AMENDED AND RESTATED LOAN AGREEMENT
AMENDED AND RESTATED LOAN AGREEMENT, dated as of March
25, 1998 (this "Loan Agreement"), between ▇▇▇▇▇▇ GUARANTY TRUST
COMPANY OF NEW YORK, as Trustee under Declaration of Trust dated
December 9, 1960, as amended, for the Commingled Pension Trust
Fund (Fixed Income-Mortgage Private Placements) ("Lender"), with
an address at ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇ and
▇▇▇▇▇▇/DREVER OPERATING PARTNERSHIP, L.P., a Delaware limited
partnership, as successor by merger to Apartment Opportunity Fund
II, L.P., a California limited partnership ("Borrower"), with an
address at One Lincoln Center, ▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇, ▇▇▇▇▇ ▇▇▇,
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇.
Background:
Pursuant to a Loan Agreement dated June 23, 1994 (as
previously supplemented and amended, the "Existing Loan
Agreement"), between Lender (formerly ▇▇▇▇▇▇ Guaranty Trust
Company of New York, as Trustee under Declaration of Trust, dated
December 9, 1960, as amended, for the Commingled Pension Trust
Fund (Fixed Income - Mortgages) and Apartment Opportunity Fund
II, L.P., a California limited partnership ("AOF"), as Borrower,
Lender previously made certain loans to AOF (the "Existing
Loans") in the aggregate original principal amount of
$81,475,000.00, of which the aggregate principal amount of
$78,051,958.80 remains outstanding as of the date hereof. The
Existing Loans are evidenced by the promissory notes described on
Annex 1 hereto (the "Existing Notes"). The Existing Notes are
secured by the deeds of trusts or mortgages, as the case may be,
described on Annex 2 hereto (the "Existing Mortgages") covering
the real property described therein.
Borrower now desires to (a) amend and restate the terms
of the Existing Loans, (b) borrow from Lender an additional
$1,948,041.20 on the same terms as the amended and restated
Existing Loans, and (c) borrow from Lender an additional
$30,000,000, all as provided in this Loan Agreement.
Borrower has agreed that the Existing Loans, as amended
and restated hereunder, shall continue to be, and all new loans
made under this Loan Agreement shall be, secured by liens on the
Collateral (as hereinafter defined), as provided in this Loan
Agreement.
Lender is willing to make such loans and permit such
amendments, all provided in this Loan Agreement.
NOW, THEREFORE, in consideration of the mutual promises
and agreements contained herein and other good and valuable
consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto hereby agree that the Existing
Loan Agreement is amended and restated in its entirety as of the
date hereof, upon all of the following terms and conditions:
Section 1. Definitions; Principles of Construction.
1.1 Definitions.
When used herein, the following capitalized terms shall
have the following meanings:
"Acquisition Cost" shall mean, with respect to each of
the Mortgaged Properties, the purchase price paid by Borrower in
acquiring such Mortgaged Property, including closing costs
relating to the acquisition and, in the plural, all such costs.
"Affiliate" shall mean, with respect to any Person, any
Person controlled by, in control of or under common control with
such Person. For purposes of this definition, the term "control"
means the possession, directly or indirectly, of the power to
direct or cause the direction of management and policies of a
Person, whether through ownership of common stock or partnership
agreement, by contract or otherwise.
"AOF" shall mean Apartment Opportunity Fund, II, a
California limited partnership which was merged into Borrower.
"Aggregate Property Valuation" shall mean, with respect
to all Mortgaged Properties, the sum of the Property Valuations
for such Mortgaged Properties.
"Amendment of Mortgage" shall have the meaning set
forth in Section 7(c)(i).
"Amended and Restated Notes" shall mean each Amended
and Restated Note dated as of the date hereof executed by
Borrower in favor of Lender in replacement of each Existing Note,
substantially in the form of Exhibit C, evidencing the respective
Mortgage Loans listed on Schedule 1.1-B under the caption "Loan
A".
"Assigned Contracts" shall mean all Contracts entered
into by Borrower with third parties (including, without
limitation, the Property Management Agreements) relating to the
management or operation of any of the Mortgaged Properties.
"Banking Day" shall mean any day other than (a)
Saturday, (b) Sunday or (c) a day on which commercial banks
located in New York City are required or authorized by applicable
law or executive order to close.
"Borrower" shall mean ▇▇▇▇▇▇/Drever Operating
Partnership, L.P., a Delaware limited partnership, as successor
by merger to AOF, together with its permitted successors and
assigns.
"Borrower's General Partner" shall mean ▇▇▇▇▇▇
Residential Properties, Inc., a Maryland corporation.
"Borrower's Knowledge" shall mean to the best knowledge
of Borrower.
"Building Engineers" shall mean A-Tec Associates, Inc.
or any other independent firm approved by Lender.
"Buildings" shall mean, with respect to any Property,
the "Buildings" as defined in the Mortgage encumbering such
Property and, where the context so requires, the "Buildings" as
defined in all of the Mortgages.
"Called Principal" shall mean, with respect to any
Mortgage Note, the principal amount of such Mortgage Note that is
to be paid or prepaid in accordance with the terms of this Loan
Agreement or is declared to be or becomes immediately due and
payable following an Event of Default, as the context requires.
"Casualty" shall mean, with respect to any Mortgaged
Property, any loss of, damage to or destruction of all or any
part of such Mortgaged Property.
"Certificate of Limited Partnership" shall mean the
Certificate of Limited Partnership of Borrower, as amended, in
effect on the date hereof and attached hereto as Exhibit A.
"Charges" shall have the meaning set forth in Section
15.14.
"Collateral" shall mean the Mortgaged Properties, the
Leases, the Rents, the Assigned Contracts and all other
collateral which may from time to time secure the Obligations as
provided in the Loan Documents.
"Collateral Assignment of Property Management
Agreements" shall mean a Collateral Assignment of Property
Management Agreements, executed by Borrower, and also among the
Property Manager and Lender, as may be amended from time to time,
in form and substance satisfactory to Lender assigning to Lender
as Collateral for the Obligations each Property Management
Agreement entered into by Borrower from time to time from and
after the date hereof.
"Condemnation" shall mean, with respect to any
Mortgaged Property, any actual or, to the knowledge of Borrower,
proposed, contemplated or threatened taking of all or any part of
such Mortgaged Property by reason of any public improvements or
condemnation or similar proceeding.
"Condemnation Proceeds" shall mean the condemnation
award proceeds or other compensation payable to Borrower in
respect of a Condemnation of all or any part of a Mortgaged
Property.
"Contract" shall mean any oral or written contract,
agreement, franchise, warranty, guarantee, document, undertaking,
commitment, understanding, arrangement, lease, license,
registration, authorization, easement, servitude, right-of-way,
mortgage, bond, note or any other instrument or obligation or
interest therein or right thereunder.
"Debt Service Coverage Ratio" shall mean, as of any
date of determination, the debt service coverage ratio for a
given Mortgaged Property, calculated as the ratio of (x) the
annual Net Operating Income of such Mortgaged Property based on
the most recent month's certified rent roll of Borrower
(multiplied by 12) provided that there shall be an assumed
vacancy rate equal to the greater of 5% or the actual vacancy
rate shown on such rent roll, over (y) the projected debt service
payable on the then aggregate outstanding principal amount of the
Related Loan for such Mortgaged Property for the succeeding 12
months, based on a 9% constant rate.
"Deeds" shall mean all of the deeds and other
instruments pursuant to which fee title to the Mortgaged
Properties has been conveyed to Borrower.
"Default" shall mean the occurrence of any event
specified in Section 12, whether or not any requirement in
connection with such event, for the giving of notice or the lapse
of time, or both, shall have been satisfied.
"Default Rate" shall mean, (A) with respect to the
Mortgage Loans, a rate of interest that is equal to the sum of
(i) the higher of (x) the Prime Rate from time to time in effect
and (y) the Interest Rate from time to time in effect, plus (ii)
five percent (5%) per annum and (B) with respect to any other
Obligations, a rate of interest equal to the sum of (i) the Prime
Rate from time to time in effect plus (ii) five percent (5%) per
annum.
"Discounted Prepayment Value" shall mean, with respect
to the Called Principal of any Mortgage Note, the amount obtained
by discounting all Remaining Scheduled Payments with respect to
such Called Principal from their respective scheduled due dates
to the Settlement Date with respect to such Called Principal, in
accordance with accepted financial practice and at a discount
factor (applied on a monthly basis) equal to the sum of the
Reinvestment Yield plus 50 basis points.
"Dollars" or "$" shall mean the lawful money of the
United States of America.
"Encumbrance" shall mean any mortgage, deed of trust,
pledge, lien, encumbrance, easement, reservation, restriction,
right of way, option, right of first refusal, right of redemption
or other similar right, Lease, assignment by way of security,
hypothecation, security interest, conditional sale, capital lease
or other title retention or security arrangement securing any
Liability of any Person.
"Environmental Consultants" shall mean Law
Environmental, Inc. or Fugro Environmental Inc., or any other
independent consultant, expert or advisor approved by Lender.
"Environmental Indemnity" shall mean the Environmental
Indemnity Agreement, dated as of June 23, 1994, originally
executed by AOF and confirmed by Borrower herein, in favor of
Lender, a copy of which is attached hereto as Exhibit B, as
amended hereby and as may be further amended from time to time.
"Equipment" shall mean, with respect to any Property,
the "Equipment" as defined in the Mortgages encumbering such
Property and, where the context so requires, the "Equipment" as
defined in all of the Mortgages.
"ERISA" shall mean the Employee Retirement Income
Security Act of 1974, as amended from time to time, or any
successor statute, and the regulations promulgated and the
rulings issued thereunder.
"ERISA Affiliate" shall mean each trade or business
(whether or not incorporated) which, together with Borrower, is
treated as a single employer under Title IV of ERISA or Section
414(b), (c), (m) or (o) of the Internal Revenue Code.
"Escrow Agent" shall mean ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇,
▇.▇. or any successor escrow agent designated pursuant to the
terms of the Escrow Agreement.
"Escrow Agreement" shall mean the Amended and Restated
Escrow Agreement, dated as of the date hereof, among Borrower,
Lender and Escrow Agent, in the form attached hereto as Exhibit
G, as may be further amended from time to time.
"Event of Default" shall mean the occurrence of any
event specified in Section 12.
"Exchange Act" shall mean the Securities Exchange Act
of 1934, as amended.
"Existing Loan Agreement" shall have the meaning set
forth in the first background paragraph.
"Existing Loans" shall have the meaning set forth in
the first background paragraph.
"Existing Notes" shall have the meaning set forth in
the first background paragraph.
"Existing Mortgages" shall have the meaning set forth
in the first background paragraph.
"Financing Statements" shall mean (i) all UCC-1
financing statements in connection with Loan A originally
executed by AOF, (ii) all UCC-3 amendments to such UCC-1
financing statements executed by Borrower in connection with this
Loan Agreement, and (iii) all new UCC-1 (and, in the case of
Mortgaged Property located in Georgia, UCC-2) financing
statements executed by Borrower in connection with Loan A, Loan B
or Loan C, in each case with respect to the Equipment, Fixtures
and Personalty, in favor of Lender and filed with the appropriate
Governmental Authorities as security for the Obligations.
"Fixtures" shall mean, with respect to any Property,
the "Fixtures" as defined in the Mortgage encumbering such
Property and, where the context so requires, "Fixtures" as
defined in all of the Mortgages.
"GAAP" shall mean generally accepted accounting
principles in the United States.
"Governmental Authority" shall mean any court, board,
agency, commission, office or authority of any nature whatsoever
for any governmental, judicial, legislative, executive,
administrative or regulatory ▇▇▇▇ (▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇,
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇▇▇ or otherwise) whether now or
hereafter in existence.
"Impositions" shall mean all real estate and personal
property taxes, water, sewer and vault charges and all other
taxes, levies, assessments and other similar charges, general and
special, ordinary and extraordinary, foreseen and unforeseen, of
every kind and nature whatsoever, which at any time prior to, at
or after the execution hereof may be assessed, levied or imposed
by, in each case, a Governmental Authority upon any Mortgaged
Property or the Rents or the ownership, use, occupancy or
enjoyment thereof, and any interest, costs or penalties with
respect to any of the foregoing.
"Indebtedness" shall mean, with respect to any Person,
(a) any debt of such Person, contingent or otherwise, (i) for
borrowed money, the advance of credit, a conditional sale or a
transfer with recourse or with an obligation to repurchase,
obligations under a lease required to be capitalized for
financial reporting purposes, or purchase money obligations or
(ii) evidenced by a note, debenture, letter of credit or similar
instrument given in connection with the acquisition of any
property or assets, (b) any debt of others described in (a) above
which such Person has guaranteed or for which it is otherwise
liable and (c) any amendment, renewal, extension or refunding of
any such debt.
"Indemnitees" shall mean Lender and each of its
respective officers, directors, agents, parents, affiliates and
its respective successors and assigns.
"Insurance Policies" shall have the meaning set forth
in section 10.1(i)(i).
"Insurance Premiums" shall have the meaning set forth
in Section 5.
"Insurance Proceeds" shall mean any payments, proceeds
or other amounts received at any time by any Person under any
insurance policy as compensation in respect of a Casualty.
"Insurance Standards" shall mean those requirements or
prerequisites imposed upon Borrower by the casualty, property or
liability insurers in connection with the underwriting of
insurance for each respective Mortgaged Property.
"Interest Rate" shall mean (i) with respect to each of
Loan A and Loan C, 6.62% per annum, and (ii) with respect to Loan
B, (A) from (and including) the date hereof through (but
excluding) the effective date on which the Loan Facility shall
become unsecured pursuant to and in accordance with the terms of
Section 11 of this Loan Agreement (the "Conversion Date"), 7.06%
per annum, and (B) from and after the Conversion Date, 7.10% per
annum.
"Internal Revenue Code" shall mean the Internal Revenue
Code of 1986, as amended from time to time, or any successor
statute, and the regulations promulgated and the rulings issued
thereunder.
"Judgments" shall mean any and all judgments, orders,
directives, rulings, decisions, injunctions (temporary,
preliminary or permanent), bankruptcy plans or reorganizations,
decrees or awards of any arbitrator or Governmental Authority.
"Land" shall mean, with respect to any Property,
"Land," as defined and more particularly described in the
mortgage encumbering such Property and, where the context so
requires, "Land" as defined in all of the Mortgages.
"Laws" shall mean all laws (whether statutory or common
law), ordinances, decrees, rules, regulations and Judgments of
any Governmental Authority including, without limitation, those
applicable to zoning, historical landmark preservation, building
and land use.
"Lease" shall mean, with respect to any Mortgaged
Property, any lease, or, to the extent of the interest therein of
Borrower, any sublease or sub-sublease, license, concession or
other agreement (whether written or oral and whether now or
hereafter in effect) pursuant to which any Person is granted a
possessory interest in, or right to use or occupy all or any
portion of such Mortgaged Property, and every modification,
amendment or other agreement relating to such lease, sublease or
other agreement and every guarantee of the performance and
observance of the covenants, conditions and agreements to be
performed and observed by the other party thereto.
"Lease Assignment" shall mean, with respect to each
Mortgaged Property, (i) each Assignment of Rents and Leases
originally executed by AOF and confirmed by Borrower herein in
connection with Loan A, and (ii) each new Assignment of Rents and
Leases executed and delivered by Borrower to Lender concurrently
herewith in connection with Loan B and Loan C, in each case as
amended from time to time, pursuant to which the Rents and Leases
in respect of each Mortgaged Property are assigned by Borrower to
Lender and, in the plural, all such Assignments of Rents and
Leases.
"Legal Rate" shall have the meaning set forth in
Section 15.14.
"Legal Requirements" shall mean, with respect to each
Mortgaged Property, all federal, state, county, municipal and
other governmental statutes, laws, rules, orders, regulations,
ordinances, judgments, decrees and injunctions of Governmental
Authorities (including, without limitation, environmental laws)
affecting such Mortgaged Property or any part thereof or the
construction, use, alteration or operation thereof, or any part
thereof, including, without limitation, those applicable to
zoning, subdivision, wetlands, historical landmark preservation,
building and land use, whether now or hereafter enacted and in
force, and all permits, licenses, authorizations and regulations
relating thereto, and all covenants, agreements, restrictions and
encumbrances contained in any instruments, either of record or
known to Borrower, at any time in force affecting such Mortgaged
Property or any part thereof (other than Leases, management
agreements and service contracts now in effect or hereafter
entered into in accordance with the terms of the Loan Documents),
including, without limitation, any such covenants, agreements,
restrictions and encumbrances which may (i) require repairs,
modifications or alterations in or to such Mortgaged Property or
any part thereof, or (ii) in any material way limit the existing
use and enjoyment thereof.
"Lender" shall mean initially the Person identified as
Lender on the first page of this Loan Agreement and shall
include, for purposes of this Loan Agreement and the other Loan
Documents, all of such Person's successors and assigns from time
to time.
"Liability" shall mean any debt, obligation,
commitment, responsibility or liability of any Person.
"Lien" shall mean, with respect to each Mortgaged
Property, any mortgage, deed of trust, deed to secure debt, lien,
pledge, hypothecation, collateral assignment, security interest,
or any other encumbrance, charge or collateral transfer of, on or
affecting such Mortgaged Property or any portion thereof or any
interest therein, 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, the filing of any financing statement (other than one
giving notice of a true lease) and mechanic's, materialmen's and
other similar liens and encumbrances.
"Loan A" shall mean all of the Mortgage Loans listed on
Schedule 1.1-B hereof under the caption "Loan A", as amended and
restated as of the date hereof and evidenced by the Amended and
Restated Mortgage Notes.
"Loan A Maturity Date" shall have the meaning set forth
in Section 3.3.
"Loan B" shall mean the new Mortgage Loan made on the
date hereof and listed on Schedule 1.1-B hereof under the caption
"Loan B", as evidenced by the New Mortgage Note therefor.
"Loan B Maturity Date" shall have the meaning set forth
in Section 3.3.
"Loan C" shall mean the new Mortgage Loan made on the
date hereof and listed on Schedule 1.1-B hereof under the caption
"Loan C", as evidenced by the New Mortgage Note therefor.
"Loan C Maturity Date" shall have the meaning set forth
in Section 3.3.
"Loans" shall mean Loan A, Loan B and Loan C,
collectively.
"Loan Documents" shall mean collectively, this Loan
Agreement, the Mortgage Notes, the Mortgages, the Lease
Assignments, any Collateral Assignment of Property Management
Agreements, the Financing Statements, the Escrow Agreement, the
Environmental Indemnity and all other agreements and
understandings relating thereto or executed in connection with
the making of the Mortgage Loans and the Loan Facility.
"Loan Facility" shall mean the aggregate $110,000,000
first mortgage loan facility provided by Lender to Borrower
comprised of Loan A, Loan B and Loan C pursuant to the terms of
this Loan Agreement.
"Lockout Period" shall mean the period from the date
hereof through the first anniversary of the date hereof.
"Major Casualty/Condemnation" shall mean any Casualty
or Condemnation to a Mortgaged Property if as a result of such
Casualty or Condemnation, in Lender's reasonable estimation,
either (a) fifty percent (50%) or more (in the aggregate) of the
total rentable square footage of such Mortgaged Property
(exclusive of common areas and leasable square footage which is
not then subject to a Lease) is rendered untenantable or (b)
occupants that, immediately prior to such Casualty or
Condemnation, generated fifty percent (50%) or more (in the
aggregate) of the aggregate Rents generated by all occupants of
such Mortgaged Property exercise their rights to cancel their
Leases or are exercising their rights to ▇▇▇▇▇ their rent and
such abatement is not covered by rent interruption/abatement
insurance; in each case, such percentages to be estimated by
Lender on or before and as of a date which is no later than
thirty days (30) after any such Casualty or Condemnation.
"Material Adverse Effect" shall mean any circumstance
or event that (i) has or would reasonably be expected to have a
material adverse effect upon the validity, priority, perfection
or enforceability of the Loan Documents taken as a whole, or (ii)
has or would have a material adverse effect on the prospect of
timely payment of interest on and principal of the Mortgage Loans
or the value of, or Lender's ability to have recourse as set
forth in the Loan Documents against, the Mortgaged Properties
taken as a whole.
"Maturity Date" shall mean (i) with respect to Loan A,
the Loan A Maturity Date, (ii) with respect to Loan B, the Loan B
Maturity Date, and (iii) with respect to Loan C, the Loan C
Maturity Date.
"Monthly Report" shall have the meaning set forth in
Section 9.1(g).
"Mortgaged Property" shall mean, collectively, the
Land, the Buildings, the Fixtures, the Equipment and the
Personalty with respect to a Property and, in the plural,
collectively, the Land, the Buildings, the Fixtures, the
Equipment and the Personalty with respect to all of the
Properties.
"Mortgage" shall mean, with respect to each Mortgaged
Property, (i) the Deed of Trust, Security Agreement, Fixture
Filing Statement, Assignment of Leases and Rents and Financing
Statement or Deed to Secure Debt, Security Agreement, Fixture
Filing Statement, Assignment of Leases and Rents and Financing
Statement, or Mortgage, Security Agreement, Fixture Filing
Statement, Assignment of Leases and Rents and Financing
Statement, as the case may be, each as may be amended from time
to time, including concurrently herewith, originally executed by
AOF and confirmed herein or by amendment thereto by Borrower, in
favor of Lender, pursuant to which Borrower has granted a first
priority lien thereon as security for Loan A, and (ii) each Deed
of Trust, Security Agreement, Fixture Filing Statement,
Assignment of Leases and Rents and Financing Statement or Deed to
Secure Debt, Security Agreement, Fixture Filing Statement,
Assignment of Leases and Rents and Financing Statement, or
Mortgage, Security Agreement, Fixture Filing Statement,
Assignment of Leases and Rents and Financing Statement, as the
case may be, each as may be amended from time to time, executed
by Borrower in favor of Lender concurrently herewith, pursuant to
which Borrower has granted a first priority lien thereon as
security for Loan B and Loan C, respectively, and (iii) in the
plural, all such documents.
"Mortgage Loan" shall mean each loan made by Lender to
Borrower identified on Schedule 1.1-B as the mortgage loan for
each Mortgaged Property, in the amount specified on Schedule 1.1-B for
such loan and, in the plural, all of the loans identified
as mortgage loans on Schedule 1.1-B.
"Mortgage Loan Balance" shall mean, as of any date of
determination, the aggregate outstanding principal balance of all
of the Mortgage Loans.
"Mortgage Note" shall mean, (i) with respect to Loan A,
each Amended and Restated Mortgage Note, (ii) with respect to
each of Loan B and Loan C, the New Mortgage Note therefor, and
(iii) in the plural, all such promissory notes.
"Net Operating Income" shall mean, with respect to a
Mortgaged Property for the relevant calculation period, the
Property Income for such calculation period minus the Normalized
Operating Expenses for such calculation period.
"New Mortgage Note" shall mean a promissory note dated
as of the date hereof executed by Borrower in favor of Lender,
substantially in the form of Exhibit C-2 and C-3, respectively,
evidencing the Mortgage Loans listed on Schedule 1.1-B under the
caption "Loan B" and "Loan C", respectively.
"Normalized Operating Expenses" shall mean, in respect
of each Mortgaged Property for the relevant calculation period,
the sum of all ordinary and customary expenses in the ordinary
course of owning and operating such Mortgaged Property as an
apartment project, accrued during such period including, without
limitation, real estate taxes and other Impositions, accounting
and audit expenses, insurance premiums and management fees (such
fees to be the greater of 2.5% of Property Income or actual
management fees), plus an annual $250/unit capital improvement
reserve; excluding, however, debt service payments in respect of
the Related Loan, income taxes of any Person, capital expenses
and non-cash items such as depreciation.
"Obligations" shall mean, collectively, all of the
obligations of Borrower under the Loan Documents.
"Partner's Certificate" shall mean a certificate duly
executed on behalf of Borrower by Borrower's General Partner and
addressed to Lender.
"Partnership Agreement" shall mean the Agreement of
Limited Partnership of Borrower, as amended, attached hereto as
Exhibit D.
"Payment Date" with respect to any Payment Period for
any Mortgage Loan shall mean the Period Commencement Date which
begins the following Payment Period or, in the case of the final
Payment Period for any Mortgage Loan, the Maturity Date.
"Payment Period" shall mean each period commencing on
(and including) a Period Commencement Date and ending on (but
excluding) the next succeeding Period Commencement Date, or, in
the case of the final Payment Period for any Mortgage Loan, the
Maturity Date.
"Period Commencement Date" shall mean, in the case of
the initial Period Commencement Date, the date hereof, and
thereafter until the Mortgage Loans are repaid in full, the first
day of each calendar month (or, if any such day is not a Banking
Day, the following Banking Day).
"Permits" shall mean any and all permits, licenses,
operating authorizations, certificates, including certificates of
occupancy or other similar instruments required for the
occupation and use of a property in the applicable jurisdiction,
variances, waivers, approvals or other authorizations of any kind
issued or granted by any Governmental Authority which are
required in connection with the management, maintenance and
operation of the Mortgaged Properties.
"Permitted Encumbrances" shall mean, collectively, the
"Permitted Encumbrances" as defined in each of the Mortgages and,
where the context so requires, the "Permitted Encumbrances"
relating to a particular Mortgaged Property, and in each case
shall include any Encumbrance created by any Loan Document.
"Person" shall mean an individual, corporation,
company, partnership, limited liability company, limited
liability partnership, trust, joint stock company, joint venture,
unincorporated association, government, Governmental Authority or
other entity.
"Personalty" shall mean, with respect to any Property,
"Personalty," as defined in the Mortgages encumbering such
Property and, where the context so requires, "Personalty" as
defined in all of the Mortgages.
"Plan" shall mean at any time an employee benefit plan
which is subject to Title IV of ERISA or subject to the minimum
funding standards under Section 412 of the Internal Revenue Code
or Section 302 of ERISA and (i) which is maintained for employees
of Borrower or any ERISA Affiliate or in which any such employees
participate or to which contributions are made or required to be
made by Borrower or any ERISA Affiliate, or (ii) with respect to
which Borrower or any ERISA Affiliate could be subjected to any
liability under Title IV of ERISA (including without limitation
Section 4069 of ERISA) in the event that such plan has been or
were to be terminated or in the event Borrower or any ERISA
Affiliate has withdrawn or were to withdraw from such plan.
"Prepaid Rent" shall mean any payment of Rents by a
Tenant under a Lease prior to the due date therefor specified in
such Lease.
"Prepayment Date" shall have the meaning set forth in
Section 6(c)(i), and (b) with respect to any prepayment in
connection with a Condemnation or Casualty.
"Prepayment Premium" means, with respect to any
Mortgage Note, a premium equal to the excess, if any, of the
Discounted Prepayment Value of the Called Principal of such
Mortgage Note over such Called Principal.
"Prime Rate" shall mean the rate of interest publicly
announced by ▇▇▇▇▇▇ Guaranty Trust Company of New York in New
York City from time to time as its Prime Rate.
"Prohibited Transfer" shall have the meaning set forth
in Section 14 (a).
"Properties" shall mean the apartment projects listed
on Schedule 1.1-C as amended from time to time.
"Property Income" shall mean, with respect to each
Mortgaged Property, all Rents (including Prepaid Rent but only to
the extent the same is applied to the applicable Tenant's
obligations under its Lease) and other benefits now or hereafter
received or collected by or on behalf of Borrower from the
related premises or the related Equipment or under or in
connection with the related Leases including, without limitation,
all income received from tenants, transient guests, lessees,
licensees and concessionaires and other persons occupying space
at such Mortgaged Property and/or rendering services to such
Mortgaged Property's Tenants; excluding, however, (i) Tenant
security deposits; (ii) Insurance Proceeds; (iii) Condemnation
Proceeds; and (iv) Prepaid Rents, except as set forth above.
"Property Management Agreement" shall mean, with
respect to any Mortgaged Property, any agreement for the
management of such Mortgaged Property on behalf of Borrower and,
in the plural, all such agreements with respect to the Mortgaged
Properties.
"Property Manager" shall mean any other property
manager engaged by Borrower to operate and manage one or more of
the Mortgaged Properties and approved by Lender.
"Property Valuation" shall mean, with respect to each
of the Mortgaged Properties, a valuation of such Mortgaged
Property by an independent MAI appraiser, satisfactory to Lender
in its sole discretion, it being understood and agreed that such
valuation shall be determined by applying a 9% capitalization
rate to the Net Operating Income of such Mortgaged Property for
the fiscal year ended December 31, 1997.
"Reinvestment Yield" shall mean, with respect to the
Called Principal of any Mortgage Note, the yield to maturity
implied by (i) the yields reported, as of 10:00 A.M. (New York
City time) on the third Business Day preceding the Settlement
Date with respect to such Called Principal, on the display
designated as "Page 678" on the Telerate Service (or such other
display as may replace Page 678 on the Telerate Service) for
actively traded U.S. Treasury securities having a maturity equal
to the weighted average remaining life of the Called Principal
being paid or prepaid as of such Settlement Date, or (ii) if such
yields shall not be reported as of such time or the yields
reported as of such time shall not be ascertainable, the Treasury
Constant Maturity Series yields reported, for the latest day for
which such yields shall have been so reported as of the third
Business Day preceding the Settlement Date with respect to such
Called Principal, in Federal Reserve Statistical Release
H.15(519) (or any comparable successor publication) for actively
traded U.S. Treasury securities having a constant maturity equal
to the weighted average remaining life of the Called Principal
being paid or prepaid as of such Settlement Date. Such implied
yield shall be determined, if necessary, by (a) converting U.S.
Treasury ▇▇▇▇ quotations to bond-equivalent yields in accordance
with accepted financial practice and (b) interpolating linearly
between reported yields.
"REIT" shall mean a real estate investment trust as
defined in Section 856(a) of the Internal Revenue Code.
"Related Loan" shall mean, with respect to any
Mortgaged Property, (i) the Amended and Restated Mortgage Note
with respect to such Mortgaged Property or (ii) that portion of
each New Mortgage Note allocated to such Mortgaged Property on
Schedule 4.3(b)-1 and 4.3(b)-2, as the case may be, secured by
the Mortgage encumbering such Mortgaged Property.
"Remaining Scheduled Payments" shall mean, with respect
to the Called Principal of any Mortgage Note, all payments of
such Called Principal and interest thereon (other than interest
accrued to the Settlement Date) that would be due on or after the
Settlement Date with respect to such Called Principal if no
payment of such Called Principal were made prior to its expressed
maturity date.
"Rent Rolls" shall mean the rent rolls relating to each
of the Mortgaged Properties.
"Rents" shall mean, with respect to any Mortgaged
Property, "Rents" as defined in the Mortgages encumbering such
Mortgaged Property and, where the context so requires, "Rents" as
defined in all of the Mortgages.
"Secured Charges" means, in the aggregate, all charges
and claims with respect to all Mortgaged Properties that are
secured by a lien of the type described in Section 10.2(a)(ii) or
(iii).
"Settlement Date" shall mean, with respect to the
Called Principal of any Mortgage Note, the date on which such
Called Principal is to be prepaid in accordance with the terms of
this Loan Agreement or is declared to be or becomes immediately
due and payable following an Event of Default, as the context
requires.
"Successor Borrower" shall have the meaning set forth
in Section 14(b).
"Tax" shall mean any (i) tax, assessment, levy, impost,
duty, license fee, registration fee, withholding, or other
similar governmental charge, including, without limitation,
income tax, franchise tax, transfer tax or fee, sales tax, excise
tax, ad valorem tax, withholding tax, minimum tax and social
security tax, and (ii) interest, penalty or addition to tax
imposed on a Tax described in clause (i), in each case, imposed
by any Governmental Authority.
"Tax and Insurance Deposits" shall have the meaning set
forth in Section 5.
"Tenant" shall mean any Person which holds a possessory
interest in any of the Mortgaged Properties under any of the
Leases.
"Title Company" shall mean, collectively, the title
insurers insuring the Encumbrance of the Mortgages upon the
Mortgaged Properties, and their respective successors and
assigns.
"Title Policies" shall mean the mortgagee title
insurance policies (i) with respect to Loan A, described on Annex
3, and (ii) with respect to each of Loan B and Loan C, dated and
issued on the date hereof, in each case as amended, endorsed
and/or redated from time to time, including concurrently
herewith, insuring Lender's interest as the holder of valid first
liens on the Mortgaged Properties securing the Mortgage Loans.
"Total Cost" shall mean, with respect to each Mortgaged
Property, the sum of the Acquisition Cost thereof, property
renovation costs and reserves thereof, reserves for contingency
and due diligence, and all closing and professional costs
thereof.
"Work" shall have the meaning set forth in Section
6(c)(ii).
1.2 Principles of Interpretation.
All references herein to sections, schedules and
exhibits are to sections, schedules and exhibits in or to this
Loan Agreement unless otherwise specified. Unless otherwise
specified, the words "hereof", "herein" and "hereunder" and words
of similar import when used in this Loan Agreement shall refer to
this Loan Agreement as a whole and not to any particular
provision of this Loan Agreement. All references herein to any
time period "before" a certain date are to the time period ending
at 12:01 A.M. on such date. Unless otherwise specified, all
meanings attributed to defined terms herein shall be equally
applicable to both the singular and plural forms of the terms so
defined. All accounting terms not specifically defined herein
shall be construed in accordance with GAAP. Unless otherwise
specified, all agreements or other instruments defined herein are
deemed to include amendments, restatements, replacements,
supplements or other modifications made to such agreements or
instruments from time to time, except as prohibited by this Loan
Agreement.
Section 2. Nonrecourse Obligations.
2.1 Nonrecourse Obligations.
Except as otherwise explicitly set forth herein, the
Obligations of Borrower are intended to be non-recourse
obligations of Borrower, and recourse may be had in respect of
the Obligations only to the Collateral. No recourse in respect
of such obligations may be had against Borrower's General Partner
or any limited partner of Borrower, or any officers, directors,
employees or agents of any of them solely by virtue of such
Person being such a partner, shareholder, officer, director,
employee or agent except for acts of fraud, misapplication or
misappropriation of funds or willful misconduct, in which case
recourse may be had to Borrower and to Borrower's General Partner
and to their respective assets.
Section 3. Loan; Disbursement to Borrower.
3.1 Loan.
On the date hereof, Lender is amending the Loan
Facility with respect to Loan A and making Loan B and Loan C to
Borrower, subject to and upon all of the terms and conditions
hereof. As of the date hereof, each of the Existing Notes is
hereby amended and restated in accordance with the terms of this
Agreement. Accordingly, on the date hereof, Lender will
surrender each Existing Note held by Lender to Borrower and
Borrower will deliver in exchange for each such Existing Note,
without expense to Lender, an Amended and Restated Mortgage Note
having a principal amount equal to the unpaid principal amount of
such Existing Note. On the date hereof, Borrower shall pay to
Lender (in immediately available funds to such account as Lender
shall direct) all interest on the Existing Notes accrued to (but
excluding) the date hereof. Borrower agrees and covenants to
repay all Mortgage Loans and to observe and comply with all of
the other terms and provisions of this Loan Agreement.
3.2 Notes.
The Mortgage Loans shall be evidenced by the Mortgage
Notes. Each Mortgage Note shall be entitled to the benefits of
the Loan Documents as provided therein.
3.3 Term.
The Mortgage Loans comprising Loan A shall mature and
become due and payable on March 31, 2007 (or, if such day is not
a Banking Day, the following Banking Day) (the "Loan A Maturity
Date"). The Mortgage Loans comprising Loan C shall also mature
and become due and payable on March 31, 2007 (or, if such day is
not a Banking Day, the following Banking Day) (the "Loan C
Maturity Date"). The Mortgage Loans comprising Loan B shall
mature and become due and payable on June 30, 2016 (or, if such
day is not a Banking Day, the following Banking Day) (the "Loan B
Maturity Date").
3.4 Use of Proceeds.
Borrower represents and warrants that it used the
proceeds of Loan A to finance or refinance the purchase of
Properties. Borrower covenants that it shall use the proceeds of
Loan B and Loan C to repay certain current outstanding
indebtedness of the Borrower and to finance the working capital
needs of the Borrower. None of the proceeds of the Loan Facility
have been or will be used, directly or indirectly, for the
purpose, whether immediate, incidental or ultimate, of buying or
carrying any "margin stock" within the meaning of Regulation G,
T, U or X of the Board of Governors of the Federal Reserve
System, as in effect from time to time.
Section 4. Payments of Principal and Interest; Lien
Releases.
4.1 Principal Payments.
Borrower shall repay any unpaid principal of any
Mortgage Note on the Maturity Date for such Mortgage Note.
4.2 Prepayments.
(a) Borrower has the right to prepay the principal of
one or all of Loan A, Loan B and Loan C in full (and not in
part) on any Payment Date after the end of the Lockout
Period, upon thirty (30) days' prior written notice to
Lender, provided that Borrower shall also pay, together with
the interest accrued and any other unpaid Obligations with
respect to the Loan(s) to be prepaid then due and the
principal to be prepaid, the Prepayment Premium with respect
to such Loan(s). The calculation of the Prepayment Premium
shall be made by Lender and shall, absent manifest error, be
conclusive. Subject to paragraph (c) below, the Prepayment
Premium for any prepayment hereunder, pursuant to Section
4.2(a), 4.2(d), 4.3(a), 4.3(b) or otherwise, shall in no
event be less than one percent (1%) of the principal amount
of the aggregate principal amount of the Loan(s) being
prepaid. Any Prepayment Premium payable pursuant to this
Loan Agreement shall constitute a portion of the
Obligations.
(b) In the event that one or more Mortgage Notes are
prepaid (in whole or in part) from Insurance Proceeds or
Condemnation Proceeds in accordance with Section 6 of this
Loan Agreement, then no Prepayment Premium shall be due or
payable with respect to such prepayment.
(c) Notwithstanding the foregoing, each of Loan A,
Loan B and Loan C may be prepaid in full (but not in part)
without a Prepayment Premium on any Payment Date during the
sixty (60) day period prior to the Maturity Date for such
Loan.
(d) Upon acceleration of any Mortgage Note in
accordance with its terms and the terms of the Loan
Agreement and the other Loan Documents, Borrower agrees to
pay the Prepayment Premium described above in the amount
that would be due if a voluntary payment were made on the
date of such acceleration. A tender of payment of the
amount necessary to pay and satisfy the entire unpaid
principal balance of the Mortgage Notes or any portion
thereof at any time after an Event of Default under this
Loan Agreement or an acceleration by Lender of the
indebtedness evidenced hereby, whether such payment is
tendered voluntarily, during or after foreclosure of the
Mortgage, or pursuant to realization upon other security,
shall constitute a purposeful evasion of the prepayment
terms of this Loan Agreement, shall be deemed to be a
voluntary prepayment hereof, and Borrower shall be required
to pay the Prepayment Premium as described above.
4.3 Lien Releases.
(a) (i) Except as set forth in this Section 4.3, no
payment or prepayment of principal on the Mortgage Loans
shall cause, give rise to a right to require or otherwise
result in the release of the Mortgages encumbering the
Mortgaged Properties.
(ii) Borrower may obtain the release of the Mortgages
on all of the Mortgaged Properties and the release of the
Encumbrances on the other Collateral under the Loan
Documents, in each case only to the extent securing the
Loan(s) then being repaid, in the case of a prepayment in
full of the entire outstanding principal amount of Loan A,
Loan B and/or Loan C pursuant either to Section 4.2(a) or on
the Maturity Date for such Loan(s), upon payment in full
also of all interest accrued under such Loan(s) and all
other unpaid Obligations with respect to such Loan(s) under
the Loan Documents (including under Section 4.2(a), if
applicable).
(iii) During the Lockout Period, the Borrower shall
have the right to obtain the release of all Mortgages on any
Mortgaged Property, and the release of the Encumbrances on
the other Collateral under the Loan Documents with respect
to such Mortgaged Property, provided that all of the
following conditions shall have been satisfied (in the sole
discretion of the Lender) effective as of the date of such
release: (a) the Mortgaged Property to be released shall be
located in the State of Texas; (b) the Borrower shall have
provided substitute Collateral for the Loans substantially
similar to such released Mortgaged Property satisfactory to
the Lender (in its sole discretion), (c) no Default or Event
of Default shall exist under this Loan Agreement or any
other Loan Document (both before and immediately after
giving effect to such release and substitution), (d) the
Borrower shall have executed and delivered such
documentation containing such terms and conditions as the
Lender shall require to give effect to such substitution,
the inclusion of such substituted Collateral as "Property",
"Mortgaged Property" and "Collateral" hereunder and under
the other Loan Documents (including, without limitation, the
Environmental Indemnity) and the granting of valid and
enforceable first priority liens and security interests with
respect thereto, (e) the Borrower shall have delivered or
caused to be delivered such legal opinions with respect to
such substitution, the Loan Documents and the documentation
and matters referred to in clause (d) as the Lender shall
request (in its sole discretion), (f) all of the conditions
set forth in Section 7(i) of this Loan Agreement shall be
satisfied (treating such substitute Collateral as "Mortgaged
Property" hereunder) on and as of the effective date of such
release and substitution (except that the Debt Service
Coverage Ratio referred to in Section 7(i)(v) shall be
1.35:1 for such substitute Collateral, and not 1.25:1);
(g) all of the conditions set forth in Sections 7(a), (c),
(d), (g) and (h) of this Loan Agreement shall be satisfied
(treating such substitute Collateral as "Mortgaged Property"
hereunder) on and as of the effective date of such release
and substitution; (h) the Borrower shall have paid to the
Lender a substitution fee in the amount of 1% of the amount
of the outstanding principal amount of the Loans to be
secured by the substitute Collateral, and (i) the Borrower
shall have paid to the Lender all of the Lender's costs and
expenses, including reasonable attorneys' fees and expenses,
in connection with such release and substitution of
Collateral.
(b) After the end of the Lockout Period, Borrower may
obtain the release of all Mortgages on any individual
Mortgaged Property and the release of all Encumbrances of
the Loan Documents on the other Collateral relating to such
Mortgaged Property under the Loan Documents by making a
prepayment of (i) with respect to the Mortgage Notes
comprising Loan A, the principal amount of the Mortgage Note
with respect to such Mortgaged Property, and (ii) with
respect to the respective Mortgage Note evidencing Loan B or
Loan C, the portion of the principal amount of such Mortgage
Note allocated to such Mortgaged Property on Schedule
4.3(b)-1 or 4.3(b)-2, as the case may be, and in each case
together with the Prepayment Premium and all other amounts
specified in Section 4.2(a) and in accordance with the
requirements of that Section. If, with respect to any
Mortgaged Property as to which a Major Casualty/Condemnation
has occurred, Lender elects to apply Condemnation Proceeds
or Insurance Proceeds to prepay the Related Loan pursuant to
Section 6(b)(i), and such Condemnation Proceeds or Insurance
Proceeds are sufficient (or if insufficient, together with
other sums made available by Borrower on account of such
prepayment) to prepay all amounts that would be required to
be paid in order for Borrower to obtain a release of such
Mortgaged Property under this Section 4.3(b), then following
such application Borrower shall be entitled to obtain a
release of the Mortgage on such Mortgaged Property as
provided in this Section 4.3(b).
(c) Concurrently with the release of any Mortgages
pursuant to this Section 4.3, Lender, upon the written
request and at the expense of Borrower, will execute and
deliver (i) at Borrower's election, either a satisfaction or
an assignment of the related Mortgages, subject to
applicable law, without any representation or warranty by or
recourse to Lender, and the other Loan Documents relating to
the Mortgaged Property and the other Collateral being
released, (ii) UCC-3 termination statements, and (iii) such
other documents as Borrower may reasonably request, each in
customary form and as may be mutually agreed upon by
Borrower and Lender, and Lender shall simultaneously return
the duplicate originals of such Mortgages and the originals
of the related Mortgage Notes to Borrower. Borrower shall
pay or reimburse on demand, concurrently or following such
release, all reasonable costs and expenses incurred by
Lender pursuant to Sections 4.2 and 4.3 in connection with
such release.
(d) Notwithstanding the release of any Mortgages and
the other Loan Documents with respect to any Mortgaged
Property pursuant to this Section 4.3, the Environmental
Indemnity shall continue to apply to such Mortgaged Property
to the extent specified therein (but shall not constitute a
continuing lien on such Mortgaged Property).
4.4 Interest Payments.
Subject to the provisions of Section 4.6, Borrower
shall pay on or prior to each Payment Date interest on each of
the Mortgage Loans for the applicable Payment Period, at a rate
equal to the Interest Rate for each such Mortgage Loan for such
Payment Period, on the outstanding principal balance of each such
Mortgage Loan, from (and including) the date hereof to (but not
including) the Maturity Date of such Mortgage Loan.
4.5 Default Rate; Post-Maturity Interest.
If Borrower shall fail to make any payment of principal
of or interest on a Mortgage Loan, or any other amount owed under
the Loan Documents, due on a scheduled due date, by acceleration
or otherwise, and shall not have rendered such payment within
five days (5) following such due date, Borrower shall pay
interest at the Default Rate upon demand from time to time, to
the extent permitted by applicable law, on such defaulted amount
from the scheduled due date to the date of payment. Payment or
acceptance of the increased interest rate provided for in this
subsection is not a permitted alternative to timely payment and
shall not constitute a waiver of any Event of Default or an
amendment to this Loan Agreement or otherwise prejudice or limit
any rights or remedies of Lender hereunder.
4.6 Computations.
Interest payable hereunder on any Mortgage Loan shall
be computed on the basis of a 360-day year of twelve 30-day
months.
4.7 Method of Payments.
Each payment by Borrower hereunder or under any
Mortgage Note shall be made by one certified or other check or
one wire transfer to Lender, in funds immediately available in
New York City, by 2:00 P.M., New York City time, on the date such
payment is due to Lender, by deposit to the account set forth
below Borrower's name on the signature page hereof, or to such
other account in the continental U.S. as Lender may have last
designated by written notice to Borrower.
Section 5. Deposits for Taxes and Insurance
Premiums and Capital.
In order to assure the payment of Taxes and premiums
payable with respect to all Insurance Policies ("Insurance
Premiums") as and when the same shall become due and payable:
(a) Borrower shall, upon Lender's election, deposit
with Lender or its designated representative on the first
Banking Day of each and every month, an amount equal to
one-twelfth (1/12) of the Taxes and Insurance Premiums to become
due upon each Mortgaged Property between one (1) and
thirteen (13) months after the date of such deposit. The
amounts of such deposits (collectively referred to herein as
"Tax and Insurance Deposits") shall be based upon Lender's
reasonable estimate as to the amount of Taxes and Insurance
Premiums. To the extent that current bills for Taxes are
not yet available, the amount deposited hereunder shall not
exceed 103% of the amount of the prior year's taxes.
Borrower shall promptly upon the demand of Lender make
additional Tax and Insurance Deposits as Lender may from
time to time reasonably require due to: (i) failure of
Lender to require or failure of Borrower to make Tax and
Insurance Deposits in previous months, (ii) underestimation
of the amounts of Taxes and/or Insurance Premiums, (iii) the
particular due dates and amounts of Taxes and/or Insurance
Premiums or (iv) insufficiency of the Tax and Insurance
Deposits. All Tax and Insurance Deposits shall be held by
Lender in an interest-bearing account for the benefit of
Borrower.
(b) Lender shall, out of the Tax and Insurance
Deposits, upon the presentation to Lender by Borrower of the
bills therefor, pay the Taxes and Insurance Premiums or, if
Borrower, in Borrower's sole discretion, pays such Taxes and
Insurance Premiums from Borrower's own funds other than
those funds held in escrow by Lender pursuant to this
Section 5, upon the presentation of receipted bills
therefor, reimburse Borrower for such payments made by
Borrower. If the total Tax and Insurance Deposits on hand
shall not be sufficient to pay all of the Taxes and
Insurance Premiums when the same shall become due, then
Borrower shall pay to Lender on demand the amount necessary
to make up the deficiency.
(c) Any excess amounts of Tax and Insurance Deposits
during any year shall be retained by Lender and applied to
pay Taxes and Insurance Premiums in the next calendar year
and credited to reduce the Tax and Insurance Deposits due by
Borrower during such calendar year, and all excess amounts
remaining when the Obligations have been paid and discharged
in full shall be returned to Borrower.
(d) Upon an Event of Default, Lender may, at its
option without being required so to do, apply any Tax and
Insurance Deposits on hand to any of the Obligations, in
such order and manner as Lender may elect. All Tax and
Insurance Deposits are hereby pledged as additional security
for the Obligations, and shall be held by Lender irrevocably
to be applied for the purposes for which made as herein
provided, and shall not be subject to the direction or
control of Borrower.
(e) Notwithstanding anything herein contained to the
contrary, Lender shall not be liable for any failure to
apply the Tax and Insurance Deposits unless Borrower, while
no default exists hereunder, shall have requested Lender in
writing to make application of such Tax and Insurance
Deposits on hand to the payment of the Taxes or Insurance
Premiums, for the payment of which such Tax and Insurance
Deposits were made, accompanied by the bills therefor.
(f) No provision of this Loan Agreement shall be
construed as creating in any party other than Borrower and
Lender any rights in and to the Tax and Insurance Deposits
or any rights to have the Tax and Insurance Deposits applied
to payment of Taxes and Premiums. Lender shall have no
obligation or duty to any third party to collect Tax and
Insurance Deposits.
(g) Notwithstanding the foregoing, Borrower will not
be obligated to deposit any Insurance Premiums with Lender
so long as no default exists under this Loan Agreement or
any of the other Loan Documents, and Borrower will not be
obligated to deposit any Taxes with Lender so long as (i) no
default exists under this Loan Agreement or any of the other
Loan Documents, (ii) the Loan Facility has not been assigned
to another entity other than Lender and (iii) Borrower
maintains an aggregate Debt Service Coverage Ratio with
respect to all of the Mortgaged Properties of at least
1.25:1.
Section 6. Condemnation and Casualty.
(a) Borrower shall give prompt written notice to
Lender of any Casualty or Condemnation, whether commenced or
threatened, affecting all or any portion of any Mortgaged
Property. All Insurance Proceeds and Condemnation Proceeds
shall be payable to Lender, and Borrower hereby authorizes
and directs any affected insurance company, Governmental
Authority or other Person to make payment of such Insurance
Proceeds or Condemnation Proceeds directly to Lender, and
all Insurance Proceeds and all Condemnation Proceeds shall
be applied and disbursed in accordance with the provisions
of this Section 6; provided, however, that in the case of
any Casualty or Condemnation relating to a Mortgaged
Property as to which the total Condemnation Proceeds or
Insurance Proceeds are less than $250,000, such Proceeds
shall be paid directly to Borrower, and Sections 6(b) and
6(c) below shall not apply, except that Borrower shall
comply with the standards in Section 6(c) (ii) (A) through
(G) below in respect of any Work undertaken.
(b) With respect to any Insurance Proceeds or
Condemnation Proceeds relating to a Mortgaged Property that
are received in respect of a Major Casualty/Condemnation,
Lender shall have the option, in its sole discretion, to:
(i) upon notice to Borrower, apply all or part of
such Insurance Proceeds or Condemnation Proceeds to the
prepayment of the Related Loan in full or in part in
accordance with Section 4.2 on the next Payment Date
occurring after receipt of such Insurance Proceeds or
Condemnation Proceeds (such Payment Date, the
"Prepayment Date" with respect to such prepayment); or
(ii) upon notice to Borrower, permit Borrower to
elect under paragraph (c) below to apply the Insurance
Proceeds or Condemnation Proceeds to the restoration of
the Mortgaged Property or to apply the Insurance
Proceeds or the Condemnation Proceeds to the prepayment
of the Related Loan in accordance with the provisions
contained in Section 4.2.
(c) With respect to any Insurance Proceeds or
Condemnation Proceeds relating to a Mortgaged Property (x)
that are received in respect of a Casualty or Condemnation
that is not a Major Casualty/Condemnation or (y) with
respect to which Lender has permitted Borrower to exercise
the option described in Section 6 (b) (ii) above, Borrower
shall have the option to:
(i) apply such Insurance Proceeds or Condemnation
Proceeds to the prepayment of the Related Loan in full
or in part in accordance with Section 4.2 on the first
Payment Date occurring after the expiration of forty-five
(45) days from the receipt of such Insurance
Proceeds or Condemnation Proceeds (such Payment Date,
the "Prepayment Date" with respect to such prepayment),
in an amount not less than the amount of Insurance
Proceeds or Condemnation Proceeds received by Borrower;
or
(ii) upon notice to Lender no later than forty-five
(45) days after receipt of such Insurance Proceeds
or Condemnation Proceeds, elect irrevocably to apply
such proceeds to the restoration of the related
Mortgaged Property, in which event Borrower shall
comply with the following conditions in connection with
the performance of all of such restoration
(hereinafter, "Work"):
(A) no Work shall be undertaken until
Borrower shall have procured and paid for, so far
as the same may be required from time to time, all
permits and consents of all Governmental
Authorities having jurisdiction;
(B) any Work done pursuant to this Section 6
(c) (ii) shall be conducted under the supervision
of a licensed architect and/or engineer selected
by Borrower and approved by Lender, and no such
Work shall be done except in accordance with plans
and specifications and cost estimates prepared and
approved in writing by (x) Borrower's architect
and/or engineer, and (y) if the cost of such Work
exceeds the lesser of twenty-five percent (25%) of
the outstanding principal balance of the Related
Loan for such Mortgaged Property and $1,000,000,
also approved by Lender (provided that Lender
shall not unreasonably withhold or delay such
approval). Prior to the commencement of any Work
and promptly thereafter, Borrower shall deliver to
Lender copies of all plans and specifications,
cost estimates relating to any such Work and any
changes thereto regardless of the cost to be
incurred in connection therewith;
(C) any Work shall be commenced promptly and
in any event within one hundred sixty-five days
(165) after receipt of the Insurance Proceeds or
the Condemnation Proceeds (except insofar as
commencement within such time is rendered
impossible due to force majeure) and, once
commenced, shall be prosecuted diligently to
completion in a good and workmanlike manner and in
compliance with all applicable permits and
authorizations and with all other applicable Laws;
(D) the Work shall be performed with the
objective of restoring the Mortgaged Property to
at least its value and general utility prior to
the relevant Casualty or Condemnation (as
determined by any MAI-licensed appraiser
associated with a nationally recognized appraisal
firm reasonably acceptable to Borrower, as
selected by Lender);
(E) any Work shall be completed free and
clear of all Encumbrances, subject to the
provisions of Section 10.2(a)(iii) hereof, and in
accordance with the plans and specifications
therefor;
(F) during the performance of any such Work,
Borrower shall procure and maintain the Insurance
Coverages required under Section l0.l (i) hereof;
and
(G) Borrower shall reimburse Lender for all
reasonable fees and expenses incurred by Lender in
connection with review of such Work, including but
not limited to the reasonable fees and expenses of
any architect selected by Lender to review the
plans and specifications and to inspect the Work
on behalf of Lender.
If Borrower fails to elect to restore the Mortgaged Property
within the time period specified above for the making of such
election, and provided the Insurance Proceeds or Condemnation
Proceeds are sufficient to prepay the Related Loan in full,
Borrower shall be deemed to have elected to prepay the Related
Loan pursuant to Section 6(c)(i).
(d) Lender shall disburse any Insurance Proceeds or
Condemnation Proceeds to be used to restore the related
Mortgaged Property pursuant to Section 6(c)(ii) above to or
for the account of Borrower, upon request, in installments,
to pay the costs and expenses associated with the
restoration of such Mortgaged Property, as set forth below.
Upon the payment of such costs and expenses, the balance of
such Insurance Proceeds or Condemnation Proceeds, if any,
shall be paid to Borrower.
(i) Each request for payment shall be made on 10
days' prior notice to Lender and shall be accompanied
by a certificate to be made by the supervising
architect or engineer or by an officer of Borrower,
stating that the sum requested is justly required to
reimburse Borrower for payments by Borrower to, or is
justly due to, the contractor, subcontractors,
materialmen, laborers, engineers, architects or other
Persons rendering services or materials for the Work
(giving a brief description of such services and
materials); and
(ii) each request shall be accompanied by waivers
of liens reasonably satisfactory to Lender covering
that part of the Work for which payment or
reimbursement is being requested, or by other evidence
reasonably satisfactory to Lender that there has not
been filed with respect to such Mortgaged Property any
mechanics' or other lien or instrument for the
retention of title in respect of any part of the Work
not discharged of record or bonded to the reasonable
satisfaction of Lender.
(e) All Insurance Proceeds and Condemnation Proceeds
received or held by or deposited with Lender shall be held
in interest-bearing accounts and all interest accruing
thereon shall be deemed part of such Insurance Proceeds or
Condemnation Proceeds.
(f) At any time when an Event of Default has occurred
and is continuing, Lender shall have the right to settle,
adjust or compromise any claim under any policy of insurance
or in connection with a Condemnation subject to Borrower's
consent. In all other cases, (i) Borrower may settle,
adjust or compromise any such claim which is less than
$100,000; and (ii) with respect to any claim in excess of
$100,000, Lender and Borrower shall consult and cooperate
with each other and each shall be entitled to participate in
all meetings and negotiations with respect to the settlement
of such claim.
(g) Nothing in this Section 6 shall prevent Lender
from applying at any time all or any part of any Insurance
Proceeds or Condemnation Proceeds then held by Lender to the
payment or prepayment of the Obligations following the
acceleration of the obligations under Section 13.1.
Section 7. Conditions Precedent.
The obligation of Lender to enter into this Loan
Agreement and amend and restate the Existing Loans and make the
new loans contemplated hereby is subject to the fulfillment by
Borrower, to the satisfaction of Lender, or waiver by Lender, of
the following conditions precedent on or prior to the date
hereof:
(a) Representations and Warranties; Compliance with
Conditions. Lender shall have received a Partner's
Certificate of Borrower, dated the date hereof, certifying
that:
(i) The representations and warranties of
Borrower contained in this Loan Agreement and the other
Loan Documents are true and correct in all material
respects on and as of the date hereof with the same
effect as if made on and as of such date;
(ii) No event has occurred and is continuing that
constitutes or would constitute, by reason of the
execution, delivery and performance of this Loan
Agreement, the other Loan Documents, the grant of the
Encumbrances on the Collateral contemplated by the Loan
Documents, the making of the Mortgage Loans or the
consummation of the other transactions contemplated by
this Loan Agreement or the other Loan Documents, a
Default or an Event of Default; and
(iii) Borrower is in compliance in all
material respects with all terms and conditions set
forth in this Loan Agreement and in each other Loan
Document to be observed or performed on its part.
(b) Delivery of Certain Agreements. Lender shall have
received originals of the following agreements and
instruments, in each case duly executed and delivered on
behalf of Borrower:
(i) this Loan Agreement;
(ii) the Mortgage Notes;
(iii) the Financing Statements;
(iv) the Environmental Indemnity, with any
appropriate amendments; and
(v) the Escrow Agreement, with any appropriate
amendments.
(c) Delivery of Loan Documents Related to the
Mortgaged Properties.
(i) Mortgages and Lease Assignments. Lender
shall have received from Borrower fully executed and
acknowledged counterparts of (i) an amendment to each
Existing Mortgage (an "Amendment of Mortgage") and to
each existing Lease Assignment on the Mortgaged
Properties with respect to Loan A and (ii) new
Mortgages and new Lease Assignments on the Mortgaged
Properties with respect to Loan B and Loan C, in each
case together with evidence that counterparts of each
such amendment, Mortgage and Lease Assignment have been
delivered to the Title Company for recording, so as to
effectively continue or create upon such recording, as
the case may be, (A) in the case of the Mortgages,
valid and enforceable first priority Mortgages on each
Mortgaged Property, subject only to Permitted
Encumbrances, and (B) in the case of the Lease
Assignments, valid and enforceable first priority
assignments of the Leases and Rents on each Mortgaged
Property, in each case in favor of Lender (or such
other trustee as may be required or desired under local
law).
(ii) Title Insurance. Lender shall have received
new or redated ALTA loan policies (or other loan
policies reasonably acceptable to Lender) of title
insurance relating to each Mortgage issued by the Title
Company dated, endorsed and/or redated as of the date
hereof, providing Lender with title insurance in
respect of the Mortgages encumbering the Mortgaged
Properties in an amount not less than 100% of the
aggregate Acquisition Costs of the Mortgaged Properties
covered by each such title policy (or such lesser
amount as Lender shall approve for title policies
subject to a first loss and tie-in endorsement where
such endorsements are available), including such
affirmative coverages and endorsements as Lender shall
reasonably require. Lender shall receive copies of all
title exceptions. The policies shall be substantially
consistent with the title insurance commitments agreed
to by Lender's representatives, Lender and the title
insurers in preparation for the execution hereof. Each
such policy shall insure Lender that each such Mortgage
creates a valid and enforceable first priority Mortgage
on the Mortgaged Property or Mortgaged Properties
encumbered thereby, free and clear of all exceptions
from coverage other than Permitted Encumbrances and
exclusions from coverage (as modified by the terms of
any endorsements or other affirmative insurance), and
name Lender and its successors and assigns as the
insured party thereunder. Lender also shall have
received evidence that all premiums in respect of such
policies have been paid. Additionally, Lender shall
have received evidence that a reinsurance plan,
including, without limitation, direct access
endorsements reasonably acceptable to Lender, is in
place. With respect to each existing Title Policy for
an Existing Mortgage on Mortgaged Property located in
the State of Texas, Lender shall also have received a
so-called "P-9b(3) endorsement" to each such Title
Policy, in form and substance acceptable to Lender,
stating that the Title Company will not claim that
coverage under such Title Policy has terminated or that
has been reduced solely by reason of the execution,
delivery or recordation or otherwise of this Loan
Agreement or any other Loan Document and maintaining
the Title Company's liability for the period of
limitation applicable to the Obligations secured by the
lien of the Mortgage insured by such Title Policy
calculated from the renewed and extended maturity date
of such Obligations as provided herein.
(iii) Surveys. Lender shall have received a
current survey of each Mortgaged Property, certified to
the Title Company and Lender and its successors and
assigns, in form and content reasonably satisfactory to
Lender and prepared by a professional and properly
licensed land surveyor reasonably satisfactory to
Lender in accordance with the minimum standard detail
requirements for A.L.T.A./A.C.S.M. Land Title Surveys
1992, and meeting the accuracy requirements of an Urban
Survey as defined therein, except that the accuracy and
precision requirements shall be modified to meet the
current minimum technical accuracy requirements of the
State in which each such Mortgaged Property is located,
and which shall include and accurately show the
following: (A) the complete and correct legal
description of the related Land as shown on the title
insurance commitment or preliminary title report (NOTE:
It must be possible to trace the legal description of
the related Land on the survey by following the
bearings and dimensions around the boundaries of the
related Land); (B) the location of all recorded
easements and of all unrecorded easements ascertainable
by an inspection of the related Land, which benefit or
burden the related Land (NOTE: All recorded easements
are to be identified by a document recording number or
by book and page numbers of recording); (C) all areas
affected by any recorded restrictions or access
limitations (NOTE: All such areas are to be identified
by a document recording number or by book and page
numbers of recording); (D) the location of all
monuments designating corners and other boundaries of
the related Land; (E) the point of commencement and
point of beginning (located with reference to a
specifically identifiable point) and the distances and
bearings of all boundaries of the property and the
location of all changes in bearing; (F) in the case of
curved boundaries, complete curve data, including
length of the arc, and the chord distance and bearing;
(G) the location of all adjoining streets, roads,
highways and alleys, with names, rights-of-way widths
and distances from the related Land noted, and, if none
adjoin the related Land, then the location of the
nearest public street, road or highway and its distance
from the related Land, together with the location of
the private access easement thereto; (H) the location
of public access to the related Land and of all
entrance drives and curb-cuts; (I) the exact dimensions
of any encroachments on the related Land and
protrusions from the related Land; (J) a directional
indicator showing North; (K) the street address of each
improvement; (L) the zoning designation of the related
Land; (M) the dimensions of the related Land; (N) the
perimeter dimensions of each improvement and the
location of each improvement as measured from the two
(2) nearest property lines or other defined points and,
depictions of any aboveground projections of buildings
and other improvements beyond the ground level
dimensions thereof; (0) the distance from the exterior
face of any building to any applicable set-back line;
(P) the number of stories of each structure; (Q) the
location (and striping) of all paved parking areas and
the number and dimension of parking spaces contained
therein (including a breakdown as to the number of
spaces for handicapped parking and the location of the
spaces designated for handicapped parking); (R) the
location of all curbing, walkways, sidewalks,
driveways, and improvements such as swimming pools,
tennis courts and the like; (S) interior lot lines, if
any; (T) all applicable municipal or private building
set-back lines; (U) the location of existing on-site
and service lines for natural gas, telephone,
electricity, water and sanitary and storm sewers, and
their points of connection with the public system; (V)
the area of the related Land, expressed in acreage and
square feet; (W) the total net usable area of the
related Land, exclusive of easements, roads and rights
of way appurtenant to the related Land, and
encroachments, if any, over any adjoining land; (X) the
square foot area of each building; (Y all entrances and
exits to and from each building; (Z) any portion of the
Land which is located in a flood plain or in any other
flood hazard, mudslide hazard or flood danger area as
designated by applicable governmental authorities; (AA)
the scale to which the survey has been prepared and a
legend which defines all abbreviations used therein;
(BB) all survey revision dates; and, (CC) a surveyor's
certificate, in form satisfactory to Lender and
Lender's counsel. Notwithstanding anything to the
contrary contained in this Section 7(c)(iii), no such
survey shall be required to identify dimensions,
markings or items which are either underground or
otherwise not visible from above ground unless such
information is filed of record in the county in which
the relevant Mortgaged Property is located.
(iv) Insurance. Lender shall have received
binders in respect of the insurance coverage required
pursuant to Section 10.1 to be carried evidencing (A)
the issuance of such policies, (B) the payment of all
premiums payable for the existing policy period, but
not in excess of one year, and (C) coverage which meets
all of the requirements set forth in Section 10.1.
(v) Environmental Assessments. Borrower shall
deliver, with respect to each of the Mortgaged
Properties, a Phase 1 environmental report acceptable
to Lender and its counsel in their sole discretion.
Each such report shall be prepared by an environmental
engineering firm approved by Lender and will be
addressed to both Borrower and Lender. If any such
report states that there exists any hazardous material
on or beneath, or stored at a Mortgaged Property (other
than those materials generally accepted and used
routinely in the maintenance of the Mortgaged Property)
which may become a hazard to public health or violate
any law or regulation requiring removal, containment or
treatment, but such report is otherwise acceptable to
Lender, Borrower will deliver a further environmental
engineer's Phase 2 report, acceptable to Lender and its
counsel in their sole discretion, describing the
feasibility and estimating the cost of such remediation
with respect to such Mortgaged Property. If such
report and the proposed remediation program are
acceptable to Lender in its sole discretion, such cost
will be reserved by Borrower in an escrow account held
by Lender as more specifically described in the Escrow
Agreement. Upon satisfactory showing of timely
completion by Borrower of the remediation recommended
in such Phase 2 report in a timely fashion, the amounts
reserved in such escrow will be released to Borrower.
If Lender does not approve Borrower's proposed method
or the cost of environmental remediation, then Lender
will not be required to finance such Mortgaged Property
and Borrower may seek financing for such Mortgaged
Property elsewhere but will still be bound by the other
terms of this Loan Agreement.
(vi) Title and Deeds. Lender shall have received
copies of all deeds transferring the Mortgaged
Properties to Borrower in recordable form and such
other evidence of Borrower's title to the Mortgaged
Properties as Lender shall require.
(vii) Engineering Reports. Lender shall have
received final engineering reports prepared by the
Building Engineers relating to each Mortgaged Property,
which shall in each case be acceptable to Lender in its
sole discretion.
(viii) Certificates of Occupancy. Lender shall
have received certificates of occupancy or like
documents relating to each of the Mortgaged Properties.
(ix) Additional Matters. Lender shall have
received evidence reasonably satisfactory to Lender
that (A) each of the Mortgaged Properties (a) complies
with all Laws applicable to zoning and land use, it
being agreed that letters with respect to each
Mortgaged Property from the appropriate Governmental
Authorities concerning such matters in a form
acceptable to Lender, shall constitute satisfactory
evidence thereof; (b) is an independent unit which does
not rely on any drainage, sewer, access, parking,
structural or other facilities located on any property
not included in such Mortgaged Property or on public or
utility easements for (i) the fulfillment of any
zoning, building code or other requirement of any
Governmental Authority having jurisdiction over such
Mortgaged Property, (ii) structural support or (iii)
the fulfillment of the requirements of any Lease or
other agreement affecting such Mortgaged Property; (c)
Borrower, directly or indirectly, has the right to use
all amenities, easements, public or private utilities,
parking, access routes or other items necessary or
currently used for the operation of the Mortgaged
Property owned by it; and (d) each of the Mortgaged
Properties is (1) contiguous to or (2) benefits from an
irrevocable easement permitting access from such
Mortgaged Property to, a physically open, dedicated
all-weather public street, and has all necessary
Permits for ingress and egress, is adequately serviced
by public water, sewer systems and utilities, is on a
tax parcel separate and apart from any other property,
and (B) no building or other improvement not located on
the Mortgaged Properties relies on any part of any of
the Mortgaged Properties to fulfill any zoning
requirements, building code or other governmental or
municipal requirement for structural support or to
furnish to such building or improvement any essential
building systems or utilities.
(d) Encumbrances. Borrower shall have taken or caused
to be taken such actions in such a manner so that Lender has
(and, in the case of Mortgages securing Mortgage Notes
comprising Loan A, continues to have) valid and perfected
first priority mortgages or other security interests, as the
case may be, in the Collateral as of (i) in the case of
Mortgages and the other Collateral securing Mortgage Notes
comprising Loan A, the original date of each such Mortgage,
and (ii) in the case of Mortgages and the other Collateral
first created concurrently herewith, the date hereof;
subject, in the case of the Mortgaged Properties, to
applicable Permitted Encumbrances, and Lender shall have
received reasonably satisfactory evidence thereof. Such
actions shall include the execution by Borrower and delivery
in form ready for filing of Financing Statements in all
jurisdictions as may be necessary or desirable to perfect
security interests in the Collateral and the delivery of
evidence reasonably requested by Lender that all other
filings, recordings and other actions Lender deems
reasonably necessary or desirable to establish, preserve and
perfect the encumbrances granted to Lender shall have been
made.
(e) Delivery of Organizational Documents.
(i) On or before the date hereof, Borrower shall
have delivered or caused to be delivered to Lender the
following:
(A) (1) a copy of the Certificate of Limited
Partnership of Borrower certified by the Secretary of
State of Delaware, as amended through the date hereof;
(2) a copy of the Partnership Agreement of Borrower, as
amended through the date hereof; (3) a good standing
certificate with respect to Borrower from the State of
Delaware; (4) a certificate of authority to do
business, or other evidence satisfactory to Lender,
indicating that Borrower is authorized to do business
in each state in which a Mortgaged Property is located
and (5) a Partner's Certificate dated the date hereof
certifying as to each of (1) through (4) above;
(B) a signature and incumbency certificate of a
duly authorized officer of Borrower's General Partner;
and
(C) a consent and authorization of Borrower's
General Partner.
(ii) On or before the date hereof, Borrower's
General Partner shall deliver or cause to be delivered
to Lender the following:
(A) certified copies of the by-laws and
certificate of incorporation of Borrower's General
Partner;
(B) certified copies of the Board Resolutions of
Borrower's General Partner;
(C) a signature and incumbency certificate of the
duly authorized officer executing this Loan Agreement
and the other Loan Documents on behalf of Borrower's
General Partner;
(D) a good standing certificate with respect to
Borrower's General Partner; and
(E) a certificate of authority to do business, or
other evidence satisfactory to Lender, indicating that
Borrower's General Partner is authorized to do business
in the jurisdictions in which the Mortgaged Properties
are located.
(f) Opinions of Counsel. On the date hereof, Borrower
shall have delivered or caused to be delivered the following
opinions of counsel: (i) the opinion of counsel for Borrower
as to the valid existence, due organization and good
standing of Borrower and Borrower's General Partner, the due
authorization and delivery by Borrower and Borrower's
General Partner of the Loan Documents and the validity and
enforceability of Borrower's Partnership Agreement; (ii)
opinions of counsel for Borrower in each state in which any
Mortgaged Property is located with respect to the legal,
valid, binding and enforceable nature of the Loan Documents
governed by the laws of such state and including an opinion
that the Mortgage Loans do not violate the usury laws of
such state; and (iii) the opinion of Borrower's New York
counsel, with respect to the legal, valid, binding and
enforceable nature of the Loan Documents governed by the
laws of New York, in each case in form and substance
reasonably satisfactory to Lender, dated as of the date
hereof and addressing such additional matters as Lender may
reasonably request and addressed to Lender and its
successors and assigns.
(g) Completion of Proceedings. All proceedings taken
or to be taken in connection with the transactions
contemplated by this Loan Agreement, the other Loan
Documents, and all documents incidental thereto shall have
been completed in a manner satisfactory in form and
substance to Lender, and Lender shall have received all such
counterpart originals or certified copies of such documents
as Lender may reasonably request, including, without
limitation, evidence of any required approvals of insurance
regulatory authorities.
(h) Rent Rolls. Borrower shall have delivered to
Lender the Rent Rolls described in Section 10.1(aa).
(i) Other Conditions.
(i) The aggregate outstanding principal under the
Loan Facility immediately after the making of the Loans
on the date hereof shall not exceed 50% of the
aggregate Total Costs of the Mortgaged Properties.
(ii) The aggregate outstanding principal under the
Loan Facility immediately after the making of the Loans
on the date hereof shall not exceed 65% of (x) the
aggregate Acquisition Costs of the Mortgaged Properties
and (y) the Aggregate Property Valuation.
(iii) The outstanding principal amount of each
individual Related Loan shall not exceed (x) 75% of the
Acquisition Cost of the Mortgaged Property securing
such Related Loan or (y) 65% of the Property Valuation
of the Mortgaged Property securing such Related Loan.
(iv) The portion of the Loan Facility allocable to
each Mortgaged Property shall not exceed $25,000 per
apartment unit, unless approved specifically by Lender.
(v) The Debt Service Coverage Ratio on the date
hereof for each Mortgaged Property shall be equal to or
greater than 1.25:1, provided, however, that if the
Debt Service Coverage Ratio on a Mortgaged Property is
less than 1.25:1, and all other closing conditions in
this Section 7 have been satisfied as of the date
hereof, then Lender shall nonetheless make the Related
Loan but the amount of Net Operating Income lacking for
such Mortgaged Property to achieve a Debt Service
Coverage Ratio of 1.25:1 on an annual basis will be
escrowed in an interest-bearing account as more
particularly described in the Escrow Agreement until
such Mortgaged Property achieves this ratio
continuously for six months, at the conclusion of which
the funds in such escrow will be released to Borrower.
(vi) Each of the Mortgaged Properties shall be
separately metered for gas and electricity.
(vii) None of the Mortgaged Properties may be
pre-1975 construction.
(viii) Each of the Mortgaged Properties will be
located in one of the metropolitan areas listed on
Exhibit E attached hereto, unless otherwise
specifically approved by Lender.
(ix) Lender shall have performed a site inspection
satisfactory to Lender in its sole discretion on each
Mortgaged Property being financed.
(x) An appraisal shall have been performed by an
independent qualified third-party appraiser conforming
to the regulations promulgated pursuant to the
Financial Institutions, Reform, Recovery and
Enhancement Act of 1989, as amended. Such appraisal
shall show, with respect to each Mortgaged Property,
the value of such Mortgaged Property "As Is", "As
Renovated" and "As Stabilized".
(xi) Lender shall have received such other
documents, materials, opinions and information as
Lender may reasonably request.
Section 8. Representations and Warranties of
Borrower.
Borrower hereby represents and warrants to Lender with
respect to itself and to each of the Mortgaged Properties owned
by it and its obligations under this Loan Agreement and the other
Loan Documents (which representations and warranties shall
survive authentication and delivery of the Mortgage Notes and
their repayment and which shall be determined to be true as of
the date hereof) that:
(a) Organization.
(i) Borrower has been duly organized and is
validly existing and in good standing as a limited
partnership under the laws of the State of Delaware,
with requisite partnership power and authority to own
its properties and to transact the businesses in which
it is now engaged. Borrower is duly qualified to do
business and is in good standing in each jurisdiction
where it is required to be so qualified in connection
with its properties, businesses and operations, and
with the execution, delivery and performance of this
Loan Agreement and the other Loan Documents. Borrower
possesses all material rights, licenses, permits and
authorizations, governmental or otherwise, necessary to
entitle it to own each Mortgaged Property and to
transact the businesses in which it is now engaged.
The sole business of Borrower is the ownership,
management and operation of the Mortgaged Properties
and other multi-family apartment projects similar to
the Mortgaged Properties. Borrower's Partnership
Agreement has been duly executed, delivered and, to the
extent required by applicable law filed, is in full
force and effect in accordance with its terms and has
not been modified or amended from the form reflected in
Exhibit D hereto.
(ii) Borrower's General Partner has been duly
organized and is validly existing and in good standing
as a corporation under the laws of the State of
Maryland, with requisite corporate power and authority
to operate each Mortgaged Property and to transact the
businesses in which it is now engaged, including,
without limitation, to be the general partner in
Borrower. Borrower's General Partner is duly qualified
to do business and is in good standing in each
jurisdiction where it is required to be so qualified in
connection with its properties, businesses and
operations, and the execution, delivery and (to the
extent applicable to it) performance of this Loan
Agreement and the other Loan Documents. Borrower's
General Partner possesses all rights, licenses, permits
and authorizations, governmental or otherwise,
necessary to entitle it to operate the Mortgaged
Properties on behalf of Borrower and to transact the
businesses in which it is now engaged, and the sole
business of Borrower's General Partner is to be the
sole general partner in Borrower. Borrower's General
Partner's certificate of incorporation and by-laws,
together with any amendments thereto, have been duly
executed, delivered and, to the extent required by
applicable law filed, and are in full force and effect
in accordance with their terms and have not been
modified or amended from the form reflected in Exhibit
F hereto.
(iii) Borrower is a single-purpose limited
partnership, the sole business of which is to own,
operate, lease and finance the Mortgaged Properties and
other multi-family apartment projects similar to the
Mortgaged Properties. The sole general partner of
Borrower is Borrower's General Partner. Borrower's
General Partner is the owner and holder of a 1% general
partner interest and a 0.24% limited partner interest
in Borrower. WDN Properties, Inc. is the owner and
holder of a 24.08% limited partnership interest in
Borrower. ▇▇▇▇▇▇ Residential Operating Partnership,
L.P. is the owner and holder of a 13.95% limited
partnership interest in Borrower. The remaining 60.73%
of the limited partnership interests in Borrower are
owned and held by private investors none of which is an
Affiliate of Borrower.
(b) Authorization; Binding Obligation. Each of
Borrower and Borrower's General Partner has taken all
necessary corporate or partnership action, as the case may
be, to authorize the execution, delivery and performance of
this Loan Agreement and the other Loan Documents. This Loan
Agreement and the other Loan Documents have been duly
executed and delivered by or on behalf of Borrower and
Borrower's General Partner, as applicable, and constitute
legal, valid and binding obligations of Borrower and
Borrower's General Partner, as applicable, enforceable
against such parties in accordance with their respective
terms, subject to applicable bankruptcy, insolvency and
similar laws affecting rights of creditors generally, and
subject, as to enforceability, to general principles of
equity (regardless of whether enforcement is sought in a
proceeding in equity or at law).
(c) No Conflicts. The execution, delivery and
performance by Borrower and Borrower's General Partner of
the Loan Documents will not conflict with or result in a
breach of any of the terms or provisions of, or constitute a
default under, or result in the creation or imposition of
any lien, charge or encumbrance (other than pursuant to the
Loan Documents) upon any of the property or assets of
Borrower or Borrower's General Partner, as applicable,
pursuant to the terms of any indenture, mortgage, deed of
trust, deed to secure debt, loan agreement, partnership
agreement or other agreement or instrument to which Borrower
or Borrower's General Partner, as applicable, is a party or
by which any of such parties is or are bound or to which any
of its or their property or assets is subject, nor will such
action result in any material violation of the provisions of
any charter, by-law, stockholder's agreement, partnership
agreement, certificate or any statute or any order, rule or
regulation of any court or governmental agency or body
having jurisdiction over Borrower or over Borrower's General
Partner or any of its or their properties or assets, and any
consent, approval, authorization, order, registration or
qualification of or with any court or any such regulatory
authority or other governmental agency or body required for
the execution, delivery and performance by Borrower or by
Borrower's General Partner of the Loan Documents, has been
obtained and is in full force and effect.
(d) No Litigation. Borrower has not received any
notice of any actions, suits, proceedings at law or in
equity by or before any Governmental Authority or other
agency, arbitrations or investigations now pending or
threatened against or affecting Borrower or Borrower's
General Partner or any of the Mortgaged Properties, which,
individually or in the aggregate, if determined against
Borrower or any of the Mortgaged Properties, might
materially and adversely affect the condition (financial or
otherwise) or business of Borrower or the condition,
operations or ownership of any of the Mortgaged Properties
or which would draw into question the validity of this Loan
Agreement or any of the Loan Documents or which would be
likely to impair materially the ability of Borrower or
Borrower's General Partner to perform their obligations
under the terms of this Loan Agreement or the other Loan
Documents.
(e) Agreements. Except for Permitted Encumbrances,
Borrower is not a party to any agreement or instrument or
subject to any restriction which might materially and
adversely affect Borrower or any of the Mortgaged
Properties, or Borrower's business, properties or assets,
operations or condition, financial or otherwise. Borrower
is not in default in any material respect in the
performance, observance or fulfillment of any of the
obligations, covenants or conditions contained in any
material agreement or instrument to which it is a party or
by which Borrower or any of the Mortgaged Properties are
bound.
(f) Title. As of the date hereof, Borrower is the
sole owner of and has good and indefeasible title in fee to
the real property comprising part of each Mortgaged Property
and good title to the balance of each such Mortgaged
Property, in each case, after giving effect to the
transactions contemplated by the Loan Documents, free and
clear of all Liens whatsoever except the Permitted
Encumbrances, such other Liens as are permitted pursuant to
the Loan Documents and the Liens created by the Loan
Documents. Each of the Mortgages have been properly
recorded in the appropriate public records, together with
any Financing Statements required to be filed in connection
therewith, and create (i) valid and perfected, first
priority Liens on each Mortgaged Property, subject only to
Permitted Encumbrances and such other Liens as are permitted
pursuant to the Loan Documents and (ii) perfected first
priority security interests in and to, and perfected first
priority assignments of all Personalty (including the
Leases) which can be perfected by the filing of Financing
Statements, all in accordance with the terms thereof, in
each case subject only to any applicable Permitted
Encumbrances and such other Liens as are permitted pursuant
to the Loan Documents. Except for any Permitted
Encumbrance, such other Liens as are permitted pursuant to
the Loan Documents or any Lien which has been "insured
around" or bonded to the satisfaction of Lender, after
giving effect to the transactions contemplated by the Loan
Documents, there are no Liens or claims for work, labor or
materials affecting the Mortgaged Properties which are or
may be prior to, or of equal priority with, the Liens
created by the Loan Documents.
(g) No Bankruptcy Filing. None of Borrower,
Borrower's General Partner, Borrower's limited partners or
any material Affiliate of any of them is contemplating or
has pursued either the filing of a petition by it under any
state or federal bankruptcy or insolvency laws or the
liquidation of all or a major portion of its assets or
property, and Borrower has no knowledge of any Person
contemplating the filing of any such petition against it or
any of the foregoing described entities. Neither Borrower
nor Borrower's General Partner has had a receiver,
conservator or liquidating agent or similar person appointed
for all or a substantial portion of its assets, or given
notice of insolvency or suspension of its operations to any
Person or made an assignment for the benefit of its
creditors or taken any other similar action for the
protection or benefit of creditors.
(h) Full and Accurate Disclosure. No statement of
fact made by Borrower in this Loan Agreement or in any of
the other Loan Documents contains any untrue statement of a
material fact or omits to state any material fact necessary
to make statements contained herein or therein not
materially misleading. There is no material fact presently
known to Borrower which has not been disclosed to Lender
(including, without limitation, facts that would have been
disclosed in the reports described in Sections 7(c)(v) and
7(c)(vii), or by the inspection contemplated by Section
7(i)(ix), or by more recent surveys under Section 7(c)(iii),
had Lender not waived the delivery of such reports and the
conduct of such inspection as a condition to closing
hereunder, in each case at Borrower's request) which
materially and adversely affects, nor as far as Borrower can
reasonably foresee, is likely to materially and adversely
affect, any Mortgaged Property or the business, operations
or condition (financial or otherwise) of Borrower.
(i) Tax Filings; Impositions. Each of Borrower and
Borrower's General Partner has filed all federal, state and
local tax returns required to be filed and has paid or made
adequate provision for the payment of all federal, state and
local taxes, charges and assessments payable by them. Each
of Borrower and Borrower's General Partner believes that
their respective tax returns, if any, properly reflect their
respective income and taxes for the periods covered thereby,
subject only to reasonable adjustments required by the
Internal Revenue Service or other applicable tax authority
upon audit. All past-due Impositions in respect of the
Mortgaged Properties have been paid, together with all
interest and penalties due in connection therewith.
(j) Compliance. (i) Borrower and each Mortgaged
Property and the use thereof comply in all material respects
with all applicable Legal Requirements, including, without
limitation, building and zoning ordinances and codes.
Borrower has duly obtained and is in compliance with all
Permits necessary or required by applicable law or insurance
standards for the conduct of its business or the use or
occupancy of the Mortgaged Properties; all such Permits are
valid and in full force and effect and have not been
modified or qualified in a manner detrimental to the
operation of each such Mortgaged Property. (ii) Borrower is
not in default or violation of any order, writ, injunction,
decree or demand of any Governmental Authority, the
violation of which might materially and adversely affect the
condition (financial or otherwise) or business of Borrower
or any Mortgaged Property.
(k) Use of Proceeds. All Mortgage Loans which have
been disbursed to Borrower prior to the date hereof have
been, and all Mortgage Loans disbursed to Borrower on the
date hereof will be, used solely for the respective purposes
set forth in Section 3.4.
(1) Financial Information. All financial data,
including, without limitation, the statements of cash flow
and income and operating expenses, that have been delivered
to Lender in respect of each Mortgaged Property (i) are true
and correct in all material respects, (ii) accurately
represent the financial condition of such Mortgaged Property
as of the date of such reports in all material respects, and
(iii) to the extent prepared by an independent certified
public accounting firm, have been prepared in accordance
with GAAP consistently applied throughout the periods
covered, except as disclosed therein. Except for the
Permitted Encumbrances and the Loan Documents, as of the
date of this Loan Agreement, and except as disclosed on
Schedule 8(l), neither Borrower nor Borrower's General
Partners has any material contingent liability, liability
for taxes or other unusual forward commitment. Since
December 31, 1997, there has been no material adverse change
in the results of operations of the Mortgaged Properties.
Neither Borrower nor Borrower's General Partner has incurred
any obligation or liability, contingent or otherwise, which
might materially and adversely affect their respective
business operations or any Mortgaged Property, except for
Permitted Encumbrances.
(m) Condemnation. Borrower has no knowledge that any
Condemnation has been commenced or is contemplated with
respect to all or any portion of any Mortgaged Property or
for the relocation of roadways providing access to any
Mortgaged Property.
(n) Debt. Neither Borrower nor Borrower's General
Partner has incurred or is the obligor with respect to any
Indebtedness other than the obligations under the Loan
Documents, obligations of Borrower's General Partner to
Borrower's limited partners which relate to Borrower's
General Partner's capital contributions to the Partnership
made pursuant to the Partnership Agreement, or obligations
disclosed on Schedule 8(l).
(o) Independent Units. (i) Except as set forth on the
Title Policies, each of the Mortgaged Properties is an
independent unit which does not rely on any drainage, sewer,
access, parking, structural or other facilities located on
any property not included in such property or on public or
utility easements (a) to fulfill any zoning, building code
or other requirement of any Governmental Authority that has
jurisdiction over the Mortgaged Properties, (b) for
structural support or (c) to fulfill the requirements of any
Lease or other agreement affecting any such Mortgaged
Property; (ii) Borrower directly or indirectly has the right
to use all amenities, easements, public or private
utilities, parking, access routes or other items necessary
or currently used for the operation of each Mortgaged
Property; (iii) all public utilities are installed and
operating at each of the Mortgaged Properties and all such
utilities are connected so as to serve such Mortgaged
Property without passing over other property (except with
respect to easements therefor benefiting the relevant
Mortgaged Property); and (iv) either (a) each of the
Mortgaged Properties is contiguous, or (b) Borrower has the
benefit of an irrevocable easement permitting access from
such property, to a physically open, dedicated all-weather
public street, and has all necessary Permits for ingress and
egress, has adequate service from public water, sewer
systems, sanitary sewer, storm drainage and utilities. No
building or other improvement not included in any Mortgaged
Property relies on any part of such Mortgaged Property to
fulfill any zoning, building code or other governmental or
municipal requirement for structural support or the
furnishing to such building or improvement of any essential
building systems or utilities.
(p) Not Foreign Person. Borrower is not a "foreign
person" within the meaning of Section 1445(f)(3) of the Internal
Revenue Code and Borrower agrees to execute any and all
documents necessary or required by the Internal Revenue
Service in connection with such declaration.
(q) Separate Lots. Each Mortgaged Property is
comprised of one (1) or more parcels which constitutes a
separate tax lot or lots and does not constitute a portion
of any other tax lot not part of such Mortgaged Property.
(r) Assessments. Except for any assessments described
in the Permitted Encumbrances, Borrower has no notice of any
pending or proposed special or other assessments for public
improvements or otherwise affecting any Mortgaged Property,
nor are there any contemplated improvements to any Mortgaged
Property that may result in such special or other
assessments.
(s) Enforceability. The Loan Documents executed by or
otherwise binding upon Borrower are not subject to any
presently existing right of rescission, set-off,
counterclaim or defense by Borrower, including the defense
of usury, and Borrower has not asserted any right of
rescission, set-off, counterclaim or defense with respect
thereto.
(t) No Prior Assignment. As of the date hereof, (i)
Lender is the sole assignee of Borrower's interests under
the Leases, and (ii) there are no prior assignments of the
Leases or any portion of the Property Income due and payable
or to become due and payable which are presently
outstanding.
(u) Insurance. Borrower has obtained and delivered to
Lender a true and complete copy of the Insurance Policies,
and an original certificate thereof in form and substance
satisfactory to Lender, reflecting the insurance coverages,
amounts and other requirements set forth in Section 10.1(i)
in respect of each Mortgaged Property.
(v) Flood Zone. Except as otherwise shown on Schedule
8.l annexed hereto, no Mortgaged Property is located in a
flood hazard area as defined by the Federal Insurance
Administration.
(w) Physical Condition. Each Mortgaged Property is
free of material structural defects, whether latent or
otherwise, and all building systems contained therein,
including, without limitation, all buildings, improvements,
parking facilities, sidewalks, storm drainage systems,
roofs, plumbing systems, HVAC systems, fire protection
systems, electrical systems, equipment, elevators, exterior
sidings and doors, landscaping, irrigation systems and all
structural components are in good working order in all
material respects, subject to ordinary wear and tear.
(x) Filing and Recording Taxes. All transfer taxes,
deed stamps, intangible taxes or other amounts in the nature
of transfer taxes required to be paid by any Person under
applicable Legal Requirements currently in effect in
connection with the transfer of each Mortgaged Property to
Borrower have been paid. All mortgage, mortgage recording,
stamp, intangible or other similar taxes required to be paid
by any Person under applicable Legal Requirements currently
in effect in connection with the execution, delivery,
recordation, filing, registration, perfection or enforcement
of any of the Loan Documents, including, without limitation,
the Mortgages, have been paid, and, under current Legal
Requirements, the Mortgages are enforceable in accordance
with their terms by Lender (or any subsequent holder
thereof), subject to applicable bankruptcy, insolvency, and
similar laws affecting the rights of creditors generally,
and subject, as to enforceability, to general principles of
equity (regardless of whether enforcement is sought in a
proceeding in equity or at law).
(y) Certain Conditions. Each of the conditions
specified in Section 7(i)(i) through (viii) is satisfied as
of the date hereof.
(z) Permitted Encumbrances. The Permitted
Encumbrances do not materially and adversely affect
Borrower's ability to meet its payment obligations in
respect of the Mortgage Loans or any other indebtedness of
Borrower.
(aa) [Intentionally omitted]
(bb) Leases.
(i) Borrower is the sole owner and holder of the
landlord's interest under all of the Leases related to
each Mortgaged Property. There are no assignments of
the landlord's interest in any of the Leases or any
portion of the Rents, additional rents, charges, issues
or profits due and payable or to become due and payable
thereunder which remain in effect on the date hereof,
except in connection with the Loan Documents.
(ii) With regard to each Mortgaged Property, each
of the Tenants thereof occupies all or a portion of the
respective Mortgaged Property pursuant to a Lease which
is in full force and effect and other than those Leases
in favor of Tenants presently in effect, the Mortgaged
Property is not subject to any leases or other
agreements granting any rights to use, occupy or
possess the Mortgaged Property; other than those
Tenants who are parties to those Leases presently in
effect, no Person has any leasehold or possessory or
occupancy right or interest in the Mortgaged Property;
and each of the Tenants occupies and uses only that
portion of the Mortgaged Property leased by it pursuant
to the applicable Lease.
(iii) All of the Leases are in full force and
effect and will remain in full force and effect
following the consummation of the transactions
contemplated hereby and by the other Loan Documents.
None of the Tenants are in monetary default under the
Leases, except as disclosed on the Rent Rolls, and to
Borrower's Knowledge, there are no material
non-monetary defaults by the Tenants under the Leases.
Borrower has complied with the terms of the Leases and
is not in default in respect of any of its obligations
under any of the Leases. Borrower has not received any
notice of default from any of the Tenants, except as
disclosed on the Rent Rolls.
(iv) None of the Tenants or any other Person has
any outstanding exercisable rights with respect to the
purchase or sale of any Mortgaged Property including,
without limitation, any purchase option, right of first
offer or right of first refusal.
(v) Except as disclosed in the Rent Rolls, none
of the Tenants has been given any free rent or
concessions or abatements relating to the payment of
rent or additional rent which remain unexpired on the
date hereof, nor have any of the Tenants been given any
credit for or offset or claim against the obligation to
pay any fixed rent or additional rent by reason of
prepayment of rent or otherwise.
(vi) Borrower has no actual knowledge of any
circumstances or conditions affecting any of the
Tenants' credit standing or with respect to any pending
litigation or other legal proceedings involving such
Tenants that could adversely affect the operation,
income or value of any of the Mortgaged Properties.
(vii) All Rent Rolls delivered in connection
with the execution and delivery hereof are true and
complete in all material respects.
(cc) No Encroachments. Except as disclosed on the
surveys referred to in Section 7(c)(iii) and in the Title
Policies, none of the Buildings located on any of the
Mortgaged Properties encroaches upon the property of any
other Person nor lies outside of the boundaries and building
restriction lines of such Mortgaged Property and no Building
located on any property adjoining any Mortgaged Property
lies within the boundaries of or in any way encroaches upon
such Mortgaged Property.
(dd) Deeds of Trust. If any of the Mortgages are deeds
of trust, a trustee, duly qualified under applicable law to
serve as such, has been properly designated and currently so
serves and is named in the deed of trust or has been
substituted in accordance with applicable law, and no fees
or expenses are or will become payable to the trustee under
the deed of trust, except in connection with a trustee's
sale after default by Borrower or in connection with the
release of the Mortgaged Property or related security for
the Mortgage Loan following payment of such Mortgage Loan in
full.
(ee) Investment Company Act. Borrower is not an
"investment company" or a company "controlled" by an
investment company within the meaning of the Investment
Company Act of 1940, as amended from time to time.
(ff) No Commissions. Neither Borrower nor any
Affiliate or representative of Borrower has dealt with any
finder, broker or other Person that may be entitled to, any
commission or compensation in connection with the
consummation of the transactions contemplated by this Loan
Agreement and the Loan Documents, and Borrower agrees to
indemnify and hold Lender harmless from any and all claims,
liabilities or obligations with respect to any fees asserted
by any Person.
(gg) No Plans. Neither Borrower nor any ERISA
Affiliate (i) currently maintains, contributes to or
participates in any Plan, (ii) has agreed to or is obligated
to maintain, contribute to or participate in any Plan or
(iii) has at any time in the past maintained, contributed to
or participated in any Plan with respect to which Borrower
or any ERISA Affiliate may have any liability that has not
been disclosed to Lender in writing.
(hh) No Liability. No event has occurred, and no sale
of any Mortgaged Property to Borrower was a transaction, in
connection with which Borrower, directly or indirectly,
could be subject to any material liability under Section
406, 409, 502(i) or 502(l) of ERISA or Section 4975 of the
Internal Revenue Code, or under any agreement, instrument,
statute, rule of law or regulation pursuant to or under
which Borrower has agreed to indemnify or is required to
indemnify any person against liability incurred under, or
for a violation or failure to satisfy the requirements of
such statutory provisions.
(ii) No Plan Assets. Borrower is not an "employee
benefit plan," as defined in Section 3(3) of ERISA, subject
to Title I of ERISA, or a "plan" as defined in Section
4975(e)(1) of the Internal Revenue Code, subject to Section
4975 of the Internal Revenue Code, and none of the assets of
Borrower constitutes or will constitute "plan assets" of one
or more such employee benefit plans or other plans within
the meaning of 29 C.F.R. Section 2510.3-101.
(jj) No Prohibited Transaction. Assuming that Lender
is a bank and the source of funds to be used by Lender to
make the Mortgage Loans hereunder is a "collective
investment fund" as defined in Section IV(e) of Prohibited
Transaction Class Exemption 91-38 and that Lender has
disclosed to Borrower in writing the identity of each
"employee benefit plan" (as defined in Section 3(3) of
ERISA) that is subject to Title I of ERISA and each "plan"
(as defined in Section 4975 of the Internal Revenue Code)
that is subject to Section 4975 of the Internal Revenue Code
whose assets in such collective investment fund exceed or
are expected to exceed 10% of the total assets of such
collective investment fund as of the date hereof (for
purposes of this paragraph (jj), all employee benefit plans
maintained by the same employer or employee organization are
deemed to be a single plan), the execution and delivery of
this Loan Agreement and the Loan Documents, the making of
the Mortgage Loans and purchase of the Mortgage Notes
hereunder and the use of the proceeds thereof by Borrower
will not involve any transaction that is prohibited under
Section 406(a) of ERISA or which is a "prohibited
transaction" as defined in Section 4975 of the Internal
Revenue Code, in either case for which a statutory or
administrative exemption is not available.
Section 9. General Covenants of Borrower.
Borrower hereby covenants and agrees with Lender as
follows:
9.1 Affirmative Covenants.
(a) Existence. Borrower shall (i) keep in full force
and effect its rights as a limited partnership under the
laws of the State of Delaware, and (ii) obtain and preserve
its qualification to do business in each jurisdiction in
which such qualification is or shall be necessary to own and
operate the Mortgaged Properties.
(b) Extension of Partnership Term. If Borrower has
not paid in full all of the Obligations prior to the date
which is eighteen (18) months before the Maturity Date,
Borrower shall extend the term of its existence until at
least the second anniversary of the Maturity Date.
(c) Governmental Authorizations. Borrower shall
obtain and maintain in full force and effect, and abide by
and satisfy the material terms and conditions of all
material permits, licenses, registrations and other
authorizations with or granted by any Governmental
Authorities that may be required from time to time with
respect to the performance of its Obligations under this
Loan Agreement and the other Loan Documents. Borrower is
duly licensed and qualified to do business, and will
maintain such licenses and qualifications and its good
standing, in each state where it owns any Mortgaged
Properties if the laws of such state require such licensing
or qualification in order to conduct business of the type
conducted by Borrower.
(d) Payment and Discharge of Liabilities. Borrower
shall pay and discharge all of its material Liabilities as
they become due and payable, including, without limitation,
taxes, assessments and other governmental charges, levies or
claims of any kind against it or on or with respect to any
of its properties, as well as claims of any kind which, if
unpaid, might become a lien upon any of its properties;
provided, however, that Borrower shall not be required to
pay or discharge any Liability covered by this paragraph (d)
so long as (i) it shall contest the validity thereof in good
faith by appropriate proceedings and shall have set aside on
its books adequate reserves in accordance with GAAP with
respect thereto and (ii) such contest does not and would not
(and if such contest were decided adversely to Borrower,
such Liabilities would not) have a Material Adverse Effect.
(e) Notices. Borrower shall, promptly upon obtaining
knowledge thereof, give written notice to Lender of the
occurrence of any event that (i) constitutes, or with the
giving of notice or the lapse of time or both would
constitute, an Event of Default or (ii) has or could
reasonably be expected to have a Material Adverse Effect.
(f) [Intentionally Omitted]
(g) Financial Statements. Borrower shall furnish to
Lender, within 45 days after the close of each quarter of
its fiscal year beginning with the quarter ending March 31,
1998, quarterly reports prepared in accordance with GAAP
consistently applied (but including a reconciliation to a
cash basis), including a balance sheet, an income and
expense statement (itemized) and a cash flow statement, in
each case certified in a Partner's Certificate of Borrower
as being true, complete and accurate and as fairly
presenting the financial condition of Borrower as at the
close of such quarter and the results of its operations for
such quarter. In addition, Borrower shall furnish to
Lender, within 90 days of the end of its fiscal year, an
annual certified financial statement prepared in accordance
with GAAP consistently applied (but including a
reconciliation to a cash basis), including a balance sheet,
an income and expense statement (itemized), and a profit and
loss statement. All financial statements to be supplied by
Borrower shall be certified by an officer of Borrower; such
financial statements shall not be required to be certified
by an independent accountant or by a certified public
accountant.
(h) [Intentionally Omitted]
(i) Compliance with Other Agreements. Borrower shall
in a timely manner observe, perform and fulfill each and
every covenant, term and provision of the Loan Documents
applicable to it.
(j) Further Assurances. Borrower shall execute,
acknowledge, record and/or file such further statements,
documents, agreements, UCC financing and continuation
statements and such other instruments and do such further
acts as Lender from time to time may reasonably request as
necessary, desirable or proper (i) to carry out more
effectively the purposes and intent of this Loan Agreement
and the other Loan Documents, (ii) to subject to the
Encumbrance of the Mortgages or the other Loan Documents any
property intended by the terms hereof or thereof to be
subject thereto, including, without limitation, any
renewals, additions, substitutions, replacements,
betterments or appurtenances to any Mortgaged Property or
the Collateral, (iii) to perfect or otherwise implement or
assure any Encumbrance intended by the terms hereof or the
Mortgages to be created thereby, (iv) to create and perfect
security interests in favor of Lender in all Contracts
related to the Mortgaged Properties to which Borrower is a
party including, without limitation, Property Management
Agreements and Permits of any type or (v) in order to
exercise or enforce its rights under this Loan Agreement and
the other Loan Documents. In addition, at the reasonable
request of Lender, Borrower hereby agrees to execute and
deliver amendments or modifications to any of the Loan
Documents recommended by local counsel to Lender in any
jurisdiction in which any Mortgaged Property is located in
order to ensure the enforceability of such Loan Documents or
to provide terms and remedies customarily included in
similar documents in such jurisdiction.
(k) Inspection Rights. Borrower shall enable
representatives of Lender to examine its books and records,
the books and records of any of its employees, agents and
representatives and any of the Mortgaged Properties during
normal business hours on forty eight hours' advance notice.
(1) ERISA Plan Notification. Borrower shall notify
Lender in writing within five Banking Days after Borrower or
any ERISA Affiliate adopts, maintains, contributes to or
begins to participate in any Plan, or agrees or becomes
obligated to adopt, maintain, contribute to or participate
in any Plan, of such fact, including the name of such Plan,
the identity of the employers maintaining such Plan, and a
summary of the obligations of the Borrower and/or such ERISA
Affiliate, as the case may be, with respect to such Plan.
(m) Certain Changes. Borrower will not (i) change its
name, identity or corporate structure in any manner or (ii)
change the location of its chief executive office or chief
place of business, in each case unless it shall have given
Lender prior notice thereof and delivered an opinion of
counsel with respect thereto in accordance with Section
9.1(n) below.
(n) Perfection Opinions. Not more than six months nor
less than 30 days prior to (i) each anniversary of the date
hereof during the term of this Agreement and (ii) each date
on which Borrower proposes to take any action contemplated
by Section 9.1(m) above, Borrower shall, at its sole cost
and expense, cause to be delivered to Lender an opinion of
counsel, in form and substance satisfactory to Lender, to
the effect that all financing statements and amendments or
supplements thereto, continuation statements and other
documents required to be recorded or filed in order to
perfect and protect the Liens in the Collateral created by
the Loan Documents for a period, specified in such opinion,
continuing until a date not earlier than eighteen months
from the date of such opinion, against all creditors of and
purchasers from Borrower have been filed in each filing
office necessary for such purpose and that all filing fees
and taxes, if any, payable in connection with such filings
have been paid in full.
9.2 Negative Covenants.
(a) Business. Borrower shall not (i) engage in any
business or activity other than those relating to the
ownership and operation of the Mortgaged Properties or other
similar type properties or (ii) change its purpose as set
forth in its Partnership Agreement on the date hereof.
(b) Partnership Agreement. Except in connection with
transfers permitted pursuant to Section 14, Borrower shall
not modify or rescind any material provision of its
Partnership Agreement (except for such amendments as may be
necessary to admit new limited partners in accordance with
the terms thereof) without Lender's prior written consent.
(c) Transactions With Affiliates. Except as may be
required by the Partnership Agreement, Borrower shall not
enter into any transaction with any of its Affiliates except
in the ordinary course of business and upon fair and
reasonable terms no less favorable to Borrower than would be
obtained in a comparable arm's length transaction with a
Person not an Affiliate.
(d) Indebtedness. Neither Borrower nor Borrower's
General Partner shall create, incur, assume or suffer to
exist or otherwise become or be liable in respect of any
Indebtedness other than (i) Indebtedness created by virtue
of the Loan Documents; (ii) ordinary course trade payables
incurred in connection with the ownership and operation of
the Mortgaged Properties not to exceed amounts reasonable
and customary for properties of the type, size and character
of such Mortgaged Property in the area in which such
Mortgaged Property is located; or (iii) Indebtedness
existing as of the date hereof and disclosed on Schedule
8(l).
(e) Consolidation, Merger; Purchase or Disposition of
Assets. Except as expressly set forth below in Section 14,
Borrower shall not (i) consolidate with or merge into or
with any other partnership, corporation or entity, (ii)
purchase or otherwise acquire all or substantially all of
the assets or business (or all or substantially all the
rights to the assets or business) of any Person (or of any
division thereof) or any other material assets after the
date hereof, or (iii) sell, transfer or assign all or
substantially all its assets or business (or all or
substantially all of the rights to its assets or business)
as an entirety or in a series of related transactions.
(f) Sale of Collateral. Except as expressly set forth
below in Section 14, Borrower shall not, directly or
indirectly, conditionally or absolutely, sell, transfer,
convey, assign or otherwise dispose of, any of the
Collateral (other than the Equipment and the Personalty) or
any part thereof and except for transfers of Borrower's
Partnership Interests permitted by its Agreement of Limited
Partnership.
(g) Encumbrances. Borrower shall not create, incur,
assume or suffer to exist any Encumbrances on any
Collateral, except Permitted Encumbrances, inchoate
mechanics' liens and immaterial easements.
(h) Transfers of Equity Ownership. Borrower shall not
permit any general or limited partnership interest or other
equity interest in it to be transferred to or held by any
Person other than the Persons who hold such interests on the
date hereof except as permitted by Borrower's Partnership
Agreement or in Section 14.
Section 10. Property-Specific Covenants of Borrower.
Borrower covenants and agrees with Lender with respect
to each of the Mortgaged Properties as follows:
10.1 Affirmative Covenants.
(a) Payments of Interest and Principal. Borrower
shall make (i) all payments of principal of and interest on
all Mortgage Loans, and (ii) all other payments required to
be made by Borrower under this Loan Agreement and under the
other Loan Documents, in each case in accordance with the
applicable provisions hereof and of the other Loan
Documents.
(b) Warranty and Defense of Title. Borrower shall
warrant and defend (i) its title to the Mortgaged Properties
and every part thereof, subject only to Encumbrances
permitted pursuant to Section 10.2(a) (including Permitted
Encumbrances), and (ii) the validity and first lien priority
and security interest status of the Encumbrance of each
Mortgage and Lease Assignment, as the case may be, subject
only to Encumbrances permitted pursuant to Section 10.2(a)
(including Permitted Encumbrances), in each case against the
claims of all Persons whomsoever, except to the extent such
Persons are lawfully in occupancy of such Mortgaged Property
pursuant to a Lease. Borrower shall reimburse Lender for
any losses, reasonable costs, damages or reasonable expenses
(including attorneys' fees and court costs) incurred by
Lender in defending any claim by any Person of an interest
in any Mortgaged Property, other than as permitted
hereunder.
(c) Qualified Property Manager. At any time that
Borrower does not manage any Mortgaged Property itself,
Borrower shall retain for such Mortgaged Property, at its
expense, a qualified professional property manager that is,
in Lender's reasonable judgment, qualified to act as such to
operate and manage such Mortgaged Property and the Leases in
respect thereof pursuant to the terms and conditions of a
management agreement in form and substance satisfactory to
Lender in its reasonable discretion. There are no Property
Management Agreements in effect on the date hereof.
Borrower shall assign to Lender each Property Management
Agreement entered into by Borrower on or after the date
hereof pursuant to a Collateral Assignment of Property
Management Agreements, evidencing each related Property
Manager's consent to the required provisions. In the event
that Lender gives notice to Borrower that the agreements
pursuant to which a property manager managing one or more of
the Mortgaged Properties are not acceptable to Lender in its
reasonable discretion, Borrower shall use reasonable efforts
to either (x) cause such agreements to be modified so as to
be reasonably acceptable to Lender, or (y) enter into new
agreements, in substitution thereof, reasonably acceptable
to Lender. Borrower shall (i) pay all sums required to be
paid by it under each Property Management Agreement to which
it is a party, if any, except to the extent such Borrower
shall contest in good faith such payment, (ii) diligently
perform and observe all of the terms, covenants and
conditions of such Property Management Agreements on its
part to be performed and observed to the end that all things
shall be done which are necessary to keep unimpaired its
rights under such Property Management Agreements, except to
the extent Borrower shall contest in good faith such terms,
covenants and conditions, (iii) diligently enforce its
rights under such Property Management Agreements in a
commercially reasonable manner so as to require full and
faithful performance by the Property Managers of their
obligations under such Property Management Agreements, (iv)
promptly notify Lender of the giving of any notice to
Borrower or one of the Property Managers of any respective
material default in the performance or observance of any of
the material terms, covenants or conditions of such Property
Management Agreements and deliver to Lender a true copy of
each such notice and (v) cause each Property Manager or any
leasing agent to comply with the terms and conditions of
this Loan Agreement and the other Loan Documents. Borrower
shall not without the prior written consent of Lender, which
consent shall not be unreasonably withheld or delayed,
replace, renew, cancel, materially abridge or materially
amend or modify any Property Management Agreement in any
respect, eitherorally or in writing, and Borrower hereby
assigns to Lender on the terms set forth in the Mortgages as
further security for the payment of the Obligations and for
the performance and observance of the terms, covenants and
conditions of this Loan Agreement, all of its rights,
privileges and prerogatives to replace, renew, cancel,
abridge or materially modify any Property Management
Agreement in any respect, and any such replacement, renewal,
cancellation, abridgment or material modification of any
such management agreements without the prior consent of
Lender shall be void and of no force and effect; provided,
however, that Borrower may, without the consent of Lender,
extend or renew any such Property Management Agreements if
such extension or renewal does not provide for a material
diminution in the responsibilities or scope of services of
the Property Manager thereunder or alter the terms of such
Property Management Agreements in any material respect. If
Borrower defaults in the performance or observance of any
material term, covenant or condition of such Property
Management Agreements to which it is a party on the part of
Borrower to be performed or observed, then, if such default
is not remedied by Borrower within 30 days after Borrower's
receipt of notice of the occurrence of such default, without
limiting the generality of the other provisions of this Loan
Agreement, and without waiving or releasing Borrower from
any of its obligations hereunder, Lender shall have the
right, but shall be under no obligation, to pay any sums as
may be appropriate to cause such term, covenant or condition
of such Property Management Agreements on the part of
Borrower to be promptly performed or observed on behalf of
Borrower, to the end that the rights of Borrower into and
under such Property Management Agreements shall be kept
unimpaired and free from default; and Borrower hereby agrees
to pay to Lender, immediately upon demand, all sums so
expended by Lender, together with interest thereon from the
date of such payment at the Default Rate, and until so paid
by Borrower, all sums so expended by Lender and the interest
thereon shall be added to the Obligations secured by the
lien and legal operation and effect of the Mortgages
encumbering the related Mortgaged Property. Lender shall be
entitled conclusively to rely on any notice received from
the Property Manager under any Property Management
Agreement, and such notice shall constitute evidence of the
matters set forth therein. Borrower shall, from time to
time, use its reasonable efforts to obtain from each
Property Manager under each Property Management Agreement to
which it is a party such certificates of estoppel with
respect to compliance by Borrower with the terms of such
Property Management Agreement as may be requested by Lender
(and the Property Management Agreements shall contain
provisions obligating each Property Manager to provide such
a certificate). Borrower shall not enter into an agreement
with any Property Manager for management of any Mortgaged
Property without the prior approval of Lender, which
approval will not be unreasonably withheld or delayed. If
Lender elects to exercise its rights pursuant to the
Collateral Assignment of Property Management Agreements,
following an Event of Defaul, to replace any Property
Manager, Lender will, to the extent Lender deems it possible
without materially prejudicing any right of Lender, consult
with Borrower and permit Borrower a reasonable period of
time to take action requested by Lender before Lender takes
any such action.
(d) Permits. Borrower shall obtain and maintain, and
each of the Mortgaged Properties shall have the benefit of
and shall be in compliance in all material respects with the
terms of, all material Permits required, whether by
applicable Laws or Insurance Standards, with respect to the
ownership, operation or use of the Mortgaged Properties.
Borrower shall maintain all such Permits in full force and
effect and shall not modify or qualify such Permits in a
manner detrimental to the operation of the Mortgaged
Properties. All Permits relating to the use, operation and
maintenance of the Mortgaged Properties shall be owned by or
issued in the name of Borrower or any applicable Property
Manager. If Borrower receives from any Governmental
Authority or insurer any written notification or threat of
any actions or proceedings, regarding the non-compliance or
non-conformity of the Mortgaged Properties with any Laws or
any Permits or Insurance Standards, respectively, it shall
give prompt notice thereof to Lender.
(e) Compliance with Laws. Borrower shall, and shall
cause the Mortgaged Properties to, promptly and faithfully
comply with, conform to and obey in all material respects
all Laws whether or not the same shall necessitate
structural changes in or improvements to, or interfere with
the use or enjoyment of, any Mortgaged Property, provided,
however, that Borrower shall have the right diligently and
in good faith to contest any such Laws for so long as the
Mortgaged Property affected thereby shall be in no danger of
being sold, forfeited or lost pursuant to such contest and
provided that adequate reserves have been set aside by
Borrower, in accordance with GAAP, to pay the costs
necessary to comply with such Laws in the event Borrower
fails to prevail in such contest.
(f) Governmental Authorizations. Borrower shall
obtain and continuously maintain in full force and effect,
and will abide by and satisfy all material terms and
conditions of, all material Permits required for (i)
construction of improvements which constitute Mortgaged
Property, (ii) any permitted use of any Mortgaged Property
or any part thereof or (iii) the lawful and proper
ownership, operation and maintenance of any Mortgaged
Property, provided that Borrower shall have the right
diligently and in good faith to contest the requirement for,
or the terms and conditions of, such Permits for so long as
the Mortgaged Property affected thereby shall be in no
danger of being sold, forfeited or lost pursuant to such
contest and provided that adequate reserves have been set
aside by Borrower, in accordance with GAAP, to pay the costs
necessary to comply with such Laws in the event Borrower
fails to prevail in such contest.
(g) Compliance with Leases.
(i) Borrower shall promptly and fully keep,
observe and perform, or cause to be kept, observed and
performed, all of the material terms, covenants,
provisions and agreements imposed upon or assumed by
Borrower under any Leases now or hereafter in effect,
including any amendments or supplements to such Leases,
and Borrower will not do or fail to do, or permit or
fail to permit to be done, any act or thing, the doing
or omission of which will give any party a right to
terminate any of such Leases or to ▇▇▇▇▇ any rental or
other material payment due thereunder, other than in
the ordinary course of business. Borrower shall use
its reasonable efforts in the ordinary course of
business to cause each and every lessee and guarantor
(if any) of each Lease to which it is a party to
perform and observe each and every material covenant,
obligation and agreement to be performed or observed on
the part of such lessee and/or guarantor under or in
respect of each Lease or guaranty thereof.
(ii) If Borrower fails in any material manner to
comply with subparagraph (i) above, Borrower agrees
that Lender may (but shall not be obligated to) take,
upon five (5) days' written notice to Borrower (or upon
lesser notice, or without notice, if Lender reasonably
deems that the same is required to protect its interest
in any Mortgaged Property), any action which Lender
shall reasonably deem necessary or desirable to keep,
observe and perform or cause to be kept, observed or
performed any such terms, covenants, provisions or
agreements and to enter upon the Mortgaged Property and
take all action thereon as may be necessary therefor,
or to prevent or cure any default by Borrower in the
performance of or compliance with any of Borrower's
covenants or obligations under said Leases. Lender may
rely on any notice of default received from any Tenant
unless, in connection with any such default or alleged
default Borrower in good faith notifies Lender of
Borrower's intention to contest such default by
appropriate procedures and diligently pursues such
contest. Borrower shall, upon Lender's request,
promptly deliver to Lender a copy of any notice
relating to defaults received from any Tenant that is a
party, or the trustee, receiver or successor for or to
a party, to any of said Leases. Lender may expend such
sums of money as are reasonable and necessary for any
such purposes, and Borrower hereby agrees to pay to
Lender, immediately upon demand, all sums so expended
by Lender, together with interest thereon from the date
of such payment at the Default Rate, and until so paid
by Borrower, all sums so expended by Lender and the
interest thereon shall be added to the Obligations
secured by the lien and legal operation and effect of
the Mortgages encumbering the related Mortgaged
Property.
(h) Payment of Taxes and Claims; Insurance. Borrower
shall, subject to Section 10.2(a)(ii), duly pay and
discharge, or cause to be paid and discharged, the
Impositions as well as claims and final, non-appealable
Judgments of any kind which, if unpaid, might become an
Encumbrance upon the Mortgaged Property owned by it.
(i) Insurance.
(i) Borrower shall at all times provide, maintain
and keep in force or cause to be provided, maintained
and kept in force, at no expense to Lender, the
following policies of insurance (unless any such policy
or policies are no longer commercially available, in
which case Borrower shall replace any such unavailable
policy or policies with one or more policies covering
substantially similar casualties, risks, perils,
liabilities and other hazards to the extent any
substitute policy is commercially available and is
maintained by owners of property of similar standard to
the Mortgaged Properties) with respect to each of the
Mortgaged Properties (the "Insurance Policies"), as
applicable:
(A) All risk property insurance for the full
replacement value, including soft costs of the
Mortgaged Property covering physical loss or damage to
such Mortgaged Property, which shall include extended
coverage against such perils of fire, lightning,
windstorm, collapse, liquid damage and sprinkler
leakage. Such policy shall also provide (1)
comprehensive boiler and machinery coverage, including
pressure vessels, air tanks, boilers, machinery
pressure piping, heating, air conditioning, elevator
equipment, escalator equipment and production
equipment, (2) earthquake coverage, if applicable and
available at commercially reasonable rates in the
region where such Mortgaged Property is located, and
(3) flood coverage as to Buildings located in a special
flood hazard area as designated by the Director of the
Federal Emergency Management Agency.
(B) Commercial comprehensive general liability
insurance written on an occurrence form covering bodily
injury and property damage for not less than $5,000,000
per Mortgaged Property. Such coverage shall include
but not be limited to premises/operations, products
liability/completed operations, broad form contractual
(including "X", "C" and "U" hazards), broad form
property damage, independent contractors, personal
injury (employee exclusion deleted), "X", "C" and "U"
exclusions deleted, incidental medical malpractice,
host liquor and broad form comprehensive general
liability endorsement form GL404, or its equivalent,
with exclusions I(B)(4)(5), II(B)(1) and (X)(B)(1)
deleted.
(C) Loss of rents or business interruption
insurance written on an all risk form which shall at
least cover the perils specified in this clause (i) (to
the extent applicable) and which shall be in an amount
sufficient to cover the annual gross rentals net of
noncontinuing expenses for the Mortgaged Property,
which amount shall be adjusted from time to time.
(D) Umbrella excess liability insurance for not
less than $40,000,000 per Mortgaged Property.
(E) Worker's Compensation and other statutory
coverages, as applicable.
(F) In addition to the policies set forth in
subparagraphs (A) through (E) of this Section
10.1(i)(i), if and while the Mortgaged Property is
under construction, rehabilitation or rebuilding such
Mortgaged Property shall also be covered by (1) all-risk
builders coverage for full replacement value
including soft costs and loss of rents; (2) statutory
workers' compensation, if applicable to Borrower; (3)
employers' liability coverage for not less than
$1,000,000 (with no exclusion for occupational
disease), if applicable to Borrower; and (4) products
liability/completed operations coverage for two years
following construction.
(G) All such policies with respect to property
insurance shall (1) provide for deductibles not to
exceed $50,000 for all perils and in an amount
satisfactory to Lender in respect of flood, windstorm
and earthquake insurance and (2) contain a "Replacement
Cost Endorsement" without any deduction made for
depreciation as well as waiving co-insurance penalties
by attaching an "Agreed Amount Endorsement"
satisfactory to Lender, with loss payable solely to
Borrower and Lender as its interest may appear, without
contribution, under a "standard" or "New York"
mortgagee clause acceptable to Lender. Borrower shall
increase the amount of property insurance required to
equal the 100% replacement cost pursuant to the
provisions of this Section 10 at the time of the
renewal of each policy.
(ii) Such insurance policies shall be endorsed to
provide that:
(A) Lender is named as Mortgagee with respect to
the all risk property and loss payee with respect to
all rent/business interruption/extra expense coverages
and as additional named insureds on all liability
coverages, with the understanding that any obligation
imposed upon the insureds (including without limitation
the liability to pay premiums) shall be the sole
obligation of Borrower and not of any other insured;
(B) The interests of Lender shall not be
invalidated by any action or inaction of Borrower or
any other Person, and such policies shall insure Lender
regardless of any breach or violation by Borrower or
any other Person of any warranties, declarations or
conditions in such policies;
(C) The insurer under each such policy shall
waive all rights of subrogation against Lender, any
right to set-off and counterclaim and any other right
to deduction, whether by attachment or otherwise;
(D) Such insurance shall be primary and without
right of contribution of any other insurance carried by
or on behalf of Lender or Borrower with respect to
their respective interests in the Mortgaged Property;
(E) If such insurance is cancelled for any reason
whatsoever, including nonpayment of premium, or any
substantial modification, change or reduction in
coverage is made in the coverage which affects the
interests of Lender, such cancellation, modification,
change or reduction in coverage shall not be effective
as to Lender until 30 days after receipt by Lender of
written notice sent by registered mail from such
insurer of such cancellation, modification, change or
reduction in coverage;
(F) Any insurance shall be endorsed to provide
that, inasmuch as the policy is written to cover more
than one insured, all terms, conditions, insuring
agreements and endorsements, with the exception of
limits of liability, shall operate in the same manner
as if there were a separate policy covering each
insured; and
(G) Such insurance shall contain "cut-through"
endorsements providing Lender with direct access to any
reinsurers.
(iii) Borrower shall deliver to Lender a copy
of each insurance policy required to be maintained by
it, or a certificate of such insurance acceptable to
Lender, together with a copy of the declaration page
for each such policy. Not later than fifteen (15) days
prior to the expiration of each policy to be furnished
pursuant to the provisions of this Section 10, Borrower
shall deliver a renewed policy or policies, or
duplicate original or originals thereof, marked
"premium paid", or accompanied by such other evidence
of payment satisfactory to Lender with standard non-
contributory mortgagee clause in favor of and
acceptable to Lender. Upon request of Lender, Borrower
shall cause its insurance underwriter or broker to
certify to Lender in writing that all the requirements
of this Loan Agreement applicable to Borrower governing
insurance have been satisfied. Borrower shall comply
promptly with and conform to (A) all provisions of each
such insurance policy, and (B) all requirements of the
insurers applicable to Borrower as respects use,
occupancy, possession, operation, maintenance,
alteration or repair of the Mortgaged Properties.
Borrower shall not use or permit the use of the
Mortgaged Properties in any manner which would permit
any insurer to cancel any insurance policy or void
coverage required to be maintained by this Loan
Agreement.
(iv) If Borrower fails to provide to Lender the
policies of insurance required by this Section 10.1(i)
or by any other Loan Document, then, in any such case,
Lender may (but shall have no obligation to) procure
such insurance or single-interest insurance for such
risks covering Lender's interest, and Borrower will pay
all premiums thereon promptly upon demand by Lender,
and until such payment is made by Borrower, the amount
of all such premiums shall bear interest at the Default
Rate and shall constitute additions to the Obligations.
(v) All Insurance Policies shall be in form and
maintained with companies and in amounts to be
consented to by Lender, such consent not to be
unreasonably withheld or delayed. Without limiting
Lender's ability to approve the aforementioned, an
insurance company shall not be reasonably satisfactory
unless such insurance company (a) has a rating of at
least A with a financial size of Class VIII or better
as specified in Best's Key Rating Guide, (b) is
licensed or authorized to do business, as required
under applicable law, in the State where the Mortgaged
Property is located, (c) if it is a mutual company, is
a nonassessable company and (d) does not provide
insurance on any one building in excess of 10% of its
policyholder's surplus (including capital). All
Insurance Policies insuring against casualty, rent loss
and business interruption and other appropriate
policies shall provide that no claims be paid
thereunder without twenty (20) days' advance written
notice to Lender.
(vi) If Borrower receives from any insurer any
written notification or threat of any actions or
proceedings regarding the non-compliance or non-conformity
of any Mortgaged Property with any insurance
requirements, it shall give prompt notice thereof to
Lender. Borrower shall not use, maintain, operate or
occupy, or allow the use, maintenance, operation or
occupancy of, any portion of any Mortgaged Property in
any manner which would make void, voidable or
cancelable, or substantially increase the premium of,
any insurance then in force with respect thereto.
(j) Maintenance. Borrower shall maintain, preserve
and operate each of the Mortgaged Properties in good and
safe working order and repair in a manner at least at a
level customary for properties of similar use, value, age,
nature and construction, and shall make all necessary
repairs and replacements. If Borrower receives notice from
any insurance company or bonding company of any defects or
inadequacies in any Mortgaged Property, or any part thereof,
which would adversely affect the insurability of the same or
cause the imposition of extraordinary premiums or charges
thereof or of any termination or threatened termination of
any policy of insurance or bond then Borrower shall promptly
forward a copy of such notice to Lender and undertake the
cure of such defects or inadequacies. Borrower shall
promptly notify Lender of all material claims against any
contractor, architect or other party with respect to the
condition of the Mortgaged Properties or the existence of
any structural or other material defect therein and shall
diligently prosecute all such claims unless doing so would
materially adversely affect Borrower or any of the Mortgaged
Properties. Borrower shall promptly notify Lender of any
assessment against or affecting any Mortgaged Properties or
any part thereof. Except as otherwise provided herein
(including, without limitation in respect of any Work) and
as otherwise provided in Section 6 hereof, none of the
Buildings, the Fixtures or the Equipment relating to any of
the Mortgaged Properties shall be removed, demolished or
materially altered without the prior written consent of
Lender, except that Borrower shall have the right without
such consent to (x) make such alterations of the Buildings
(which may include demolition) as Borrower, acting in a
manner which is consistent with good real estate industry
practice generally applicable to the ownership and operation
of property similar to the relevant Mortgaged Property or as
may be required by law, and (y) to remove and dispose of
Equipment, free from the lien of ny applicable Mortgage and
the security interest created by such Mortgage, (i) as from
time to time may become worn or obsolete, provided that such
Equipment shall be replaced with other Equipment with a
value at least equal to that of the replaced Equipment and
free from any other security interest or lien other than a
lease thereof, and by such removal and replacement, Borrower
shall be deemed to have subjected such new Equipment to the
lien of the related Mortgage, or (ii) as from time to time
may become worn or obsolete, provided that such Equipment is
not material in its use to the value and operation of the
related Mortgaged Property or (iii) as from time to time may
in the reasonable judgment of Borrower be determined to be
unusable or unnecessary for the continued operation of the
related Mortgaged Property. Borrower shall complete
promptly and in a good and workmanlike manner any
improvement which may be now or hereafter constructed on the
Mortgaged Properties. In any case and to the extent the
completion of any such improvement is also the obligation of
a third party in possession, Borrower shall not be obligated
to complete such improvement itself, but shall use
commercially reasonable efforts to cause performance of such
obligation by such third party. Provided Insurance Proceeds
are made available to Borrower pursuant to Section 6(b),
Borrower shall promptly restore or cause to be restored in
like manner any portion of the improvements which may be
damaged or destroyed thereon from any cause whatsoever
(except as may be otherwise expressly provided in Section
6), and pay or cause to be paid when due all claims for
labor performed and materials furnished therefor, subject to
Borrower's rights of contest set forth in Section
10.2(a)(iii) hereof. Borrower shall comply in all material
respects with all Laws and all covenants, conditions and
restrictions now or hereafter affecting the Mortgaged
Properties or requiring any alterations or improvements
thereto. In any case and to the extent where compliance
with any such Laws, covenant, condition or restriction is
the obligation of a third party in possession, Borrower
shall not be obligated to undertake such compliance itself,
but shall use commercially reasonable efforts to cause
performance of such obligation by such third party.
(k) Inspection. Borrower shall permit any Person
designated by Lender, at Lender's expense (or if a Default
shall have occurred and be continuing, then at Borrower's
expense), to (i) visit and inspect, during normal business
hours and upon 48 hours' prior notice, any Mortgaged
Property and the books and records maintained by it or by
any of its agents, employees or representatives in respect
of such Mortgaged Property, and to make copies of and to
take extracts from such records as are reasonably necessary
for Lender's evaluation of such Mortgaged Property, (ii)
discuss, with Borrower, the affairs, finances and accounts
of such Mortgaged Property, and (iii) verify the amount,
quantity, quality, value and/or condition of, or any other
matter reasonably relating to, any or all of such Mortgaged
Property, all at such reasonable times and as often as
Lender may reasonably request; provided, however, (x) that
Lender shall not interfere with the rights of any of the
Tenants in any Mortgaged Property under the Leases or
disturb the conduct of their business or interfere with the
rights of any other party or with the conduct of Borrower's
business thereon and (y) any information obtained as
referred to in clauses (i), (ii) or (iii) above shall be
treated with an appropriate level of confidentiality.
(l) Taxes and Fees. Borrower shall pay, together with
interest, fines, and penalties, if any, any Impositions due
under applicable Laws in connection with the making,
execution, delivery, filing of record, recordation, release,
or discharge of any of the Mortgages.
(m) Other Taxes. If any Tax (other than a franchise
tax imposed on, and other taxes imposed on, or measured by,
the net income or capital (including branch profits tax) of
Lender) is levied, assessed or charged by the United States
or any political subdivision or taxing authority thereof or
therein upon any Mortgage, the Obligations, the interest of
Lender in any Mortgaged Property, or Lender by reason of or
as holder of any Mortgage, Borrower shall pay all such Tax
to, for, or on account of Lender (or provide funds to Lender
for such payment) as they become due and payable and shall
promptly furnish written notice of the date and amount of
such payment to Lender. In the event of passage of any law
or regulation permitting, authorizing or requiring such Tax
to be levied, assessed or charged, which law or regulation
in the reasonable opinion of counsel to Lender may prohibit
Borrower from paying the Tax to or for Lender, Borrower
shall enter into such further instruments as may be
permitted by law to obligate Borrower to pay such Tax. In
the event that Lender assigns any Mortgage Loan, Borrower's
payment obligation under this Section 10.1(m) shall not
apply to any greater extent than if such Mortgage Loan had
not be assigned.
(n) Notice Regarding Special Flood Hazards. If
Borrower receives evidence that any Mortgaged Property is
within a zone identified by the Director of the Federal
Emergency Management Agency as a special flood hazard zone
described in 12 CFR Section 22.2, Borrower shall furnish Lender
with a copy of the notice regarding Federal disaster relief
assistance referred to in the Appendix to 12 CFR Part 22.
(o) Amendment to Legal Description. If it becomes
evident, either by virtue of the surveys to be delivered to
Lender or otherwise, that the legal description attached to
any Loan Document is inaccurate or does not fully describe
all of the real property in which Borrower has an interest,
Borrower hereby agrees to amendment of such legal
description and the legal description contained in the
corresponding title policy so that such error is corrected
and to execute and cause to be recorded, if applicable, such
documentation as may be appropriate for such purpose.
(p) Notices. Borrower shall, promptly upon obtaining
knowledge thereof, give written notice to Lender of the
occurrence of any event that has or could reasonably be
expected to have a material adverse effect on the use,
value, ownership or operation of any Mortgaged Property.
(q) Compliance with Other Instruments. Borrower shall
in a timely manner observe, perform and fulfill each and
every covenant, term and provision of each Loan Document
applicable to it.
(r) Estoppel Certificates. Within 10 days following
the request of Lender, Borrower shall certify to Lender, by
an instrument in form satisfactory to Lender in its
reasonable discretion, duly acknowledged, among other
things, the amount then owing by Borrower to Borrower's
Knowledge under the Loan Documents and the date through
which interest thereon has been paid, and whether any
offsets, counterclaims, credits, or defenses exist against
payment thereof or performance of any obligation of Borrower
under this Loan Agreement or the other Loan Documents.
Lender shall have the right to rely on any such
certification.
(s) Creation and Recordation of Additions and
Betterments. Borrower shall arrange for timely recording or
filing as required by Lender of all documents having to do
with additions to or betterments of any portion of the
Mortgaged Property owned by it, and the covenants and
agreements set forth in this Loan Agreement shall apply to
all such additions and betterments.
(t) Consents. Borrower shall obtain and maintain the
consent or approval of any Person whose consent or approval
is required to the granting of an Encumbrance on any of the
Collateral in favor of Lender.
(u) Environmental Assessments and Remediation.
Borrower shall cause all environmental remediation,
maintenance and monitoring which is recommended or called
for or otherwise indicated by any environmental reports
obtained by it pursuant to Section 7(c)(v) or otherwise
(subject to review at Lender's discretion by the
Environmental Consultants) to be promptly and diligently
undertaken and completed.
(v) No Contractual Defaults. There shall be no
material defaults by Borrower under any material Contract to
which Borrower is a party relating to any of the Mortgaged
Properties, including, without limitation, any management,
rental, service, supply, security, maintenance or similar
contract; provided, however, that no default by Borrower
shall be deemed to violate the covenant set forth in this
paragraph (v) so long as (i) it shall contest the validity
thereof in good faith by appropriate proceedings and shall
have set aside on its books adequate reserves in accordance
with GAAP with respect thereto and (ii) such contest does
not and would not (and if such contest were decided
adversely to Borrower, would not) have a Material Adverse
Effect.
(w) No Encroachments. Except as disclosed on the
surveys referred to in Section 7(c)(iii) and in the Title
Policies, none of the improvements located on any of the
Mortgaged Properties shall materially encroach upon the
property of any other Person or lie outside of the
boundaries and building restriction lines of such Mortgaged
Property and no improvement located on any property
adjoining any of the Mortgaged Properties shall lie within
the boundaries of or in any way encroach upon such Mortgaged
Property.
(x) Impositions. Borrower shall file all property,
personal property and similar tax returns required to be
filed by it with respect to the Mortgaged Properties and
shall pay all water and sewer charges and, unless such
amounts have been deposited by Borrower with Lender for the
payment of Taxes pursuant to Section 5, all other taxes,
levies, assessments and governmental charges that, on or
prior to the date hereof, were due and owing with respect to
such Mortgaged Property; provided, however, that Borrower
shall not be required to pay or discharge any charges
covered by this paragraph so long as (i) it shall contest
the validity thereof in good faith by appropriate
proceedings and shall have set aside on its books adequate
reserves in accordance with GAAP with respect thereto and
(ii) such contest does not and would not (and if such
contest were decided adversely to Borrower, would not) have
a Material Adverse Effect.
(y) No Rights of First Offer or First Refusal.
Borrower shall not, without Lender's prior written consent,
grant any exercisable rights with respect to the purchase or
sale of any of the Mortgaged Properties including, without
limitation, any purchase option, right of offer or right of
refusal.
(z) Status of the Landlord Under the Leases. Borrower
shall be the sole owner and holder of the landlord's
interest under all of the Leases related to the Mortgaged
Properties, subject only to the Encumbrances created by the
Loan Documents. Borrower shall not make any assignment of
the landlord's interest in any of the Leases or any portion
of the Rents, additional rents, charges, issues or profits
due and payable or to become due and payable thereunder
except pursuant to the Loan Documents.
(aa) Rent Rolls. Upon the execution and delivery
hereof, and on or before February 15 of each calendar year
while any Obligations remain outstanding, beginning with
calendar year 1999, Borrower shall furnish to Lender one or
more Rent Rolls for each Mortgaged Property covering the
prior calendar year. All Rent Rolls provided to Lender
shall be accurate and complete in all material respects for
the period reflected therein. Except to the extent the term
of any Lease has terminated or expired, each of the Tenants
listed on such Rent Rolls shall be obligated pursuant to
their Leases to occupy all or a portion of the Mortgaged
Properties pursuant to a Lease which is then in full force
and effect; other than those Leases in favor of Tenants
listed on the Rent Rolls or entered into after the date of
the then most recently delivered Rent Rolls, the Mortgaged
Properties shall not be subject to any Lease.
(bb) No Free or Prepaid Rent. Except as stated in
writing to Lender, as of the date of each Rent Roll, none of
the Tenants shall have been given any material free rent or
concessions or abatements relating to the payment of rent or
additional rent, nor shall any of the Tenants have been
given any material credit for or offset or claim against the
obligations to pay any fixed rent or additional rent by
reason of prepayment of rent or otherwise. Notwithstanding
the foregoing, nothing contained herein shall prohibit
Borrower from granting to the Tenants any of the concessions
stated in this paragraph (bb) if such concessions are, in
Borrower's reasonable judgment, consistent with good
business and marketing practices.
(cc) Subordination. All future Leases at the Mortgaged
Properties (i) shall be subordinate to the Liens created by
the Mortgages, and (ii) shall obligate the Tenant to attorn
to Lender or any purchaser in the event of foreclosure, deed
in lieu of foreclosure or exercise of possessory rights by
or on behalf of Lender in connection with Lender's right
under any of the Loan Documents.
10.2 Negative Covenants.
(a) Encumbrances. Without Lender's express written
consent, Borrower shall not create, incur, assume or suffer
to exist any Encumbrance on the Mortgaged Properties,
except:
(i) Permitted Encumbrances;
(ii) liens for taxes, assessments or other
governmental charges not yet due or which are being
diligently contested in good faith and by appropriate
proceedings, provided that (v) if the aggregate amount
of all Secured Charges is less than or equal to
$100,000, adequate reserves shall have been set aside
therefor in the books of such Borrower in accordance
with generally accepted accounting principles, (w) if
the aggregate amount of all Secured Charges exceeds
$100,000 either (l) cash or cash equivalents in an
amount not less than the amount of such claims shall
have been deposited with Lender, in escrow, to be held
by Lender during the pendency of such contests or (2)
Borrower shall have caused such liens to be duly bonded
in accordance with applicable law such that the lien in
question attaches only to the bond and not to any
Mortgaged Property, (x) no risk of sale, forfeiture or
loss of any interest in any Mortgaged Property or any
part thereof arises or would arise during the pendency
of such contests, (y) such contests do not or would
not, in the aggregate, have a material adverse effect
on the use, value, operation or ownership of any
Mortgaged Property and (z) Borrower shall give prompt
notice thereof to Lender;
(iii) carriers', warehousemen's, mechanic's,
materialmen's, repairmen's and other similar liens
arising in the ordinary course of business and which
are being diligently contested in good faith and by
appropriate proceedings, provided that (v) if the
aggregate amount of all Secured Charges is less than or
equal to $100,000, adequate reserves shall have been
set aside therefor in the books of Borrower in
accordance with generally accepted accounting
principles, (w) if the aggregate amount of all Secured
Charges exceeds $100,000, either (1) cash or cash
equivalents in an amount not less than the amount of
such claims shall have been deposited with Lender, in
escrow, to be held by Lender during the pendency of
such contests or (2) Borrower shall have caused such
liens to be duly bonded in accordance with applicable
law such that the lien in question attaches to the bond
and not to any Mortgaged Property, (x) no risk of sale,
forfeiture or loss of any interest in any Mortgaged
Property or any part thereof arises or would arise
during the pendency of such contest, (y) such contests
do not or would not, in the aggregate, have a material
adverse effect on the use, value, operation or
ownership of any Mortgaged Property and (z) Borrower
shall give prompt notice thereof to Lender; and
(iv) zoning restrictions, easements, rights-of-way,
restrictions on use of real property and other
similar Encumbrances incurred or entered into in the
ordinary course of business which do not or would not,
in the aggregate, have a material adverse effect on the
use, value, operation or ownership of the Mortgaged
Property subject thereto or materially interfere with
the operation and use of, or the ordinary conduct of
the business on, the Mortgaged Property subject
thereto.
(b) Sale of Equipment and Personalty. Borrower shall
not, directly or indirectly, sell, transfer, convey, assign
or otherwise dispose of, in whole or in part, any Equipment
or other Personalty at any of the Mortgaged Properties;
provided, however, that the foregoing shall not apply to (i)
Equipment or other Personalty as from time to time may
become worn or obsolete, so long as such Equipment or other
Personalty shall be replaced with other Equipment or other
Personalty (x) with a value at least equal to that of the
replaced Equipment or other Personalty and free from any
Encumbrance thereon other than a lease thereof and (y)
properly made subject to the Encumbrance of the relevant
Mortgage, or (ii) Equipment or other Personalty as from time
to time may in the reasonable judgment of Borrower be
determined to be unusable or unnecessary for the continued
operation of the relevant Mortgaged Property.
(c) Zoning. Borrower shall not initiate or consent to
any zoning reclassification of any Mortgaged Property or
seek any variance under any existing zoning ordinance or use
or permit the use of any Mortgaged Property in any manner
that is reasonably likely to result in such use becoming a
non-conforming use under any zoning ordinance or any other
applicable land use law, rule or regulation.
(d) Use Violations. Borrower shall not use, maintain,
operate or occupy, or allow the use, maintenance, operation
or occupancy of, any portion of any Mortgaged Property in
any manner which would result in a violation of Section
l0.l(e) above or make void, voidable or cancelable, or
substantially increase the premium of, any insurance then in
force with respect thereto.
(e) Waste. Borrower shall not commit or permit any
waste of any of the Mortgaged Property owned by it or permit
any nuisance to be maintained thereon.
Section 11. Conversion to Unsecured Loans.
At Borrower's request, this secured Loan Facility may
be converted to an unsecured Loan Facility, and if Borrower shall
also request Borrower's General Partner may be substituted as the
borrower hereunder, and the Mortgaged Properties and any other
Collateral released from the Liens of the Loan Documents, subject
to and upon the following conditions: (i) Borrower (or if
Borrower's General Partner is to be substituted as borrower
hereunder, then Borrower's General Partner) shall have received a
credit rating on its senior unsecured long-term debt of not lower
than (x) Baa3 from ▇▇▇▇▇'▇ Investors Service, Inc. and (y) BBB-
from Standard & Poor's Rating Services, a division of McGraw
Hill, Inc.; (ii) no Default or Event of Default shall exist under
this Loan Agreement or any other Loan Document; (iii) Borrower
shall have delivered to Lender guarantees of the Loans, in form
and substance acceptable to Lender, from one or more Persons
acceptable to Lender, in each case in Lender's sole and absolute
discretion; (iv) Borrower (and if Borrower's General Partner is
to be substituted as the borrower hereunder, then Borrower's
General Partner) shall have executed and delivered to Lender
appropriate new or amended Loan Documents to reflect the
unsecured nature of the Loans (and, if applicable, the
substitution of Borrower's General Partner as the new borrower
hereunder), which shall include such covenants, defaults and
other provisions as Lender shall determine to be consistent with
then-customary documentation for unsecured loans by prudent
institutional lenders to REITs with similar credit ratings and of
similar quality, in each case in form and substance acceptable to
Lender in Lender's sole and absolute discretion (it being
understood and agreed, however, that from and after such
conversion (x) interest shall be payable, in arrears, in semi-annual
(and not monthly) installments, and (y) the discount
factor to be applied in the calculation of a Prepayment Premium
shall be applied on a semi-annual (and not monthly) basis); (v)
from and after the effective date of such conversion, the
Interest Rate with respect to Loan B of the Loan Facility shall
be increased to be 7.10% per annum; (vi) Lender shall have
received one or more opinions of counsel acceptable to Lender
with respect to all of the foregoing and (vii) Borrower shall
have paid to Lender all of Lender's out-of-pocket expenses in
connection with the foregoing.
Section 12. Events of Default.
If one or more of the following events (each, an "Event
of Default") occurs and is continuing (whether any such event
shall be voluntary or involuntary or come about or be effected by
operation of law or pursuant to or in compliance with any
judgment, decree or order of any court or any order, rule or
regulation of any Governmental Authority), Lender shall be
entitled to the remedies set forth in Section 13:
(a) Borrower fails:
(i) to perform or observe any agreement or
covenant to be performed or observed by it pursuant to
Section 4.1, 4.4 (and such failure has not been
remedied before the fifth day after it occurs), 9.1(e),
9.2(e), 9.2(f), 9.2(g), 10.l(a) (and such failure has
not been remedied before the fifth day after it
occurs), 10.2(a), 10.1(h) (and such failure has not
been remedied before the fifteenth day after it
occurs), or 10.l(i) (and such failure is either a
material failure or has not been remedied before the
eleventh day after Borrower receives written notice
from any Person of the facts giving rise to any such
failure or prospective failure); or
(ii) to observe any agreement or covenant to be
observed or performed by it pursuant to Section 5; or
(iii) to perform or observe any agreement or
covenant (other than those referred to in subparagraph
(i) or (ii)) to be performed or observed by it pursuant
to this Loan Agreement or any of the other Loan
Documents and fails to remedy the failure before the
thirty-first day after it occurs, provided, however,
that if Borrower has promptly begun and diligently
pursued all reasonable measures to cure any failure
which is the subject of this Section 12(a)(iii) and
continues to do so, any failure that would otherwise
constitute an Event of Default under this Section
12(a)(iii) will not constitute an Event of Default
unless such cure has not been effected before the
ninety-first day after such failure occurs.
(b) Any representation or warranty made by Borrower in
this Loan Agreement (including, without limitation, Section
8) or in any other Loan Document, or any representation,
warranty, statement or information contained in any
Partner's Certificate made or delivered or caused to be made
or delivered to Lender by Borrower in connection with or
pursuant to this Loan Agreement or any other Loan Document,
shall have been false in any material respect as of the date
made or deemed to be made.
(c) An involuntary proceeding shall be commenced or an
involuntary petition shall be filed in a court of competent
jurisdiction seeking:
(i) relief in respect of Borrower or Borrower's
General Partner, or of a substantial part of the
property or assets of Borrower or Borrower's General
Partner, under Title 11 of the United States Code, as
now constituted or hereafter amended, or any successor
to or replacement of such statute, or any other
Federal, state or foreign, bankruptcy, insolvency,
reorganization, dissolution, conservation, liquidation,
rehabilitation, delinquency, receivership or similar
law;
(ii) the appointment of a receiver,
rehabilitation, conservation, trustee, custodian,
sequestrator, conservator or similar official for
Borrower or Borrower's General Partner or for a
substantial part of either of their respective
properties or assets; or
(iii) the winding-up or liquidation of
Borrower or Borrower's General Partner;
and in each case such proceeding or petition shall
continue undismissed for 60 days or an order or decree
approving or ordering any of the foregoing shall be
entered.
(d) Borrower or Borrower's General Partner shall:
(i) consent to, or fail to contest in a timely
and appropriate manner, the commencement against it of
delinquency, rehabilitation, liquidation, conservation,
reorganization, dissolution or similar proceedings,
including without limitation, summary proceedings,
under any laws, rules or regulations applicable to it
as in effect from time to time;
(ii) be dissolved;
(iii) fail, be unable or admit in writing its
inability to pay its debts generally as they become
due;
(iv) commence a voluntary case or file any
petition seeking relief under Title 11 of the United
States Code, as now constituted or hereafter amended,
or any successor to or replacement of such statute, or
any other applicable bankruptcy, insolvency,
reorganization, dissolution, conservation, liquidation,
rehabilitation, delinquency, receivership or similar
law of any jurisdiction;
(v) consent by answer or otherwise to, or fail to
contest in a timely and appropriate manner, the
commencement against it of any proceeding described in
paragraph (c) above or this paragraph (d);
(vi) apply for or consent to the appointment of a
receiver, trustee, custodian, sequestrator, conservator
or similar official for itself or for a substantial
part of its property or assets;
(vii) file an answer admitting the material
allegations of a petition filed against it in any
proceeding described in paragraph (c) above or this
paragraph (d);
(viii) make a general assignment for the
benefit of creditors; or
(ix) take any action for the purpose of effecting
any of the foregoing.
(e) (i) Any Loan Document shall cease in any material
respect to be in full force and effect, or (ii) any Mortgage
shall cease to constitute a first priority lien on the
Mortgaged Property or Mortgaged Properties which it
encumbers, in each case other than in accordance with its
terms and other than any Permitted Encumbrance.
(f) an event of default has occurred under any of the
other Loan Documents.
(g) Borrower has committed a Prohibited Transfer under
Section 14.
(h) Borrower or any ERISA Affiliate shall adopt,
maintain, contribute to or begin to participate in any Plan,
or agree or become obligated to adopt, maintain, contribute
to or participate in any Plan, unless Lender shall have
given its prior written consent to any such action.
Section 13. Remedies.
13.1 Remedies.
(a) If any Event of Default (other than an event
described in paragraph (c), (d) or (e) of Section 12) shall
occur and be continuing, (i) Lender may in its sole
discretion declare the unpaid principal of and the accrued
interest on any or all of the Mortgage Loans and any or all
other Obligations of Borrower to Lender under the Loan
Documents immediately due and payable, whereupon the
principal of such Mortgage Loans, together with the accrued
interest thereon, applicable Prepayment Premiums in
connection with the acceleration of such Mortgage Loans,
and/or such other Obligations of Borrower accrued under this
Loan Agreement and under the other Loan Documents shall
become forthwith due and payable, without need for
presentment, demand, protest or any other notice of any
kind, all of which are hereby expressly waived by Borrower,
anything contained herein or in any other Loan Document to
the contrary notwithstanding, and (ii) Lender may pursue any
of its other rights and remedies under the Loan Documents or
otherwise available at law or in equity.
(b) If any Event of Default described in paragraph
(c), (d) or (e) of Section 12 shall occur and be continuing,
then (i) the unpaid principal of and accrued interest on all
of the Mortgage Loans and all other Obligations of Borrower
to Lender under this Loan Agreement and the other Loan
Documents (including, without limitation, the obligation to
pay applicable Prepayment Premiums in connection with the
acceleration of the Mortgage Loans), shall automatically
become due and payable, without need for presentment,
demand, protest or any other notice of any kind, all of
which are hereby expressly waived by Borrower anything
contained herein or in any other Loan Document to the
contrary notwithstanding, and (ii) Lender may pursue any of
its other rights and remedies under the Loan Documents or
otherwise available at law or in equity.
(c) During the continuance of any Event of Default,
Borrower will furnish Lender, within 14 days following any
request from Lender, with Borrower's balance sheet as of the
date of such request and its income and cash flow statements
for the period from the date of the last balance sheet
delivered for Borrower pursuant to any provision of this
Loan Agreement to the date of such request, certified in a
Partner's Certificate of Borrower as fairly presenting the
financial condition of Borrower as at, and for the period
ending on, the date of such request.
13.2 Foreclosure Proceeds.
The net proceeds realized by Lender in connection with
the foreclosure of any Mortgaged Property or the exercise by
Lender of any other rights in respect of the Collateral shall be
applied in accordance with the Mortgage on such Mortgaged
Property.
Section 14. Restrictions on Transfer.
(a) Except as otherwise permitted in paragraphs (b)
through (e) of this Section 14, Borrower shall not, directly
or indirectly (i) sell, assign, convey, transfer or
otherwise dispose of legal or equitable title to any of the
Mortgaged Properties or any portions thereof or interest
therein or (ii) sell, assign, convey, transfer or otherwise
dispose of any legal or beneficial interest in Borrower or
permit any owner directly or indirectly, of a beneficial
interest in Borrower, to transfer any such legal or
beneficial interest, directly or indirectly, whether by
transfer of any shares of capital stock of Borrower's
General Partner or a corporation which is the owner of
substantially all of the capital stock of Borrower's General
Partner or by transfer of any other legal or beneficial
interest in any such entity or otherwise; in each case
whether any such sale, assignment, conveyance, transfer or
disposal is effected directly, indirectly, voluntarily or
involuntarily, by operation of law or otherwise (each, a
"Prohibited Transfer"); provided, however, that the
foregoing provisions of this paragraph (a) shall not apply
to any transfers of any of the Mortgaged Properties, or
parts thereof, or legal or beneficial interests therein, or
shares of stock or partnership or joint venture interests,
as the case may be, by or on behalf of any incompetent or
deceased owner to such owner's heirs, legatees, devisees,
executors, administrators, estate or personal
representatives.
(b) Borrower shall have the option to transfer one or
more of the Mortgaged Properties (in whole and not in part),
to one or more successor borrowers (each, a "Successor
Borrower") provided the following conditions, with respect
to each such transferred Mortgaged Property are met to
Lender's reasonable satisfaction: (i) upon each such
transfer, Borrower shall pay to Lender a transfer fee equal
to one percent (1%) of such outstanding principal amount of
the Related Loan; (ii) the ownership structure of each such
Successor Borrower shall be reasonably acceptable to Lender;
(iii) Lender shall reasonably approve in writing the
creditworthiness, credibility, real estate experience and
management ability of each such Successor Borrower and its
property manager after review of all documents, records and
current financial information of each such Successor
Borrower reasonably requested by Lender; (iv) no Default or
Event of Default shall exist under this Loan Agreement or
any other Loan Document; (v) payment to Lender of its
out-of-pocket expenses in connection with the transfer shall be
made; (vi) each such Successor Borrower expressly assumes
all of the obligations and liabilities of Borrower under the
Loan Documents relating to the Mortgaged Property to be
transferred and the Related Loan (or, in the case of a
merger under Section 14(e), under all Loan Documents), and
executes such additional or amended documentation to such
effect as Lender shall reasonably require (and which shall,
in the case of a merger under Section 14(e) include such
additional covenants, defaults and other provisions as
Lender shall deem appropriate); (vii) Lender receives
opinions of counsel reasonably acceptable to Lender
containing equivalent opinions, to the extent applicable
with respect to each such Successor Borrower, equivalent to
those given with respect to Borrower on the date hereof,
including but not limited to opinions that each such
Successor Borrower is duly organized and validly existing,
and that the Successor Borrower has duly assumed Borrower's
obligations and liabilities under the Loan Documents and
with respect to the enforceability thereof; (viii) the
purchase price paid by the Successor Borrower for such
Mortgaged Property is at least double the original principal
amount of the Related Loan; (ix) the Debt Service Coverage
Ratio for such Mortgaged Property is equal to at least
1.35:1, and the aggregate Debt Service Coverage Ratio for
all other Mortgaged Properties is equal to at least 1.35:1;
and (x) Borrower shall continue to be liable, jointly and
severally with the Successor Borrower, for all of the
obligations and liabilities of Borrower under the
Environmental Indemnity. Unless otherwise approved by
Lender, the purchase price for any such transfer shall be
paid in cash.
(c) Borrower may, upon prior notice to Lender but
without Lender's prior written consent, permit a change in
the composition of its limited partners by permitting a
transfer of up to 30% of the limited partnership interests
in Borrower. Any change in the composition of Borrower's
limited partners above such 30% (unless solely among the
existing limited partners of Borrower) shall be subject to
the transfer fee described in clause (i) of paragraph (b)
above, and to the other conditions set forth in paragraph
(b) above, with the exception of the conditions set forth in
clauses (vi) and (viii) thereof, or else constitute a
Prohibited Transfer and an Event of Default hereunder.
(d) Changes in the ownership of the capital stock of
the Borrower's General Partner shall be permitted; provided
that no Person or group of Persons (within the meaning of
Section 13 or 14 of the Exchange Act) shall acquire, without
the consent of Lender, beneficial ownership (within the
meaning of Rule 13d-3 promulgated by the Securities and
Exchange Commission under the Exchange Act) of more than 5%
of the outstanding shares of capital stock of the Borrower's
General Partner. Any transfer of shares of capital stock of
Borrower's General Partner not in accordance with this
paragraph (d) shall constitute a Prohibited Transfer and an
Event of Default hereunder.
(e) Borrower may merge into a publicly-traded
corporation that has been duly organized under the laws of
any State of the United States and that qualifies as a REIT
under the Internal Revenue Code, provided that in such
event, all of the terms and conditions set forth in clauses
(ii) through (vii) of Section 14(b) shall also be deemed to
apply to such merger (such corporation, for such purpose,
also being referred to as a "Successor Borrower") and
Borrower shall have satisfied and complied with all of the
same. Any non-compliance by Borrower with the provisions of
this paragraph (e) shall constitute a Prohibited Transfer
and an Event of Default hereunder.
Section 15. Miscellaneous.
15.1 Amendments.
The terms of this Loan Agreement shall not be altered,
modified, amended or supplemented in any manner whatsoever except
by a written instrument signed on behalf of Borrower and Lender.
15.2 Binding Effect; Successors and Assigns.
This Loan Agreement shall be binding upon and inure to
the benefit of the parties hereto and their permitted successors
and assigns. The terms and provisions of this Loan Agreement and
all other Loan Documents shall inure to the benefit of any
assignee or transferee of any of the Mortgage Loans or the
Mortgage Notes, and in the event of such transfer or assignment,
the rights and privileges herein and therein conferred upon
Lender shall automatically extend to and be vested in such
transferee or assignee, all subject to the terms and conditions
hereof and thereof. Except as set forth in Section 14 hereof,
Borrower shall not assign its rights, interests and obligations
hereunder or under any of the other Loan Documents without the
prior written consent of Lender.
15.3 Captions. Section headings and the Table of Contents are for
convenience only and shall not be construed as a part of this
Loan Agreement.
15.4 Counterparts.
This Loan Agreement may be executed by the parties
hereto in separate counterparts, each of which when so executed
and delivered shall be an original for all purposes, but all such
counterparts shall together constitute but one and the same
instrument.
15.5 Severability.
If any term or provision of this Loan Agreement or any
other Loan Document or the application thereof to any
circumstance shall, in any jurisdiction and to any extent, be
invalid, illegal or unenforceable, such term or such provision
shall be ineffective as to such jurisdiction to the extent of
such invalidity, illegality or unenforceability without
invalidating or rendering unenforceable any remaining terms and
provisions hereof or the application of such term or provision to
circumstance other than those as to which it is held invalid,
illegal or unenforceable.
15.6 Expenses. (a) Whether or not the transactions contemplated
hereby are consummated, Borrower agrees to reimburse Lender upon
receipt of written notice from Lender for all reasonable costs
and expenses (including reasonable attorneys' fees and
disbursements, but excluding Lender's overhead or administrative
costs or expenses) incurred by Lender in connection with:
(i) the preparation, negotiation, execution and
delivery of the Loan Documents and the consummation of
the transactions contemplated thereby and all costs of
counsel for Borrower in preparing or furnishing any
opinions (including without limitation (x) any opinions
requested by Lender as to any legal matters arising
under the Loan Documents or with respect to the
Mortgaged Properties and (y) any costs associated with
obtaining any Property Valuation);
(ii) Borrower's ongoing performance of and
compliance with all agreements and covenants contained
in the Loan Documents to be performed or complied with
on its part on or after the date hereof including,
without limitation, the fees and expense of any
Environmental Consultant;
(iii) Lender's ongoing performance and
compliance with all agreements and conditions contained
in the Loan Documents to be performed or complied with
on its part on or after the date hereof;
(iv) the negotiation, preparation, execution,
delivery and administration of any consents,
amendments, waivers or other modifications to the Loan
Documents;
(v) the filing and recording fees, taxes
(including intangible recording taxes) and expenses,
title insurance and reasonable fees and expenses of
counsel for providing to Lender the opinions delivered
pursuant to Section 7(f), and other similar expenses
incurred in creating and perfecting Encumbrances in
favor of Lender pursuant to the Loan Documents;
(vi) enforcing or preserving any rights in
response to third party claims or prosecuting or
defending of any action or proceeding or other
litigation, in each case against, under or affecting
Borrower, the Loan Documents, any party (other than
Borrower) to any Loan Document or the Collateral; and
(vii) enforcing, after the occurrence and
during the continuance of an Event of Default, any
obligations of or collecting any amounts in respect of
the Obligations by reason of such Event of Default or
in connection with any refinancing or restructuring of
the credit arrangements provided under this Loan
Agreement in the nature of a "work-out" or of any
insolvency or bankruptcy proceedings.
(b) In addition to but without duplication of the
payment of expenses pursuant to paragraph (a) above or the
indemnification provided for in the Environmental Indemnity,
whether or not the transactions contemplated hereby shall be
consummated, Borrower agrees to indemnify, pay and hold
harmless the Indemnitees, and each of them, from and against
any and all other liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, claims, costs,
expenses and disbursements of any kind or nature whatsoever
(including, without limitation, the reasonable fees and
disbursements of counsel for such Indemnitee in connection
with any investigative, administrative or judicial
proceeding commenced or threatened, whether or not such
Indemnitee shall be designated a party thereto), that may be
imposed on, incurred by, or asserted against such Indemnitee
in any manner relating to or arising out of (i) the Loan
Documents, or (ii) Lender's agreement to make the Mortgage
Loans hereunder or the use or intended use of the proceeds
of the Mortgage Loans; provided, however, that Borrower
shall have no obligation to an Indemnitee hereunder to the
extent that such indemnified liabilities arise from the
gross negligence or willful misconduct of such Indemnitee.
To the extent that the undertaking to indemnify, pay and
hold harmless set forth in the preceding sentence may be
unenforceable because it violates any law or public policy,
Borrower shall contribute the maximum portion that it is
permitted to pay and satisfy under applicable law to the
payment and satisfaction of all such indemnified liabilities
incurred by the Indemnities or any of them.
(c) Borrower hereby acknowledges and agrees that each
Indemnitee (other than Lender and its successors and
assigns) is an intended third-party beneficiary of this
Section 15.6.
15.7 Survival of Representations, Etc.
Except for any longer period set forth in the
Environmental Indemnity and except for Section 15.6(b) (which
shall survive indefinitely), all representations, warranties,
covenants and agreements made herein by Borrower and in Partner's
Certificates delivered by Borrower pursuant to the Loan Documents
shall survive any investigation or inspection made by or on
behalf of Lender and shall continue in full force and effect
until the Mortgage Loans and all accrued interest thereon and all
the other Obligations are finally paid in full.
15.8 Notices.
(a) Except as otherwise provided herein, all notices
and other communications required under the terms and provisions
hereof shall be in writing and shall be delivered by hand or by a
nationally recognized overnight courier or registered first class
mail, postage prepaid, return receipt requested, or by facsimile,
to the parties at the addresses and fax numbers set forth below
until such party or its successors and assigns shall have
designated otherwise in a notice given in accordance with this
Section 15.8:
If to Lender:
▇▇▇▇▇▇ Guaranty Trust Company of New York
c/o ▇.▇ ▇▇▇▇▇▇ Investment Management Inc.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: J. ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇.▇.
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
with an additional copy to:
▇▇▇▇▇▇, ▇▇▇▇▇ & ▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
If to Borrower:
▇▇▇▇▇▇/▇▇▇▇▇▇ Operating Partnership, L.P.
One Lincoln Center
▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇ & ▇▇▇▇▇
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
(b) Such notices, requests, approvals, communications
and demands shall be deemed given on the date on which
delivered or on the date on which the attempted initial
delivery is refused or cannot be made because of a change of
address of which the sending party has not been notified.
15.9 [Intentionally Omitted]
15.10 Waivers.
Lender shall not by any act, delay, omission or
otherwise be deemed to have waived any of its rights, remedies or
privileges hereunder and no waiver shall be valid unless in
writing, signed by Lender, and then only to the extent therein
set forth. A waiver by Lender of any right, remedy or privilege
hereunder on any one occasion shall not be construed as a bar to
any right, remedy or privilege which Lender would otherwise have
had on any future occasion. No failure to exercise nor any delay
in exercising on the part of Lender any right, power or privilege
hereunder or under the other Loan Documents shall be deemed a
waiver of any default or acquiescence therein or shall preclude
any other or further exercise thereof or the exercise of any
other right, power or privilege. All rights and remedies
existing under the Loan Documents are cumulative and not
exclusive of each other and any rights or remedies otherwise
available.
15.11 Marshalling; Payments Set Aside.
Lender shall not be under any obligation to marshal any
assets in favor of Borrower or any other party or against or in
payment of any or all of the obligations of Borrower under the
Loan Documents. To the extent that Borrower makes a payment or
payments to Lender or Lender enforces its Encumbrances or
exercises any rights of setoff, and such payment or payments or
the proceeds of such enforcement or setoff or any part thereof
are subsequently invalidated, declared to be fraudulent or
preferential, set aside and/or required to be repaid to a
trustee, receiver or any other party under any bankruptcy law,
state or Federal law, common law or equitable cause, then to the
extent of such recovery, the obligation or part thereof
originally intended to be satisfied, and all such Encumbrances
and rights and remedies therefor, shall be revived and continue
in full force and effect as if such payment had not been made or
such enforcement or setoff had not occurred.
15.12 Liens Absolute, Multisite Real Estate Collateral Transaction.
Borrower acknowledges that the Loan Documents
collectively secure the Obligations. Borrower agrees that
Lender's Encumbrances on the Collateral and all the Obligations
hereunder shall be absolute and unconditional and shall not in
any manner be affected or impaired by:
(a) any lack of validity or enforceability of any of
the Loan Documents, any agreement with respect to any of the
Obligations or any other agreement or instrument relating to
any of the foregoing;
(b) any acceptance by Lender of any additional
security for or guarantees of any of the Obligations;
(c) any failure, neglect or omission on the part of
Lender to realize upon or protect any of the Obligations or
any Collateral or due to any other circumstance which might
otherwise constitute a defense available to, or a discharge
of, Borrower in respect of the Obligations or any of the
Loan Documents (other than the indefeasible payment in full
in cash of all of the Obligations);
(d) any change in the time, manner or place of payment
of, or in any other term of, all or any of the Obligations;
(e) any release (except as to the property released),
sale, pledge, surrender, compromise, settlement,
nonperfection, renewal, extension, indulgence, alteration,
exchange, modification or disposition of any of the
Obligations hereby secured or of any of the Collateral;
(f) any amendment or waiver of or any consent to any
departure from any of the Loan Documents or of any guaranty
thereof, if any, and Lender may in its discretion foreclose,
exercise any power of sale, or exercise any other remedy
available to it under any or all of the Loan Documents; and
(g) any exercise of the rights or remedies of Lender
under any of the other Loan Documents.
Borrower specifically consents and agrees that Lender may
exercise its rights and remedies hereunder and under the other
Loan Documents separately or concurrently and in any order that
Lender may deem appropriate.
15.13 Waiver of Jury Trial.
TO THE EXTENT PERMITTED BY APPLICABLE LAW, EACH OF THE
PARTIES TO THIS LOAN AGREEMENT HEREBY AGREES TO WAIVE ITS
RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION
BASED UPON OR ARISING OUT OF THIS LOAN AGREEMENT, ANY OTHER LOAN
DOCUMENT, OR ANY DEALINGS BETWEEN THEM RELATING TO THE SUBJECT
MATTER OF THIS CREDIT TRANSACTION AND LENDER/BORROWER
RELATIONSHIP THAT IS BEING ESTABLISHED. THE SCOPE OF THIS WAIVER
IS INTENDED TO ENCOMPASS ANY AND ALL DISPUTES THAT MAY BE FILED
IN ANY COURT AND THAT RELATE TO THE SUBJECT MATTER OF THIS
TRANSACTION, INCLUDING WITHOUT LIMITATION, CONTRACT CLAIMS, TORT
CLAIMS, BREACH OF DUTY CLAIMS, AND ALL OTHER COMMON LAW AND
STATUTORY CLAIMS. EACH PARTY HERETO ACKNOWLEDGES THAT THIS
WAIVER IS A MATERIAL INDUCEMENT TO ENTER INTO THIS LOAN AGREEMENT
AND THE OTHER LOAN DOCUMENTS, AND THAT EACH WILL CONTINUE TO RELY
ON THE WAIVER IN THEIR RELATED FUTURE DEALING. EACH PARTY HERETO
FURTHER WARRANTS AND REPRESENTS THAT IT HAS REVIEWED THIS WAIVER
WITH ITS LEGAL COUNSEL, AND THAT IT KNOWINGLY AND VOLUNTARILY
WAIVES ITS JURY TRIAL RIGHTS FOLLOWING CONSULTATION WITH LEGAL
COUNSEL. THIS WAIVER IS IRREVOCABLE, MEANING THAT IT MAY NOT BE
MODIFIED EITHER ORALLY OR IN WRITING, AND THE WAIVER SHALL APPLY
TO ANY SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS OR
MODIFICATIONS TO THIS LOAN AGREEMENT, ANY SECURITY DOCUMENT, OR
ANY OTHER DOCUMENTS OR AGREEMENTS RELATING TO THE MORTGAGE LOANS.
IN THE EVENT OF LITIGATION, THIS LOAN AGREEMENT MAY BE FILED AS A
WRITTEN CONSENT TO A TRIAL BY THE COURT.
15.14 Interest Rate Limitation.
Notwithstanding anything in this Loan Agreement or in
the Mortgage Notes to the contrary, if at any time the Interest
Rate, together with all fees and charges which are treated as
interest under applicable law, including the Default Rate
(collectively, the "Charges"), as provided for in this Loan
Agreement or in any other document executed in connection
herewith, or otherwise contracted for, charged, received, taken
or reserved by Lender, shall exceed the maximum lawful rate (the
"Legal Rate") which may be contracted for, charged, taken,
received or reserved by Lender in accordance with applicable law,
the interest rate applicable to each Mortgage Note held by
Lender, together with all Charges payable to Lender, shall be
limited to the Legal Rate and any interest or Charges not so
charged, taken, received or reserved by Lender at such time shall
be spread, prorated or amortized over the term of this Loan
Agreement or such Mortgage Note to the fullest extent permitted
by law.
15.15 Entire Agreement; Confirmation of Prior Agreements.
(a) This Loan Agreement and the other Loan Documents
and any additional agreements signed on the date
hereof, or previously signed and confirmed in writing
on the date hereof, constitute the entire agreement
among the parties pertaining to the subject matter
hereof and thereof and supersede all prior agreements,
understandings, representations or other arrangements,
whether express or implied, written or oral, of the
parties in connection herewith or therewith except to
the extent expressly incorporated or specifically
referred to herein.
(b) Borrower hereby confirms that it assumes all of
the obligations of the Borrower under each Loan Document
that is not otherwise being amended or confirmed pursuant to
separate written agreement concurrently with the execution
of this Loan Agreement, including without limitation each
Environmental Indemnity and Lease Assignment, and confirms
that except to the extent expressly amended by Section
15.15(c) below or elsewhere in this Loan Agreement, each
such document remains unmodified and in full force and
effect. The Borrower also hereby confirms and assumes all
of the obligations under each Loan Document that is being
amended pursuant to separate written agreement concurrently
with the execution and delivery hereof, as amended by each
such respective separate written agreement.
(c)(i) The following exhibit and schedule to the
Environmental Indemnity are hereby amended and replaced with
the version of such exhibit and schedule attached hereto:
Schedule I Environmental Reports
Exhibit A List of Mortgaged Properties.
(ii) Each of the representations and warranties made by
Borrower in the Environmental Indemnity shall be deemed made
on (and as of) the date hereof with respect to the Mortgaged
Properties.
(iii) All notices and communications to be given
under the Environmental Indemnity shall be given to the
Persons and to the addresses and fax numbers set forth in
Section 15.8 of this Loan Agreement in lieu of such
information set forth in Section 7 of the Environmental
Indemnity.
(iv) Each capitalized term used in the Environmental
Indemnity and also defined in this Loan Agreement shall have
the meaning in the Environmental Indemnity given to such
term in this Loan Agreement.
15.16 Relationship of Lender to Borrower and Third
Parties.
Borrower agrees that Lender (a) shall not be liable to
any contractor, subcontractor, supplier, laborer, architect,
engineer or any other party for services performed or materials
supplied in connection with any Mortgaged Property, (b) shall not
be liable for any debts or claims accruing in favor of any such
parties against Borrower or others against any Mortgaged
Property, and (c) are not now, and upon the exercise of any or
all of their respective remedies under this Loan Agreement or any
of the other Loan Documents, shall not be, joint venturers or
partners with Borrower in any manner whatsoever. Lender shall
not be deemed to be in privity of contract with any contractor or
provider of services to any Mortgaged Property, nor shall any
payment of funds directly to a contractor, subcontractor or
provider of services be deemed to create any third party
beneficiary status or recognition of same by Lender. Borrower
agrees that Lender shall have no duty to detect or warn Borrower
or any third party of any deficiency or defect in any matter or
thing submitted to Lender for approval or otherwise. Approvals
granted by Lender to Borrower for any matters covered under this
Loan Agreement or the other Loan Documents shall be narrowly
construed to cover only the parties and facts identified in any
written approval or, if not in writing, such approvals shall be
solely for benefit of Borrower. Borrower is not, nor shall it
be, an agent of Lender for any purposes.
15.17 GOVERNING LAW.
THIS LOAN AGREEMENT SHALL IN ALL RESPECTS BE GOVERNED
BY, AND BE CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAWS
OF THE STATE OF NEW YORK, WITHOUT REGARD TO ITS PRINCIPLES OF
CONFLICTS OF LAWS.
15.18 JURISDICTION; SERVICE OF PROCESS.
THE PARTIES HERETO CONSENT FOR THEMSELVES AND IN
RESPECT OF THEIR PROPERTIES, GENERALLY, UNCONDITIONALLY AND
IRREVOCABLY, TO THE NONEXCLUSIVE JURISDICTION OF THE FEDERAL AND
STATE COURTS IN THE STATE OF NEW YORK WITH RESPECT TO ANY
PROCEEDING RELATING TO ANY MATTER, CLAIM OR DISPUTE ARISING UNDER
THE LOAN DOCUMENTS OR THE TRANSACTIONS CONTEMPLATED THEREBY.
BORROWER FURTHER CONSENTS, GENERALLY, UNCONDITIONALLY AND
IRREVOCABLY, TO THE NONEXCLUSIVE JURISDICTION OF THE STATE AND
FEDERAL COURTS OF EACH STATE IN WHICH ANY OF THE COLLATERAL IS
LOCATED IN RESPECT OF ANY PROCEEDING RELATING TO ANY MATTER,
CLAIM OR DISPUTE ARISING WITH RESPECT TO SUCH COLLATERAL.
BORROWER FURTHER IRREVOCABLY CONSENTS TO THE SERVICE OF PROCESS,
GENERALLY, UNCONDITIONALLY AND IRREVOCABLY, AT THE ADDRESSES SET
FORTH IN SECTION 15.8 HEREOF IN CONNECTION WITH ANY OF THE
AFORESAID PROCEEDINGS IN ACCORDANCE WITH THE RULES APPLICABLE TO
SUCH PROCEEDINGS. BORROWER HEREBY IRREVOCABLY WAIVES ANY
OBJECTION WHICH IT MAY NOW HAVE OR HAVE IN THE FUTURE TO THE
LAYING OF VENUE IN RESPECT OF ANY OF THE AFORESAID PROCEEDINGS
BROUGHT IN THE COURTS REFERRED TO ABOVE AND AGREES NOT TO PLEAD
OR CLAIM IN ANY SUCH COURT THAT ANY SUCH ACTION OR PROCEEDING
BROUGHT IN ANY SUCH COURT HAS BEEN BROUGHT IN AN INCONVENIENT
FORUM. NOTHING HEREIN SHALL AFFECT THE RIGHT OF LENDER TO SERVE
PROCESS IN ANY MANNER PERMITTED BY LAW OR TO COMMENCE PROCEEDINGS
OR OTHERWISE PROCEED AGAINST BORROWER IN ANY JURISDICTION.
* * *
IN WITNESS WHEREOF, Borrower and Lender have caused
this Loan Agreement to be duly executed as of the date and year
first above written.
▇▇▇▇▇▇ GUARANTY TRUST COMPANY
OF NEW YORK
as Trustee under Declaration of
Trust dated December 9, 1960, as
amended, for the Commingled Pension
Trust Fund (Fixed Income-Mortgage
Private Placements)
By:___________________________________
Name:
Title:
▇▇▇▇▇▇/DREVER OPERATING
PARTNERSHIP, L.P.
By: ▇▇▇▇▇▇ Residential Properties, Inc., a
Maryland corporation, its sole
general partner
By:_________________________________
Name:
Title:
Initial account for payments to
Lender pursuant to Section 4.7:
Nationsbank of Texas, N.A.
Dallas, TX
ABA #▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, Inc.
Clearing Account #1390002220
ANNEX 1
List of Existing Notes
1. Canyon Ridge: Mortgage Note 1, dated June
23, 1994, in the amount of
$2,500,000.00
2. Holiday on ▇▇▇▇▇: Mortgage Note 2, dated June
23, 1994, in the amount of
$5,000,000.00
3. Bayou Oaks: Mortgage Note 3, dated June
23, 1994, in the amount of
$2,900,000.00
4. Shadowridge: Mortgage Note 4, dated June
23, 1994, in the amount of
$2,780,000.00
5. Montfort Oaks: Mortgage Note 5, dated June
23, 1994, in the amount of
$5,400,000.00
6. Saratoga Springs (f/k/a Pleasant Lake): Mortgage Note 6,
dated June 23, 1994, in the
amount of $4,600,000.00
7. Northwoods: Mortgage Note 7, dated June
30, 1994, in the amount of
$2,980,000.00
8. Shadow Creek (f/k/a Stoney Creek): Mortgage Note 8, dated
June 30, 1994, in the amount
of $6,350,000.00
9. Bent Creek: Mortgage Note 9, dated June
30, 1994, in the amount of
$4,360,000.00
10. Silverado: Mortgage Note 10, dated July
7, 1994, in the amount of
$5,250,000.00
11. Creekwood: Mortgage Note 11, dated
August 18, 1994, in the amount
of $5,325,000.00
12. Sun Ridge (f/k/a/ Horizon): Mortgage Note 12, dated
September 29, 1994, in the
amount of $3,375,000.00
13. ▇▇▇▇▇▇▇▇ Creek: Mortgage Note 13, dated
September 29, 1994, in the
amount of $3,250,000.00
14. ▇▇▇▇▇▇▇ ▇▇▇▇▇: Mortgage Note 14, dated
October 27, 1994, in the
amount of $3,150,000.00
15. Cimarron Park: Mortgage Note 15, dated
November 30, 1994, in the
amount of $2,350,000.00
16. Rafters: Mortgage Note 16, dated
November 30, 1994, in the
amount of $4,100,000.00
17. Willowick: Mortgage Note 17, dated
November 30, 1994, in the
amount of $4,075,000.00
18. Wharf: Mortgage Note 18, dated
November 30, 1994, in the
amount of $4,055,000.00
19. Trinity ▇▇▇▇▇: Mortgage Note 19, dated
February 28, 1995, in the
amount of $3,675,000.00
20. ▇▇▇▇ ▇▇▇▇▇▇: Mortgage Note 20, dated April
25, 1995, in the amount of
$6,000,000.00
ANNEX 2
List of Existing Mortgages
All Mortgages granted by Borrower to Lender with
respect to the Mortgaged Properties, including, without
limitation, the following:
GEORGIA
(1) Deed to Secure Debt, Security Agreement, Fixture
Filing Statement, Assignment of Leases and Rents and Financing
Statement made by Apartment Opportunity Fund II, L.P., as
predecessor in interest to Borrower, for the benefit of Lender,
dated as of June 23, 1994 and filed for record on June 30, 1994 in
Book 10457, Page 0223, in the Office, Clerk Superior Court,
Gwinnett County, Georgia, as amended by instrument dated July 25,
1995, recorded August 9, 1995 in Book 11586, Page 153;
(2) Deed to Secure Debt, Security Agreement, Fixture
Filing Statement, Assignment of Leases and Rents and Financing
Statement made by Borrower for the benefit of Lender, dated as of
October 27, 1994, and filed for record on December 30, 1994 in Deed
Book 19125, Page 229, with the Clerk of the Superior Court of
▇▇▇▇▇▇ County, Georgia, as amended by instrument dated July 25,
1995, recorded August 7, 1995 in Deed Book 19847, Page 145.
TEXAS
(1) Deed of Trust, Security Agreement, Fixture Filing
Statement, Assignment of Leases and Rents and Financing Statement
made by Borrower for the benefit of Lender, dated as of June 23,
1994 and filed for record in the Deed of Trust Records of Dallas
County, Texas on June 29, 1994 in Volume 94124, Page 02573, in
the Official Public Records of Real Property of ▇▇▇▇▇▇ County,
Texas on June 29, 1994 under County Clerk's File No. P935776, and
in the Real Property Records of Rockwall County, Texas on June
29, 1994 in Volume 0915, Page 247 (the "June 23 Deed of Trust");
(2) Deed of Trust, Security Agreement, Fixture Filing
Statement, Assignment of Leases and Rents and Financing Statement
made by Borrower for the benefit of Lender, dated as of June 30,
1994 and filed for record in the Deed of Trust Records of Dallas
County, Texas on June 30, 1994 in Volume 94125, Page 04835, in
the Official Public Records of Real Property of ▇▇▇▇▇▇ County,
Texas on June 30, 1994 under County Clerk's File No. P938540, in
the Real Property Records of ▇▇▇▇▇▇ County, Texas on June 30,
1994 in Volume 12219, Page 0553, and in the Real Property Records
of Rockwall County, Texas on July 1, 1994 in Volume 0916, Page
202 (the "June 30 Deed of Trust");
(3) Deed of Trust, Security Agreement, Fixture Filing
Statement, Assignment of Leases and Rents and Financing Statement
made by Borrower for the benefit of Lender, dated July 7, 1994
and filed for record in the Deed of Trust Records of Dallas
County, Texas on July 8, 1994 in Volume 94130, Page 01932, in the
Official Public Records of Real Property of ▇▇▇▇▇▇ County, Texas
on July 8, 1994 under County Clerk's File No. P950733, in the
Real Property Records of ▇▇▇▇▇▇ County, Texas on July 8, 1994 in
Volume 12224, Page 1746, and in the Real Property Records of
Rockwall County, Texas on July 8, 1994 in Volume 0919, Page 144
(the "July 7 Deed of Trust" and, collectively with the June 30
Deed of Trust, each as amended by the First Amendment, the "June
30 and July 7 Deeds of Trust", which June 30 and July 7 Deeds of
Trust were previously amended by that certain Amendment of Deeds
of Trust and Assignments of Rents and Leases executed by Borrower
and Lender, dated as of September 29, 1994, and filed for record
in the Deed Records of Dallas County, Texas on November 2, 1994
in Volume 94212, Page 01873, in the Official Public Records of
Real Property of ▇▇▇▇▇▇ County, Texas on November 3, 1994, under
County Clerk's File No. R131490, in the Real Property Records of
▇▇▇▇▇▇ County, Texas on November 2, 1994 in Volume 12306, Page
0230, and in the Real Property Records of Rockwall County, Texas
on November 2, 1994 in Volume 0955, Page 047 (the "First
Amendment");
(4) Deed of Trust, Security Agreement, Fixture Filing
Statement, Assignment of Leases and Rents and Financing Statement
made by Borrower for the benefit of Lender, dated August 18, 1994
and filed for record in the Deed of Trust Records of Dallas
County, Texas on August 19, 1994 in Volume 94161, Page 02306, in
the Official Public Records of Real Property of ▇▇▇▇▇▇ County,
Texas on August 19, 1994 under County Clerk's File No. R018785,
in the Real Property Records of ▇▇▇▇▇▇ County, Texas on August
19, 1994 in Volume 12254, Page 0567, and in the Real Property
Records of Rockwall County, Texas on August 19, 1994 in Volume
0932, Page 136 (the "August 18 Deed of Trust");
(5) Deed of Trust, Security Agreement, Fixture Filing
Statement, Assignment of Leases and Rents and Financing Statement
made by Borrower for the benefit of Lender, dated November 30,
1994 and filed for record in the Deed of Trust Records of Dallas
County, Texas on December 2, 1994 in Volume 94232, Page 01943, in
the Official Public Records of Real Property of ▇▇▇▇▇▇ County,
Texas on December 2, 1994 under County Clerk's File No. R173345,
in the Real Property Records of ▇▇▇▇▇▇ County, Texas on December
2, 1994 in Volume 12325, Page 1458, in the Real Property Records
of Rockwall County, Texas on December 2, 1994 in Volume 0963,
Page 034, in the Official Public Records of Real Property of
▇▇▇▇▇▇▇▇▇▇ County, Texas on December 2, 1994 under Clerk's File
No. 9466759, and in the Official Public Records of Nueces County,
Texas on December 1, 1994 as Document No. 940270 (the "November
30 Deed of Trust"); and
(6) Deed of Trust, Security Agreement, Fixture Filing
Statement, Assignment of Leases and Rents and Financing Statement
made by Borrower for the benefit of Lender, dated February 28,
1995 and filed for record in the Deed of Trust Records of Dallas
County, Texas on March 2, 1995 in Volume 95042, Page 00645, in
the Official Public Records of Real Property of ▇▇▇▇▇▇ County,
Texas on March 2, 1995 under County Clerk's File No. R290632, in
the Real Property Records of ▇▇▇▇▇▇ County, Texas on March 2,
1995 in Volume 12385, Page 0223, in the Real Property Records of
Rockwall County, Texas on March 2, 1995 in Volume 0987, Page 061,
in the Official Public Records of Real Property of ▇▇▇▇▇▇▇▇▇▇
County, Texas on March 2, 1995 under Clerk's File No. 9511324,
and in the Official Public Records of Nueces County, Texas on
March 2, 1995 as Document No. 952224 (the "February 28 Deed of
Trust");
All as amended by that certain Amendment of Deeds of
Trust dated as of July 25, 1995, and filed for record in (a) the
Deed Records of Dallas County, Texas, on March 22, 1996 in Volume
95150, Page 5799, (b) the Official Public Records of Real
Property of ▇▇▇▇▇▇ County, Texas under County Clerk's File No.
R512003, (c) the Real Property Records of ▇▇▇▇▇▇ County, Texas on
August 3, 1995, in Volume 1028, Page 207, (d) the Real Property
Records of Rockwall County, Texas on July 25, 1995 in Volume
1028, Page 207, and (e) the Official Public Records of Nueces
County, Texas under Clerk's File No. 972258 (the "Second
Amendment").
CALIFORNIA
(1) Deed of Trust, Security Agreement, Fixture Filing
Statement, Assignment of Leases and Rents and Financing Statement
made by Borrower for the benefit of Lender, dated as of September
29, 1994 and filed for record on October 31, 1994 as Document No.
1994-0635741 in the Official Records of the San Diego County
Recorder's Office in San Diego, California (the "▇▇▇▇▇▇▇▇ Creek
Deed of Trust");
(2) Deed of Trust, Security Agreement, Fixture Filing
Statement, Assignment of Leases and Rents and Financing Statement
made by the Borrower for the benefit of Lender, dated as of
September 29, 1994, and filed for record on October 31, 1994 as
Document No. 1994-0635739 in the Official Records of the San
Diego County Recorder's Office in San Diego, California (the
"Horizon Deed of Trust"); and
(3) Deed of Trust, Security Agreement, Fixture Filing
Statement, Assignment of Leases and Rents and Financing Statement
made by the Borrower for the benefit of Lender, dated as of April
25, 1995, and filed for record on April 25, 1995 as Document No.
1995-0173250 in the Official Records of the San Diego County
Recorder's Office in San Diego, California (the "▇▇▇▇ ▇▇▇▇▇▇ Deed
of Trust");
each as amended by Amendment of Deeds of Trust, dated as of July
25, 1995, filed for record on August 3, 1995 as Document #1995-0336143
in the Official Records of the San Diego County
Recorder's Office in San Diego, California
ANNEX 3
List of Title Policies
EXHIBIT A
Certificate of Limited Partnership
EXHIBIT B
Form of Environmental Indemnity Agreement
EXHIBIT C-1
Form of Amended and Restated Mortgage Note - Loan A
EXHIBIT C-2
Form of New Mortgage Note - Loan B
EXHIBIT C-3
Form of New Mortgage Note - Loan C
EXHIBIT D
Partnership Agreement
EXHIBIT E
Metropolitan Area List
Texas
Dallas
Houston
Conroe
Clearlake
Austin
San Antonio
Fort Worth
Georgia
Atlanta
Savannah
California
Major Metropolitan Areas
EXHIBIT F
Borrower's General Partner's Certificate of Incorporation
EXHIBIT G
Form of Amended and Restated Escrow Agreement
SCHEDULE 1.1-B
List of Mortgage Loans
A. Loan A
Apartment Project Loan Amount
Saratoga Springs
(f/k/a Pleasant Lake) $4,404,237.27
Canyon Ridge $2,393,607.23
Holiday on ▇▇▇▇▇ $4,787,214.48
Bayou Oaks $2,776,584.44
Shadowridge $2,661,689.77
Montfort Oaks $5,170,191.40
Northwoods $2,853,178.35
Bent Creek $4,174,448.18
Shadow Creek
(f/k/a Stoney Creek) $6,079,758.99
Silverado $5,026,571.68
Creekwood $5,098,381.54
▇▇▇▇▇▇▇▇ Creek $3,111,685.93
Sun Ridge (f/k/a Horizon) $3,231,364.67
▇▇▇▇▇▇▇ ▇▇▇▇▇ $3,015,941.67
Cimarron Park $2,249,987.53
Rafters $3,925,515.75
Willowick $3,901,574.80
Wharf $3,882,431.23
Trinity ▇▇▇▇▇ $3,530,578.32
▇▇▇▇ ▇▇▇▇▇▇ $5,777,015.57
B. Loan B
All Properties $30,000,000.00
Loan C
All Properties $1,948,041.20
SCHEDULE 1.1-C
List of Properties
Saratoga Springs (f/k/a Pleasant Lake Village), Duluth, ▇▇▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇▇▇
Holiday on ▇▇▇▇▇ Apartments, Houston, Texas
Bayou Oaks Apartments, Houston, Texas
Shadowridge Village Apartments, Dallas, Texas
Montfort Oaks Apartments, Dallas, Texas
Northwoods, Houston, Texas
Shadow Creek (f/k/a Stoney Creek), Austin, Texas
Bent Creek, Dallas, Texas
Silverado, Houston, Texas
Creekwood, Dallas, Texas
▇▇▇▇▇▇▇▇ Creek, Escondido, California
Sun Ridge (f/k/a Horizon), Santee, California
▇▇▇▇▇▇▇ ▇▇▇▇▇, Union City, Georgia
Cimarron Park, Conroe, Texas
Rafters, Corpus Christi, Texas
Willowick, Corpus Christi, Texas
Wharf, Corpus Christi, Texas
Trinity ▇▇▇▇▇, Carrollton, Texas
▇▇▇▇ ▇▇▇▇▇▇, National City, California
SCHEDULE 4.3(b)-1
Allocation of Loan B Among Mortgaged Properties
SCHEDULE 4.3(b)-2
Allocation of Loan C Among Mortgaged Properties
SCHEDULE 8(l)
Certain Debt
SCHEDULE 8(v)
List of Properties Located in Flood Zones
Bayou Oaks: a portion of the Bayou Oaks property is
located in a one hundred year flood
plain
Bent Creek: a portion of the Bent Creek property is
located in a one hundred year flood
plain
Stoney Creek: a portion of the Stoney Creek property
is located in a one hundred year flood
plain
Silverado: a portion of the Silverado property is
located in a one hundred year flood
plain
▇▇▇▇▇▇▇ ▇▇▇▇▇: a portion of the ▇▇▇▇▇▇▇ ▇▇▇▇▇ property
is located in a five hundred year flood
plain
SCHEDULE 15.15(a)
Revised Schedule I to
Environmental Indemnity
SCHEDULE I
Environmental Reports
1. ▇▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ Phase I
Environmental Site Assessment and Limited Asbestos Sampling,
dated November 24, 1993, prepared by Fugro Environmental,
Inc.
2. ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇▇▇ Report of
Preliminary Environmental Site Assessment and Limited
Asbestos Survey, dated December 8, 1993, prepared by Law
Engineering, Inc.
3. Holiday on ▇▇▇▇▇ Apartments, Houston, Texas Report of
Phase I Environmental Site Assessment and Limited Asbestos
Survey, dated December 14, 1993, prepared by Law
Engineering, Inc.
4. The Bayou Oaks Apartments, Houston, Texas Report of Phase
I Environmental Site Assessment and Limited Asbestos Survey,
dated December 21, 1993, prepared by Law Engineering, Inc.
5. The Shadowridge Village Apartments, Dallas, Texas Phase I
Environmental Site Assessment and Limited Environmental
Sampling, dated March 22, 1994, prepared by Fugro
Environmental, Inc.
6. Montfort Oaks, Dallas, Texas Phase I Environmental Site
Assessment and Limited Asbestos Survey, dated March 22,
1994, prepared by Law Engineering, Inc.
7. Northwoods Apartments, Houston, Texas Phase I
Environmental Site Assessment and Limited Environmental
Sampling, dated March 22, 1994, prepared by Fugro
Environmental, Inc.
8. Bent Creek Apartments, Dallas, Texas Phase I Environmental
Site Assessment and Limited Environmental Sampling, dated
March 22, 1994, prepared by Fugro Environmental, Inc.
9. Stoney Creek Apartments, Austin, Texas Phase I
Environmental Site Assessment and Limited Environmental
Sampling, dated March 22, 1994, prepared by Fugro
Environmental, Inc.
10. Silverado Apartments, Houston, Texas Phase I Environmental
Site Assessment and Limited Environmental Sampling, dated
June 22, 1994, prepared by Fugro Environmental, Inc.
▇▇. ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇ Phase I Environmental
Assessment and Limited Asbestos Survey, dated August 8,
1994, prepared by Law Engineering, Inc.
12. ▇▇▇▇▇▇▇▇ Creek Apartments, Escondido, California Phase I
Environmental Site Assessment and Limited Asbestos Sampling,
dated July 29, 1994, prepared by Fugro West, Inc.
13. Horizon Apartments, Santee, California Phase I
Environmental Assessment and Limited Asbestos Survey, dated
July 14, 1994, prepared by Law/▇▇▇▇▇▇▇▇, Inc.
14. ▇▇▇▇▇▇▇ ▇▇▇▇▇ Apartments, Union City, Georgia Phase I
Environmental Site Assessment and Limited Environmental
Sampling, dated August 5, 1994, prepared by Fugro
Environmental, Inc.
15. Cimarron Park Apartments, Conroe, Texas Phase I
Environmental Site Assessment, Limited Asbestos Survey and
Environmental Sampling, dated September 28, 1994, prepared
by Law Engineering and Environmental Services.
16. Rafters Apartments, Corpus Christi, Texas Phase I
Environmental Site Assessment and Limited Asbestos Sampling,
dated September 13, 1994, prepared by Fugro Environmental,
Inc.
17. Willowick Apartments, Corpus Christi, Texas Phase I
Environmental Site Assessment and Limited Environmental
Sampling, dated September 14, 1994, prepared by Fugro
Environmental, Inc.
18. ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇ Phase I
Environmental Site Assessment and Limited Asbestos Sampling,
dated September 13, 1994, prepared by Fugro Environmental,
Inc.
19. Trinity ▇▇▇▇▇ Apartments, Carrollton, Texas Phase I
Environmental Site Assessment and Limited Asbestos Sampling,
dated December 5, 1994, and Phase II Environmental Site
Assessment Subsurface Investigation, dated January 5, 1995,
prepared by Fugro Environmental, Inc.
20. ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ Phase I
Environmental Site Assessment and Limited Asbestos Survey,
dated April 12, 1995, prepared by Law/▇▇▇▇▇▇▇▇, Inc., and
Law Engineering, Inc.
SCHEDULE 15.15(b)
Revised Exhibit A to
Environmental Indemnity
EXHIBIT A
List of Properties
Saratoga Springs (f/k/a Pleasant Lake Village), Duluth, ▇▇▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇▇▇
Holiday on ▇▇▇▇▇ Apartments, Houston, Texas
Bayou Oaks Apartments, Houston, Texas
Shadowridge Village Apartments, Dallas, Texas
Montfort Oaks Apartments, Dallas, Texas
Northwoods, Houston, Texas
Shadow Creek (f/k/a Stoney Creek), Austin, Texas
Bent Creek, Dallas, Texas
Silverado, Houston, Texas
Creekwood, Dallas, Texas
▇▇▇▇▇▇▇▇ Creek, Escondido, California
Horizon, Santee, California
▇▇▇▇▇▇▇ ▇▇▇▇▇, Union City, Georgia
Cimarron Park, Conroe, Texas
Rafters, Corpus Christi, Texas
Willowick, Corpus Christi, Texas
Wharf, Corpus Christi, Texas
Trinity ▇▇▇▇▇, Carrollton, Texas
▇▇▇▇ ▇▇▇▇▇▇, National City, California
TABLE OF CONTENTS
Page
Section 1. Definitions; Principles of Construction.. . . . . . . . . . . .2
1.1 Definitions. . . . . . . . . . . . . . . . . . . . . . . . . .2
1.2 Principles of Interpretation.. . . . . . . . . . . . . . . . 15
Section 2. Nonrecourse Obligations.. . . . . . . . . . . . . . . . . . . 15
2.1 Nonrecourse Obligations. . . . . . . . . . . . . . . . . . . 15
Section 3. Loan; Disbursement to Borrower. . . . . . . . . . . . . . . . 15
3.1 Loan.. . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
3.2 Notes. . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
3.3 Term.. . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
3.4 Use of Proceeds. . . . . . . . . . . . . . . . . . . . . . . 16
Section 4. Payments of Principal and Interest; Lien Releases.. . . . . . 16
4.1 Principal Payments.. . . . . . . . . . . . . . . . . . . . . 16
4.2 Prepayments. . . . . . . . . . . . . . . . . . . . . . . . . 16
4.3 Lien Releases. . . . . . . . . . . . . . . . . . . . . . . . 17
4.4 Interest Payments. . . . . . . . . . . . . . . . . . . . . . 19
4.5 Default Rate; Post-Maturity Interest.. . . . . . . . . . . . 19
4.6 Computations.. . . . . . . . . . . . . . . . . . . . . . . . 20
4.7 Method of Payments.. . . . . . . . . . . . . . . . . . . . . 20
Section 5. Deposits for Taxes and Insurance Premiums and Capital. 20
Section 6. Condemnation and Casualty.. . . . . . . . . . . . . . . . . . 22
Section 7. Conditions Precedent. . . . . . . . . . . . . . . . . . . . . 25
Section 8. Representations and Warranties of Borrower. . . . . . . . . . 33
Section 9. General Covenants of Borrower.. . . . . . . . . . . . . . . . 43
9.1 Affirmative Covenants. . . . . . . . . . . . . . . . . . . . 43
9.2 Negative Covenants.. . . . . . . . . . . . . . . . . . . . . 46
Section 10. Property-Specific Covenants of Borrower. . . . . . . . . . . 47
10.1 Affirmative Covenants.. . . . . . . . . . . . . . . . . . . 47
10.2 Negative Covenants. . . . . . . . . . . . . . . . . . . . . 60
Section 11. Conversion to Unsecured Loans.. . . . . . . . . . . . . . . 62
Section 12. Events of Default.. . . . . . . . . . . . . . . . . . . . . 62
Section 13. Remedies. . . . . . . . . . . . . . . . . . . . . . . . . . 65
13.1 Remedies. . . . . . . . . . . . . . . . . . . . . . . . . . 65
13.2 Foreclosure Proceeds. . . . . . . . . . . . . . . . . . . . 66
Section 14. Restrictions on Transfer. . . . . . . . . . . . . . . . . . 66
Section 15. Miscellaneous. . . . . . . . . . . . . . . . . . . . . . . . 68
15.1 Amendments. . . . . . . . . . . . . . . . . . . . . . . . . 68
15.2 Binding Effect; Successors and Assigns. . . . . . . . . . . 68
15.3 Captions. . . . . . . . . . . . . . . . . . . . . . . . . . 68
15.4 Counterparts. . . . . . . . . . . . . . . . . . . . . . . . 68
15.5 Severability. . . . . . . . . . . . . . . . . . . . . . . . 69
15.6 Expenses. . . . . . . . . . . . . . . . . . . . . . . . . . 69
15.7 Survival of Representations, Etc. . . . . . . . . . . . . . 70
15.8 Notices.. . . . . . . . . . . . . . . . . . . . . . . . . . 71
15.9 [Intentionally Omitted] . . . . . . . . . . . . . . . . . . 72
15.10 Waivers. . . . . . . . . . . . . . . . . . . . . . . . . . 72
15.11 Marshalling; Payments Set Aside. . . . . . . . . . . . . . 72
15.12 Liens Absolute, Multisite Real Estate Collateral
Transaction. . . . . . . . . . . . . . . . . . . . . . . . . . . 73
15.13 Waiver of Jury Trial.. . . . . . . . . . . . . . . . . . . 74
15.14 Interest Rate Limitation.. . . . . . . . . . . . . . . . . 74
15.15 Entire Agreement; Confirmation of Prior
Agreements.. . . . . . . . . . . . . . . . . . . . . . . . . . . 75
15.16 Relationship of Lender to Borrower and Third
Parties. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 75
15.17 GOVERNING LAW. . . . . . . . . . . . . . . . . . . . . . . 76
15.18 JURISDICTION; SERVICE OF PROCESS.. . . . . . . . . . . . . 76
ANNEXES
ANNEX 1: List of Existing Notes
ANNEX 2: List of Existing Mortgages
ANNEX 3: List of Title Policies
EXHIBITS
EXHIBIT A: Certificate of Limited Partnership
EXHIBIT B: Form of Environmental Indemnity Agreement
EXHIBIT C: Forms of Mortgage Notes
Exhibit C-1: Form of Amended and Restated
Mortgage Note - Loan A
Exhibit C-2: Form of New Mortgage Note - Loan B
Exhibit C-3: Form of New Mortgage Note - Loan C
EXHIBIT D: Partnership Agreement
EXHIBIT E: Metropolitan Area List
EXHIBIT F: Borrower's General Partner's Certificate of
Incorporation
EXHIBIT G: Form of Amended and Restated Escrow Agreement
SCHEDULES
SCHEDULE 1.1-A: . . . . . . . . . . . . . . . . . . . . .Omitted
SCHEDULE 1.1-B: . . . . . . . . . . . . . List of Mortgage Loans
SCHEDULE 1.1-C: . . . . . . . . . . . . . . . List of Properties
SCHEDULE 4.3(b)-1: . . . . . Allocation of Loan B Among Mortgaged
Properties
SCHEDULE 4.3(b)-2: . . . . . Allocation of Loan C Among Mortgaged
Properties
SCHEDULE 8(l): . . . . . . . . . . . . . . . . . . . Certain Debt
SCHEDULE 8(v): . . . . .List of Properties Located in Flood Zones
SCHEDULE 15.15(a): . . . . . .Revised Schedule I to Environmental Indemnity
SCHEDULE 15.15(b): . . . . . . Revised Exhibit A to Environmental Indemnity
