.
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(i) Mergers, Sales, Etc. (i) Merge into or consolidate with any
other Person; (ii) sell, assign, lease, transfer, convey or otherwise
dispose of (in one transaction or a series of transactions) all or
substantially all of the Borrower's assets to any Person or group (as
such term is used in Section 13(d)(3) of the Exchange Act), (iii) the
liquidation or dissolution of the Borrower or the adoption of a plan
by the stockholders of the Borrower relating to the dissolution or
liquidation of the Borrower; (iv) the acquisition by any Person or
group (as such term is used in Section 13(d)(3) of the Exchange Act),
except for Realty or Affiliates thereof, of a direct or indirect
majority interest (more than 50%) of the voting power of the capital
stock of the Borrower by way of purchase, merger or consolidation or
otherwise; or (v) during any period of two consecutive years,
individuals who at the beginning of such period constituted the Board
of Directors of the Borrower (which includes any new directors whose
election by such Board of Directors or whose nomination for election
by the stockholders of the Borrower was approved by a vote of at least
two-thirds (2/3) of the directors then still in office who were either
directors at the beginning of such period or whose election or
nomination for election was previously so approved) cease for any
reason to constitute a majority of the Board of Directors of the
Borrower.
(j) Changes in Property or Business. Except in connection with
the development of an extended stay facility and such ancillary facilities
related thereto or with the prior written consent of the Agent:
(A) Make or allow any material change to be made in the nature of
the use of any Mortgaged Property, or any part thereof from that in
effect on the date hereof or the date acquired, as the case may be; or
(B) Initiate or acquiesce in any change in any Use Requirements
now or hereafter in effect and affecting any Mortgaged Property or any
part thereof.
(k) Transactions with Affiliates. Purchase, acquire, or lease
any property from, or sell, transfer, or lease any property to, or lend or
advance any money to, or borrow any money from, or guarantee any obligation of,
or acquire any stock, obligations, or securities of, or enter into any merger or
consolidation agreement, or any management or similar agreement with, any
Affiliate, or enter into any other transaction or arrangement or make any
payments to (including, without limitation, on account of any management fees,
service fees, office charges, consulting fees, technical service charges, or tax
sharing charges) or otherwise deal with, in the ordinary course of business or
otherwise, any Affiliate on terms other than arm's-length commercially
reasonable terms (other than (i) any such transactions in effect on the Closing
Date and described in Schedule 7 attached hereto, and (ii) any such transactions
between the Borrower and any of its Subsidiaries and between Subsidiaries of
Borrower).
(l) Use of Proceeds. Use the proceeds of the Advances for other
than any Permitted Purpose.
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(m) Change of Business. Make or allow any material change in the
nature or scope of the business of the Borrower or any Subsidiary.
(n) Hazardous Materials. Subject to the provisions of Section
5.5 hereof:
(i) Use or permit or suffer use of any Mortgaged Property or any
part thereof or any interest therein or conduct any activity or
operations thereon in any manner which:
(A) would involve or result in the occurrence or presence of or
exposure to Hazardous Materials at, upon, under, across or within any
Mortgaged Property or any part thereof not in the ordinary course of
operation;
(B) would violate any Relevant Environmental Laws; or
(C) would result in the occurrence of any Environmental
Discharge.
(ii) Install or suffer or permit installation or Presence on, in
or under any Mortgaged Property or any part thereof of any underground
or above-ground containers for the storage of fuel oil, gasoline or
other petroleum products or by-products, except (i) such above-ground
containers that are required for the operation of the Mortgaged
Property and that are at all times in compliance with all Relevant
Environmental Laws and any other applicable Requirements of Law and
(ii) such underground containers that are required for the operation
of the Mortgaged Property and are at all times in compliance with all
Relevant Environmental Laws and any other applicable Requirements of
Law.
Section 5.4 Material Casualties. The Borrower agrees that if at any time
prior to the repayment in full of the Advances and the termination of the
Commitment (including, but not limited to, at any time, prior to or after an
Event of Default) any Mortgaged Property is damaged by fire, earthquake or other
casualty in such a manner or to such an extent so that it is unlikely, in the
Agent's reasonable judgment, that such Mortgaged Property will be restored on or
prior to the Maturity Date to the same physical, leased and operating condition
as it exists prior to such casualty, the Borrower shall, within twenty (20) days
of the Agent's written request, direct that the insurance proceeds from the
casualty be delivered over to the Agent, to be applied by the Agent to repayment
of or the Borrower's obligations under this Agreement and the other Loan
Documents.
Section 5.5 Effect of Certain Representations or Covenants Being Inaccurate
or Breached. In the event that any of the representations and warranties
contained in Sections 4.11, 4.17, 4.18, 4.22, 4.24, 4.25, 4.27 and 4.28 of this
Agreement (or any representation or warranty contained in any other Loan
Document which is substantially similar to any of the foregoing representations
and warranties) are not accurate when made or deemed made, or in the event that
any of the covenants contained in Sections 5.1(c), (d)(ii), (h), (i), (j), (k)
and (m) and 5.3(n) (or any covenant contained in any other Loan Document which
is substantially similar to any of the foregoing covenants) are breached, then,
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notwithstanding anything to the contrary, such breach or inaccuracy shall not
constitute or be deemed a Default or Event of Default, and Borrower shall not be
deemed to have made any misrepresentation, or breached any warranty or covenant
unless and until (but shall, at Agent's option, constitute and be deemed a
Default and Event of Default, and Borrower shall be deemed to have made such
misrepresentation, or breached such warranty or covenant, if and when):
(a) (i) Borrower is given notice of the circumstances which, but for
this Section 5.5, would constitute such misrepresentation, or
breach of warranty or covenant and such circumstances are not
remediated (i.e, the circumstances which would otherwise
constitute such misrepresentation, or breach of warranty or
covenant no longer exist) within (1) in the case of circumstances
which can be remediated by the payment of a sum of money only, 10
days after such notice is given, and (2) in the case of all other
circumstances, 30 days after such notice is given plus, if such
circumstances cannot reasonably be remediated within 30 days
after such notice is given and the Borrower has during such
30-day period commenced to remediate such circumstances and
thereafter diligently pursues all necessary efforts to effect
such remediation, such additional period of time as may be
required to effect such remediation; provided, however, that if
at any time during any cure period described above regarding
circumstances the cost to remediate which are quantifiable,
Borrower shall not have provided evidence satisfactory to the
Agent that the Borrower has available to it sufficient funds
(other than from borrowings pursuant to this Agreement) to
promptly effect any such remediation, then the cure period
provided for above regarding such circumstances shall immediately
expire; and
(ii) upon the expiration of the applicable cure period described in
Section 5.5(a)(i), if such circumstances have not been
remediated, the aggregate principal amount of all outstanding
Advances at such time exceeds the "Eligible Maximum Availability
Amount", as herein defined, at such time. The term "Remediation
Amount" means the amount which Borrower certifies
------------------ to Agent in writing (Borrower hereby agreeing
to so certify such amount promptly upon Agent's request) as being
Borrower's reasonable estimate (determined in a manner reasonably
acceptable to Agent, the basis for which determination shall be
set forth in reasonable detail in such certification) of the
aggregate cost of remediating all circumstances which would
constitute a misrepresentation or breach of warranty or covenant
of any of the representations, warranties or covenants described
above in this Section 5.5. The term "Eligible Maximum
Availability Amount" means, as of the date of
------------------------------------ expiration of such
applicable cure period, the Maximum Availability Amount as of
such date recomputed by subtracting from the Eligible Costs as of
such date the amount by which the Remediation Amount exceeds, if
at all, the lesser of (x) $3,000,000.00, and (y) the greater of
(A) $300,000.00, and (B)
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3% of the Eligible Costs as of such date; provided, however,
notwithstanding the foregoing, the aggregate principal amount of
all outstanding Advances shall not at any time exceed the lesser
of (i) the Commitment, and (ii) the Maximum Availability Amount
at such time; or
(b) all circumstances which would constitute a misrepresentation
or breach of warranty or covenant of any of the representations,
warranties or covenants described above in this Section 5.5, when
taken as a whole, constitute a Material Adverse Change.
In the event that any misrepresentation or breach of warranty or covenant with
respect to one or more Mortgaged Properties occurs which, pursuant to the
provisions of this Section 5.5, constitutes or will constitute a Default and
Event of Default, then, subject to the terms hereof, Borrower shall have the
right to substitute for such affected Mortgaged Properties one or more other
properties of the Borrower or its Subsidiaries, provided that (i) all of such
proposed substitute properties are acceptable in all respects to the Agent in
its sole, absolute and subjective discretion, (ii) all other conditions herein
to a property becoming a Mortgaged Property are satisfied and complied with, and
(iii) both before and after giving effect to such proposed substitution, no
Default or Event of Default (other than as a result of such misrepresentation or
breach of warranty or covenant) shall exist.
ARTICLE VI
EVENTS OF DEFAULT
Section 6.1 Events of Default. The occurrence and continuance of any of the
following specified events shall constitute an "Event of Default":
(a) Payments. The Borrower shall fail to pay (i) any principal
of the Advances hereunder when due, or (ii) within three (3) days when due
(including, without limitation, by mandatory prepayment) (1) any interest on any
of the Advances or any fees or (2) any other amount payable hereunder or under
the other Loan Documents.
(b) Certain Property Representations and Covenants. Any
misrepresentation or breach of warranty or covenant occurs which, pursuant to
the provisions of Section 5.5 hereof, constitutes a Default and Event of
Default.
(c) Other Covenants. The Borrower shall fail to observe or perform any
covenant or agreement (other than those referred to in Sections 6.1(a) and (b))
and such failure shall remain unremedied (i) in the case of any amounts payable
hereunder or under the other Loan Documents, for 3 days after notice from the
Agent, (ii) in the case of covenants or agreements contained in Section 5.2(a),
(b), (c) and (d) of this Agreement, for 20 Business Days after the occurrence
thereof; or (iii) in all other cases, for 30 days after the occurrence thereof.
In the event that a breach of a covenant described in clause (iii) above cannot
be cured within 30 days after the occurrence thereof and the Borrower has during
such 30-day period commenced to cure such breach and thereafter diligently
pursues all necessary efforts to effect a cure, an Event of Default shall be
deemed only to have occurred if the breach either cannot be remedied, or remains
unremedied, for 60 days after the occurrence thereof.
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(d) Representations. Any representation, warranty, or statement
(other than those referred to in Section 6.1(b)) made or deemed to be made by
the Borrower or any other Person (other than the Agent or any Lender) that is a
party to any Loan Document under or in connection with any Loan Document shall
have been incorrect in any material respect as of the date hereof, or as of the
date deemed to have been made.
(e) Non-Payments of Other Indebtedness. The Borrower shall fail
to make any payment of principal of or interest on any Indebtedness of the
Borrower (other than any Indebtedness under this Agreement or the other Loan
Documents and other than Permissible Assumed Indebtedness), in an aggregate
principal amount of not less than $5,000,000.00 within the applicable cure
period or any event specified in any note, agreement, indenture or other
document evidencing or relating to any such Indebtedness shall occur; and the
effect of such failure or event is to accelerate, or to permit the holder of
such aggregate Indebtedness or any other Person to accelerate, the maturity of
such Indebtedness; or such Indebtedness shall be required to be prepaid (other
than by a regularly scheduled required prepayment) in whole or in part prior to
its stated maturity.
(f) Defaults Under Loan Documents. The Borrower or any other
Person (other than the Agent or any Lender) that is a party to any Loan Document
shall fail to observe or perform any covenant or agreement (other than those
referred to in Sections 6.1(a) and (b)) contained in any other Loan Document, or
any default shall occur under any other Loan Document (other than those referred
to in Sections 6.1(a) and (b)) and such failure or default shall remain
unremedied (i) in the case of any amounts payable under the other Loan
Documents, for 3 days after notice from the Agent, (ii) in the case of covenants
or agreements similar to the covenants or agreements contained in Section
5.2(a), (b), (c) and (d) of this Agreement, for 20 Business Days after the
occurrence thereof; or (iii) in all other cases, for 30 days after the
occurrence thereof. In the event that a breach of a covenant described in clause
(iii) above cannot be cured within 30 days after the occurrence thereof and the
Borrower or such other Person has during such 30-day period commenced to cure
such breach and thereafter diligently pursues all necessary efforts to effect a
cure, an Event of Default shall be deemed only to have occurred if the breach
either cannot be remedied, or remains unremedied, for 60 days after the
occurrence thereof.
(g) Bankruptcy. The Borrower shall commence a voluntary case
concerning itself under Title 11 of the United States Code entitled "Bankruptcy"
as now or hereafter in effect, or any successor thereto (the "Bankruptcy Code");
or an involuntary case is commenced against the Borrower and the petition is not
dismissed within 90 days, after commencement of the case; or a custodian (as
defined in the Bankruptcy Code) is appointed for, or takes charge of, all or any
substantial part of the property of the Borrower; or the Borrower commences any
other proceeding under any reorganization, arrangement, adjustment of debt,
relief of debtors, dissolution, insolvency, or liquidation or similar law of any
jurisdiction whether now or hereafter in effect relating to the Borrower or
there is commenced against the Borrower any such proceeding which remains
undismissed for a period of 90 days; or the Borrower is adjudicated insolvent or
bankrupt; or any order of relief or other order approving any such case or
proceeding is entered; or the Borrower suffers any appointment of any custodian
or the like for it or any substantial part of its property to continue
undischarged or unstayed for a period of 90 days; or the Borrower makes a
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general assignment for the benefit of creditors; or the Borrower shall fail to
pay, or shall state that it is unable to pay, or shall be unable to pay, its
debts generally as they become due; or the Borrower shall call a meeting of its
creditors with a view to arranging a composition or adjustment of its debts; or
the Borrower shall by any act or failure to act indicate its consent to,
approval of, or acquiescence in any of the foregoing; or any action is taken by
the Borrower for the purpose of effecting any of the foregoing; or any of the
foregoing shall occur with respect to any Subsidiary Mortgagor.
(h) Money Judgement. A judgment or order for the payment of money
in excess of $5,000,000 shall be rendered against the Borrower and such judgment
or order shall continue unsatisfied (in the case of a money judgment) and in
effect for a period of 30 days during which execution shall not be effectively
stayed or deferred (whether by action of a court, by agreement, or otherwise)
(or, if such judgment is covered by insurance, such longer period during which
the Borrower is appealing or otherwise contesting such judgment in good faith).
(i) Second Amendment to Credit Agreement and Other Loan Documents. An
Event of Default (as defined in that certain Credit Agreement referred to
in Section 5.3(a)(vii)0 shall have occurred.
Section 6.2 Global Remedies. Upon the occurrence and continuation of an
Event of Default, and at any time thereafter, if any Event of Default shall then
be continuing, the Lenders may, by written notice to the Borrower, take any or
all of the following actions, without prejudice to the rights of the Lenders to
enforce its claims against the Borrower: (i) declare the Commitment terminated,
whereupon the Commitment shall terminate immediately; (ii) declare all or any
portion of the principal of and any accrued interest on the Advances and all
other obligations owing hereunder and under the other Loan Documents, to be,
whereupon the same shall become, forthwith due and payable without presentment,
demand, protest, or other notice of any kind, all of which are hereby waived by
the Borrower; (iii) foreclose on any Collateral concurrently or in such order as
the Agent may from time to time see fit; or (iv) take any action permitted under
any Loan Document; provided, that, if any Event of Default specified in Section
6.1(g) shall occur, the actions specified in clauses (i) and (ii) above shall be
deemed to have immediately and automatically occurred without the giving of any
notice to the Borrower.
Section 6.3 Marshalling; Waiver of Certain Rights; Recapture. Neither the
Agent nor the Lenders shall be under any obligation to xxxxxxxx any assets in
favor of the Borrower or any other party or against or in payment of any or all
of the obligations of such parties. To the extent permitted by law the Borrower
waives and renounces the benefit of all valuation, appraisement, homestead,
exemption, stay, redemption, and moratorium rights under or by virtue of the
constitution and laws of the state in which the Mortgaged Properties are located
and of any other state or of the United States, now existing or hereafter
enacted. To the extent the Agent or any Lender receives any payment by or on
behalf of the Borrower, which payment or any part thereof is subsequently
invalidated, declared to be fraudulent or preferential, set aside or required to
be repaid to the Borrower or its estate, trustee, receiver, custodian, or any
other party under any bankruptcy law, state or federal law, common law, or
equitable cause, then to the extent of such payment or repayment, the obligation
or part thereof which has been paid, reduced, or satisfied by the amount so
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repaid shall be reinstated by the amount so repaid and shall be included within
the liabilities of the Borrower to such party as of the date such initial
payment, reduction, or satisfaction occurred, together with interest at the
Default Rate. The Borrower agrees that (i) the Agent on behalf of the Lenders
shall have the right to pursue all of its rights and remedies in one proceeding,
or separately and independently in separate proceedings from time to time, as
the Agent, in its sole and absolute discretion, shall determine from time to
time, (ii) the Collateral may be sold at such proceeding or proceedings in one
or more sales and in such portions or combinations as the Agent, in its sole and
absolute discretion, shall determine, (iii) the Agent on behalf of the Lenders
shall not be required to xxxxxxxx assets, sell any of the Collateral in any
inverse order of alienation, or be subject to any "one action" or "election of
remedies" law or rule, (iv) the exercise by the Lenders of any remedies against
any one item of Collateral will not impede the Lenders from subsequently or
simultaneously exercising remedies against any other item of Collateral, and (v)
all Liens and other rights, remedies, or privileges provided to the Agent and
the Lenders under this Agreement and the other Loan Documents shall remain in
full force and effect until the Agent and the Lenders have exhausted all of
their remedies against the Collateral and all of the Collateral has been
foreclosed, sold or otherwise realized upon in satisfaction of the Promissory
Notes and the other obligations of the Borrower to the Agent and the Lenders.
Each Lender and its officers, directors, shareholders, employees, counsel and
agents shall not incur any liability as a result of the sale of the Collateral,
or any part thereof, in accordance with the provisions of this Agreement or any
Loan Document, or for the failure to sell or offer for sale the Collateral, or
any part thereof, for any reason whatsoever. The Borrower waives any claims
against each Lender and its officers, directors, shareholders, employees,
counsel and agents arising with respect to the price at which the Collateral, or
any part thereof, may have been sold by reason of the fact that such price was
less than the aggregate amount of the indebtedness due under the Promissory
Notes, this Agreement and the other Loan Documents.
Section 6.4 Application of Proceeds. (a) All proceeds received by the Agent
or the Lenders in respect of the repayment of any sums due hereunder or in
connection with a foreclosure sale of all or any portion of the Collateral after
the occurrence of an Event of Default shall be applied, first, to the costs of
enforcement of the Lenders' rights hereunder and under the other Loan Documents;
second, to pay any accrued and unpaid interest (including all interest owing at
the Default Rate), the principal amount of the Advances and any unpaid fees
payable under this Agreement and the other Loan Documents in such order of
priority as the Agent, in its sole and absolute discretion shall determine but
subject to the rights of the Lenders; and third, if any excess proceeds exist,
to the Borrower or any party entitled thereto as a matter of law. If the amount
of all proceeds received in liquidation of the Collateral which shall be applied
to payment of the indebtedness due in respect of this Agreement, the Promissory
Notes and the Loan Documents shall be insufficient to pay all such indebtedness
or obligations in full, the Borrower acknowledges that it shall remain liable
for any deficiency, together with interest thereon and costs of collection
thereof (including reasonable counsel fees and legal expenses).
(b) The Agent shall have the right, but not the obligation, to
deposit any proceeds in its possession which are available under clause third of
Section 6.4(a) above into a court of competent jurisdiction for determination by
such court of the disposition of such excess proceeds and upon such deposit, the
Agent shall have no further liability with respect to such proceeds. All costs
and expenses of the Agent in connection with such action may be deducted or
charged by the Agent against such excess proceeds and shall otherwise be
reimbursed by the Borrower upon demand. The Agent shall have the right, but not
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the obligation, to request and rely on the instructions of the Borrower in
connection with the disposition of any such excess proceeds and, upon compliance
with such instructions, shall have no further liability with respect to such
proceeds.
Section 6.5 Attorneys-in-Fact. The Borrower hereby makes, constitutes and
appoints the Agent, and its agents and designees, the true and lawful agents and
attorneys-in-fact of the Borrower, with full power of substitution, to take any
or all of the following actions during the continuance of an Event of Default:
(i) to receive, open and dispose of all mail addressed to the Borrower relating
to the Collateral, (ii) to notify and direct the United States Post Office
authorities by notice given in the name of the Borrower and signed on its
behalf, to change the address for delivery of all mail addressed to the Borrower
relating to the Collateral to an address to be designated by the Agent, and to
cause such mail to be delivered to such designated address where the Agent may
open all such mail and remove therefrom any notes, checks, acceptances, drafts,
money orders or other instruments in payment of the Collateral in which the
Agent has a security interest hereunder and any documents relative thereto, with
full power to endorse the name of the Borrower upon any such notes, checks,
acceptances, drafts, money orders or other form of payment or on Collateral or
security of any kind and to effect the deposit and collection thereof, and the
Agent shall have the further right and power to endorse the name of the Borrower
on any documents otherwise relating to such Collateral, and (iii) to do any and
all other things necessary or proper to carry out the intent of this Agreement
and to perfect and protect the liens and rights of the Agent created under this
Agreement, including, without limitation, to claim, bring suit, settle or adjust
any insurance proceeds claims relating to the Collateral. The Borrower agrees
that neither the Lenders nor any of their officers, directors, shareholders,
employees, counsel, agents, designees or attorneys-in-fact will be liable for
any acts of commission or omission, or for any error of judgment or mistake of
fact or law, except for any acts of gross negligence or willful misconduct. The
powers granted hereunder are coupled with an interest and shall be irrevocable
during the term hereof.
ARTICLE VII
AGENCY AND INTERCREDITOR RELATIONSHIPS
Section 7.1 Appointment. Each Lender hereby irrevocably designates and
appoints Commerzbank AG, New York Branch, as the Agent of such Lender under the
Loan Documents, and each such Lender irrevocably authorizes Commerzbank AG, New
York Branch, to act as the Agent for such Lender, to take such action on its
behalf under the provisions of this Agreement and the Loan Documents and to
exercise such powers and perform such duties as are expressly delegated to the
Agent by the terms of this Agreement and the Loan Documents, together with such
other powers as are reasonably incidental thereto. The Agent shall not have any
duties or responsibilities, except those expressly set forth in this Agreement
and the Loan Documents, or any fiduciary relationship with any Lender, and no
implied covenants, functions, responsibilities, duties, obligations or
liabilities on the part of the Agent shall be read into any of the Loan
Documents or otherwise exist against the Agent. The provisions of this Article
VII are solely for the benefit of the Agent and the Lenders, and the Borrower
shall not have any rights as a third-party beneficiary or otherwise under any of
the provisions of this Article VII. In performing its functions and duties under
the Loan Documents, the Agent shall act solely as the agent of the Lenders and
does not assume nor shall the Agent be deemed to have assumed any obligation or
relationship of trust or agency with or for the Borrower or any of such party's
respective successors and assigns.
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Section 7.2 Delegation of Duties. The Agent may execute any of its duties
under the Loan Documents by or through agents or attorneys-in-fact and shall be
entitled to advice of counsel (including its internal counsel) concerning all
matters pertaining to such duties. The Agent shall not be responsible for the
negligence or misconduct of any agents or attorneys-in-fact selected by it with
reasonable care.
Section 7.3 Exculpatory Provisions. The Agent shall not be (a) liable for
any action lawfully taken or omitted to be taken by it or any Person described
in Section 7.2 under or in connection with any Loan Document (except for those
actions arising from the Agent's own gross negligence or willful misconduct), or
(b) responsible in any manner to any of the Lenders for any recitals,
statements, representations or warranties made by the Borrower contained in any
Loan Document, or by the Borrower in any certificate, report, statement or other
document referred to or provided for in, or received under or in connection with
any Loan Document or for the value, validity, effectiveness, genuineness,
enforceability or sufficiency of any Loan Document or any such certificate,
report, statement or other document, or for any failure of the Borrower, or any
Lender to perform or observe its respective obligations hereunder or thereunder.
Unless the Agent shall have been requested to do so by a Lender on such Lender's
behalf, the Agent shall not be under any obligation to any Lender to ascertain
or to inquire as to the observance or performance of any of the agreements
contained in, or conditions of any Loan Document, or to inspect the properties,
or the books or records of the Borrower. This Section 7.3 is intended to govern
solely the relationship between the Agent, on the one hand, and the Lenders, on
the other.
Section 7.4 Reliance by the Agent. The Agent shall be entitled to rely, and
shall be fully protected in relying, upon any writing, resolution, notice,
consent, certificate, affidavit, letter, cablegram, telegram, telecopy, telex or
teletype message, statement, order or other document or conversation (including
by telephone) believed by it to be genuine and correct and to have been signed,
sent or made by the proper Person or Persons and upon advice and statements of
legal counsel (including, without limitation, its internal counsel and counsel
to the Borrower), independent accountants and other experts selected by the
Agent. The Agent shall be fully justified in failing or refusing to take any
action under any Loan Document unless it shall first receive such advice or
concurrence of the Lenders required pursuant to this Agreement or it shall first
be indemnified to its satisfaction by the Lenders against any and all liability
and expense which may be incurred by it by reason of taking or continuing to
take any such action.
Section 7.5 Notice of Default. (a) The Agent shall not be deemed to have
knowledge or notice of the occurrence of any Default or Event of Default unless
(i) the Agent has received notice from a Lender or the Borrower referring to
this Agreement, describing such Default or Event of Default and stating that
such notice is a "notice of default," or (ii) the Agent, in its capacity as a
Lender, has actual knowledge of such Default or Event of Default. In the event
that the Agent receives such a notice, the Agent shall promptly give notice
thereof to the Lenders. The Agent shall take such action with respect to such
Default or Event of Default as shall be directed by the Required Lenders;
provided that unless and until the Agent shall have received such directions,
the Agent may (but shall not be obligated to) take such action, or refrain from
taking such action, with respect to such Default or Event of Default as the
Agent shall deem advisable and in the best interests of the Lenders.
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(b) Each Lender agrees that it shall promptly notify the Agent in
writing after it first has knowledge of any Default or Event of Default or of
any matter which in such Lender's judgment adversely affects any Lender's
respective interests in the Commitment, which notice will describe the Default
or Event of Default or matter in reasonable detail. The Agent shall give a copy
of any such notice received by the Agent to the other Lenders if such notice
pertains to a Decision by the Lenders pursuant to Section 7.14 or 7.15 hereof.
Section 7.6 Non-Reliance on the Agent and the Other Lenders. Each Lender
expressly acknowledges that neither the Agent, nor any of its officers,
directors, employees, agents, attorneys-in-fact or affiliates has made any
representations or warranties to it and that no act by the Agent hereafter
taken, including, without limitation, any review of the affairs of the Borrower
shall be deemed to constitute any representation or warranty by the Agent. Each
Lender represents and warrants to the Agent that it has, independently and
without reliance upon the Agent or any other Lender and based on such documents
and information as it has deemed appropriate, (a) made its own appraisal of and
investigation into the business, operations, property, prospects, financial and
other condition, creditworthiness and solvency of the Borrower, (b) satisfied
itself as to the due execution, legality, validity, enforceability, genuineness,
sufficiency and value of all of the Loan Documents and all other instruments and
documents furnished pursuant to any Loan Document, and (c) made its own decision
as to its Percentage of the Commitment pursuant to this Agreement. Each Lender
also represents that it will, independently and without reliance upon the Agent
or any other Lender, and based on such documents and information as it shall
deem appropriate at the time, continue to make its own credit analyses,
appraisals and decisions in taking or not taking action under this Agreement,
and to make such investigation as it deems necessary to inform itself as to the
business, operations, property, prospects, financial and other condition and
creditworthiness of the Borrower. Except for notices, reports and other
documents expressly required pursuant to the Loan Documents to be furnished by
the Agent to the Lenders, the Agent shall not have any duty or responsibility to
provide any Lender with any credit or other information concerning the business,
operations, property, prospects, financial and other condition or
creditworthiness of the Borrower which may come into the possession of the Agent
or any of its officers, directors, employees, agents, attorneys-in-fact or
affiliates.
Section 7.7 Indemnification. The Lenders agree to indemnify the Agent (in
its capacity as such) and its officers, directors, employees, representatives
and agents (to the extent not reimbursed by the Borrower and without limiting
the obligation, if any, of the Borrower to do so), ratably in accordance with
their Percentages, from and against any and all liabilities, obligations,
losses, damages, penalties, actions, judgments, suits, costs, expenses or
disbursements of any kind or nature whatsoever (including, without limitation,
the fees and disbursements of counsel for the Agent or such Person in connection
with any investigative, administrative or judicial proceeding commenced or
threatened, whether or not the Agent or such Person shall be designated a party
thereto) that may at any time be imposed on, incurred by or asserted against the
Agent or such Person as a result of, or arising out of, or in any way related to
or by reason of, any of the transactions contemplated by the Loan Documents or
the execution, delivery or performance of any Loan Document (but excluding any
such liabilities, obligations, losses, damages, penalties, actions, judgments,
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suits, costs, expenses or disbursements resulting solely from the gross
negligence or willful misconduct of the Agent or such Person as determined by a
court of competent jurisdiction). The agreements in this subsection shall
survive the payment of the Promissory Notes and all other amounts payable
hereunder.
Section 7.8 The Agent in Its Individual Capacity. The Agent and its
Affiliates may make loans to, accept deposits from and generally engage in any
kind of business with the Borrower as though it were not the Agent hereunder.
With respect to Advances made or renewed by it and any Promissory Note issued to
it, the Agent shall have the same rights and powers under this Agreement as any
Lender and may exercise the same as though it were not the Agent.
Section 7.9 Agent's Resignation. The Agent may resign at any time by giving
notice thereof to the Lenders and the Borrower. Upon any such resignation, the
Required Lenders shall designate within 45 days in writing another Person as the
successor Agent. Provided that no Event of Default shall have occurred and be
continuing, Borrower shall have the right to approve such successor Agent. If
such proposed successor Agent agrees in writing to act as the Agent in
accordance with the terms hereof, such successor Agent shall thereupon succeed
to and become vested with all the rights, powers, privileges, duties and
obligations of the resigning Agent, and the resigning Agent shall be discharged
from its duties and obligations as Agent under this Agreement. After any
retiring Agent's resignation hereunder, the provisions of this Article VII shall
inure to its benefit as to any actions taken or omitted to be taken by it while
it was the Agent under this Agreement.
Section 7.10 Appointment of a Substitute Agent. (a) Commerzbank AG, New
York Branch, shall be the initial Agent under this Agreement and the Loan
Documents until the Loan Documents have been terminated and the Lenders have
been paid in full. In the event that any Agent determines, for good cause
(including, without limitation, a conflict which, in such Agent's judgment, is
material), that it is not in the best interest of the Agent to continue to act
as the Agent, then the Agent may, at its option and upon thirty (30) days' prior
written notice to the Borrower and the Lenders, request a substitute Agent be
selected in accordance with the terms of this Section to act as the Agent with
respect to such matters. Within fifteen (15) days after receipt of such notice,
the Required Lenders shall select a proposed substitute agent and shall notify
the Borrower of the identity of such proposed substitute agent. In addition, the
Required Lenders, on not less than thirty (30) days' notice to the Agent, may
elect to appoint a substitute Agent in the event that the Agent has acted
hereunder with willful misconduct, gross negligence or exhibited a continuing
pattern of negligence with respect to its duties and obligations hereunder.
Provided that no Event of Default shall have occurred and be continuing,
Borrower shall have the right to approve any such proposed substitute agent. The
succeeding substitute Agent shall have all the rights, powers and duties of the
Agent and the term "Agent" shall mean such substitute Agent, effective upon its
appointment. In the event that the substitute Agent wishes to resign, it may do
so upon thirty (30) days' prior notice to the Borrower, the Agent and the
Lenders, and a new substitute Agent shall be appointed in accordance with this
Section. After any retiring substitute Agent's resignation hereunder as
substitute Agent, the provisions of this Section 7.10 and Section 8.4 hereof
shall inure to the benefit of such retired substitute Agent as to any actions
taken or omitted to be taken by it while it was substitute Agent under this
Agreement.
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Section 7.11 Loans. Each Lender shall make available to the Borrower such
Lender's portion of the Commitment subject to and in accordance with the
provisions of the Loan Documents. The Borrower shall look solely to each Lender
for the performance of such Lender's obligations, covenants and agreements under
the Loan Documents on the part of each Lender to be performed or observed with
respect to each such portion of the Commitment, subject to and upon the
conditions, limitations and restrictions set forth herein and in the other Loan
Documents, as evidenced by the signature of each such party hereto. In the event
any Lender has not made available its Percentage of any Advance, the Agent may
(but shall not be obligated to), and each Lender authorizes the Agent to,
advance for such Lender's account, pursuant to the terms hereof, the amount of
the Advance to be made by such Lender and each Lender agrees to reimburse the
Agent in immediately available funds for any amount so advanced on its behalf.
If any such reimbursement is not made in immediately available funds on the same
day on which the Agent shall have made such amount available on behalf of any
Lender, such Lender shall also pay interest thereon to the Agent at the Federal
Funds Rate.
Section 7.12 Priority of Loans. Each Lender's portion of the Commitment
shall be of equal priority with each other Lender's portion of the Commitment,
and no portion of the Commitment shall have priority or preference over any
other portion of the Commitment or the security therefor, except as provided in
Sections 7.20 through 7.24 hereof.
Section 7.13 Books and Records. The Agent will keep customary books and
records relating to the Advances, and such books and records shall be available
at the Agent's office for the Lenders' reasonable inspection during the Agent's
normal business hours. The original Loan Documents shall be kept at the New York
office of the Agent or at such other office of the Agent or at such other place
as may be designated from time to time by the Agent and shall be made available
to any Lender for inspection at such office within a reasonable period of time
following such Lender's written request to inspect same.
Section 7.14 Decisions of the Lenders. (a) Except as expressly set forth in
Sections 7.15 and 7.16 hereof, all decisions, consents, waivers, approvals and
other actions (collectively, "Decisions") authorized to be taken under or in
connection with this Agreement and the other Loan Documents by any Lender shall
be taken by the Agent in its discretion reasonably exercised, subject to the
provisions of Section 7.4 hereof. Except as expressly provided in Sections 7.15
and 7.16 hereof, the Agent (i) may consent or withhold consent to any action by
the Borrower, (ii) may exercise or refrain from exercising any power, rights or
remedies hereunder or under the other Loan Documents or otherwise in respect of
the Advances, and/or (iii) may waive any conditions in any Loan Documents, so
long as such consent, exercise or waiver would not, in the Agent's judgment
reasonably exercised, represent a departure from the standards followed by the
Agent in the administration of loans held by the Agent entirely for its own
account. The Agent may request a Decision with respect to matters described in
Sections 7.15 and 7.16 hereof at any time by making a request for such Decision
in writing to all of the Lenders. Any such request (x) shall contain an adequate
description together with relevant background information of the Decision being
requested, (y) shall specify the reasons for such request, and (z) shall state
the effect of not responding to such notice as set forth in this Section. The
Agent will provide the Lenders with such additional information as the Lenders
may reasonably request to assist such Lenders in reaching a Decision, to the
extent such information is in the Agent's possession or under its control. The
requested Decision shall be deemed approved by the Lenders if and when the Agent
receives written approval from the required percentage of the Lenders as
specified in Sections 7.15 and 7.16 hereof, as the case may be. If a Lender does
not deliver to the Agent a written objection thereto within ten (10) Business
Days after hand delivery, mailing or delivery to an express courier service
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of the request by the Agent, the Agent shall make a second written request for a
Decision from that Lender. If the Lender does not deliver to the Agent a written
objection within five (5) Business Days after hand delivery, mailing or delivery
to an express courier service of such a second request, such Lender shall be
deemed to have approved the requested Decision. If the Agent is unable to
contact the usual representatives of a Lender for any reason, the Agent will
make a good faith effort to contact other representatives of such Lender as
necessary to reach a Decision within the allotted time. To the extent that the
Agent reasonably deems necessary, any such Decision may also be requested
telephonically by the Agent from each Lender with such telephonic request to be
confirmed in writing by the Agent. Any Decision as to which the Agent has made
telephonic requests for approval shall be deemed approved by the Lenders after
the Agent has received the written approval of the required percentage of the
Lenders as specified in Sections 7.15 and 7.16 hereof. The Borrower shall be
promptly notified of the Decision, if such Decision was made in response to a
request by the Borrower.
Section 7.15 Unanimous Approvals by the Lenders. No written amendment,
supplement, modification or waiver which adds, deletes, changes or waives any
provisions of the Loan Documents shall (i) extend either the Maturity Date or
any installment or required prepayment of any Advances; (ii) reduce the rate or
extend the time of payment of interest on any Advances; (iii) reduce the
principal amount of any Advances; (iv) reduce the fees payable under this
Agreement and the other Loan Documents, or any other fee payable to the Lenders;
(v) change any Lender's portion of the Commitment or the amount of any Advance
of any Lender (except to the extent permitted by Sections 7.18 and 7.19 hereof);
(vii) change any provision of this Section 7.15 or the definition of Required
Lenders; (viii) modify any financial covenants, waive any Default or Event of
Default, or waive or release any lien on any of the Mortgaged Properties or
commence any judicial or nonjudicial foreclosure proceeding, in each case
without the written consent of all the Lenders; or (ix) amend, modify or waive
any provision of any Loan Document, if the effect thereof is to affect the
rights or duties of the Agent, without the written consent of the then the
Agent. Any such amendment, supplement, modification or waiver shall apply to
each of the Lenders equally and shall be binding upon the Borrower, the Lenders,
Agent and all future holders of the Promissory Notes. In the case of any waiver,
the Borrower, the Lenders and the Agent shall be restored to their former
position and rights hereunder and under the outstanding Promissory Notes, and
any Default or Event of Default waived shall be deemed to be cured and not
continuing, but no such waiver shall extend to any subsequent or other Default
or Event of Default, or impair any right consequent thereon.
Section 7.16 Approvals by the Required Lenders. (a) Upon the Agent's
receipt of a notice of default (as defined in Section 7.5(a) hereof) with
respect to an Event of Default, the Agent shall consult with the Lenders in
respect of any such Event of Default to determine a course of action which is
acceptable to the Required Lenders. Subject to Section 7.15 hereof, the Agent
shall pursue any such course of action approved by the Required Lenders in
respect of any such Event of Default, including, without limitation,
acceleration of the Advances. In the event that the Required Lenders cannot
decide which remedies, if any, are to be pursued, the Agent may commence
proceedings on behalf of the Lenders; provided, however, that if at any time
thereafter the Required Lenders shall direct that a different or additional
remedial action shall be taken, such different or additional remedial action
shall be taken in lieu of or in addition to such proceedings.
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(b) The Agent shall not without the prior approval of the
Required Lenders, (i) enter into written amendments, supplements, modifications
or waivers for the purpose of adding, deleting, changing or waiving any of the
provisions of Article V or Section 6.1, except to the extent such amendment,
supplement, modification or waiver requires the unanimous consent of the Lenders
pursuant to Section 7.15 hereof, or (ii) enter into written amendments,
supplements, modifications or waivers for the purpose of adding, deleting,
changing or waiving any provision of the Loan Documents, except to the extent
such amendment, supplement, modification or waiver requires the unanimous
consent of the Lenders (pursuant to Section 7.15 hereof), or (iii) consent to,
approve, or waive the requirement of receipt of, any documents, certificates or
other agreements or statements delivered or to be delivered by the Borrower or
any other Person pursuant to Article III hereof, or (iv) consent to or permit
(if not expressly permitted under the Loan Documents) the assignment or transfer
by the Borrower of any of its rights and obligations under any Loan Document, or
consent to any merger or consolidation or sale, lease or other disposal of all
or a substantial part of the Borrower's property or assets.
(c) All losses, costs, expenses, disbursements, liabilities, fees
(including reasonable attorneys' fees and disbursements), obligations, damages,
suits, actions and penalties of any kind or nature whatsoever (collectively, a
"Loss") incurred by the Agent in connection with the Advances or the enforcement
thereof shall be borne by the Lenders in accordance with each Lender's
Percentage.
(d) Each Lender shall, upon demand by the Agent, reimburse the
Agent (to the extent not otherwise reimbursed by the Borrower) for such Lender's
Percentage of (i) any out-of-pocket expenses incurred by the Agent in good faith
in connection with any Event of Default under the Loan Documents (including,
without limitation, reasonable fees and disbursements of outside counsel), and
(ii) any other expenses incurred in good faith to the extent not reimbursed by
the Borrower in connection with the enforcement of the Loan Documents.
(e) The Borrower hereby consents and agrees to the provisions of
Sections 7.14 through 7.16 and any modifications thereof entered into by the
Agent and the Lenders of such provisions and specifically acknowledges and
agrees that, notwithstanding any provisions in the Loan Documents requiring
action by the "Lenders" or similar provisions in connection with the declaration
of an Event of Default, the acceleration of the indebtedness evidenced by the
Loan Documents and/or the exercise of any remedies under the Loan Documents, the
Agent is hereby empowered to act on behalf of the Lenders in accordance with the
provisions hereof and the authority of the Agent with respect to any action
taken by the Agent pursuant to and in accordance with this Agreement shall not
be contested by the Borrower by reason of any different or conflicting provision
contained in any of the Loan Documents.
Section 7.17 Participation. Any Lender may at any time after the execution
and delivery of this Agreement, sell to one or more Persons (each a
"Participant") participating interests in any Advance owing to such Lender, any
Promissory Note held by such Lender and/or any other interest of such Lender
hereunder (in respect of any such Lender, its "Credit Exposure").
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Notwithstanding any such sale by a Lender of participating interests to a
Participant, unless the Agent shall have agreed otherwise, such Lender's rights
and obligations hereunder shall remain unchanged, such Lender shall remain
solely responsible for the performance thereof, such Lender shall remain the
holder of any such Promissory Note for all purposes hereunder (except as
expressly provided below), and the Agent shall continue to deal solely and
directly with such Lender in connection with such Lender's rights and
obligations hereunder. The Borrower also agrees that each Participant shall be
entitled to the benefits of Sections 2.11, 2.13 and 2.15 hereof. Each Lender
agrees that any agreement between such Lender and any such Participant in
respect of such participating interest shall not restrict such Lender's right to
agree to any amendment, supplement, waiver or modification to any Loan Document,
except where the result of any of the foregoing would be to extend the final
maturity of any Advance or any regularly scheduled installment thereof or reduce
the rate or extend the time of payment of interest thereon or reduce the
principal amount thereof.
Section 7.18 Assignments. (a) Any Lender may, in the ordinary course of its
business and in accordance with applicable law, at any time after the execution
and delivery of this Agreement and from time to time assign to any Lender or any
affiliate thereof or to any other Person (each a "Purchasing Lender") all or any
part of its Credit Exposure in amounts not less than $10,000,000. The Borrower,
the Agent and the Lenders agree that to the extent of any assignment, the
Purchasing Lender shall be deemed to have the same rights and benefits under the
Loan Documents and the same obligation to share pursuant to Section 7.24 hereof
as it would have had if it had been a Lender which was one of the original
parties hereto. The consent of the Agent and, provided no Default or Event of
Default has occurred, the Borrower shall be required prior to an assignment
becoming effective, which consents will not be unreasonably withheld, delayed or
conditioned; provided that the Agent shall be entitled to continue to deal
solely and directly with the assignor Lender in connection with the interests so
assigned to the Purchasing Lender unless and until such Purchasing Lender
executes a supplement to this Agreement, substantially in the form of Exhibit M
hereto (a "Form of Assignment and Assumption Agreement").
(b) Upon (i) execution of a Form of Assignment and Assumption
Agreement, (ii) delivery of an executed copy thereof to the Borrower and the
Agent, (iii) payment by such Purchasing Lender to such transferor Lender of an
amount equal to the purchase price agreed between such transferor Lender and
such Purchasing Lender, and (iv) payment to Agent of an assignment fee of $2500
for each assignment by any Lender of all or any portion of its Credit Exposure,
such transferor Lender shall be released from its obligations hereunder to the
extent of such assignment and such Purchasing Lender shall for all purposes be a
Lender party to this Agreement and shall have all the rights and obligations of
a Lender under this Agreement to the same extent as if it were an original party
hereto, and no further consent or action by the Borrower, the Lenders or the
Agent shall be required. Such Form of Assignment and Assumption Agreement shall
be deemed to amend this Agreement to the extent, and only to the extent,
necessary to reflect the addition of such Purchasing Lender as a Lender.
Promptly after the consummation of any transfer to a Purchasing Lender pursuant
hereto, the transferor Lender, the Agent and the Borrower shall make appropriate
arrangements so that a replacement Promissory Note is issued to such transferor
Lender and a new Promissory Note is issued to such Purchasing Lender, in each
case in principal amounts reflecting such transfer. The Purchasing Lender shall
furnish to Borrower, at least 10 days prior to the date on which the first
payment to such Purchasing Lender is due, the documents described in Section
2.17(b) hereof.
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(c) Commerzbank AG, Los Angeles Branch, agrees that it will not
assign to a Purchasing Lender any part of its Credit Exposure such that, after
giving effect to such assignment, Commerzbank AG, Los Angeles Branch's
Percentage shall be less than 20%, unless the foregoing shall (or in Commerzbank
AG, Los Angeles Branch's reasonable judgment is likely to) constitute a
violation of any Requirement of Law. Notwithstanding the foregoing, nothing
herein shall restrict or limit Commerzbank AG, Los Angeles Branch, from selling
a participating interest in any portion, or all, of its Credit Exposure.
Section 7.19 Withholding. Notwithstanding anything to the contrary herein,
no Participant or other assignee of all or any part of the Credit Exposure of
any Lender (each, a "Non-Party Holder"), other than a Purchasing Lender, shall
be entitled to any of the benefits of Section 2.16 hereof.
Section 7.20 Amounts Received by the Lenders. Each Lender agrees that it
shall act as a trustee for the benefit of the other Lenders to the extent of the
respective interests of the other Lenders in the Advances with respect to all
sums of any kind paid to or received by such Lender in payment of all or a
portion of the Advances by or on behalf of the Borrower.
Section 7.21 No Joint Venture. Neither the execution of this Agreement nor
the selling of an interest in the Advances nor any agreement to share in profits
or losses as provided herein is intended to be, nor shall it be construed to be,
the formation of a partnership or joint venture among the parties to this
Agreement.
Section 7.22 Acknowledgment by Parties Hereto. The agreement to and
acceptance of this Agreement by the parties hereto, indicated by the execution
of this Agreement, shall evidence (a) each party's acceptance of all the terms
and conditions of this Agreement and the other Loan Documents and (b) each
party's consent to the Agent's acting as the Agent on behalf of the Lenders with
regard to all aspects of the administration, enforcement and collection of the
Advances and to all matters pertaining to the Loan Documents as provided for
herein.
Section 7.23 Right of the Lenders and the Agent to Transact Business. The
Lenders, the Agent and/or any of their respective affiliates may accept deposits
from, lend money to, act as trustee under indentures of, and generally engage in
any kind of business with, the Borrower or any other Person without any duty to
account therefor to the other Lenders and/or the Agent, as the case may be.
Section 7.24 Sharing of Payments. Each of the Lenders agrees that if it
should receive any amount under this Agreement or any of the other Loan
Documents (whether by voluntary payment, by realization upon security, by the
exercise of the right of banker's lien, by counterclaim or cross action, by the
enforcement of any right under the Loan Documents, or otherwise) which is
applicable to the payment of any Advance of a sum which with respect to the
related sum or sums received by the other Lenders is in a greater proportion
than the total of such Advance then owed and due to such Lender bears to the
total of such Advance then owed and due to all of the Lenders immediately prior
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to such receipt, then such Lender receiving such excess payment shall purchase
for cash without recourse or warranty from the other Lenders an interest in such
Advance owing to such Lenders in such amount as shall result in a proportional
participation by all of the Lenders in such amount; provided that if all or any
portion of such excess amount is thereafter recovered from such Lender, such
purchase shall be rescinded and the purchase price restored to the extent of
such recovery, but without interest.
Section 7.25 Limitation of Liability. No claim may be made by the Borrower
or any other Person against the Agent or any Lender or any of their affiliates,
directors, officers, employees, attorneys or agent of any of such Persons for
any special, indirect or consequential damages in respect of any claim for
breach of contract or any other theory of liability arising out of or under this
Article VII; and the Borrower hereby waives, releases and agrees not to xxx upon
any such claim for any such damages, whether or not accrued and whether or not
known or suspected to exist in its favor.
ARTICLE VIII
MISCELLANEOUS
Section 8.1 Notices. All notices, requests, and other communications to any
party hereunder shall be in writing (including bank wire, telecopy, or similar
teletransmission or writing) and shall be given to such party at its address or
telecopy number set forth on Schedule 3 annexed hereto or such other address or
telecopier number as such party may hereafter specify by notice to the Agent and
the Borrower. No notices, requests, and other communications given to any Person
other than the Agent (including, without limitation, any Affiliate of the Agent)
shall be deemed to have been given to the Agent. Each such notice, request, or
other communication shall be effective (i) when delivered personally, (ii) if
given by telecopier, when such telecopy is transmitted to the telecopier number
specified in this Section 8.1, (iii) if given by certified or registered mail,
return receipt requested, 72 hours after such communication is deposited in the
mails with first-class postage prepaid, addressed as aforesaid, or (iv) by
Federal Express or other recognized overnight delivery service (provided that,
in either such case, such delivery is made with a request for receipt), on the
next Business Day after such communication is deposited with such delivery
service, or (v) if given by any other means when delivered at the address
specified in this Section 8.1.
Section 8.2 Amendments, Etc. No amendment or waiver of any provision of
this Agreement or the other Loan Documents, nor consent to any departure by
either party therefrom, shall in any event be effective unless the same shall be
in writing and signed by the party or its agent, if authorized to act on its
behalf, against whom enforcement of such waiver or amendment is sought, and then
such waiver or consent shall be effective only in the specific instance and for
the specified purpose for which given. None of the foregoing shall negate or
vitiate any of the provisions of Sections 7.14, 7.15 or 7.16.
Section 8.3 No Waiver; Remedies Cumulative. No failure or delay on the part
of the Lenders in exercising any right or remedy hereunder or under any other
Loan Document and no course of dealing between the Borrower and the Agent or the
Lenders shall operate as a waiver thereof, nor shall any single or partial
-62-
exercise of any right or remedy hereunder or under any other Loan Document
preclude any other or further exercise thereof or the exercise of any other
right or remedy hereunder. The rights and remedies herein and in the other Loan
Documents expressly provided are cumulative and not exclusive of any rights or
remedies that the Lenders would otherwise have. No notice to or demand on the
Borrower not required hereunder or under the other Loan Documents in any case
shall entitle the Borrower to any other or further notice or demand in similar
or other circumstances or constitute a waiver of the rights of the Lenders to
any other or further action in any circumstances without notice or demand.
Section 8.4 Payment of Expenses, Etc. The Borrower shall: (a) whether or
not the transactions hereby contemplated are consummated, pay all reasonable
out-of-pocket costs and expenses of the Lenders in the administration (both
before and after the execution hereof and including advice of counsel as to the
rights and duties of the Agent or the Lenders) of, and in connection with the
preparation, execution, and delivery of, preservation of rights under,
enforcement of, and, after an Event of Default, refinancing, renegotiation, or
restructuring of, this Agreement and the other Loan Documents and the documents
and instruments referred to therein; any amendment, waiver, or consent relating
thereto (including, without limitation, the reasonable fees and disbursements of
counsel for the Agent and the Lenders);
(b) to the extent permitted by applicable law, pay and hold the
Agent and the Lenders harmless from and against any and all present and future
stamp, recording, and other similar taxes and fees with respect to the foregoing
matters and save the Lenders harmless from and against any and all liabilities
with respect to or resulting from any delay or omission to pay such taxes and
fees; and
(c) indemnify the Agent and the Lenders and each of their
officers, directors, employees, Affiliates, representatives, and agents from,
and hold each of them harmless against, any and all costs, losses, liabilities,
claims, damages and expenses incurred by any of them (whether or not any of them
is designated a party thereto) arising out of or by reason of any litigation, or
other proceeding related to any actual or proposed use by the Borrower of the
proceeds of any of the Advances or the Borrower entering into and performing of
this Agreement or the other Loan Documents or resulting from the ownership of
any Mortgaged Property, including, without limitation, the reasonable fees and
disbursements of counsel incurred in connection with any such investigation,
litigation, or other proceeding; provided that the Borrower shall not be
obligated to indemnify any such Person to the extent of any costs, losses,
liabilities, claims, damages, or expenses caused by the gross negligence or
willful misconduct of such Person.
If and to the extent that the obligations of the Borrower under this
Section 8.4 are unenforceable for any reason, the Borrower hereby agrees to make
the maximum contribution to the payment and satisfaction of such obligations
which is permissible under applicable law. The Borrower's obligations under this
Section 8.4 shall survive any termination of this Agreement and the payment of
the sums due hereunder and under the other Loan Documents.
Section 8.5 Right of Setoff. In addition to and not in limitation of all
rights of offset that the Lenders may have under applicable law, the Lenders
shall, upon the occurrence and during the continuance of any Event of Default
and whether or not the Lenders have made any demand or the Borrower's
obligations are matured, have the right to appropriate and apply to the payment
of the Borrower's obligations hereunder and under the other Loan Documents, all
deposits (general or special, time or demand, provisional or final) of the
Borrower then or thereafter held by, and other indebtedness or property then or
thereafter owing by, the Lenders.
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Section 8.6 Benefit of Agreement. This Agreement shall be binding upon and
inure to the benefit of and be enforceable by the respective successors and
assigns of the parties hereto, provided that the Borrower may not assign or
transfer any of its interest hereunder without the prior written consent of the
Lenders.
Section 8.7 Governing Law; Submission to Jurisdiction. (a) This Agreement
and the rights and obligations of the parties hereunder shall be construed in
accordance with and be governed by the law (without giving effect to the
conflict of law principles thereof) of the State of New York except as otherwise
specifically provided in the Loan Documents with respect to the perfection,
priority and enforcement of liens upon real property and fixtures not located in
the State of New York. (b) Any legal action or proceeding with respect to this
Agreement or the other Loan Documents or any document related thereto may be
brought in the courts of the State of New York or of the United States of
America for the Southern District of New York, and by execution and delivery of
this Agreement, the Borrower hereby accepts for itself and in respect of its
property generally and unconditionally, the jurisdiction of the aforesaid
courts. The Borrower hereby irrevocably waives any objection, including, without
limitation, any objection to the laying of venue or based on the grounds of
forum non conveniens, which it may now or hereafter have to the bringing of any
such action or proceeding in such respective jurisdictions. The Borrower agrees
that any process in any proceeding in any such court may be served on the
Borrower through the United States mails in accordance with Section 8.1.
(c) WAIVER OF JURY TRIAL. TO THE EXTENT PERMITTED BY APPLICABLE
LAW, EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES
TRIAL BY JURY IN ANY LEGAL ACTION OR PROCEEDING RELATING TO THIS AGREEMENT OR
THE PROMISSORY NOTE OR ANY OTHER LOAN DOCUMENTS AND FROM ANY COUNTERCLAIM
THEREIN.
(d) Nothing herein shall affect the right of the Lenders to serve
process in any other manner permitted by law or to commence legal proceedings or
otherwise proceed against the Borrower in any other jurisdiction.
Section 8.8 Counterparts. This Agreement may be executed in any number of
counterparts and by the different parties hereto on separate counterparts, each
of which when executed and delivered shall be an original, but all of which
shall together constitute one and the same instrument.
Section 8.9 Headings Descriptive. The headings contained in this Agreement
are for convenience only and shall not in any way affect the meaning or
construction of any provision of this Agreement.
-64-
Section 8.10 Entire Agreement. This Agreement and the other Loan Documents
constitute the entire agreement of the parties with respect to the subject
matter hereof and thereof, and all prior discussions, negotiations, term sheets,
commitment letters, agreements, correspondence and document drafts with respect
to such matters are merged herein and therein. Neither the Lenders nor any
employee of the Lenders has been authorized to make any representation or
agreement upon which the Borrower or its Affiliates may rely unless such matter
is set forth in this Agreement or the other Loan Documents.
Section 8.11 Release of Certain Mortgaged Property. Agent agrees that, upon
Borrower's request (a "Release Request"), it will deliver to Borrower a form of
release, duly executed and acknowledged by the Agent, releasing from the lien of
the applicable Mortgage (a "Release"), any real property constituting a portion
of a Mortgaged Property (a "Release Parcel") but only if and on the condition
that:
(i) each Release Request shall be in writing, shall contain all
information necessary for the Agent to cause a Release in recordable form
to be prepared and shall be given at least five (5) Business Days prior to
the requested date of such Release;
(ii) each Release Request shall constitute Borrower's representation
and warranty that, and shall be accompanied by evidence demonstrating to
the Agent's satisfaction that (a) no portion of the extended stay facility
and such related ancillary facilities constructed (or to be constructed) on
the Mortgaged Property from which the Release Parcel is to be Released is
(or will be) located on such Release Parcel, (b) the requested Release
shall not cause or result in the remaining Mortgaged Property and the
existence and use of the extended stay facility and such related ancillary
facilities constructed (or to be constructed) thereon to fail to comply
with any Use Requirements or Requirements of Law, and (c) no portion of the
Total Costs allocated in a manner satisfactory to Agent to the Release
Parcel is included in the computation of the Maximum Availability Amount;
(iii) as of the date of such Release Request, and as of the effective
date of such Release (before as well as after giving effect to such
Release), no Default or Event of Default shall have occurred and be
continuing, and each Release Request shall constitute Borrower's
representation and warranty that the foregoing is true, complete and
accurate;
(iv) before as well as after giving effect to such Release, subject to
the provisions of Section 5.5 hereof, all representations and warranties
contained herein (except representations and warranties expressly provided
herein as being made only as of the Closing Date) shall be true and correct
in all material respects with the same effect as though such
representations and warranties had been made on and as of the date of such
Release;
(v) Borrower executes, acknowledges and delivers to Agent, at
Borrower's expense, any and all documents and instruments reasonably
required by Agent to preserve and maintain Agent's and Lenders' rights,
upon and following any such Release, under and with respect to the Loan
Documents; and
(vi) (1) The Agent shall have received payment of all costs and
expenses (other than the legal fees described in the following clause (2)
of this subparagraph) incurred by Agent in connection with such Release,
including, but not limited to, all title insurance premiums arising as a
result of endorsements required by Agent in connection with such Release,
and (2) receipt of a Release Request for each Release shall constitute
Borrower's agreement and covenant to pay to the Agent, promptly upon demand
(together with a
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reasonably detailed invoice(s) in respect thereof), all reasonable legal
fees and expenses arising in connection with the preparation, execution,
delivery and review of each Release, the documents and instruments
described in this Section, and all other documents relating to, and
rendering at the request of Agent all advice respecting, each Release.
In the event that all of the foregoing conditions to a Release have been
satisfied, then, at Borrower's request, the Agent shall furnish such Release for
recordation to the title company insuring the Agent's interest in the Mortgaged
Property affected by such Release or as otherwise designated by Borrower.
Section 8.12 Subordination of Certain Mortgaged Property. Agent agrees
that, upon Borrower's request (a "Subordination Request"), it will deliver to
Borrower a form of subordination, duly executed and acknowledged by the Agent,
subordinating the lien of the applicable Mortgage (a "Subordination"), to any
Development Encumbrances on a Mortgaged Property, but only if and on the
condition that:
(i) each Subordination Request shall be in writing, shall contain all
information necessary for the Agent to cause a Subordination in recordable
form to be prepared and shall be given at least five (5) Business Days
prior to the requested date of such Subordination;
(ii) Agent shall have received an endorsement to the title policy
referred to in Section 3.3(a)(iii) with respect to the applicable Mortgaged
Property indicating that since the date of the last endorsement to such
policy there has been no change in the state of title not theretofore
approved by Agent, providing with respect to such Development Encumbrances
a so-called "comprehensive endorsement" (or equivalent), to the extent
available in the jurisdiction in which such Mortgaged Property is located,
and such other affirmative insurance as Agent shall reasonably require,
which endorsement shall have the effect of redating the title policy to the
date of recordation of, and insuring the lien of the Mortgage as
subordinated pursuant to, the Subordination;
(iii) as of the date of such Subordination Request, and as of the
effective date of such Subordination (before as well as after giving effect
to such Subordination), no Default or Event of Default shall have occurred
and be continuing, and each Subordination Request shall constitute
Borrower's representation and warranty that the foregoing is true, complete
and accurate;
(iv) before as well as after giving effect to such Subordination,
subject to the provisions of Section 5.5 hereof, all representations and
warranties contained herein (except representations and warranties
expressly provided herein as being made only as of the Closing Date) shall
be true and correct in all material respects with the same effect as though
such representations and warranties had been made on and as of the date of
such Subordination;
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(v) Borrower executes, acknowledges and delivers to Agent, at
Borrower's expense, any and all documents and instruments reasonably
required by Agent to preserve and maintain Agent's and Lenders' rights,
upon and following any such Subordination, under and with respect to the
Loan Documents; and
(vi) (1) The Agent shall have received payment of all costs and
expenses (other than the legal fees described in the following clause (2)
of this subparagraph) incurred by Agent in connection with such
Subordination, including, but not limited to, all title insurance premiums
arising as a result of endorsements required by Agent in connection with
such Subordination, and (2) receipt of a Subordination Request for each
Subordination shall constitute Borrower's agreement and covenant to pay to
the Agent, promptly upon demand (together with a reasonably detailed
invoice(s) in respect thereof), all reasonable legal fees and expenses
arising in connection with the preparation, execution, delivery and review
of each Subordination, the documents and instruments described in this
Section, and all other documents relating to, and rendering at the request
of Agent all advice respecting, each Subordination.
Section 8.13 Confidentiality by the Agent and the Lenders. The Agent and
the Lenders agree that, unless otherwise agreed to in writing by us, except as
required by law or regulation or by legal process, to keep all Non-public
Information delivered by the Borrower to the Agent or the Lenders confidential
and not to disclose or reveal any Non-public Information to any person, other
than those employed or retained by the Agent or the Lenders (including, without
limitation, employees, counsel, accountants, engineers, advisers, experts and
consultants to the Agent or the Lenders). Except as provided for in the next
sentence, in the event that the Agent or any Lender is requested pursuant to, or
required by, applicable law or regulation or by legal process to disclose any
Non-public Information, the Agent or such Lender agrees that it shall provide
the Borrower with prompt notice of such request(s) and, unless required by law
or regulation to disclose sooner, shall wait at least forty-eight (48) hours
before disclosing such Non-public information. Notwithstanding the foregoing or
anything else to the contrary herein contained or contained in any of the other
Loan Documents, the provisions of this Section 8.13 shall not apply to (a) the
disclosure or sharing of any non-public information among the Agent and the
Lenders, (b) the disclosure by the Agent or any Lender of any non-public
information to federal, state and local bank regulators or other governmental
agencies to the extent required or requested to do so (such disclosure shall
not, however, in and of itself be deemed to render such information public), and
(c) the Agent or any Lender may, in connection with any assignment or
participation or proposed assignment or participation, disclose to the assignee
or participant or proposed assignee or participant under a requirement of
confidentiality, any non-public information relating to the Borrower, the
Collateral, the Borrower's assets, properties or financial condition or
information otherwise furnished to the Agent or the Lenders by the Borrower.
[Signature is on the Following Page]
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IN WITNESS WHEREOF, the parties hereto have caused their duly authorized
officers to execute and deliver this Agreement as of the date first written
above.
HOMESTEAD VILLAGE INCORPORATED
By: _____________________________________
Name:
Title:
COMMERZBANK AG, New York Branch,
as Agent
By: _____________________________________
Name:
Title:
By: _____________________________________
Name:
Title:
COMMERZBANK AG, Los Angeles Branch,
as a lender
By: _____________________________________
Name:
Title:
By: _____________________________________
Name:
Title:
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TABLE OF CONTENTS
Page
ARTICLE I
DEFINITIONS; CONSTRUCTION..............................................-1-
Section 1.1 Definitions...............................................-1-
Section 1.2 Accounting Terms and Determinations......................-14-
Section 1.3 Other Definitional Terms.................................-14-
ARTICLE II
AMOUNTS AND TERMS OF LOANS............................................-14-
Section 2.1 Commitment...............................................-14-
Section 2.2 Advances.................................................-14-
Section 2.3 Notices of Borrowing.....................................-15-
Section 2.4 Disbursement of Funds....................................-15-
Section 2.5 Promissory Notes; Collateral.............................-15-
Section 2.6 Interest on Advances.....................................-15-
Section 2.7 Interest Periods.........................................-16-
Section 2.8 Repayment of Advances....................................-17-
Section 2.9 Prepayments of Advances..................................-17-
Section 2.10 Fees.....................................................-18-
Section 2.11 Payments, Etc............................................-18-
Section 2.12 Interest Rate Not Ascertainable, Etc.....................-19-
Section 2.13 Illegality...............................................-19-
Section 2.14 Increased Costs..........................................-19-
Section 2.15 Change of Lending Office.................................-21-
Section 2.16 Funding Losses...........................................-21-
Section 2.17 Taxes....................................................-21-
Section 2.18 Extension of Maturity Date...............................-22-
ARTICLE III
CONDITIONS TO BORROWINGS..............................................-23-
Section 3.1 Conditions Precedent to Closing..........................-23-
Section 3.2 Conditions Precedent to Each Advance.....................-24-
Section 3.3 Additional Conditions Precedent to an Advance in
Respect of New Mortgaged Property......................-27-
Section 3.4 Additional Conditions Relating to Unsecured Advances.....-30-
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Page
ARTICLE IV
REPRESENTATIONS AND WARRANTIES.........................................-31-
Section 4.1 Corporate Existence.......................................-31-
Section 4.2 Authorization of Agreement; No Violation..................-31-
Section 4.3 Governmental Approvals....................................-31-
Section 4.4 Binding Effect............................................-31-
Section 4.5 Financial Information and No Material Adverse Change......-32-
Section 4.6 Litigation................................................-32-
Section 4.7 Compliance with Law.......................................-32-
Section 4.8 Labor Matters.............................................-32-
Section 4.9 ERISA.....................................................-33-
Section 4.10 No Default................................................-33-
Section 4.11 Improvements..............................................-33-
Section 4.12 Intellectual Property.....................................-34-
Section 4.13 Unrecorded Mortgages......................................-34-
Section 4.14 Taxes.....................................................-34-
Section 4.15 Investment Company Act; Other Regulations.................-34-
Section 4.16 Intentionally omitted.....................................-35-
Section 4.17 Insurance.................................................-35-
Section 4.18 Properties................................................-36-
Section 4.19 Full and Accurate Disclosure..............................-37-
Section 4.20 Solvency..................................................-38-
Section 4.21 Not Foreign Person........................................-38-
Section 4.22 Assessments...............................................-38-
Section 4.23 Flood Zone................................................-38-
Section 4.24 Physical Condition........................................-38-
Section 4.25 Operation of Premises.....................................-38-
Section 4.26 Margin Regulations........................................-38-
Section 4.27 Hazardous Materials.......................................-39-
Section 4.28 Representations and Warranties in the Loan Documents......-39-
Section 4.29 Loan Documents............................................-39-
Section 4.30 Balloon Payments..........................................-39-
Section 4.31 Subsidiary Mortgagors.....................................-39-
Section 4.32 Nature of Business........................................-39-
ARTICLE V
COVENANTS..............................................................-40-
Section 5.1 Certain Affirmative Covenants.............................-40-
Section 5.2 Reporting Covenants.......................................-42-
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Page
Section 5.3 Certain Negative Covenants................................-45-
Section 5.4 Material Casualties.......................................-48-
Section 5.5 Effect of Certain Representations or Covenants
Being Inaccurate........................................-48-
ARTICLE VI
EVENTS OF DEFAULT......................................................-50-
Section 6.1 Events of Default.........................................-50-
Section 6.2 Global Remedies...........................................-52-
Section 6.3 Marshalling; Waiver of Certain Rights; Recapture..........-52-
Section 6.4 Application of Proceeds...................................-53-
Section 6.5 Attorneys-in-Fact.........................................-53-
ARTICLE VII
AGENCY AND INTERCREDITOR RELATIONSHIPS.................................-54-
Section 7.1 Appointment...............................................-54-
Section 7.2 Delegation of Duties......................................-54-
Section 7.3 Exculpatory Provisions....................................-54-
Section 7.4 Reliance by the Agent.....................................-55-
Section 7.5 Notice of Default.........................................-55-
Section 7.6 Non-Reliance on the Agent and the Other Lenders...........-55-
Section 7.7 Indemnification...........................................-56-
Section 7.8 The Agent in Its Individual Capacity......................-56-
Section 7.9 Agent's Resignation.......................................-56-
Section 7.10 Appointment of a Substitute Agent.........................-57-
Section 7.11 Loans.....................................................-57-
Section 7.12 Priority of Loans.........................................-57-
Section 7.13 Books and Records.........................................-58-
Section 7.14 Decisions of the Lenders..................................-58-
Section 7.15 Unanimous Approvals by the Lenders........................-59-
Section 7.16 Approvals by the Required Lenders.........................-59-
Section 7.17 Participation.............................................-60-
Section 7.18 Assignments...............................................-60-
Section 7.19 Withholding...............................................-61-
Section 7.20 Amounts Received by the Lenders...........................-61-
Section 7.21 No Joint Venture..........................................-62-
Section 7.22 Acknowledgment by Parties Hereto..........................-62-
Section 7.23 Right of the Lenders and the Agent to Transact Business...-62-
Section 7.24 Sharing of Payments.......................................-62-
Section 7.25 Limitation of Liability...................................-62-
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Page
ARTICLE VIII
MISCELLANEOUS..........................................................-63-
Section 8.1 Notices...................................................-63-
Section 8.2 Amendments, Etc...........................................-63-
Section 8.3 No Waiver; Remedies Cumulative............................-63-
Section 8.4 Payment of Expenses, Etc..................................-63-
Section 8.5 Right of Setoff...........................................-64-
Section 8.6 Benefit of Agreement......................................-64-
Section 8.7 Governing Law; Submission to Jurisdiction.................-64-
Section 8.8 Counterparts..............................................-65-
Section 8.9 Headings Descriptive......................................-65-
Section 8.10 Entire Agreement..........................................-65-
Section 8.11 Release of Certain Mortgaged Property.....................-65-
Section 8.12 Subordination of Certain Mortgaged Property...............-66-
Section 8.13 Confidentiality by the Agent and the Lenders..............-67-
-iv-
