SUBORDINATION AGREEMENT
THIS SUBORDINATION AGREEMENT (this "AGREEMENT") is entered into as
of November 25, 1998 between ARLINGTON SQUARE LIMITED PARTNERSHIP, a Virginia
limited partnership ("BORROWER"), ALLIED CAPITAL CORPORATION, a Maryland
corporation and the successor to Allied Capital Commercial Corporation
("JUNIOR LENDER") and METROPOLITAN LIFE INSURANCE COMPANY, a New York
corporation ("SENIOR LENDER").
RECITALS
A. Junior Lender has made a loan to Borrower in the original
principal amount of One Million Dollars ($1,000,000.00) (the "JUNIOR LOAN")
evidenced by that certain Promissory Note dated as of November 20, 1997 from
Borrower to Junior Lender and that certain Allonge and Modification to
Promissory Note dated April 23, 1998 (collectively, the "JUNIOR NOTE") and
secured by, among other things, (i) that certain Deed of Trust and Security
Agreement "B" (the "JUNIOR TRUST") dated as of November 20, 1997, executed by
Borrower to Xxxxxx Title and Escrow Company, Inc., as trustee for the benefit
of Junior Lender recorded in Deed Book 2860, Page 1530 in the Land Records of
Arlington County, Virginia (the "OFFICIAL RECORDS") and encumbering the real
property described on EXHIBIT A attached hereto and incorporated herein by
reference (the "PROPERTY"), and (ii) a separate Guaranty Agreement executed
by each of the Borrower's partners, whereby each such partner guarantees
repayment of all sums owing to Junior Lender under the Junior Loan
(collectively, the "GUARANTEES") secured by those Pledge Agreements dated as
of even date herewith of 51 percent of the partnership interests in Borrower
(collectively, the "PLEDGE AGREEMENTS"). All or a portion of the principal
amount of the Junior Loan has this date has been curtailed by Borrower
leaving certain sums owing from Borrower to Junior Lender thereunder
(including specifically principal of not more than $1,000 and Junior Lender's
"participation interest" under and as defined in the Junior Note). The
documents evidencing, securing or relating to the Junior Loan are hereafter
referred to collectively as the "JUNIOR LOAN DOCUMENTS," and the Borrower
hereby represents that all of the Junior Loan Documents are listed in Exhibit
B attached hereto and incorporated herein by reference.
B. Senior Lender has agreed to make a loan to Borrower in the original
principal amount of Twenty-One Million, Five Hundred Thousand Dollars
($21,500,000.00) (the "SENIOR LOAN"), evidenced by that certain Promissory Note
of even date herewith from Borrower to Senior Lender and secured by, among other
things, that certain Deed of Trust, Security Agreement and Fixture Filing of
even date herewith executed by Borrower to Xxxxx X. Xxxxxxx and Xxxxx X.
Xxxxxxxxx, as trustees for the benefit of Senior Lender, recorded concurrently
herewith in the Official Records and encumbering the Property (the "SENIOR
TRUST"). The documents evidencing, securing or relating to the Senior Loan are
hereafter referred to collectively as the "SENIOR LOAN DOCUMENTS."
C. Senior Lender has indicated that it will not extend credit to
Borrower unless Junior Lender executes this Agreement.
NOW, THEREFORE, for good and valuable consideration, the receipt and
adequacy of which are hereby acknowledged by each party hereto, the parties
hereby agree as follows:
1. DEFINITIONS. As used herein,
(a) "INDEBTEDNESS" shall mean all advances, debts, obligations
and liabilities of Borrower heretofore, now or hereafter made,
incurred, suffered or created, whether voluntary or involuntary and
however arising, whether due or not due, absolute or contingent,
liquidated or unliquidated, determined or undetermined, and whether
Borrower may be liable individually or jointly or in its capacity as a
general partner of a borrower, including without limitation obligations
and liabilities arising after the commencement of any bankruptcy or
insolvency proceeding by or against Borrower;
(b) "JUNIOR INDEBTEDNESS" shall mean all Indebtedness now or
hereafter remaining owing from Borrower to Junior Under in connection
with the Junior Loan, including specifically its participation interest
under the Junior Note; and
(c) "SENIOR INDEBTEDNESS" shall mean all Indebtedness now or
hereafter owing from Borrower to Senior Lender in connection with the
Senior Loan, excluding, however, any increase in the principal amount
of the Senior Loan beyond the amount stated in the Senior Trust.
2. SUBORDINATION. Junior Lender hereby unconditionally subordinates all
Junior Indebtedness, and the lien or charge and each and all of the terms of all
of the Junior Loan Documents, to all Senior Indebtedness, and the lien or charge
and each and all of the terms of all of the Senior Loan Documents.
3. RESTRICTIONS UPON EXERCISE OF REMEDIES. So long as the Senior Trust
shall remain on the Property or any part thereof, Junior Lender will not, even
if entitled to, exercise any of its rights against Borrower or the Property or
any part thereof then subject to the Junior Trust (including, without
limitation, commencing a foreclosure of the lien of the Junior Trust or
exercising any right to receive the rents for the Property) available to Junior
Lender under the Junior Trust without Senior Lender's prior written consent.
Junior Lender covenants and agrees that, from and after Junior Lender's receipt
of notice that a default exists under the Senior Trust and thereafter until
Junior Lender shall have received notice from Senior Lender that all defaults
under the Senior Loan have been cured and are no longer in existence, Junior
Lender shall not, even if entitled to, collect or receive from Borrower any
"participation interest" under and as such term is defined in the Junior Note.
The above notwithstanding, until its receipt of such notice of default under the
Senior Loan, and, if any such notice of default under the Senior Loan is given
to the Junior Lender after Junior Lender's receipt of notice from the Senior
Lender that such default has been cured and for so long as Junior Lender has not
received another notice of default, Junior Lender shall be permitted to receive
regularly scheduled payments under the Junior Indebtedness, including
specifically its participation interest under the Junior Note. Junior
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Lender hereby agrees to vote in accordance with Senior Lender's instructions for
the purpose of accepting or rejecting any plan of reorganization or otherwise in
acting on behalf of or voting Junior Lender's claim in any proceeding under
applicable bankruptcy laws, all at no material out of pocket cost to Junior
Lender. The provisions of this SECTION 3 shall be for the benefit of Senior
Lender as holder of the Senior Loan Documents. However, Senior Lender hereby
acknowledges the execution and delivery of the Guarantees and the Pledge
Agreements and the performance of the respective parties' obligations
thereunder, and further agrees that Allied may enforce its rights under the
Guarantees and the Pledge Agreements (subject only to the provisions of this
Section 3 and Section 6(a) hereof) as against the guarantors thereunder and
their property (but not against the Borrower or property of the Borrower) in the
event of a default under any of the Junior Loan Documents and further agrees
that Allied or its "affiliate" may acquire up to 51% of the partnership
interests in the Borrower (consisting of 50% limited partner interests and one
percent general partner interests) in realization by Allied upon such interests
in foreclosure or transfer in lieu of foreclosure under the Pledge Agreements,
provided that, prior to or concurrent with any transfers to Allied or its
"affiliate" in foreclosure or in lieu thereof, Allied shall have assumed all of
the obligations and liabilities of a Liable Party under the existing Guaranty
Agreement and Unsecured Indemnity Agreement but only those obligations and
liabilities attributable to events occurring after the date of such transfer,
and shall have executed, as of the date of such transfer, a Guaranty Agreement
and an Unsecured Indemnity Agreement in the same form as executed by the
existing Liable Parties on even date herewith, subject to the foregoing
limitation. For purposes of this Section 3, the term "affiliate" of a company
means (a) an entity that directly or indirectly controls, is controlled by or is
under common control with such company or (b) an entity at least a majority of
whose economic interest is owned by such company and the term "control" means
the power to direct, the management of such entity through voting rights,
ownership or contractual obligations. For purposes of this Section 3, the terms
"Liable Party," "Guaranty Agreement" and "Unsecured Indemnity Agreement" shall
have their meanings as defined in the Senior Trust.
4. DISPOSITION OF EVIDENCE OF JUNIOR INDEBTEDNESS. Junior Lender
warrants to Senior Lender that it has not heretofore assigned, transferred,
hypothecated or disposed of any Junior Indebtedness to any third party. Junior
Lender shall not assign, transfer, hypothecate or dispose of the Junior
Indebtedness or any claim it has or may have against Borrower while any Senior
Indebtedness remains outstanding; provided that Junior Lender may assign or
transfer the Junior Indebtedness to a Qualified Real Estate Investor, as
hereinafter defined. "Qualified Real Estate Investor" is defined as any
reputable Institutional Investor (hereinafter defined) with a minimum net
worth of $400,000,000 (or in the case of a foreign real estate investment
trust, $750,000,000) minimum net worth, which shall acquire its ownership
interest through a United States entity based in the United States free from
any bankruptcy, reorganization or insolvency proceedings or any criminal
charges or proceedings and shall not be, at the time of transfer, plaintiff
or defendant adverse to Lender in any suit brought against or by Lender.
Lender agrees to be reasonable in the review of such qualifications.
"Institutional Investor" is defined as (i) any United States bank, Xxxx
Xxxxxxx plan, union or profit sharing plan, commingled real estate fund,
group trust, insurance company, pension fund, real estate investment trust,
charitable foundation, or (ii) a foreign bank, insurance company, pension
fund or real estate investment
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trust or United States entity controlled or established by one of the foregoing
in connection with the intended transaction.
5. AGREEMENT TO BE CONTINUING, APPLIES TO BORROWER'S EXISTING SENIOR
INDEBTEDNESS AND ANY SENIOR INDEBTEDNESS HEREAFTER ARISING. This Agreement
shall be a continuing agreement and shall apply to any and all Senior
Indebtedness of Borrower to Senior Lender now existing or hereafter advanced
or outstanding under the Senior Loan or relating to the protection of the
security therefor including any Senior Indebtedness advanced or outstanding
under the Senior Loan or relating to the protection of the security therefor
of any receiver, trustee, debtor-in-possession or the similar person or
entity that is a successor in interest of Borrower in the event of Borrower's
insolvency.
6. NOTICES OF DEFAULT, MODIFICATIONS UNDER THE JUNIOR LOAN.
(a) DEFAULTS. Junior Lender shall provide Senior Lender with a
copy of each and every notice of default or other notice given to
Borrower under any of the Junior Loan Documents at the same time such
notice is served upon Borrower, and no such notice to Borrower shall be
effective unless and until a copy thereof is served upon Senior Lender.
A default under any of the Junior Loan Documents shall, at the sole and
exclusive option of Senior Lender, constitute a default under the
Senior Trust. If any default under any of the Junior Loan Documents is
not cured by Borrower within the applicable grace period, if any,
Junior Lender agrees that, before giving any notice or taking any
action the result of which may be the acceleration of the Junior
Indebtedness, foreclosure upon the security granted by the Junior
Trust, the taking of possession or sale of all or any part of the
Property, or the exercise of any other remedy under the Junior Loan
Documents, Junior Lender shall give an additional notice of the
continuing default to Senior Lender and shall allow Senior Lender an
additional grace period of twenty (20) days to cure any such continuing
default (but without any obligation on the part of Senior Lender so as
to cure any such default). Junior Lender shall not take any action
which may result in the acceleration of the Junior Indebtedness, the
foreclosure upon the security granted by the Junior Trust or the taking
of possession or sale of all or any part of the Property or exercise
any of its rights upon default by Borrower under the Junior Loan
Documents if (i) in the case of a default in the payment of any sum of
money payable to Junior Lender under the Junior Trust, Senior Lender,
within the additional grace period, shall pay such sum, or cure such
default, or (ii) in the case of any nonmonetary default which is
susceptible of being cured by Senior Lender, Senior Lender shall
promptly commence to cure the default, and shall thereafter diligently
prosecute such cure to completion. In addition, if any default under
the Junior Trust is not cured by Borrower within the applicable grace
period, if any, Junior Lender agrees that, before exercising any of its
remedies under the Junior Trust, including the foreclosure upon the
security granted by the Junior Trust or the taking of possession or
sale of all or any part of the Property secured by the Junior Trust or
exercise any of its rights upon default by Borrower under the Junior
Trust, Junior Lender shall obtain Senior Lender's prior written consent
as provided in SECTION 3 above.
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(b) MODIFICATIONS AND TERMINATION. Junior Lender covenants and agrees
that, without Senior Lender's prior written consent, Junior Lender shall not (i)
modify, amend or extend the Junior Loan Documents, (ii) extend any additional
credit or make any additional loans to Borrower secured by the Property or any
part thereof, or (iii) terminate or permit the termination of this Agreement for
any reason.
7. MODIFICATIONS UNDER THE SENIOR LOAN. No notice, consent or approval
shall be required to, by or from Junior Lender in connection with (i) any
extension, amendment or other modification of the documents evidencing and
securing the Senior Loan (provided such amendment or modification does not
increase in the principal amount of the Senior Loan beyond the amount stated in
the Senior Trust), or (ii) any refinancing of the Senior Indebtedness, it being
understood and agreed by Junior Lender that Junior Lender waives any rights it
may otherwise have at law and/or in equity to so receive and/or give notice,
consent or approval to any such amendment, extension, or other modification of
the documents evidencing and securing that Senior Loan or any refinancing of the
Senior Loan. If requested by Borrower or Senior Lender, Junior Lender shall
execute such additional subordination agreements or other documentation as may
be required to confirm the subordination of the Junior Loan Documents to the
documents evidencing any loan obtained by Borrower to refinance the Senior
Indebtedness.
8. CASUALTY AND CONDEMNATION. Junior Lender, its successors and assigns
hereby assign and release unto Senior Lender, as beneficiary under the Senior
Trust:
(a) all of its right, title and interest or claim, if any, in and to
the proceeds of all policies of insurance covering the Property for
application upon the Indebtedness secured by, or other disposition
thereof in accordance with the provisions of, the Senior Trust and of
the Assignment of Leases, relating thereto; and
(b) all of its right, title and interest or claim, if any, in and to
all awards or other compensation made for any taking of any part of the
Property, to be applied upon the Indebtedness secured by, or disposed of
in accordance with, the provisions of the Senior Trust and of the said
Assignment of Leases.
Junior Lender acknowledges and agrees that, consistent with the
foregoing, the application and disposition of insurance proceeds shall be
governed by and in accordance with the terms of the Senior Loan Documents.
In the event that following any such application and disposition of the
insurance proceeds and condemnation award and other compensation, any balance
remains, then such excess shall be made payable to the order of Junior Lender
hereunder or its successors or assigns to the extent that Junior Lender has an
interest therein under the terms of the Junior Loan Documents and subject to the
provisions of any other agreements between the parties hereto and any third
parties. If the holder of the Senior Trust shall at any time release to Borrower
any such insurance proceeds or condemnation awards for the purpose of
restoration of the Property, or
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if any such amounts shall be paid to Junior Lender in accordance with the
provisions of the foregoing sentence, such releases shall not be deemed to be an
additional advance under the Senior Trust.
9. NO LIENS. So long as the Senior Trust shall remain on the Property
or any part thereof, Junior Lender shall not acquire by subrogation, contract or
otherwise any lien upon the estate, right or interest in the Property which may
arise as a result of payment by Junior Lender of real estate taxes, assessments
or other governmental charges levied by the state, county or federal government,
which is or may be prior in right to the Senior Trust.
10. APPROVAL RIGHTS. Any approval rights of Junior Lender under the
Junior Loan Documents with regard to the Property, are expressly subject and
subordinate to any related approval rights of Senior Lender arising under the
Senior Loan Documents, for so long as the Senior Trust shall remain on the
Property or any part thereof.
11. INFORMATION, OTHER AGREEMENTS. Junior Lender shall advise Senior
Lender, at Senior Lender's request from time to time, of the status of the
performance of Borrower's obligations under the Junior Loan Documents. Junior
Lender agrees that Senior Lender shall have no obligation to inform Junior
Lender or keep Junior Lender informed of the financial and other information
pertaining to Borrower's financial condition. Junior Lender assumes the
responsibility to keep itself adequately informed by such means of any facts,
events or circumstances which might in any way affect Junior Lender's risks
hereunder, and Junior Lender agrees that Senior Lender shall not have any
obligation to disclose to Junior Lender any information or material acquired by
Senior Lender in the course of Senior Lender's relationship with Borrower.
Should Senior Lender elect to provide information to Junior Lender as a
courtesy, Junior Lender understands that, by providing such information, Senior
Lender shall not be deemed to have warranted the accuracy, completeness or value
of the information so provided, and Junior Lender agrees that Senior Lender
shall not have any liability to Junior Lender for providing inaccurate,
incomplete, erroneous or outdated information. Junior Lender understands that
there may be various agreements between Senior Lender and Borrower evidencing
and governing the Senior Indebtedness, and Junior Lender acknowledges and agrees
that such agreements are not intended to confer any benefits on Junior Lender
and that Senior Lender shall have no obligation to Junior Lender or any other
person to exercise any rights, enforce any remedies, or take any other actions
which may be available to them under such agreements. Nothing in this Agreement
shall obligate Senior Lender to give any notice of any default or event of
default to Junior Lender at any time, provided that nothing in this Agreement
shall constitute a waiver by Junior Lender of any notice rights provided by
applicable law in connection with a foreclosure of the Senior Trust.
12. TRANSFER OF ASSETS OR REORGANIZATION OF BORROWER. As a material
inducement to Senior Lender to make the Senior Loan to Borrower, and for so long
as any of the Senior Indebtedness remains unpaid or any of Borrower's
obligations under the Senior Loan documents remain unperformed, Junior Lender
hereby agrees that it shall not file or consent to an involuntary bankruptcy
proceeding with respect to Borrower or any of its general partners, or
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join in any such filing, without the prior written consent of Senior Lender,
which Senior Lender may grant or withhold in its sole discretion. In the event
Borrower enters into or is the subject of any bankruptcy proceeding,
receivership, insolvency, assignment for the benefit of creditors,
reorganization, whether or not pursuant to bankruptcy laws, sale of all or
substantially all of its assets, dissolution, liquidation or any other
marshaling of the assets and liabilities of Borrower, then in any such event any
payment or distribution of any of Borrower's assets, whether in cash, securities
or other property, shall be paid or delivered first to Senior Lender until all
Senior Indebtedness is paid in full. In the event Junior Lender receives any
such payment or distribution that is payable to Senior Lender pursuant to the
terms of this Agreement, Junior Lender shall hold such payment or distribution
and forthwith deliver same in kind to Senior Lender.
13. NO WAIVER BY SENIOR LENDER. No delay or failure of Senior Lender in
exercising any right or remedy hereunder shall be deemed a waiver of such right
or remedy. Any waiver, permit, consent or approval of any kind by, Senior Lender
must be in writing and shall be effective only to the extent set forth in such
writing.
14. WAIVERS AND CONSENTS BY JUNIOR LENDER. All of the Senior
Indebtedness shall be deemed to have been made or incurred in reliance upon this
Agreement, and, except as otherwise expressly provided herein, Junior Lender
expressly waives all notice of the acceptance by Senior Lender of the
subordination and other provisions of this Agreement and all other notices
whatsoever (except as set forth herein), and Junior Lender expressly waives
reliance by Senior Lender upon the subordination and other agreements as herein
provided.
Junior Lender agrees (a) that Senior Lender has not made any warranties
or representations to Junior Lender with respect to the due execution, legality,
validity, completeness or enforceability of the Senior Loan Documents, or the
collectibility of the Senior Indebtedness, and (b) that Senior Lender shall not
have any liability to Junior Lender for, and Junior Lender waives any claim or
defense which Junior Lender may now or hereafter have against Senior Lender
arising out of (i) any and all actions which Senior Lender takes or omits to
take (including, without limitation, actions with respect to the creation,
perfection or continuation of liens or security interests in any collateral,
actions with respect to the occurrence of any default or event of default,
actions with respect to the foreclosure upon, sale, release of, depreciation of
or failure to realize upon, any collateral and actions with respect to the
collection of any claim for all or any part of the Senior Indebtedness from any
account debtor, guarantor or any other party) with respect to the Senior Loan
Documents in effect from time to time, (ii) Senior Lender's election, in any
proceeding instituted under Title 11 of the United States Code (11 U.S.C. ss.101
et seq.) (the "BANKRUPTCY CODE"), of the application or nonapplication of
Section 1111(b)(2) of the Bankruptcy Code, and/or (iii) any borrowing or grant
of a security interest by Borrower, as debtor-in-possession, under Section 364
of the Bankruptcy Code.
Senior Lender acknowledges that Junior Lender has made no warranties or
representations to Senior Lender with respect to the due execution, legality,
validity,
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completeness or enforceability of the Junior Loan Documents or the
collectibility of the Junior Indebtedness.
Senior Lender, at any time and from time to time, may enter into such
agreements with Borrower as Senior Lender may deem proper, extending the time
for payment of, or renewing or otherwise altering the terms of all or any of the
Senior Indebtedness or affecting any security underlying any or all of such
Senior Indebtedness, or may exchange, sell, release, surrender or otherwise deal
with any such security, without in any way impairing or affecting this Agreement
thereby; provided, however that Senior Lender may not amend the Senior Loan
Documents to increase the principal amount of the Senior Loan beyond the amount
stated in the Senior Trust without Junior Lender's prior written consent. Senior
Lender shall not be required to proceed against Borrower or any surety or
guarantor or against any collateral heretofore or hereafter provided by Borrower
or any surety or guarantor prior to or as a condition of exercising or enforcing
its rights thereunder.
Junior Lender waives any right to challenge, attack or seek to avoid
the Senior Indebtedness, or any liens on collateral securing same, under
Virginia law, to the extent applicable, Bankruptcy Code Section 548, or any
other law or statute, and agrees that the Senior Indebtedness was incurred, and
any liens securing same were granted, in good faith, for reasonably equivalent
value, and upon the basis of balance sheets and cash flow statements
demonstrating the solvency and adequate capitalization and cash flow of
Borrower. Even in the event any of the Senior Indebtedness, or any lien securing
same, should be invalidated, avoided or set aside, the subordination provided
for herein nevertheless shall continue in full force and effect and, as between
Senior Lender and Junior Lender, the Senior Indebtedness shall be deemed to
remain in full force and effect.
In the event that all or any part of the Senior Indebtedness at any
time is secured by any deeds of trust or mortgages or other instruments creating
or granting liens on any interest in real property (which event has occurred and
is contemplated to occur), Junior Lender authorizes Senior Lender, upon the
occurrence of and during the continuance of any event of default under the
Senior Indebtedness, at its sole option, without notice or demand and without
affecting any obligations of Junior Lender hereunder, the enforceability of this
Agreement, or the validity or enforceability of any liens of Senior Lender on
any collateral, to foreclose any and all of such deeds of trust or mortgages or
other instruments by judicial or nonjudicial sale. The above notwithstanding,
Senior Lender shall endeavor to give Junior Lender notices of default under the
Senior Indebtedness; provided, however, that Senior Lender's failure to
deliver such notice shall not constitute a breach of this Agreement and shall
have no legal effect on the terms and conditions of this Agreement or the
obligations and rights of the parties hereunder. Except to the extent required
by applicable law relating to such foreclosure or sale, Junior Lender expressly
waives any right to receive notice of any judicial or nonjudicial foreclosure or
sale of any real property or interest therein subject to any such deeds of trust
or mortgages or other instruments and Junior Lender's failure to receive any
such notice shall not impair or affect Junior Lender's obligations to Senior
Lender or the enforceability of this Agreement or any liens created or granted
hereby.
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15. REPRESENTATIONS AND WARRANTIES. Borrower hereby represents and
warrants to Senior Lender as follows:
(a) The outstanding principal balance of the Junior
Indebtedness, as of the date hereof, is not more than $1,000 (not
including the Junior Lender's participation interest). Borrower has
delivered to Senior Lender a true, correct and complete statement of
the outstanding balance of the Junior Indebtedness prepared by Junior
Lender and dated not earlier than 15 days prior to the date hereof.
(b) Borrower has delivered to Senior Lender true, correct and
complete copies of each and all of the Junior Loan Documents. The
Junior Loan Documents have not been amended, modified or assigned and
are in full force and effect without default thereunder.
16. APPLICATION OF PAYMENTS. Junior Lender agrees that Senior Lender
may apply payments received from Borrower in such manner or fashion as Senior
Lender in its discretion deems appropriate, and Junior Lender shall have no
right to direct the manner or fashion in which Senior Lender applies such
payments.
17. MISCELLANEOUS. This Agreement binds and inures to the benefit of
the successors and assigns of the parties, including without limitation the
holders of any participation interests purchased from Senior Lender, provided
that Junior Lender may not assign the Junior Indebtedness except as set forth in
Section 4 above. This Agreement may not be amended, modified or terminated
except by a written instrument signed by the party or parties to be charged.
18. APPLICABLE LAW. This Agreement shall be governed by and construed
in accordance with the local laws of the Commonwealth of Virginia, without
reference to choice of law rules.
19. COUNTERPART EXECUTION. This Agreement may be executed in
counterparts and shall become effective as of the date first set forth above
when each party shall have delivered executed counterparts hereof to the other
parties, whereupon all such counterparts shall be deemed originals and, when
taken together, shall constitute but one agreement.
20. AUTHORITY. Junior Lender hereby certifies to Senior Lender that
Junior Lender has all necessary authority to grant the subordination evidenced
hereby and to execute this Agreement.
21. COSTS AND EXPENSES OF PROCEEDINGS. In the event of any litigation,
arbitration, hearing or other proceeding relating to this Agreement, the
prevailing party shall be entitled to recover its reasonable costs and expenses,
including attorneys' fees. As used in this Agreement, the term "attorneys' fees"
or "attorneys' fees and costs" shall mean the fees and expenses of counsel to
the parties hereto, which may include printing, photostating, duplicating and
other
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expenses, air freight charges, and fees billed for law clerks, paralegals,
librarians and others not admitted to the bar but performing services under the
supervision of an attorney. The terms "attorneys' fees" or "attorneys' fees and
costs" shall also include, without limitation, all such fees and expenses
incurred with respect to appeals, arbitrations, bankruptcy proceedings and any
post-Judgment proceedings to collect any judgment, and whether or not any action
or proceeding is brought with respect to the matter for which said fees and
expenses were incurred. The provisions allowing for the recovery of
post-judgment fees, costs and expenses are separate and several and shall
survive the merger of this Agreement into any judgment.
22. WAIVER OF RIGHT TO TRIAL BY JURY. EACH PARTY TO THIS AGREEMENT
HEREBY EXPRESSLY WAIVES ANY RIGHT TO TRIAL BY JURY OF ANY CLAIM, DEMAND, ACTION
OR CAUSE OF ACTION (A) ARISING UNDER THIS AGREEMENT OR ANY OTHER INSTRUMENT,
DOCUMENT OR AGREEMENT EXECUTED OR DELIVERED IN CONNECTION HEREWITH, OR (B) IN
ANY WAY CONNECTED WITH OR RELATED OR INCIDENTAL TO THE DEALINGS OF THE PARTIES
HERETO OR ANY OF THEM WITH RESPECT TO THIS AGREEMENT OR ANY OTHER INSTRUMENT,
DOCUMENT OR AGREEMENT EXECUTED OR DELIVERED IN CONNECTION HEREWITH, OR THE
TRANSACTIONS RELATED HERETO OR THERETO, IN EACH CASE WHETHER NOW EXISTING OR
HEREAFTER ARISING, AND WHETHER SOUNDING IN CONTRACT OR TORT OR OTHERWISE; AND
EACH PARTY HEREBY AGREES AND CONSENTS THAT ANY SUCH CLAIM, DEMAND, ACTION OR
CAUSE OF ACTION SHALL BE DECIDED BY COURT TRIAL WITHOUT A JURY, AND THAT ANY
PARTY TO THIS AGREEMENT MAY FILE AN ORIGINAL COUNTERPART OR A COPY OF THIS
SECTION WITH ANY COURT AS WRITTEN EVIDENCE OF THE CONSENT OF THE PARTIES HERETO
TO THE WAIVER OF THEIR RIGHT TO TRIAL BY JURY. AS BETWEEN JUNIOR LENDER AND
BORROWER ONLY, THE FOREGOING WAIVER SHALL NOT BE DEEMED TO APPLY TO ANY OF THE
JUNIOR LOAN DOCUMENTS OTHER THAN THIS AGREEMENT, UNLESS SET FORTH IN SUCH
DOCUMENTS.
23. NOTICES. Any notice, or other document or demand required or
permitted under this Agreement shall be in writing addressed to the appropriate
address set forth below and shall be deemed delivered upon the earliest of (a)
actual receipt, (b) the next business day after the date when sent by recognized
overnight courier, or (c) the second business day after the date when sent by
registered or certified mail, postage prepaid. Any party may, from time to time,
change the address at which such written notice or other documents or demands
are to be sent, by giving the other party written notice of such change in the
manner hereinabove provided.
To Senior Lender: Metropolitan Life Insurance Company
a New York corporation
000 Xxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Senior Vice President
Real Estate Investments
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with a copy to: Metropolitan Life Insurance Company
Xxx Xxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000-0000
Attention: Vice-President and Investment Counsel
Real Estate Investments
To Borrower: Arlington Square Limited Partnership
c/o The Washington Corporation
0000 Xxxx Xxxx Xxxxxxx, Xxxxx 000
Xxxxxxxx, Xxxxxxxx 00000
Attention: Xxxxxxx X. Xxxxx
with a copy to: Bean, Xxxxxx & Xxxxxx, P.C.
0000 Xxxxx Xxxxxxxxxx Xxxxxx, Xxxxx 000
Xxxxxxxxx, Xxxxxxxx 00000
Attention: Xxxxxxxx X. Xxxxxx
To Junior Lender: Allied Capital Corporation
0000 Xxxxxxxxxxxx Xxxxxx, XX
Xxxxxxxxxx, XX 00000-0000
Attention: Xxxx X. Xxxxxxxx, President
with a copy to: Dickstein, Shapiro, Xxxxx & Xxxxxxxx. LLP
0000 X Xxxxxx, XX
Xxxxxxxxxx, XX 00000-0000
Attention: Xxxxx X. Xxxxxxxxx, Esq.
24. FURTHER ASSURANCES. Junior Lender shall, at any time and from time
to time, upon the request of Senior Lender, execute, acknowledge and deliver all
such further documents and instruments, and take all such further actions, as
shall be necessary or reasonable to give effect to the agreements set forth
herein.
IN WITNESS WHEREOF, each of the undersigned has caused this
Subordination Agreement to be executed under seal by its duly authorized
representative as of the day and year first above written.
[SIGNATURE PAGE FOLLOWS]
-11-
SENIOR LENDER:
WITNESS: METROPOLITAN LIFE INSURANCE
COMPANY, a New York corporation
/s/ ILLEGIBLE By: /s/ Xxxxxxx X. Xxxxxx [Seal]
------------------------------------- ------------------------------
Name: Xxxxxxx X. Xxxxxx
------------------------------
Title: AVP
------------------------------
BORROWER:
ARLINGTON SQUARE LIMITED[ITED
PARTNERSHIP, a Virginia limited
partnership
By: Arlington Square, Inc.,
a Virginia corporation,
its general partner
/s/ Xxxxxxxxx X. Okay By: /s/ Xxxxxxx X. Xxxxx [Seal]
------------------------------------- ------------------------------
Xxxxxxx X. Xxxxx
President
JUNIOR LENDER:
ALLIED CAPITAL CORPORATION, a
Maryland corporation
By: [Seal]
------------------------------------- ------------------------------
Name:
------------------------------
Title:
------------------------------
-12-
SENIOR LENDER:
WITNESS: METROPOLITAN LIFE INSURANCE
COMPANY, a New York corporation
By:
------------------------------------- ------------------------------
Name:
------------------------------
Title: [Seal]
------------------------------
BORROWER:
ARLINGTON SQUARE LIMITED[ITED
PARTNERSHIP, a Virginia limited
partnership
By: Arlington Square, Inc.,
a Virginia corporation,
its general partner
By: [Seal]
------------------------------------- ------------------------------
Xxxxxxx X. Xxxxx
President
JUNIOR LENDER:
ALLIED CAPITAL CORPORATION, a
Maryland corporation
/s/ Xxxxx X. Xxxxxx By: /s/ Xxxxxxx X. Xxxxxxx [Seal]
------------------------------------- ------------------------------
Name: /s/ Xxxxxxx X. Xxxxxxx
------------------------------
Title: Principal
------------------------------
-12-
DISTRICT OF )
)ss:
COLUMBIA )
I HEREBY CERTIFY that on this 24th day of November, 1998, before the
subscriber a Notary Public in and for the jurisdiction aforesaid, personally
appeared Xxxxxxx Xxxxxx, the AVP of Metropolitan Life Insurance Company,
personally well known to me or proven to be the person who executed the
foregoing and annexed Subordination Agreement, and acknowledged that he/she
executed the same on behalf of the said corporation, for the purposes therein
contained.
IN WITNESS WHEREOF I hereunto set my hand and official seal.
/s/ Xxxxxxxx Xxxxxxx
-------------------------------------------------
Notary Public
My Commission Expires: April 30, 2003
[NOTARIAL SEAL]
-13-
DISTRICT OF )
)ss:
COLUMBIA )
I HEREBY CERTIFY that on this 24th day of November, 1998, before the
subscriber, a Notary Public in and for the jurisdiction aforesaid, personally
appeared Xxxxxxx X. Xxxxx, President of Arlington Square, Inc., the general
partner of Arlington Square Limited Partnership, personally well known to me
or proven to be the person who executed the foregoing and annexed
Subordination Agreement, and acknowledged that he executed the same on behalf
of the said corporation, as the general partner of Arlington Square Limited
Partnership, for the purposes therein contained.
IN WITNESS WHEREOF, I hereunto set my hand and official seal.
/s/ Xxxxxxxx Xxxxxxx
-------------------------------------------------
Notary Public
My Commission Expires: April 30, 2003
[NOTARIAL SEAL]
-14-
DISTRICT OF )
)ss:
COLUMBIA )
I HEREBY CERTIFY that on this 24th day of November, 1998, before the
subscriber, a Notary Public in and for the jurisdiction aforesaid, personally
appeared Xxxxxxx X. Xxxxxxx, the Principal of Allied Capital Corporation,
personally well known to me or proven to be the person who executed the
foregoing and annexed Subordination Agreement, and acknowledged that he/she
executed the same on behalf of the said Allied Capital Commercial
Corporation, for the purposes therein contained.
IN WITNESS WHEREOF, I hereunto set my hand and official seal.
/s/ Xxxxxx Xxxxxxx
-------------------------------------------------
Notary Public
My Commission Expires: October 31, 2002
[NOTARIAL SEAL]
-15-
EXHIBIT A
LEGAL DESCRIPTION OF THE PROPERTY
Parcel A, ARLINGTON SQUARE, as duly dedicated, platted, and recorded in
Deed Book 2210, page 994, among the land records of Arlington County, Virginia.
EXHIBIT B
JUNIOR LOAN DOCUMENTS
Promissory Note dated as of November 20, 1997 from Borrower to Junior Lender.
Allonge and Modification to Promissory Note dated April 23, 1998 from Borrower
to Junior Lender
Loan Agreement dated November 20, 1998 among Borrower, The Washington
Corporation and Junior Lender.
Deed of Trust dated November 20, 1997 from Borrower to Xxxxxx Title and
Escrow Company, Inc., Trustee, recorded November 21, 1997, in Deed Book 2860,
Page 1530.
Assignment of Leases and Rents dated November 20, 1997 from Borrower to Junior
Lender recorded in Deed Book 2860, Page 1560 and Deed Book 2860, Page 1568.
Guarantees dated of even date herewith from each of Borrower's partners to
Junior Lender.
Assignment of Partnership interests As Collateral dated of even date herewith
from each of Borrower's partners to Junior Lender.
Consent, Certification and Agreement to Assignment of Partnership Interests As
Collateral dated of even date herewith from each of Borrower's partners to
Junior Lender.
