LOAN AGREEMENT
Dated: As of February 19, 2003
Among
SHELBOURNE PROPERTIES I L.P. , a Delaware
limited partnership,
SHELBOURNE PROPERTIES II L.P. , a Delaware
limited partnership,
SHELBOURNE PROPERTIES III L.P. , a Delaware
limited partnership,
SHELBOURNE RICHMOND COMPANY LLC, a Delaware
limited liability company,
SHELBOURNE XXXXXXXX COMPANY LLC, a Delaware
limited liability company,
SHELBOURNE LAS VEGAS COMPANY LLC, a Delaware
limited liability company,
CENTURY PARK I JOINT VENTURE, a Delaware
general partnership,
SEATTLE LANDMARK JOINT VENTURE, a Delaware
general partnership,
TRI-COLUMBUS ASSOCIATES, a Delaware
general partnership,
FLEET NATIONAL BANK ("Agent"),
and
FLEET NATIONAL BANK and any other Lenders, if any, which are, or may become,
parties to this Agreement ("Lenders")
----------------
FLEET SECURITIES, INC. ("Arranger")
----------------
$55,000,000.00 LOAN
TABLE OF CONTENTS
-----------------
Page
----
1. BACKGROUND........................................................................................1
1.1 Defined Terms............................................................................1
1.2 Loan Parties ............................................................................1
1.3 Use of Loan Proceeds ....................................................................3
1.4 Guaranties ..............................................................................3
1.5 Loan ....................................................................................4
2. LOAN PROVISIONS...................................................................................4
2.1 Amount of Loan ..........................................................................4
2.2 Term of Loan; Extension Rights ..........................................................4
2.3 Interest Rate and Payment Terms .........................................................4
2.3.1 Borrower's Options............................................................4
2.3.2 Selection To Be Made..........................................................4
2.3.3 Notice........................................................................4
2.3.4 Conversion of Other Advances..................................................5
2.3.5 Telephonic Notice.............................................................5
2.3.6 Limits On Options, One Selection Per Month....................................5
2.3.7 Payment and Calculation of Interest...........................................5
2.3.8 Principal Payments............................................................5
2.3.9 Mandatory Principal Payments..................................................6
2.3.10 Prepayment....................................................................7
2.3.11 Maturity......................................................................7
2.3.12 Method of Payment; Date of Credit.............................................8
2.3.13 Xxxxxxxx......................................................................8
2.3.14 Default Rate..................................................................8
2.3.15 Late Charges..................................................................8
2.3.16 Breakage Fee..................................................................8
2.4 Loan Fees; Agent's Fees .................................................................9
2.4.1 Loan Fees.....................................................................9
2.4.2 Agent's Fees..................................................................9
2.4.3 Extension Fees................................................................9
2.5 Acceleration ............................................................................9
2.6 Conditions to Extending Loan ............................................................9
2.6.1 No Default....................................................................9
2.6.2 Notice From Borrower..........................................................9
2.6.3 Covenant Compliance...........................................................9
2.6.4 Conditions Satisfied..........................................................9
2.6.5 Extension Fee.................................................................9
2.6.6 Additional Documents.........................................................10
2.6.7 Before End of Term...........................................................10
2.7 Additional Provisions Related to Interest Rate Selection................................10
2.7.1 Increased Costs..............................................................10
2.7.2 Illegality...................................................................10
2.7.3 Additional LIBO Rate Conditions..............................................11
2.7.4 Variable Rate Advances.......................................................13
(2)
3. SECURITY FOR THE LOAN; LOAN AND SECURITY DOCUMENTS...............................................13
3.1 Security................................................................................13
3.1.1 Mortgage/ Deed of Trust and Security Agreement...............................13
3.1.2 Collateral Assignment of Leases and Rents....................................13
3.1.3 Pledge and Security Agreement................................................13
3.1.4 Guaranties...................................................................14
3.1.5 Environmental Compliance and Indemnification Agreement.......................14
3.1.6 Additional Documents.........................................................14
3.2 Loan Documents and Security Documents...................................................14
3.3 Removal of Specified Collateral Property................................................14
3.4 Additional Collateral Property..........................................................15
4. CONTINUING AUTHORITY OF AUTHORIZED REPRESENTATIVES...............................................16
5. CONDITIONS PRECEDENT.............................................................................16
5.1 Closing Loan and Funding Loan Advance...................................................16
5.1.1 Satisfactory Loan Documents and Related Documents; Loan Agenda Items.........16
5.1.2 Financial Information; No Material Change....................................16
5.1.3 Warranties and Representations Accurate......................................17
5.1.4 Validity and Sufficiency of Security Documents...............................17
5.1.5 Payment Direction And Authorization..........................................17
5.1.6 Litigation...................................................................17
5.1.7 Formation Documents; Approvals...............................................18
5.1.8 Compliance With Law..........................................................18
5.1.9 Compliance With Financial Covenants..........................................18
5.1.10 Collateral Property Due Diligence............................................18
5.1.11 Condition of Property........................................................18
5.1.12 Insurance....................................................................18
5.1.13 Third Party Consents and Agreements..........................................19
5.1.14 Management Agreement.........................................................19
5.1.15 Cash Management..............................................................19
5.1.16 Legal Opinions...............................................................19
5.1.17 No Default...................................................................19
6. WARRANTIES AND REPRESENTATIONS...................................................................19
6.1 Formation...............................................................................19
6.2 Proceedings; Enforceability.............................................................19
6.3 Conflicts...............................................................................19
6.4 Ownership and Taxpayer Identification Numbers...........................................20
6.5 Litigation..............................................................................20
6.6 Information.............................................................................20
6.7 Taxes...................................................................................20
6.8 Financial Information...................................................................20
6.9 Management and Advisory Agreements......................................................20
6.10 Control Provisions......................................................................21
6.11 Formation Documents.....................................................................21
6.12 Bankruptcy Filings......................................................................21
6.13 Investment Company......................................................................21
(3)
6.14 Holding Company.........................................................................21
6.15 Fraudulent Transfer. ..................................................................21
6.16 Collateral Properties...................................................................22
6.17 Use of Proceeds.........................................................................23
6.18 Insurance...............................................................................23
6.19 Deferred Compensation and ERISA.........................................................23
6.20 No Default..............................................................................23
6.21 Related Documents.......................................................................23
6.22 Qualification as a REIT.................................................................24
6.23 Other Loan Parties' Warranties and Representations......................................24
7. AFFIRMATIVE COVENANTS............................................................................24
7.1 Notices.................................................................................24
7.2 Financial Statements; Reports; Officer's Certificates...................................24
7.2.1 Annual Statements............................................................24
7.2.2 Periodic Statements..........................................................25
7.2.3 Collateral Property Reports..................................................25
7.2.4 SEC Reports..................................................................25
7.2.5 Compliance Certificates......................................................25
7.2.6 Data Requested...............................................................26
7.2.7 Tax Returns..................................................................26
7.2.8 Lease Notices................................................................26
7.2.9 Entity Notices...............................................................26
7.2.10 Property Acquisition or Sale.................................................26
7.2.11 Notices Regarding Payment Direction Letters..................................26
7.2.12 Notice of Termination of Payment Direction Letter............................26
7.2.13 Notice of Litigation.........................................................26
7.2.14 Notice of Hazardous Materials................................................26
7.3 Existence...............................................................................27
7.4 Payment of Taxes........................................................................27
7.5 Insurance; Casualty, Taking.............................................................27
7.6 Inspection..............................................................................27
7.7 Loan Documents..........................................................................28
7.8 Further Assurances......................................................................28
7.9 Books and Records.......................................................................28
7.10 Business and Operations.................................................................28
7.11 Title...................................................................................28
7.12 Estoppel................................................................................29
7.13 ERISA...................................................................................29
7.14 Depository Accounts.....................................................................29
7.15 Cash Flow; Payment Direction Letters....................................................30
7.16 Costs and Expenses......................................................................31
7.17 Appraisals..............................................................................31
7.17.1 Appraisal....................................................................31
7.17.2 Costs of Appraisal...........................................................31
7.18 Indemnification.........................................................................31
7.19 Leasing Matters.........................................................................32
7.19.1 Agent's Approval Required....................................................32
7.19.2 Borrower's Requests..........................................................32
7.20 Loan To Value Ratio Covenant............................................................33
7.20.1 Value of the Collateral Property.............................................33
7.20.2 LTV. .......................................................................33
(4)
7.21 Debt Service Coverage Ratios............................................................33
7.21.1 Certain Definitions..........................................................33
7.21.2 Minimum Consolidated Debt Service Coverage...................................33
7.22 Fixed Charge Ratio......................................................................34
7.23 Minimum Net Worth.......................................................................34
7.24 Cash Sweep Account Test.................................................................34
7.25 Replacement Documentation...............................................................35
7.26 Other Covenants.........................................................................35
7.27 Related Documents.......................................................................35
7.28 T/I CAPEX Fund Accounts.................................................................36
7.29 Broadway Cash Collateral Account........................................................37
7.30 Single-Purpose Entity...................................................................37
7.31 Maintenance of REIT Status; Subsequent Conversion to Liquidating Trust..................37
7.32 Maintenance of American Stock Exchange Listing..........................................37
7.33 Lenders' Consultants....................................................................38
7.33.1 Right to Employ. ...........................................................38
7.33.2 Functions....................................................................38
7.33.3 Payment......................................................................38
7.33.4 Access.......................................................................38
7.33.5 No Liability.................................................................38
8. NEGATIVE COVENANTS...............................................................................38
8.1 No Changes to Borrower and other Shelbourne Entity......................................38
8.2 Restrictions on Liens...................................................................38
8.3 Consolidations, Mergers, Sales of Assets, Issuance and Sale of Equity...................39
8.4 Restrictions on Debt....................................................................40
8.5 Respecting Collateral Properties........................................................41
8.6 Other Business..........................................................................41
8.7 Change of Control.......................................................................41
8.8 Forgiveness of Debt.....................................................................41
8.9 Affiliate Transactions..................................................................41
8.10 Management and Advisory Agreements......................................................41
8.11 Amendments; Terminations of Related Documents...........................................41
8.12 ERISA. 42
8.13 Bankruptcy Filings......................................................................42
8.14 Investment Company......................................................................42
8.15 Holding Company.........................................................................42
8.16 Use of Proceeds.........................................................................42
8.17 Advances and Loans......................................................................42
8.18 Distributions...........................................................................42
8.19 Restrictions on Investments.............................................................42
8.20 Contracts of a Material or Significant Nature...........................................43
8.21 Negative Pledges, etc...................................................................43
8.22 Collateral Property Transactions........................................................43
8.23 Litigation..............................................................................43
9. SPECIAL PROVISIONS...............................................................................43
9.1 Legal Requirements......................................................................43
9.2 Limited Recourse Provisions.............................................................44
9.2.2 Certain Non-Recourse.........................................................44
9.2.3 Additional Matters...........................................................44
(5)
9.3 Payment of Obligations..................................................................44
10. EVENTS OF DEFAULT................................................................................44
10.1 Default and Events of Default...........................................................44
10.1.1 Failure to Pay the Loan......................................................44
10.1.2 Failure to Make Other Payments...............................................44
10.1.3 Note, Security Documents, and Other Loan Documents...........................45
10.1.4 Default under Other Agreements...............................................45
10.1.5 Representations and Warranties...............................................45
10.1.6 Affirmative Covenants........................................................45
10.1.7 Negative Covenants...........................................................45
10.1.8 Financial Status and Insolvency..............................................45
10.1.9 Loan Documents...............................................................46
10.1.10 Default under Related Documents. ...........................................46
10.1.11 Judgments....................................................................46
10.1.12 ERISA........................................................................46
10.1.13 Change of Control............................................................46
10.1.14 Indictment; Forfeiture.......................................................46
10.1.15 Default of Other Obligations.................................................47
10.1.16 Termination of Guaranty or Consent...........................................47
10.1.17 Generally....................................................................47
10.2 Grace Periods and Notice................................................................47
10.2.1 No Notice or Grace Period....................................................47
10.2.2 Nonpayment of Interest and Principal.........................................47
10.2.3 Other Monetary Defaults......................................................47
10.2.4 Nonmonetary Defaults.........................................................47
11. REMEDIES.........................................................................................48
11.1 Remedies................................................................................48
11.1.1 Accelerate Debt..............................................................48
11.1.2 Pursue Remedies..............................................................48
11.2 Written Waivers.........................................................................48
11.3 Power of Attorney.......................................................................48
12. SECURITY INTEREST AND SET-OFF....................................................................48
12.1 Security Interest.......................................................................48
12.2 Set-Off.................................................................................49
12.3 Application.............................................................................49
12.4 Right to Freeze.........................................................................49
12.5 Additional Rights.......................................................................50
13. THE AGENT AND THE LENDERS........................................................................50
13.1 Rights, Duties and Immunities of the Agent..............................................50
13.1.1 Appointment of Agent.........................................................50
13.1.2 Administration of Loan by Agent..............................................50
13.1.3 Delegation of Duties.........................................................50
13.1.4 Exculpatory Provisions.......................................................51
13.1.5 Reliance by Agent............................................................51
13.1.6 Notice of Default............................................................51
(6)
13.1.7 Lenders' Credit Decisions....................................................52
13.1.8 Agent's Reimbursement and Indemnification....................................52
13.1.9 Agent in its Individual Capacity.............................................52
13.1.10 Successor Agent..............................................................52
13.1.11 Duties in the Case of Enforcement............................................53
13.2 Respecting Loans and Payments...........................................................53
13.2.1 Procedures for Loans.........................................................53
13.2.2 Nature of Obligations of Lenders.............................................54
13.2.3 Payments to Agent............................................................54
13.2.4 Distribution of Liquidation Proceeds.........................................54
13.2.5 Adjustments..................................................................55
13.2.6 Distribution by Agent........................................................55
13.2.7 Delinquent Lender............................................................55
13.2.8 Holders......................................................................56
13.3 Assignment and Participation............................................................56
13.3.1 Conditions to Assignment by Lenders..........................................56
13.3.2 Certain Representations and Warranties.......................................57
13.3.3 Register.....................................................................58
13.3.4 Register.....................................................................58
13.3.5 Participations...............................................................58
13.3.6 Disclosure...................................................................58
13.3.7 Miscellaneous Assignment Provisions..........................................58
13.4 Administrative Matters..................................................................59
13.4.1 Amendment, Waiver, Consent, Etc..............................................59
13.4.2 Deemed Consent or Approval...................................................60
13.5 Arranger................................................................................60
14. CASUALTY AND TAKING..............................................................................60
14.1 Casualty or Taking; Obligation To Repair................................................60
14.2 Adjustment of Claims....................................................................60
14.3 Payment and Application of Insurance Proceeds and Condemnation Awards...................60
14.4 Conditions To Release of Insurance Proceeds.............................................62
15. GENERAL PROVISIONS...............................................................................63
15.1 Notices.................................................................................63
15.2 Limitations on Assignment...............................................................64
15.3 Further Assurances......................................................................65
15.4 Payments................................................................................65
15.5 Parties Bound...........................................................................65
15.6 Governing Law; Consent to Jurisdiction; Mutual Waiver of Jury Trial.....................65
15.6.1 Substantial Relationship.....................................................65
15.6.2 Place of Delivery............................................................65
15.6.3 Governing Law................................................................65
15.6.4 Exceptions...................................................................66
15.6.5 Consent to Jurisdiction......................................................66
15.6.6 JURY TRIAL WAIVER............................................................66
15.7 Survival................................................................................67
15.8 Cumulative Rights.......................................................................67
15.9 Claims Against Agent or Lenders.........................................................67
15.9.1 Borrower and Shelbourne OP Must Notify.......................................67
(7)
15.9.2 Remedies.....................................................................67
15.9.3 Limitations..................................................................67
15.10 Regarding Consents......................................................................68
15.11 Obligations Absolute....................................................................68
15.12 Table of Contents, Title and Headings...................................................68
15.13 Counterparts............................................................................68
15.14 Satisfaction of Commitment..............................................................68
15.15 Time Of the Essence.....................................................................68
15.16 No Oral Change..........................................................................68
15.17 Monthly Statements......................................................................68
(8)
EXHIBITS:
---------
Section
Reference
Number
---------
Exhibit A - Definitions.....................................................1.1
Exhibit B - Allocation of Proceeds .........................................1.3
Exhibit C - Note............................................................3.2
Exhibit D - Authorized Representatives........................................4
Exhibit E - Required Property, Hazard and Other Insurance...................7.5
Exhibit F - Ownership Interests and Taxpayer Identification Numbers.........6.4
Exhibit G - Compliance Certificate........................................7.2.5
Exhibit H - Management and Advisory Agreements..............................6.9
Exhibit I - Form of Assignment and Acceptance...........................13.3.1
Exhibit J - Collateral Properties.....................................Exhibit A
Exhibit K - Commitment................................................Exhibit A
Exhibit L - Loan Agenda...............................................Exhibit A
Exhibit M - Non-Collateral Individual Properties......................Exhibit A
(9)
SCHEDULES
Schedule 5.1.2(i) ...........................................................16
Schedule 5.1.11 .............................................................18
Schedule 6.5.................................................................22
Schedule 6.16.2 .............................................................22
Schedule 6.21.4..............................................................23
(10)
LOAN AGREEMENT
--------------
This agreement ("Loan Agreement" or "Agreement") is made and entered into
as of the 19th day of February, 2003, by and between (i) SHELBOURNE RICHMOND
COMPANY LLC, a Delaware limited liability company, SHELBOURNE XXXXXXXX COMPANY
LLC, a Delaware limited liability company, SHELBOURNE LAS VEGAS COMPANY LLC, a
Delaware limited liability company, CENTURY PARK I JOINT VENTURE, a Delaware
general partnership, SEATTLE LANDMARK JOINT VENTURE, a Delaware general
partnership, TRI-COLUMBUS ASSOCIATES, a Delaware general partnership, each
having an address at Seven Xxxxxxxx Xxxxx, Xxxxx 000, X.X. Xxx 0000, Xxxxxx,
Xxxxxxxxxxxxx (singly and collectively, and jointly and severally, as the
"Borrower" or the "Borrowers"), (ii) SHELBOURNE PROPERTIES I L.P., a Delaware
limited partnership ("Shelbourne I Guarantor"), SHELBOURNE PROPERTIES II L.P., a
Delaware limited partnership ("Shelbourne II Guarantor") and SHELBOURNE
PROPERTIES III L.P., a Delaware limited partnership ("Shelbourne III Guarantor),
each having an address at Seven Xxxxxxxx Xxxxx, Xxxxx 000, X.X. Xxx 0000,
Xxxxxx, Xxxxxxxxxxxxx, (xxx) FLEET NATIONAL BANK, a national banking
association, with a place of business at 000 Xxxxxxx Xxxxxx, Xxxxxx,
Xxxxxxxxxxxxx, 00000 and the other lending institutions which are, or may
become, parties to this Agreement pursuant to Section 13.3 (singly and
collectively, the "Lenders"), and (iv) FLEET NATIONAL BANK, a national banking
association, with a place of business at 000 Xxxxxxx Xxxxxx, Xxxxxx,
Xxxxxxxxxxxxx, 00000, as agent for itself and such other lending institutions
(the "Agent").
WITNESSETH:
1. BACKGROUND.
1.1 Defined Terms. Capitalized terms used in this Agreement are defined in
Exhibit A, or in specific sections of this Agreement, or in another Loan
Document, as referenced in Exhibit A.
1.2 Loan Parties.
1.2.1 Shelbourne I Guarantor is a limited partnership organized under
the laws of the State of Delaware of which (i) the sole general partner is
Shelbourne Properties I GP, LLC, a Delaware limited liability company
("Shelbourne I GP") and (ii) the sole holder of the Common Interests is
Shelbourne Properties I, Inc., a Delaware corporation ("Shelbourne I
REIT"), with Shelbourne I REIT having the 100% ownership interest in
Shelbourne I GP.
1.2.2 Shelbourne II Guarantor is a limited partnership organized under
the laws of the State of Delaware of which (i) the sole general partner is
Shelbourne Properties II GP, LLC, a Delaware limited liability company
("Shelbourne II GP") and (ii) the sole holder of the Common Interests is
Shelbourne Properties II, Inc., a Delaware corporation ("Shelbourne II
REIT"), with Shelbourne II REIT having the 100% ownership interest in
Shelbourne II GP.
1.2.3 Shelbourne III Guarantor is a limited partnership organized under
the laws of the State of Delaware of which (i) the sole general partner is
Shelbourne Properties III GP, Inc., a Delaware corporation ("Shelbourne III
GP") and (ii) the sole holder of the Common Interests is Shelbourne
Properties III, Inc., a Delaware corporation ("Shelbourne III REIT"), with
Shelbourne III REIT having the 100% ownership interest in Shelbourne III
GP.
-1-
1.2.4 Shelbourne Richmond Company LLC is a limited liability company
organized under the laws of the State of Delaware of which the sole member
and manager is Shelbourne II Guarantor.
1.2.5 Shelbourne Xxxxxxxx Company LLC is a limited liability company
organized under the laws of the State of Delaware of which the sole member
and manager is Shelbourne II Guarantor.
1.2.6 Shelbourne Las Vegas Company LLC is a limited liability company
organized under the laws of the State of Delaware of which the sole member
and manager is Shelbourne III Guarantor.
1.2.7 Century Park I Joint Venture is a general partnership organized
under the laws of the State of Delaware of which the partners are
Shelbourne I Century Park Company LLC and Shelbourne II Century Park
Company LLC. Shelbourne I Century Park Company LLC is a limited liability
company organized under the laws of the State of Delaware of which the sole
member and manager is Shelbourne I Guarantor and Shelbourne II Century Park
Company LLC is a limited liability company organized under the laws of the
State of Delaware of which the sole member and manager is Shelbourne II
Guarantor.
1.2.8 Seattle Landmark Joint Venture is a general partnership organized
under the laws of the State of Delaware of which the partners are
Shelbourne I Seattle Landmark Company LLC and Shelbourne II Seattle
Landmark Company LLC. Shelbourne I Seattle Landmark Company LLC is a
limited liability company organized under the laws of the State of Delaware
of which the sole member and manager is Shelbourne I Guarantor and
Shelbourne II Seattle Landmark Company LLC is a limited liability company
organized under the laws of the State of Delaware of which the sole member
and manager is Shelbourne II Guarantor.
1.2.9 Tri-Columbus Associates is a general partnership organized under
the laws of the State of Delaware of which the partners are Shelbourne II
Tri-Columbus Company LLC and Shelbourne III Tri-Columbus Company LLC.
Shelbourne II Tri-Columbus Company LLC is a limited liability company
organized under the laws of the State of Delaware of which the sole member
and manager is Shelbourne II Guarantor and Shelbourne III Tri-Columbus
Company LLC is a limited liability company organized under the laws of the
State of Delaware of which the sole member and manager is Shelbourne III
Guarantor.
1.2.10 Shelbourne I GP, Shelbourne II GP, and Shelbourne III GP may be
referred to herein sometimes, singly and collectively, as the "Shelbourne
GP".
1.2.11 Shelbourne I REIT, Shelbourne II REIT, and Shelbourne III REIT
may be referred to herein sometimes, singly and collectively, as the
"Shelbourne REIT".
1.2.12 Shelbourne I Guarantor, Shelbourne II Guarantor, and Shelbourne
III Guarantor may be referred to herein sometimes, singly and collectively,
as the "Shelbourne OP".
1.2.13 The term "Borrower" shall mean individually and collectively,
with all representations, warranties and covenants herein contained to be
applicable to Shelbourne Richmond Company LLC, Shelbourne Xxxxxxxx Company
LLC, Shelbourne Law Vegas
-2-
Company LLC, Century Park I Joint Venture, Seattle Landmark Joint Venture,
and Tri-Columbus Associates, singularly, as the context so provides.
Without limiting the generality of the foregoing, (i) any representations
contained herein of the Borrower shall be applicable to any such Person, as
the context so provides, (ii) any affirmative covenants contained herein
shall be deemed to be covenants of each such Person, and shall require
performance by each such Person, (iii) any negative covenants contained
therein shall be deemed to be covenants of each such Person, and shall be
breached if any such Person fails to comply therewith, (iv) the occurrence
of any Event of Default with respect to any such Person shall be deemed to
be an Event of Default hereunder, and (v) any Obligations of the Borrower
shall be deemed to include any Obligations of all of such Persons, or any
Obligations of any of such Person.
1.3 Use of Loan Proceeds. Borrower has applied to Lenders for a loan of
FIFTY-FIVE MILLION DOLLARS ($55,000,000.00) (the "Loan"), the proceeds of which
are being used to refinance the obligations of the Borrower and certain of the
Guarantors under the Existing Secured Loan, and are being, or may be, used to
provide funds to the Borrower and the Shelbourne Subsidiaries for working
capital purposes, to facilitate the liquidation of real estate properties, to
make Permitted Distributions, and to pay certain closing and all transactional
costs as approved by the Agent, such proceeds to be advanced and allocated to
each Borrower and the Shelbourne I Guarantor in accordance with the schedule
annexed hereto as Exhibit B.
1.4 Guaranties.
1.4.1 As an inducement to Lenders to make the Loan, each of the
following entities:
(i) Shelbourne Richmond Company LLC ,
(ii) Shelbourne Xxxxxxxx Company LLC,
(iii) Shelbourne Las Vegas Company LLC,
(iv) Seattle Landmark Joint Venture,
(v) Tri-Columbus Associates,
(vi) each Shelbourne REIT,
(vii) each Shelbourne GP,
(viii) each Shelbourne OP,
(ix) Shelbourne I Century Park Company LLC,
(x) Shelbourne II Century Park Company LLC,
(xi) Shelbourne I Seattle Landmark Company LLC,
(xii) Shelbourne II Seattle Landmark Company LLC,
(xiii) Shelbourne II Tri-Columbus Company LLC, and
(xiv) Shelbourne III Tri-Columbus Company LLC.
(severally and collectively, together with any other Person who may
hereafter become a Guarantor in accordance with the terms and provisions
hereof, the "Guarantor" or "Guarantors") have agreed to furnish guaranties
to the Agent, on behalf of the Lenders. The establishment of the facility
provided for herein and the making of the Loan is in the best interest of
each of the Guarantors as the proceeds of the Loan are being used to
refinance the obligations of the Borrower and certain of the Guarantors
under the Existing Secured Loan, and are being, or may be, used to provide
funds to the Borrower and certain of the Guarantors for working capital
purposes and to provide funds to facilitate the liquidation of the Borrower
and the Guarantors in accordance with the Plan of Liquidation. The Lenders
have advised the Borrower that the Lenders will not establish this facility
without the Guaranty from the Guarantors.
-3-
1.5 Loan. Subject to all of the terms, conditions and provisions of this
Agreement, and of the agreements and instruments referred to herein, each of the
Lenders agrees severally to make a loan to the Borrower an amount equal to such
Lender's Commitment, and Borrower agrees to accept and, jointly and severally,
repay the Loan.
2. LOAN PROVISIONS.
2.1 Amount of Loan. Subject to all of the terms and conditions hereof, the
Lenders hereby agree to lend to Borrower, and Borrower hereby agrees to borrow
the Loan. In no event shall the aggregate amount of the Loan and Total
Commitment exceed $55,000,000.00. Any and all advances of proceeds of the Loan
shall be made by the Lenders pro rata in accordance with each Lender's
Commitment Percentage.
2.2 Term of Loan; Extension Rights. The Loan shall be for a term (the
"Initial Term") commencing on the date hereof and ending on February 19, 2006
(the "Maturity Date"). The Initial Term may be extended for one year (the "First
Extended Term") until February 19, 2007 (the "First Extended Maturity Date") and
thereafter may be further extended for an additional one year (the "Second
Extended Term") until February 19, 2008 (the "Second Extended Maturity Date"),
in each instance upon satisfaction of the conditions set forth in Section 2.6
(hereinafter, the First Extended Term and the Second Extended Term may be
referred to herein sometimes as the "Extended Term" as may be applicable)
(hereinafter, the First Extended Maturity Date and the Second Extended Maturity
Date may be referred to herein sometimes as the "Extended Maturity Date" as may
be applicable).
2.3 Interest Rate and Payment Terms. The Loan shall be payable as to
interest and principal in accordance with the provisions of this Agreement and
the Note. This Agreement also provides for interest at a Default Rate, Late
Charges, Mandatory Principal Payments, and prepayment rights and fees. All
payments for the account of Lenders shall be applied to the respective accounts
of the Lenders in accordance with each Lender's Commitment Percentage of the
Loan. The Agent will disburse such payments to the Lenders on the date of
receipt thereof if received prior to 10:00 a.m. on such date and, if not, on the
next Business Day. Any and all interest rate selection and conversion provisions
in this Agreement are to be administered by the Agent and to be allocated on a
pro rata basis to the portion of the balance due under the Note held by each
Lender based upon such Lender's Commitment Percentage.
2.3.1 Borrower's Options. Principal amounts outstanding under the Loan
shall bear interest at the following rates, at Borrower's selection,
subject to the conditions and limitations provided for in this Agreement:
(i) Variable Rate or (ii) Effective LIBO Rate.
2.3.2 Selection To Be Made. Borrower shall select, and thereafter may
change the selection of, the applicable interest rate, from the
alternatives otherwise provided for in this Agreement, by giving Agent a
Notice of Rate Selection (in accordance with the requirements of Section
2.3.3, below): (i) prior to the Loan, (ii) prior to the end of each
Interest Period applicable to an Effective LIBO Rate Advance, or (iii) on
any Business Day on which Borrower desires to convert an outstanding
Variable Rate Advance to an Effective LIBO Rate Advance.
2.3.3 Notice. A "Notice of Rate Selection" shall be a written notice,
given by cable, tested telex, telecopier (with authorized signature), or by
telephone if immediately confirmed by such a written notice, from an
Authorized Representative of Borrower which: (i) is irrevocable; (ii) is
received by Agent not later than 10:00 o'clock A.M. Eastern Time: (a) if an
Effective LIBO Rate is selected, at least two (2) Business Days prior to
the first day of the Interest Period to which such selection is to apply,
(b) if a
-4-
Variable Rate is selected, on the first day of the Interest Period to which
it applies; and (iii) as to each selected interest rate option, sets forth
the aggregate principal amount(s) to which such interest rate option(s)
shall apply and the Interest Period(s) applicable to each Effective LIBO
Rate Advance.
2.3.4 Conversion of Other Advances. At the end of each applicable
Interest Period, the applicable Effective LIBO Rate Advance shall be
converted to an Effective LIBO Rate Advance with an Interest Period of
thirty (30) days unless Borrower selects another option in accordance with
the provisions of this Agreement.
2.3.5 Telephonic Notice. Without in any way limiting Borrower's
obligation to confirm in writing any telephonic notice, Agent may act
without liability upon the basis of telephonic notice believed by Agent in
good faith to be from Borrower prior to receipt of written confirmation. In
each case Borrower hereby waives the right to dispute Agent's record of the
terms of such telephonic Notice of Rate Selection in the absence of
manifest error.
2.3.6 Limits On Options, One Selection Per Month. Each Effective LIBO
Rate Advance shall be in a minimum amount of $1,000,000.00. At no time
shall there be outstanding a total of more than four (4) Effective LIBO
Rate Advances combined at any time. If Borrower shall make more than one
(1) interest rate selection in any thirty (30) day period, excluding
conversions of outstanding advances made at the end of an applicable
Interest Period of any previously outstanding Effective LIBO Rate Advance,
Agent may impose and Borrower shall pay a reasonable processing fee for
each such additional selection.
2.3.7 Payment and Calculation of Interest. All interest shall be: (a)
payable in arrears commencing March 1, 2003 and on the first Business Day
of each month thereafter until the principal together with all interest and
other charges payable with respect to the Loan shall be fully paid; and (b)
calculated on the basis of a 360 day year and the actual number of days
elapsed. Each change in the Prime Rate shall simultaneously change the
Variable Rate payable under this Agreement. Interest at the Effective LIBO
Rate shall be computed from and including the first day of the applicable
Interest Period to, but excluding, the last day thereof.
2.3.8 Principal Payments.
(i) Commencing on September 1, 2004 and continuing on the first
day of each calendar month thereafter through the Maturity Date (or as
may be applicable, any Extended Maturity Date), the Borrower shall pay
principal in equal monthly installments of $100,000.00, subject,
however, to the provisions of Section 2.3.8(iii).
(ii) The entire principal balance of the Loan shall be due and
payable in full on the Maturity Date (or as may be applicable, any
Extended Maturity Date).
(iii) Notwithstanding the requirements regarding installment
payments of principal set forth in Section 2.3.8(i), the Borrower shall
no longer be required to make scheduled monthly installments of
principal as herein provided during the periods indicated below so long
as the following conditions exist, as determined solely by the Agent:
-5-
(a) No principal amortization payments shall be required
during the period from September1, 2004 to the Initial Maturity
date, if on or before September 1, 2004, (x) the total principal
payments on the Loan shall be at least $10,000,000.00, and (y)
the LTV is less than or equal to sixty (60%) percent; provided,
however, if at any time during such principal payment deferment
period the condition set forth in subsection (y) is no longer
satisfied, the Borrower shall thereafter be required to resume
the installment payments of principal set forth in Section
2.3.8(i);
(b) If the Initial Maturity Date is extended to the First
Extended Maturity Date, no principal amortization payments shall
be required during the period from the Initial Maturity Date to
the First Extended Maturity Date, if on or before the Initial
Maturity Date, (x) the total principal payments on the Loan shall
be at least $15,000,000.00, and (y) the LTV is less than or equal
fifty-five (55%) percent; provided, however, if at any time
during such principal payment deferment period the condition set
forth in subsection (y) is no longer satisfied, the Borrower
shall thereafter be required to resume the installment payments
of principal set forth in Section 2.3.8(i);
(c) If the First Extended Maturity Date is extended to the
Second Extended Maturity Date, no principal amortization payments
shall be required during the period from the First Extended
Maturity Date to the Second Extended Maturity Date, if on or
before the First Extended Maturity Date, (x) the total principal
payments on the Loan shall be at least $20,000,000.00 and (y) the
LTV is less than or equal to fifty (50%) percent; provided,
however, if at any time during such principal payment deferment
period the condition set forth in subsection (y) is no longer
satisfied, the Borrower shall thereafter be required to resume
the installment payments of principal set forth in Section
2.3.8(i).
2.3.9 Mandatory Principal Payments.
(i) In addition to the scheduled payments of principal, as
provided in Section 2.3.8, the Borrower shall make the following
mandatory prepayments of principal (singly and collectively, the
"Mandatory Principal Payments") each of which shall be due and payable,
except as otherwise provided for herein, on the later of (x) within
five (5) Business Days of the event giving rise to such Mandatory
Principal Prepayment obligation or (y) within three (3) Business Days
of written demand therefor by the Agent; provided, however, at the
request of the Borrower, the Agent agrees to hold the amount of any
such Mandatory Principal Payment in an account in the name of
Shelbourne OP pledged to the Agent (the "Mandatory Principal Payment
Account"), on behalf of the Lenders, to secure the repayment of the
Obligations, until the earlier of (x) the expiration of any relevant
Interest Period so that the prepayment can be made without the Borrower
incurring any costs under Section 2.3.16 or (y) ninety (90) days:
(a) If at any time the outstanding principal balance of the
Loan shall be greater than the Maximum Collateral Property Loan
Amount, then the Borrower shall make a principal payment to the
Agent, on behalf of the Lenders, in the amount of such excess in
immediately available funds
-6-
(b) Except with respect to the Net Proceeds resulting from
the Seattle Tower Casualty, if at any time or from time to time
(x) a Collateral Property Owner shall suffer a Major Event of
Loss with respect to a Collateral Property or (y) any Collateral
Property as to which an Event of Loss (other than a Major Event
of Loss) has occurred is not, or ceases to be, a Restoration
Property, then the Borrower shall prepay the Loan in an amount
equal to the Release Price of such Collateral Property in
immediately available funds; provided, however, such Mandatory
Principal Payment shall be due and payable on the later of (1)
within two (2) Business Days of the date on which the applicable
Collateral Property Owner receives the initial payment of
insurance proceeds or condemnation awards with respect to such
Event of Loss or (2) within three (3) Business Days of written
demand therefor by the Agent.
(c) In connection with the release of the Lien in favor of
the Agent on behalf of the Lenders on any Collateral Property in
accordance with Section 3.3, the Borrower shall prepay the Loan
in an amount equal to the Release Price of the said Collateral
Property in immediately available funds simultaneously with, or
prior to, the release of the said Lien.
(d) If the Borrower or any Collateral Property Owner shall
sell or otherwise transfer a Collateral Property, then the
Borrower shall prepay the Loan in an amount equal to the Release
Price of the said Collateral Property in immediately available
funds.
(ii) Any Mandatory Principal Payment shall be applied in
reduction of the outstanding principal balance of the Loan; provided,
however, that upon the occurrence and continuation of any Event of
Default, any Mandatory Principal Payment shall be so applied in
reduction of the Loan in such order and manner as determined solely by
the Agent.
(iii) Notwithstanding anything herein to the contrary, the entire
principal balance of the Loan, if not payable sooner as and when
provided herein, shall be due and payable in full on the Maturity Date
(or as may be applicable, on the Extended Maturity Date).
2.3.10 Prepayment. The Loan or any portion thereof may be prepaid in
full or in part at any time upon fifteen (15) days prior written notice to
the Agent, without premium or penalty with respect to Variable Rate
Advances and, with respect to Effective LIBO Rate Advances subject to the
payment of any additional amounts provided for in Section 2.3.16. Except as
specifically provided in Section 2.3.9(ii), any Mandatory Principal Payment
and any other partial prepayment of principal shall first be applied to the
principal due in the reverse order of maturity, and no such partial
prepayment shall relieve Borrower of the obligation to pay each installment
of principal when due. Any amounts prepaid may not be reborrowed.
2.3.11 Maturity. At maturity all accrued interest, principal and other
charges due with respect to the Loan shall be due and payable in full and
the principal balance and such other charges, but not unpaid interest,
shall bear interest at the Default Rate until so paid.
-7-
2.3.12 Method of Payment; Date of Credit. All payments of interest,
principal and fees shall be made in lawful money of the United States in
immediately available funds, without counterclaim or setoff and free and
clear of, and without any deduction or withholding for, any taxes or other
payments: (a) by direct charge to an account of Borrower maintained with
Agent (or the then holder of the Loan), (b) by wire transfer to Agent, (c)
to such other bank or address as the Agent may designate in a written
notice to Borrower, or (d) as provided in the Cash Management Agreement.
Payments shall be credited on the Business Day on which immediately
available funds are received prior to one o'clock P.M. Eastern Time;
payments received after one o'clock P.M. Eastern Time shall be credited to
the Loan on the next Business Day. Payments which are by check, which Agent
may at its option accept or reject, or which are not in the form of
immediately available funds shall not be credited to the Loan until such
funds become immediately available to Agent, and, with respect to payments
by check, such credit shall be provisional until the item is finally paid
by the payor bank.
2.3.13 Xxxxxxxx. Agent may submit monthly xxxxxxxx reflecting payments
due; however, any changes in the interest rate which occur between the date
of billing and the due date may be reflected in the billing for a
subsequent month. Neither the failure of Agent to submit a billing nor any
error in any such billing shall excuse Borrower from the obligation to make
full payment of all Borrower's payment obligations when due.
2.3.14 Default Rate. Agent shall have the option of imposing, and
Borrower shall pay upon billing therefor, an interest rate which is four
and one half percent (4.5%) per annum above the Variable Rate ("Default
Rate"): (a) following the occurrence and during the continuance of any
Event of Default, and (b) after Maturity, Borrower's right to select
pricing options shall cease following and during the continuance of any
Event of Default.
2.3.15 Late Charges. Borrower shall pay, upon billing therefor, a late
charge (the "Late Charge") equal to five percent (5%) of the amount of any
regularly scheduled payment of principal, interest, or both, which is not
paid within ten (10) days of the due date thereof (other than with respect
to any payment as to which the said ten (10) day period expires after the
implementation of the Default Rate). Late Charges are: (a) except as
provided above, payable in addition to, and not in limitation of, the
Default Rate, (b) intended to compensate Agent for administrative and
processing costs incident to late payments, (c) are not interest, and (d)
shall not be subject to refund or rebate or credited against any other
amount due.
2.3.16 Breakage Fee. Borrower shall pay to Agent, immediately upon
request and notwithstanding contrary provisions contained in any of the
Loan Documents, such amounts as shall, in the conclusive judgment of Agent
(in the absence of manifest error), compensate Agent and the Lenders for
the loss, cost or expense which they may reasonably incur as a result of
(i) any payment or prepayment, under any circumstances whatsoever, whether
voluntary or involuntary, of all or any portion of an Effective LIBO Rate
Advance on a date other than the last day of the applicable Interest Period
of an Effective LIBO Rate Advance, (ii) the conversion, for any reason
whatsoever, whether voluntary or involuntary, of any Effective LIBO Rate
Advance to a Variable Rate Advance on a date other than the last day of the
applicable Interest Period, (iii) the failure of all or a portion of a Loan
which was to have borne interest at the Effective LIBO Rate pursuant to the
request of Borrower to be made under the Loan Agreement (except as a result
of a failure by any Lender to fulfill such Lender's obligations to fund),
or (iv) the failure of Borrower to borrow in accordance with any request
submitted by it for an Effective LIBO Rate Advance. Such amounts payable by
Borrower shall be equal to any
-8-
administrative costs actually incurred plus any amounts required to
compensate for any loss, cost or expense incurred by reason of the
liquidation or redeployment of deposits or other funds acquired by Agent or
any Lender to fund or maintain an Effective LIBO Rate Advance (herein,
collectively, the "Breakage Fee").
2.4 Loan Fees; Agent's Fees.
2.4.1 Loan Fees. Borrower and the Shelburne OP shall pay Agent for its
own account a "Commitment Fee" (so referred to herein) in accordance with
the written agreement between the Borrower and the Agent.
2.4.2 Agent's Fees. Borrower and the Shelbourne OP shall pay to the
Agent for its own account an "Agent's Fee" in accordance with the written
agreement between the Borrower and the Agent.
2.4.3 Extension Fees. Borrower and Shelbourne OP shall pay to the Agent
for the account of the Lenders "Extension Fees" (so referred to herein) in
amounts representing one quarter of one percent (0.25%) of the then
outstanding principal balance of the Loan at the Maturity Date (and at the
First Extended Maturity Date, as applicable), on each occasion, in
connection with Borrower's exercise of its extension rights, and as a
condition precedent to the effectiveness thereof, in each instance, as
provided in Section 2.6.
2.5 Acceleration. The Agent may, and upon the request of the Required
Lenders shall, accelerate the Loan, after the occurrence and during the
continuance of an Event of Default. Upon such an acceleration, all principal,
accrued interest, Breakage Fee, and costs and expenses shall be due and payable
together with interest on such principal at the Default Rate and any applicable
Breakage Fee and any amounts due under Section 2.3.16.
2.6 Conditions to Extending Loan. Upon satisfaction of each of the
following conditions, Borrower may extend the Loan until the First Extended
Maturity Date, and thereafter, again upon satisfaction of each of the following
conditions, Borrower may further extend the Loan until the Second Extended
Maturity Date:
2.6.1 No Default. No Default shall exist on the date of the Borrower's
written notice for an extension as provided for below and on the Maturity
Date (or as may be applicable, the First Extended Maturity Date).
2.6.2 Notice From Borrower. Borrower shall have given Agent written
notice of Borrower's request to exercise its extension right at least sixty
(60) days, but no more than ninety (90) days, before the Maturity Date (or
as may be applicable, the First Extended Maturity Date).
2.6.3 Covenant Compliance. No breach of any covenants imposed upon
Borrower or Guarantor shall exist including, without limitation, the
Financial Covenants;
2.6.4 Conditions Satisfied. All of the conditions set forth in Section
5.1 of this Agreement, to the extent applicable, shall continue to be
satisfied;
2.6.5 Extension Fee. The Extension Fee of 0.25% of the Loan referred to
in Section 2.4 shall have been paid at least five (5) days prior to the
Maturity Date (or as may be applicable, the First Extended Maturity Date)
and shall be returned to the Borrower if the Loan is not extended for any
reason;
-9-
2.6.6 Additional Documents. Borrower and Guarantor shall have executed
and delivered to Agent such agreements and documents as Agent may
reasonably require to effectuate the extension, provided, however, none of
said requested agreements or documents shall provide for additional
collateral or include any substantive modification of the terms and
provisions of the Loan Documents; and
2.6.7 Before End of Term. Each of the foregoing conditions are
satisfied not later than, and on, the Maturity Date (or as applicable, the
First Extended Maturity Date).
Within twenty (20) days following receipt by Agent of Borrower's written notice
under clause 2.6.2 above requesting the extension accompanied by the items
described in Section 2.6, Agent shall notify Borrower in writing if all of the
conditions precedent to the extension, other than payment of the extension fee,
have been satisfied, or if further information or documents set forth in Section
2.6 are required, specifying such missing information or documents. If Agent
determines that the conditions to extension have been satisfied (or if the Agent
notified the Borrower as provided above of any outstanding information or
documents required by this Section 2.6, specifying such missing information or
documents, and the Borrower provides outstanding information or documents prior
to ten (10) days before the Maturity Date (or as may be applicable, the First
Extended Maturity Date)), other than payment of the Extension Fee, Agent shall
so notify Borrower and upon Agent's receipt of the Extension Fee not later than
five (5) days prior to the Maturity Date (or as may be applicable, the First
Extended Maturity Date), so long as no Default exists, the term of the Loan
shall be extended until the First Extended Maturity Date (or as may be
applicable, the Second Extended Maturity Date).
2.7 Additional Provisions Related to Interest Rate Selection.
2.7.1 Increased Costs. Subject to Section 2.7.3 hereafter, if, due to
any one or more of: (i) the introduction of any applicable law or
regulation or any change (other than any change by way of imposition or
increase of reserve requirements already referred to in the definition of
Adjusted LIBO Rate) in the interpretation or application by any authority
charged with the interpretation or application thereof of any law or
regulation; or (ii) the compliance with any guideline or request from any
governmental central bank or other governmental authority (whether or not
having the force of law), there shall be an increase in the cost to any
Lender of agreeing to make or making, funding or maintaining Effective LIBO
Rate Advances, including without limitation changes which affect or would
affect the amount of capital or reserves required or expected to be
maintained by any Lender, with respect to all or any portion of the Loan,
or any corporation controlling any Lender, on account thereof, then
Borrower from time to time shall, upon written demand by Agent, pay
additional amounts sufficient to indemnify any Lender against the increased
cost. A certificate as to the amount of the increased cost and the reason
therefor submitted to Borrower by Agent, in the absence of manifest error,
shall be conclusive and binding for all purposes.
2.7.2 Illegality. Notwithstanding any other provision of this
Agreement, if the introduction of or change in, or the interpretation of,
any law, treaty, statute, regulation or interpretation thereof shall make
it unlawful, or any central bank or government authority shall assert by
directive, guideline or otherwise, that it is unlawful, for any Lender to
make or maintain Effective LIBO Rate Advances or to continue to fund or
maintain Effective LIBO Rate Advances then, on written notice thereof and
demand by Agent to Borrower, (a) the obligation of Agent to make Effective
LIBO Rate Advances and to convert or continue any Loan as Effective LIBO
Rate Advances shall terminate and (b)
-10-
Borrower shall convert all principal outstanding under this Agreement into
Variable Rate Advances.
2.7.3 Additional LIBO Rate Conditions. The selection by Borrower of an
Effective LIBO Rate and the maintenance of the Loan at such rate shall be
subject to the following additional terms and conditions:
(i) Availability. If, before or after Borrower has selected to
take or maintain an Effective LIBO Rate Advance, Agent notifies
Borrower that:
(a) dollar deposits in the amount and for the maturity
requested are not available to Lenders in the London interbank
market at the rate specified in the definition of Effective LIBO
Rate, or
(b) reasonable means do not exist for Agent to determine the
Effective LIBO Rate for the amounts and maturity requested,
then the principal which would have been an Effective LIBO Rate Advance
shall be a Variable Rate Advance.
(ii) Payments Net of Taxes. All payments and prepayments of
principal and interest under this Agreement shall be made without
withholding or deduction for or on account of any present or future
tax, assessment or other governmental charge (including penalties,
interest and other liabilities related thereto) imposed upon or as a
result of such payment by any political subdivision or taxing authority
of any jurisdiction in which the Borrower is organized or doing
business ("Withholding Taxes") unless the withholding or deduction of
such Withholding Taxes is required by law. In that event, the Borrower
will pay to the Agent such additional amounts as may be necessary in
order that every net payment made hereunder, after deduction or
withholding for or on account of any Withholding Taxes, will not be
less than the amount to be paid hereunder, except that no such
additional amounts shall be payable for or on account of any tax,
assessment or other governmental charge:
(a) that would not have been imposed but for the existence
of any present or former connection between the Agent or the
applicable Lender and the jurisdiction imposing such Withholding
Taxes including, without limitation, the Agent or the applicable
Lender having engaged in a trade or business therein, or having
or having had a permanent establishment therein (other than the
mere ownership of a participation in the Loan or mere receipt of
payment under this Agreement);
(b) that would not have been imposed but for the failure of
the Agent or the applicable Lender to comply with income tax laws
and regulations of any such jurisdiction or any political
subdivision or taxing authority thereof or therein, if such
compliance is required to establish entitlement to an exemption
from such tax, assessment or other governmental charge;
(c) that is based on the net income of the Agent or the
applicable Lender and would not have been imposed but for the
mere ownership of a participation in the Loan or the mere receipt
of payment under this Agreement;
-11-
(d) to which any person that is a transferee of the Agent or
any Lender is subject immediately following the transfer or to
which such transferee will become subject under a tax law,
regulation or other legal pronouncement or holding that has been
enacted, issued or announced as of the date of the transfer, in
either case except to the extent that the transferor was or would
have become subject to such Withholding Taxes;
(e) any combination of (a), (b), (c) and (d) above (the
Withholding Taxes described in clauses (a) through (d) for which
no additional amounts are payable, are hereinafter referred to as
("Excluded Taxes").
(iii) Each Lender organized under the laws of a jurisdiction
outside of the United States (a "Foreign Lender") shall provide to the
Borrower and the Agent two properly completed and executed Internal
Revenue Service Forms W-8BEN or other applicable forms, certificates or
documents prescribed by the Internal Revenue Service of the United
States certifying as to such Foreign Lender's entitlement to exemption
from United States withholding tax under an applicable statute or tax
treaty with respect to payments to be made to such Foreign Lender
hereunder ("Certificates of Exemption"). Each Foreign Lender shall
provide such Certificates of Exemption on or before the Closing Date,
and shall provide Certificates of Exemption on or before the first
business day of each taxable year of such Foreign Lender thereafter.
Each Foreign Lender that becomes a Lender pursuant to Section 13.3
after the Closing Date shall provide Certificates of Exemption on or
before the date such Foreign Lender becomes a Lender and on or before
the first business day of each taxable year of such Foreign Lender
thereafter. Each Foreign Lender further agrees to provide the Borrower
and the Agent with new Certificates of Exemption (x) upon the
obsolescence of any letter, form, certificate or document previously
delivered by the Foreign Lender to the Borrower and the Agent hereunder
or (y) promptly after the occurrence of any event requiring a change in
the status of the Foreign Lender or in any of the other information
provided on the most recent letter, form, certificate or document
previously delivered by the Foreign Lender to the Borrower and the
Agent hereunder. If the Borrower shall provide written notice to the
Foreign Lender that new Certificates of Exemption are required, and if
the Foreign Lender does not submit them within 30 days following the
receipt of such notice and if the failure to do so increases the amount
the Borrower otherwise must pay to or on behalf of the Foreign Lender,
then the Borrower is relieved of the liability to pay the Foreign
Lender the increased amount caused solely by such Foreign Lender's
failure to provide such Certificates and shall be permitted to deduct
the increased withholding tax from the payment due to such Foreign
Lender. Notwithstanding anything to the contrary in this clause (iii),
the Borrower will remain liable to the Foreign Lender for all amounts
not caused by such Foreign Lender's failure to provide new Certificates
of Exemption.
(iv) Notwithstanding the foregoing, if a Foreign Lender that
originally provided Certificates of Exemption indicating that such
Foreign Lender was exempt from United States withholding tax thereafter
ceases to qualify for such exemption, the Borrower shall be obligated
for the payment of all Withholding Taxes resulting from such subsequent
non-exemption, but the Borrower shall have the right to require such
Foreign Lender to assign its pro rata share of the Loan (including its
pro rata share of the interest accrued thereon) to one or more
-12-
Eligible Assignees identified by the Borrower at a purchase price equal
to the principal of and accrued but unpaid interest, costs, and fees
(to the date of purchase) on such Foreign Lender's pro rata share of
the Loan. Until such Foreign Lender's pro rata share of the Loan is
assigned to an Eligible Assignee, such Foreign Lender, if eligible for
a partial exemption from or a reduction in the rate of United States
withholding tax under an applicable statute or tax treaty with respect
to payments to be made to such Foreign Lender hereunder, shall provide
to the Borrower and the Agent two properly completed and executed
Internal Revenue Service Forms W-8BEN or other applicable forms,
certificates or documents prescribed by the Internal Revenue Service of
the United States certifying as to such Foreign Lender's entitlement to
said partial exemption or reduction ("Certificates of Partial
Exemption"), and the provisions of (iii) above shall continue to apply
to such Foreign Lender substituting the words "Certificates of Partial
Exemption" for "Certificates of Exemption" in (iii) above.
2.7.4 Variable Rate Advances. Each Variable Rate Advance shall continue
as a Variable Rate Advance until Maturity of the Loan, unless sooner
converted, in whole or in part, to an Effective LIBO Rate Advance, subject
to the limitations and conditions set forth in this Agreement.
3. SECURITY FOR THE LOAN; LOAN AND SECURITY DOCUMENTS.
3.1 Security. The Loan, together with interest thereon and all other
charges and amounts payable by, and all other obligations of, Borrower and the
other Loan Parties to the Agent and/or each of the Lenders, whenever incurred,
direct or indirect, absolute or contingent, arising under or with respect to
this Agreement, the Security Documents, or any other Loan Document, together
with all other Obligations, shall be secured by the following Collateral which
Borrower agrees to provide and maintain, or cause to be provided and maintained
(whether provided for each in separate agreements or combined with various other
agreements):
3.1.1 Mortgage/ Deed of Trust and Security Agreement. A first priority
mortgage/deed of trust (as applicable) and security agreement (singly and
collectively, the "Mortgage") granted by each Collateral Property Owner to
the Agent or a trustee on behalf of the Agent, as applicable, on behalf of
the Lenders, on (i) each Collateral Property, (ii) all land, improvements,
furniture, fixtures, equipment, and other assets (including, without
limitation, property management agreements, contracts, contract rights,
accounts, Licenses and Permits and general intangibles), including all
after-acquired property, owned, or in which each Collateral Property Owner
has or obtains any interest, in connection with each Collateral Property;
and (iii) all insurance proceeds and other proceeds therefrom.
3.1.2 Collateral Assignment of Leases and Rents. A first priority
collateral assignment of leases and rents (singly and collectively, the
"Assignment of Leases and Rents") granted by each Collateral Property Owner
to the Agent, on behalf of the Lenders, with respect to all Leases of each
Collateral Property and all income and profits to be derived from the
operation and leasing of each Collateral Property.
3.1.3 Pledge and Security Agreement.
(i) A first priority Pledge and Security Agreement granted by the
Shelbourne OP to the Agent, on behalf of the Lenders, respecting the
Broadway Cash Collateral Account.
-13-
(ii) A first priority Pledge and Security Agreement granted by
the Shelbourne OP and the Collateral Property Owners to the Agent, on
behalf of the Lenders, respecting the T/I CAPEX Fund Accounts, the Cash
Sweep Cash Collateral Account, the Mandatory Principal Payment Account,
and all other Accounts and Depository Accounts heretofore or hereafter
maintained by such Persons at Fleet National Bank (or any successor
thereto or affiliate thereof) (the Pledge and Security Agreements
referred to in subparagraphs (i) and (ii), the "Pledge and Security
Agreement").
3.1.4 Guaranties. The unconditional, continuing guaranty from each
Guarantor, pursuant to which each Guarantor shall unconditionally guaranty
the prompt, punctual, and faithful payment of the Loan and the performance
of all Borrower's other Obligations to the Agent and each of the Lenders
under the Loan Documents; (such guaranties referred to this Section being
referred to herein, singly and collectively, as the "Guaranty").
3.1.5 Environmental Compliance and Indemnification Agreement. A
compliance and indemnification agreement with respect to environmental
matters ("Environmental Indemnity") from Borrower and the Guarantors in
favor of the Agent and each of the Lenders.
3.1.6 Additional Documents. Any other documents, instruments and
agreements set forth on the Loan Agenda.
3.2 Loan Documents and Security Documents.
3.2.1 The Loan shall be made, evidenced, administered, secured and
governed by all of the terms, conditions and provisions of the "Loan
Documents", each as the same may be hereafter modified or amended,
consisting of: (i) this Loan Agreement; (ii) a promissory note in the form
of Exhibit C, annexed hereto, payable to the Agent on behalf of the Lenders
in the original principal amount of up to FIFTY-FIVE MILLION DOLLARS
($55,000,000.00)(the "Note"); (iii) the various documents and agreements
referenced in Section 3.1, above; (iv) the Interest Rate Protection
Agreements, if any, that may be issued by Fleet National Bank; (v) the Cash
Management Agreement, (vi) any Payment Direction Letters, and (vii) any
other documents, instruments, or agreements heretofore or hereafter
executed to further evidence, modify, supplement, or otherwise secure the
Loan.
3.2.2 Each of the Loan Documents listed above is dated as of the date
hereof. The Loan Documents referenced in Section 3.1, together with any
such other Loan Documents as may be executed in accordance with Section
3.4, as to any Collateral Property or other Collateral, are sometimes
referred to herein, singly and collectively as the "Security Documents".
3.3 Removal of Specified Collateral Property. From time to time during the
term of this Agreement following (i) Borrower's written request ("Collateral
Release Request") indicating that the Borrower intends to sell the subject
Collateral Property and (ii) satisfaction of the Release Conditions, the Agent
shall release such Collateral Property from the Lien held by the Agent and
terminate the assignment made by such Collateral Property Owner pursuant to
Sections 3.1.2 . The "Release Conditions" are the following conditions
precedent:
3.3.1 The Borrower shall make a Mandatory Principal Payment equal to
the Release Price relative to the subject Collateral Property.
-14-
3.3.2 Upon release of the Lien on the subject Collateral Property, the
Financial Covenants shall remain satisfied (or be satisfied if the release
cures a Default which resulted from the Financial Covenants not being
satisfied).
3.3.3 No Default or Event of Default shall exist under this Agreement
or the other Loan Documents at the time of any such release, except for any
Default or Event of Default which is cured or remedied by the removal of
such Collateral Property.
3.3.4 The Borrower shall execute and deliver to Agent such other and
further certifications, representations, and warranties as the Agent shall
reasonably require.
3.3.5 The Borrower shall pay or reimburse the Agent for all appraisal
fees, title insurance and recording costs, reasonable legal fees and
expenses and other reasonable costs and expenses incurred by Agent in
connection with the release.
Any failure of any removal and release requested by the Borrower to meet all of
the Release Conditions, as determined solely by the Agent, shall be deemed a
rejection of the proposed Collateral Release Request and such Collateral
Property shall remain a Collateral Property hereunder and shall continue be
included within the Collateral.
3.4 Additional Collateral Property. From time to time during the term of
this Agreement following Borrower's written request ("Additional Collateral
Request"), in compliance with, and subject to, the provisions of this Section
3.4, the Agent may, in its sole discretion, accept one or more Individual
Properties (as specifically identified by the Borrower in its Additional
Collateral Request) as Collateral Properties to be held by the Agent as
Collateral along with (or in substitution of one or more of) the other
Collateral Properties. The Agent shall agree to the acceptance of the Individual
Property as an additional Collateral Property only upon the satisfaction of the
following conditions, in a manner reasonably acceptable to the Agent:
3.4.1 The Borrower shall have obtained Preliminary Approval for the
addition of such Individual Property.
3.4.2 The Individual Property satisfies the Collateral Property
Requirements.
3.4.3 No Default or Event of Default by Borrower shall exist under this
Agreement or the other Loan Documents at the time of any such Individual
Property becoming a Collateral Property, except for any Default or Event of
Default which is cured or remedied by such Individual Property becoming a
Collateral Property.
3.4.4 All representations and warranties contained herein or in the
other Loan Documents shall be true and correct in all material respects as
of the time of any such Individual Property becoming a Collateral Property.
3.4.5 The Borrower shall pay or reimburse the Agent for all appraisal
fees, title insurance and recording costs, reasonable legal fees and
expenses and other costs and expenses incurred by Agent in connection with
the additional Collateral Property.
3.4.6 The Borrower, the subject Collateral Property Owner, and the
subject Individual Property shall have satisfied all applicable conditions
precedent set forth in Article 5 prior to the inclusion of the Individual
Property as a Collateral Property.
Any failure of the proposed Collateral Property to meet all of the
foregoing conditions precedent shall be deemed a rejection of the proposed
Collateral Property for that Additional
-15-
Collateral Request unless and until it is accepted by Agent and all of the
foregoing conditions are satisfied or waived by the Agent. Notwithstanding
anything herein to the contrary, the Borrower acknowledges that the approval by
the Agent to accept an additional Collateral Property is in the sole and
exclusive discretion of the Agent and that the Borrower WAIVES any right to
claim that the Agent and/or the Lenders were not reasonable, commercially
reasonable, or failed to act in good faith in making such determination
regardless of whether the Borrower has otherwise complied with the requirements
of this Section 3.4. Upon the acceptance of any additional Individual Property
as a Collateral Property, the Agent and the Borrower shall establish the Partial
Release Amount for such Collateral Property and adjust the Partial Release
Amount for any other Collateral Properties. In the event that the Borrower and
the Agent are unable to make such determination, the Agent shall, in its
discretion, make such determination.
4. CONTINUING AUTHORITY OF AUTHORIZED REPRESENTATIVES. Agent and each of
the Lenders are authorized to rely upon the continuing authority of the persons,
officers, signatories or agents hereafter designated (the "Authorized
Representatives") to bind Borrower with respect to all matters pertaining to the
Loan and the Loan Documents including, but not limited to, the selection of
interest rates, the submission of the request for the Loan Advance and
certificates with regard thereto. Such authorization may be changed only upon
written notice to Agent accompanied by evidence, reasonably satisfactory to
Agent, of the authority of the person giving such notice. The present Authorized
Representatives are listed on Exhibit D. The Agent shall have a right of
approval, not to be unreasonably withheld or delayed, over the identity of the
Authorized Representatives so as to assure Agent and each of the Lenders that
each Authorized Representative is a responsible and senior official of Borrower.
5. CONDITIONS PRECEDENT.
5.1 Closing Loan and Funding Loan Advance. It shall be a condition
precedent of Lenders' obligation to close the Loan and to fund the proceeds of
the Loan (the "Loan Advance") that each of the following conditions precedent be
satisfied in full (as determined by each Lender in its discretion which
discretion shall be exercised in good faith having due regard for the advice of
the Agent), unless specifically waived in writing by all of the Lenders at or
prior to the date of the funding of the Loan Advance (the date of the closing of
the Loan shall be referred to herein as the "Closing Date" and the date of the
funding of the Loan shall be referred to herein as the "Funding Date"):
5.1.1 Satisfactory Loan Documents and Related Documents; Loan Agenda
Items. On the Funding Date, each of the Loan Documents and the Related
Documents shall be satisfactory in form, content and manner of execution
and delivery to Agent and Agent's counsel and all Loan Documents and
Related Documents shall be in full force and effect. Without limiting the
foregoing, the Agent shall have received each of the instruments,
documents, and agreements itemized on the Loan Agenda, each executed and
delivered in favor of, and/or in form and substance reasonably satisfactory
to, the Agent.
5.1.2 Financial Information; No Material Change.
(i) Except for those matters listed on Schedule 5.1.2 hereof, no
change shall have occurred in the financial condition, business,
affairs, operations or control of Borrower and/or the other Loan
Parties since the date of their respective financial statements or
financial projections most recently delivered to Agent, which change
has had or could reasonably be expected to have a Material Adverse
Effect; and Borrower and the other Loan Parties shall have furnished
Agent such other financial information, projections, and certifications
as reasonably requested by the Agent.
-16-
(ii) The absence of any material adverse change in the loan
syndication, financial or capital market conditions generally from
those currently in effect.
(iii) The Borrower shall have provided to the Agent a copy
certified by an officer of Borrower of a pro-forma balance sheet after
giving effect to the Loan hereunder, to evidence that the Borrower and
each of the Guarantors is solvent, has assets having a fair value in
excess of the amount required to pay such Person's probable liabilities
on such Person's existing Debts as such become absolute and mature, and
has adequate capital for the conduct of such Person's business and the
ability to pay such Person's Debts from time to time incurred in
connection therewith as such Debts mature.
5.1.3 Warranties and Representations Accurate. All warranties and
representations made by or on behalf of any of the Borrower and the other
Loan Parties, or any of them, to Agent or any of the Lenders shall be true,
accurate and complete in all material respects and, to the best of the
Borrower's and Shelbourne OP's Knowledge, shall not omit any material fact
necessary to make the same not misleading.
5.1.4 Validity and Sufficiency of Security Documents. The Security
Documents shall create a valid and perfected lien on the property described
therein (singly and collectively, the "Collateral") and each of the
Security Documents and related UCC filings shall have been duly recorded
and filed to the satisfaction of Agent and Agent's counsel, including,
without limitation, as follows:
(i) On the Closing Date, the Borrower, the other Loan Parties,
and any other Persons executing Loan Documents on the Closing Date
shall have delivered to the Agent evidence of the completion of all
recordings and filings of, or with respect to, the Security Documents
or, in the case of UCC-1 financing statements, delivery of such
financing statements in proper form for recording, and shall have taken
all such other actions as may be necessary or, in the opinion of the
Agent, desirable to perfect the Liens and security interests intended
to be created by the Security Documents in the Collateral covered
thereby. Such filings, recordings and other actions shall include,
without limitation, the Mortgage, the Assignment of Leases and Rents,
and the UCC-1 financing statements, and delivery to the Agent of the
certificates, if any, representing the respective partnership and
membership interests in each partnership and limited liability company,
the partnership or membership interests in which are being pledged to
Agent on behalf of the Lenders pursuant to the Security Documents.
(ii) On or prior to the Closing Date, the Agent shall have
received the results of a UCC, tax lien and judgment search as may be
reasonably requested by the Agent with respect to the Borrower and any
other Loan Parties, and the results of such search shall indicate there
are no judgments or Liens not permitted under the Loan Documents or to
be satisfied with the proceeds of the initial Loan Advance.
5.1.5 Payment Direction And Authorization. Agent shall have received
evidence of such Payment Direction Letters required by the Agent in order
to evidence the intended management of the cash flow of the Borrower and
certain of the Loan Parties in accordance with the Cash Management
Agreement.
5.1.6 Litigation. On the Funding Date, there shall not be any actions,
suits or proceedings at law or in equity or by or before any governmental
instrumentality or other agency or regulatory authority by any entity
(private or governmental) pending or, to the best
-17-
of the Borrower's and Shelbourne OP's Knowledge, threatened with respect to
the Loan, the transactions contemplated in the Loan Documents, the
Collateral Properties, the Borrower, the Shelbourne Subsidiaries, or any
other Loan Party, which the Agent shall have determined in good faith
either (i) not to be fully covered by an insurance policy by a reputable
and financially viable insurance company or (ii) to the extent it is not so
covered, to be likely to have a Material Adverse Effect.
5.1.7 Formation Documents; Approvals. On the Closing Date, the Agent
shall have received a certificate of an officer of each Shelbourne GP and
each Shelbourne REIT annexing and certifying as to (a) resolutions of such
entity authorizing and approving the transactions contemplated by the Loan
Documents, and the execution and delivery thereof by such entity in respect
of the documents to which it is a party on its own behalf, or as a general
partner or managing member of any Loan Party, in respect of any of the Loan
Documents, (b) signatures and incumbency of all officers of such entity
executing documentation on behalf of such entity or on behalf of any Loan
Party as to which such entity is a general partner or managing member, as
the case may be, in connection with the transactions contemplated by the
Loan Documents, (c) the Formation Documents of such entity and the Loan
Party which it is a managing member or general partner of, having been duly
executed, delivered and filed (to the extent required by applicable Legal
Requirements) and remaining in full force and effect and unmodified as of
the date of such certificate (and annexing copies thereof), (d) such entity
and the Loan Party which it is a managing member or general partner of,
being in good standing and authorized to do business in each jurisdiction
where the conduct of its business and ownership of its assets requires such
qualification, and (e) the compliance of the Loan and the transactions
contemplated herein with the Plan of Liquidation and the Restructuring
Agreements.
5.1.8 Compliance With Law. There are no Legal Requirements which
prohibit or adversely limit the capacity or authority of the Borrower to
enter into the Loan or any Loan Party to execute the Loan Documents to
which it is a party, and perform the obligations of such Person with
respect thereto.
5.1.9 Compliance With Financial Covenants. Agent shall have received an
Officer's Certificate reflecting the compliance with the Financial
Covenants and the terms and conditions hereof.
5.1.10 Collateral Property Due Diligence. Agent shall have received and
completed a review of such due diligence as the Agent may require with
respect to any Collateral Property, including, without limitation,
satisfaction of the Collateral Property Requirements.
5.1.11 Condition of Property. Except as set forth in Schedule 5.1.11
hereto, there shall have been no uninsured unrepaired or unrestored damage
or destruction by fire or otherwise to any of the real or tangible personal
property comprising or intended to comprise the Collateral Properties which
could reasonably be expected to have a Material Adverse Effect.
5.1.12 Insurance. Borrower shall have provided to Agent and each of the
Lenders with respect to each Collateral Property, the Borrower, the
Guarantors, and the Collateral, evidence of: (i) insurance coverages which
meet the property, hazard, terrorism and other insurance requirements set
forth on Exhibit E of this Loan Agreement to the satisfaction of Agent.
-18-
5.1.13 Third Party Consents and Agreements. The Agent shall have
received such third party consents and agreements as the Agent may
reasonably require with respect to the Loan.
5.1.14 Management Agreement. The Agent shall have received a consent
from each property manager of the Collateral Properties as to the
collateral assignment of the applicable Management Agreement to the Agent,
on behalf of the Lenders.
5.1.15 Cash Management. The Borrower, the Shelbourne OP, the Shelbourne
REIT, the Shelbourne GP, and each Property Owner shall open a Depository
Account, as provided for herein, and the Borrower, the Shelbourne OP, and
each Property Owner shall enter into a Cash Management Agreement with the
Agent, in form and substance reasonably satisfactory to the Agent.
5.1.16 Legal Opinions. Agent shall have received and approved legal
opinion letters from counsel representing the Borrower and the other Loan
Parties which meet Agent's legal opinion requirements and covering such
matters incident to the transactions contemplated herein, as the Agent may
reasonably request.
5.1.17 No Default. There shall not be any Default under any of the Loan
Documents.
6. WARRANTIES AND REPRESENTATIONS. Borrower and Shelbourne OP warrant and
represent to Agent and each of the Lenders for the express purpose of inducing
Lenders to enter into this Agreement, to make the Loan Advance, and to otherwise
complete all of the transactions contemplated hereby that upon the date of the
Loan Advance and at all times thereafter until the Loan has been repaid and all
Obligations have been satisfied as follows:
6.1 Formation. Each Loan Party has been duly formed and is validly existing
and in good standing as a corporation, partnership or limited liability company,
as the case may be, under the laws of the State of its formation. Each Loan
Party has the requisite corporate, partnership or company power and authority,
as applicable, to own its assets and conduct its businesses as currently
conducted and owned, and to enter into and perform its obligations under each
Loan Document to which it is a party. Each Loan Party is in good standing and
authorized to do business in each jurisdiction where the ownership of its assets
and/or the conduct of its business requires such qualification except where the
failure to be so qualified would not have a Material Adverse Effect.
6.2 Proceedings; Enforceability. Each Loan Party has taken all requisite
corporate, partnership or company action, as applicable, to authorize the
execution, delivery and performance by such Loan Party of the Loan Documents to
which it is a party, including, without limitation, any such action required by
the Plan of Liquidation. Each Loan Document which is required to be executed and
delivered on or prior to the date on which this representation and warranty is
being made has been duly authorized, executed and delivered and constitutes the
legal, valid and binding obligation of each Loan Party thereto, enforceable
against each such Loan Party in accordance with its respective terms except to
the extent that the enforceability thereof may be limited by applicable
bankruptcy, insolvency and similar laws affecting rights of creditors generally
and to general principles of equity (regardless of whether enforcement is sought
in a proceeding in equity or at law).
6.3 Conflicts. Neither the execution, delivery and performance of the Loan
Documents by the Loan Parties or compliance by any Loan Party with the terms and
provisions thereof (including, without limitation, the granting of Liens
pursuant to the Security Documents), (i) will contravene any provision of any
law, statute, rule or regulation or any order, writ, injunction or decree of any
court or governmental instrumentality, (ii) will conflict with or result in any
breach of
-19-
any of the terms, covenants, conditions of, or constitute a default under, or
result in the creation or imposition (or the obligation to create or impose) of
any Lien (except pursuant to the Security Documents) upon any of the property or
assets of any Loan Party pursuant to the terms of any indenture, mortgage, deed
of trust, credit agreement or loan agreement or any other agreement, contract or
instrument to which any Loan Party is a party or by which it or any of its
properties or assets is bound or to which it may be subject, or (iii) will
violate any provision of any Formation Document of any Loan Party or any Related
Document.
6.4 Ownership and Taxpayer Identification Numbers. All of the partners,
owners, stockholders, and members, respectively and as may be applicable, of
each Borrower and Guarantor (other than the shareholders of the Shelbourne REIT
and the holders of the Preferred Interests) are listed in Exhibit F. The exact
correct name and organizational number(s) and federal employment identification
number(s) of the Borrower and each Guarantor are accurately stated in Exhibit F.
Each Shelbourne Entity which is not a Guarantor is listed in Exhibit F.
6.5 Litigation. Except as set forth in Schedule 6.5, there are no actions,
suits or proceedings at law or in equity or by or before any governmental
instrumentality or other agency or regulatory authority by any entity (private
or governmental) pending or, to the best of the Borrower's and Shelbourne OP's
Knowledge, threatened with respect to the Loan, the transactions contemplated in
the Loan Documents, or any other Shelbourne Subsidiary, which are not fully
covered by an insurance policy issued by a reputable and financially viable
insurance company, or, to the extent not so covered, could have or reasonably be
expected to have a Material Adverse Effect.
6.6 Information. All factual information furnished by or on behalf of the
Borrower or any Loan Party to the Agent and/or any of the Lenders (including,
without limitation, all information contained in the Loan Documents) for
purposes of or in connection with this Agreement, the other Loan Documents or
any transaction contemplated herein or therein is, and all other such factual
information hereafter furnished by or on behalf of the Borrower or any Loan
Party to the Agent and/or any of the Lenders will be, true and accurate in all
material respects on the date as of which such information is dated or certified
and not incomplete by omitting to state any fact necessary to make such
information not misleading in any material respect at such time in light of the
circumstances under which such information was provided. There is no material
fact presently known to the Borrower which has not been disclosed to Agent which
could have or reasonably be expected to have a Material Adverse Effect.
6.7 Taxes. All Loan Parties have made all required tax filings and are not
delinquent in the payment of any federal, state and local taxes, assessments,
impositions or other governmental charges applicable to them and/or their
respective assets, except to the extent same are being contested in a manner
which complies with the requirements of Section 9.1.
6.8 Financial Information. The financial statements and financial
projections of the Borrower and the Loan Parties delivered to the Agent present
fairly the financial conditions of each at the dates of such statements of
financial condition and the results of operations for the periods covered
thereby. Except as set forth in Schedule 5.1.2, since the dates of the relevant
financial statements, no change has occurred which could have or reasonably be
expected to have a Material Adverse Effect. All financial statements and
projections of the Borrower, the Shelbourne Subsidiaries, or any other Loan
Parties hereafter furnished to Agent or any of the Lenders shall be true,
accurate and complete in all material respects and shall fairly present the
financial condition of Borrower and respective Loan Party as of the date
thereof.
6.9 Management and Advisory Agreements.
-20-
6.9.1 True and correct copies of each Management Agreement has been
delivered to the Agent and each is in full force and effect and no material
default has occurred thereunder. There are no property management
agreements respecting any of the Collateral Properties which provides for a
payment of a fee for such services by the Borrower, any Loan Party, or any
Shelbourne Subsidiary, except as set forth in Exhibit H. The basic payments
required under any property management agreement relative to each
Non-Collateral Individual Properties does not exceed three (3%) percent of
gross revenue per year.
6.9.2 True and correct copies of each Advisory Agreement and Kestrel
Agreement have been delivered to the Agent and each is in full force and
effect and no material default has occurred thereunder. There are no
management agreements, advisory agreements, investment agreements or asset
management agreements respecting the Shelbourne REIT, the Shelbourne OP,
the Shelbourne GP, the Borrower or any Shelbourne Subsidiary which provides
for a payment of a fee for such services by the Borrower, any Loan Party,
or any Shelbourne Subsidiary, except as provided for in Section 6.9.1,
8.10.1 and as set forth in Exhibit H.
6.10 Control Provisions. The applicable Shelbourne OP controls, directly or
indirectly, and without the requirement for consent of any other Person, the
management of each Collateral Property Owner.
6.11 Formation Documents. The Borrower has delivered or caused to be
delivered to the Agent true and complete copies of all Formation Documents of
the Loan Parties, and all amendments thereto.
6.12 Bankruptcy Filings. No Loan Party is contemplating either a filing of
a petition under any state or federal bankruptcy or insolvency laws or the
liquidation of all or a major portion of its assets or property, and the
Borrower and the Shelbourne OP have no knowledge of any Person contemplating the
filing of any such petition against any Loan Party.
6.13 Investment Company. No Loan Party is an "investment company" or a
company "controlled" by an "investment company," within the meaning of the
Investment Company Act of 1940, as amended.
6.14 Holding Company. No Loan Party is a "holding company," or a
"subsidiary company" of a "holding company," or an "affiliate" of a "holding
company" or of a "subsidiary company" of a "holding company," within the meaning
of the Public Utility Holding Company Act of 1935, as amended.
6.15 Fraudulent Transfer. None of the Loan Parties (i) has entered into the
Loan or any Loan Document with the intent to hinder, delay, or defraud any
creditor and (ii) has not received reasonably equivalent value in exchange of
the respective Obligations under the Loan Documents. Giving effect to the
transactions contemplated by the Loan Documents, to Borrower's and Shelbourne
OP's Knowledge, the fair saleable value of each Loan Party's assets, inclusive
of the value of any indemnification or contribution agreement from any other
Loan Party, exceeds and will, immediately following the execution and delivery
of the Loan Documents, exceed the respective total liabilities of such Loan
Party, including subordinated, unliquidated, disputed or contingent liabilities.
To Borrower's and Shelbourne OP's Knowledge, the fair saleable value of each
Loan Party's assets, together with value of any indemnification or contribution
agreement from any other Loan Party, is and will, immediately following the
execution and delivery of the Loan Documents, be greater than its probable
liabilities, including the maximum amount of its contingent liabilities or its
Debts as such Debts become absolute and matured. Each Loan Party's assets do not
and, immediately following the execution and delivery of the Loan Documents will
not, constitute
-21-
unreasonably small capital to carry on its business as conducted or as proposed
to be conducted. No Loan Party intends to incur Debts and liabilities (including
contingent liabilities and other commitments) beyond its ability to pay such
Debts as they mature (taking into account the timing and amounts to be payable
on or in respect of its obligations).
6.16 Collateral Properties.
6.16.1 Each of the Collateral Property Owners possesses such Licenses
and Permits issued by the appropriate federal, state, or local regulatory
agencies or bodies necessary to own and operate each Collateral Property,
except where the failure to possess any such License or Permit would not
have a Material Adverse Effect. The Collateral Property Owners are in
material compliance with the terms and conditions of all such Licenses and
Permits, except where the failure so to comply would not, singly or in the
aggregate, result in a Material Adverse Effect. All of the Licenses and
Permits are valid and in full force and effect, except where the invalidity
of such Licenses and Permits or the failure of such Licenses and Permits to
be in full force and effect would not result in a Material Adverse Effect.
Neither the Borrower nor any of the Collateral Property Owners has received
any notice of proceedings relating to the revocation or modification of any
such Licenses and Permits which, singly or in the aggregate, if the subject
of an unfavorable decision, ruling or finding, would result in a Material
Adverse Effect.
6.16.2 (i) The Collateral Property Owners have fee simple title to the
Collateral Properties; (ii) the interest of the Collateral Property Owners
in the Collateral Properties are not subject to any Liens except for those
in favor of the Agent on behalf of the Lenders securing the repayment of
Obligations and other Permitted Liens, (iii) neither the Borrower nor any
of the Collateral Property Owners has received notice of the assertion of
any claim by anyone adverse to any Loan Party's ownership, or leasehold
rights in and to any Collateral Property; and (iv) except as set forth in
Schedule 6.16.2 hereto, no Person has an option or right of first refusal
to purchase all or part of any Collateral Property or any interest therein
which has not been waived;
6.16.3 Except to the extent the failure of the following to be true
would not result in a Material Adverse Effect or is disclosed in the
Environmental Reports (as defined in the Environmental Indemnity), (i) each
Collateral Property is free of any Hazardous Materials in violation of any
Environmental Legal Requirements applicable to such property; (ii) none of
the Collateral Property Owners or Borrower has received any notice of a
claim under or pursuant to any Environmental Legal Requirements applicable
to an Collateral Property or under common law pertaining to Hazardous
Materials on or originating from any Collateral Property; and (iii) none of
the Collateral Property Owners or Borrower has received any notice from any
Governmental Authority claiming any material violation of any Environmental
Legal Requirements that is uncured or unremediated;
6.16.4 Except to the extent the failure of the following to be true
would not result in a Material Adverse Effect, (i) with respect to the
Collateral Properties, each Major Lease is in full force and effect, (ii)
none of the Collateral Property Owners is in default in the performance of
any material obligation under any Major Lease and the Borrower has no
knowledge of any circumstances which, with the passage of time or the
giving of notice, or both, would constitute an event of default by any
party under any of the Major Leases, (iii) no tenant is in monetary default
beyond 30 days or material nonmonetary default under any Major Lease, (iv)
there are no actions, voluntary or involuntary, pending against any tenant
under a Major Lease under any bankruptcy or insolvency laws, and (v) none
of the Leases and none of the rents or other amounts payable thereunder has
been assigned, pledged or encumbered by any of the Collateral Property
Owners or any other Person, except with
-22-
respect to the Lien in favor of the Agent on behalf of the Lenders securing
the repayment of Obligations.
6.16.5 All matters described and set forth in Schedule 5.1.11 regarding
the Seattle Tower Casualty are true, correct and compete in all material
respects.
6.17 Use of Proceeds. The proceeds of the Loan shall be used solely and
exclusively as provided in Section 1.3 and the Plan of Liquidation. No portion
of the proceeds of the Loan shall be used directly or indirectly, and whether
immediately, incidentally or ultimately (i) to purchase or carry any margin
stock or to extend credit to others for the purpose thereof or to repay or
refund indebtedness previously incurred for such purpose, or (ii) for any
purpose which would violate or in inconsistent with the provisions of
regulations of the Board of Governors of the Federal Reserve System including,
without limitation, Regulations T, U and X thereof.
6.18 Insurance. The Collateral Properties are insured by insurers of
recognized financial responsibility against such losses and risks in compliance
with the requirements of Exhibit E hereto. 6.19 Deferred Compensation and ERISA.
Neither Borrower nor any other Loan Party, has any pension, profit sharing,
stock option, insurance or other arrangement or Plan for employees covered by
ERISA except as may be designated to Agent in writing by Borrower from time to
time and, to the best of the Borrower's and Shelbourne OP's Knowledge, no
Reportable Event has occurred and is now continuing with respect to any such
ERISA Plan. The granting of the Loan, the performance by Borrower and/or any of
the Loan Parties of their respective obligations under the Loan Documents and
Borrower's and/or such other Loan Parties' conducting of their respective
operations do not and will not violate any provisions of ERISA.
6.20 No Default. There is no Default on the part of Borrower or any of the
other Loan Parties under this Agreement or any of the other Loan Documents and
no event has occurred and is continuing which would constitute a Default under
any Loan Document.
6.21 Related Documents.
6.21.1 To the extent not provided for otherwise in this Article 6, true
and correct copies of all other Related Documents have been delivered to
the Agent, each of which is in full force and effect and no material
default has occurred thereunder.
6.21.2 The Plan of Liquidation has an Effective Time (as defined in the
Plan of Liquidation) of October 29, 2002, and provides for the liquidation
of the assets of the Shelbourne REIT by October 29, 2005.
6.21.3 No event has occurred which has, or would solely with the
passage of time, trigger a Put Event (as defined in the Restructuring
Agreements).
6.21.4 Except (i) for the direct or contingent obligations described in
Schedule 6.21.4, (ii) for the payments due to Kestrel Management, L.P.
provided for in the Kestrel Agreements, (iii) for Distributions, the
payment of which are subject to the terms and provisions of Section 8.18,
or (iv) for the contingent obligations provided for in the Accotel
Guaranty, none of the Borrower, the Shelbourne REIT, the Shelbourne OP, the
Shelbourne GP, any Shelbourne Subsidiary (other than Xxxxxxxxxx XX LLC and
any Subsidiaries of Xxxxxxxxxx XX LLC), or any other Loan Party has, or may
incur, any financial obligations, whether direct or contingent, by guaranty
or otherwise, to any other Person under, or arising out of, any of the
Advisory Agreements, the Purchase and Contribution Agreement, the
-00-
Xxxxxxx Xxxxxxxxxx, the Restructuring Agreement, the Preferred Interests,
or the ownership of the Accor Property.
6.22 Qualification as a REIT. Each Shelbourne REIT is qualified as a REIT
under the provisions of the Code. All appropriate federal income tax returns for
the fiscal years through December 31, 2001 have been filed by Shelbourne REIT
with the IRS and no previously filed return has been examined and reported on by
the IRS. Shelbourne REIT has not incurred any liability for excise taxes
pursuant to Section 4981 of the Code. Shelbourne REIT is organized in conformity
with the requirements for qualification as a REIT pursuant to Sections 856
through 860 of the Code, and Shelbourne REIT's proposed method of operation
consistent with Shelbourne REIT's business and the business activities
contemplated by this Agreement will enable each to meet the requirements for
qualification and taxation as a REIT under the Code.
6.23 Other Loan Parties' Warranties and Representations. Borrower and
Shelbourne OP have no reason to believe that any warranties or representations
made in writing by any of the Loan Parties to the Agent or any of the Lenders
are untrue, incomplete or misleading in any material respect.
7. AFFIRMATIVE COVENANTS. Borrower and Shelbourne OP covenant and agree
that from the date hereof and so long as any indebtedness is outstanding
hereunder, or any of the Loan or other Obligations remains outstanding, as
follows:
7.1 Notices. Borrower and Shelbourne OP shall, with reasonable promptness,
but in all events within five (5) days after it has actual Knowledge thereof,
notify Agent and each of the Lenders in writing of the occurrence of any act,
event or condition which constitutes a Default or Event of Default under any of
the Loan Documents or any Related Document. Such notification shall include a
written statement of any remedial or curative actions which Borrower proposes to
undertake and/or to cause any of the other Loan Parties to undertake to cure or
remedy such Default or Event of Default.
7.2 Financial Statements; Reports; Officer's Certificates. Borrower and
Shelbourne OP shall furnish or cause to be furnished to Agent as set forth
herein from time to time, the following financial statements, reports,
certificates, and other information, all in form, manner of presentation and
substance acceptable to Agent and each of the Lenders:
7.2.1 Annual Statements.
(i) Within ninety (90) days after the close of each fiscal year
of the Shelbourne REIT, the consolidated audited statements of
financial condition of the Shelbourne REIT and each other Shelbourne
Entity as at the end of such fiscal year and the related consolidated
statements of income and retained earnings and statements of changes in
financial position for such fiscal year, in each case, commencing with
the Fiscal Year ending December 31, 2002, setting forth comparative
figures for the preceding fiscal year and certified by Deloitte &
Touche LLP or other independent certified public accountants of
recognized national standing reasonably acceptable to the Agent, in
each case together with a report of such accounting firm stating that
in the course of its regular audit of the financial statements of such
Party, which audit was conducted in accordance with GAAP, consistently
applied, such accounting firm obtained no knowledge of any Default or
Event of Default which has occurred and is continuing or, if in the
opinion of such accounting firm such a Default or Event of Default has
occurred and is continuing, a statement as to the nature thereof; such
financial statements to include and to be
-24-
supplemented by such detail and supporting data and schedules as Agent
may from time to time reasonably determine;
(ii) The Shelbourne REIT, no sooner than ninety (90) days nor
later than sixty (60) days prior to the end of each of the Shelbourne
REIT's Fiscal Years, shall provide the Agent with (i) an updated and
extended business plan which shall go out at least through the end of
the then next Fiscal Year and shall include an income statement,
balance sheet, and statement of cash flow, by month, each prepared, on
a Consolidated basis and consistent with the Shelbourne REIT's then
current practices and otherwise in form and substance satisfactory to
the Agent, and (ii) a proposed budget respecting anticipated tenant
improvement and capital expenditures for the then next Fiscal Year of
the Shelbourne REIT and all Collateral Property Owners (the Agent,
following the receipt of any of such proposed budget, may, but shall
not be under any obligation to, provide its written sign-off on such
budget, in which event, such budget shall become the "T/I and Capital
Expenditure Budget" so referred to herein).
7.2.2 Periodic Statements Within sixty (60) days after the close of
each calendar quarter (except for the quarter ending on December 31), the
following: (i) the consolidated statements of financial condition of the
Shelbourne REIT and each other Shelbourne Entity, internally prepared in
accordance with GAAP, consistently applied, as at the end of such quarterly
period and the related consolidated statements of income and retained
earnings and statements of changes in financial position for such quarterly
period and for the elapsed portion of the Fiscal Year ended with the last
day of such quarterly period, in each case commencing with the Fiscal Year
ending December 31, 2002, setting forth comparative figures for the related
periods in the prior fiscal year, subject to normal year-end audit
adjustments, all in form and manner of presentation acceptable to Agent,
such financial statements to include and to be supplemented by such detail
and supporting data and schedules as Agent may from time to time reasonably
determine, and (ii) an Officer's Certificate from the Shelbourne REIT
certifying that such financial statements are true, accurate, and complete
in all material respects and that no Default or Event of Default has
occurred and is continuing.
7.2.3 Collateral Property Reports. Quarterly and annually, upon
delivery of each of the financial statements required pursuant to Sections
7.2.1 and 7.2.2, above, the following financial statements for each of the
Collateral Property Owners internally prepared by Borrower and certified by
the Shelbourne REIT to be true, accurate and complete: (i) an operating
statement showing the results of operation for the prior quarter and on a
year-to-date basis for the period just ended and, annually, an operating
statement for the year just ended; (ii) a detailed, current rent roll of
the subject Collateral Property, containing such details as Agent may
reasonably request, and (iii) cash flows for the quarter just ended;
7.2.4 SEC Reports. Within ten (10) days of being filed, copies of all
filings by Shelbourne OP, Shelbourne GP, or Shelbourne REIT with the SEC,
and within ten (10) days of being received, copies of all correspondence
from the SEC, other than routine non-substantive general communications
from the SEC.
7.2.5 Compliance Certificates. Within sixty (60) days after the close
of each quarterly accounting period in each fiscal year of the Borrower
(except within ninety (90) days at the close of each fiscal year) , a
Compliance Certificate in form of Exhibit G, annexed hereto, together with
an Officer's Certificate from the Shelbourne OP providing (i) that no
Default or Event of Default has occurred and is continuing and (ii)
otherwise certifying the
-25-
compliance or non-compliance with the Financial Covenants, with such
supporting detail as is reasonably deemed necessary by the Agent to verify
the calculations incorporated therein.
7.2.6 Data Requested. Within a reasonable period of time and from time
to time such other financial data or information as Agent or the Lenders
may reasonably request with respect to the Collateral Properties, the
Shelbourne OP and/or the other Loan Parties including, but not limited to,
rent rolls, aged receivables, aged payables, leases, budgets, forecasts,
reserves, cash flow projections, deposit accounts, mortgage information,
physical condition of the Collateral Properties and pending lease
proposals.
7.2.7 Tax Returns. Upon Agent's request, copies of all federal and
state tax returns of the Shelbourne OP and the other Loan Parties.
7.2.8 Lease Notices. Concurrently with the giving thereof, and within
ten (10) Business Days of receipt thereof, copies of all notices, other
than routine correspondence, given or received by the Borrower or any other
Loan Party with respect to any Major Lease.
7.2.9 Entity Notices. Concurrently with the issuance thereof, copies of
all material written notices (excluding routine correspondence) given to
the partners, owners, stockholders, and/or members, respectively, of the
Shelbourne OP or the Shelbourne REIT.
7.2.10 Property Acquisition or Sale. Within ten (10) Business Days of
receipt thereof, copies of all contracts or agreements entered into
relating to a proposed sale or acquisition of any material asset by the
Borrower or any other Loan Party. With respect to the acquisition of any
Individual Property, the Borrower shall also provide to the Agent such
Payment Direction Letters and other documents and agreements as may be
necessary to effectuate the cash management arrangements set forth in
Section 7.15.
7.2.11 Notices Regarding Payment Direction Letters. Within ten (10)
Business Days of receipt thereof, copies of all notices (excluding routine
correspondence) received by the Borrower or any other Loan Party from any
Person who has agreed to the direction of the payment of funds as provided
for in a Payment Direction Letter.
7.2.12 Notice of Termination of Payment Direction Letter. Promptly, and
in any event within ten (10) Business Days after an officer of the Borrower
or the Shelbourne OP obtains Knowledge thereof, written notice of the
termination of any Payment Direction Letter, together with evidence of the
satisfactory reinstatement or replacement thereof in accordance with the
terms and conditions hereof.
7.2.13 Notice of Litigation. Promptly and in any event within ten (10)
Business Days after an officer of either Borrower or Shelbourne OP obtains
Knowledge thereof, written notice of any pending or, to the best of the
Borrower's and Shelbourne OP's Knowledge, threatened action, suit or
proceeding at law or in equity or by or before any governmental
instrumentality or other agency or regulatory authority by any entity
(private or governmental) relating in any way to the Loan, the transactions
contemplated in the Loan Documents, or the transactions contemplated in any
documentation executed in connection therewith, or the Borrower or any
other Loan Party, which could have or reasonably be expected to have a
Material Adverse Effect.
7.2.14 Notice of Hazardous Materials Promptly, and in any event within
ten (10) Business Days after Borrower or Shelbourne OP obtains Knowledge
thereof, written notice of (i) any Release (as defined in the Environmental
Indemnity) or Threat of Release (as defined in the Environmental Indemnity)
of Hazardous Materials on, in, under or affecting
-26-
all or any portion of any Collateral Property or (ii) the violation of any
Environmental Law, in each case which could reasonably be expected to have
a Material Adverse Effect.
7.3 Existence. Except as otherwise permitted herein, Borrower and
Shelbourne OP shall do or cause to be done all things necessary to (i) preserve,
renew and keep in full force and effect (x) the partnership, company or
corporate existence, as applicable, of each Loan Party and (y) the material
rights, licenses, permits and franchises of each Loan Party, (ii) comply with
the terms and provisions of the Plan of Liquidation and all laws and other Legal
Requirements applicable to it and its assets, business and operations, the
non-compliance with which could have or reasonably be expected to have a
Material Adverse Effect, (iii) to the extent applicable, at all times maintain,
preserve and protect all material franchises and trade names and all the
remainder of its property used or useful in the conduct of its business, and
(iv) to keep and cause each Loan Party to keep, its assets in good working order
and repair, ordinary wear and tear and damage by casualty or taking by
condemnation excepted, and from time to time make, or cause to be made, all
reasonably necessary repairs, renewals, replacements, betterments and
improvements thereto.
7.4 Payment of Taxes. Borrower and Shelbourne OP shall duly pay and
discharge, and cause each Loan Party to duly pay and discharge, before the same
shall become overdue, all taxes, assessments, impositions, and other
governmental charges payable by it or with respect to the Collateral Properties,
to the extent that same are not paid by the tenants under the respective Leases;
provided, however, the failure of any Loan Party to pay such taxes, assessments,
impositions, or other governmental charges shall not constitute a Default or
Event of Default as long as same are being contested in a manner which complies
with the requirements of Section 9.1.
7.5 Insurance; Casualty, Taking.
7.5.1 Borrower and Shelbourne OP shall at all times maintain or cause
the appropriate Person to maintain in full force and effect the following
insurance: (i) the Collateral Properties shall be insured by insurers of
recognized financial responsibility against such losses and risks in
compliance with the Major Leases and the requirements set forth in Exhibit
E, hereto, and (ii) all other assets of the Borrower and the Shelbourne
Subsidiaries shall be insured with such insurance as is reasonable and
usual for Persons conducting business operations similar to those of the
Borrower and Shelbourne OP and in compliance with the terms of any secured
financing with respect thereto.
7.5.2 All insurance premiums shall be paid in a timely fashion in
accordance with the requirements of the applicable insurance company, and
Agent shall be provided with evidence of such payment of insurance premiums
upon request.
7.5.3 In the event of any damage or destruction to any Collateral
Property by reason of fire or other hazard or casualty, Borrower shall give
immediate written notice thereof to Agent. With respect to any such damage
or destruction, the Borrower shall make the Mandatory Principal Payment, if
any is required, set forth herein. If there is any condemnation for public
use of any Collateral Property Borrower shall give immediate written notice
thereof to Agent. With respect to any such condemnation, the Borrower shall
make the Mandatory Principal Payment, if any is required, set forth herein.
Further, Borrower shall upon the request of the Agent provide to the Agent
a report as to the status of any insurance adjustment, condemnation claim,
or restoration resulting from any casualty or taking.
7.6 Inspection. Borrower and Shelbourne OP shall (and shall cause the other
Loan Parties to) permit the Agent and the Lenders and its/their agents,
representatives and employees to inspect
-27-
the Collateral Properties, the Collateral, and any and all other assets of the
Borrower, the Shelbourne OP or any of the Loan Parties, at reasonable hours upon
reasonable notice.
7.7 Loan Documents. Borrower and Shelbourne OP shall (and shall cause the
other Loan Parties to) observe, perform and satisfy all the terms, provisions,
covenants and conditions to be performed by it under, and to pay when due all
costs, fees and expenses, and other Obligations to the extent required under,
the Loan Documents.
7.8 Further Assurances. Borrower and Shelbourne OP shall (and shall cause
the other Loan Parties to) execute and deliver to the Agent and the other
Lenders such documents, instruments, certificates, assignments and other
writings, and do such other acts, necessary or desirable in the reasonable
judgment of the Agent, to evidence, preserve and/or protect the Collateral at
any time securing or intended to secure the Obligations or for the better and
more effective carrying out of the intents and purposes of this Agreement and
the other Loan Documents.
7.9 Books and Records. Borrower and Shelbourne OP shall and shall cause the
other Loan Parties to keep and maintain in accordance with GAAP (or such other
accounting basis reasonably acceptable to the Agent), proper and accurate books,
records and accounts reflecting all of the financial affairs of the Borrower and
such other Loan Parties and all items of income and expense in connection with
their respective business and operations and in connection with any services,
equipment or furnishings provided in connection with the operation of the
business of the Borrower, the Shelbourne OP and the other Loan Parties, whether
such income or expense is realized thereby or by any other Person. The Agent
shall have the right, not more than once each quarter (unless an Event of
Default shall have occurred and be continuing in which case as often as the
Agent shall determine), during normal business hours and upon reasonable notice,
to examine such books, records and accounts at the office of the Person
maintaining such books, records, correspondence, and accounts and to make such
copies or extracts thereof as the Agent shall desire. Borrower shall maintain
all of its business records at the address specified at the beginning of this
Agreement. The Agent may discuss the financial and other affairs of the
Borrower, the Shelbourne OP and the other Loan Parties with any of its partners,
owners, and any accountants hired by Borrower or the Shelbourne OP, it being
agreed that Agent and each of the Lenders shall use reasonable efforts to not
divulge information obtained from such examination to others except in
connection with Legal Requirements and in connection with administering the
Loan, enforcing its rights and remedies under the Loan Documents and in the
conduct, operation and regulation of its banking and lending business (which may
include, without limitation, the transfer of the Loan or of participation
interests therein). Any assignee or transferee of the Loan, co-lender, or any
holder of a participation interest in the Loan shall be entitled to deal with
such information in the same manner and in connection with any subsequent
transfer of its interest in the Loan or of further participation interests
therein.
7.10 Business and Operations. Borrower and the Shelbourne OP shall (and
shall cause the other Loan Parties to) (i) continue to engage in the type of
businesses presently conducted by them as of the Closing Date, respectively,
(ii) limit its operations to such matters as are in conformity with the Plan of
Liquidation, and (iii) be qualified to do business and in good standing under
the laws of each jurisdiction, and otherwise to comply with all Legal
Requirements, as and to the extent the same are required for the ownership,
maintenance, management and operation of the assets of such Person except where
the failure to be so qualified could not have or reasonably be expected to have
a Material Adverse Effect.
7.11 Title. Borrower and the Shelbourne OP shall (and shall cause the other
Loan Parties to) (i) warrant and defend (x) the title to each item of Collateral
owned by such Person and every part thereof, subject only to the Liens (if any)
permitted hereunder, (y) the validity and priority of the Liens and security
interests held by the Agent pursuant to the Loan Documents, in each case against
-28-
the claims of all Persons whomsoever, and (z) the title to and in the Collateral
Properties, and (ii) Borrower and the other Loan Parties shall be responsible,
jointly and severally, to reimburse Agent and the Lenders for any losses, costs,
damages or expenses (including reasonable attorneys' fees and court costs)
incurred by the Agent and/or any of the Lenders if an interest in any item of
Collateral, other than as permitted hereunder, is claimed by another Person.
7.12 Estoppel. Borrower and the Shelbourne OP shall (and shall cause the
other Loan Parties to), within ten (10) Business Days after a request therefor
from the Agent, which request shall not be made by Agent more than once each
quarter during each Fiscal Year, furnish to the Agent a statement, duly
acknowledged and certified, setting forth (i) the amount then owing by Borrower
in respect of the Obligations, (ii) the date through which interest on the Loan
has been paid, (iii) to Borrower's and Shelbourne OP's Knowledge, any offsets,
counterclaims, credits or defenses to the payment by any Loan Party to the
Obligations and (iv) whether any written notice of Default from Agent to the
Borrower or any of the other Loan Parties is then outstanding and acknowledging
that this Agreement and the other Loan Documents are in full force and effect
and unmodified, or if modified, giving the particulars of such modification.
7.13 ERISA. Borrower and the Shelbourne OP shall (and shall cause each of
the other Loan Parties to) as soon as possible and, in any event, within ten
(10) days after any Loan Party or any ERISA Affiliate knows of the occurrence of
any of the following which could have or reasonably be expected to have a
Material Adverse Effect, deliver to Agent a certificate of an executive officer
of the Borrower setting forth details as to such occurrence and the action, if
any, that the applicable Borrower or other Loan Party or such ERISA Affiliate is
required or proposes to take, together with any notices required or proposed to
be given to or filed with or by such Borrower, Loan Party, the ERISA Affiliate,
the PBGC, a Plan participant or the Plan administrator with respect thereto: (i)
that a Reportable Event has occurred; (ii) that an accumulated funding
deficiency has been incurred or an application may be or has been made to the
Secretary of the Treasury for a waiver or modification of the minimum funding
standard (including any required installment payments) or an extension of any
amortization period under Section 412 of the Code with respect to a Plan; (iii)
that a contribution required to be made to a Plan has not been timely made; (iv)
that a Plan has been or may be terminated, reorganized, partitioned or declared
insolvent under Title IV of ERISA; (v) that a Plan has an Unfunded Current
Liability giving rise to a lien under ERISA or the Code; (vi) that proceedings
may be or have been instituted to terminate or appoint a trustee to administer a
Plan; (vii) that a proceeding has been instituted pursuant to Section 515 of
ERISA to collect a delinquent contribution to a Plan; (viii) that such Borrower,
Loan Party, or ERISA Affiliate will or may incur any liability (including any
indirect, contingent, or secondary liability) to or on account of the
termination of or withdrawal from a Plan under Section 4062, 4063, 4064, 4069,
4201, 4204 or 4212 of ERISA or with respect to a Plan under Section 401(a)(29),
4971, 4975 or 4980 of the Code or Section 409 or 502(i) or 502(l) of ERISA; (ix)
or that such Borrower or the Loan Party may incur any material liability
pursuant to any employee welfare benefit plan (as defined in Section 3(l) of
ERISA) that provides benefits to retired employees or other former employees
(other than as required by Section 601 of ERISA) or any employee pension benefit
plan (as defined in Section 3(2) of ERISA). Upon the request of the Agent, the
Borrower and the Shelbourne OP shall (and shall cause the other Loan Parties to)
deliver to Agent a complete copy of the annual report (Form 5500) of each Plan
required to be filed with the Internal Revenue Service. In addition to any
certificates or notices delivered to Agent pursuant to the first sentence
hereof, copies of any material notices received by any Borrower or Loan Party or
any ERISA Affiliate with respect to any Plan shall be delivered to Agent no
later than ten (10) days after the date such report has been filed with the
Internal Revenue Service or such notice has been received by such Borrower or
Loan Party or ERISA Affiliate, as applicable.
7.14 Depository Accounts. The Borrower and the Shelbourne OP shall (and
shall cause the Shelbourne REIT, the Shelbourne GP and each Property Owner to)
(i) maintain all operating and
-29-
other depository accounts, if any, with Fleet National Bank (or any successor
thereto) (singly and collectively, including the Depository Accounts, the
"Accounts"), unless otherwise agreed by Agent in writing, (ii) maintain a
minimum of one depository account with Fleet National Bank (or any successor
thereto) (singly and collectively, the "Depository Accounts"), unless otherwise
agreed by Agent in writing, and (iii) to the extent requested by the Agent,
execute and deliver such cash management agreements (singly and collectively
"Cash Management Agreement") as Agent shall deem customary and appropriate to
provide for terms and conditions satisfactory to the Agent with respect to the
use and disbursement of funds in any Account. Each of the Accounts (other than
those Accounts in the name of the Shelbourne REIT, the Shelbourne GP or any
Non-Collateral Individual Property Owner) shall at all times be pledged to the
Agent, on behalf of the Lenders, as security for the Obligations pursuant to the
Pledge and Security Agreement.
7.15 Cash Flow; Payment Direction Letters.
7.15.1 The Borrower and the Shelbourne OP agree that appropriate
procedures satisfactory to the Agent will be put in place such that any
revenues, Distributions, or other payments received by any Property Owner
shall be directly deposited in a designated Depository Account in the name
of such Person.
7.15.2 The Borrower and the Shelbourne OP agree that appropriate
procedures satisfactory to the Agent will be put in place such that during
any period in which the Cash Sweep Account Test is not complied with,
withdrawals shall be permitted from such Depository Accounts only for the
purpose of payment of such costs and other obligations approved by the
Agent in accordance with the Cash Management Agreement. The Borrower and
the Shelbourne OP agree that appropriate procedures satisfactory to the
Agent will be put in place such that during any period in which the Cash
Sweep Account Test is not complied with, any funds in the Depository
Accounts of any Property Owner shall be transferred to a designated Cash
Sweep Cash Collateral Account in the name of the applicable Shelbourne OP.
7.15.3 The Borrower agrees that appropriate procedures satisfactory to
the Agent will be put in place such that after the occurrence and during
the continuance of an Event of Default: (i) any funds in the Depository
Accounts of any Non-Collateral Individual Property Owner shall be
transferred to a designated Depository Account in the name of the
applicable Shelbourne OP or as otherwise directed by the Agent, and (ii)
any Distributions by any Property Owner payable to any Shelbourne OP shall
be directly deposited in the designated Depository Account in the name of
the applicable Shelbourne OP or as otherwise directed by the Agent.
Further, after the occurrence and during the continuance of an Event of
Default, Agent shall have the right to receive any and all such
Distributions or other revenues and make application thereof to the
Obligations.
7.15.4 Borrower and the Shelbourne OP shall (and shall cause each
Property Owner to) maintain in place during the term of the Loan such
direction letters as the Agent may from time to time require in order to
effectuate the terms and provisions hereof relating to the management of
the cash flow of such Person ("Payment Direction Letters"), including,
without limitation, to each tenant under a Lease for any Individual
Property to pay rent and any other amounts payable under such Lease into
the applicable designated Deposit Account.
7.15.5 The use and disbursement of all funds in the Depository Accounts
and the Accounts shall be subject to the terms and provisions hereof and
the Cash Management Agreement.
-30-
7.15.6 The Borrower and the Shelbourne OP agree that to the extent that
the Borrower, the Shelbourne OP or any Property Owner receives directly any
revenues, Distributions or other payments which are required to be
deposited as provided for herein, the Borrower and the Shelbourne OP shall,
and shall cause any such other Person to, deposit such funds in the
applicable designated Depository Account.
7.16 Costs and Expenses. Borrower shall pay all costs and expenses
(excluding salaries or wages of employees of Agent) reasonably incurred by Agent
in connection with the implementation and syndication of the Loan and the
administration of the Loan, and reasonably incurred by the Agent or any of the
Lenders in connection with the enforcement of the Agent's and Lenders' rights
under the Loan Documents, including, without limitation, legal fees and
disbursements, appraisal fees, inspection fees, plan review fees, travel costs,
fees and out-of-pocket costs of independent engineers and consultants.
Borrower's obligations to pay such costs and expenses shall include, without
limitation, all reasonable attorneys' fees and other costs and expenses for
preparing and conducting litigation or dispute resolution arising from any
breach by Borrower or the Loan Parties of any covenant, warranty, representation
or agreement under any one or more of the Loan Documents. Unless an Event of
Default has occurred and is then continuing, the Agent shall use its best
efforts to notify the Borrower prior to the incurrence of any such cost or
expense if the aggregate amount of such costs and expenses in any one calendar
year will exceed $25,000.00; provided, however, that the failure shall provide
such notice shall not affect in any manner whatsoever on the Borrower's
Obligations hereunder.
7.17 Appraisals
7.17.1 Appraisal. Agent shall have the right at its option, from time
to time, to order an appraisal of one or more of the Collateral Properties
prepared at Agent's direction by an appraiser selected by Agent (the
"Appraisal"). An appraiser selected by Agent shall be an MAI member with
not less than ten (10) years experience appraising commercial properties in
the respective area(s) of the Individual Properties and otherwise qualified
pursuant to provisions of applicable laws and regulations under and
pursuant to which Agent operates).
7.17.2 Costs of Appraisal. Borrower shall pay for the costs of each
Appraisal and each updated Appraisal only (i) after the occurrence and
during the continuance of an Event of Default and (ii) prior to the
occurrence of an Event of Default, not for more than one (1) Appraisal of
each Individual Property in any twelve (12) month period.
7.18 Indemnification. Borrower shall at all times, both before and after
repayment of the Loan, at its sole cost and expense defend, indemnify, exonerate
and save harmless Agent and each of the Lenders and all those claiming by,
through or under Agent and each of the Lenders ("Indemnified Party") (to the
extent not paid by Borrower in this Section 7.18 or under the applicable
provisions of this or any other Loan Document) against and from all damages,
losses, liabilities, obligations, penalties, claims, litigation, demands,
defenses, judgments, suits, proceedings, costs, disbursements or expenses of any
kind whatsoever, including, without limitation, attorneys, fees and experts'
fees and disbursements, which may at any time (including, without limitation,
before or after discharge or foreclosure of the Security Documents) be imposed
upon, incurred by or asserted or awarded against the Indemnified Party and
arising from or out of:
(i) any liability for damage to person or property arising out of
any violation of any Legal Requirement, or
(ii) any and all liabilities, damages, penalties, costs, and
expenses, relating in any manner to any brokerage or finder's fees in
respect of the Loan arising from
-31-
any act or course of dealing by the Borrower, the Shelbourne OP or any
Loan Party, or
(iii) any act, omission, negligence or conduct at any Collateral
Property, or arising or claimed to have arisen, out of any act,
omission, negligence or conduct of Borrower, the Shelbourne OP, any
Shelbourne Subsidiary, or any tenant, occupant or invitee thereof which
is in any way related to any Collateral Property.
Notwithstanding the foregoing, an Indemnified Party shall not be entitled to
indemnification in respect of claims arising from acts of its own gross
negligence or willful misconduct to the extent that such gross negligence or
willful misconduct is determined by the final judgment of a court of competent
jurisdiction, not subject to further appeal, in proceedings to which such
Indemnified Party is a proper party.
7.19 Leasing Matters.
7.19.1 Agent's Approval Required.
(i) Except as provided for herein, the Loan Parties may enter
into any Lease for a Collateral Property without the approval of the
Agent or the Lenders.
(ii) Agent's prior written approval shall be required in each
instance as to any Major Lease, which approval shall not unreasonably
withheld if (x) such Major Lease contains rental and payment terms no
less favorable than the Lease in effect as of the date hereof for such
leased premises and (y) is with a tenant of similar or better financial
condition than the tenant as of the date hereof for such leased
premises, each as determined by the Agent.
(iii) For any Major Lease requiring approval hereunder, the
approval shall relate to: (i) the economic and other terms of the Major
Lease; (ii) each tenant under a proposed Major Lease; (iii) each
guarantor of a tenant's obligations under a proposed Major Lease; (iv)
any modification or amendment to the Major Lease, and (v) any optional
termination, cancellation or surrender of any Major Lease by the Loan
Party thereto.
7.19.2 Borrower's Requests. Any request by Borrower for an approval
from Agent with respect to leasing matters shall be sent to the Agent and
shall be accompanied, at a minimum, by the following: (i) the proposed
lease or amendment or modification thereof complete with all applicable
schedules and exhibits; (ii) a complete copy of any proposed guaranty;
(iii) comprehensive financial information with respect to the proposed
tenant and, if applicable, the proposed guarantor (as to new leases or
amendments or modifications to existing leases involving material economic
changes); and (iv) an executive summary of the terms and conditions of the
proposed lease and, if applicable, the proposed guaranty.
7.19.3 Response. The Agent shall act on requests from Borrower for any
approval required under Section 7.19.1 in a commercially reasonable manner
and shall use commercially reasonable efforts to respond to any such
request within ten (10) Business Days, in each instance following Agent's
receipt thereof with all required supporting information. Agent's response
may consist of an approval or disapproval of the request, or a conditional
approval thereof subject to specified conditions, or a request for further
data or information, or any combination thereof. If Agent fails to respond
to any such request
-32-
within such prescribed time period, such request shall be deemed approved
by the Agent (and the Required Lenders, as applicable).
7.19.4 Advance Information. In order to expedite the processing of
requests for such approvals, Borrower agrees to provide Agent with as much
advance information as is possible in a commercially reasonable manner in
advance of Borrower's formal request for an approval.
7.20 Loan To Value Ratio Covenant.
7.20.1 Value of the Collateral Property. "Value of the Collateral
Property" shall mean, with respect to any Collateral Property (a) on the
Closing Date, the initial Adjusted Appraised Value of such Collateral
Property, and (b) subsequently, the lesser of (1) the Adjusted Appraised
Value of such Collateral Property if the Appraisal thereof is within 12
months of the determination date, as determined solely by the Agent or (2)
the Adjusted Capitalized Value of such Collateral Property, as determined
solely by the Agent; provided, however, if there is no Appraisal of such
Collateral Property within 12 months of the determination date, the
Adjusted Capitalized Value of such Collateral Property shall be used for
the purpose of determining the Value of the Collateral Property.
7.20.2 LTV. At all times, the ratio (the "LTV") obtained by dividing:
(i) the outstanding principal balance of the Loan by (ii) the aggregate of
the Value of the Collateral Property for all of the Collateral Properties,
expressed as a percentage, shall not be greater than sixty-five (65%), all
as determined solely by the Agent.
7.21 Debt Service Coverage Ratios.
7.21.1 Certain Definitions.
(i) "Consolidated Debt Service Coverage" shall mean the ratio as
of each Calculation Date of (A) the aggregate of the Adjusted Net
Operating Income for all of the Collateral Properties for the subject
Calculation Period to (B) Debt Service on the Loan for the subject
Calculation Period.
(ii) "Debt Service on the Loan" shall mean the greater of (i) the
outstanding principal balance of the Loan as of the Calculation Date
multiplied by a constant of eight and one-half (8.5%) percent per annum
or (ii) the projected payments of principal and interest for a twelve
(12) month period calculated utilizing: (x) the outstanding principal
balance of the Loan as of the Calculation Date, (y) that rate equal to
the sum of (A) the 10-Year Treasury Rate (or if said 10-Year Treasury
Rate at any time is less than five (5.00%) percent per annum, then the
10-Year Treasury Rate will be deemed to equal five (5.00%) percent per
annum), plus (B) two and one-half (2.5%) percent per annum; and (z) an
amortization schedule having a period of three hundred (300) months,
all of the foregoing as determined solely by the Agent.
7.21.2 Minimum Consolidated Debt Service Coverage.
(i) The Consolidated Debt Service Coverage, as determined solely
by the Agent on each Calculation Date, shall be not less than 1.40:1.
(ii) The Consolidated Debt Service Coverage covenant shall be
tested by the Agent on each Calculation Date with results based upon
the results for the most
-33-
recent Calculation Period, such calculation and results to be as
determined solely by the Agent.
7.22 Fixed Charge Ratio. The Fixed Charge Ratio as determined on each
Calculation Date shall be not less than 1.30:1. The Fixed Charge Ratio covenant
shall be tested by the Agent on each Calculation Date with results based upon
the results for the most recent Calculation Period, such calculation and results
to be as determined solely by the Agent.
7.23 Minimum Net Worth. The Net Worth as determined on each Calculation
Date shall be equal to or greater than $30,000,000.00; provided, however, that
for so long as no Default shall have occurred and be continuing said
$30,000,000.00 amount shall be deemed to be reduced by $0.50 for each $1.00 of
principal reduction on the Loan from and after the Closing Date through the
Calculation Date; provided further, however, that in no event shall the amount
of such minimum Net Worth required hereunder be less than $20,000,000.00. The
Net Worth covenant shall be tested by the Agent on each Calculation Date, such
calculation and results to be as determined solely by the Agent.
7.24 Cash Sweep Account Test.
7.24.1 Without limiting the obligation to satisfy the Consolidated Debt
Service Coverage covenant, in accordance with the provisions of Section
7.21.2, and the Fixed Charge Ratio covenant, in accordance with the
provisions of Section 7.22, the Agent, in determining the compliance with
each of the Consolidated Debt Service Coverage covenant and the Fixed
Charge Ratio covenant, shall also determine whether the following tests
have been complied with (each such test being referred to, singly and
collectively, as the "Cash Sweep Account Test"), all as determined solely
by the Agent:
(i) The Consolidated Debt Service Coverage determined on each
Calculation Date shall be not less than 1.75:1; or
(ii) The Fixed Charge Ratio determined on each Calculation Date
shall be not less than 1.50:1.
7.24.2 If at any time the Agent determines that the Cash Sweep Account
Test has not been complied with, then immediately thereafter and continuing
until the Borrower's compliance with the Cash Sweep Account Test, (i) all
rents and other cash proceeds received or otherwise payable to any Loan
Party on account of the Collateral Properties, less any reasonable
operating expenses approved in writing by the Agent, and (ii) all other
cash, funds, Distributions, or other amounts received by, or otherwise
payable to, any Loan Party shall be deposited in an Account with Fleet
National Bank (or any successor thereto) in the name of the Shelbourne OP
designated by Agent as the "Cash Sweep Cash Collateral Account" (so
referred to herein), such Cash Sweep Cash Collateral Account to be pledged
to the Agent, on behalf of the Lenders, as security for the Loan pursuant
to the Pledge and Security Agreement; provided, however, that the Borrower,
at its option, may elect at any time to apply amounts maintained in the
Cash Sweep Cash Collateral Account in reduction of the Loan (with any such
application to be in such order and manner as the Agent in its sole
discretion may determine appropriate). So long as no Default or Event of
Default shall occur and be continuing, if and to the extent the Cash Sweep
Account Test is thereafter satisfied, as and when determined solely by the
Agent, the Agent, upon Borrower's written request, shall release or
otherwise make available to the Shelbourne OP some or all of the amounts
maintained in the Cash Sweep Cash Collateral Account (however, such release
agreement specifically shall not relate to any funds in the T/I CAPEX Fund
Accounts).
-34-
7.25 Replacement Documentation. Upon receipt of an affidavit of an officer
of Agent as to the loss, theft, destruction or mutilation of the Note or any
other Security Document which is not of public record, and, in the case of any
such loss, theft, destruction or mutilation, upon surrender and cancellation of
such Note or other Security Document, Borrower will issue, in lieu thereof, a
replacement Note or other security document in the same principal amount and
otherwise of like tenor upon receipt by Borrower of a suitable indemnity.
7.26 Other Covenants. The Borrower and the Shelbourne OP hereby represent
and warrant that no Collateral is in the possession of any third party bailee
(such as at a warehouse). In the event that the Borrower and/or any of the other
Loan Parties, after the date hereof, intends to store or otherwise deliver any
Collateral or other personal property in which the Agent has been granted a
security interest to such a bailee, then the Borrower shall receive the prior
written consent of the Agent and such bailee must acknowledge in writing that
the bailee is holding such Collateral or such other personal property for the
benefit of the Agent and the Lenders.
7.27 Related Documents.
7.27.1 The Borrower and the Shelbourne OP will, or will cause each
respective Loan Party to, perform in a timely manner all its obligations
under any of the Related Documents. The Borrower and the Shelbourne OP
will, or will cause each respective Loan Party to, maintain the Related
Documents to which it is a party in full force and effect, and shall, in a
timely manner, take all action necessary to preserve the rights of such
party, and it successors and assigns, thereunder, and pay all amounts due
thereunder and will not cause or consent to any amendment, modification,
termination, or endorsement to the Related Documents without the prior
written approval of the Agent.
7.27.2 Without limiting the generality of the foregoing, the Borrower
and the Shelbourne OP will, or will cause each respective Loan Party to:
(i) perform in a timely manner all its obligations under the
Restructuring Agreement and the Purchase and Contribution Agreement;
(ii) not take any action, or allow the sufferance of any action,
which would trigger a Put Event (as defined in the Restructuring
Agreement);
(iii) after the occurrence of an Event of Default, not pay to any
Person any amount the payment of which was triggered by the occurrence
of a Put Event (as defined in the Restructuring Agreement), including,
without limitation, the Reacquisition Price (as defined in the
Restructuring Agreement);
(iv) not amend, terminate, distribute, transfer, or otherwise
dispose of any of the Advisory Agreements,
(v) not make any payments under the Advisory Agreements,
(vi) provide to the Agent immediately upon the receipt thereof a
copy of any notice received alleging a default under the Restructuring
Agreement and/or the Purchase and Contribution Agreement or of the
occurrence, or alleged occurrence, of a so called Put Event under the
Restructuring Agreement;
(vii) provide to the Agent immediately upon the receipt thereof a
copy of any New Acquisition Notice (as defined in the Restructuring
Agreement) or notice
-35-
received relative to the exercise of the New Acquisition Right (as
defined in the Restructuring Agreement);
(viii) not acquire any New Property (as defined in the
Restructuring Agreement) without (x) providing to the Agent thirty (30)
days written notice thereof and copies of all documents and agreements
relating to the acquisition and ownership thereof and (y) executing
such documentation as may be reasonably requested by the Agent to
provide that thereafter, the owner of the Accor Property shall be
deemed to be a Shelbourne Subsidiary and the Accor Property shall be
deemed to be a Non-Collateral Individual Property; and
(ix) not acquire the Accor Property pursuant to the Put Right (as
defined in the Restructuring Agreement) without (x) providing to the
Agent thirty (30) days written notice thereof and copies of all
documents and agreements relating to the acquisition and ownership
thereof, (y) the Agent's prior written approval of any guaranty to be
issued in connection therewith, and (z) executing such documentation as
may be reasonably requested by the Agent to provide that thereafter,
the owner of the Accor Property shall be deemed to be a Shelbourne
Subsidiary and the Accor Property shall be deemed to be a
Non-Collateral Individual Property.
7.28 T/I CAPEX Fund Accounts.
7.28.1 Each Shelbourne OP shall create for the benefit of Agent (on
behalf of the Lenders) a reserve Account (the "T/I CAPEX Fund Accounts")
for the purpose of creating a reserve for projected tenant improvements and
capital expenditures (pursuant to a T/I and Capital Expenditure Budget) for
the Collateral Property Owners (singly and collectively, the "Permitted T/I
CAPEX Costs").
7.28.2 The Shelbourne OP shall deposit with Agent in the T/I CAPEX Fund
Accounts on the Funding Date an aggregate amount of no less than
Five-Million ($5,000,000.00) Dollars.
7.28.3 Provided that (i) no Default or Event of Default exists and is
continuing, and (ii) the Borrower is in compliance with the Cash Sweep
Account Test, the Shelbourne OP may request disbursements from the
applicable T/I CAPEX Fund Account from time to time as necessary, provided:
(i) The Shelbourne OP shall have delivered a written request for
the disbursement to the Agent, which request shall (1) specify the
Permitted T/I CAPEX Costs for the period in which the disbursement is
requested, (2) set forth the amount of the requested disbursement, (3)
the specific T/I CAPEX Fund Account out of which the disbursement is to
funded, and (4) if the requested disbursement exceeds Fifty Thousand
Dollars ($50,000), include an invoice or signed contract specifying
that the work has been done or the cost incurred;
(ii) Such disbursement is used to pay the actual cost of a
Permitted T/I CAPEX Cost; and
(iii) The Permitted T/I CAPEX Cost is generally in compliance
with the then current overall T/I and Capital Expenditure Budget.
7.28.4 The T/I CAPEX Fund Accounts shall be an interest bearing Account
maintained at the Agent. The T/I CAPEX Fund Accounts shall be pledged to
the Agent, on
-36-
behalf of the Lenders, as security for the Loan pursuant to the Pledge and
Security Agreement.
7.28.5 Provided no Event of Default shall have occurred and be
continuing, upon the satisfaction in full of all the Obligations, Agent
shall release the sums remaining in the T/I CAPEX Fund Accounts, if any, to
Shelbourne OP.
7.29 Broadway Cash Collateral Account.
7.29.1 Shelbourne OP shall create for the benefit of Agent (on behalf
of the Lenders) the Broadway Cash Collateral Account and on the Funding
Date, Shelbourne OP shall deposit with Agent in the Broadway Cash
Collateral Account the sum of Ten-Million ($10,000,000.00) Dollars.
7.29.2 Provided that no Default or Event of Default exists and is
continuing, the funds in the Broadway Cash Collateral Account shall be
released to Shelbourne OP and the interest of the Agent, on behalf of the
Lenders, in and to the Broadway Cash Collateral Account shall be
terminated, upon the earlier of (i) the discharge of the Broadway Mortgage
and the satisfaction in full of the Broadway Debt, (ii) the sale by the
applicable Shelbourne Entities of the Broadway Property and in connection
therewith, the release of all applicable Shelbourne Entities from any
obligation to pay the Broadway Debt, or (iii) the satisfaction in full of
the Obligations.
7.29.3 The Broadway Cash Collateral Account shall be an interest
bearing Account maintained at the Agent. The Broadway Cash Collateral
Account shall be pledged to the Agent, on behalf of the Lenders, as
security for the Loan pursuant to the Pledge and Security Agreement.
7.30 Single-Purpose Entity. The Borrower and the Shelbourne OP shall cause
each Collateral Property Owner to be a Single-Purpose Entity and to comply with
the terms and provisions hereof with respect thereto.
7.31 Maintenance of REIT Status; Subsequent Conversion to Liquidating
Trust. At all times prior to later of (i) October 29, 2004 or (ii) the
conversion of the Shelbourne REIT to a liquidating trust as provided for herein
and in the Plan of Liquidation, Shelbourne REIT shall engage in such business
activities, and shall refrain from engaging in such activities, so as to
continue to meet the requirements for qualification and taxation as a REIT under
the Code. At any time prior to October 29, 2004, the Shelbourne REIT may convert
to a liquidating trust as required by the Plan of Liquidation. The right set
forth herein to convert to a liquidating trust shall be subject to (i) the
Shelbourne REIT providing to the Agent sixty (60) days written notice of the
establishment of such liquidating trust, (ii) Agent's approval of all amended
Formation Documents and other documentation with respect thereto and (iii) the
Borrower and each Loan Party executing and delivering such documents and
agreements as shall may be reasonably requested by the Agent to evidence and
confirm the term of the Loan provided for herein and in the Loan Documents,
including, without limitation, (x) satisfactory replacement guarantees for any
guaranty which would be of no further value, force or effect, (y) confirmation
as to the Lien held by the Agent, for the benefit of the Lenders, in the
Collateral, and (z) confirmation and, to extent required, establishment of cash
management arrangements in accordance with the terms and provisions hereof.
7.32 Maintenance of American Stock Exchange Listing. Shelbourne REIT shall
engage in such business activities, and shall refrain from engaging in such
activities, so as to continue to be listed on the American Stock Exchange until
such date as it is converted into a liquidating trust.
-37-
7.33 Lenders' Consultants.
7.33.1 Right to Employ. The Borrower agrees that the Agent shall have
the right to employ on its behalf and on behalf of the Lenders, its own
personnel, or one or more engineers, architects, environmental advisors,
scientists, accountants, and attorneys to act as an advisor to Agent and
the Lenders in connection with the Loan (each of which shall be a "Lenders'
Consultant").
7.33.2 Functions. The functions of a Lenders' Consultant shall include,
without limitation: (i) inspection and physical review of any Collateral
Property; (ii) review and analysis of environmental matters; (iii) review
and analysis of financial and legal matters; and (iv) providing usual
inspection and review services in the event of the use of Net Proceeds for
any Repair Work.
7.33.3 Payment. Subject to Section 7.17.2, the reasonable costs and
fees of Lenders' Consultants shall be paid by Borrower upon billing
therefor and, if not so paid within thirty (30) days, may be paid directly
by the Agent on behalf of the Lenders.
7.33.4 Access. Borrower shall and the Shelbourne OP (and shall cause
the Loan Parties to) provide Lenders' Consultants with reasonable access to
all Collateral Properties.
7.33.5 No Liability. Neither Agent nor any Lender shall have liability
to Borrower, the Shelbourne OP, any Loan Party, Guarantor, or third party
on account of: (i) services performed by Lenders' Consultant; or (ii) any
failure or neglect by Lenders' Consultant to properly perform services.
Borrower and the Shelbourne OP shall have no rights under or relating to
any agreement, report, or similar document prepared by any Lenders'
Consultant for Agent or Lenders. No Lenders' Consultant shall have
liability to Borrower, the Shelbourne OP, any Loan Party, Guarantor, or
third party on account of: (i) services performed by such Lenders'
Consultant; or (ii) any failure or neglect by such Lenders' Consultant to
properly perform services, except for its gross negligence or willful
misconduct.
8. NEGATIVE COVENANTS. Borrower and the Shelbourne OP covenant and agree
that from the date hereof and so long as any indebtedness is outstanding
hereunder, or any of the Loan or other obligation remains outstanding, the
Borrower and the Shelbourne OP shall not (and shall not suffer or permit the
other Shelbourne Entity) do any of the following:
8.1 No Changes to Borrower and other Shelbourne Entity. Without the prior
written consent of the Agent, which consent will not be unreasonably withheld if
such action is consistent with the Plan of Liquidation, after not less than
thirty (30) days' prior written notice (with reasonable particularity of the
facts and circumstances attendant thereto):(i) change its jurisdiction of
organization, (ii) change its organizational structure or type, (iii) change its
legal name, or (iv) change the organizational number (if any) assigned by its
jurisdiction of formation or its federal employer identification number (if
any).
8.2 Restrictions on Liens. Create, incur, assume or suffer to exist any
Lien upon or with respect to any property or assets (real or personal, tangible
or intangible, including, without limitation, the Collateral Properties),
whether now owned or hereafter acquired, or sell any such property or assets
subject to an understanding or agreement, contingent or otherwise, to repurchase
such property or assets (including sales of accounts receivable with recourse)
or assign any right to receive income or permit the filing of any financing
statement under the UCC or any other similar notice of Lien under any similar
recording or notice statute, or grant rights with respect to, or otherwise
encumber or create a security interest in, such property or assets (including,
without
-38-
limitation, any item of Collateral) or any portion thereof or any other revenues
therefrom or the proceeds payable upon the sale, transfer or other disposition
of such property or asset or any portion thereof, or permit or suffer any such
action to be taken, except the following (but only to the consistent, or allowed
under, with the Plan of Liquidation) (singly and collectively, "Permitted
Liens"):
8.2.1 Liens created by the Loan Documents;
8.2.2 Liens for taxes, assessments or other governmental charges not
yet delinquent or which are being diligently contested in good faith and by
appropriate proceedings, if (x) to the extent such contest concerns a
Collateral Property, reasonable reserves in an amount not less than the
tax, assessment or governmental charge being so contested shall have been
established in a manner satisfactory to the Agent or deposited in cash (or
cash equivalents) with the Agent to be held during the pendency of such
contest, or such contested amount shall have been duly bonded in accordance
with applicable law, (y) no risk of sale, forfeiture or loss of any
interest in any Collateral Property or the Collateral or any part thereof
arises during the pendency of such contest and (z) such contest does not
have and could not reasonably be expected to have a Material Adverse
Effect;
8.2.3 Liens in respect of property or assets imposed by law, which do
not secure Debt, such as judgment Liens (provided such judgment Liens do
not cause the occurrence of an Event of Default hereunder), carriers',
warehousemen's, material men's and mechanics' liens and other similar Liens
arising in the ordinary course of business, (x) which, except for such
judgment Liens, do not in the aggregate materially detract from the value
of any property or assets or have, and could not reasonably be expected to
have, a Material Adverse Effect, (y) which, except for such judgment Liens,
are being contested in good faith by appropriate proceedings, which
proceedings have the effect of preventing the forfeiture or sale of the
property or assets subject to any such Lien, and (z) which as to any
Collateral Property do not have a lien priority prior to the Lien in favor
of the Agent, for the benefit of the Lenders, with respect to the
Obligations;
8.2.4 The Lien on the Accotel Property as set forth in Exhibit M;
8.2.5 The Broadway Mortgage; and
8.2.6 Personal property financing leases entered into in the ordinary
course of business with respect to equipment, fixtures, furniture,
furnishings and similar assets.
8.3 Consolidations, Mergers, Sales of Assets, Issuance and Sale of Equity.
(i) Dissolve, terminate, liquidate, consolidate with or merge with or into any
other Person, (ii) issue, sell, lease, transfer or assign to any Persons or
otherwise dispose of (whether in one transaction or a series of transactions)
any portion of its assets (whether now owned or hereafter acquired) or any
equity interests in itself, including, without limitation, any securities,
membership or partnership interests, or other interests of any kind in itself or
any other Loan Party, directly or indirectly (whether by the issuance of rights
of, options or warrants for, or securities convertible into, any such security,
membership or partnership interests or other interests of any kind), (iii)
permit another Person to merge with or into it, (iv) acquire all or
substantially all the capital stock, membership or partnership interests or
assets of any other Person, or (v) take any action which could have the effect,
directly or indirectly, of diluting the economic interest of any holder of
ownership interest in the Borrower or any holder of the Common Interests in the
Shelbourne OP or the holder of any ownership interest in any other Loan Party;
except the following (but only to the consistent with, or allowed under, the
Plan of Liquidation):
-39-
8.3.1 Transfers pursuant to the Security Documents and other agreements
in favor of Agent on behalf of the Lenders;
8.3.2 Any such dissolution, liquidation, or termination which does not
involve a Loan Party;
8.3.3 Any consolidation, merger, transfer or sale between and among
Loan Parties; provided that (x) the Borrower will be in compliance with the
Financial Covenants considering the consequences of such event, (y) no such
event shall cause a Change of Control, and (z) each Collateral Property
Owner will continue to be a Wholly-Owned Subsidiary of Shelbourne OP,
Shelbourne GP, or Shelbourne REIT;
8.3.4 Sales of any Collateral Property, provided the Release Conditions
are satisfied with respect thereto;
8.3.5 Leases of all or any portion of any Collateral Property which
either (i) are permitted by the terms of this Agreement without Agent's or
Lenders' consent or approval or (ii) are approved as provided for in this
Loan Agreement;.
8.3.6 Sales, leases, transfers or assignments of Non-Collateral
Individual Properties or other assets of any Shelbourne Entity which are
not within the Collateral, provided that the Borrower will be in compliance
with the Financial Covenants considering the consequences of the sale;
8.3.7 Sales or dispositions in the ordinary course of business of worn,
obsolete or damaged items of personal property or fixtures which are
suitably replaced;
8.3.8 Transactions contemplated by the Restructuring Agreement; and
8.3.9 Transactions, whether outright or as security, for which Agent's
prior written consent has been obtained.
8.4 Restrictions on Debt. (i) Create, incur or assume any Debt, or make any
voluntary prepayments of any Debt in respect of which it is an obligor, (ii)
enter into, acquiesce, suffer or permit any amendment, restatement or other
modification of the documentation evidencing and/or securing any Debt under
which it is an obligor, (iii) increase the amount of any Debt existing as of the
Closing Date; except with respect to the following (but only to the consistent,
or allowed under, with the Plan of Liquidation) (singly and collectively,
"Permitted Debt"):
8.4.1 The Obligations;
8.4.2 The Debt of the owner of the Accor Property secured by the Accor
Property as set forth in Exhibit M;
8.4.3 The Broadway Debt;
8.4.4 The Accotel Guaranty;
8.4.5 To the extent set forth in Schedule 6.21.4, obligations incurred
pursuant to the terms of the Restructuring Agreement;
-40-
8.4.6 Indebtedness incurred in the ordinary course of business for the
purchase of goods or services which are payable, without interest, within
thirty (30) days of billing; and
8.4.7 Transactions, whether secured or unsecured, for which Agent's
prior written consent has been obtained.
8.5 Respecting Collateral Properties. Permit or otherwise suffer to occur
any event such that the representations and warranties of the Borrower set forth
in Section 6.16 would be untrue or misleading in any material respect.
8.6 Other Business. Enter into any line of business or make any material
change in the nature of its business, purposes or operations, except as
otherwise specifically permitted by this Agreement, the other Loan Documents and
the Plan of Liquidation.
8.7 Change of Control. Permit or otherwise suffer to occur any Change of
Control.
8.8 Forgiveness of Debt. Cancel or otherwise forgive or release any Debt
owed to it by any Person, except upon receipt of adequate consideration.
8.9 Affiliate Transactions. Enter into, or be a party to, any transaction
with any Person which is an Affiliate of any Loan Party, except transactions (a)
involving the offering or sale of a Person's equity interests on an arm's length
basis, (b) entered into in the ordinary course of business and on terms which
are no less favorable to such Loan Party than would be obtained in a comparable
arm's-length transaction with an unrelated third party, (c) respecting any
property management agreement for an Individual Property with a management fee
not to exceed three (3%) percent of gross revenue per year, (d) any construction
management contract for improvements to be made to any Individual Property with
a construction management fee not to exceed five (5%) percent of the gross cost
of the construction of improvements, provided that this clause shall not apply
to transactions between and among Loan Parties, (e) as provided for in the Plan
of Liquidation, respecting the agreement by each Shelbourne REIT to pay an
amount not to exceed $200,000.00 each per annum (not to exceed $600,000.00 per
annum in the aggregate) to Kestrel Management, L.P. for supervisory, management
and investor services (the "Kestrel Agreements"), and (f) respecting the payment
of fees to the Independent Directors (as defined in the Plan of Liquidation) of
the Shelbourne REIT not to exceed an annual payment of $10,000.00 for each such
Independent Director, plus $500.00 for each committee meeting.
8.10 Management and Advisory Agreements.
8.10.1 Enter into any property management agreement relative to any
Individual Property other than as set forth in Exhibit H, except for a
property management agreement which provides for a management fee that does
not exceed three (3%) percent of gross revenue per year and is with a
property management company reasonably acceptable to the Agent.
8.10.2 Enter into any other management agreement, advisory agreement,
investment agreement or asset management agreements which provides for a
payment of a fee for such services by the Borrower, any Loan Party, or any
Shelbourne Subsidiary, other than as set forth in Exhibit H.
8.11 Amendments; Terminations of Related Documents. Enter into, acquiesce
in, suffer or permit any amendment, restatement or other modification or
termination of any of the Related Documents, without the express prior written
consent of the Agent.
-41-
8.12 ERISA. Except for Code Section 401(k) plans, establish or be obligated
to contribute to any Plan.
8.13 Bankruptcy Filings. File, or suffer to permit any Loan Party to file,
a petition under any state or federal bankruptcy or insolvency laws or the
liquidation of all or a major portion of its assets or property.
8.14 Investment Company. Become, or suffer to permit any Loan Party to
become, an "investment company" or a company "controlled" by an "investment
company," within the meaning of the Investment Company Act of 1940, as amended.
8.15 Holding Company. Become, or suffer to permit any Loan Party to become,
a "holding company," or a "subsidiary company" of a "holding company," or an
"affiliate" of a "holding company" or of a "subsidiary company" of a "holding
company," within the meaning of the Public Utility Holding Company Act of 1935,
as amended.
8.16 Use of Proceeds. Permit the proceeds of the Loan, or any other
accommodation at any time made hereunder, to be used for any purpose which
entails a violation of, or is inconsistent with, Regulation T, U or X of the
Board of Governors of the Federal Reserve, or for any purpose other than those
set forth in Section 1.3 and in a manner consistent with the Plan of
Liquidation.
8.17 Advances and Loans. Except for loans from the Borrower to any
Shelbourne Subsidiary or loan attributable to disproportionate payments of
amounts due under the Loan, directly or indirectly, lend money or credit or make
advances to any Person.
8.18 Distributions. Authorize, declare, or pay any Distributions on behalf
of the Shelbourne OP or the Shelbourne REIT, except for Permitted Distributions.
The term "Permitted Distributions" shall mean, only to the extent permitted by
the Plan of Liquidation (i) any Distributions by a Shelbourne Subsidiary to the
Shelbourne OP, (ii) the Distribution of a portion of the proceeds of the Loan as
provided for in Section 1.3, hereof, (ii) so long as (x) no Default or Event of
Default exists and is continuing, or would be created thereby, (y) the Financial
Covenants and the Cash Sweep Account Test are complied with and will remain in
compliance after the said Distribution, and (z) all payments then due have been
paid into the T/I CAPEX Fund Accounts, subject to requirements set forth in
Section 7.28.1, hereof, any Distributions by the Shelbourne OP and the
Shelbourne REIT and/or (iii) at any time after and during the continuance of any
Default or Event of Default (other than a monetary Event of Default), such
Distributions as are necessary for Shelbourne REIT to maintain its REIT status
(measured on a rolling four quarter basis).
8.19 Restrictions on Investments. Make or permit to exist or to remain
outstanding any Investment except which is or results in (but only to the
consistent, or allowed under, with the Plan of Liquidation) ("Permitted
Investments"):
(i) marketable direct or guaranteed general obligations of the
United States of America which mature within one year from the date of
purchase;
(ii) bank deposits, certificates of deposit and banker's
acceptances, or other obligations in or of the Lenders or banks located
within and chartered by the United States of America or a state and
having assets of over $500,000,000.00;
(iii) the Shelbourne Subsidiaries, subject in all instances to
the terms of this Agreement; and
-42-
(iv) the acquisition of a member's interest in Accotel Remainder
LLC by Xxxxxxxxxx XX LLC for a balance due of $3,000.00 pursuant to the
terms of the Option Agreement, with the prior written consent of the
Agent.
All such Investments shall be made by the Borrower in a manner which
assures that Agent shall have and maintain a perfected first lien security
interest therein.
8.20 Contracts of a Material or Significant Nature. Except for contracts
otherwise complying with this Agreement, entered into in the normal course of
business or contemplated in the business plan delivered pursuant to Section
7.2.1(ii), not enter into any other contracts, agreements or purchase orders
which would involve the expenditure of more than $1,000,000.00 in any instance
or $1,000,000.00 in the aggregate without Agent's prior written consent, which
consent shall not be unreasonably withheld or delayed, but which consent may be
conditioned upon a demonstration by Borrower to Agent's reasonable satisfaction
that the contract, agreement or purchase order is reasonable and that the Party
entering into such contract has adequate resources to pay and perform the same.
8.21 Negative Pledges, etc. Enter into any agreement subsequent to the
Closing Date (other than a Loan Document) which (a) prohibits the creation or
assumption of any Lien upon any of the Collateral, including, without
limitation, any hereafter acquired property, (b) specifically prohibits the
amendment or other modification of this Agreement or any other Loan Document, or
(c) could reasonably be expected to have a Material Adverse Effect.
8.22 Collateral Property Transactions. Conduct any business activities that
relate, directly or indirectly, to the Collateral Property Owners or the
Collateral Properties through any Person other than a Shelbourne Subsidiary,
except pursuant to the structure of ownership existing as of the Closing Date
and disclosed to the Agent in writing.
8.23 Litigation. Consent or agree to any settlement of the litigation set
forth in Schedule 6.5, if such settlement involves the payment of any funds or
the occurrence of any monetary liability by the Borrower, the Shelbourne OP, or
any Loan Party, or the agreement to any undertaking or term that could have or
reasonably be expected to have a Material Adverse Effect, without the prior
written consent of the Agent.
9. SPECIAL PROVISIONS.
9.1 Legal Requirements. Borrower or any other Loan Party may contest in
good faith any claim, demand, levy or assessment under any Legal Requirements by
any person or entity if: (i) the contest is based upon a material question of
law or fact raised by Borrower in good faith; (ii) such Person properly
commences and thereafter diligently pursues the contest; (iii) the contest will
not materially impair the ability to ultimately comply with the contested Legal
Requirement should the contest not be successful; (iv) if the contest concerns a
Collateral Property or a Collateral Property Owner, reasonable reserves in an
amount necessary to undertake and pay for such contest and any corrective or
remedial action then or thereafter reasonably likely to be necessary shall have
been established in a manner satisfactory to the Agent or deposited in cash (or
cash equivalents) with the Agent to be held during the pendency of such contest,
or such contested amount shall have been duly bonded in accordance with
applicable law; (vi) no Event of Default exists; (vii) if the contest relates to
an Environmental Legal Requirement, the conditions set forth in the
Environmental Indemnity relating to such contests shall be satisfied; (viii) no
risk of sale, forfeiture or loss of any interest in any Collateral Property or
the Collateral or any part thereof arises during the pendency of such contest;
and (ix) such contest does not have and could not reasonably be expected to have
a Material Adverse Effect.
-43-
9.2 Limited Recourse Provisions.
9.2.1 Fully Liable. Borrower and the Shelbourne OP shall be fully
liable for the Loan and the Obligations of Borrower to each of the Lenders.
9.2.2 Certain Non-Recourse. The Loan shall be on a non-recourse basis
to all partners, members, or shareholders of Borrower and the other Loan
Parties, except to the extent provided for in any Loan Document executed by
any such member or partner on its own behalf.
9.2.3 Additional Matters. Nothing contained in this non-recourse
provisions or elsewhere shall: (i) limit the right of Agent or any of the
Lenders to obtain injunctive relief or to pursue equitable remedies under
any of the Loan Documents, excluding only any injunctive relief ordering
payment of obligations by any Person or entity for which personal liability
does not otherwise exist; or (ii) limit the liability of any attorney, law
firm, accountant or other professional who or which renders or provides any
written opinion or certificate to Agent or any of the Lenders in connection
with the Loan even though such person or entity may be a member, partner or
shareholder of Borrower, the Shelbourne OP or any Loan Party.
9.3 Payment of Obligations. Upon the payment in full of the Obligations, in
immediately available funds, including, without limitation, all unreimbursed
costs and expenses of the Agent and of each Lender for which the Borrower is
responsible, the Agent shall release any security and other collateral
interests, including, without limitation, the Payment Direction Letters, rights
of setoff and right to freeze granted to the Agent as provided for herein and
under the other Loan Documents and shall execute and deliver such documents and
termination statements as Borrower or any other Loan Party reasonably requests
to evidence such termination and release. However, such release by the Agent
shall not be deemed to terminate or release any Person from any obligation or
liability under the Loan Documents which specifically by its terms survives the
payment in full of the Obligations.
10. EVENTS OF DEFAULT. The following provisions deal with Default, Events
of Default, notice, grace and cure periods, and certain rights of Agent
following an Event of Default.
10.1 Default and Events of Default. The term "Default" as used herein or in
any of the other Loan Documents shall mean an Event of Default, or any fact or
circumstance which constitutes, or upon the lapse of time, or giving of notice,
or both, could constitute, an Event of Default. The occurrence of any of the
following events, respectively, shall, subject to the giving of any notice or
the expiration of any applicable grace period referred to in Section 10.2
without the cure thereof, constitute an "Event of Default" herein. Upon the
occurrence of any Event of Default described in Section 10.1.8, any and all
Obligations shall become due and payable without any further act on the part of
the Agent. Upon the occurrence of any other Event of Default, the Agent may
declare any and all Obligations immediately due and payable. The occurrence and
continuance of any Event of Default shall also constitute, without notice or
demand, a default under all other agreements between the Agent and/or the
Lenders and the Borrower and instruments and papers heretofore, now, or
hereafter given the Agent and/or the Lenders by the Borrower.
10.1.1 Failure to Pay the Loan. The failure by the Borrower to pay when
due any principal of, interest on, or fees in respect of, the Loan.
10.1.2 Failure to Make Other Payments. The failure by the Borrower to
pay when due (or upon demand, if payable on demand) any payment Obligation
other than any payment Obligation on account of the principal of, or
interest on, or fees in respect of, the Loan.
-44-
10.1.3 Note, Security Documents, and Other Loan Documents. Any other
default in the performance of any term or provision of any Note, or of the
Security Documents, or of any of the other Loan Documents, or a breach, or
other failure to satisfy, any other term, provision, condition or warranty
under the Note, the Security Documents, or any other Loan Document,
regardless of whether any then undisbursed portion of the Loan is
sufficient to cover any payment of money required thereby, and the specific
grace period, if any, allowed for the default in question shall have
expired without such default having been cured.
10.1.4 Default under Other Agreements. The occurrence of any breach of
any covenant or Obligation imposed by, or of any default under, any
agreement (including any Loan Document) between the Agent and/or the
Lenders and the Borrower and/or any other Loan Parties or instrument given
by the Borrower and such Persons to the Agent and/or the Lenders and the
expiry, without cure, of any applicable grace period (notwithstanding that
the Agent and/or the Lenders may not have exercised all or any of its/their
rights on account of such breach or default).
10.1.5 Representations and Warranties. If any representation or
warranty made by the Borrower or by any of the other Loan Parties in the
Loan Documents, including, without limitation, as set forth in Article 6
herein, was untrue or misleading in a manner which could reasonably be
expected to have a Material Adverse Effect.
10.1.6 Affirmative Covenants. The breach of any covenant contained in
Article 7 herein, including, without limitation, the Financial Covenants.
10.1.7 Negative Covenants. The breach of any covenant contained in
Article 8 herein.
10.1.8 Financial Status and Insolvency. A. Any Borrower or Shelbourne
OP shall: (i) admit in writing its inability to pay its debts generally as
they become due; (ii) file a petition in bankruptcy or a petition to take
advantage of any insolvency act; (iii) make an assignment for the benefit
of creditors; (iv) consent to, or acquiesce in, the appointment of a
receiver, liquidator or trustee of itself or of the whole or any
substantial part of its properties or assets; (v) file a petition or answer
seeking reorganization, arrangement, composition, readjustment,
liquidation, dissolution or similar relief under the Federal Bankruptcy
laws or any other applicable law; (vi) have a court of competent
jurisdiction enter an order, judgment or decree appointing a receiver,
liquidator or trustee of such Borrower or Shelbourne OP, or of the whole or
any substantial part of the property or assets of such Borrower or
Shelbourne OP, and such order, judgment or decree shall remain unvacated or
not set aside or unstayed for sixty (60) days; (vii) have a petition filed
against it seeking reorganization, arrangement, composition, readjustment,
liquidation, dissolution or similar relief under the Federal Bankruptcy
laws or any other applicable law and such petition shall remain undismissed
for sixty (60) days; (viii) have, under the provisions of any other law for
the relief or aid of debtors, any court of competent jurisdiction assume
custody or control of such Borrower or Shelbourne OP of the whole or any
substantial part of its property or assets and such custody or control
shall remain unterminated or unstayed for sixty (60) days; or (ix) have an
attachment or execution levied against any substantial portion of the
property of such Borrower or Shelbourne OP or against any substantial
portion of the Collateral which is not discharged or dissolved by a bond
within thirty (30) days; or
B. any such event set forth in subsection A above shall occur with
respect to any Loan Party;
-45-
10.1.9 Loan Documents. If any Loan Document for any reason other than
the satisfaction in full of all Obligations shall cease to be in full force
and effect (other than in accordance with its terms), thereby preventing
the Agent and/or the Lenders from obtaining the practical realization of
the benefits thereof, or if any Loan Document shall be declared null and
void or any Loan Party shall claim or declare any such Loan Document to no
longer be in full force and effect or is null and void, or if the Liens and
security interests purported to be created by any of the Loan Documents
shall cease to be valid, perfected, first priority (except as otherwise
expressly provided herein) security interests;
10.1.10 Default under Related Documents.
(i) Borrower and/or any other Loan Party defaults under any of
the Related Documents and such default is not cured within the grace
period applicable thereto.
(ii) The occurrence of a Put Event (as defined in the
Restructuring Agreement).
10.1.11 Judgments. One or more judgments or decrees shall be entered
against Borrower or any other Loan Party involving a liability (not paid or
fully covered by a reputable and solvent insurance company) and such
judgments and decrees either shall be final and non-appealable or shall not
be vacated, discharged or stayed or bonded pending appeal for any period of
sixty (60) consecutive days, and the aggregate amount of all such judgments
exceeds $250,000.00;
10.1.12 ERISA. (i) If any Plan shall fail to satisfy the minimum
funding standard required for any plan year or part thereof or a waiver of
such standard or extension of any amortization period is sought or granted
under Section 412 of the Code, any Plan shall have had or is likely to have
a trustee appointed to administer such Plan, any Plan is, shall have been
or is likely to be terminated or to be the subject of termination
proceedings under ERISA, any Plan shall have an Unfunded Current Liability,
a contribution required to be made to a Plan has not been timely made, the
Borrower or any Loan Party or any ERISA Affiliate has incurred or is likely
to incur a liability to or on account of a Plan under Section 409, 502(i),
502(l), 515, 4062, 4063, 4064, 4069, 4201, 4204 or 4212 of ERISA or Section
401(a)(29), 4971, 4975 or 4980 of the Code, or the Borrower or any Loan
Party has incurred or is likely to incur liabilities pursuant to one or
more employee welfare benefit plans (as defined in Section 3(l) of ERISA)
that provide benefits to retired employees or other former employees (other
than as required by Section 601 of ERISA) or employee pension benefit plans
(as defined in Section 3(2) of ERISA) and any of the foregoing could have a
Material Adverse Effect; (ii) if there shall result from any such event or
events the imposition of a lien, the granting of a security interest, or a
liability or a material risk of incurring a liability which could have, or
reasonably be expected to have, a Material Adverse Effect; or (iii) if
which lien, security interest or liability, individually, and/or in the
aggregate, in the opinion of the Agent could have, or reasonably be
expected to have, a Material Adverse Effect.
10.1.13 Change of Control. If a Change of Control shall occur.
10.1.14 Indictment; Forfeiture. The indictment of, or institution of
any legal process or proceeding against, the Borrower or any other Loan
Party under any applicable law where the relief, penalties, or remedies
sought or available include the forfeiture of any property of Borrower
and/or any other such Person and/or the imposition of any stay or other
order, the effect of which could reasonably be expected to have a Material
Adverse Effect.
-46-
10.1.15 Default of Other Obligations. Any failure by the Borrower or
any other Loan Party to pay at maturity, or within any applicable grace
period, any obligation for borrowed money, or in respect of any capitalized
lease, or any failure to observe or perform any material term, covenant or
agreement relative to the Broadway Debt or contained in any agreement by
which the Borrower and/or such other Loan Party is bound, evidencing or
securing borrowed money, or in respect of any capitalized lease, such that
the holder or holders thereof or of any obligations issued thereunder have
accelerated the maturity thereof.
10.1.16 Termination of Guaranty or Consent. The termination or
attempted termination of any Guaranty by any Guarantor of the Obligations;
10.1.17 Generally. A default by Borrower or any other Loan Party in the
performance of any term, provision or condition of this Agreement to be
performed by Borrower and/or such other Loan Party, or a breach, or other
failure to satisfy, any other term provision, condition, covenant or
warranty under this Agreement and such default remains uncured beyond any
applicable specific grace period provided for in this Agreement, or as set
forth in Section 10.2. below;
10.2 Grace Periods and Notice. As to each of the foregoing events the
following provisions relating to grace periods and notice shall apply:
10.2.1 No Notice or Grace Period. Except for any grace or notice period
specifically provided for in any referenced section of this Agreement,
there shall be no grace period and no notice provision with respect to the
payment of principal at maturity and no grace period and no notice
provision with respect to defaults related to the voluntary filing of
bankruptcy or reorganization proceedings or an assignment for the benefit
of creditors, or with respect to a breach of warranty or representation as
set forth in Section 10.1.5, or with respect to the breach of any of the
Financial Covenants.
10.2.2 Nonpayment of Interest and Principal. As to the nonpayment of
interest, installments of principal, and in connection with a Mandatory
Principal Prepayment prior to maturity there shall be a ten (10) Business
Day grace period without any requirement of notice from Agent.
10.2.3 Other Monetary Defaults. All other monetary defaults shall have
a five (5) Business Day grace period following notice from Agent.
10.2.4 Nonmonetary Defaults.
(i) As to non-monetary default under Section 7.2, 7.5.1, or 7.19,
or with respect to the breach of any of the negative covenants set
forth in Article 8, there shall be a ten (10) day grace period
following notice from Agent of such default;
(ii) As to non-monetary default under Section 7.28 there shall be
a five (5) day grace period following notice from Agent of such
default;
(iii) As to any other non-monetary default, unless there is a
specific shorter or longer grace period provided for in this Loan
Agreement or in another Loan Document, there shall be a thirty (30) day
grace period following notice from Agent or, if such default would
reasonably require more than thirty (30) days to cure or remedy, such
longer period of time not to exceed a total of ninety (90) days from
Agent's notice as may be reasonably required so long as Borrower shall
commence reasonable actions to remedy or cure the default within thirty
(30) days following
-47-
such notice and shall diligently prosecute such curative action to
completion within such ninety (90) day period. However, where there is
an emergency situation in which there is danger to person or property
such curative action shall be commenced as promptly as possible. As to
breaches of warranties and representations (other than those related to
financial information) there shall be a thirty (30) day grace period
following notice from Agent.
11. REMEDIES.
11.1 Remedies. Upon the occurrence and during the continuance of an Event
of Default, whether or not the indebtedness evidenced by the Note and secured by
the Security Documents shall be due and payable or Agent shall have instituted
any foreclosure or other action for the enforcement of the Security Documents or
the Note, Agent may, and shall upon the direction of the Required Lenders, in
addition to any other remedies which Agent may have hereunder or under the other
Loan Documents, or otherwise, and not in limitation thereof, and in Agent's sole
and absolute discretion:
11.1.1 Accelerate Debt. Agent may, and with the direction of the
Required Lenders shall, declare the indebtedness evidenced by the Note and
secured by the Security Documents immediately due and payable (provided
that in the case of a voluntary petition in bankruptcy filed by Borrower or
an involuntary petition in bankruptcy filed against Borrower (after
expiration of the grace period, if any, set forth in Section 10.1.8), such
acceleration shall be automatic).
11.1.2 Pursue Remedies. Agent may, and with the direction of the
Required Lenders shall, pursue any and all remedies provided for hereunder,
under any one or more of the other Loan Documents, and/or otherwise.
11.2 Written Waivers. Except as otherwise provided in Section 13.4, if a
Default or an Event of Default is waived by the Required Lenders, in its sole
discretion, pursuant to a specific written instrument executed by an authorized
officer of Agent, the Default or Event of Default so waived shall be deemed to
have never occurred.
11.3 Power of Attorney. For the purpose of exercising the rights granted by
this Article 11, as well as any and all other rights and remedies of Agent under
the Loan Documents, Borrower and the Shelbourne OP hereby irrevocably
constitutes and appoints Agent (or any agent designated by Agent) its true and
lawful attorney-in-fact, with full power of substitution, upon the occurrence
and during the continuance of any Event of Default, to execute, acknowledge and
deliver any instruments and to do and perform any acts in the name and on behalf
of Borrower or the Shelbourne OP. In connection with the foregoing power of
attorney, the Borrower and the Shelbourne OP hereby grant unto the Agent (acting
through any of its officers) full power to do any and all things after the
occurrence and during the continuance of an Event of Default necessary or
appropriate in connection with the exercise of such powers as fully and
effectually as the Borrower or the Shelbourne OP might or could do, hereby
ratifying all that said attorney shall do or cause to be done by virtue of this
Agreement. The foregoing power of attorney shall not be affected by any
disability or incapacity suffered by the Borrower or the Shelbourne OP and shall
survive the same. All powers conferred upon the Agent by this Agreement, being
coupled with an interest, shall be irrevocable until this Agreement is
terminated by a written instrument executed by a duly authorized officer of the
Agent.
12. SECURITY INTEREST AND SET-OFF.
12.1 Security Interest. Borrower and the Shelbourne OP hereby grant to the
Agent and each of the Lenders, a continuing lien, security interest and right of
setoff as security for all of the
-48-
Obligations to Agent and each of the Lenders, whether now existing or hereafter
arising, upon and against all Depository Accounts, Accounts (including, without
limitation, the Cash Sweep Cash Collateral Account and the T/I CAPEX Fund
Accounts), deposits, credits, collateral and property, now or hereafter in the
possession, custody, safekeeping or control of Agent or any of the Lenders or
any entity under the control of FleetBoston Financial Corporation and its
successors and assigns, or in transit to any of them.
12.2 Set-Off. After the occurrence and during the continuance of any Event
of Default, any such Depository Accounts, Accounts, deposits, balances or other
sums credited by or due from Agent, any affiliate of Agent or FleetBoston
Financial Corporation or any of the Lenders, or from any such affiliate of any
of the Lenders, to Borrower or the Shelbourne OP may to the fullest extent not
prohibited by applicable law at any time or from time to time, without regard to
the existence, sufficiency or adequacy of any other collateral, and without
notice or compliance with any other condition precedent now or hereafter imposed
by statute, rule of law or otherwise, all of which are hereby waived, be set
off, appropriated and applied by Agent against any or all of the Obligations
irrespective of whether demand shall have been made, in such manner as Agent in
its sole and absolute discretion may determine. Within three (3) Business Days
of making any such set off, appropriation or application, Agent agrees to notify
Borrower or the Shelbourne OP, as applicable, thereof, provided the failure to
give such notice shall not affect the validity of such set off or appropriation
or application. ANY AND ALL RIGHTS TO REQUIRE AGENT OR ANY OF THE LENDERS TO
EXERCISE ITS RIGHTS OR REMEDIES WITH RESPECT TO ANY OTHER COLLATERAL WHICH
SECURES THE LOAN, PRIOR TO EXERCISING ITS RIGHT OF SETOFF WITH RESPECT TO SUCH
DEPOSITS, CREDITS OR OTHER PROPERTY OF THE BORROWER OR ANY GUARANTOR, ARE HEREBY
KNOWINGLY, VOLUNTARILY AND IRREVOCABLY WAIVED.
12.3 Application Each of the Lenders agrees with each other Lender that
with respect to this Agreement or under any other Loan Document (a) if an amount
to be set off is to be applied to indebtedness of the Borrower or any other Loan
Party to such Lender, other than the Obligations evidenced by the Note due to
such Lender, such amount shall be applied ratably to such other indebtedness and
to the Obligations evidenced by the Note due to such Lender, and (b) if such
Lender shall receive from the Borrower or any other Loan Party, whether by
voluntary payment, exercise of the right of setoff, counterclaim, cross action,
enforcement of the claim evidenced by the Note due to such Lender by proceedings
against the Borrower or any other Loan Party at law or in equity or by proof
thereof in bankruptcy, reorganization, liquidation, receivership or similar
proceedings, or otherwise, and shall retain and apply to the payment of the Note
due to such Lender any amount in excess of its ratable portion of the payments
received by all of the Lenders with respect to Obligations under the Note due to
all of the Lenders, such Lender will make such disposition and arrangements with
the other Lenders with respect to such excess, either by way of distribution,
pro tanto assignment of claims, subrogation or otherwise as shall result in each
Lender receiving in respect of the Note its proportionate payment as
contemplated by this Agreement; provided that if all or any part of such excess
payment is thereafter recovered from such Lender, such disposition and
arrangements shall be rescinded and the amount restored to the extent of such
recovery, but without interest.
12.4 Right to Freeze. The Agent and each of the Lenders shall also have the
right, at its option, upon the occurrence and during the continuance of any
event which would entitle the Agent and each of the Lenders to set off or debit
as set forth in Section 12.2, to freeze, block or segregate any such deposits,
balances and other sums so that Borrower and/or any other applicable Loan Party
may not access, control or draw upon the same.
-49-
12.5 Additional Rights. The rights of Agent, the Lenders and each affiliate
of Agent and each of the Lenders under this Article 12 are in addition to, and
not in limitation of, other rights and remedies, including other rights of set
off, which Agent or any of the Lenders may have.
13. THE AGENT AND THE LENDERS
13.1 Rights, Duties and Immunities of the Agent.
13.1.1 Appointment of Agent. Each Lender hereby irrevocably designates
and appoints Fleet National Bank as Agent of such Lender to act as
specified herein and in the other Loan Documents, and each such Lender
hereby irrevocably authorizes the Agent to take such actions, exercise such
powers and perform such duties as are expressly delegated to or conferred
upon the Agent by the terms of this Loan Agreement and the other Loan
Documents, together with such other powers as are reasonably incidental
thereto. The Agent agrees to act as such upon the express conditions
contained in this Article 13. The Agent shall not have any duties or
responsibilities except those expressly set forth herein or in the other
Loan Documents, nor shall it have any fiduciary relationship with any
Lender, and no implied covenants, responsibilities, duties, obligations or
liabilities shall be read into this Loan Agreement or otherwise exist
against the Agent. The provisions of this Article 13 are solely for the
benefit of the Agent and the Lenders, and the Borrower and the Shelbourne
OP shall not have any rights as a third party beneficiary of any of the
provisions hereof.
13.1.2 Administration of Loan by Agent. The Agent shall be responsible
for administering the Loan on a day-to-day basis. In the exercise of such
administrative duties, the Agent shall use the same diligence and standard
of care that is customarily used by the Agent with respect to similar loans
held by the Agent solely for its own account.
Each Lender delegates to the Agent the full right and authority on its
behalf to take the following specific actions in connection with its
administration of the Loan:
(i) to fund the Loan in accordance with the provisions of the Loan
Documents, but only to the extent of immediately available funds provided
to the Agent by the respective Lenders for such purpose;
(ii) to receive all payments of principal, interest, fees and other
charges paid by, or on behalf of, the Borrower and, except for fees to
which the Agent is entitled pursuant to the Loan Documents or otherwise, to
distribute all such funds to the respective Lenders as provided for
hereunder;
(iii) to keep and maintain complete and accurate files and records of
all material matters pertaining to the Loan, and make such files and
records available for inspection and copying by each Lender and its
respective employees and agents during normal business hours upon
reasonable prior notice to the Agent; and
(iv) to do or omit doing all such other actions as may be reasonably
necessary or incident to the implementation, administration and servicing
of the Loan and the rights and duties delegated hereinabove.
13.1.3 Delegation of Duties. The Agent may execute any of its duties
under this Loan Agreement or any other Loan Document by or through its
agents or attorneys-in-fact, and shall be entitled to the advice of counsel
concerning all matters pertaining to its rights and duties hereunder or
under the Loan Documents. The Agent shall not be responsible for
-50-
the negligence or misconduct of any agents or attorneys-in-fact selected by
it with reasonable care.
13.1.4 Exculpatory Provisions. Neither the Agent nor any of its
officers, directors, employees, agents, attorneys-in-fact or affiliates
shall be liable for any action lawfully taken or omitted to be taken by it
or them under or in connection with this Loan Agreement or the other Loan
Documents, except for its or their gross negligence or willful misconduct.
Neither the Agent nor any of its officers, directors, employees, agents,
attorneys-in-fact or affiliates shall be responsible for or have any duty
to ascertain, inquire into, or verify (i) any recital, statement,
representation or warranty made by the Borrower or the Shelbourne OP, or
any of its officers or agents contained in this Loan Agreement or the other
Loan Documents or in any certificate or other document delivered in
connection therewith; (ii) the performance or observance of any of the
covenants or agreements contained in, or the conditions of, this Loan
Agreement or the other Loan Documents; (iii) the state or condition of any
properties of the Borrower, any Loan Party, or any other obligor hereunder
constituting Collateral for the Obligations, or any information contained
in the books or records of the Borrower or any Loan Party; (iv) the
validity, enforceability, collectibility, effectiveness or genuineness of
this Loan Agreement or any other Loan Document or any other certificate,
document or instrument furnished in connection therewith; or (v) the
validity, priority or perfection of any lien securing or purporting to
secure the Obligations or the value or sufficiency of any of the
Collateral.
13.1.5 Reliance by Agent. The Agent shall be entitled to rely, and
shall be fully protected in relying, upon any notice, consent, certificate,
affidavit, or other document or writing believed by it to be genuine and
correct and to have been signed, sent or made by the proper person or
persons, and upon the advice and statements of legal counsel (including,
without, limitation, counsel to the Borrower and the Shelbourne OP),
independent accountants and other experts selected by the Agent. The Agent
shall be fully justified in failing or refusing to take any action under
this Loan Agreement or any other Loan Document unless it shall first
receive such advice or concurrence of the Required Lenders as it deems
appropriate or it shall first be indemnified to its satisfaction by the
Lenders against any and all liability and expense which may be incurred by
it by reason of the taking or failing to take any such action. The Agent
shall in all cases be fully protected in acting, or in refraining from
acting, under this Loan Agreement and the other Loan Documents in
accordance with any written request of the Required Lenders, and each such
request of the Required Lenders, and any action taken or failure to act by
the Agent pursuant thereto, shall be binding upon all of the Lenders;
provided, however, that the Agent shall not be required in any event to
act, or to refrain from acting, in any manner which is contrary to the Loan
Documents or to applicable law.
13.1.6 Notice of Default. The Agent shall not be deemed to have
knowledge or notice of the occurrence of any Default or Event of Default
unless the Agent has actual knowledge of the same or has received notice
from a Lender or the Borrower referring to this Loan Agreement, describing
such Default or Event of Default and stating that such notice is a "notice
of default". In the event that the Agent obtains such actual knowledge or
receives such a notice, the Agent shall give prompt notice thereof to each
of the Lenders. The Agent shall take such action with respect to such
Default or Event of Default as shall be reasonably directed by the Required
Lenders. Unless and until the Agent shall have received such direction, the
Agent may (but shall not be obligated to) take such action, or refrain from
taking such action, with respect to any such Default or Event of Default as
it shall deem advisable in the best interest of the Lenders.
-51-
13.1.7 Lenders' Credit Decisions. Each Lender acknowledges that it has,
independently and without reliance upon the Agent or any other Lender, and
based on the financial statements prepared by the Borrower, the Shelbourne
OP or any Loan Party, and such other documents and information as it has
deemed appropriate, made its own credit analysis and investigation into the
business, assets, operations, property, and financial and other condition
of the Borrower or any Loan Party and has made its own decision to enter
into this Loan Agreement and the other Loan Documents. Each Lender also
acknowledges that it will, independently and without reliance upon the
Agent or any other Lender, and based on such documents and information as
it shall deem appropriate at the time, continue to make its own credit
decisions in determining whether or not conditions precedent to Closing any
Loan hereunder have been satisfied and in taking or not taking any action
under this Loan Agreement and the other Loan Documents.
13.1.8 Agent's Reimbursement and Indemnification. The Lenders agree to
reimburse and indemnify the Agent, ratably in proportion to their
respective Commitments, for (i) any amounts not reimbursed by the Borrower
for which the Agent is entitled to reimbursement by the Borrower under this
Loan Agreement or the other Loan Documents, (ii) any other expenses
incurred by the Agent on behalf of the Lenders in connection with the
preparation, execution, delivery, administration, amendment, waiver and/or
enforcement of this Loan Agreement and the other Loan Documents, and (iii)
any liabilities, obligations, losses, damages, penalties, actions,
judgments, suits, costs, expenses or disbursements of any kind and nature
whatsoever which may imposed on, incurred by or asserted against the Agent
in any way relating to or arising out of this Loan Agreement or the other
Loan Documents or any other document delivered in connection therewith or
any transaction contemplated thereby, or the enforcement of any of the
terms hereof or thereof, provided that no Lender shall be liable for any of
the foregoing to the extent that they arise from the gross negligence or
willful misconduct of the Agent. If any indemnity furnished to the Agent
for any purpose shall, in the opinion of the Agent, be insufficient or
become impaired, the Agent may call for additional indemnity and cease, or
not commence, to do the action indemnified against until such additional
indemnity is furnished.
13.1.9 Agent in its Individual Capacity. With respect to its Commitment
as a Lender, and the Loans made by it and the Note issued to it, the Agent
shall have the same rights and powers hereunder and under any other Loan
Document as any Lender and may exercise the same as though it were not the
Agent, and the term "Lender" or "Lenders" shall, unless the context
otherwise indicates, include the Agent in its individual capacity. The
Agent and its subsidiaries and affiliates may accept deposits from, lend
money to, and generally engage in any kind of commercial or investment
banking, trust, advisory or other business with the Borrower, the
Shelbourne REIT, the Shelbourne GP, the Shelbourne OP, any Shelbourne
Subsidiary , any Shelbourne Entity, or other Loan Party as if it were not
the Agent hereunder.
13.1.10 Successor Agent. The Agent may resign at any time by giving
thirty (30) days' prior written notice to the Lenders and Borrower. The
Required Lenders, for good cause, may remove Agent at any time by giving
thirty (30) days' prior written notice to the Agent, the Borrower and the
other Lenders. Upon any such resignation or removal, the Required Lenders
shall have the right to appoint a successor Agent. If no successor Agent
shall have been so appointed by the Required Lenders and accepted such
appointment within thirty (30) days after the retiring Agent's giving
notice of resignation or the Required Lenders' giving notice of removal, as
the case may be, then the retiring Agent may appoint, on behalf of the
Borrower and the Lenders, a successor Agent. Each such successor Agent
shall be a financial institution which meets the requirements of an
Eligible Assignee. Upon the acceptance of any appointment as Agent
hereunder by a successor Agent, such successor
-52-
Agent shall thereupon succeed to and become vested with all the rights,
powers, privileges and duties of the retiring Agent, and the retiring Agent
shall be discharged from its duties and obligations hereunder and under the
other Loan Documents. After any retiring Agent's resignation hereunder, the
provisions of this Article 13 shall continue in effect for its benefit in
respect of any actions taken or omitted to be taken by it while it was
acting as the Agent hereunder.
13.1.11 Duties in the Case of Enforcement. In case one or more Events
of Default have occurred and shall be continuing, and whether or not
acceleration of the Obligations shall have occurred, the Agent shall, at
the request, or may, upon the consent, of the Required Lenders, and
provided that the Lenders have given to the Agent such additional
indemnities and assurances against expenses and liabilities as the Agent
may reasonably request, proceed to enforce the provisions of this Loan
Agreement and the other Loan Documents respecting the foreclosure, the
sale, or other disposition of all or any part of the Collateral and the
exercise of any other legal or equitable rights or remedies as it may have
hereunder or under any other Loan Document or otherwise by virtue of
applicable law, or to refrain from so acting if similarly requested by the
Required Lenders. The Agent shall be fully protected in so acting or
refraining from acting upon the instruction of the Required Lenders, and
such instruction shall be binding upon all the Lenders. The Required
Lenders may direct the Agent in writing as to the method and the extent of
any such foreclosure, sale or other disposition or the exercise of any
other right or remedy, the Lenders hereby agreeing to indemnify and hold
the Agent harmless from all costs and liabilities incurred in respect of
all actions taken or omitted in accordance with such direction, provided
that the Agent need not comply with any such direction to the extent that
the Agent reasonably believes the Agent's compliance with such direction to
be unlawful or commercially unreasonable in any applicable jurisdiction.
The Agent may, in its discretion but without obligation, in the absence of
direction from the Required Lenders, take such interim actions as it
believes necessary to preserve the rights of the Lenders hereunder and in
and to any Collateral securing the Obligations, including but not limited
to petitioning a court for injunctive relief, appointment of a receiver or
preservation of the proceeds of any Collateral. Each of the Lenders
acknowledges and agrees that no individual Lender may separately enforce or
exercise any of the provisions of any of the Loan Documents, including
without limitation the Note, other than through the Agent.
13.2 Respecting Loans and Payments.
13.2.1 Procedures for Loans. Agent shall give written notice to each
Lender of each request for a Loan or conversion of an existing Loan from a
Variable Rate Advance to an Effective LIBO Rate Advance or from an
Effective LIBO Rate Advance to a Variable Rate Advance to, by facsimile
transmission, hand delivery or overnight courier, not later than 11:00 a.m.
(Boston time) (i) two (2) Business Days prior to any Effective LIBO Rate
Advance or conversion to an Effective LIBO Rate Advance, or (ii) one (1)
Business Day prior to any Variable Rate Advance. Each such notice shall be
accompanied by a written summary of the request for a Loan and shall
specify (a) the date of the requested Loan, (b) the aggregate amount of the
requested Loan, (c) each Lender's pro rata share of the requested Loan, and
(d) the applicable interest rate selected by Borrower with respect to such
Loan, or any portion thereof, together with the applicable Interest Period,
if any, selected, or deemed selected, by Borrower. Each Lender shall,
before 11:00 a.m. (Boston time) on the date set forth in any such request
for a Loan, make available to Agent, at an account to be designated by
Agent at Fleet National Bank in Boston, Massachusetts, in same day funds,
each Lender's ratable portion of the requested Loan. After Agent's receipt
of such funds and upon Agent's determination that the applicable conditions
to making the requested Loan have been fulfilled, Agent shall make such
funds available to Borrower as provided for in this Loan
-53-
Agreement. Within a reasonable period of time following the making of each
Loan, but in no event later than ten (10) Business Days following such
Loan, Agent shall deliver to each Lender a copy of Borrower's request for
Loan. Promptly after receipt by Agent of written request from any Lender,
Agent shall deliver to the requesting Lender the accompanying
certifications and such other instruments, documents, certifications and
approvals delivered by or on behalf of Borrower to Agent in support of the
requested Loan.
13.2.2 Nature of Obligations of Lenders. The obligations of the Lenders
hereunder are several and not joint. Failure of any Lender to fulfill that
its obligations hereunder shall not result in any other Lender becoming
obligated to advance more than its Commitment Percentage of the Loan, nor
shall such failure release or diminish the obligations of any other Lender
to fund its Commitment Percentage provided herein.
13.2.3 Payments to Agent. All payments of principal of and interest on
the Loans or the Note shall be made to the Agent by the Borrower or any
other obligor or guarantor for the account of the Lenders in immediately
available funds as provided in the Note and this Loan Agreement. Except as
otherwise expressly provided herein, the Agent agrees promptly to
distribute to each Lender, on the same Business Day upon which each such
payment is made, such Lender's proportionate share of each such payment in
immediately available funds excluding Liquidation Proceeds which shall be
distributed in accordance with Section 13.2.4 below. The Agent shall upon
each distribution promptly notify Borrower of such distribution and each
Lender of the amounts distributed to it applicable to principal of, and
interest on, the proportionate share held by the applicable Lender. Each
payment to the Agent under the first sentence of this Section shall
constitute a payment by the Borrower to each Lender in the amount of such
Lender's proportionate share of such payment, and any such payment to the
Agent shall not be considered outstanding for any purpose after the date of
such payment by the Borrower to the Agent without regard to whether or when
the Agent makes distribution thereof as provided above. If any payment
received by the Agent from the Borrower is insufficient to pay both all
accrued interest and all principal then due and owing, the Agent shall
first apply such payment to all outstanding interest until paid in full and
shall then apply the remainder of such payment to all principal then due
and owing, and shall distribute the payment to each Lender accordingly.
13.2.4 Distribution of Liquidation Proceeds. Subject to the terms and
conditions hereof, the Agent shall distribute all Liquidation Proceeds in
the order and manner set forth below:
First: To the Agent, towards any fees and any expenses for which the
Agent is entitled to reimbursement under this Agreement or the
other Loan Documents not theretofore paid to the Agent.
Second: To all applicable Lenders in accordance with their
proportional share based upon their respective Commitment
Percentages until all Lenders have been reimbursed for all
expenses which such Lenders have previously paid to the Agent
and not theretofore paid to such Lenders.
Third: To all Lenders in accordance with their proportional share
based upon their respective Commitment Percentages until all
Lenders have been paid in full all principal and interest due
to such Lenders under the Loan, with each Lender applying such
proceeds for purposes of this Agreement first against the
outstanding principal balance due to such Lender under the
Loan and then to accrued and unpaid interest due under the
Loan.
-54-
Fourth: To all applicable Lenders in accordance with their
proportional share based upon their respective Commitment
Percentages until all Lenders have been paid in full all other
amounts due to such Lenders under the Loan including, without
limitation, any costs and expenses incurred directly by such
Lenders to the extent such costs and expenses are reimbursable
to such Lenders by the Borrower under the Loan Documents.
Fifth: To Fleet National Bank (or any successor thereto) with respect
to the Obligations specifically arising on account of the
Interest Rate Protection Agreement, if issued by Fleet
National Bank.
Sixth: To the Borrower or such third parties as may be entitled to
claim Liquidation Proceeds.
13.2.5 Adjustments. If, after Agent has paid each Lender's
proportionate share of any payment received or applied by Agent in respect
of the Loan and other Obligations, that payment is rescinded or must
otherwise be returned or paid over by Agent, whether pursuant to any
bankruptcy or insolvency law, sharing of payments clause of any loan
agreement or otherwise, such Lender shall, at Agent's request, promptly
return its proportionate share of such payment or application to Agent,
together with the Lender's proportionate share of any interest or other
amount required to be paid by Agent with respect to such payment or
application.
13.2.6 Distribution by Agent. If in the opinion of the Agent
distribution of any amount received by it in such capacity hereunder or
under the Note or under any of the other Loan Documents might involve any
liability, it may refrain from making distribution until its right to make
distribution shall have been adjudicated by a court of competent
jurisdiction or has been resolved by the mutual consent of all Lenders. In
addition, the Agent may request full and complete indemnity, in form and
substance satisfactory to it, prior to making any such distribution. If a
court of competent jurisdiction shall adjudge that any amount received and
distributed by the Agent is to be repaid, each person to whom any such
distribution shall have been made shall either repay to the Agent its
proportionate share of the amount so adjudged to be repaid or shall pay
over to the same in such manner and to such Persons as shall be determined
by such court.
13.2.7 Delinquent Lender. If for any reason any Lender shall fail or
refuse to abide by its obligations under this Loan Agreement, including
without limitation its obligation to make available to Agent its pro rata
share of any Loans, expenses or setoff (a "Delinquent Lender") and such
failure is not cured within ten (10) days of receipt from the Agent of
written notice thereof, then, in addition to the rights and remedies that
may be available to Agent, other Lenders, the Borrower or any other party
at law or in equity, and not at limitation thereof, (i) such Delinquent
Lender's right to participate in the administration of, or decision-making
rights related to, the Loans, this Loan Agreement or the other Loan
Documents shall be suspended during the pendency of such failure or
refusal, and (ii) a Delinquent Lender shall be deemed to have assigned any
and all payments due to it from the Borrower, whether on account of
outstanding Loans, interest, fees or otherwise, to the remaining
non-delinquent Lenders for application to, and reduction of, their
proportionate shares of all outstanding Loans until, as a result of
application of such assigned payments the Lenders' respective pro rata
shares of all outstanding Loans shall have returned to those in effect
immediately prior to such delinquency and without giving effect to the
nonpayment causing such delinquency. The Delinquent Lender's
decision-making and participation rights and rights to payments as set
forth in clauses (i) and (ii) hereinabove shall be restored only upon the
payment by the Delinquent Lender of its pro rata share of any Loans or
expenses
-55-
as to which it is delinquent, together with interest thereon at the Default
Rate from the date when originally due until the date upon which any such
amounts are actually paid.
The non-delinquent Lenders shall also have the right, but not the
obligation, in their respective, sole and absolute discretion, to acquire for no
cash consideration (pro rata, based on the respective Commitments of those
Lenders electing to exercise such right) the Delinquent Lender's Commitment to
fund future Loans (the "Future Commitment"). Upon any such purchase of the pro
rata share of any Delinquent Lender's Future Commitment, the Delinquent Lender's
share in future Loans and its rights under the Loan Documents with respect
thereto shall terminate on the date of purchase, and the Delinquent Lender shall
promptly execute all documents reasonably requested to surrender and transfer
such interest, including, if so requested, an Assignment and Acceptance. Each
Delinquent Lender shall indemnify Agent and each non-delinquent Lender from and
against any and all loss, damage or expenses, including but not limited to
reasonable attorneys' fees and funds advanced by Agent or by any non-delinquent
Lender, on account of a Delinquent Lender's failure to timely fund its pro rata
share of a Loan or to otherwise perform its obligations under the Loan
Documents.
13.2.8 Holders. The Agent may deem and treat the Lender designated in
the Register as the proportionate owner of such interest in the Note for
all purposes hereof unless and until a written notice of the assignment,
transfer or endorsement thereof, as the case may be, shall have been filed
with the Agent. Any request, authority or consent of any Person who, at the
time of making such request or giving such authority or consent, is the
holder of any designated interest in the Note shall be conclusive and
binding on any subsequent holder, transferee or endorsee, as the case may
be, of such interest in the Note or of any Note or Notes issued in exchange
therefor.
13.3 Assignment and Participation.
13.3.1 Conditions to Assignment by Lenders. Except as provided herein,
each Lender may assign to one or more Eligible Assignees all or a portion
of its interests, rights and obligations under this Loan Agreement
(including all or a portion of its Commitment Percentage and Commitment and
the same portion of the Loans at the time owing to it and the portion of
the Note held by it), upon satisfaction of the following conditions: (a)
each of the Agent and the Shelbourne OP shall have given its prior written
consent to such assignment, which consent shall not be unreasonably
withheld, delayed or conditioned by either the Agent or the Shelbourne OP
(provided that, in the case of the Shelbourne OP, such consent shall not be
required if a Default or Event of Default shall have occurred and be
continuing and provided, further, such consent shall not be required from
either the Agent or the Shelbourne OP in connection with any assignment as
to which (i) the assignee is an existing Lender (other than a Delinquent
Lender) or (ii) an Affiliate or a Related Fund of the assigning Lender);
(b) each such assignment shall be of a constant, and not a varying,
percentage of all the assigning Lender's rights and obligations under this
Loan Agreement, (c) each assignment shall be in an amount that is at least
$1,000,000.00 and is a whole multiple of $1,000,000.00 (provided, such
minimum amount shall not apply if the assigning Lender is assigning its
entire remaining interest in the Loan), (d) each Lender which is a Lender
at the time of such assignment shall retain, free of any such assignment,
an amount of its Commitment of not less than $1,000,000.00 (provided, such
minimum amount shall not apply if the assigning Lender is assigning its
entire remaining interest in the Loan), (e) unless an Event of Default
shall have occurred and be continuing, the Agent, in its individual
capacity as a Lender, shall retain, free of any such assignment, an amount
of its Commitment of not less than $2,000,000.00, and (f) the parties to
such assignment shall execute and deliver to the Agent, for recording in
the Register (as hereinafter defined), an Assignment and Acceptance,
substantially in the form of Exhibit I hereto (an "Assignment and
-56-
Acceptance"). Upon such execution, delivery, acceptance and recording, from
and after the effective date specified in each Assignment and Acceptance,
which effective date shall be at least five (5) Business Days after the
execution thereof (or such shorter period of time as may be agreed to by
the Agent), (x) the assignee thereunder shall be a party hereto and, to the
extent provided in such Assignment and Acceptance, have the rights and
obligations of a Lender hereunder, and (y) the assigning Lender shall, to
the extent provided in such assignment and upon payment to the Agent of the
registration fee referred to in Section 13.3.3, be released from its
obligations under this Loan Agreement.
13.3.2 Certain Representations and Warranties. Limitations, Covenants.
By executing and delivering an Assignment and Acceptance, the parties to
the assignment thereunder confirm to and agree with each other and the
other parties hereto as follows:
(a) other than the representation and warranty that it is the legal and
beneficial owner of the interest being assigned thereby free and clear of
any adverse claim, unless specifically agreed in writing otherwise by the
assigning Lender, the assigning Lender makes no representation or warranty,
express or implied, and assumes no responsibility with respect to any
statements, warranties or representations made in or in connection with
this Loan Agreement or the execution, legality, validity, enforceability,
genuineness, sufficiency or value of this Loan Agreement, the other Loan
Documents or any other instrument or document furnished pursuant hereto or
the attachment, perfection or priority of any security interest or
mortgage;
(b) unless specifically agreed in writing otherwise by the assigning
Lender, the assigning Lender makes no representation or warranty and
assumes no responsibility with respect to the financial condition of the
Borrower or any Loan Party and its affiliates, related entities or
subsidiaries or any other person primarily or secondarily liable in respect
of any of the Obligations, or the performance or observance by the Borrower
or any other Person primarily or secondarily liable in respect of any of
the Obligations of any of their obligations under this Loan Agreement or
any of the other Loan Documents or any other instrument or document
furnished pursuant hereto or thereto;
(c) such assignee confirms that it has received a copy of this Loan
Agreement, together with copies of the most recent financial statements
provided by any Person as required by the terms of this Loan Agreement,
together with such other documents and information as it has deemed
appropriate to make its own credit analysis and decision to enter into such
Assignment and Acceptance;
(d) unless specifically agreed in writing otherwise by the assigning
Lender, such assignee will, independently and without reliance upon the
assigning Lender, the Agent or any other Lender and based on such documents
and information as it shall deem appropriate at the time, continue to make
its own credit decisions in taking or not taking action under this Loan
Agreement;
(e) such assignee represents and warrants that it is an Eligible
Assignee;
(f) such assignee appoints and authorizes the Agent to take such action
as agent on its behalf and to exercise such powers under this Loan
Agreement and the other Loan Documents as are delegated to the Agent by the
terms hereof or thereof, together with such powers as are reasonably
incidental thereto;
-57-
(g) such assignee agrees that it will perform in accordance with their
terms all of the obligations that by the terms of this Loan Agreement are
required to be performed by it as a Lender; and
(h) such assignee represents and warrants that it is legally authorized
to enter into such Assignment and Acceptance.
13.3.3 Register. The Agent shall maintain a copy of each Assignment and
Acceptance delivered to it and a register or similar list (the "Register")
for the recordation of the names and addresses of the Lenders and the
Commitment Percentage of, and principal amount of the Loans owing to the
Lenders from time to time. The entries in the Register shall be conclusive,
in the absence of manifest error, and the Borrower, the Shelbourne OP, the
Agent and the Lenders may treat each person whose name is recorded in the
Register as a Lender hereunder for all purposes of this Loan Agreement. The
Register shall be available for inspection by the Borrower and the Lenders
at any reasonable time and from time to time upon reasonable prior notice.
Upon each such recordation, the assigning Lender agrees to pay to the Agent
a registration fee in the sum of ($3,500.00), except there shall be no such
registration fee if the assignment is to an Affiliate or Related Fund of
the assigning Lender.
13.3.4 Register. Upon its receipt of an Assignment and Acceptance
executed by the parties to such assignment, the Agent shall (a) record the
information contained therein in the Register, and (b) give prompt notice
thereof to the Borrower and the Lenders (other than the assigning Lender).
13.3.5 Participations. Each Lender may sell participations to one or
more banks or other financial institutions in all or a portion of such
Lender's rights and obligations under this Loan Agreement and the other
Loan Documents; provided that (a) each such participation shall be in a
minimum amount of $1,000,000.00 (provided, such minimum amount shall not
apply to participations with Affiliates or Related Funds of the assigning
Lender), (b) each participant shall meet the requirements of an Eligible
Assignee, (c) any such sale or participation shall not affect the rights
and duties of the selling Lender hereunder to the Borrower or the
Shelbourne OP, and (d) the only rights granted to the participant pursuant
to such participation arrangements with respect to waivers, amendments or
modifications of the Loan Documents shall be the rights to approve waivers,
amendments or modifications that would reduce the principal of or the
interest rate on any Loans, extend the term or increase the amount of the
Commitment of such Lender as it relates to such participant, reduce the
amount of any commitment fees to which such participant is entitled or
extend any regularly scheduled payment date for principal or interest.
13.3.6 Disclosure. The Borrower and the Shelbourne OP agree that in
addition to disclosures made in accordance with standard and customary
banking practices any Lender may disclose information obtained by such
Lender pursuant to this Loan Agreement to assignees, pledgees, or
participants and potential assignees, pledgees, or participants hereunder
(other than a competitor of the Shelbourne OP); provided that such
assignees, pledgees, or participants or potential assignees or participants
shall agree (a) to treat in confidence such information unless such
information otherwise becomes public knowledge, (b) not to disclose such
information to a third party, except as required by law or legal process
and (c) not to make use of such information for purposes of transactions
unrelated to such contemplated assignment or participation.
13.3.7 Miscellaneous Assignment Provisions. Any assigning Lender shall
retain its rights to be indemnified pursuant to Section 7.18 with respect
to any claims or actions arising prior to the date of such assignment. If
any assignee Lender is not incorporated under
-58-
the laws of the United States of America or any state thereof, it shall,
prior to the date on which any interest or fees are payable hereunder or
under any of the other Loan Documents for its account, deliver to the
Borrower and the Agent Certificates of Exemption, as provided in Section
2.7.3. Anything contained in this Section 13.3.7 to the contrary
notwithstanding, any Lender may at any time pledge all or any portion of
its interest and rights under this Loan Agreement (including all or any
portion of its Notes) (i) to any of the twelve Federal Reserve Banks
organized underss.4 of the Federal Reserve Act, 12 U.S.C.ss.341, (ii) in
case of any Lender that is a fund, to any holders of obligations owed or
securities issued by such Lender or to any trustee for or other
representative of such holders, or (iii) as approved by the Agent. No such
pledge or the enforcement thereof shall release the pledgor Lender from its
obligations hereunder or under any of the other Loan Documents.
13.4 Administrative Matters.
13.4.1 Amendment, Waiver, Consent, Etc. Except as otherwise provided
herein or as to any term or provision hereof which provides for the consent
or approval of the Agent, no term or provision of this Loan Agreement or
any other Loan Document may be changed, waived, discharged or terminated,
nor may any consent required or permitted by this Loan Agreement or any
other Loan Document be given, unless such change, waiver, discharge,
termination or consent receives the written approval of the Required
Lenders.
Notwithstanding the foregoing, the unanimous written approval of all the
Lenders (other than a Defaulting Lender) shall be required with respect to any
proposed amendment, waiver, discharge, termination, or consent which:
(i) has the effect of (a) extending the final scheduled maturity or the
date of any amortization payment of any Loan or Note, (b) reducing the rate
or extending the time of payment of interest or fees thereon, (c)
increasing or reducing the principal amount thereof, or (d) otherwise
postponing or forgiving any indebtedness thereunder,
(ii) releases or discharges any material portion of the Collateral
other than in accordance with the express provisions of the Loan Documents,
(iii) amends, modifies or waives any provisions of this Section 13.4,
(iv) amends, modifies or waives any of the Financial Covenants,
(v) reduces the percentage specified in the definition of Required
Lenders,
(vi) except as otherwise provided in the Loan Agreement, changes the
amount of any Lender's Commitment or Commitment Percentage or percentage
interest in the Loan,
(vii) releases or waives any guaranty of the Obligations or
indemnifications provided in the Loan Documents,
(viii) modifies any prepayment events (mandatory or optional) or the
application of proceeds from such events, or
(ix) modifies the provisions of Section 13.2.4 as to the disposition of
Liquidation Proceeds,
-59-
and provided, further, that without the consent of the Agent, no such action
shall amend, modify or waive any provision of this Article or any other
provision of any Loan Document which relates to the rights or obligations of the
Agent.
13.4.2 Deemed Consent or Approval. With respect to any requested
amendment, waiver, consent or other action which requires the approval of
the Required Lenders or all of the Lenders, as the case may be, in
accordance with the terms of this Loan Agreement, or if the Agent is
required hereunder to seek, or desires to seek, the approval of the
Required Lenders or all of the Lenders, as the case may be, prior to
undertaking a particular action or course of conduct, the Agent in each
such case shall provide each Lender with written notice of any such request
for amendment, waiver or consent or any other requested or proposed action
or course of conduct, accompanied by such detailed background information
and explanations as may be reasonably necessary to determine whether to
approve or disapprove such amendment, waiver, consent or other action or
course of conduct. The Agent may (but shall not be required to) include in
any such notice, printed in capital letters or boldface type, a legend
substantially to the following effect:
"THIS COMMUNICATION REQUIRES IMMEDIATE RESPONSE. FAILURE TO RESPOND WITHIN
TEN (10) CALENDAR DAYS FROM THE RECEIPT OF THIS COMMUNICATION SHALL
CONSTITUTE A DEEMED APPROVAL BY THE ADDRESSEE OF THE ACTION REQUESTED BY
THE BORROWER OR THE SHELBOURNE OP OR THE COURSE OF CONDUCT PROPOSED BY THE
AGENT AND RECITED ABOVE,"
and if the foregoing legend is included by the Agent in its communication, a
Lender shall be deemed to have approved or consented to such action or course of
conduct for all purposes hereunder if such Lender fails to object to such action
or course of conduct by written notice to the Agent within ten (10) calendar
days of such Lender's receipt of such notice.
13.5 Arranger. Notwithstanding the provisions of this Agreement or of the
other Loan Documents, the Arranger shall have no powers, rights, duties,
responsibilities or liabilities with respect to this Agreement and the other
Loan Documents. To the extent requested by the Agent, the Arranger has
coordinated, or will coordinate, the initial syndication of the Loan and the
assignment of interests in the Loan.
14. CASUALTY AND TAKING.
14.1 Casualty or Taking; Obligation To Repair. In the event of the
occurrence of an Event of Loss as to any Collateral Property, Borrower shall
give immediate written notice thereof to Agent and proceed with reasonable
diligence, in full compliance with all Legal Requirements and the other
requirements of the Loan Documents, to repair, restore, rebuild or replace the
affected Collateral Property (each, the "Repair Work").
14.2 Adjustment of Claims. All insurance claims or condemnation or similar
awards shall be adjusted or settled by Shelbourne OP, at Shelbourne OP's sole
cost and expense, but subject to Agent's prior written approval which approval
shall not be unreasonably withheld; provided, however, that (i) the Agent shall
have the right to participate in any adjustment or settlement with respect to
which the Net Proceeds in the aggregate are equal to or greater than Two Hundred
and Fifty Thousand Dollars ($250,000.00) (ii) if any Default exists under any of
the Loan Documents, Agent shall have the right to adjust, settle, and compromise
such claims without the approval of Borrower or the Shelbourne OP.
14.3 Payment and Application of Insurance Proceeds and Condemnation Awards.
-60-
14.3.1 All Net Proceeds shall be paid to Agent, on behalf of the
Lenders, and except as otherwise provided for herein, at Agent's option, be
applied to Obligations or released, in whole or in part, to pay for the
actual cost of repair, restoration, rebuilding or replacement
(collectively, "Cost To Repair"). If any Net Proceeds are received directly
by any Loan Party, such Loan Party shall hold such Net Proceeds in trust
for the Agent and shall promptly deliver such Net Proceeds in kind to the
Agent.
14.3.2 Notwithstanding the terms and provisions hereof, if the Net
Proceeds do not exceed Two Hundred and Fifty Thousand Dollars ($250,000.00)
and the Insurance/Taking Release Conditions have been satisfied in a manner
reasonably acceptable to the Agent, Agent shall release so much of the Net
Proceeds as may be required to pay for the actual Cost to Repair and the
applicable Loan Party shall commence and diligently prosecute to
completion, the Repair Work relative to the subject Collateral Property.
14.3.3 Notwithstanding the terms and provisions hereof, any Net
Proceeds relative to the Seattle Tower Casualty shall be released to the
Borrower to be used for the actual Cost to Repair relating thereto.
14.3.4 Except as provided for in Sections 14.3.2 and 14.3.3, if either
(i) the Net Proceeds are equal to or greater than Two Hundred and Fifty
Thousand Dollars ($250,000.00) or (ii) the Net Proceeds do not exceed Two
Hundred and Fifty Thousand Dollars ($250,000.00), but the Insurance/Taking
Release Conditions have not been satisfied with respect to such Event of
Loss, the Agent shall release so much of the Net Proceeds as may be
required to pay for the actual Cost To Repair in accordance the limitations
and procedures set forth in Section 14.4, if the following conditions are
satisfied in a manner acceptable to the Agent:
(i) no Default or Event of Default shall have occurred and be
continuing under the Loan Documents;
(ii) in Agent's good faith judgment such Net Proceeds together
with any additional funds as may be deposited with and pledged to
Agent, on behalf of the Lenders, are sufficient to pay for the Cost To
Repair. In order to make this determination, Agent shall be furnished
by the Borrower with an estimate of the Cost to Repair accompanied by
an independent architect's certification as to such Cost to Repair and
appropriate plans and specifications for the Repair Work;
(iii) the subject Event of Loss was not a Major Event of Loss;
(iv) Agent in the exercise of its reasonable discretion, shall
have determined that all rents from Leases of the subject Collateral
Property which are to xxxxx pursuant to their terms are to be payable
to the Collateral Property Owner, subject to deductibles, if any,
permitted pursuant to the insurance policies to be maintained pursuant
to this Agreement, from Rent Loss Proceeds;
(v) in Agent's good faith judgment, the Repair Work can
reasonably be completed on or before the earliest to occur of (A) the
earliest date required for such completion under the terms of any Major
Lease and (B) such time as may be required under applicable Legal
Requirements; and
(vi) each tenant under a Major Lease which might otherwise have a
right to terminate its lease on account of such Event of Loss shall
have waived its right to
-61-
so terminate conditioned only upon the Repair Work being completed
within a reasonable period of time acceptable to Agent.
14.4 Conditions To Release of Insurance Proceeds. If Agent elects or is
required to release insurance proceeds, except with respect to the Net Proceeds
resulting from the Seattle Tower Casualty, Agent may impose reasonable
conditions on such release which shall include, but not be limited to, the
following:
14.4.1 Prior written approval by Agent, which approval shall not be
unreasonably withheld or delayed of plans, specifications, cost estimates,
contracts and bonds for the Repair Work;
14.4.2 Waivers of lien, architect's certificates, contractor's sworn
statements and other evidence of costs, payments and completion as Agent
may reasonably require;
14.4.3 The funds shall be released upon final completion of the Repair
Work, unless Borrower requests earlier funding, in which event partial
monthly disbursements equal to (i) 90% of the costs of the work completed
prior to the certification by the applicable Lender's Consultant and if
there is no Lender's Consultant, an independent architect retained by the
Borrower, that the Repair Work is 50% completed, and thereafter (ii) 100%
of the costs of the work completed thereafter (such that the effective
retainage upon completion of the Repair Work would be 5%), and then (iii)
upon final completion of the Repair Work as certified by such Lender's
Consultant or independent architect, and the receipt by Agent of
satisfactory evidence of payment and release of all liens, the balance of
the funds shall be released;
14.4.4 Determination by Agent that the undisbursed balance of such Net
Proceeds on deposit with Agent, together with additional funds deposited
for the purpose, shall be at least sufficient to pay for the remaining Cost
To Repair, free and clear of all liens and claims for lien;
14.4.5 All work to comply with the standards, quality of construction
and Legal Requirements applicable to the construction of the Improvements;
and
14.4.6 The absence of any Default or Event of Default under any Loan
Documents.
14.5 Except with respect to the Net Proceeds resulting from the Seattle
Tower Casualty, the Agent shall have the right to hire, at the cost and expense
of the Borrower, a Lender's Consultant to assist the Agent in the determination
of the satisfaction of the conditions provided for herein for the release of the
Net Proceeds to pay the Costs to Repair and to periodically inspect the status
of the construction of any Repair Work.
14.6 Except with respect to the Net Proceeds resulting from the Seattle
Tower Casualty, in the event that the Agent makes any Net Proceeds available to
any Loan Party for the payment of Costs to Repair as provided for herein, upon
the completion of the Repair Work as certified by the applicable Lender's
Consultant and if there is no Lender's Consultant, an independent architect
retained by the Borrower, and receipt by Agent of satisfactory evidence of
payment and release of all liens, any excess Net Proceeds still held by the
Agent shall be remitted by the Agent to the Borrower provided that no Event of
Default shall have occurred and be continuing;
14.7 The terms and provisions of this Article 14 shall be subject to the
terms and provisions of any Lease as to which the Agent has agreed otherwise
with respect to the use and
-62-
disbursement of Net Proceeds in any agreement entered into between the tenant
under such Lease and the Agent.
14.8 The Agent acknowledges that provided that no Event of Default has
occurred and is then continuing, all Rent Loss Proceeds shall be payable to the
Borrower or the applicable Loan Party.
15. GENERAL PROVISIONS.
15.1 Notices. Any notice or other communication in connection with this
Loan Agreement, the Note, the Security Documents, or any of the other Loan
Documents, shall be in writing, and (i) deposited in the United States Mail,
postage prepaid, by registered or certified mail, or (ii) hand delivered by any
commercially recognized courier service or overnight delivery service such as
Federal Express, or (iii) sent by facsimile transmission if a FAX Number is
designated below addressed:
If to Borrower
or Shelbourne OP:
[Such Person]
Seven Bulfinch Place, Suite 500
P.O. Box 9507
Xxxxxx, Xxxxxxxxxxxxx 00000
Attention: Xxxxxxx Xxxxxxx, Chief Financial Officer
FAX Number: (000) 000-0000
with copies by regular mail or such hand delivery or overnight delivery or
facsimile transmission to:
Post & Xxxxxxx, LLP
000 Xxxxxxx Xxxxxxxxxx, Xxxxx 000
Xxxxxxx, Xxx Xxxx 00000
Attention: Xxxxx X. Xxxxxxx, Esquire
FAX Number: (000) 000-0000
If to Agent:
Fleet National Bank, N.A.
000 Xxxxxxx Xxxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
Attention: Xxxxx X. Xxx, Director
FAX Number: (000) 000-0000
And
Attention: Xxxxxx X. Xxxxxxxx, Director
FAX Number: (000) 000-0000
with copies by regular mail or such hand delivery or overnight delivery or
facsimile transmission to:
-63-
Xxxxxx & Xxxxxxxxxx LLP
Xxxxx Xxxxxx Xxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
Attention: Xxxxxx X. Xxxxxxxxx, Esquire
FAX Number: (000) 000-0000
If to Fleet National Bank:
Fleet National Bank, N.A.
000 Xxxxxxx Xxxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
Attention: Xxxxx X. Xxx, Director
FAX Number: (000) 000-0000
And
Attention: Commercial Real Estate Loan
Administration Manager,
with copies by regular mail or such hand delivery or overnight delivery or
facsimile transmission to:
Xxxxxx & Xxxxxxxxxx LLP
Xxxxx Xxxxxx Xxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
Attention: Xxxxxx X. Xxxxxxxxx, Esquire
FAX Number: (000) 000-0000
If to Lender other than Fleet National Bank, to the addresses set forth on the
signature page or to such addresses as set forth in the Assignment and
Acceptance.
Any such addressee may change its address for such notices to such other address
in the United States as such addressee shall have specified by written notice
given as set forth above. All periods of notice shall be measured from the
deemed date of delivery.
A notice shall be deemed to have been given, delivered and received for the
purposes of all Loan Documents upon the earliest of: (i) if sent by such
certified or registered mail, on the third Business Day following the date of
postmark, or (ii) if hand delivered at the specified address by such courier or
overnight delivery service, when so delivered or tendered for delivery during
customary business hours on a Business Day, or (iii) if so mailed, on the date
of actual receipt as evidenced by the return receipt, or (iv) if so delivered,
upon actual receipt, or (v) if facsimile transmission is a permitted means of
giving notice, upon receipt as evidenced by confirmation.
In the event of a notice being provided by means of a facsimile
transmission, the Person providing such notice shall use its best efforts to
provide a copy of such notice by one of the other notification methods provided
for herein; provided, however, the failure to provide such other copy of the
said notice shall have no impact whatsoever on the receipt, timing, validity or
effectiveness of the original facsimile notice.
15.2 Limitations on Assignment. Borrower may not assign this Agreement or
the monies due thereunder without the prior written consent of all of the
Lenders in each instance, but in such event Lenders may nevertheless at their
option make the Loan under this Agreement to Borrower or to those who succeed to
the title of Borrower and all sums so advanced by Lenders shall be deemed
-64-
a Loan Advance under this Agreement and not to be modifications thereof and
shall be secured by all of the Collateral given at any time in connection
herewith.
15.3 Further Assurances. Borrower shall upon request from Agent from time
to time execute, seal, acknowledge and deliver such further instruments or
documents which Agent may reasonably require to better perfect and confirm its
rights and remedies hereunder, under the Note, under the Security Documents and
under each of the other Loan Documents.
15.4 Payments.
(i) All payments shall be applied first to the payment of all fees,
expenses and other amounts due to the Agent (excluding principal and interest)
and, to the extent reimbursement is provided for herein, the Lenders, then to
accrued interest, and the balance on account of outstanding principal; provided,
however, that after an Event of Default, Liquidation Proceeds will be applied to
the Obligations of Borrower to Agent and the Lenders as otherwise provided for
herein.
(ii) Any payments required by this Agreement, the Note or any of the
other Loan Documents, or any other instruments or agreements executed in
connection herewith or therewith, may (but not before the due date thereof) be
deducted by each Lender from the amount, if any, not already advanced, and the
same shall be deemed to be a Loan Advance, or may be deducted from any Loan
Advance due hereunder. Any attorneys' fees, appraisal charge, inspection fee, or
any other expense payable by Borrower as herein provided for, or incurred in
connection with the drafting of the Loan Documents and other instruments
evidencing or securing the Obligations and all other Loan Documents may if not
paid within thirty (30) days of written demand therefor, be likewise deducted
from the amounts, if any, not already advanced or from any Loan Advance payable
to Borrower and, in any event, charged as a Loan Advance hereunder.
15.5 Parties Bound. The provisions of this Agreement and of each of the
other Loan Documents shall be binding upon and inure to the benefit of the
Shelbourne OP, the Borrower and the Agent and each of the Lenders and their
respective successors and assigns, except as otherwise prohibited by this
Agreement or any of the other Loan Documents.
This Agreement is a contract by and among Borrower, the Shelbourne OP, the
Agent and each of the Lenders for their mutual benefit, and no third person
shall have any right, claim or interest against either Agent, any of the
Lenders, the Shelbourne OP, or Borrower by virtue of any provision hereof.
15.6 Governing Law; Consent to Jurisdiction; Mutual Waiver of Jury Trial.
15.6.1 Substantial Relationship. It is understood and agreed that all
of the Loan Documents were negotiated, executed and delivered in The
Commonwealth of Massachusetts, which Commonwealth the parties agree has a
substantial relationship to the parties and to the underlying transactions
embodied by the Loan Documents.
15.6.2 Place of Delivery. Borrower agrees to furnish to Agent at the
Agent's office in Boston, Massachusetts all further instruments,
certifications and documents to be furnished hereunder.
15.6.3 Governing Law. This Agreement, except as otherwise provided in
Section 15.6.4, and each of the other Loan Documents shall in all respects
be governed, construed, applied and enforced in accordance with the
internal laws of the Commonwealth of Massachusetts without regard to
principles of conflicts of law.
-65-
15.6.4 Exceptions. Notwithstanding the foregoing choice of law:
(i) Matters relating to the creation, perfection, priority and
enforcement of the liens on and security interests in each Collateral
Property, including by way of illustration, but not in limitation,
actions for foreclosure, for injunctive relief, or for the appointment
of a receiver, shall be governed by the laws of the State in which such
Collateral Property is located;
(ii) Agent shall comply with applicable law of such State to the
extent required by the law of such jurisdiction in connection with the
foreclosure of the security interests and liens created under the
Security Documents and the other Loan Documents with respect to each
Collateral Property or other assets situated in such State; and
(iii) provisions of Federal law and the law of such State shall
apply in defining the terms Hazardous Materials, Environmental Legal
Requirements and Legal Requirements applicable to each Collateral
Property as such terms are used in this Loan Agreement, the
Environmental Indemnity and the other Loan Documents.
Nothing contained herein or any other provisions of the Loan Documents
shall be construed to provide that the substantive laws of any other State
shall apply to any parties, rights and obligations under any of the Loan
Documents, which, except as expressly provided in clauses (i), (ii) and
(iii) of this Section 15.6.4., are and shall continue to be governed by the
substantive law of Commonwealth of Massachusetts, except as set forth in
clauses (i) , (ii) and (iii) of this Section 15.6.4. In addition, the fact
that portions of the Loan Documents may include provisions drafted to
conform to the law of any other State is not intended, nor shall it be
deemed, in any way, to derogate the parties, choice of law as set forth or
referred to in this Loan Agreement or in the other Loan Documents. The
parties further agree that the Agent may enforce its rights under the Loan
Documents including, but not limited to, its rights to xxx the Borrower or
to collect any outstanding indebtedness in accordance with applicable law.
15.6.5 Consent to Jurisdiction. Borrower hereby consents to personal
jurisdiction in any state or Federal court located within The Commonwealth
of Massachusetts.
15.6.6 JURY TRIAL WAIVER. BORROWER, AGENT, AND EACH OF THE LENDERS
MUTUALLY HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVE THE RIGHT TO
A TRIAL BY JURY IN RESPECT OF ANY LITIGATION BASED ON THIS LOAN AGREEMENT,
ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS LOAN AGREEMENT OR ANY
OTHER LOAN DOCUMENTS CONTEMPLATED TO BE EXECUTED IN CONNECTION HEREWITH, OR
ANY COURSE OF CONDUCT, COURSE OF DEALINGS, STATEMENTS (WHETHER VERBAL OR
WRITTEN) OR ACTIONS OF ANY PARTY, INCLUDING, WITHOUT LIMITATION, ANY COURSE
OF CONDUCT, COURSE OF DEALINGS, STATEMENTS OR ACTIONS OF AGENT OR ANY
LENDER RELATING TO THE ADMINISTRATION OF THE LOAN OR ENFORCEMENT OF THE
LOAN DOCUMENTS, AND AGREE THAT NEITHER PARTY WILL SEEK TO CONSOLIDATE ANY
SUCH ACTION WITH ANY OTHER ACTION IN WHICH A JURY TRIAL CANNOT BE OR HAS
NOT BEEN WAIVED. EXCEPT AS PROHIBITED BY LAW, EACH PARTY HEREBY WAIVES ANY
RIGHT IT MAY HAVE TO CLAIM OR RECOVER IN ANY LITIGATION ANY SPECIAL,
INDIRECT, SPECULATIVE, EXEMPLARY, PUNITIVE OR CONSEQUENTIAL DAMAGES OR ANY
DAMAGES OTHER THAN, OR IN ADDITION TO, ACTUAL DAMAGES. BORROWER
-66-
CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF AGENT OR ANY LENDER
HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT AGENT OR ANY LENDER WOULD
NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER. THIS
WAIVER CONSTITUTES A MATERIAL INDUCEMENT FOR EACH OF THE PARTIES HERETO TO
ENTER INTO THE TRANSACTIONS CONTEMPLATED HEREBY.
15.7 Survival. All representations, warranties, covenants and agreements of
Borrower, or a Loan Party, herein or in any other Loan Document, or in any
notice, certificate, or other paper delivered by or on behalf of Borrower or a
Loan Party pursuant hereto are significant and shall be deemed to have been
relied upon by Agent and each of the Lenders notwithstanding any investigation
made by Agent or any of the Lenders or on its behalf and shall survive the
delivery of the Loan Documents and the making of the Loan pursuant thereto. No
review or approval by Agent or the Lenders or any of their representatives, of
any opinion letters, certificates by professionals or other item of any nature
shall relieve Borrower or anyone else of any of the obligations, warranties or
representations made by or on behalf of Borrower or a Loan Party, or any one or
more of them, under any one or more of the Loan Documents.
15.8 Cumulative Rights. All of the rights of Agent and the Lenders
hereunder and under each of the other Loan Documents and any other agreement now
or hereafter executed in connection herewith or therewith, shall be cumulative
and may be exercised singly, together, or in such combination as Agent may
determine in its sole good faith judgment.
15.9 Claims Against Agent or Lenders.
15.9.1 Borrower and Shelbourne OP Must Notify. The Agent and each of
the Lenders shall not be in default under this Agreement, or under any
other Loan Document, unless a written notice specifically setting forth the
claim of Borrower and/or Shelbourne OP shall have been given to Agent and
each of the Lenders within thirty (30) days after Borrower or Shelbourne OP
first had actual Knowledge or actual notice of the occurrence of the event
which Borrower or Shelbourne OP alleges gave rise to such claim and Agent
or any of the Lenders does not remedy or cure the default, if any there be,
with reasonable promptness thereafter. Such actual Knowledge or actual
notice shall refer to what was actually known by, or expressed in a written
notification furnished to, any of the persons or officials referred to in
Exhibit D as Authorized Representatives.
15.9.2 Remedies. If it is determined by the final order of a court of
competent jurisdiction, which is not subject to further appeal, that Agent
or any of the Lenders has breached any of its obligations under the Loan
Documents and has not remedied or cured the same with reasonable promptness
following notice thereof, Agent's and each of the Lenders' responsibilities
shall be limited to: (i) where the breach consists of the failure to grant
consent or give approval in violation of the terms and requirements of a
Loan Document, the obligation to grant such consent or give such approval
and to pay Borrower's reasonable costs and expenses including, without
limitation, reasonable attorneys' fees and disbursements in connection with
such court proceedings; and (ii) the case of any such failure to grant such
consent or give such approval, or in the case of any other such default by
Agent or any of the Lenders, where it is also so determined that Agent or
any of the Lenders acted in bad faith, the payment of any actual, direct,
compensatory damages sustained by Borrower as a result thereof plus
Borrower's reasonable costs and expenses, including, without limitation,
reasonable attorneys' fees and disbursements in connection with such court
proceedings.
15.9.3 Limitations. In no event, however, shall Agent and each of the
Lenders be liable to Borrower or to any Loan Party or anyone else for other
damages such as, but not
-67-
limited to, indirect, speculative, special, exemplary, punitive or
consequential damages whatever the nature of the breach by Agent or any of
the Lenders of its obligations under this Loan Agreement or under any of
the other Loan Documents. In no event shall Agent or any of the Lenders be
liable to Borrower or to any Loan Party or anyone else unless a written
notice specifically setting forth the claim of Borrower shall have been
given to Agent and each of the Lenders within the time period specified
above.
15.10 Regarding Consents. Except to the extent expressly provided herein,
any and all consents to be made hereunder by the Agent, Required Lenders, or
Lenders shall be in the discretion of the Party to whom consent rights are given
hereunder.
15.11 Obligations Absolute. Except to the extent prohibited by applicable
law which cannot be waived, the Obligations of Borrower and the obligations of
the Guarantor and the other Loan Parties under the Loan Documents shall be joint
and several, absolute, unconditional and irrevocable and shall be paid strictly
in accordance with the terms of the Loan Documents to which such Loan Party is a
party under all circumstances whatsoever, including, without limitation, the
existence of any claim, set off, defense or other right which Borrower or any
Loan Party may have at any time against Agent or any of the Lenders whether in
connection with the Loan or any unrelated transaction.
15.12 Table of Contents, Title and Headings. Any Table of Contents, the
titles and the headings of sections are not parts of this Loan Agreement or any
other Loan Document and shall not be deemed to affect the meaning or
construction of any of its or their provisions.
15.13 Counterparts. This Loan Agreement and each other Loan Document may be
executed in several counterparts, each of which when executed and delivered is
an original, but all of which together shall constitute one instrument. In
making proof of this agreement, it shall not be necessary to produce or account
for more than one such counterpart which is executed by the party against whom
enforcement of such loan agreement is sought.
15.14 Satisfaction of Commitment. The Loan being made pursuant to the terms
hereof and of the other Loan Documents is being made in satisfaction of Agent's
and each of the Lenders' obligations under the Commitment dated December 19,
2002. The terms, provisions and conditions of this Agreement and the other Loan
Documents supersede the provisions of the Commitment.
15.15 Time Of the Essence. Time is of the essence of each provision of this
Agreement and each other Loan Document.
15.16 No Oral Change. This Loan Agreement and each of the other Loan
Documents may only be amended, terminated, extended or otherwise modified by a
writing signed by the party against which enforcement is sought (except no such
writing shall be required for any party which, pursuant to a specific provision
of any Loan Document, is required to be bound by changes without such party's
assent). In no event shall any oral agreements, promises, actions, inactions,
knowledge, course of conduct, course of dealings or the like be effective to
amend, terminate, extend or otherwise modify this Loan Agreement or any of the
other Loan Documents.
15.17 Monthly Statements. While Agent may issue invoices or other
statements on a monthly or periodic basis (a "Statement"), it is expressly
acknowledged and agreed that: (i) the failure of Agent to issue any Statement on
one or more occasions shall not affect Borrower's obligations to make payments
under the Loan Documents as and when due; (ii) the inaccuracy of any Statement
shall not be binding upon Lenders and so Borrower shall always remain obligated
to pay the full amount(s) required under the Loan Documents as and when due
notwithstanding any provision to the contrary contained in any Statement; (iii)
all Statements are issued for information
-68-
purposes only and shall never constitute any type of offer, acceptance,
modification, or waiver of the Loan Documents or any of Lenders' rights or
remedies thereunder; and (iv) in no event shall any Statement serve as the basis
for, or a component of, any course of dealing, course of conduct, or trade
practice which would modify, alter, or otherwise affect the express written
terms of the Loan Documents.
-69-
IN WITNESS WHEREOF this Agreement has been duly executed and delivered as a
sealed instrument at Boston, Massachusetts, as of the date first written above.
BORROWER: SHELBOURNE RICHMOND COMPANY LLC
By: Shelbourne Properties II L.P., member manager
By: Shelbourne Properties II GP, LLC,
General Partner
By:
----------------------------------------
BORROWER: SHELBOURNE XXXXXXXX COMPANY LLC
By: Shelbourne Properties II L.P., member manager
By: Shelbourne Properties II GP, LLC,
General Partner
By:
----------------------------------------
BORROWER: SHELBOURNE LAS VEGAS COMPANY LLC
By: Shelbourne Properties III L.P., member manager
By: Shelbourne Properties III GP, Inc.,
General Partner
By:
----------------------------------------
BORROWER: CENTURY PARK I JOINT VENTURE
By: Shelbourne I Century Park Company LLC
By: Shelbourne Properties I L.P, member manager
By: Shelbourne Properties I GP, LLC,
General Partner
By:
----------------------------------------
By: Shelbourne II Century Park Company LLC
By: Shelbourne Properties II L.P, member manager
By: Shelbourne Properties II GP, LLC,
General Partner
By:
----------------------------------------
S-1
BORROWER: TRI-COLUMBUS ASSOCIATES
By: Shelbourne II Tri-Columbus Company LLC
By: Shelbourne Properties II L.P, member manager
By: Shelbourne Properties II GP, LLC,
General Partner
By:
----------------------------------------
By: Shelbourne III Tri-Columbus Company LLC
By: Shelbourne Properties III L.P, member manager
By: Shelbourne Properties III GP, Inc.,
General Partner
By:
----------------------------------------
BORROWER: SEATTLE LANDMARK JOINT VENTURE
By: Shelbourne I Seattle Landmark Company LLC
By: Shelbourne Properties I L.P, member manager
By: Shelbourne Properties I GP, LLC,
General Partner
By:
----------------------------------------
By: Shelbourne II Seattle Landmark Company LLC
By: Shelbourne Properties II L.P, member manager
By: Shelbourne Properties II GP, LLC,
General Partner
By:
----------------------------------------
S-2
SHELBOURNE OP: SHELBOURNE PROPERTIES I L.P.
By: Shelbourne Properties I GP, LLC, its General Partner
By:
--------------------------------------------------
SHELBOURNE PROPERTIES II L.P.
By: Shelbourne Properties II GP, LLC, its General Partner
By:
--------------------------------------------------
SHELBOURNE PROPERTIES III L.P.
By: Shelbourne Properties III GP, Inc. its General Partner
By:
--------------------------------------------------
AGENT: FLEET NATIONAL BANK
By:
--------------------------------------
Xxxxx X. Xxx
Duly Authorized
LENDER: FLEET NATIONAL BANK
By:
--------------------------------------
Xxxxx X. Xxx
Duly Authorized
S-3
EXHIBIT A TO LOAN AGREEMENT
---------------------------
DEFINITIONS
-----------
Accor Property shall mean the motel property portfolio acquired on or about
January15, 2003, by Xxxxxxxxxx XX LLC, an entity as to which (i) 32.51% of the
beneficial interest is owned directly or indirectly by Shelbourne I Guarantor,
(ii) 40.60% of the beneficial interest is owned directly or indirectly by
Shelbourne II Guarantor, and (iii) 26.89% of the beneficial interest is owned
directly or indirectly by Shelbourne III Guarantor.
Accotel Guaranty shall mean that certain Guaranty dated as of January 15, 2003,
executed and delivered by the Shelbourne REIT in favor of AP/RH Holdings LLC,
Xxxxxxx X. Xxxx, Xxxxx X. Xxxx, Xxxxxx X. Xxxxxx, Xxxxx Xxxxxxx, Xxxxxxxx X.
Xxxxx and Xxxx Xxxxxxx.
Accounts as defined in Section 7.14.
Additional Collateral Request as defined in Section 3.4.
Adjusted Appraised Value. With respect to any Individual Property that is the
subject of an Appraisal, the appraised value set forth in such Appraisal, as
such may be reviewed and adjusted from time to time by the Agent.
Adjusted Capitalized Value. With respect to any Collateral Property, based upon
the most recent four (4) fiscal quarters Adjusted Net Operating Income for such
Collateral Property, annualized, divided by a ten and one-quarter (10.25%)
percent capitalization rate.
Adjusted LIBO Rate. The Term "Adjusted LIBO Rate" means for each Interest Period
the rate per annum obtained by dividing (i) the LIBO Rate for such Interest
Period, by (ii) a percentage equal to one hundred percent (100%) minus the
maximum reserve percentage applicable during such Interest Period under
regulations issued from time to time by the Board of Governors of the Federal
Reserve System for determining the maximum reserve requirements (including,
without limitation, any basic, supplemental, marginal and emergency reserve
requirements) for Agent (or of any subsequent holder of a Note which is subject
to such reserve requirements) in respect of liabilities or assets consisting of
or including Eurocurrency liabilities (as such term is defined in Regulation D
of the Board of Governors of the Federal Reserve System) having a term equal to
the Interest Period.
Adjusted Net Operating Income: For any period of determination, for any
Individual Property (i) Net Operating Income less (ii) allowances for capital
expenditures in the amount of (x) $0.25 per rentable square foot of commercial
properties and (y) $300.00 per unit for multifamily properties
Advisory Agreement shall mean (i) the Advisory Agreement entered into by the
Shelbourne I REIT and the Shelbourne I GP with Shelbourne Management LLC dated
as of Xxxxx 00, 0000, (xx) the Advisory Agreement entered into by the Shelbourne
II REIT and the Shelbourne II GP with Shelbourne Management LLC dated as of
April 17, 2001, and (iii) the Advisory Agreement entered into by the Shelbourne
III REIT and the Shelbourne III GP with Shelbourne Management LLC dated as of
April 17, 2001.
Affiliate shall mean, as to any Person, any other Person that, directly or
indirectly, is in control of, is controlled by or is under common control with
such Person or is a director or officer of such Person. For purposes of this
definition, control of a Person shall mean the power, direct or indirect, (i) to
vote 10% or more of the securities having ordinary voting power for the election
of directors
A-1
of such Person or (ii) to direct or cause the direction of the management and
policies of such Person, whether by contract or otherwise.
Agent. Fleet National Bank, acting as agent for the Lenders.
Agent's Fee as defined in Section 2.4.
Agreement as defined in the Preamble.
Appraisal as defined in Section 7.17.1 .
Arranger as defined in the Preamble.
Authorized Representatives as defined in Section 4 and listed on Exhibit D.
Banking Day. The term "Banking Day" means a day on which banks are not required
or authorized by law to close in the city in which Agent's principal office is
situated.
Borrower as defined in the Preamble.
Breakage Fees as defined in Section 2.3.16.
Broadway Cash Collateral Account shall mean an interest bearing account
established with Fleet National Bank (or any successor thereto) in the name of
the Shelbourne OP, which Broadway Collateral Account shall at all times be
subject to a Pledge and Security Agreement.
Broadway Debt shall mean the obligations of 000 Xxxxxxxx Joint Venture (but no
other Shelbourne Entity) under that certain Promissory Note in the original
principal amount of $10,000,000.00.
Broadway Mortgage shall mean the first mortgage held by the holder of the
Broadway Debt on the Broadway Property, which Broadway Mortgage shall secure the
payment of the Broadway Debt.
Broadway Property shall mean that Individual Property owned by 000 Xxxxxxxx
Joint Venture located at 000 Xxxxxxxx, Xxx Xxxx, Xxx Xxxx.
Business Day shall mean any day of the year on which offices of Agent are not
required or authorized by law to be closed for business in Boston,
Massachusetts. If any day on which a payment is due is not a Business Day, then
the payment shall be due on the next day following which is a Business Day, and
such extension of time shall be included in computing interest and fees in
connection with such payment. Further, if there is no corresponding day for a
payment in the given calendar month (i.e., there is no "February 30th"), the
payment shall be due on the last Business Day of the calendar month.
Calculation Date shall mean the last day of each calendar quarter commencing
with March 31, 2003.
Calculation Period shall mean each successive twelve (12) month period ending on
a Calculation Date
Capital Stock shall mean (i) with respect to any Person that is a corporation,
any and all shares, interests, participations or other equivalents (however
designated and whether or not voting) of corporate stock, including without
limitation, each class or series of common stock and preferred stock of such
Person and (ii) with respect to any Person that is not a corporation, any and
all investment units, partnership, membership or other equity interests of such
Person.
A-2
Cash Management Agreement as defined in Section 7.14.
Cash Sweep Account Test as defined in Section 7.24.
Cash Sweep Cash Collateral Account as defined in Section 7.24.2, which Cash
Sweep Cash Collateral Account shall at all times be subject to a Pledge and
Security Agreement.
Certificates of Exemption as defined in Section 2.7.3.
Certificates of Partial Exemption as defined in Section 2.7.3.
Change of Control shall mean the occurrence of any of the following, as
determined solely by the Agent:
(a) The acquisition by any Person, or "group" (within the meaning of
Sections 13(d) and 14(d)(2) of the Securities Exchange Act of 1934, as
amended) of Persons acting in concert, of beneficial ownership (within the
meaning of Rule 13d-3 of the Securities and Exchange Commission under the
Securities Exchange Act of 1934, as amended), directly or indirectly, of
50% or more of the outstanding shares of voting stock of any Shelbourne
REIT;
(b) During any period of twelve (12) consecutive calendar months,
individuals (other than any director who is an Independent Director (as
defined in the Plan of Liquidation) and is replaced with a similarly
situated Independent Director):
(1) who were directors of any Shelbourne REIT, any Shelbourne OP, or
any Shelbourne GP on the first day of such period; or
(2) whose election or nomination for election to the board of
directors of any Shelbourne REIT, any Shelbourne OP, or any Shelbourne
GP was recommended or approved by at least a majority of the directors
then still in office who were directors of such Shelbourne REIT,
Shelbourne OP, or Shelbourne GP on the first day of such period, or
whose election or nomination for election was so approved,
shall cease to constitute a majority of the board of directors of such
Shelbourne REIT, Shelbourne OP, or Shelbourne GP.
(c) Each respective Shelbourne GP shall cease to be the sole general
partner of the respective Borrower; or
(d) Each respective Shelbourne REIT shall cease to own at least one-hundred
percent (100%) of the Common Interests in the respective Shelbourne OP and
at least one-hundred percent (100%) of the beneficial ownership interest in
the respective Shelbourne GP; or
(e) The removal or replacement of the general partner or managing member of
any Collateral Property Owner such that the sole general partner or
managing member thereof is not the Shelbourne OP, the Shelbourne REIT, or a
Wholly-Owned Subsidiary of the Shelbourne OP or the Shelbourne REIT; or
(f) With respect to any Collateral Property Owner, the transfer of any
ownership interest therein such that such Collateral Property Owner is not
a Wholly-Owned Subsidiary of the Shelbourne OP or the Shelbourne REIT; or
A-3
(g) The death or disability of both of Xxxxxxx Xxxxxx and Xxxxx Xxxxxxxxx,
or the failure of both of Xxxxxxx Xxxxxx and Xxxxx Xxxxxxxxx, at any time
to serve as a director of each Shelbourne REIT, each Shelbourne OP, and
each Shelbourne GP, and exercise that authority and discharge those
management responsibilities with respect to the Shelbourne OP, the
Shelbourne REIT, and the Shelbourne GP, as are exercised and discharged by
such Person at the execution of this Agreement; provided, however, the
death or disability of both Xxxxxxx Xxxxxx and Xxxxx Xxxxxxxxx shall not be
a default hereunder if within thirty (30) days of the death or disability
of the second to die or become disabled, the Borrower provides the Agent
with evidence satisfactory to the Agent of acceptable replacement or
substitute management of the Shelbourne Entities.
Closing Date as defined in Section 5.1.
Code shall mean the Internal Revenue Code of 1986, as amended from time to time,
and the regulations promulgated and rulings issued thereunder. Section
references to the Code are to the Code, as in effect at the date of this
Agreement and any subsequent provisions of the Code, amendatory thereof,
supplemental thereto or substituted therefor.
Collateral as defined in Section 5.1.4.
Collateral Property or Collateral Properties shall mean, singly and
collectively, the Individual Properties initially listed in Exhibit J hereto,
plus any Individual Property which subsequently becomes a Collateral Property in
accordance with Section 3.4 hereof, less any Collateral Property which is
released as Collateral in accordance with Section 3.3 hereof.
Collateral Property Owner or Collateral Property Owners shall mean, singly and
collectively, each of those Persons listed on Exhibit J who owns the respective
Collateral Properties, together with the owners of any other Individual
Properties which become Collateral Properties hereunder.
Collateral Property Requirements.
(a) The Individual Property satisfies all Eligibility Criteria.
(b) The Borrower (or applicable Loan Party) has executed all Security
Documents in connection with such Individual Property, including, without
limitation, the Security Documents set forth in Sections 3.1 hereof and the
Guaranty/Co-Borrower Agreement by the applicable Collateral Property Owner.
(c) The Individual Property is owned by Shelbourne OP or a Wholly-Owned
Subsidiary of the Shelbourne OP.
(d) Agent shall have received and completed a satisfactory review of such
due diligence as the Agent may require with respect to any Individual Property,
including, without limitation:
(1) A mortgagee's title insurance policy naming the Agent, on behalf
of the Lenders, as the first mortgagee, which meets Agent's title
insurance requirements (including with respect to endorsements)
heretofore or hereafter furnished to Borrower to the reasonable
satisfaction of Agent and Agent's counsel; and (2) such other
evidence of the perfection of its security interests as Agent and
Agent's counsel may reasonably require;
(2) A current, on site instrument survey of the Individual Property
containing a certification thereon, or on a separate surveyor's
certificate, of a land surveyor
A-4
acceptable to Agent which meets Agent's survey requirements
previously furnished to Borrower to the reasonable satisfaction
of Agent and its counsel;
(3) If the Individual Property is ground leased by the Collateral
Property Owner, a copy of the Ground Lease.
(4) The Borrower has obtained executed estoppel certificates and
subordination, nondisturbance and attornment agreements from
tenants under Major Leases;
(5) Copies of all Major Leases and, to the extent required by the
Agent, copies of other Leases;
(6) A copy of the property management agreement with respect to the
Individual Property, if any, and, if requested by the Agent, a
consent by the property manager to the collateral assignment of
the property management agreement to the Agent, on behalf of the
Lenders;
(7) Evidence of existence of all Licenses and Permits to evidence
compliance with Legal Requirements with respect to the use and
operation of the Individual Property;
(8) Evidence of insurance complying with the requirements of Exhibit
E, hereto;
(9) A current Appraisal;
(10) A current environmental Phase I Site Assessment performed by a
firm acceptable to the Agent, which indicates the property is
free from recognized hazardous materials or substances apparent
from the inspection, or affected by such environmental matters as
may be acceptable to the Agent in its sole and absolute
discretion;
(11) A current structural report relative to any improvements on the
Individual Property; and
(12) Such other real estate documents reasonably deemed appropriate
for commercially reasonable underwriting by the Agent in respect
of the Collateral Property.
Collateral Release Request as defined in Section 3.3.
Combined EBITDA shall mean the sum of the EBITDA for all of the Shelbourne
Entities, without duplication.
Commitment shall mean, with respect to each Lender, the amount set forth on
Exhibit K hereto as the amount of such Lender's commitment to make advances to
the Borrower, as may be amended from time to time by the Agent as provided in
Article 13.
Commitment Fee as defined in Section 2.4.
Commitment Percentage shall mean, with respect to each Lender, the percentage
set forth on Exhibit K hereto as such Lender's percentage of the aggregate
Commitments of all of the Lenders, as may be amended from time to time by the
Agent as provided in Article 13.
A-5
Common Interests shall mean all limited partnership interests in each of
Shelbourne OP other than the Preferred Interests.
Consolidated or Consolidating means consolidated or consolidating as defined in
accordance with GAAP.
Consolidated Debt Service Coverage as defined in Section 7.21.1(i).
Cost to Repair as defined in Section 14.3.1.
Debt shall mean, with respect to any Person, without duplication, (i) all
indebtedness of such Person for borrowed money, (ii) all indebtedness of such
Person for the deferred purchase price of property or services (other than
property and services purchased, and expense accruals and deferred compensation
items arising, in the ordinary course of business), (iii) all obligations of
such Person evidenced by notes, bonds, debentures or other similar instruments
(other than performance, surety and appeal bonds arising in the ordinary course
of business), (iv) all indebtedness of such Person created or arising under any
conditional sale or other title retention agreement with respect to property
acquired by such Person (even though the rights and remedies of the seller or
lender under such agreement in the event of default are limited to repossession
or sale of such property), (v) all obligations of such Person under leases which
have been, or should be, in accordance with generally accepted accounting
principles, recorded as capital leases, to the extent required to be so
recorded, (vi) all reimbursement, payment or similar obligations of such Person,
contingent or otherwise, under acceptance, letter of credit or similar
facilities (other than letters of credit in support of trade obligations or in
connection with workers' compensation, unemployment insurance, old-age pensions
and other social security benefits in the ordinary course of business), (vii)
all Debt in the nature of that referred to in clauses (i) through (vi) above
which is guaranteed directly or indirectly by such Person, or in effect
guaranteed directly or indirectly by such Person through an agreement (A) to pay
or purchase such Debt or to advance or supply funds for the payment or purchase
of such Debt, (B) to purchase, sell or lease (as lessee or lessor) property, or
to purchase or sell services, primarily for the purpose of enabling the debtor
to make payment of such Debt or to assure the holder of such Debt against loss
in respect of such Debt, (C) to supply funds to or in any other manner invest in
the debtor (including any agreement to pay for property or services irrespective
of whether such property is received or such services are rendered) or (D)
otherwise to assure a creditor against loss in respect of such Debt, (viii) any
obligation, contingent or otherwise, of such Person guaranteeing or having the
economic effect of guaranteeing any indebtedness referred to in clause (i)
through (iv) above of any Person, either directly or indirectly, and (ix) all
Debt referred to in clauses (i) through (vi) above secured by (or for which the
holder of such Debt has an existing right, contingent or otherwise, to be
secured by) any Lien, security interest or other charge or encumbrance upon or
in property (including, without limitation, accounts and contract rights) owned
by such Person, even though such Person has not assumed or become liable for the
payment of such Debt.
Debt Service on the Loan as defined in Section 7.21.1(viii).
Default as defined in Section 10.1.
Default Rate as defined in Section 2.3.14.
Delinquent Lender as defined in Section 13.2.7.
Depository Accounts as defined in Section 7.14.
Distribution shall mean, with respect to any Person, that such Person has paid a
dividend or returned any equity capital to its stockholders, members or partners
or made any other distribution, payment
A-6
or delivery of property (other than common stock or partnership or membership
interests of such Person) or cash to its stockholders, members or partners as
such, or redeemed, retired, purchased or otherwise acquired, directly or
indirectly, for a consideration any shares of any class of its capital stock or
any membership or partnership interests (or any options or warrants issued by
such Person with respect to its capital stock or membership or partnership
interests), or shall have permitted any of its Subsidiaries to purchase or
otherwise acquire for a consideration any shares of any class of the capital
stock or any membership or partnership interests of such Person (or any options
or warrants issued by such Person with respect to its capital stock or
membership or partnership interests). Without limiting the foregoing,
"Distributions" with respect to any Person shall also include all payments made
by such Person with respect to any stock appreciation rights, plans, equity
incentive or achievement plans or any similar plans, and any proceeds of a
dissolution or liquidation of such Person. Further, without limiting the
foregoing, "Distributions" with respect to the Borrower or the Shelbourne REIT
shall also include any payments of any nature whatsoever due and payable on
account of a Preferred Interest.
Dollars shall mean lawful money of the United States.
EBITDA shall mean for any Shelbourne Entity the sum of (i) net income (or loss),
plus (ii) actual interest paid or payable respecting all Debt to the extent
included as an expense in the calculation of net income, plus (iii) total Tax
Expenses to the extent included as an expense in the calculation of net income,
plus (iv) total depreciation and amortization expense, whether paid or accrued,
to the extent included as an expense in the calculation of net income, plus (v)
losses from extraordinary items, nonrecurring items, asset sales, write-ups or
forgiveness of debt, to the extent included as an expense in the calculation of
net income, minus (vi) gains from extraordinary items, nonrecurring items, asset
sales, write-ups or forgiveness of debt, to the extent included as income in the
calculation of net income, minus (vii) an assumed replacement reserve in an
amount equal to (x) $0.25 per annum multiplied by the average rentable square
footage of commercial properties and (y) $300.00 per unit for multifamily
properties on any applicable Individual Property, all of the foregoing as
determined in accordance with GAAP and acceptable to the Agent.
Effective LIBO Rate. The term "Effective LIBO Rate" means the per annum rate
equal to the aggregate of (x) the Adjusted LIBO Rate, plus (y) 275 basis points.
Effective LIBO Rate Advance. The term "Effective LIBO Rate Advance" means any
principal outstanding under this Agreement which pursuant to this Agreement
bears interest at the Effective LIBO Rate.
Eligibility Criteria shall mean the following criteria which must be satisfied
in a manner acceptable to the Agent for each Collateral Property:
(a) the Borrower provides reasonably acceptable historical operating and
leasing information;
(b) the Borrower provides a certification as to the absence of any material
environmental issues;
(c) the Borrower provides certification as to the absence of any material
structural issues; and
(d) no liens or encumbrances shall exist on the Collateral Property upon
its inclusion as a Collateral Property, other than Permitted Liens.
A-7
Eligible Assignee shall mean any of (a) a commercial bank organized under the
laws of the United States, or any State thereof or the District of Columbia, and
having total assets in excess of $1,000,000,000; (b) a savings and loan
association or savings bank organized under the laws of the United States, or
any State thereof or the District of Columbia, and having a net worth of at
least $100,000,000, calculated in accordance with generally accepted accounting
principles; (c) a commercial bank organized under the laws of any other country
which is a member of the Organization for Economic Cooperation and Development
(the "OECD"), or a political subdivision of any such country, and having total
assets in excess of $1,000,000,000, provided that such bank is acting through a
branch or agency located in the country in which it is organized or another
country which is also a member of the OECD; (d) the central bank of any country
which is a member of the OECD; and (e) any other assignee that, in the
reasonable judgment of the Agent, is a reputable institutional investor with
substantial experience in lending and originating loans similar to the Loan, or
in purchasing, investing in or otherwise holdings such loans, having a financial
net worth of at least $100,000,000 and (f) any Lender Affiliate or a Related
Fund of a Lender. For the purposes hereof, "Lender Affiliate" shall mean, (a)
with respect to any Person who would otherwise be an Eligible Assignee under
clauses (a) - (e), above (a "Qualified Assignee"), (i) an Affiliate of such
Qualified Assignee or (ii) any entity (whether a corporation, partnership, trust
or otherwise) that is engaged in making, purchasing, holding or otherwise
investing in bank loans and similar extensions of credit in the ordinary course
of its business and is administered (including as placement agent therefor) or
managed by a Qualified Assignee or an Affiliate of such Qualified Assignee and
(b) with respect to any Lender that is a fund which invests in bank loans and
similar extensions of credit, any other fund that invests in bank loans and
similar extensions of credit and is managed by the same investment advisor as
such Lender or by an Affiliate of such investment advisor(i.e., a Related Fund
of such Lender). Neither the Borrower, an Affiliate of the Borrower, Xxxx Xxxxx,
an Affiliate of Xxxx Xxxxx, Northstar Capital Investment Corp., nor an Affiliate
of Northstar Capital Investment Corp. shall be Eligible Assignee.
Environmental Indemnity as defined in Section 3.1.5.
Environmental Legal Requirements as defined in the Environmental Indemnity.
ERISA shall mean the Employee Retirement Income Security Act of 1974, as amended
from time to time, and the regulations promulgated and rulings issued
thereunder. Section references to ERISA are to ERISA, as in effect at the date
of this Agreement and any subsequent provisions of ERISA, amendatory thereof,
supplemental thereto or substituted therefor.
ERISA Affiliate shall mean each person (as defined in Section 3(9) of ERISA)
which together with either the Shelbourne REIT, Shelbourne GP, Shelbourne OP,
Borrower or a Subsidiary of any such Person would be deemed to be a "single
employer" within the meaning of Section 414(b), (c), (m) or (o) of the Code.
Event of Default as defined in Section 10.1.
Event of Loss shall mean, with respect to any Collateral Property, any of the
following: (a) any loss or destruction of, or damage to, such Collateral
Property; or (b) any actual condemnation, seizure or taking, by exercise of the
power of eminent domain or otherwise, of such Collateral Property, or
confiscation of such Collateral Property or the requisition of such Collateral
Property by a Governmental Agency or any Person having the power of eminent
domain, or any voluntary transfer of such Collateral Property or any portion
thereof in lieu of any such condemnation, seizure or taking.
Excluded Taxes as defined in Section 2.7.3.
A-8
Extended Maturity Date as defined in Section 2.2.
Extended Term as defined in Section 2.2.
Extension Fee as defined in Section 2.4.
Financial Covenants shall mean, singly and collectively, those covenants of the
Borrower set forth in Sections 7.20, 7.21, 7.22, 7.23, and 7.24.
First Extended Maturity Date as defined in Section 2.2.
First Extended Term as defined in Section 2.2.
Fiscal Year shall mean each twelve month period commencing on January 1 and
ending on December 31.
Fixed Charges shall mean the aggregate for all Shelbourne Entities of all (a)
Interest Expenses, (b) all regularly scheduled principal amortization payments
on all Debt,(c) all preferred dividend payments paid or payable by the
Shelbourne OP or the Shelbourne REIT, (d) all Tax Expenses, and (e) all Ground
Lease Payments, all of the foregoing as determined in accordance with GAAP and
acceptable to Agent.
Fixed Charge Ratio shall mean, as of each Calculation Date, the ratio of (a)
Combined EBITDA for the subject Calculation Period to (b) Fixed Charges for the
subject Calculation Period, as determined solely by the Agent.
Foreign Lender as defined in Section 2.7.3.
Formation Documents shall mean, singly and collectively, the partnership
agreements, joint venture agreements, limited partnership agreements, limited
liability company or operating agreements and certificates of limited
partnership and certificates of formation, articles (or certificate) of
incorporation and by-laws and any similar agreement, document or instrument of
any Person.
Funding Date as defined in Section 5.1.
GAAP shall mean generally accepted accounting principles in the United States of
America as of the date applicable.
Governmental Authority shall mean any court, board, agency, commission, office
or authority of any nature whatsoever for any governmental xxxx (xxxxxxx, xxxxx,
xxxxxx, xxxxxxxx, xxxxxxxxx, xxxx or otherwise) whether now or hereafter in
existence.
Ground Leases shall mean, from time to time, any ground lease relative to an
Individual Property as to which a Loan Party is the ground lessee.
Ground Lease Payments shall mean, as may be applicable, the sum of payments made
under Ground Leases.
Guaranty as defined in Section 3.1.4.
Guarantor as defined in Section 1.4.1.
A-9
Hazardous Materials shall mean and include asbestos, mold, flammable materials,
explosives, radioactive substances, polychlorinated biphenyls, radioactive
substances, other carcinogens, oil and other petroleum products, pollutants or
contaminants that could be a detriment to the environment, and any other
hazardous or toxic materials, wastes, or substances which are defined,
determined or identified as such in any past, present or future federal, state
or local laws, rules, codes or regulations, or any judicial or administrative
interpretation of such laws, rules, codes or regulations.
Indemnified Party as defined in Section 7.18.
Indianapolis Property shall mean the Super Value Store site located in
Indianapolis, Indiana, owned by Indiana Market, Ltd., an entity as to which
fifty (50%) of the beneficial interest is owned directly or indirectly by
Shelbourne III Guarantor.
Individual Property and Individual Properties shall mean, from time to time, all
real estate property owned or ground leased by the Shelbourne OP, the Shelbourne
REIT, the Shelbourne GP or a Wholly-Owned Subsidiary of any such Person,
together with all improvements, fixtures, equipment, and personalty relating to
such property, except for the Accor Property or the real estate property owned
by Indiana Market, Ltd..
Initial Term as defined in Section 2.2.
Interest Expense shall mean the sum of the aggregate actual interest (including
capitalized interest) paid or payable respecting all Debt by Shelbourne
Entities.
Interest Period.
(A) The term "Interest Period" means with respect to each Effective LIBO
Rate Advance: a period of one (1), two (2), or three (3) consecutive months,
subject to availability, as selected, or deemed selected, by Borrower at least
two (2) Business Days prior to the initial date of such Effective LIBO Rate
Advance, or if an advance is already outstanding, at least two (2) Business Days
prior to the end of the current Interest Period. Each such Interest Period shall
commence on the Business Day so selected, or deemed selected, by Borrower and
shall end on the numerically corresponding day in the first, second, third, or
sixth month thereafter, as applicable; provided, however: (i) if there is no
such numerically corresponding day, such Interest Period shall end on the last
Business Day of the applicable month, (ii) if the last day of such an Interest
Period would otherwise occur on a day which is not a Business Day, such Interest
Period shall be extended to the next succeeding Business Day; but (iii) if such
extension would otherwise cause such last day to occur in a new calendar month,
then such last day shall occur on the next preceding Business Day.
(B) The term "Interest Period" shall mean with respect to each Variable
Rate Advance consecutive periods of one (1) day each.
(C) No Interest Period may be selected which would end beyond the then
Maturity Date of the Loan (including as may actually be extended to any Extended
Maturity Date). If the last day of an Interest Period would otherwise occur on a
day which is not a Business Day, such last day shall be extended to the next
succeeding Business Day, except as provided above in clause (A) relative to an
Effective LIBO Rate Advance.
Interest Rate Protection Agreement shall mean, as heretofore or hereafter may be
applicable from time to time any interest rate protection agreements, now or
hereafter executed by and between Borrower, Shelbourne REIT, Shelbourne GP, or
Shelbourne OP and Fleet National Bank, and any and all existing or future
extensions, renewals, modifications and amendments thereto, including, without
limitation, the ISDA Master Agreement, the Schedule to the Master Agreement, and
any and
A-10
all confirmations for individual transactions executed under the foregoing
agreements, or any other interest rate agreement related in any way to the Loan.
Investment shall mean the acquisition of any real or tangible personal property
or of any stock or other security, any loan, advance, bank deposit, money market
fund, contribution to capital, extension of credit (except for accounts
receivable arising in the ordinary course of business and payable in accordance
with customary terms), or purchase or commitment or option to purchase or
otherwise acquire real estate or tangible personal property or stock or other
securities of any party or any part of the business or assets comprising such
business, or any part thereof.
Kestrel Agreements as defined in Section 8.9.
Knowledge shall mean with respect to the Borrower, Shelbourne OP, Shelbourne GP,
the Shelbourne REIT, or the Subsidiaries of any such Person, the knowledge of
any of Xxxxxxx Xxxxxx, Xxxxx Xxxxxxxxx, Xxxx Xxxxxxx, or Xxxxxxx Xxxxxxx, or any
Person who shall at any time replace any of the foregoing.
Late Charge as defined in Section 2.3.15.
Lease shall mean any lease relative to all or any portion of an Collateral
Property.
Legal Requirements shall mean all applicable federal, state, county and local
laws, by-laws, rules, regulations, codes and ordinances, and the requirements of
any governmental agency or authority having or claiming jurisdiction with
respect thereto, including, but not limited to, all Environmental Legal
Requirements, and those applicable to zoning, subdivision, building, health,
fire, safety, sanitation, the protection of the handicapped, and environmental
matters and shall also include all orders and directives of any court,
governmental agency or authority having or claiming jurisdiction with respect
thereto.
Lenders as defined in the Preamble.
Lenders' Consultant as defined in Section 7.33.
LIBO Rate. The term "LIBO Rate" means, as applicable to any Effective LIBO Rate
Advance, the rate per annum as determined on the basis of the offered rates for
deposits in Dollars, for a period of time equal to the Interest Period for the
Effective LIBO Rate Advance which appears on the "Telerate Page 3750" as of
11:00 a.m. London time on the day that is two (2) London Banking Days preceding
the first day of such Effective LIBO Rate Advance (or if the Effective LIBO Rate
Advance is the conversion of an outstanding Effective LIBO Rate Advance, two
London Banking Days preceding the end of the Interest Period of such outstanding
advance); provided, however, if the rate described above does not appear on the
Telerate System on any applicable interest determination date, the LIBO Rate
shall be the rate (rounded upward, if necessary, to the nearest one
hundred-thousandth of a percentage point), determined on the basis of the
offered rates for deposits in Dollars for a period of time comparable to such
Interest Period which are offered by four major banks in the London interbank
market at approximately 11:00 a.m. London time, on the day that is two (2)
London Banking Days preceding the first day of such Effective LIBO Rate Advance
as selected by Agent (or if the Effective LIBO Rate Advance is the conversion of
an outstanding Effective LIBO Rate Advance, two London Banking Days preceding
the end of the Interest Period of such outstanding advance). The principal
London office of each of the four major London banks will be requested to
provide a quotation of its Dollar deposit offered rate. If at least two (2) such
quotations are provided, the rate for that date will be the arithmetic mean of
the quotations. If fewer than two (2) quotations are provided as requested, the
rate for that date will be determined on the basis of the rates quoted for loans
in Dollars to leading European banks for a period of time comparable to such
A-11
Interest Period offered by major banks in New York City at approximately 11:00
a.m. New York City time, on the day that is two (2) London Banking Days
preceding the first day of such Effective LIBO Rate Advance (or if the Effective
LIBO Rate Advance is the conversion of an outstanding Effective LIBO Rate
Advance, two London Banking Days preceding the end of the Interest Period of
such outstanding advance).
Lien shall mean any mortgage, deed of trust, lien, pledge, hypothecation,
assignment, security interest, or any other encumbrance, charge or transfer,
including, without limitation, any conditional sale or other title retention
agreement, any financing lease having substantially the same economic effect as
any of the foregoing, and mechanic's, materialmen's and other similar liens and
encumbrances.
Licenses and Permits shall mean all licenses, permits, authorizations and
agreements issued by or agreed to by any governmental authority, including, but
not limited to, building permits, occupancy permits and such special permits,
variances and other relief as may be required pursuant to Legal Requirements
which may be applicable to any Collateral Property.
Liquidation Proceeds. Amounts received by the Agent and/or the Lenders in the
exercise of the rights and remedies under the Loan Documents (including, but not
limited to, all rents, profits and other proceeds received by the Agent and/or
the Lenders from the liquidation of, or exercising rights upon the occurrence of
an Event of Default relative to, any Collateral, but not including any amount
bid at a foreclosure sale or on behalf of the Agent or otherwise credited to the
Borrower in, any deed-in-lieu of foreclosure or similar transaction).
Loan as defined in Section 1.3.
Loan Advance as defined in Section 5.1.
Loan Agenda shall mean that Document Agenda respecting the establishment of the
Loan annexed hereto as Exhibit L.
Loan Agreement as defined in the Preamble.
Loan Documents as defined in Section 3.2.
Loan Party and Loan Parties shall mean, singly and collectively, the Borrower,
the Shelbourne OP, the Shelbourne REIT, the Shelbourne GP, any Shelbourne
Subsidiary which is or becomes a party to any Loan Document, the Guarantor, and
any Subsidiary and Affiliate of any of the foregoing which is or also becomes a
party to any Loan Document.
London Banking Day. The term "London Banking Day" means any day on which
dealings in deposits in Dollars are transacted in the London interbank market.
Major Event of Loss shall mean, with respect to any Collateral Property, both
(1) any of the following: (a) any loss or destruction of, or damage to, such
Collateral Property such that either (x) the repairs and restoration thereof
cannot be completed, in the judgment of the applicable Lender's Consultant and
if there is no Lender's Consultant, an independent architect retained by the
Borrower, within twelve (12) months after the occurrence of such loss, damage or
destruction or (y) rendering more than fifty (50%) percent of the said
Collateral Property unusable for the purposes conducted thereon immediately
prior to such loss, destruction or damage, as determined by the applicable
Lender's Consultant and if there is no Lender's Consultant, an independent
architect retained by the Borrower; or (b) any actual condemnation, seizure or
taking, by exercise of the power of eminent domain or otherwise, of such
Collateral Property, or confiscation of such Collateral Property or the
A-12
requisition of such Collateral Property by a Governmental Agency or any Person
having the power of eminent domain, or any voluntary transfer of such Collateral
Property or any portion thereof in lieu of any such condemnation, seizure or
taking, rendering more than fifty (50%) percent of the said Collateral Property
unusable for the purposes conducted thereon immediately prior to action, as
determined by the applicable Lender's Consultant and if there is no Lender's
Consultant, an independent architect retained by the Borrower, and (2) the Agent
does not elect under Section 14.4 to make the Net Proceeds with respect to such
Event of Loss available for Repair Work.
Major Lease shall mean any Lease for space in any Collateral Property in excess
of 10,000 rentable square feet.
Management Agreement shall mean any agreement entered into, from time to time,
in connection with the property management of any Collateral Property, as may be
amended, modified, supplemented, or replaced from time to time, including,
without limitation, the Management Agreements listed in Exhibit H.
Mandatory Principal Payment as defined in Section 2.3.9.
Mandatory Principal Payment Account as defined in Section 2.3.9.
Material Adverse Effect shall mean a material adverse effect on (i) the
business, assets, prospects, operations or financial or other condition of any
of the Borrower, the Shelbourne Subsidiaries, the Shelbourne OP, the Shelbourne
REIT, the Shelbourne GP, or, taken as a whole, the Loan Parties, and/or the
Collateral Properties, (ii) the ability of any of the Borrower or the other Loan
Parties to perform any material Obligations or to pay any Obligations which it
is obligated to pay in accordance with the terms hereof or of any other Loan
Document, (iii) the rights of, or benefits available to, the Agent and/or any of
the Lenders under any Loan Document or (iv) any Lien given to Agent and/or any
of the Lenders on any material portion of the Collateral or the priority of any
such Lien.
Maturity shall mean the Maturity Date, or, if the Maturity Date has been
extended pursuant to the provisions of the Loan Agreement, the applicable
Extended Maturity Date, or in any instance, upon acceleration of the Loan, if
the Loan has been accelerated by Lenders upon an Event of Default.
Maturity Date as defined in Section 2.2.
Maximum Collateral Property Loan Amount shall mean, at any time, the aggregate
for all of the Collateral Properties of sixty-five (65%) percent of the Value of
the Collateral Property of each Collateral Property.
Net Operating Income: For any period of determination, (i) net operating income
generated by an Individual Property for such period (i.e., gross operating
income, inclusive of any Rent Loss Proceeds, less expenses (exclusive of debt
service, capital expenditures and vacancy allowances), determined in accordance
with GAAP, as generated by, through or under Leases, and (ii) all other income
arising from direct operations of or licenses or operating agreements for any
part of the Individual Property determined on a GAAP basis. For purposes hereof,
all rental income shall be adjusted for straight line rents. Borrower shall
provide Agent with all information and materials required by Agent necessary for
the determination of Net Operating Income
Net Proceeds. (1) The net amount of all insurance proceeds received under any
insurance policies other than Rent Loss Proceeds as a result of the occurrence
of an Event of Loss described in clause (a) of the definition of Event of Loss
with respect to any Collateral Property, after deduction of the reasonable costs
and expenses (including, but not limited to reasonable counsel fees), if any, in
collecting the same, or (2) the net amount of all awards and payments received
with respect to the
A-13
occurrence of an Event of Loss described in clause (b) of the definition of
Event of Loss, after deduction of the reasonable costs and expenses (including,
but not limited to reasonable counsel fees), if any, in collecting the same,
whichever the case may be.
Net Sales Proceeds shall mean the gross sale proceeds received from the closing
of the sale of a Collateral Property less the aggregate of (i) obligations due
to the holders of Permitted Liens thereon, (ii) usual closing adjustments, and
(iii) reasonable closing costs payable to third-parties who are not a Loan Party
or an Affiliate thereof.
Net Worth shall mean the (a) the aggregate of the Adjusted Appraised Value of
all Individual Properties, as determined solely by the Agent, less (b) the total
liabilities of the Shelbourne Entities (exclusive of deferred gain recognized in
liquidation accounting) determined in accordance with GAAP, without duplication.
Non-Collateral Individual Property and Non-Collateral Individual Properties
shall mean, at any time, any Individual Property which is not a Collateral
Property, such Non-Collateral Individual Properties initially listed in Exhibit
M hereto,
Non-Collateral Individual Property Owner or Non-Collateral Individual Property
Owners shall mean, singly and collectively, each of those Persons listed on
Exhibit M who owns the respective Non-Collateral Individual Properties, together
with the owners of any other Individual Properties which become Non-Collateral
Individual Properties hereunder.
Note shall mean the Note or Notes payable to the Lenders in the aggregate
original principal amount of Fifty-Five Million Dollars ($55,000,000.00),
together with any Notes issued in replacement or substitution thereof.
Notice of Rate Selection as defined in Section 2.3.3.
Obligations shall mean without limitation, all and each of the following,
whether now existing or hereafter arising:
(a) Any and all direct and indirect liabilities, debts, and obligations
of the Borrower or any Loan Party to the Agent or any Lender under or
arising out of the Loan Documents, each of every kind, nature, and
description.
(b) Each obligation to repay any loan, advance, indebtedness, note,
obligation, overdraft, or amount now or hereafter owing by the Borrower or
any Loan Party to the Agent or any Lender (including all future advances
whether or not made pursuant to a commitment by the Agent or any Lender)
under or arising out of the Loan Documents, whether or not any of such are
liquidated, unliquidated, primary, secondary, secured, unsecured, direct,
indirect, absolute, contingent, or of any other type, nature, or
description, or by reason of any cause of action which the Agent or any
Lender may hold against the Borrower or any Loan Party including, without
limitation, any obligation arising under any interest rate hedging, cap or
other protection arrangement with the Agent or any Lender.
(c) All notes and other obligations of the Borrower or any Loan Party
now or hereafter assigned to or held by the Agent or any Lender under or
arising out of the Loan Documents, each of every kind, nature, and
description.
(d) All interest, fees, and charges and other amounts which may be
charged by the Agent or any Lender to the Borrower or any Loan Party and/or
which
A-14
may be due from the Borrower or any Loan Party to the Agent or any Lender
from time to time under or arising out of the Loan Documents.
(e) All costs and expenses incurred or paid by the Agent or any Lender
in respect of any agreement between the Borrower or any Loan Party and the
Agent or any Lender or instrument furnished by the Borrower or any Loan
Party to the Agent or any Lender (including, without limitation, costs of
collection, attorneys' reasonable fees, and all court and litigation costs
and expenses) in connection with the Loan.
(f) Any and all covenants of the Borrower or any Loan Party to or with
the Agent or any Lender and any and all obligations of the Borrower or any
Loan Party to act or to refrain from acting in accordance with any
agreement between the Borrower or any Loan Party and the Agent or any
Lender or instrument furnished by the Borrower or any Loan Party to the
Agent or any Lender in connection with the Loan.
Officer's Certificate shall mean a certificate delivered to the Agent by the
Borrower or other Loan Party, as the case may be, respectively, which is signed
by an authorized officer thereof (or an authorized officer of the direct or
indirect managing general partner or managing member, as applicable, of the
Borrower or other Loan Party, if and as applicable.
Option Agreement shall mean that certain Option Agreement, dated as of January
15, 2003, among Xxxxxxxxxx XX LLC and Accotel Remainder Equity LLC and that
certain Letter Agreement, dated as of January 15, 2003, from Accotel Remainder
Equity LLC to Xxxxxxxxxx XX LLC relating to the right of Xxxxxxxxxx XX LLC to
acquire Accotel Remainder Equity LLC's interest in Accotel Remainder LLC.
PBGC shall mean the Pension Benefit Guaranty Corporation established pursuant to
Section 4002 of ERISA, or any successor thereto.
Partial Release Amount shall mean the principal amount of the Loan allocated to
each Collateral Property as set forth on Exhibit J; provided, however, that the
Partial Release Amount for a Collateral Property may be adjusted upon the
addition of any additional Collateral Property as set forth in Section 3.4 .
Payment Direction Letters as defined in Section 7.15.
Permitted Debt as defined in Section 8.4.
Permitted Distributions as defined in Section 8.18.
Permitted Investments as defined in Section 8.19.
Permitted Liens as defined in Section 8.2.
Permitted T/I CAPEX Costs as defined in Section 7.28.1.
Person shall mean any individual, corporation, partnership, joint venture,
estate, trust, unincorporated association or limited liability company, any
federal, state, county or municipal government or any bureau, department or
agency thereof and any fiduciary acting in such capacity on behalf of any of the
foregoing.
A-15
Plan shall mean any multiemployer or single-employer plan as defined in Section
4001 of ERISA, which is maintained or contributed to by (or to which there is an
obligation to contribute of) the Shelbourne OP, Shelbourne REIT, Shelbourne GP,
Borrower or any Subsidiary of any such Person or an ERISA Affiliate, and each
such plan for the five year period immediately following the latest date on
which such Person or an ERISA Affiliate maintained, contributed to or had an
obligation to contribute to such plan.
Plan of Liquidation Documents shall mean (i) that certain Settlement Agreement
and Mutual Release, dated as of July 1, 2002, among Presidio Capital Investment
Company, LLC, HX Investors, L.P. and certain other plaintiffs, the Shelbourne
REIT, and Shelbourne Management, LLC, (ii) those three (3) Stock Purchase
Agreements, dated as of July 1, 2002, each with HX Investors, L.P. as purchaser,
Exeter Capital Corporation, and a Shelbourne REIT (one being with Shelbourne I
REIT, one being with Shelbourne II REIT, and one being with Shelbourne III
REIT), as amended as of August 5, 2002, (iii) those three (3) Plans of
Liquidation, one each for Shelbourne I REIT, Shelbourne II REIT, and Shelbourne
III REIT, having been approved at a special meeting of the shareholders of the
Shelbourne REIT on October 29, 2002, and (iv) any and all other agreements,
instruments and documents executed by a Loan Party or a Shelbourne Subsidiary in
connection with the above referenced agreements.
Pledge and Security Agreement as defined in Section 3.1.3.
Preferred Interests shall mean (i) the Class A Preferred Units (no liquidation
preference) issued by each Shelbourne OP to Shelbourne Management LLC as of the
date hereof and (ii) the Class B Partnership Units issued by each Shelbourne OP
to HX Investors, L.P. on the date hereof
Preliminary Approval shall mean the following:
(a) Delivery by the Borrower to the Agent and the Lenders of the
following with respect to any Individual Property proposed to be a
Collateral Property, each such item to the reasonable satisfaction of the
Agent:
(i) physical description;
(ii) current rent roll and operating statements;
(iii) to the extent then available in Borrower's files, the following:
a survey, environmental reports, copies of existing title insurance policies or
a title commitment, and copies of all title exceptions, engineering reports and
similar information; and
(iv) the Borrower's certification that to its knowledge the proposed
Collateral Property presently satisfies (or is anticipated to satisfy upon the
grant of such Collateral) the Eligibility Criteria set forth in subsections (b),
(c), and (d) of the definition of Eligibility Criteria.
(b) Agent shall, within ten (10) Business Days after delivery of all items
described in subsection (a), above, grant or deny the preliminary approval for
the proposed additional and/or replacement Collateral Property, all in the sole
and exclusive determination of the Agent and the Required Lenders.
Prime Rate. The term "Prime Rate" means the greater of (a) the variable per
annum rate of interest so designated and publicly announced from time to time by
Fleet National Bank (or any successor thereto) as its prime rate, or (b) five
percent (5%). The Prime Rate is a reference rate and does not necessarily
represent the lowest or best rate being charged to any customer.
A-16
Property Owner or Property Owners shall mean, singly and collectively, all
Collateral Property Owners and all Non-Collateral Individual Property Owners.
Purchase and Contribution Agreement shall mean (i) that certain Purchase and
Contribution Agreement, dated February 14, 2002, among Presidio Capital
Investment Company, LLC, certain subsidiaries of Presidio Capital Investment
Company, LLC listed on the signature page thereto, NorthStar Capital Investment
Corp., Shelbourne Management LLC, Shelbourne I REIT, Shelbourne II REIT,
Shelbourne III REIT, Shelbourne I Guarantor, Shelbourne II Guarantor, Shelbourne
III Guarantor and HX Investors, L.P., as amended by the Restructuring Agreement,
and (ii) any and all other agreements, instruments and documents executed by a
Loan Party or a Shelbourne Subsidiary in connection with the above referenced
agreements.
Register as defined in Section 13.3.3.
REIT means a "real estate investment trust" as such term is defined in Section
856 of the Code.
Related Documents shall mean, singly and collectively, the Formation Documents,
the Management Agreement, any Payment Direction Letters, the Advisory Agreement,
the Kestrel Agreements, the Plan of Liquidation Documents, the Purchase and
Contribution Agreement, and the Restructuring Agreement.
Related Fund shall mean, with respect to a Lender which is a fund that invests
in loans, any other such fund managed by the same investment advisor as such
Lender or by an Affiliate of such Lender or such advisor.
Release Conditions as defined in Section 3.3
Release Price shall mean, with respect to any Collateral Property, as determined
solely by the Agent, the greater of (a) ninety (90%) percent of the Net Sales
Proceeds (if in connection with the sale of a Collateral Property) or (b) the
Partial Release Amount with respect to such Collateral Property; provided,
however, for the Collateral Property owned by Century Park I Joint Venture, the
Release Price shall be the Partial Release Amount with respect to such
Collateral Property.
Rent Loss Proceeds. The proceeds received under any rent loss or business
interruption insurance policies.
Repair Work. as defined in Section 14.1.
Reportable Event shall mean an event described in Section 4043(b) of ERISA with
respect to a Plan other than those events as to which the 30-day notice period
is waived under subsection .13, .14, .16, .18, .19 or .20 of PBGC Regulation
Section 2615, or as otherwise now or hereafter defined in ERISA.
Required Lenders. As of any date, the Lenders holding greater than fifty percent
(50%) of the outstanding principal amount due under the Note on such date; and
if no such principal is outstanding, the Lenders whose aggregate Commitments
constitute greater than fifty percent (50%) of the Total Commitment.
Restoration Property. Any Collateral Property as to which an Event of Loss has
occurred and as to which the Net Proceeds are being made available in accordance
with the terms and provisions of Article 14 for Repair Work relative to the
subject Collateral Property.
A-17
Restructuring Agreement shall mean (i) that certain Agreement, dated as of
January 15, 2003, among Presidio Capital Investment Company, LLC, certain
subsidiaries of Presidio Capital Investment Company, LLC listed on the signature
page thereto, NorthStar Capital Investment Corp., Shelbourne Management LLC,
Shelbourne I REIT, Shelbourne II REIT, Shelbourne III REIT, Shelbourne I
Guarantor, Shelbourne II Guarantor, Shelbourne III Guarantor and HX Investors,
L.P., (ii) the Option Agreement, and (iii) any and all other agreements,
instruments and documents executed by a Loan Party or a Shelbourne Subsidiary in
connection with the above referenced agreements.
Seattle Tower Casualty shall mean the damage to the Collateral Property known as
the Seattle Tower, Seattle, Washington, relating to the earthquake in that area
in 2001.
Second Extended Maturity Date as defined in Section 2.2.
Second Extended Term as defined in Section 2.2.
Security Documents as defined in Section 3.2.
Shelbourne I Guarantor as defined in the Preamble.
Shelbourne II Guarantor as defined in the Preamble
Shelbourne III Guarantor as defined in the Preamble
Shelbourne I GP as defined in Section 1.2.1.
Shelbourne II GP as defined in Section 1.2.2.
Shelbourne III GP as defined in Section 1.2.3.
Shelbourne I REIT as defined in Section 1.2.1.
Shelbourne II REIT as defined in Section 1.2.2.
Shelbourne III REIT as defined in Section 1.2.3.
Shelbourne Entity or Shelbourne Entities shall mean, singly and collectively,
the Borrower, the Shelbourne OP, the Shelbourne GP, the Shelbourne REIT, and
each Subsidiary of any such Person
Shelbourne GP as defined in Section 1.2.10.
Shelbourne OP as defined in Section 1.2.12.
Shelbourne REIT as defined in Section 1.2.11.
Shelbourne Subsidiary or Shelbourne Subsidiaries shall mean all of the
Subsidiaries of each Shelbourne OP, each Borrower, the Shelbourne OP, or the
Borrower, and all Subsidiaries of Subsidiaries of each Shelbourne OP, each
Borrower, the Shelbourne OP, or the Borrower, including, without limitation, the
following:
(i) Shelbourne Richmond Company LLC, a Delaware limited liability
company;
A-18
(ii) Shelbourne Xxxxxxxx Company LLC, a Delaware limited liability
company;
(iii) Shelbourne Las Vegas Company LLC, a Delaware limited liability
company;
(iv) Shelbourne I Century Park Company LLC, a Delaware limited
liability company;
(v) Shelbourne II Century Park Company LLC, a Delaware limited
liability company;
(vi) Shelbourne I Seattle Landmark Company LLC, a Delaware limited
liability company;
(vii) Shelbourne II Seattle Landmark Company LLC, a Delaware limited
liability company;
(viii) Shelbourne II Tri-Columbus Company LLC, a Delaware limited
liability company;
(ix) Shelbourne III Tri-Columbus Company LLC, a Delaware limited
liability company;
(x) Tri-Columbus Associates, a Delaware general partnership;
(xi) Century Park I Joint Venture, a Delaware general partnership; or
(xii) Seattle Landmark Joint Venture, a Delaware general partnership.
As used herein, the term "Shelbourne Subsidiary" shall not include
Xxxxxxxxxx XX LLC, a Delaware limited liability company, or Indiana Market,
Ltd., a Wyoming limited liability company.
Single-Purpose Entity shall mean, with respect to a Person, that such Person has
Formation Documents which contain generally the following provisions , and has
agreed to abide by such terms and conditions:
(a) Such Person shall not engage in any business or activity other than in
connection with owning, operating, leasing and disposing of the applicable
Collateral Property.
(b) Such Person shall not acquire or own any material assets other than the
applicable Collateral Property, and such incidental personal property as may be
necessary for the operation of such real property.
(c) Such Person shall not fail to preserve its existence as an entity duly
organized, validly existing and in good standing (if applicable) under the laws
of the jurisdiction of its organization or formation and under the applicable
laws of any state or states in which the ownership of its assets or the conduct
of its business requires such qualification.
(d) Such Person shall not incur any Debt, except as provided herein.
A-19
(e) Such Person shall not merge into or consolidate with any person or
entity or dissolve, terminate or liquidate in whole or in part, transfer or
otherwise dispose of all or substantially all of its assets or change its legal
structure.
(f) Such Person shall not own any subsidiary or make any investment in any
person or entity.
(g) Such Person shall not file or consent to the filing of any petition,
either voluntary or involuntary, to take advantage of any applicable insolvency,
bankruptcy, liquidation or reorganization statute, or make an assignment for the
benefit of creditors.
(h) Such Person shall agree to abide by the following covenants in its
management and operation:
(i) To maintain its records, books of account and bank accounts
separate and apart from those of the Borrower and any other Person;
(ii) Not to commingle assets with those of the Borrower or any other
Person;
(iii) Not to maintain its assets in such a manner that it will be
costly or difficult to segregate, ascertain or identify its individual
assets from those of any other Person;
(iv) To maintain separate financial statements and to file its own tax
returns;
(v) To pay its own liabilities out of its own funds;
(vi) To observe all corporate, partnership or limited liability company
formalities;
(vii) To maintain an arm's-length relationship with its Affiliates;
(viii) To pay the salaries of its own employees and maintain a
sufficient number of employees in light of its contemplated business
operations;
(ix) Not to guarantee or become obligated for the debts of any other
entity or hold out its credit as being available to satisfy the obligations
of others, except as provided for herein;
(x) Not to acquire obligations or securities of its partners, members
or shareholders;
(xi) To allocate and charge fairly and reasonably any overhead for
shared office space or any common employee or overhead shared with
affiliates;
(xii) To use separate stationery, invoices and checks;
(xiii) Not to pledge its assets for the benefit of any other entity or
make any loans or advances to any entity, except as provided for herein;
(xiv) To hold itself out to the public as a legal entity separate and
distinct from any other Person and to conduct its business solely in its
own name in order not (A) to mislead others as to the identity with which
such other Person is transacting business, or (B) to suggest that such
Person is responsible for the debts of any third party;
A-20
(xv) To correct any known misunderstanding regarding its separate
identity; and
(xvi) To maintain adequate capital and cash on hand for the normal
obligations reasonably foreseeable in a business of its size and character
and in light of its contemplated business operations.
State shall mean the State or Commonwealth in which the subject of such
reference or any part thereof is located.
Subsidiary shall mean, with respect to any Person, any corporation, association,
limited liability company, partnership or other business entity of which
securities or other ownership interests representing more than 50% of either (x)
the beneficial ownership interest or (y) ordinary voting power are, at the time
as of which any determination is being made, owned or controlled, directly or
indirectly, by such Person.
Tax Expenses shall mean tax expense (if any) attributable to income and
franchise taxes based on or measured by income, whether paid or accrued.
T/I and Capital Expenditure Budget as defined in Section 7.2.1(ii).
T/I CAPEX Fund Accounts as defined in Section 7.28.1, which T/I CAPEX Fund
Accounts shall at all times be subject to a Pledge and Security Agreement.
Total Commitment. The sum of the Commitments of the Lenders, as in effect from
time to time.
Treasury Rate The term "Treasury Rate" means, as of the date of any calculation
or determination, the latest published rate for United States Treasury Notes or
Bills (but the rate on Bills issued on a discounted basis shall be converted to
a bond equivalent) as published weekly in the Federal Reserve Statistical
Release H.15(519) of Selected Interest Rates in an amount which approximates (as
determined solely by Agent) the amount (i) approximately comparable to the
portion of the Loan to which the Treasury Rate applies for the Interest Period,
or (ii) in the case of a prepayment, the amount prepaid and with a maturity
closest to the original maturity of the installment which is prepaid in whole or
in part.
UCC or the Uniform Commercial Code means the Uniform Commercial Code in effect
and applicable from time to time in a State.
Unfunded Current Liability of any Plan means the amount, if any, by which the
actuarial present value of the accumulated plan benefits under the Plan as of
the close of its most recent plan year exceeds the fair market value of the
assets allocable thereto, each determined in accordance with Statement of
Financial Accounting Standards No. 35, based upon the actuarial assumptions used
by the Plan's actuary in the most recent annual valuation of the Plan.
United States and U.S. shall each mean the United States of America.
Value of the Collateral Property as defined in Section 7.20.1.
Variable Rate. The term "Variable Rate" means a per annum rate equal at all
times to the Prime Rate plus 100 basis points, with changes therein to be
effective simultaneously without notice or demand of any kind with any change in
the Prime Rate].
Variable Rate Advance. The term "Variable Rate Advance" means any principal
amount outstanding under this Agreement which pursuant to this Agreement bears
interest at the Variable Rate.
A-21
Wholly-Owned Subsidiary shall mean, with respect to any Person, any other Person
as to which one-hundred (100%) percent of the Capital Stock thereof is owned,
directly or indirectly, by such Person.
Withholding Taxes as defined in Section 2.7.3.
X-00
XXXXXXX X TO LOAN AGREEMENT
ALLOCATION OF PROCEEDS
--------------------------------------------------------------------------------
Borrower/Guarantor Loan Proceeds
--------------------------------------------------------------------------------
Shelbourne I Guarantor $5,948,869.00
--------------------------------------------------------------------------------
Century Park I Joint Venture $14,060,964.00
--------------------------------------------------------------------------------
Seattle Landmark Joint Venture $9,031,465.00
--------------------------------------------------------------------------------
Tri-Columbus Associates $9,896.756.00
--------------------------------------------------------------------------------
Shelbourne Xxxxxxxx Company LLC $4,596,853.00
--------------------------------------------------------------------------------
Shelbourne Richmond Company LLC $3,893,805.00
--------------------------------------------------------------------------------
Shelbourne Las Vegas Company LLC $7,571,288.00
--------------------------------------------------------------------------------
B-1
EXHIBIT C TO LOAN AGREEMENT
PROMISSORY NOTE
$_________________ February 19, 2003
1. Promise To Pay.
FOR VALUE RECEIVED, SHELBOURNE RICHMOND COMPANY LLC, a Delaware limited
liability company("Shelbourne Richmond"), SHELBOURNE XXXXXXXX COMPANY LLC, a
Delaware limited liability company ("Shelbourne Xxxxxxxx"), SHELBOURNE LAS VEGAS
COMPANY LLC, a Delaware limited liability company ("Shelbourne Las Vegas"),
CENTURY PARK I JOINT VENTURE, a Delaware general partnership ("Shelbourne
Century Park"), SEATTLE LANDMARK JOINT VENTURE, a Delaware general partnership
("Shelbourne Seattle"), TRI-COLUMBUS ASSOCIATES, a Delaware general partnership
("Shelbourne Tri-Columbus"), each having an address at Seven Xxxxxxxx Xxxxx,
Xxxxx 000, X.X. Xxx 0000, Xxxxxx, Xxxxxxxxxxxxx (singly and collectively, and
jointly and severally, as the "Borrower" or the "Borrowers"), jointly and
severally, promise to pay to the order of _________________________,
a_________________________________, with a place of business at
_____________________________ (hereinafter, a "Lender"), the principal sum of
________________________ ($___________________), or so much thereof as may be
advanced by or on behalf of Lender, with interest thereon, or on the amount
thereof from time to time outstanding, to be computed, as hereinafter provided,
on each advance from the date of its disbursement until such principal sum shall
be fully paid. Interest and principal shall be payable in installments as set
forth in the Loan Agreement (as defined below). The total principal sum, or the
amount thereof outstanding, together with any accrued but unpaid interest, shall
be due and payable in full on February 19, 2006 (hereinafter, the "Maturity
Date"), which term is further defined in, and is subject to acceleration, or
extension until February 19, 2007 (hereinafter, the "First Extended Maturity
Date") and thereafter to February 19, 2008 (hereinafter, the "Second Extended
Maturity Date"), in accordance with, the Loan Agreement pursuant to which this
Note has been issued.
The term "Borrower" shall mean individually and collectively, with all
representations, warranties and covenants herein contained to be applicable to
Shelbourne Richmond, Shelbourne Xxxxxxxx, Shelbourne Las Vegas, Shelbourne
Century Park, Shelbourne Seattle, and Shelbourne Tri-Columbus jointly, and each
of Shelbourne Richmond, Shelbourne Xxxxxxxx, Shelbourne Las Vegas, Shelbourne
Century Park, Shelbourne Seattle, and Shelbourne Tri-Columbus singularly, as the
context so provides. Without limiting the generality of the foregoing, (i) any
representations contained herein of the Borrower shall be applicable to
Shelbourne Richmond, Shelbourne Xxxxxxxx, Shelbourne Las Vegas, Shelbourne
Century Park, Shelbourne Seattle, and/or Shelbourne Tri-Columbus , as the
context so provides, (ii) any affirmative covenants contained herein shall be
deemed to be covenants of each of Shelbourne Richmond, Shelbourne Xxxxxxxx,
Shelbourne Las Vegas, Shelbourne Century Park, Shelbourne Seattle, and
Shelbourne Tri-Columbus, and shall require performance by each of Shelbourne
Richmond, Shelbourne Xxxxxxxx, Shelbourne Las Vegas, Shelbourne Century Park,
Shelbourne Seattle, and Shelbourne Tri-Columbus, (iii) any negative covenants
contained therein shall be deemed to be covenants of each of Shelbourne
Richmond, Shelbourne Xxxxxxxx, Shelbourne Las Vegas, Shelbourne Century Park,
Shelbourne Seattle, and Shelbourne Tri-Columbus, and shall be breached if any
one of Shelbourne Richmond, Shelbourne Xxxxxxxx, Shelbourne Las Vegas,
Shelbourne Century Park, Shelbourne Seattle, and Shelbourne Tri-Columbus fails
to comply therewith, (iv) the occurrence of any Event of Default with respect to
any one of Shelbourne Richmond, Shelbourne Xxxxxxxx, Shelbourne Las Vegas,
Shelbourne Century Park, Shelbourne Seattle, and Shelbourne Tri-Columbus shall
be deemed to be
C-1
an Event of Default hereunder, and (v) any Obligations of the Borrower shall be
deemed to include any Obligations of Shelbourne Richmond, Shelbourne Xxxxxxxx,
Shelbourne Las Vegas, Shelbourne Century Park, Shelbourne Seattle, and
Shelbourne Tri-Columbus, or any Obligations of either one of them.
2. Loan Agreement.
This Note is issued pursuant to the terms, provisions and conditions of an
agreement captioned "Loan Agreement" (hereinafter, the "Loan Agreement") dated
as of even date among Borrower, Lender and the other financial institutions
named therein (the Lender and such other institutions, the "Lenders") and Fleet
National Bank as Agent (hereinafter the "Agent") and evidences the Loan and Loan
Advances made by or on behalf of the Lender pursuant thereto. Capitalized terms
used herein which are not otherwise specifically defined shall have the same
meaning herein as in the Loan Agreement. This Note is one of several Notes
executed and delivered by the Borrower to the Lenders in accordance with the
terms and provisions of the Loan Agreement.
3. Acceleration; Event of Default.
At the option of the Agent, subject to the terms of the Loan Agreement,
this Note and the indebtedness evidenced hereby shall become immediately due and
payable without further notice or demand, and notwithstanding any prior waiver
of any breach or default, or other indulgence, upon the occurrence of an Event
of Default. Upon the occurrence and during the continuance of an Event of
Default, Agent shall have, in addition to any rights and remedies contained
herein, any and all rights and remedies set forth in the Loan Agreement or any
other Loan Document.
4. Certain Waivers, Consents and Agreements.
Each and every party liable hereon or for the indebtedness evidenced hereby
whether as maker, endorser, guarantor, surety or otherwise hereby: (a) waives
presentment, demand, protest, suretyship defenses and defenses in the nature
thereof; (b) waives any defenses based upon and specifically assents to any and
all extensions and postponements of the time for payment, changes in terms and
conditions and all other indulgences and forbearances which may be granted by
the Agent or the holder to any party now or hereafter liable hereunder or for
the indebtedness evidenced hereby; (c) agrees to any substitution, exchange,
release, surrender or other delivery of any security or collateral now or
hereafter held hereunder or in connection with the Loan Agreement, or any of the
other Loan Documents, and to the addition or release of any other party or
person primarily or secondarily liable; (d) agrees that if any security or
collateral given to secure this Note or the indebtedness evidenced hereby or to
secure any of the obligations set forth or referred to in the Loan Agreement, or
any of the other Loan Documents, shall be found to be unenforceable in full or
to any extent, or if Agent or any other party shall fail to duly perfect or
protect such collateral, the same shall not relieve or release any party liable
hereon or thereon nor vitiate any other security or collateral given for any
obligations evidenced hereby or thereby; (e) agrees to pay all costs and
expenses actually incurred by Agent and Lenders or any other holder of this Note
in connection with the indebtedness evidenced hereby pursuant to the Loan
Agreement, including, without limitation, all attorneys' fees and costs, for the
implementation of the Loan, the collection of the indebtedness evidenced hereby
and the enforcement of rights and remedies hereunder or under the other Loan
Documents, whether or not suit is instituted; and (f) consents to all of the
terms and conditions contained in this Note, the Loan Agreement, the Mortgage,
the Assignment of Leases and Rents, and all other instruments now or hereafter
executed evidencing or governing all or any portion of the security or
collateral for this Note and for such Loan Agreement, or any one or more of the
other Loan Documents.
C-2
5. Delay Not A Bar.
No delay or omission on the part of the Agent or the holder in exercising
any right hereunder or any right under any instrument or agreement now or
hereafter executed in connection herewith, or any agreement or instrument which
is given or may be given to secure the indebtedness evidenced hereby or by the
Loan Agreement, or any other agreement now or hereafter executed in connection
herewith or therewith shall operate as a waiver of any such right or of any
other right of such holder, nor shall any delay, omission or waiver on any one
occasion be deemed to be a bar to or waiver of the same or of any other right on
any future occasion.
6. Partial Invalidity.
The invalidity or unenforceability of any provision hereof, of the Loan
Agreement, of the other Loan Documents, or of any other instrument, agreement or
document now or hereafter executed in connection with the Loan made pursuant
hereto and thereto shall not impair or vitiate any other provision of any of
such instruments, agreements and documents, all of which provisions shall be
enforceable to the fullest extent now or hereafter permitted by law.
7. Compliance With Usury Laws.
All agreements among Borrower, Guarantor, Agent and Lenders are hereby
expressly limited so that in no contingency or event whatsoever, whether by
reason of acceleration of maturity of the indebtedness evidenced hereby or
otherwise, shall the amount paid or agreed to be paid to Agent or Lenders for
the use or the forbearance of the indebtedness evidenced hereby exceed the
maximum permissible under applicable law. As used herein, the term "applicable
law", shall mean the law in effect as of the date hereof, provided, however,
that in the event there is a change in the law which results in a higher
permissible rate of interest, then this Note shall be governed by such new law
as of its effective date. In this regard, it is expressly agreed that it is the
intent of Borrower, Agent and Lenders in the execution, delivery and acceptance
of this Note to contract in strict compliance with the laws of the Commonwealth
of Massachusetts from time to time in effect. If, under or from any
circumstances whatsoever, fulfillment of any provision hereof or of any of the
Loan Documents or the Security Documents at the time performance of such
provision shall be due, shall involve transcending the limit of validity
prescribed by applicable law, then the obligation to be fulfilled shall
automatically be reduced to the limit of such validity, and if under or from any
circumstances whatsoever Agent or Lenders should ever receive as interest an
amount which would exceed the highest lawful rate, such amount which would be
excessive interest shall be applied to the reduction of the principal balance
evidenced hereby and not to the payment of interest. This provision shall
control every other provision of all agreements among Borrower, the Guarantor,
Agent and Lenders.
8. Use of Proceeds.
All proceeds of the Loan shall be used solely for the purposes more
particularly provided for and limited by the Loan Agreement.
9. Security.
This Note is secured by the Collateral as further set forth in the Loan
Agreement. The Collateral for this Note may be held by the Agent, on behalf of
the Lender.
10. Notices.
Any notices given with respect to this Note shall be given in the manner
provided for in the Loan Agreement.
C-3
11. Governing Law and Consent to Jurisdiction.
11.1 Substantial Relationship. It is understood and agreed that all of
the Loan Documents were delivered in the Commonwealth of
Massachusetts, which Commonwealth the parties agree has a
substantial relationship to the parties and to the underlying
transactions embodied by the Loan Documents.
11.2 Place of Delivery. Borrower agrees to furnish to Lender at Lender's
office in Boston, Massachusetts all further instruments,
certifications and documents to be furnished hereunder, if any.
11.3 Governing Law. This Note, except as otherwise provided in Section
11.4, and each of the other Loan Documents shall in all respects be
governed, construed, applied and enforced in accordance with the
internal laws of the Commonwealth of Massachusetts without regard to
principles of conflicts of law.
11.4 Exceptions. Notwithstanding the foregoing choice of law:
(i) The procedures governing the enforcement by Agent of its foreclosure
and other remedies under the Security Documents and under the other Loan
Documents with respect to each Collateral Property shall be governed by the
laws of the State in which such Collateral Property is located;
(ii) Agent shall comply with applicable law of such State to the extent
required by the law of such jurisdiction in connection with the foreclosure
of the security interests and liens created under the Security Documents
and the other Loan Documents with respect to each Collateral Property or
other assets situated in such State; and
(iii) provisions of Federal law and the law of such State shall apply in
defining the terms Hazardous Materials, Environmental Legal Requirements
and Legal Requirements applicable to each Collateral Property as such terms
are used in this Loan Agreement, the Environmental Indemnity and the other
Loan Documents.
Nothing contained herein or any other provisions of the Loan Documents
shall be construed to provide that the substantive laws of any other State
shall apply to any parties, rights and obligations under any of the Loan
Documents, which, except as expressly provided in clauses (i), (ii) and
(iii) of this Section 11.4., are and shall continue to be governed by the
substantive law of Commonwealth of Massachusetts, except as set forth in
clauses (i) , (ii) and (iii) of this Section 11.4. In addition, the fact
that portions of the Loan Documents may include provisions drafted to
conform to the law of any other State is not intended, nor shall it be
deemed, in any way, to derogate the parties, choice of law as set forth or
referred to in this Loan Agreement or in the other Loan Documents. The
parties further agree that the Agent may enforce its rights under the Loan
Documents including, but not limited to, its rights to xxx the Borrower or
to collect any outstanding indebtedness in accordance with applicable law.
11.5 Consent to Jurisdiction. Borrower hereby consents to the
nonexclusive personal jurisdiction in any state or Federal court
located within the Commonwealth of Massachusetts.
C-4
12. Waiver of Jury Trial.
BORROWER, AGENT AND LENDERS MUTUALLY HEREBY KNOWINGLY, VOLUNTARILY AND
INTENTIONALLY WAIVE THE RIGHT TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION
BASED HEREON, ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS NOTE OR ANY OTHER
LOAN DOCUMENTS CONTEMPLATED TO BE EXECUTED IN CONNECTION HEREWITH, OR ANY COURSE
OF CONDUCT, COURSE OF DEALINGS, STATEMENTS (WHETHER VERBAL OR WRITTEN) OR
ACTIONS OF ANY PARTY. THIS WAIVER CONSTITUTES A MATERIAL INDUCEMENT FOR LENDER
TO ACCEPT THIS NOTE AND MAKE THE LOAN.
13. No Oral Change.
This Note and the other Loan Documents may only be amended, terminated,
extended or otherwise modified by a writing signed by the party against which
enforcement is sought. In no event shall any oral agreements, promises, actions,
inactions, knowledge, course of conduct, course of dealing, or the like be
effective to amend, terminate, extend or otherwise modify this Note or any of
the other Loan Documents.
14. Rights of the Agent and Holder.
This Note and the rights and remedies provided for herein may be enforced
by Agent, the holder, or any subsequent holder hereof. Wherever the context
permits each reference to the term "holder" herein shall mean and refer to
Agent, the holder, or the then subsequent holder of this Note.
15. Right to Pledge.
Lender may at any time pledge all or any portion of its rights under the
Loan Documents including any portion of this Note to any of the twelve (12)
Federal Reserve Banks organized under Section 4 of the Federal Reserve Act, 12
U.S.C. Section 341. No such pledge or enforcement thereof shall release Lender
from its obligations under any of the Loan Documents.
16. Setoff
The setoff provisions set forth in Article 12 of the Loan Agreement are
incorporated herein by reference.
(REMAINDER OF PAGE INTENTIONALLY LEFT BLANK)
C-5
IN WITNESS WHEREOF, Borrower has caused this Note to be duly executed as of
the date set forth above as a sealed instrument.
WITNESS: BORROWER:
SHELBOURNE RICHMOND COMPANY LLC,
a Delaware limited liability company
By: Shelbourne Properties II L.P.,
Managing Member
By: Shelbourne Properties II GP, LLC
General Partner
By:
--------------------- ----------------------------
Name:
Title:
SHELBOURNE XXXXXXXX COMPANY LLC
a Delaware limited liability company
By: Shelbourne Properties II L.P.,
Managing Member
By: Shelbourne Properties II GP, LLC
General Partner
By:
--------------------- ----------------------------
Name:
Title:
SHELBOURNE LAS VEGAS COMPANY LLC
a Delaware limited liability company
By: Shelbourne Properties III L.P.
Managing Member
By: Shelbourne Properties III GP, Inc.,
General Partner
By:
--------------------- ----------------------------
Name:
Title:
C-6
CENTURY PARK I JOINT VENTURE,
a Delaware general partnership
By: Shelbourne I Century Park Company LLC,
a Delaware limited liability company
By: Shelbourne Properties I L.P.,
Managing Member
By: Shelbourne Properties I GP, LLC,
General Partner
By:
------------------------- -----------------------------------
Name:
Title:
By: Shelbourne II Century Park Company LLC,
a Delaware limited liability company
By: Shelbourne Properties II L.P.,
Managing Member
By: Shelbourne Properties II GP, LLC,
General Partner
By:
------------------------- -----------------------------------
Name:
Title:
C-7
SEATTLE LANDMARK JOINT VENTURE,
a Delaware general partnership
By: Shelbourne I Seattle Landmark Company LLC,
a Delaware limited liability company
By: Shelbourne Properties I L.P.,
Managing Member
By: Shelbourne Properties I GP, LLC,
General Partner
By:
------------------------- -----------------------------------
Name:
Title:
By: Shelbourne II Seattle Landmark Company LLC,
a Delaware limited liability company
By: Shelbourne Properties II L.P.,
Managing Member
By: Shelbourne Properties II GP, LLC,
General Partner
By:
------------------------- -----------------------------------
Name:
Title:
C-8
TRI-COLUMBUS ASSOCIATES,
a Delaware general partnership
By: Shelbourne II Tri-Columbus Company LLC,
a Delaware limited liability company
By: Shelbourne Properties II L.P.,
Managing Member
By: Shelbourne Properties II GP, LLC,
General Partner
By:
---------------------------- -----------------------------------
Name:
Title:
By: Shelbourne III Tri-Columbus Company LLC,
a Delaware limited liability company
By: Shelbourne Properties III L.P.,
Managing Member
By: Shelbourne Properties III GP, Inc,
General Partner
By:
---------------------------- -----------------------------------
Name:
Title:
EXHIBIT D TO LOAN AGREEMENT
AUTHORIZED REPRESENTATIVES
Xxxxxxx Xxxxxx
Xxxxx Xxxxxxxxx
Xxxx Xxxxxxx
Xxxxxxx Xxxxxxx
D-1
EXHIBIT E TO LOAN AGREEMENT
REQUIRED PROPERTY, HAZARD AND OTHER INSURANCE
With respect to any Leases entered into following the date hereof, Borrower
shall at all times provide and maintain, or cause a Shelbourne Subsidiary or
tenant under any such Lease to provide and maintain, the following insurance
coverages with respect to any Collateral Property issued by companies qualified
to do business in the applicable jurisdiction where the Collateral Property is
located, and otherwise acceptable to Agent in its sole discretion:
(i) physical insurance on an all-risk basis without exception
(including, without limitation, flood required if property is in a "Special
Flood Hazard Area" A or V), vandalism and malicious mischief, earthquake,
mold infestation insurance (only if commercially available at commercially
reasonable rates), collapse, boiler explosion, sprinkler coverage, cost of
demolition, increased costs of construction and the value of the undamaged
portion of the building and soft costs coverage) covering all the real
estate, fixtures and personal property to the extent of the full insurable
value thereof, on a builder's risk non-reporting form prior to completion
and occupancy to Occupy Endorsement, having replacement cost and agreed
amount endorsements (with deductibles not in excess of the insurable
value);
(ii) rent loss or business interruption insurance in an amount equal to
one year's rentals or gross revenues;
(iii) public liability insurance, with underlying and umbrella
coverages totaling not less than $100,000,000.00 per occurrence and
$100,000,000.00 in the aggregate or such other amounts as may be determined
by Agent from time to time;
(iv) such other insurance coverages in such amounts as Agent may
request consistent with the customary practices of prudent developers and
owners of similar properties;
(v) Without limiting the generality of the insurance requirements set
forth herein, only if commercially available at commercially reasonable
rates (in an amount reasonably consistent with the amount of such insurance
generally obtained by companies engaging in real estate business operations
of a similar size, common nature, and with similar property types as that
of the Borrower) either (i) the insurance policies required hereunder shall
not include any so called "terrorist exclusion" or similar exclusion or
exception to insurance coverage relating to the acts of terrorist groups or
individuals, or (ii) excess or blanket coverage with respect thereto shall
be provided, which excess or blanket coverage must be in an amount, from an
insurer, and in accordance with terms and conditions reasonably acceptable
to the Agent.
All notices provided to be given by any insurer to Agent shall be mailed to
or delivered to Agent by certified or registered mail, return receipt requested,
as follows:
Fleet National Bank as Agent
ISAOA/ATIMA
Insurance Department
Mail Code: CT EH 4151 MP
P. O. Xxx 0000
Xxxxxxxx, XX 00000-0000
E-1
EXHIBIT F TO LOAN AGREEMENT
OWNERSHIP INTERESTS AND TAXPAYER IDENTIFICATION NUMBERS
F-1
EXHIBIT G TO LOAN AGREEMENT
COMPLIANCE CERTIFICATE
F-2
EXHIBIT H
MANAGEMENT AND ADVISORY AGREEMENTS
H-1
EXHIBIT I
FORM OF ASSIGNMENT AND ACCEPTANCE
I-1
EXHIBIT J
COLLATERAL PROPERTIES
COLLATERAL PROPERTY OWNERS
PARTIAL RELEASE AMOUNT
---------------------------------------------------------------------------------------------------------------
Collateral Property Borrower/Guarantor Partial
Release
Amount
---------------------------------------------------------------------------------------------------------------
Loch Raven Plaza, Towson, Maryland Shelbourne I Guarantor $7,500,000
---------------------------------------------------------------------------------------------------------------
Century Plaza, San Diego, California Century Park I Joint Venture $20,000,000
---------------------------------------------------------------------------------------------------------------
Seattle Tower, Seattle, Washington Seattle Landmark Joint Venture $13,650,000
---------------------------------------------------------------------------------------------------------------
Tri-Columbus Volvo, Westerville, Ohio Tri-Columbus Associates $9,200,000
---------------------------------------------------------------------------------------------------------------
Tri-Columbus Xxxxxxx, Grove City, Ohio Tri-Columbus Associates $3,300.000
---------------------------------------------------------------------------------------------------------------
Xxxxxxxx Festival, Matthews, North Shelbourne Matthews Company LLC $6,500,000
Carolina
---------------------------------------------------------------------------------------------------------------
Commerce Plaza, Richmond, Virginia Shelbourne Richmond Company LLC $7,500,000
---------------------------------------------------------------------------------------------------------------
Sunrise Marketplace, Las Vegas, Nevada Shelbourne Las Vegas Company LLC $9,600,000
---------------------------------------------------------------------------------------------------------------
J-1
EXHIBIT K TO LOAN AGREEMENT
LENDERS' COMMITMENT
K-1
EXHIBIT L
LOAN AGENDA
EXHIBIT M
NON-COLLATERAL INDIVIDUAL PROPERTIES
NON-COLLATERAL INDIVIDUAL PROPERTY OWNERS
OTHER PROPERTIES OWNED BY SHELBOURNE ENTITIES
DEBT
Property Owner Debt
-------- ----- ----
000 Xxxxxxxx 000 Xxxxxxxx Xxxxx Xxxxxxx Xxxxxxxx Debt and Broadway
New York, New York Mortgage
Melrose Crossing I Shelbourne Properties II L.P. None
Melrose Outparcel
Melrose Park, Illinois
Melrose Crossing II Shelbourne Properties III L.P. None
Melrose Park, Illinois
Super Valu Stores Indiana Market, Ltd. None
Indianapolis, Indiana
20 Motel Properties Accotel Property Investors, LLC Approximately $74,000,000 of
non-recourse indebtedness owed
to Berkshire Hathaway Credit
Corporation
M-1
SCHEDULE 5.1.2(i)
MATERIAL CHANGES TO FINANCIAL CONDITION
On January 31, 2003, the Shelbourne REITs paid dividends per share as follows:
Shelbourne Properties I, Inc. $ 3.50
Shelbourne Properties II, Inc. $ 14.50
Shelbourne Properties III, Inc. $ 2.50
On January 22, 2003, Shelbourne Properties I, Inc. sold its property located in
Fort Lauderdale, Florida commonly referred to as Southport Shopping Center
On January 19, 2003, Shelbourne Properties III, Inc. sold its property located
in Livonia, Michigan commonly referred to as Livonia Plaza
On January 31, 2003, Tri-Columbus Associates sold its property located in
Hilliard, Ohio.
Sch 5-1-2 --- 1
SCHEDULE 5.1.11
CHANGES TO CONDITION OF PROPERTY
Seattle Tower sustained significant damage from an earthquake on February 28,
2001. Remaining repairs consist of elevator shaft wall repairs and exterior
facade repairs, the cost of which are estimated to be approximately $1,500,000
in the aggregate. Borrower had in effect at the time of the casualty property
insurance which included earthquake coverage with limits in excess of
$1,500,000.00. Borrower has made a timely claim against the policy for the costs
of repair in compliance with all procedures and requirements of the policy.
Borrower is not aware of any reason why such claim would not be paid by the
insurer in full.
Xxxxxxxx Festival is currently undergoing a significant refurbishment program
pursuant to which the theater is being converted to commercial retail space. The
estimated cost of such refurbishment is approximately $1,200,000.
Sch 5-1-11 --- 1
SCHEDULE 6.5
LITIGATION
On February 26 and March 6, 2002, respectively, plaintiffs Xxxxxx Xxxxxx
and Xxxx Xxxxxxx filed individual and derivative action lawsuits, which were
subsequently consolidated, on behalf of Shelbourne Properties I, Inc.,
Shelbourne Properties II, Inc. and Shelbourne Properties III, Inc.
(collectively, the "Companies") against Northstar Capital Investment Corp.
("Northstar"), several of its affiliates, and the members of the boards of
directors of the Companies as of February 13, 2002 in the Court of Chancery of
the State of Delaware. The two actions challenged the propriety of transactions
consummated on February 14, 2002, by which the Companies and their respective
operating partnerships agreed to purchase from Northstar approximately 30% of
the then outstanding shares of each of the Companies as well as the right to
terminate certain management services agreements.
On May 7, 2002, plaintiffs Xxxxxxx and Xxxxxx jointly filed a separate
individual and class action in Delaware Chancery Court alleging that the
Companies and the members of the Boards at that time had violated 8 Del. C. ss.
211 by failing to call and hold annual meetings of the stockholders within 13
months of the incorporation of the Companies, and had breached their fiduciary
duties and the provisions of the Companies' Amended and Restated Certificates of
Incorporation, by, inter alia, reducing and reorganizing the Companies' boards
and issuing allegedly false and/or misleading statements and omissions of
material facts in press releases and the 2001 Annual Reports filed with the SEC
by each of the Companies. On May 29, 2002, the Court consolidated the claims
pursuant to 8 Del. C. ss. 211 for purposes of discovery and trial with similar
claims in a lawsuit brought in the same forum by HX Investors, L.P. ("HX
Investors") and other shareholders against the Companies.
The Companies vigorously defended all of the litigation, and, on July 1,
2002, HX Investors, L.P., the additional shareholders, the Companies, the
additional defendants, and Xx. Xxxxxxx entered into several related agreements
pursuant to which the aforementioned actions by plaintiffs Grening, Hudson, and
HX Investors were settled, subject, with respect to the class and derivative
actions, to the approval of the Court, in exchange for, (1) the Companies'
agreement to adopt those by-laws and take all other steps necessary to, inter
alia, (a) approve the expansion of the size of the then current Boards to six
members each, with a majority of members of each Board required thereafter to be
independent, (b) conduct Annual Meetings in September 2002 at which all six
seats on each of the Boards would be placed up for election by the stockholders,
(c) to adopt and implement additional corporate governance provisions, (d)
facilitate the consummation of tender offers by HX Investors for the purchase of
up to 30% of the outstanding common stock of each of the Companies at prices
that offered a significant premium to then current market trading prices that
was required to be based upon a value for all outstanding shares of the
Companies in the aggregate amount of at least $138.5 million; (2) HX Investors'
agreement to commence such tender offers and to thereafter put forth, and vote
all of its shares in favor of, a proposal by which the Companies would be
liquidated in an orderly fashion; and (3) Northstar's agreement to contribute
(a) up to $1 million for the payment of the class and derivative plaintiffs'
attorneys' fees, expenses, and incentive fees as approved by the Court and (b)
up to 42% of the OP Units owned by an affiliate of Northstar with a value of up
to $1.05
Sch 6-5 --- 1
million, to be paid to HX Investors upon the completion of the tender offers and
settlement of the Actions, so that HX Investors would agree to consummate tender
offers at prices that were based upon a minimum value of $138.5 million for all
outstanding shares.
The settlement with Xx. Xxxxxxx was memorialized by letter agreement dated
July 1, 2002, setting forth the agreement in principal. By letter agreement
dated October 28, 2002, Plaintiff Xxxxxx Xxxxxx joined in the agreement in
principle. Confirmatory discovery and drafting of the full settlement agreement
is proceeding, after which Court approval for the settlement must be obtained
and notice and the opportunity to opt-out of the class provided to relevant
current and former shareholders.
Sch 6-5 --- 2
SCHEDULE 6.16.2
OPTION RIGHTS
Property Tenant Option
-------- ------ ------
Sunrise Marketplace Xxxxx'x Foods Right to purchase their space at the end of the initial
lease term for $4.2 million.
Century Park SDGE Right to make a rejectible offer to purchase the property
upon landlord giving notice of its intention to market the
property for sale. Should tenant decline to make an offer,
Landlord may sell the property within 6 months. Should
tenant make an offer that Landlord rejects, Landlord may
sell the property within 6 months on terms no less favorable
than tenant's offer.
Tri-Columbus Volvo Tenant may elect to terminate its lease by making a payment
of $1,123,732.50 on December 31, 2005, by providing Landlord
notice no later than January 1, 2005, of its intention to do
so.
Sch 6-16-2 --- 1
SCHEDULE 6.21.4
DISCLOSED OBLIGATIONS
Each of Shelbourne Properties I L.P., Shelbourne Properties II L.P. and
Shelbourne Properties III L.P. is obligated under the Restructuring Agreement
and the other agreements entered into on connection therewith to:
1. Upon the occurrence of a "Put Event" (as defined in the Restructuring
Agreement), to repurchase from Shelbourne Management LLC, at its election, the
Class A Units in each of them for a purchase price aggregating $2,500,000 plus a
premium equal to the following amounts:
(all amounts are in thousands)
Period Shelbourne I OP Shelbourne II OP Shelbourne III OP
------ --------------- ---------------- -----------------
2/14/03 - 5/13/03 $4,889 $6,106 $4,044
5/14/03 - 8/13/03 $4,503 $5,624 $3,725
8/14/03 - 11/13/03 $4,128 $5,156 $3,415
11/14/03 - 2/13/04 $3,766 $4,703 $3,115
2/14/04- 5/13/04 $3,415 $4,264 $2,864
5/14/04 - 8/13/04 $3,074 $3,840 $2,543
8/14/04 - 11/13/04 $2,744 $3,427 $2,270
11/14/04 - 2/13/05 $2,425 $3,029 $2,006
2/14/05 - 5/13/05 $2,116 $2,642 $1,750
5/14/05 - 8/13/05 $1,816 $2,268 $1,502
8/14/05 - 11/13/05 $1,525 $1,905 $1,262
11/14/05 - 2/13/06 $1,244 $1,553 $1,029
2/14/06 - 5/13/06 $971 $1,213 $803
5/14/06 - 8/13/06 $708 $883 $585
8/14/06 - 11/13/06 $451 $563 $373
11/14/06 - 2/13/07 $203 $253 $168
2. At the election of Shelbourne Management, LLC to expend up to $2,500,000 in
the aggregate to acquire a replacement asset for the benefit of Shelbourne
Management LLC.
3. Maintain a net worth at least equal to the amounts that could be paid
pursuant to paragraph 1 above plus $5,000,000.
4. Upon receipt of a payment from Shelbourne Management, LLC of $105,000, all
profit and loss allocation from the Accotel asset is to be allocated to Class A
Unitholder.
5. Shelbourne Management, LLC can put their interest in Xxxxxxxxxx XX LLC to
the operating partnerships for no cost.
6. The Class A Units receive a quarterly distribution of $31,250.
Sch 6-21-4 --- 1
