LOAN AGREEMENT
THIS AGREEMENT is made effective as of December 1, 1998, and is entered
into by and between AIOP LOST DUTCHMAN NOTES, L.L.C., a Delaware limited
liability company ("Borrower"), ASSET INVESTORS OPERATING PARTNERSHIP, L.P., a
Delaware limited partnership ("Operating Partnership"), ASSET INVESTORS
CORPORATION, a Maryland corporation ("Corporation") (Operating Partnership and
Corporation are individually and collectively the "Guarantor" or "Guarantors")
and U.S. BANK NATIONAL ASSOCIATION (the "Bank").
RECITALS
This Agreement is entered into upon the basis of the following facts
and circumstances:
A. Borrower has applied to the Bank for a loan to be made available for
the refinance of certain existing debt upon the terms and subject to the
conditions set forth herein.
B. Guarantors are directly benefited by the loan to be made available
by the Bank to Borrower.
NOW, THEREFORE, in consideration of the foregoing Recitals and the
covenants and conditions, representations and warranties contained herein, the
parties hereto agree as follows:
ARTICLE 1.
DEFINITIONS
The following terms when used in this Agreement shall, except where the
context otherwise requires, have the following meanings (such definitions to be
equally applicable to the singular and the plural forms thereof):
1.1 "Affiliate" shall mean, with respect to any Loan Party, any entity
controlled by the Loan Party, any entity which controls the Loan Party, or any
entity under common control with the Loan Party.
1.2 "Agreement" shall mean this Agreement as originally executed and as
amended, extended, supplemented or restated from time to time.
1.3 "Assignment of Membership Interests" shall mean the assignment by
Operating Partnership of 100% of its membership interests in Borrower.
1.4 "Authorized Officer" shall mean one of the following senior
officers of the Corporation: Chief Executive Officer, President, Chief Financial
Officer or Treasurer or any officer of the Borrower certified by the Borrower
and Guarantors to the Bank for the purpose of making certifications required by
this Agreement.
1
1.5 "Business Day" shall mean every day except a Saturday, Sunday or
public holiday under the laws of the United States or the State of Colorado on
which banks are required or authorized to close in Denver, Colorado.
1.6 "Change of Control" shall mean the occurrence, after the Closing
Date, of a sale, assignment, conveyance or transfer of any equity interest in
the Borrower so that the entire equity interest therein is not one hundred
percent (100%) owned by Operating Partnership and any pledge, hypothecation,
encumbrance or sale, assignment, conveyance or transfer for security purposes by
which the legal or beneficial ownership of the Borrower would, upon the exercise
of its remedies by the transferee, become vested in the transferee or the
occurrence, after the Closing Date, of a sale, assignment, conveyance or
transfer of any equity interest in Operating Partnership so that the equity
interest of Corporation in Operating Partnership is less than 78% owned by
Corporation and any pledge, hypothecation, encumbrance or sale, assignment,
conveyance or transfer for security purposes by which the legal or beneficial
ownership of Operating Partnership by Corporation would, upon the exercise of
its remedies by the transferee and the vesting of such legal or beneficial
ownership in the transferee, be less than seventy-eight percent (78%).
1.7 "Closing Date" shall mean any Business Day selected by United and
Bank for the closing of the Loan; provided that all the conditions precedent to
the obligation of Bank to make the Loan have been, or, on the Closing Date, will
be, satisfied.
1.8 "Code" shall mean the Internal Revenue Code of 1986, as amended
from time to time.
1.9 "Collateral" shall mean, individually or collectively, each
Mortgage Loan and all promissory notes, documents, agreements, guarantees, deeds
of trust, security agreements, pledges, assignments of leases and rents, letters
of credit, chattel paper and similar instruments, money, real or personal
property evidencing or securing a Mortgage Loan or executed and delivered by any
Person obligated in respect of such Mortgage Loan, including without limitation
the documents and instruments listed on Exhibit A attached hereto, and the title
policies insuring the Borrower with respect to the Mortgages, and any other
documents and instruments included in the mortgage file relating to such
Mortgage Loans and all proceeds, products, rents, profits, income, benefits,
substitutions and replacements of or associated with or proceeding from the
Mortgage Loans and the documents and instruments evidencing and securing the
Mortgage Loans.
1.10 "Collateral Assignment of Mortgage Loan Documents" shall mean an
assignment to Bank of Borrower's right, title and interest in the Mortgage Loan
Documents.
1.11 "Collateral Security Documents" shall mean the collective
reference to the Security Agreement, the Assignment of Membership Interests, the
Collateral Assignment of Mortgage Loan Documents, and the UCC-1 financing
statements and any other agreement or instrument now or hereafter entered into
by a Borrower or any other Person which secures any of the Obligations.
2
1.12 "Default" shall mean any event which if continued uncured would,
with notice or lapse of time or both, constitute an Event of Default.
1.13 "ERISA" shall mean The Employee Retirement Income Security Act of
1974, as amended.
1.14 "ERISA Affiliate" shall mean any trade or business (whether or not
incorporated) that is a member of a group of trades or business under common
control of which Borrower or either Guarantor is a member and which is treated
as a single employer under Section 414 of the Code.
1.15 "Event of Default" shall mean any Event of Default described in
Section 7.1.
1.16 "GAAP" shall mean generally accepted accounting principles set
forth in the opinions and pronouncements of the Accounting Principles Board of
the American Institute of Certified Public Accountants and statements and
pronouncements of the Financial Accounting Standards Board or in any other
statements by any other entity as may be approved by a significant segment of
the accounting profession, which are applicable to the circumstances as of any
date of determination. Whenever any accounting term is used herein which is not
otherwise defined, it shall be interpreted in accordance with GAAP.
1.17 "Governmental Entity" shall mean any federal, state, or local
governmental or quasi-governmental entity, agency, board, commission or
organization having jurisdiction over any Collateral or Person relevant to this
Agreement.
1.18 "Governmental Requirements" shall mean all laws, statutes, codes,
ordinances, and governmental rules, regulations and requirements applicable to
Borrower, Guarantor, Bank and/or any Collateral.
1.19 "Guarantee" shall mean that certain guarantee of even date
pursuant to which each Guarantor has, jointly and severally, unconditionally and
irrevocably guaranteed the Obligations of Borrower hereunder.
1.20 "Guarantor" shall mean, jointly and severally, Operating
Partnership and Corporation.
1.21 "Lien" or "Liens" mean each and all of the following: (1) any
lease or other right to use; (2) any assignment as security, conditional sale,
grant in trust, lien, mortgage, pledge, security interest, title retention
arrangement, other encumbrance, or other interest or right securing the payment
of money or the performance of any other liability or obligation, whether
voluntarily or involuntarily created and whether arising by agreement, document,
or instrument, under any law, ordinance, regulation, or rule (federal, state, or
local), or otherwise not approved in advance by Bank; and (3) any option, right
of first refusal, or other interest or right.
3
1.22 "Loan" shall mean the term loan in the principal amount of
$8,500,000.00 to be made by Bank to Borrower pursuant to this Agreement.
1.23 "Loan Amount" shall mean the amount of Eight Million Five Hundred
Thousand and 00/100 Dollars ($8,500,000.00).
1.24 "Loan Documents" shall mean the Note, this Agreement and any other
documents or instruments executed or delivered to further evidence or secure the
Loan, including the Collateral Security Documents and the other documents and
instruments described in Section 3.2 below, as the same may be modified,
amended, extended, supplemented or restated.
1.25 "Loan Party" shall mean Borrower, each Guarantor and each other
Person that from time to time is or becomes obligated to the Bank under any Loan
Document.
1.26 "Material Adverse Occurrence" shall mean any occurrence of
whatsoever nature (including, without limitation, any adverse determination in
any litigation, arbitration or governmental investigation or proceeding) which
in Bank's reasonable judgment materially adversely affects (i) the present or
prospective financial condition or operations of a Loan Party or (ii) the
ability of a Loan Party to perform its obligations under the Loan Documents,
including without limitation, the occurrence of any event of dissolution or
termination of any Loan Party, or (iii) the operations or value of the Mortgaged
Properties, and remains unsatisfied or is not discharged or eliminated after
thirty (30) days following written notice from the Bank.
1.27 "Maturity Date" shall mean the earlier of (i) a date six (6)
months after the date hereof, unless extended in accordance with Section 2.2
below or (ii) the date on which the Loan is accelerated as a consequence of an
Event of Default.
1.28 "Mortgages" shall mean, individually and collectively, mortgages,
deeds of trust, and assignments of leases and rents executed in connection with
or securing any Mortgage Loan or Mortgage Note listed on Exhibit A attached
hereto, as the same may from time to time be extended, renewed or modified.
1.29 "Mortgage Loan Documents" shall mean, individually or
collectively, the Mortgage Notes, the Mortgages, and all other promissory notes,
documents, agreements, mortgages, deeds of trust, assignments of leases and
rents and security agreements, collateral assignments, guarantees, pledges,
letters or credit, chattel paper and similar instruments evidencing or securing
or delivered in connection with a Mortgage Loan.
1.30 "Mortgage Loan" shall mean any of those certain loans in the
initial principal amount of $4,601,566.14, made by Lost Dutchman Parks, LLC, to
the order of Operating Partnership, evidenced by the Mortgage Note dated July
30, 1997, and that certain loan in the initial principal amount of
$5,500,000.00, made by Xxxxxx Xxxxxx to the order of Eastrich Multiple Investor
Fund, L.P., evidenced by the Mortgage Note dated April 15, 1994, and that
certain loan in the initial principal amount of $600,000.00, made by Lost
4
Dutchman Parks, LLC, to the order of AIOP Lost Dutchman Notes, L.L.C., each as
more particularly described in Exhibit A attached hereto.
1.31 "Mortgage Loan Borrower" shall mean Lost Dutchman Parks, LLC, an
Arizona limited liability company, the fee simple owner of the Mortgaged
Property, and its permitted successors and assigns under the Mortgage Loan
Documents.
1.32 "Mortgage Notes" shall mean individually and collectively, the
promissory notes evidencing the Mortgage Loans made by various persons and
entities and endorsed to the order of the Borrower listed on Exhibit A attached
hereto as the same may from time to time be extended, renewed or modified.
1.33 "Mortgaged Properties" shall mean any of the real property and
improvements described on Exhibit B attached hereto which are encumbered by the
Mortgage Loan Documents.
1.34 "Multiemployer Plan" shall mean a multiemployer plan, as that term
is defined in Section 4001(a)(3) of ERISA, which is maintained (on the Closing
Date, within the five years preceding the Closing Date, or at any time after the
Closing Date) for employees of any Borrower and/or any ERISA Affiliate.
1.35 "Note" shall mean the Promissory Note dated as of the date hereof
executed by Borrower payable to the order of the Bank in an amount equal to the
Loan Amount, evidencing the Loan, as the same may be modified, amended,
extended, supplemented or restated.
1.36 "Obligations" shall mean the obligations of payment and
performance by Borrower in connection with the Loan as evidenced by the Note,
this Agreement, and the Loan Documents.
1.37 "PBGC" shall mean the Pension Benefit Guaranty Corporation,
established pursuant to Subtitle A of Title IV of ERISA, and any successor
thereto or to the functions thereof.
1.38 "Person" shall mean any natural person, corporation, limited
liability company, partnership, joint venture, firm, association, trust,
unincorporated organization, government or governmental agency or political
subdivision or any other entity, whether acting in an individual, fiduciary or
other capacity.
1.39 "Plan" shall mean each employee benefit plan (whether in existence
on the Closing Date or thereafter instituted), as that term is defined in
Section 3 of ERISA, maintained for the benefit of employees, officers or
directors of Borrower and/or of any ERISA Affiliate.
1.40 "Prohibited Transaction" shall mean the respective meanings
assigned to that term in Section 4975 of the Code and Section 406 of ERISA.
5
1.41 "Reportable Event" shall mean a reportable event as defined in
Section 4043 of ERISA and the regulations issued under such Section, with
respect to a Plan, excluding, however, the events as to which the PBGC by
regulation has waived the requirement of Section 4043(a) of ERISA that it be
notified within 30 days of the occurrence of such event, provided that a failure
to meet the minimum funding standards of Section 412 of the Code and of Section
302 of ERISA shall be a Reportable Event regardless of the issuance of any
waivers in accordance with Section 412(d) of the Code.
1.42 "Security Agreement" shall mean that certain Collateral
Assignment, Pledge and Security Agreement executed by Borrower for the benefit
of Bank, granting the Bank a first lien interest in the Collateral described
therein.
Other terms defined herein shall have the meaning ascribed to them
herein.
ARTICLE 2.
THE LOAN
In reliance upon the representations and warranties contained in this
Agreement, and subject to the terms and conditions of this Agreement and the
Loan Documents, Bank hereby agrees to loan to the Borrower a sum of
$8,500,000.00 under the terms set forth herein, to be advanced and disbursed by
the Bank in accordance with this Agreement.
2.1 The Loan.
(a) Type of Loan: The Loan shall be for the purposes of allowing
Borrower to refinance approximately $8,500,000.00 in existing debt. The Loan is
a non-revolving, single-advance, loan. Amounts advanced under the Loan may not
be reborrowed after being repaid.
(b) Term: The Loan shall have a term which commences as of the date
hereof and expires on the Maturity Date, unless extended in accordance with the
terms of Section 2.2 below.
(c) Interest and Payment: The Loan shall bear interest on the
outstanding principal balance at the interest rate described in the Note, and
shall be payable as further provided in the Note. Any prepayment of the
principal balance of the Note in excess of the scheduled principal payments
shall be subject to the prepayment indemnity described in the Note, if
applicable.
(d) Evidence of Obligations Under Loan. Amounts outstanding under
the Loan and the Borrower's Obligations to the Bank in connection with the Loan
shall be evidenced by the Note and this Agreement. All documentation evidencing
the foregoing shall be in form and substance satisfactory to the Bank.
2.2 Extension Period. Borrower is entitled to extend the Maturity Date
to April 15, 2001, ("Extension Period") upon satisfaction of the conditions
precedent set forth in this section. From and after the first (1st) day of the
6
Extension Period (the "Conversion Date"), the principal balance of the Note
shall bear interest at the Adjusted Eurodollar Rate as defined in and further
described in the Note. Interest shall be payable monthly in arrears commencing
on the first (1st) day of the month immediately following the month in which the
Conversion Date occurs and continuing on the first (1st) day of each month
thereafter, and concurrently with such interest payments, principal shall be
payable as provided in the Note. On the last day of the Extension Period (the
"Extended Maturity Date"), the entire outstanding principal balance of the Note,
together with all accrued but unpaid interest and all other sums due under the
Note, this Agreement or the other Loan Documents, shall be due and payable in
full.
(a) At least thirty (30) days prior to the Maturity Date, Borrower
shall give Bank written notice that Borrower desires to extend the Maturity Date
of the Loan;
(b) On the Conversion Date, no Event of Default shall have occurred
and be continuing or which with notice or lapse of time (or both) would become
an Event of Default shall have occurred and be continuing;
(c) On the Conversion Date, there shall have been no Material
Adverse Occurrence which is continuing;
(d) On the Conversion Date, there shall have been no breach in the
Financial Covenants (set forth in Article 6) which has occurred and is
continuing;
(e) On the Conversion Date, there shall have been no downgrade in
the investment rating of Corporation by Xxxxx'x or Standard and Poor's or any
other national investment rating service;
(f) On or prior to the Conversion Date, Borrower shall pay to the
Bank an extension fee in an amount equal to one-quarter of one percent (.25%) of
the principal balance of the Loan as of the Conversion Date, which, upon
payment, shall be fully earned by the Bank and nonrefundable to Borrower.
2.3 Default Rate/Late Charges. Upon the occurrence of an Event of
Default under the Loan, the Bank shall have the right to collect interest on the
outstanding principal balance under the Loan at a rate of interest equal to the
greater of (i) eighteen percent (18%) per annum or (ii) five percent (5%) per
annum in excess of the Base Rate ("Default Rate"); provided that any interest at
the Default Rate which has accrued shall be paid at the time of and as a
condition precedent to the curing of any Default under the Loan. In the event
any payment of principal, interest, or other sum due in connection with the Loan
is not made within five (5) days after the due date, the Bank may, at its
option, require the payment of a late charge in the amount of four percent (4%)
of the delinquent sum ("Late Charge").
7
ARTICLE 3.
CONDITIONS PRECEDENT TO CLOSING
The Bank's obligation to make the Loan and to enter into and perform
its agreements under this Agreement shall be subject to the full and complete
satisfaction of the following conditions precedent, including receipt and
approval by the Bank of the following agreements, documents and instruments,
each in form and substance satisfactory to the Bank, in each case as determined
by the Bank in its sole and absolute discretion, at the time of closing of the
Loan ("Closing") and subsequently:
3.1 Representations and Warranties Accurate. The representations and
warranties by each Loan Party in the Loan Documents shall be correct on and as
of the date of this Agreement.
3.2 Loan Documents. The Bank shall have received and approved fully
executed copies of the following Loan Documents which shall have been duly
authorized, executed (and, where appropriate, acknowledged), and delivered by
the parties thereto and any and all other documents as Bank may deem reasonably
necessary with respect to the Loan;
(a) Agreement. This Agreement, duly executed by Bank and Borrower;
(b) Note. The Note, duly executed by Borrower;
(c) Security Agreement. The Security Agreement, duly executed by
Borrower, encumbering the Collateral.
(d) Assignment of Membership Interests. The Assignment of
Membership Interests, duly executed by Operating Partnership.
(e) Collateral Assignment of Mortgage Loan Documents. The
Collateral Assignment of Mortgage Loan Documents, duly executed by Borrower.
(f) Guarantee. The Guarantee, duly executed by each Guarantor.
(g) Financing Statements. The UCC-1 financing statements required
to perfect the Bank's first lien interest in the Collateral as evidenced by the
Collateral Security Documents.
(h) Original Documents. The original Mortgage Notes, together with
an Allonge executed by Borrower to the order of the Bank, and the original
Mortgage Loan Documents.
(i) Other Documents. Such other collateral documents as Bank may
from time to time reasonably require to further evidence or perfect the Bank's
security interests in the Collateral or the grant to the Bank of a lien or
security interest in subsequently acquired Collateral.
8
3.3 Review Items. The Bank shall have received and approved the
following:
(a) Financial Statements. Certified financial statements of the
Borrower and Guarantors, as specified in Section 5.1 below.
(b) Opinions. Legal opinions ("Legal Opinions") of independent
counsel for each Loan Party with respect to the Loan Documents, in form and
substance satisfactory to the Bank opining that (i) that each Borrower is duly
organized, existing, and in good standing under the laws of the jurisdiction in
which it is incorporated and has duly qualified to transact business in all
states in which it transacts business or its property is located, (ii) that the
transaction described in the opinion and the execution and delivery of the
documentation evidencing such transaction and the performance of obligations
thereunder have been duly authorized by all necessary parties, (iii) that the
transaction documents are legal, valid and binding in accordance with their
terms, subject to customary exceptions, (iv) concerning such other legal matters
as the Bank may require regarding the specific transaction and the absence of
conflicts with the governing documents of the entity or any other agreement,
instrument or governmental order or rule to which the entity is subject and the
absence of any material litigation against the entity which would materially
adversely affect the entity's ability to perform its legal obligations under the
transaction documents, and (v) such other opinions specific to the entity or the
transaction as the Bank may reasonably require.
(c) Certification of Mortgage Loan Borrower. A certification by the
Mortgage Loan Borrower regarding the outstanding principal balance of each
Mortgage Note, the absence of defaults by the holder of the Mortgage Notes and
rights of offset against the holder of the Mortgage Notes, certain information
regarding the Mortgaged Properties and the income and expenses associated
therewith, and other information reasonably required by the Bank to evaluate the
status of the Mortgaged Properties.
(d) Environmental Audits. A Phase I environmental audit of the
Mortgaged Properties prepared by an environmental engineering company
satisfactory to the Bank and in substance satisfactory to the Bank, regarding
the environmental conditions affecting the Mortgaged Properties, which audits
shall be prepared for the Bank or shall be accompanied by a reliance letter in
favor of the Bank.
(e) Zoning. Evidence of compliance of the Mortgaged Properties with
zoning restrictions, which evidence may include a zoning certificate from the
applicable Governmental Entity in form and substance acceptable to the Bank
and/or a zoning opinion from independent counsel for Borrower regarding
compliance of the Mortgaged Properties with zoning laws.
(f) Appraisal. A current appraisal of the Property ("Appraisal")
prepared by an appraiser, licensed by the State of Arizona, engaged by and
acceptable to Bank, which appraisal shall determine the market value of the
Property in its current as-is condition and shall comply with (1) Title XI of
the Federal Financial Institution Reform, Recovery and Enforcement Act of 1989
(FIRREA); (2) the OCC Appraisal Standards of 12 CFR, part 34; and (3) the Code
9
of Professional Ethics and Standards of Professional Practice of the American
Institute of Real Estate Appraisers and the Guidelines for Real Estate Appraisal
Policies and Review Procedures adopted by the bank supervision offices of the
Federal Deposit Insurance Corporation, the Office of Thrift Supervision (OTS),
Board of Governors of the Federal Reserve System and the Office of the
Comptroller of the Currency as of December 14, 1987 and shall be in form and
substance satisfactory to the Bank;
(g) Taxes. Borrower shall provide a treasurer's tax certificate
disclosing that no general and special taxes or assessments encumbering the
Mortgaged Properties are delinquent ("Tax Certificate"). All taxes, fees and
other charges in connection with the execution, delivery and recording of the
Loan Documents shall have been paid, and all delinquent taxes, assessments or
other governmental charges or liens affecting the Mortgaged Properties, if any,
shall have been paid.
3.4 Title and Other Matters. Title to the Mortgaged Properties, the
legal description of the Mortgaged Properties, and all documents and other
matters relating in any way to the Loan or to the Mortgaged Properties must be
to the satisfaction of Bank. At Borrower's expense, Borrower shall furnish Bank
with a 1992 ALTA Mortgagee's Policy of Title Insurance (Form 1970 or Form 1992
Revised 10-23-92 with the exclusion for creditors rights and arbitration
requirements deleted) (the "Title Policy"), in the face amount of the Loan,
insuring the deed(s) of trust encumbering the Mortgaged Properties as a first
lien on a good and marketable fee simple title to the Mortgaged Properties,
together with endorsements as Bank may require, including 110.7 (Variable Rate),
deletion of standard exceptions 1 through 4, containing no exceptions other than
those Bank approves, issued in substance and in form by a company or companies
acceptable to Bank. Alternatively, the Bank will consider appropriate
endorsements to any existing Title Policies covering the Mortgaged Properties
insuring the present interests of Borrower.
3.5 Insurance. Borrower shall maintain or cause Mortgage Loan Borrower
to maintain and shall deposit or cause to be deposited with the Bank original
certificates of insurance policies issued by insurance companies with current
Best's Key Ratings of not less than A/V and written in form and content
acceptable to Bank, with appropriate mortgagee clauses in favor of Bank,
providing the following minimum insurance coverages:
(a) Commercial general public liability insurance in an amount not
less than $2,000,000.00 (combined single limit for bodily injury and property
damage) and an umbrella excess liability coverage in an amount not less than
$10,000,000.00 shall be in shall be in effect with the Bank named as an
additional insured. Such liability policy must provide comprehensive general
liability insurance with coverages for Property and Operations, Products and
Completed Operations, Blanket Contractual Liability, Personal Injury Liability,
Broad Form Property Damage (including completed operations), Explosion Hazard,
Collapse Hazard and Underground Property Damage Hazard. Such policies must be
written on an occurrence basis so as to provide blanket contractual liability,
broad form property damage coverage, and coverage for products and completed
operations. Liability insurance under this paragraph may be provided under a
10
blanket policy which specifically refers to the Mortgaged Properties.
(b) Worker's Compensation Insurance covering all persons engaged in
the operation of the Mortgaged Properties.
(c) If the Mortgaged Properties, or any part thereof, lies within a
"special flood hazard area" as designated on maps prepared by the Department of
Housing and Urban Development, a National Flood Insurance Association standard
flood insurance policy, plus insurance from a private insurance carrier, if
necessary, for the duration of the Loan in the amount of the full insurable
value of the completed Improvements.
(d) Fire and extended coverage property damage insurance,
including, but not limited to all risk insurance, in an amount equal to the full
replacement value of the improvements located on the Mortgaged Properties,
without coinsurance or deducting for depreciation, containing a waiver of
subrogation clause and a deductible amount acceptable to Bank, with the Bank
named as an additional insured and as a loss payee;
(e) Business interruption or rent loss insurance in an amount
satisfactory to Bank;
(f) Boiler and machinery insurance when risks covered thereby are
present and Bank requires such insurance;
(g) Such other insurance coverages and/or increased coverage
amounts as may be required by the Bank.
Notwithstanding the above, both Borrower and Mortgage Loan Borrower shall
maintain and provide to Bank original certificates of insurance evidencing
comprehensive general public liability coverage and umbrella excess liability
coverage as described in 3.5(a) above. Each of the foregoing policies shall
contain a clause requiring thirty (30) day notice to Bank of cancellation,
termination or material modification. Borrower shall provide proof of premiums
paid and, throughout the term of the Loan, shall provide evidence to Bank no
later than thirty (30) days prior to expiration of each annual policy of payment
of renewal premiums and continuation of insurance coverage.
3.6 Survey. Borrower shall have furnished to Bank, at Borrower's
expense, a current improvement survey plat ("Survey") of the Mortgaged
Properties acceptable to Bank and the title insurance company issuing the Title
Policy (the "Title Company") indicating, without limitation, that all
foundations or other improvements currently constructed, if any, are located
within the lot lines, without infringement on established easements or
rights-of-way and not in violation of any ordinance including zoning ordinances
which impose lot line setback requirements and parking requirements. The survey
shall show the legal description of the Mortgaged Properties as it will be
insured by the Title Company, the courses and distances of the Mortgaged
Properties lot lines, all appurtenant and servient easements, setbacks, building
lines and width of abutting streets, distance to nearest intersecting streets
11
affording ingress and egress to and from the Mortgaged Properties, and the
location and dimensions of all encroachments, improvements, above or below
ground easements and utilities, and designated parking spaces. The surveyor
shall also certify whether or not any portion of the Improvements is located
within a Federal Emergency Management Agency identified flood-prone area of a
community and if located thereon, state the map number and whether or not the
Mortgaged Properties appears in the "Flood Hazard Area." The survey must be
certified as accurate by a licensed surveyor in the State of Arizona and contain
a certificate imprinted thereon in the form approved by the American Land Title
Association stating that the survey is made for the benefit of the Bank and the
Title Company.
3.7 Corporation, Limited Liability Company, or Operating Partnership
Documents. If any Loan Party is a corporation, a limited liability company, or a
partnership, certified copies of i) resolutions of its board of directors or, if
all managers or all general partners do not sign the Loan Documents, resolutions
of the managers of the limited liability company or partners of the partnership,
as the case may be, authorizing such Loan Party to execute, deliver, and perform
its obligations under the Loan Documents and certifying the names and signatures
of the officer(s), member(s), manager(s), or partner(s), as the case may be, of
such Loan Party authorized to execute the Loan Documents and, ii) the
certificate of incorporation and bylaws, limited liability company operating
agreement, or partnership agreement, as the case may be, of such Loan Party and
all amendments thereto, iii) if any Loan Party is a general partnership or joint
venture, the filed or recorded fictitious name certificate for such Loan Party
and all amendments thereto, iv) if any Loan Party is a limited partnership, the
filed or recorded certificate of limited partnership of such Loan Party and all
amendments thereto, and v) a certificate of good standing as a corporation,
limited liability company, or limited partnership, as the case may be, from the
jurisdiction of formation or organization of such Loan Party, and if such
jurisdiction is not the State of Colorado, a certificate of qualification as a
foreign corporation, limited liability company, or limited partnership, as the
case may be, authorized to transact business in the State of Colorado.
3.8 Loan Costs. Borrower shall have produced evidence satisfactory to
Bank of the payment of all fees, assessments and charges incurred under the Loan
and in connection with the negotiation, documentation, analysis or funding of
the Loan, including, but not limited to, the loan fees agreed herein to be paid
to the Bank; any other charges for appraisals, surveys, environmental audits,
title insurance and endorsement premiums and recording fees, and attorneys'
fees, (including the fees of Xxxxxxx Xxxxxx LLP, (counsel for Bank) (the "Loan
Costs").
3.9 Original Mortgage Loan Documents. Borrower shall deliver to the
Bank the original Mortgage Loan Documents assigned and pledged under the
Collateral Security Documents.
3.10 Other Actions. The Borrower and Guarantors shall have performed
such other actions as the Bank may reasonably require.
12
ARTICLE 4.
REPRESENTATIONS, WARRANTIES AND COVENANTS
In order to induce Bank to make the Loan, each Loan Party, for itself,
represents, warrants and covenants as follows, which representations, warranties
and covenants shall be true and correct as of the execution hereof and shall
survive the execution and delivery of the Loan Documents:
4.1 Organization of Loan Party; Authority to Enter into Agreement.
Borrower is a limited liability company, duly formed and validly in existence
and in good standing under the laws of the State of Delaware. Operating
Partnership is a limited partnership, duly formed and validly in existence and
in good standing under the laws of the State of Delaware. Corporation is a
corporation, duly formed and validly in existence and in good standing under the
laws of Maryland. Each Loan Party is duly qualified to do business and is in
good standing in each jurisdiction where the nature of its business makes such
qualification necessary and where the failure to so qualify permanently
precludes the Loan Party from enforcing its contracts. Each Loan Party has full
power and authority to enter into this Agreement, to borrow money as
contemplated herein and to execute and carry out the provisions of the Loan
Documents. The execution, delivery and performance of the Loan Documents have
been duly authorized by all necessary action of each Loan Party, and no other
action of the Loan Party is required for the execution, delivery and performance
of the Loan Documents. The Loan Documents which have been executed and delivered
pursuant to this Agreement constitute, or, if not yet executed or delivered,
will when so executed and delivered, constitute valid and binding obligations of
the Loan Party, each enforceable in accordance with its respective terms. Each
Loan Party holds all certificates of authority, licenses and permits necessary
to carry on its business as presently conducted in each jurisdiction in which it
is carrying on such business.
4.2 No Violation of Other Agreements; No Default. The execution,
delivery and performance by the Loan Party of the Loan Documents will not (a)
violate any provision of any Governmental Regulation or any order, writ,
judgment, injunction, decree, determination or award of any court, governmental
agency or arbitrator presently in effect having applicability to the Loan Party,
(b) violate or contravene any provision of the constituent documents of the Loan
Party, or (c) result in a breach of or constitute an event of default under any
indenture, deed of trust, mortgage, loan or credit agreement, note or, except as
specifically identified to the Bank in writing, any other agreement, lease or
instrument to which the Loan Party is a party or by which it or any of its
properties may be bound or result in the creation of any lien or security
interest thereunder. The Loan Party is not in default under or in violation of
any such Governmental Requirement, order, writ, judgment, injunction, decree,
determination or award or any such indenture, loan or credit agreement or other
agreement, lease or instrument in any case in which the consequences of such
default or violation could have a material adverse effect on the business,
operations, properties, assets or condition (financial or otherwise) of the Loan
Party.
13
4.3 Economic Benefit. The execution and delivery by Bank of the Loan
Agreement and the extension of credit by the Bank thereunder constitutes an
economic benefit to each Loan Party at least equal to the amount of each of its
obligations hereunder and each Loan Party has received fair equivalent value by
the extension of the credit facility described in this Agreement and the funding
of the Loan in exchange for the Liens granted by the Loan Party to the Bank
under the Collateral Security Documents.
4.4 Government Consents. No order, consent, approval, license,
authorization or validation of, or filing, recording or registration with, or
exemption by, any Governmental Entity is required on the part of any Loan Party
to authorize, or is required in connection with the execution, delivery and
performance of, or the legality, validity, binding effect or enforceability of,
the Loan Documents, except for any necessary filing or recordation of or with
respect to any of the Collateral Security Documents.
4.5 Solvency. The fair value of each Loan Party's assets is greater
than its debts, and the fair value of each Loan Party's assets will continue to
be greater than its debts after the transactions contemplated in the Loan
Documents.
4.6 Good Faith; Bankruptcy. This Loan Agreement is executed in good
faith by each Loan Party and is not given or intended to hinder, delay or
defraud any creditor or to contravene any of the bankruptcy laws of the United
States (11 U.S.C. Section 101, et seq.), or any other applicable laws. As of the
date of the execution of this Loan Agreement, no Loan Party is the subject of a
pending bankruptcy case. No Loan Party is aware of any threatened bankruptcy
case, nor is any Loan Party presently intending to file such a case.
4.7 Financial Statements. Any loan applications, financial statements,
supporting schedules, and financial reports heretofore delivered to the Bank in
connection with the Loan Documents by or on behalf of each Loan Party are true
and correct in all material respects, and, as to each Loan Party, have been
prepared in accordance with GAAP, consistently applied, and fairly represent the
respective financial conditions of the subjects thereof as of the dates thereof
and for the periods covered thereby, and no Material Adverse Occurrence has
occurred in the financial conditions presented therein since the respective
dates thereof. Each Loan Party agrees to promptly notify Bank in the event that
any such documentation or information is later discovered by the Loan Party to
be materially inaccurate.
4.8 No Litigation. There are no actions, suits or proceedings pending,
or to the knowledge of the Loan Party threatened against or affecting the Loan
Party, or any of the property or assets of the Loan Party, in any court at law
or in equity, or before or by any governmental or municipal authority which
might materially adversely affect the ability of the Loan Party to perform its
respective obligations hereunder or under any of the Loan Documents to which the
Loan Party is a party.
4.9 Marketable Title. Each Loan Party has good and marketable title to
all of its assets which secure repayment of the Note, free and clear of all
Liens securing or evidencing a monetary obligation or containing provisions by
14
which title could be divested by an event of default or the passage of time.
4.10 Compliance With Documents. As of the date hereof and for so long
as the Loan Documents remain in effect, each Loan Party is and will remain in
full compliance with all of the terms and conditions of this Agreement and the
Loan Documents, and no Default has or shall have occurred or shall have occurred
and be continuing, which, with the lapse of time or the giving of notice, or
both, would constitute an Event of Default under the foregoing.
4.11 Mortgage Loan Document Representations. Borrower and Guarantor
hereby represent the following with respect to the Mortgage Loan Documents:
(a) As of December 28, 1998, the total outstanding principal
balance of Note # 1 (defined in Exhibit A) is $5,007,972.82, including accrued
but unpaid interest at the Pay Rate (defined in Note #1) and accrued but
capitalized interest in the amount of the difference between interest paid at
the Pay Rate of nine percent (9%) per annum and interest accrued but capitalized
at the note rate of fifteen percent (15%) per annum as more particularly
described in Note #1;
(b) As of December 28, 1998, the total outstanding principal
balance of Note # 2 (defined in Exhibit A) is $5,440,421.68, including accrued
but unpaid interest at the rate of ten percent (10%) per annum pursuant to the
Assumption Agreement and Note Modification, dated July 30, 1997.
(c) As of December 28, 1998, the total outstanding principal
balance of Note #3 (defined in Exhibit A) is $262,432.40, including accrued but
unpaid interest at the rate of fifteen percent (15%) per annum.
(d) As of the date hereof, (a) the provisions of the Mortgage Notes
and the Mortgage Loan Documents are in full force and effect and have not been
amended or changed in any manner, (b) there are no defaults or events of default
now existing under the terms of the Mortgage Notes or any Mortgage Loan
Documents, and (c) Mortgage Loan Borrower has no defenses, claims or offsets
against full enforcement of the Mortgage Notes and Mortgage Loan Documents
according to their terms.
(e) There are no unwritten or oral agreements with respect to the
Mortgage Loan Documents, except the oral waiver by Operating Partnership or its
agent of Mortgage Loan Borrower's obligations under the Loan, Security and Lock
Box Agreement, dated July 30, 1997, as amended by Amended and Restated Loan,
Security and Lockbox Agreement dated December 1, 1998, described on Exhibit A
regarding payment of rents into a lockbox account for the benefit of the holder
of the Mortgage Notes.
4.12 Responsible Parties. Each Loan Party acknowledges and agrees that
the acts of the Authorized Officer are the acts of each Loan Party and that the
representations, warranties, covenants and agreements of each Borrower in this
Agreement and the Loan Documents shall be deemed to be those of the other Loan
Parties.
15
4.13 Use of Proceeds. The proceeds of the Loan will be used by the
Borrower solely for the purposes permitted under this Agreement. The proceeds of
the Loan shall not be used to make loans to, or investments in, or purchases of
any corporation, partnership, joint venture, or third party.
4.14 Margin Stock. No part of the proceeds of the Loan shall be used at
any time by the Borrower to purchase or carry margin stock (within the meaning
of Regulation U promulgated by the Board of Governors of the Federal Reserve
System) or to extend credit to others for the purpose of purchasing or carrying
any margin stock. The Borrower is not engaged principally, or as one of its
important activities, in the business of extending credit for the purpose of
purchasing or carrying any such margin stock. No part of the proceeds of the
Loan hereunder will be used by the Borrower for any purpose which violates, or
which is inconsistent with, any regulations promulgated by the Board of
Governors of the Federal Reserve System.
4.15 Taxes. Each Loan Party has filed all federal, state and local tax
returns required to be filed and has paid or made provision (as required by
GAAP) for the payment of all taxes due and payable pursuant to such returns and
pursuant to any assessments made against it or any of its property and all other
taxes, fees and other charges imposed on it or any of its property by any
Governmental Entity (other than taxes, fees or charges the applicability, amount
or validity of which is currently being contested in good faith by appropriate
proceedings and with respect to which reserves in accordance with GAAP have been
provided on the books of each Loan Party). No tax liens have been filed and no
material claims are being asserted with respect to any such taxes, fees or
charges. The charges, accruals and reserves on the books of each Loan Party in
respect of taxes and other governmental charges are adequate, and each Loan
Party knows of no proposed material tax assessment against it or any basis
therefor.
4.16 Trademarks, Patents. Each Borrower possesses or has the right to
use all of the patents, trademarks, trade names, service marks and copyrights,
and applications therefor, and all technology, know-how, processes, methods and
designs used in or necessary for the conduct of its business, without known
conflict with the rights of others.
4.17 Accuracy of Information. All factual information heretofore or
herewith furnished by or on behalf of each Loan Party to the Bank for purposes
of or in connection with this Agreement or any transaction contemplated hereby
is, and all other such factual information hereafter furnished by or on behalf
of each Loan Party to the Bank will be, true and accurate in every material
respect on the date as of which such information is dated or certified and no
such information contains any misstatement of fact or omits to state any fact
necessary to make the statements contained therein not misleading.
4.18 Representations and Warranties Upon Delivery of Financial
Statements, Documents and Other Information. Each delivery by a Loan Party to
Bank of financial statements, other documents, or information after the date of
16
this Agreement shall be a representation and warranty that such financial
statements, other documents, or information is correct and complete in all
material respects, that there are no omissions therefrom that result in such
financial statements, other documents, or information being incomplete,
incorrect, or misleading in any material respect as of the date thereof, and
that such financial statements accurately present the financial condition and
results of operations of the Loan Party in all material respects as at the dates
thereof and for the periods covered thereby.
4.19 Single Purpose Entity. Borrower is a single purpose entity and has
no ownership interest, directly or indirectly, in any other Person.
4.20 Survival of Representations. All representations, warranties and
covenants contained in this Article 4 shall survive the delivery of the Note and
the Loan Documents, and the making of the Loan evidenced thereby and any
investigation at any time made by or on behalf of the Bank shall not diminish
its rights to rely on all of such representations and warranties.
4.21 Year 2000 Compliance. The Borrower has reviewed and assessed its
business operations and computer systems and applications to address the "year
2000 problem" (that is, that computer applications and equipment used by the
Borrower, directly or indirectly through third parties, may be unable to
properly perform date-sensitive functions before, during and after January 1,
2000). The Borrower reasonably believes that the year 2000 problem will not
result in a material adverse change in the Borrower's business condition
(financial or otherwise), operations, properties or prospects or ability to
repay any indebtedness due to Bank.
The Borrower agrees that this representation will be true and correct
on each date the Borrower requests a loan or Advance or delivers information
under any credit agreement between Bank and Borrower.
In addition to the Events of Default in any of Borrower's agreements
with Bank, it will be an Event of Default under each such agreement if (a) any
representation in this Section 4.21 is false or misleading when made, or becomes
false or misleading at any time thereafter; (b) Borrower fails to perform or
comply with any term, condition or obligation set forth herein; or (c) there is
any material adverse change in Borrower's business condition (financial or
otherwise), operations, prospects or ability to repay Bank which relates to or
results from the year 2000 problem. The Borrower agrees to promptly deliver to
Bank such information relating to this representation as Bank may request from
time to time.
ARTICLE 5.
GENERAL COVENANTS
Each Loan Party agrees with the Bank that, so long as the Loan shall be
outstanding, unless the Bank shall otherwise consent in writing, each Guarantor
covenants and agrees as follows:
17
5.1 Financial Information. The Loan Parties will furnish to the Bank
copies of such of its financial statements, reports and information as may be
requested by the Bank, including, without limitation, the following financial
statements, reports and information, each of which shall be prepared on a
consolidated and consolidating basis for which no additional request shall be
required:
(a) As soon as available, and in any event within 120 calendar days
after the end of each fiscal year of each Guarantor, a copy of its audited
annual financial reports, and the 10K filing of Corporation with the Securities
and Exchange Commission;
(b) As soon as available, and in any event within forty-five (45)
calendar days after the end of each fiscal quarter of each Guarantor, a copy of
its unaudited financial statement and the Corporation's 10Q report filed with
the Securities and Exchange Commission;
(c) Within ten (10) days after filing, a copy of any filing
available to the public made by Corporation with the Securities and Exchange
Commission.
(d) As soon as available, and in any event within forty-five (45)
days after the end of each fiscal quarter, a compliance certificate ("Compliance
Certificate") signed by the Authorized Officer. Each Compliance Certificate
shall be in the form and substance satisfactory to the Bank, shall contain
detailed calculations of the financial covenants referred to in Article 6, and
shall contain statements by the Authorized Officer to the effect that, except as
explained in reasonable detail in such Compliance Certificate, (i) the attached
financial statements are complete and correct in all material respects (subject,
in the case of financial statements other than annual, to normal year-end audit
adjustments) and have been prepared in accordance with GAAP and applied
consistently throughout the periods covered thereby and with prior periods
(except as disclosed therein), (ii) all of the representations and warranties of
the Loan Parties contained in this Agreement and other Loan Documents are true
and correct as of the date of such certification is given as if made on such
date, and (iii) there is no Default or Event of Default. If any Compliance
Certificate delivered to the Bank discloses that a representation or warranty is
not true and correct, or that there is a Default or Event of Default, such
Compliance Certificate shall state what action Borrower has taken or proposes to
take with respect thereto.
5.2 Accounting System. Each Borrower shall maintain a system of
accounting established and administered in accordance with GAAP.
5.3 Security Interests. Borrower shall not create, incur, assume or
allow to exist any Liens upon all or any part of the Collateral, now owned or
hereafter acquired, except the Liens in favor of the Bank securing the
Obligations.
5.4 Notices. Each Loan Party, each for itself or himself, as soon as
practicable, shall give notice to the Bank of:
18
(a) The commencement of any uninsured litigation in excess of
$1,000,000.00 relating to any Loan Party or relating to the transactions
contemplated by this Agreement;
(b) The commencement of any material arbitration or governmental
investigation or proceeding not previously disclosed by the Loan Party to the
Bank in writing which has been instituted or, to the knowledge of the Loan
Party, threatened against any Loan Party or to which its properties or assets
are subject which, if determined adversely to the Loan Party would constitute a
Material Adverse Occurrence;
(c) Any adverse development which occurs in any litigation,
arbitration or governmental investigation or proceeding previously disclosed by
any Loan Party to the Bank which, if determined adversely to any Loan Party
would constitute a Material Adverse Occurrence;
(d) Any Event of Default under this Agreement or the Loan
Documents.
5.5 Books and Records, Periodic Audits. Each Borrower shall keep books
and records reflecting all of its business affairs and transactions in
accordance with GAAP and permit the Bank, and its representatives and agents at
reasonable times and intervals and upon reasonable notice to the Borrower, to
visit all of its offices, discuss its financial matters with officers of the
Borrower and its Independent Public Accountants (and by this provision the
Borrower authorizes its Independent Public Accountants to participate in such
discussions) and examine any of its books and other corporate records.
5.6 Corporate Existence. Each Borrower shall maintain its legal
existence in good standing under the laws of its jurisdiction of incorporation
and its qualification to transact business in each jurisdiction where failure to
qualify would permanently preclude the Loan Party from enforcing its rights with
respect to any material asset or would expose the Loan Party to any material
liability.
5.7 Inconsistent Agreements. No Loan Party shall enter into any
agreement containing any provision which would be violated or breached by the
Loan Party in the performance of its obligations under any Loan Document.
5.8 Compliance with Laws. Each Loan Party shall carry on its business
activities in substantial compliance with all Governmental Regulations and all
applicable rules, regulations and orders of all Governmental Entities having
power to regulate or supervise its business activities.
5.9 Conduct of Business. Each Loan Party shall maintain and keep its
assets, property and equipment in good repair, working order and condition and
from time to time make or cause to be made all needed renewals, replacements and
repairs.
5.10 Maintain Business. Each Loan Party shall continue to engage
primarily in the business being conducted on the date of this Agreement.
19
5.11 Payment of Taxes and Claims. Each Loan Party shall file all tax
returns and reports which are required by law to be filed by it and shall pay
before they become delinquent all taxes, assessments and governmental charges
and levies imposed upon it or its property and all claims or demands of any kind
(including but not limited to those of suppliers, mechanics, carriers,
warehouses, landlords and other like Persons) which, if unpaid, might result in
the creation of a Lien upon its property; provided that the foregoing items need
not be paid if they are being contested in good faith by appropriate
proceedings, and as long as each Loan Party's title to its property is not
materially adversely affected, its use of such property in the ordinary course
of its business is not materially interfered with and adequate reserves with
respect thereto have been set aside on its books in accordance with GAAP.
5.12 ERISA. Each Loan Party shall maintain each Plan in compliance with
all applicable requirements of ERISA and of the Code and with all material
applicable rulings and regulations issued under the provisions of ERISA and of
the Code and will not, and will not permit any of the ERISA Affiliates to, (a)
engage in any transaction in connection with which the Loan Party or any of the
ERISA Affiliates would be subject to either a civil penalty assessed pursuant to
Section 502(i) of ERISA or a tax imposed by Section 4975 of the Code, in either
case in an amount exceeding $50,000, (b) fail to make full payment when due of
all amounts which, under the provisions of any Plan, the Loan Party or any ERISA
Affiliate is required to pay as contributions thereto, or permit to exist any
accumulated funding deficiency (as such term is defined in Section 302 of ERISA
and Section 412 of the Code), whether or not waived, with respect to any Plan in
an aggregate amount exceeding $25,000.00 or (c) fail to make any payments in an
aggregate amount exceeding $25,000.00 to any Multiemployer Plan that the Loan
Party or any of the ERISA Affiliates may be required to make under any agreement
relating to such Multiemployer Plan or any law pertaining thereto.
5.13 Prohibition of Transfers in Violation of ERISA. In addition to the
prohibitions set forth in this Agreement, and not in limitation thereof,
Borrower shall not assign, sell, pledge, encumber, transfer, hypothecate or
otherwise dispose of its interest or rights in this Agreement or in any
Collateral, or attempt to do any of the foregoing or suffer any of the
foregoing, nor shall any party owning a direct or indirect interest in Borrower
assign, sell, pledge, encumber, transfer, hypothecate or otherwise dispose of
any of its rights or interest (direct or indirect) in Borrower, attempt to do
any of the foregoing or suffer any of the foregoing, if such action would cause
the Loan, or the exercise of any of the Bank's rights in connection therewith,
to constitute a prohibited transaction under ERISA or the Code (unless Borrower
furnishes to the Bank a legal opinion reasonably satisfactory to the Bank that
the transaction is exempt from the prohibited transaction provisions of ERISA
and the Code) or otherwise result in the Bank being deemed in violation of any
applicable provision of ERISA. Borrower agrees to indemnify and hold the Bank
free and harmless from and against all losses, costs (including reasonable
attorneys' fees and expenses), taxes, damages (including consequential damages)
and expenses the Bank may suffer by reason of the investigation, defense and
settlement of claims and in obtaining any prohibited transaction exemption under
ERISA necessary or desirable in the Bank's sole judgment or by reason of a
breach of the foregoing prohibitions.
20
5.14 Plans. The Loan Parties shall not permit any event to occur or
condition to exist which would permit any Plan to terminate under any
circumstances which would cause the Lien provided for in Section 4068 of ERISA
to attach to any assets of the Loan Parties; and the Loan Parties will not
permit the underfunded amount of Plan benefits guaranteed under Title IV of
ERISA to exceed $25,000.00 with respect to any Plan.
5.15 Loan Proceeds. No Loan Party shall use any part of the proceeds of
the Loan or any Advance directly or indirectly, and whether immediately,
incidentally or ultimately, (a) to purchase or carry margin stock (as defined in
Regulation U of the Board) or to extend credit to others for the purpose of
purchasing or carrying margin stock or to refund Indebtedness originally
incurred for such purpose, or (b) for any purpose which entails a violation of,
or which is inconsistent with, the provisions of Regulations G, U or X of the
Board.
5.16 Consolidation, Merger, Sale or Disposal of Assets. A Loan Party
shall not without the prior written approval from the Bank:
(a) acquire, consolidate or merge into or with any other entity; or
(b) sell, (other than sales of inventory in the ordinary course of
business) transfer, lease, or otherwise dispose of all, or substantially all, of
its assets during the term of this Agreement.
5.17 Indebtedness. Borrower shall not create, incur, assume, or allow
to exist any Indebtedness of any kind or description, except the following:
(a) Indebtedness to trade creditors incurred in the ordinary course
of business, to the extent that it is not overdue past the original due date by
more than ninety (90) days.
(b) The Obligations.
5.18 Sales, Mergers, and other Fundamental Changes. Except as may be
permitted by the Bank in its sole and absolute discretion, Operating Partnership
and Corporation shall not cause, suffer or permit, voluntarily or involuntarily,
Borrower or Operating Partnership to enter into or offer or agree to: (a) any
change in the legal or beneficial ownership of Operating Partnership or
Borrower; (b) any sale, lease, sublease, assignment, transfer, conveyance,
exchange, spin off or other disposition of, individually or in a series of
related transactions, assets or properties of Borrower; (c) any sale, lease,
sublease, assignment, transfer, conveyance, exchange, spin off or other
disposition of any asset, including, without limitation, any contract right,
general intangible or chose in action, which is material to the business
operations of Borrower; (d) any purchase or other acquisition by Borrower of all
or substantially all of the business, property or assets of, or equity interest
in, any Person or (e) a Change of Control. For purposes of this Agreement,
"change in the legal or beneficial ownership" shall include any transfer, sale,
assignment, conveyance, exchange, transfer in connection with a pledge or
hypothecation or the foreclosure of a pledge or hypothecation, transfer in
connection with a grant of rights or warrants or options or proxies with respect
21
to such ownership interests, merger, consolidation, reorganization, dissolution,
liquidation or winding up of such entity, creation of additional classes of
stock or equity interests, change in the rights associated with classes of
preferred stock to permit conversion to common or voting stock or to grant
voting rights, or any other act that would have the effect of altering or
diminishing the legal or beneficial ownership or any rights or duties with
respect thereto. Notwithstanding the foregoing, Operating Partnership shall be
entitled to changes in its legal or beneficial ownership provided that no such
changes shall impair or diminish the voting and managerial control by
Corporation of Operating Partnership.
5.19 Returned Payments. Each Loan Party agrees that, in the event any
payment made by or on behalf of any Loan Party respecting any Obligations, or
any portion any such payment, shall at any time be returned by the recipient
thereof for any reason, including pursuant to any order (whether or not final)
by a court of competent jurisdiction, any provision of the United States
Bankruptcy Code as now existing or hereafter amended, or any other applicable
federal or state law or because of acts or omissions of any Loan Party, the
Obligations shall not be deemed to have been satisfied to the extent of the
returned payment, and the obligations of each Loan Party shall be deemed to be
reinstated automatically and to continue in full force and effect.
5.20 Modification of Mortgage Loan Documents. Borrower shall not enter
into any agreement, written or verbal, purporting to modify, amend, waive,
defer, or release (in whole or in part) any obligations of the Mortgage Loan
Borrower under the Mortgage Loan Documents or any collateral for any obligations
under the Mortgage Loan Documents or any provision of the Mortgage Loan
Documents without the prior written consent of the Bank, which consent may be
withheld in the Bank's sole and absolute discretion.
5.21 Lock-Box Account. Pursuant to a Loan, Security and Lock Box
Agreement, dated July 30, 1997, by and among Mortgage Loan Borrower and
Operating Partnership ("Original Lock Box Agreement"), Mortgage Loan Borrower is
obligated to make or cause certain payments to be made into an account for the
benefit of Operating Partnership. The Loan Parties and the Mortgage Loan
Borrower have represented to the Bank that, by oral waiver, Mortgage Loan
Borrower is not currently obligated to comply with the provisions of the
Original Lock Box Agreement and, instead, Mortgage Loan Borrower is currently
making payments due under the Mortgage Loan Documents directly to Borrower. The
Original Lock Box Agreement has been amended by Amended and Restated Loan,
Security and Lockbox Agreement dated December 1, 1998 by and among Mortgage Loan
Borrower, Borrower and Xxxxxx Xxxxxx, as servicer (the "Amended Lock Box
Agreement"). Pursuant to the Amended Lock Box Agreement, Mortgage Loan Borrower
22
is obligated to make payments of gross income to the Servicer (defined in the
Amended Lock Box Agreement) for distribution in the manner described therein.
The Loan Parties agree that the rights, benefits and remedies of the Loan
Parties are being assigned to Bank under the Loan Documents, and upon the
occurrence of an Event of Default, Bank shall be entitled at its sole option to
require the Mortgage Loan Borrower to comply with the provisions of the Original
Lock Box Agreement or, alternately, to require substitution of the Servicer
under the Amended Lock Box Agreement and to require that Mortgage Loan Borrower
continue to comply with the provisions of the Amended Lock Box Agreement.
5.22 Further Assurances. Each Loan Party will at any time and from time
to time upon request of the Bank take or cause to be taken any action, execute,
acknowledge, deliver or record any further documents, opinions or other
instruments or obtain such additional insurance as Bank in its discretion deems
necessary or appropriate to carry out the purposes of this Agreement.
5.23 Mergers; Acquisitions. Neither Guarantor shall merge with any
other entity or dispose of any of its current subsidiaries without the prior
written consent of the Bank.
5.24 Operating Partnership Debt. Operating Partnership shall not incur
or assume any debts or other liabilities or obligations, other than the Loan and
other credit agreements with the Bank, non-recourse first mortgage loans on real
property owned by Operating Partnership, or indebtedness to trade creditors
incurred in the ordinary course of business, to the extent that it is not
overdue past the original due date by more than ninety (90) days.
ARTICLE 6.
FINANCIAL COVENANTS
6.1 Special Definitions. In this Article, the following terms shall
have the following meanings as to Operating Partnership:
(a) "Capital Expenditure" shall mean an expenditure for an asset
that must be depreciated or amortized under GAAP, for goodwill, or for any asset
that under GAAP must be treated as a capital asset, including payments under
Capital Leases.
(b) "Capital Lease" shall mean any lease that has been or should be
capitalized under GAAP.
(c) "Current Assets" shall have the meaning given that term in
accordance with GAAP.
(d) "Current Liabilities" shall have the meaning given that term in
accordance with GAAP, excluding, however, any outstanding principal under the
Loan or under any loan or credit facility to any Loan Party existing as of the
date of this Loan Agreement.
(e) "Current Ratio" shall mean the ratio of Current Assets to
Current Liabilities.
(f) "Debt Service Coverage Ratio" shall mean, as of any date of
determination, the quotient of (i) actual Net Operating Income for the Mortgaged
Properties for a period of twelve (12) calendar months prior to such date of
determination, divided by (ii) the amount of all principal and interest payments
required to be made during such period in respect of a loan that (x) has a
23
principal balance that is (1) equal to the outstanding principal balance of the
Loan as of such date of determination, and (2) fully payable in equal monthly
installments over an amortization period of twenty (20) years commencing upon
the date of determination, and (y) bears interest at an annual rate of eight
percent (8%).
(g) "EBITDA" means, for any period of calculation, an amount equal
to the sum of (i) Net Income, (ii) federal, state and local income tax expense,
(iii) Interest Expense, (iv) losses on the sale or other disposition of assets,
(v) depreciation and amortization, and (vi) extraordinary losses, minus (a)
gains on the sale or other disposition of assets, and (b) extraordinary gains,
each calculated for such period.
(h) "Indebtedness" shall mean, as to any Person at any particular
date, any contractual obligation enforceable against such Person (i) to repay
borrowed money; (ii) to pay the deferred purchase price of property or services;
(iii) to make payments or reimbursements with respect to letters of credit
whether or not there have been drawings thereunder; (v) with respect to which
there is any security interest in any property of such Person; (vi) to make any
payment or contribution to a Multi-Employer Plan; (vii) that is evidenced by a
note, bond, debenture or similar instrument; and (viii) under any conditional
sale agreement or title retention agreement.
(i) "Indirect Obligation" shall mean, as to any Person, (a) any
guaranty by such Person of any obligation of another Person; (b) any security
interest in any property of such Person that secures any obligation of another
person; (c) any enforceable contractual requirement that such person (i)
purchase an obligation of another Person or any property that is security for
such obligation; (ii) advance or contribute funds to another Person for the
payment of an obligation of such other Person or to maintain the working
capital, net worth or solvency of such other Person as required in any documents
evidencing an obligation of such other Person; (iii) purchase property,
securities or services from another person for the purpose of assuring the
beneficiary of any obligation of such other Person that such other Person has
the ability to timely pay or discharge such obligation; (iv) grant a security
interest in any property of such Person to secure any obligation of another
Person; or (v) otherwise assure or hold harmless the beneficiary of any
obligation of another Person against loss in respect thereof; and (d) any other
contractual requirement enforceable against such person that has the same
substantive effect as any of the foregoing. The term "Indirect Obligation" does
not, however, include the endorsement by a Person of instruments for deposit or
collection in the ordinary course of business or the liability of a general
partner of a partnership for obligations of such partnership. The amount of any
Indirect Obligation of a Person shall be deemed to be the stated or determinable
amount of the obligation in respect to which such Indirect Obligation is made
or, if not stated or determinable, the maximum reasonable anticipated liability
in respect thereof as determined by such Person in good faith.
(j) "Intangible Assets" means: (a) patents, copyrights, trademarks,
tradenames, franchise, license agreements, goodwill, and other similar
intangibles; (b) unamortized debt discount and expenses; and (c) fixed assets to
the extent of any write-up in the book value thereof resulting from a
24
revaluation effective after the date of this Loan Agreement.
(k) "Interest Expense" means, for any period of calculation, all
interest, whether paid in cash or accrued as a liability, without duplication,
on Indebtedness or Indirect Obligations of any Person during such period.
(l) "Liabilities" shall have the meaning given that term in
accordance with GAAP.
(m) "Liquidity" shall mean available unrestricted cash or cash
equivalents, but not including any receivables of United or a Subsidiary from
any other Subsidiary.
(n) "Mandatory Debt Retirement and Interest" shall mean, at any
date of determination, the sum of all mandatory payments of principal and
interest (including payments due in connection with any Capital Lease) due
during the period of twelve (12) months from the date of determination.
(o) "Net Income" shall have the meaning given that term in
accordance with GAAP.
(p) "Net Operating Income" shall mean, as of any date of
determination, the aggregate actual rental income received by Mortgage Loan
Borrower during the prior twelve (12) calendar months from leases or other
occupancy agreements regarding the Mortgaged Properties, less the actual
operating expenses of the Mortgaged Properties paid or to be paid by Mortgage
Loan Borrower for such period (including annual real estate taxes and
assessments, annual insurance premiums), provided that Net Operating Income
shall be determined without deduction for depreciation, amortization, Mortgage
Loan Borrower's income and franchise taxes, Mortgage Loan Borrower's debt
service payments under the Mortgage Loans, capital expenditures and other costs
and expenses which would not be expenses deductible from net operating income
under GAAP.
(q) "Tangible Net Worth" means as of any date, total assets of the
Person as determined in accordance with GAAP, minus the sum of (i) Liabilities
and (ii) Intangible Assets.
6.2 Guarantors' Financial Covenants. As of the Conversion Date and
until the Loan and all indebtedness hereunder has been paid in full and all
Obligations hereunder have been fully discharged, each Loan Party covenants and
agrees as follows:
(a) Minimum Tangible Net Worth. The consolidated Tangible Net Worth
of Operating Partnership shall not fall below $70,000,000.00, at any time.
(b) Ratio of Current Assets to Current Liabilities. The ratio of
Current Assets to Current Liabilities of Operating Partnership shall not fall
below 2.0 to 1, at any time.
25
(c) Cash Flow Coverage. The ratio of EBITDA of Operating
Partnership to Mandatory Debt Retirement and Interest Payments of Operating
Partnership determined over the prior four (4) quarters shall not fall below 2.0
to 1, at any time.
(d) Debt Service Coverage Ratio. The Debt Service Coverage Ratio
for the Mortgaged Properties shall not fall below 1.25 at any time.
6.3 Compliance Certificate. Within forty-five (45) days after the close
of each calendar quarter the Authorized Officer shall execute and deliver to
Bank a Compliance Certificate, in the form and substance satisfactory to the
Bank, confirming and certifying its continuing compliance with the financial
covenants set forth in this Section, as further described in Section 6.1 above.
ARTICLE 7.
DEFAULT AND REMEDIES
7.1 Event of Default. The occurrence of any of the following events
shall constitute an Event of Default hereunder:
(a) Monetary. The Borrower shall default in the payment when due of
any Obligations owing to Bank under the terms of the Note and such failure to
make payment shall continue for a period of five (5) days or longer.
(b) Covenant. A Default shall occur in the due performance and
observance of any of the covenants and conditions of this Agreement or the Loan
Documents, other than a monetary obligation, or an Event of Default specifically
set forth in this Section, which breach is not cured to Bank's satisfaction
within the applicable cure period for breach of such covenant or condition, and,
if no specific cure period is provided, within thirty (30) days of notice of
such Default being sent by the Bank to Borrower; provided, however, that if the
Default cannot by its nature reasonably be cured within thirty (30) days and
Borrower commences cure within thirty (30) days, Borrower shall be entitled to
an additional thirty (30) days to complete such cure.
(c) Financial Covenant. A breach by any Loan Party of the financial
covenants set forth in Article 6 shall occur which is not cured to the
satisfaction of the Bank within thirty (30) days after written notice from the
Bank of such Default .
(d) Representation and Warranties. Any written representation,
warranty or disclosure made by a Loan Party proves to be materially false or
misleading as of the date when made, whether or not such representation or
disclosure appears in this Agreement, the Loan Documents, or items submitted by
the Loan Party in connection therewith.
(e) Debt. A Loan Party shall generally not pay its debts as such
debts become due, or shall admit in writing its inability to pay its debts
generally, or shall make a general assignment for the benefit of creditors; or
any proceeding shall be instituted by the Loan Party seeking to adjudicate the
Loan Party as bankrupt or insolvent, or seeking liquidation, winding up,
26
reorganization, arrangement, adjustment, protection, relief composition of it or
its debts under any law relating to bankruptcy, insolvency or reorganization or
relief of debtors, or seeking the entry of an order for relief or the
appointment of a custodian, receiver, trustee, or other similar official for it
of for any substantial and material part of its property; or the Loan Party
shall take any action to authorize any of the actions set forth above in this
subsection.
(f) Third Party Proceeding. The commencement of a proceeding
against a Loan Party seeking to adjudicate it a bankrupt or insolvent, or
seeking liquidation, winding up, reorganization, arrangement, adjustment,
protection, relief, or composition of it or its debts under any law relating to
bankruptcy, insolvency or reorganization or relief of debtors, or seeking the
entry of an order for relief or the appointment of a custodian, receiver,
trustee, or other similar official for it of for any substantial part of its
property that is not stayed or dismissed within ninety (90) days after receipt
by a Loan Party of written notice thereof.
(g) Material Adverse Occurrence. There occurs any Material Adverse
Occurrence.
(h) Other Credit Facilities. A default shall occur and continue
beyond applicable cure periods, if any, in any other loan agreement or credit
facility between any Loan Party and the Bank, now or hereafter existing.
Each Loan Party acknowledges and agrees that all material non-monetary
Defaults are conclusively deemed to be and are defaults which impair the
security of the Loan Documents, and that Bank shall be entitled to exercise any
appropriate remedy, including without limitation, foreclosure of the Loan
Documents upon the occurrence of any such material non-monetary default after
the expiration of any cure period, if applicable.
7.2 Remedies. Upon the occurrence of an Event of Default, Bank may, in
addition to any other remedies which Bank may have hereunder or under the Loan
Documents or by law, at its option and without prior demand or notice take any
or all of the following actions:
(a) Acceleration. Declare the Obligations under the Note
immediately due and payable.
(b) Realization. Proceed to protect and enforce its rights and
remedies under the Loan Documents and avail itself of any other relief to which
the Bank may be legally or equitably entitled.
(c) Compelled Return of Payments or Proceeds. If Bank is for any
reason compelled to surrender any payment or any proceeds of the Collateral
because such payment or the application of such proceeds is for any reason
invalidated, declared fraudulent, set aside, or determined to be void or
voidable as a preference, an impermissible setoff, or a diversion of trust
funds, then this Agreement and the Obligations to which such payment or proceeds
was applied or intended to be applied shall be revived as if such application
were never made; and each Loan Party shall be liable to pay to Bank, and shall
indemnify Bank for and hold Bank harmless from any loss with respect to the
27
amount of such payment or proceeds surrendered. This Section shall be effective
notwithstanding any contrary action Bank may take in reliance upon its receipt
of any such payment or proceeds. Any such contrary action so taken by Bank shall
be without prejudice to Bank's right under this Agreement and shall be deemed to
have been conditioned upon the application of such payment or proceeds having
become final and irrevocable. The provisions of this Section shall survive the
payment and satisfaction of all the Obligations.
(d) Right of Set-off. Upon the occurrence of any Event of Default
and at any time and from time to time thereafter, Bank is hereby authorized,
without notice to Borrower (any such notice being expressly waived by Borrower),
to set off and apply against the Obligations any and all deposits (general or
special, time or demand, provisional or final) at any time held, or any other
Indebtedness at any time owing by Bank to or for the credit or the account of
Borrower, irrespective of whether or not Bank has made any demand under the Loan
Documents and although such Obligations may be unmatured, but subject to the
rights of any Person for whom the Borrower is holding funds as escrow agent. The
right of Bank under this Section are in addition to other rights and remedies
(including, without limitation, other rights of set-off) which Bank may
otherwise have.
(e) Exercise of Rights as Secured Party. Upon an Event of Default
and acceleration of the Obligations as provided herein, and at any time and from
time to time thereafter:
(i) The Bank may exercise its rights under the Collateral
Security Documents; and.
(ii) The Bank may exercise any and all of its rights under the
Security Agreement as a secured party under the UCC and any other applicable law
or the terms thereof; and
(iii) The Bank may sell or otherwise dispose of any or all of
the Collateral at public or private sale in a commercially reasonable manner,
for cash or credit, which sale the Bank may postpone from time to time by
announcement at the time and place of sale stated in the notice of sale or by
announcement at any adjourned sale without being required to give a new notice
of sale, all as the Bank deems advisable. The Bank may become the purchaser at
any such sale if permissible under applicable law, and Bank may, in lieu of
actual payment of the purchase price, offset the amount thereof against
Borrower's Obligations owing to Bank.
All remedies of Bank provided for herein and in any other Loan Document
are cumulative and shall be in addition to all other rights and remedies
provided by law. The exercise of any right or remedy by Bank hereunder shall not
in any way constitute a cure or waiver of default hereunder or under any other
Loan Document or invalidate any act done pursuant to any notice of default, or
prejudice Bank in the exercise of any of its rights hereunder or under any other
28
Loan Documents unless, in the exercise of its rights, Bank realizes all amounts
owed to it under such Loan Documents.
7.3 Limitation of Liability; Waiver. The Bank shall not be liable to
Borrower as a result of any commercially reasonable possession, repossession,
collection or sale by the Bank and Borrower hereby waives the benefit of all
valuation or appraisal laws. If the Bank seeks to take possession of any of the
Collateral by replevin or other court process after an Event of Default,
Borrower hereby irrevocably waives (i) the posting of any bonds, surety and
security relating thereto required by any statute, court rule or otherwise as an
incident to such possession, (ii) any demand for possession of the Collateral
prior to the commencement of any suit of action to recover possession thereof,
(iii) any requirement that the Bank retain possession and not dispose of any
Collateral until after trial or final judgment, and (iv) to the extent permitted
by applicable law, all rights to notice and hearing prior to the exercise by the
Bank of its right to repossess the Collateral without judicial process or to
replevy, attach or levy upon the Collateral without notice or hearing. The Bank
shall not have any obligation to preserve rights to the Collateral against prior
parties or to xxxxxxxx any Collateral for the benefit of any Person.
7.4 Notice. Any notice of intended action required to be given by the
Bank (including notice of a public or private sale of the Collateral), if given
as provide in Section 9.3 at least ten (10) days prior to such proposed action,
shall be effective and constitute reasonable and fair notice to Borrower
7.5 No Duty to Protect Collateral. Bank shall have no duty to Borrower
or Guarantor or any other Person as to the collection or protection of
Collateral held hereunder or any income therefrom, not as to the preservation of
any rights pertaining thereto, beyond the reasonable care thereof. Such care as
Bank gives to the safekeeping of its own property of like kind shall constitute
reasonable care of Collateral when in Bank's possession; but Bank is not
required to make presentment, demand or protest, or give notice, and need not
take action to preserve any rights against prior parties, obligors, account
debtors, or others, in connection with any obligation or evidence of
indebtedness held as Collateral or in connection with Borrower's obligations.
7.6 Limitation; Insolvency Laws. As used in this Section: (a) the term
"Applicable Insolvency Laws" means the laws of the United States of America or
of any state or other governmental unit relating to bankruptcy, reorganization,
arrangement, adjustment of debts, relief of debtors, dissolution, insolvency,
fraudulent transfers or conveyances or other similar laws (including, without
limitation, 11 U.S.C. ss. 548, ss. 550 and other "avoidance" provisions of Title
11 of the United States Code) as applicable in any proceeding in which the
validity and/or enforceability of the Loan Documents or any Specified Lien is in
issue; and (b) "Specified Lien" means any security interest, mortgage, lien or
encumbrance securing the Obligations, in whole or in part. Notwithstanding any
other provision of this Agreement, if, in any proceeding against the Borrower, a
court of competent jurisdiction determines that the Obligations or any Specified
Lien would, but for the operation of this Section, be subject to avoidance
and/or recovery or be unenforceable against the Borrower by reason of Applicable
29
Insolvency Laws, the Obligations and each such Specified Lien shall be valid and
enforceable only to the maximum extent that would not cause the Obligations and
such Specified Lien to be subject to avoidance, recovery or unenforceability. To
the extent that any payment to, or realization by, the Bank on the Obligations
exceeds the limitations of this Section and is otherwise subject to avoidance
and recovery in any such proceeding, the amount subject to avoidance shall in
all events be limited to the amount by which such actual payment or realization
exceeds such limitation, and the Obligations as limited shall in all events
remain in full force and effect and be fully enforceable against the Borrower.
This Section is intended solely to reserve the rights of the Bank hereunder
against the Borrower in such proceedings to the maximum extent permitted by
Applicable Insolvency Laws and neither the Borrower nor any Person shall have
any right, claim or defense under this Section that would not otherwise be
available under Applicable Insolvency Laws in such proceedings. If the
Obligations or any Specified Lien are subject to avoidance or recovery, or are
unenforceable, with respect to the Borrower by reason of Applicable Insolvency
Laws, or if the validity and enforceability of the Obligations or any Specified
Lien are limited with respect to the Borrower pursuant to this Section 7.6, such
avoidance, recovery, unenforceability or limitation shall not affect the
validity or enforceability of the Obligations or any Specified Lien with respect
to any other Loan Party .
ARTICLE 8.
RELATIONSHIP AMONG LOAN PARTIES
8.1 Joint and Several Liability. BY SIGNING THIS AGREEMENT, BORROWER
AND EACH OF THE GUARANTORS AGREE THAT IT IS LIABLE, JOINTLY AND SEVERALLY WITH
EACH OTHER LOAN PARTY, FOR THE PAYMENT OF THE NOTE AND ALL OTHER OBLIGATIONS OF
THE BORROWER UNDER THIS AGREEMENT, AND THAT BANK CAN ENFORCE SUCH OBLIGATIONS
AGAINST ANY OF BORROWER OR EACH GUARANTOR, IN BANK'S SOLE AND UNLIMITED
DISCRETION.
8.2 Bank's Right to Administer Credit. Bank may at any time and from
time to time, without the consent of, or notice to, Borrower or Guarantor,
without incurring responsibility to Borrower or Guarantor, and without
affecting, impairing or releasing any of the obligations of Borrower hereunder:
(a) alter, change, modify, extend, release, renew, cancel,
supplement or amend in any manner this Agreement or any of the Loan Documents,
and the Borrower's and Guarantors' joint and several liability shall continue to
apply after giving effect to any alteration, change, modification, extension,
release, renewal, cancellation, supplement of amendment.
(b) sell, exchange, surrender, realize upon, release (with or
without consideration) or otherwise deal with in any manner and in any order any
property of any person or entity mortgaged to Bank or otherwise securing the
Borrower's and Guarantors' joint and several liability, or otherwise providing
recourse to Bank with respect thereto;
30
(c) exercise or refrain from exercising any rights against Borrower
or any Guarantor or others with respect to the Borrower's or Guarantors' joint
and several liability, or otherwise act or refrain from acting;
(d) settle or compromise any of the Borrower's or Guarantors' joint
and several liability, any security therefor or other recourse with respect
thereto, or subordinate the payment or performance of all or any part thereof to
the payment of any liability (whether due or not) of Borrower or any Guarantor
to any creditor of Borrower or any Guarantor, as applicable, including without
limitation, Bank and Borrower or any Guarantor;
(e) apply any sums received by Bank from any source in respect of
any liabilities of Borrower or any Guarantor to Bank to any of such liabilities,
regardless of whether the Note remains unpaid;
(f) fail to set off and/or release, in whole or in part, any
balance of any account or any credit on its books in favor of Borrower or any
Guarantor, or of any other person, and extend credit in any manner whatsoever to
Borrower or any Guarantor, and generally deal with Borrower or any Guarantor and
any security for the Borrower's or Guarantors' joint and several liability of
any recourse with respect thereto as Bank may see fit; and/or
(g) consent to or waive any breach of, or any act, omission or
default under, this Agreement or any other Loan Document, including, without
limitation, any agreement providing collateral security for the payment of the
Borrower's and Guarantors' joint and several liability or any other indebtedness
of any Borrower to Bank.
8.3 Primary Obligation. No invalidity, irregularity or unenforceability
of all or any part of Borrower's or Guarantors' joint and several liability or
of any security therefor or other recourse with respect thereto shall affect,
impair or be a defense to any other Loan Party's joint and several liability,
and all obligations under the Note and this Agreement are primary obligations of
Borrower and each Guarantor.
8.4 Payments Recovered From Bank. Notwithstanding any other term or
provision hereof, if claim is ever made upon Bank for repayment or recovery of
any amount or amounts received by Bank from Borrower, Guarantor or any other
person or entity and applied in payment of or on account of any of the
Borrower's or Guarantors' joint and several liability and Bank is required to
repay all or any part of said amount or amounts by reason of (i) judgment,
decree or order of any court of administrative body having jurisdiction over
Bank or any of its property, or (ii) any settlement or compromise of any such
claim effected by Bank with any such claimant (including Borrower or Guarantor),
then and in such event such judgment, decree, order, settlement or compromise
shall be binding upon Borrower and each Guarantor and Borrower and each
Guarantor shall be and remain liable to Bank hereunder for the amount so repaid
or recovered to the same extent as if such amount had never been received by
Bank.
31
8.5 No Release. Until the Note and all other obligations under this
Agreement have been paid in full and each and every one of the covenants and
agreements of this Agreement are fully performed, the obligations of Borrower
and each Guarantor hereunder shall not be released, in whole or in part, by any
action or thing which might, but for this provision of this Agreement, be deemed
a legal or equitable discharge of a surety or guarantor, or by reason of any
waiver, extension, modification, forbearance or delay or other act or omission
of Bank or its failure to proceed promptly or otherwise, or by reason of any
action taken or omitted by Bank whether or not such action or failure to act
varies or increases the risk of, or affects the rights or remedies of Borrower
or Guarantor, nor shall any modification of any of the Note or this Agreement or
release of any security therefor by operation law or by the action of any third
party affect in any way the obligations of Borrower or Guarantor hereunder, and
Borrower or each Guarantor hereby expressly waives and surrenders any defense to
its liability hereunder based upon any of the foregoing acts, omissions, things,
agreements or waivers of any of them, it being the purpose and intent of the
parties hereto that the Borrower's or Guarantors' joint and several liability
constitute the direct and primary obligations of Borrower and each Guarantor and
that the covenants, agreements and all obligations of Borrower and each
Guarantor hereunder be absolute, unconditional and irrevocable.
8.6 No Marshalling. Borrower and each Guarantor hereby waives any and
all right to cause a marshalling of any other Loan Party's assets or any other
action by any court or other governmental body with respect thereto insofar as
the rights of Bank hereunder are concerned or to cause Bank to proceed against
any security for the Loan Party's joint and several liability or any other
recourse which Bank may have with respect thereto, and further waives any and
all requirements that Bank institute any action or proceeding at law or in
equity against any other Loan Party or anyone else, or with respect to this
Agreement, the Loan Documents, or any collateral security for the Borrower's or
Guarantors' joint and several liability, as a condition precedent to making a
demand on, or bringing an action or obtaining and/or enforcing a judgment
against Borrower or any Guarantor. Borrower and each Guarantor further waives
any requirement that Bank seek performance by any other Loan Party or any other
person, of any obligation under this Agreement, the Loan Documents or any
collateral security for the Borrower's or Guarantors' joint and several
liability as a condition precedent to making a demand on, or bringing any action
or obtaining and/or enforcing a judgment against, Borrower or any Guarantor.
Neither Borrower nor any Guarantor shall have any right of setoff against Bank
with respect to any of its obligations hereunder. Any remedy or right hereby
granted which shall be found to be unenforceable as to any person or under any
circumstance, for any reason, shall in no way limit or prevent the enforcement
of such remedy or right as to any person or circumstance, nor shall such
unenforceability limit or prevent enforcement of any other remedy or right
hereby granted.
8.7 Deficiencies. Borrower and each Guarantor specifically agrees that
in the event of a foreclosure under any security agreement or other similar
agreement held by Bank which secures any part or all of the Borrower's and
Guarantors' joint and several liability and in the event of a deficiency
resulting therefrom, Borrower and each Guarantor shall be, and hereby is
expressly made, liable to Bank for the full amount of such deficiency
notwithstanding any other provision of this Agreement or provision of such
agreement, any document or documents evidencing the indebtedness secured by such
32
agreement or any other document or any provision of applicable law which might
otherwise prevent Bank from enforcing and/or collecting such deficiency.
Borrower and each Guarantor hereby waives any right to notice of a foreclosure
under any security agreement or other similar agreement given to Bank by any
other Loan Party which secures any part or all of the Loan Parties' joint and
several liability.
8.8 Bankruptcy. Borrower and each Guarantor expressly agrees that its
liability and obligations under the Note and this Agreement shall not in any way
be affected by the institution by or against any other Loan Party or any other
person or entity of any bankruptcy, reorganization, arrangement, insolvency or
liquidation proceedings, or any other similar proceedings for relief under any
bankruptcy law or similar law for the relief of debtors, or any action taken or
not taken by Bank in connection therewith, and that any discharge of Borrower's
or Guarantors' joint and several liability pursuant to any such bankruptcy or
similar law or other law shall not discharge or otherwise affect in any way the
obligations of any other Loan Party under the Note, the Guarantee and this
Agreement, and that upon or at any time after the institution of any of the
above actions, at Bank's sole discretion, the Borrower's and Guarantors' joint
and several obligations shall be enforceable against Borrower or any Guarantor
that is not itself the subject of such proceedings. Borrower and each Guarantor
expressly waives any right to argue that Bank's enforcement of any remedies
against Borrower or that Guarantor is stayed by reason of the pendency of any
such proceeding against any other Loan Party.
ARTICLE 9.
MISCELLANEOUS
9.1 No Waiver. No waiver of any default or breach by a Loan Party
hereunder shall be implied from any failure by Bank to take action on account of
such default if such default persists or is repeated, and an express waiver
shall not affect any default other than the default specified in the waiver and
shall be operative only for the time and to the extent therein stated. Waivers
of any covenant, term or condition contained herein shall not be construed as a
waiver of any subsequent breach of the same covenant, term or condition. The
consent or approval by Bank to, or of, any act by a Loan Party requiring further
consent or approval shall not be deemed to waive or render unnecessary the
consent or approval to, or of, any subsequent similar act.
9.2 Successors and Assigns. This Agreement is made and entered into for
the sole protection and benefit of Bank and the Loan Parties, their successors
and assigns, and no other person or persons shall have any right of action
hereunder. The terms hereof shall be binding upon and shall inure to the benefit
of the parties hereto and the personal representatives, executors, successors
and assigns of the parties hereto; provided, however, that the interests of a
Loan Party hereunder cannot be assigned or otherwise transferred without the
prior consent of Bank.
33
9.3 Subrogation of Bank. Bank shall be subrogated to the lien of any
previous encumbrance discharged with funds advanced by Bank under the Loan
Documents, regardless of whether such previous encumbrance has been released of
record.
9.4 Notices. Any notice required or permitted to be given by Borrower
or Bank under this Agreement shall be in writing and will be deemed given (a)
upon personal delivery or upon confirmed transmission by telecopier or similar
facsimile transmission device, (b) on the first business day after receipted
delivery to a courier service which guarantees next-business-day delivery, or
(c) on the third business day after mailing, by registered or certified United
States mail, postage prepaid, in any case to the appropriate party at its
address set forth below:
If to Borrower:
AIOP Lost Dutchman Notes, L.L.C.
c/o Asset Investors Corporation
0000 X. Xxxxxx Xxxxxx, Xxxxx 000
Xxxxxx, XX 00000
Attn: Chief Financial Officer
Telecopy No.: 000-000-0000
If to Guarantor:
Asset Investors Operating Partnership, L.P.
c/o Asset Investors Corporation
0000 X. Xxxxxx Xxxxxx, Xxxxx 000
Xxxxxx, XX 00000
Attn: Chief Financial Officer
Telecopy No.: 000-000-0000
Asset Investors Corporation
0000 X. Xxxxxx Xxxxxx, Xxxxx 000
Xxxxxx, XX 00000
Attn: Chief Financial Officer
Telecopy No.: 000-000-0000
If to Bank:
U.S. Bank National Association
000 Xxxxxxxxxxx Xxxxxx
Xxxxxx, Xxxxxxxx 00000
Attn: Real Estate Banking
Xxxxx Xxxxxx, Vice President
Telecopy No.: (000) 000-0000
With copy to:
Xxxxxxx Xxxxxx LLP
00
Xxxxx X, Xxxxx 0000
0000 Xxxxxxxx
Xxxxxx, Xxxxxxxx 00000
Attn: Xxxxxx X. Xxxx, Esq.
Telecopy No.: (000) 000-0000
9.5 Authority to File Notices. Borrower irrevocably appoints,
designates and authorizes Bank as its agent (said agency being coupled with an
interest) to send to any third party any other notice or documents or take any
other action that Bank deems necessary or desirable to protect its interest
hereunder, or under the Loan Documents, and will upon request by Bank, execute
such additional documents as Bank may require to further evidence the grant of
the aforesaid right to Bank.
9.6 Time. Time is of the essence hereof.
9.7 Amendments, etc. No amendment, modification, termination or waiver
of any provisions of this Agreement or of any of the Loan Documents nor consent
to any departure by Borrower therefrom shall in any event be effective unless
the same shall be in writing and signed by Bank, and then such waiver or consent
shall be effective only in the specific instance and for the specific purpose
for which given.
9.8 Headings. The article and section headings in no way define, limit,
extend or interpret the scope of this Agreement or of any particular article or
section.
9.9 Number and Gender. When the context in which the words are used in
this Agreement indicate that such is the intent, words in the singular number
shall include the plural and vice-versa. References to any one gender shall also
include the other gender if applicable under the circumstances.
9.10 Validity. In the event that any provisions of this Agreement shall
be held to be invalid, the same shall not affect in any respect whatsoever the
validity of the remainder of this Agreement.
9.11 No Joint Venture; No Third Party Beneficiary. The Bank, on the one
hand, and the Loan Parties, on the other, each have separate and independent
rights and obligations under this Agreement. Nothing contained herein shall be
construed as creating, forming or constituting any partnership, joint venture,
merger or consolidation of the Loan Parties and the Bank for any purpose or in
any respect. Nothing in this Agreement, express or implied, is intended to
confer upon any Person other than the parties hereto and their respective
successors and assigns any rights and remedies under or by reason of this
Agreement.
9.12 Governing Law; Venue. This Agreement shall be governed by and
construed in accordance with the laws of the State of Colorado without regard to
principles of conflict of laws.
35
9.13 Survival of Warranties. All agreements, representations and
warranties made herein shall survive the execution and delivery of this
Agreement and of the Loan Documents and the extension of the Loan hereunder and
continue in full force and effect until the Obligations of Borrower hereunder
evidenced by the Note have been fully paid and satisfied.
9.14 Automatic Acceleration. Should there occur an Event of Default
which would, with the giving of notice, the passage of time, or both, constitute
an Event of Default hereunder and if a petition under the United States
Bankruptcy Code thereafter is filed by or against Borrower while such event
remains uncured, all obligations hereunder shall be automatically accelerated
and due and payable and the Default Rate of interest provided for in the Note
shall automatically apply as of the date of the first occurrence of the event
which would, with the giving of notice, the passage of time, or both, constitute
an Event of Default, without any notice, demand or action of any type on the
part of Bank (including any action evidencing the acceleration or imposition of
the default rate of interest). The fact that the Bank has, prior to the filing
of the voluntary petition under the United States Bankruptcy Code, acted in a
manner which is inconsistent with the acceleration and imposition of the default
rate of interest provided for in the Note, shall not constitute a waiver of this
Section 9.13 or estop Bank from asserting or enforcing Bank's rights hereunder.
9.15 Costs and Expenses. The Loan Parties shall reimburse Bank for all
reasonable attorneys' fees and expenses incurred by Bank in connection with
negotiation, preparation, approval, review, execution, delivery, amendment, and
modification of the Loan and the enforcement of Bank's rights under this
Agreement and each of the other Loan Documents, including, without limitation,
reasonable attorneys' fees and reimbursements for trial, appellate proceedings,
out-of-court workouts and settlements and for enforcement of rights under any
state or federal statute, including, without limitation, reasonable attorneys'
fees incurred in bankruptcy and insolvency proceedings such as in connection
with seeking relief from stay in a bankruptcy proceeding or negotiating and
documenting any amendment or modification of the Loan or reviewing subsequent
submission items pertaining to the Loan. The Loan Parties shall pay all costs
incurred by the Bank in negotiation, preparation, approval, review, execution,
delivery, amendment, and modification of the Loan and the enforcing payment and
performance of the Loan, exercising rights and remedies of Bank under the Loan
Documents, or reviewing submission items pertaining to the Loan. The Loan
Parties' reimbursement obligation shall be part of the indebtedness evidenced by
the Loan Documents.
9.16 Severability; Titles. If any provision of this Agreement or of any
other Loan Document executed in connection with this Agreement is, for any
reason and to any extent, invalid or unenforceable, then neither the remainder
of the Loan Document in which such provision is contained, or the application of
the provision to other persons, entities or circumstances, nor any other
document referred to in this Agreement, shall be affected by such invalidity or
unenforceability, and there shall be deemed substituted for the invalid or
unenforceable provision the most similar provision which would be valid and
enforceable under applicable law.
36
9.17 Counterparts. This Agreement may be executed in counterparts, each
of which shall be deemed an original, but all of which shall constitute the same
document.
9.18 Waiver of Rights. In order to avoid delays in time and any
prejudice that may arise from trial by jury and in light of the complexities of
this transaction, in the event of litigation arising out of or relating to this
Loan Agreement, the Note and/or the other Loan Documents, and/or in any way
connected with or related or incidental to the dealings of the parties hereto or
any of them with respect to this Loan Agreement, the other Loan Documents and/or
any other instrument, document or agreement executed or delivered in connection
herewith, or the transaction related hereto or thereto, in each case, whether
sounding in contract, tort or otherwise, Bank, each Guarantor and Borrower, with
the prior advice of counsel, knowingly, intelligently and as a bargained for
matter, waives its right to trial by jury and agree and consent that any claim,
demand, action or cause of action in respect to such litigation shall be decided
by a trial to the court without a jury.
The written Loan Documents represent the final agreement by and between
the parties and may not be contradicted by evidence of prior, contemporaneous or
subsequent oral agreements of the parties. There are no unwritten oral
agreements of the parties.
IN WITNESS WHEREOF, Borrower, Guarantor and Bank have executed this
Agreement as of the date first written above by and through their duly
authorized representatives.
BANK:
U.S. BANK NATIONAL ASSOCIATION
By: /s/ Xxxxx Xxxxxx
--------------------------------------
Xxxxx Xxxxxx, Vice President
37
BORROWER:
AIOP LOST DUTCHMAN NOTES, L.L.C., a
Delaware limited liability company
BY: ASSET INVESTORS OPERATING PARTNERSHIP,
L.P., a Delaware limited partnership,
Sole Member and Manager
BY: ASSET INVESTORS CORPORATION, a
Maryland corporation, General
Partner
By: /s/Xxxxx X. Xxxxxx
------------------------------
Name: Xxxxx X. Xxxxxx
Title: Chief Financial Officer
GUARANTORS:
ASSET INVESTORS OPERATING PARTNERSHIP,
L.P., a Delaware limited partnership
BY: ASSET INVESTORS CORPORATION, a
Maryland corporation, General
Partner
By: /s/Xxxxx X. Xxxxxx
------------------------------
Name: Xxxxx X. Xxxxxx
Title: Chief Financial Officer
ASSET INVESTORS CORPORATION, a Maryland
corporation
By: /s/ Xxxxx X. Xxxxxx
--------------------------------------
Name: Xxxxx X. Xxxxxx
Title: Chief Financial Officer
38
