SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
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FORM 10-K
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[X] ANNUAL REPORT PURSUANT TO Section 13 or 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 1997 OR
[ ] TRANSITION REPORT PURSUANT TO Section 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from ___________ to _____________
Commission File Number 1-12917
WELLSFORD REAL PROPERTIES, INC.
(Exact name of registrant as specified in its charter)
Maryland 13-3926898
(State of organization) (I.R.S. employer
identification number)
610 Fifth Avenue, New York, NY 10020
(Address of principal executive offices) (Zip code)
Registrant's telephone number, including area code: (212) 333-2300
Securities registered pursuant to Section 12(b) of the Act:
Title of each class Name of each exchange
on which registered
Common Stock
$.01 par value American Stock Exchange
Securities registered pursuant to Section 12(g) of the Act: None
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act
of 1934 during the preceding 12 months and (2) has been subject to such
filing requirements for the past 90 days. YES X NO
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Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained,
to the best of registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. [X]
The aggregate market value of the voting shares held by non-affiliates of
the registrant was approximately $233.6 million based on the closing price
on the American Stock Exchange for such shares on March 12, 1998.
The number of the Registrant's shares of Common Stock outstanding was
16,999,688 as of March 12, 1998 (including 339,806 shares of Class A Common
Stock).
Documents Incorporated By Reference
Portions of the Definitive Proxy Statement for the Annual Shareholders'
Meeting to be held May 28, 1998 are incorporated by reference into Part
III.
<PAGE>
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TABLE OF CONTENTS
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Form
10-K
Item Report
No. Page
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PART I
1. Business . . . . . . . . . . . . . . . . . . . . . . . . . .3
2. Properties . . . . . . . . . . . . . . . . . . . . . . . . 10
3. Legal Proceedings . . . . . . . . . . . . . . . . . . . . 10
4. Submission of Matters to a Vote of Security-Holders. . . . 10
PART II
5. Market for Registrant's Common Equity
and Related Shareholder Matters . . . . . . . . . . . 11
6. Selected Consolidated Financial Data . . . . . . . . . . . 12
7. Management's Discussion and Analysis of Financial
Condition and Results of Operations . . . . . . . . . 13
8. Consolidated Financial Statements and Supplementary Data . 17
9. Changes in and Disagreements with Accountants on
Accounting and Financial Disclosure . . . . . . . . . 17
PART III
10. Directors and Executive Officers of the Registrant . . . . 18
11. Executive Compensation . . . . . . . . . . . . . . . . . . 18
12. Security Ownership of Certain Beneficial Owners
and Management. . . . . . . . . . . . . . . . . . . . 18
13. Certain Relationships and Related Transactions . . . . . . 18
PART IV
14. Exhibits, Financial Statement Schedules and Reports
on Form 8-K . . . . . . . . . . . . . . . . . . . . . 19
FINANCIAL STATEMENTS
Consolidated Balance Sheets as of December 31, 1997
and 1996. . . . . . . . . . . . . . . . . . . . . . .F-3
Consolidated Statements of Income for the Years Ended
December 31, 1997 and 1996. . . . . . . . . . . . . .F-4
Consolidated Statements of Changes in Shareholders' Equity
for the Years Ended December 31, 1997 and
1996 and the Period from March 22, 1995 (Inception)
to December 31, 1995. . . . . . . . . . . . . . . . .F-5
Consolidated Statements of Cash Flows for the Years Ended
December 31, 1997 and 1996 and the Period from
March 22, 1995 (Inception) to December 31, 1995 . . .F-6
Notes to Consolidated Financial Statements . . . . . . . .F-7
FINANCIAL STATEMENTS SCHEDULE
III. Real Estate and Accumulated Depreciation . . . . . . . . .S-1
IV. Mortgage Loans on Real Estate. . . . . . . . . . . . . . .S-2
All other schedules have been omitted because the required information for
such other schedules is not present, is not present in amounts sufficient
to require submission of the schedule or is included in the consolidated
financial statements.
<PAGE>
PART I
Item 1. Business.
Wellsford Real Properties, Inc. (and subsidiaries, collectively, the
"Company") was formed on January 8, 1997, as a corporate subsidiary of
Wellsford Residential Property Trust (the "Trust"). The Trust was formed
in 1992 as the successor to Wellsford Group Inc. (and affiliates) which was
formed in 1986. On May 30, 1997, the Trust merged (the "Merger") with
Equity Residential Properties Trust ("EQR"). Immediately prior to the
Merger, the Trust contributed certain of its assets to the Company and the
Company assumed certain liabilities of the Trust. Immediately after the
contribution of assets to the Company and immediately prior to the Merger,
the Trust distributed to its common shareholders all of the outstanding
shares of the Company owned by the Trust (the "Spin-off"). The common
shareholders of the Trust received 0.25 of a common share of the Company
for each common share of the Trust owned. Upon consummation of the Spin-
off and Merger, the Company had issued and outstanding approximately
4,547,771 shares of common stock and 339,806 shares of Class A common stock
that was issued to an affiliate of EQR. On June 2, 1997, the Company sold
12,000,000 shares of its common stock in a private placement (the "Private
Placement") to a group of institutional investors at $10.30 per share, the
Company's then book value per share.
The Company is a real estate merchant banking firm which acquires, develops
and operates real properties and invests in the debt and equity securities
of private and public real estate companies. The Company has established
three strategic business units ("SBUs") within which it intends to execute
its business plan: an SBU for commercial property investments which is held
in its 99.9% subsidiary, Wellsford Commercial Properties Trust ("WCPT"), an
SBU for debt and equity investments and an SBU for property development and
land investments. The Company currently has approximately 34 employees.
See the accompanying consolidated financial statements for certain
financial information regarding the Company's industry segments.
Commercial Property Investments - WCPT
The Company, through WCPT, seeks to acquire commercial properties below
replacement cost and operate and/or resell the properties after renovation,
redevelopment and/or repositioning. The Company believes that appropriate
well-located commercial properties which are currently underperforming can
be acquired on advantageous terms and repositioned with the expectation of
achieving returns which are greater than returns which could be achieved by
acquiring a stabilized property.
At the time of the Spin-off, the Company owned six commercial office
buildings, five of which were vacant, located in Northern New Jersey,
containing an aggregate of approximately 949,400 square feet and acquired
for an aggregate of approximately $47.6 million (the "WRP Commercial
Properties").
On August 28, 1997, the Company, through WCPT, in a joint venture with
WHWEL Real Estate Limited Partnership ("Whitehall"), an affiliate of
Goldman, Sachs & Co., formed a private real estate operating company,
Wellsford/Whitehall Properties, L.L.C. ("Wellsford Commercial"). Wellsford
Commercial's initial target markets include New York, New Jersey,
Connecticut and the Boston and Washington D.C. metropolitan areas. WCPT
manages Wellsford Commercial on a day-to-day basis, and certain major
decisions require the consent of both partners. WCPT intends to qualify as
a real estate investment trust ("REIT") and has a 50.1% interest in
Wellsford Commercial.
Wellsford Commercial owned and operated 13 office buildings containing
approximately 2.3 million square feet ("SF") of office space in New Jersey
and Washington, D.C. as of December 31, 1997 with an aggregate gross book
value of $212.9 million. These buildings consist of the WRP Commercial
Properties, which were contributed by the Company upon formation of
Wellsford Commercial, and 300 Atrium Drive, 400 Atrium Drive, 500 Atrium
Drive and 1275 K Street, which were contributed by Whitehall upon formation
of Wellsford Commercial, as well as 700 Atrium Drive and Mountain Heights
(two buildings) which were acquired in September and December 1997,
respectively, for $18.1 million and $29.1 million, respectively. In
addition, Wellsford Commercial purchased an industrial warehouse in New
Jersey in December 1997 for $7.1 million.
In January 1998, Wellsford Commercial executed an agreement to purchase an
80,000SF property for $5.4 million. The purchase may be completed by March
31, 1998, subject to certain contingencies.
In February 1998, Wellsford Commercial entered into an option agreement to
enter into a contribution agreement whereby a 972,000SF portfolio of
thirteen office buildings would be contributed to Wellsford Commercial for
$141.9 million, in the event certain lender approvals can be obtained.
In February 1998, Wellsford Commercial acquired a 65,000SF office building
in Boston, MA for $5.5 million ("15 Broad Street") and 19 acres of
undeveloped land in Somerset, NJ for $2.0 million ("600 Atrium Drive").
The Wellsford Commercial transactions described above were funded primarily
by capital contributions from the Company and Whitehall, by $48 million in
debt which encumbered certain of the properties contributed by Whitehall
(the "Atrium Loan") which was assumed by Wellsford Commercial, and by a
term loan agreement (the "WRP Loan") between the Company and Wellsford
Commercial.
The Atrium Loan bore interest at LIBOR +3% and was due on May 15, 2000.
Wellsford Commercial has an interest rate protection agreement which was
related to this loan which caps LIBOR at 7.69% on a notional balance of $64
million until June 15, 2000. The lender on this loan was Goldman Sachs
Mortgage Company. This loan was repaid in December 1997. The Company has
retained the interest rate protection agreement to hedge other floating
rate borrowings.
Pursuant to the WRP Loan, the Company has agreed to loan Wellsford
Commercial up to approximately $86.3 million bearing interest at LIBOR plus
3% until November 26, 1997 and at LIBOR plus 4% until maturity in May 1998.
As of December 31, 1997, approximately $4.3 million was outstanding under
the WRP Loan.
In December 1997, Wellsford Commercial obtained a $375 million loan
facility (the "Wellsford Commercial Bank Facility") from BankBoston and
Goldman Sachs Mortgage Company, consisting of a secured term loan facility
of up to $225 million and a secured revolving credit facility of up to $150
million. The term loan facility bears interest at LIBOR +1.6% and has a
term of four years; the revolving credit facility bears interest at LIBOR
+2.5% and has a term of three years, which may be renewed by Wellsford
Commercial for one additional year. As of December 31, 1997, approximately
$146.9 million was outstanding under the Wellsford Commercial Bank Facility
($107.9 million of which was under the term loan), the proceeds of which
were used primarily to repay amounts outstanding under the Atrium Loan and
the WRP Loan.
WCPT is entitled to incentive compensation equal to (a) 17.5% of available
cash after a return of capital to WCPT and Whitehall and a 17.5% return on
equity to each of them, and (b) 22.5% of available cash after a 22.5%
return on equity to WCPT and Whitehall. The Company and Whitehall have
committed to make additional equity contributions of $50 million each for
new acquisitions, capital needs, and working capital. Whitehall may
exchange the membership units it receives in Wellsford Commercial relating
to capital contributions in excess of an additional $25 million up to an
additional $50 million, for shares of the Company's common stock or, in the
Company's sole discretion, cash, based upon the price paid for such
membership units and the current market value of the Company's common
stock.
In connection with the transactions described above, the Company issued
warrants (the "Warrants") to Whitehall to purchase 4,132,230 shares of
common stock at an exercise price of $12.10 per share. The Warrants are
exercisable for five years for either, at the Company's option, shares of
the Company's common stock or cash. The exercise price for the Warrants is
payable in cash or, after August 28, 1999, either with cash or membership
units in Wellsford Commercial.
The Company has agreed with Whitehall to conduct its business and
activities relating to office properties (but not other types of commercial
properties) located in North America solely through its interest in
Wellsford Commercial except, in certain circumstances, where Wellsford
Commercial has declined the investment opportunity.
Debt and Equity Investments - dba Wellsford Capital Company
The Company makes loans that constitute, or will invest in, real estate-
related senior, junior or otherwise subordinated debt instruments, which
may be unsecured or secured by liens on real estate, interests therein or
the economic benefits thereof, and which have the potential for high yields
or returns more characteristic of equity ownership. These investments may
include debt that is acquired at a discount, mezzanine financing,
commercial mortgage-backed securities ("CMBS"), secured and unsecured lines
of credit, distressed loans, and loans previously made by foreign and other
financial institutions. The Company believes that there are opportunities
to acquire real estate debt securitized by the use of CMBS, especially in
the low or below investment grade tranches, at significant returns as a
result of inefficiencies in pricing, while utilizing management's real
estate expertise to analyze the underlying properties and thereby
effectively minimizing risk. At December 31, 1997, the Company had $105.6
million of debt investments which bore interest at an average yield of 4.4%
over LIBOR.
277 Park
The Company and BankBoston have provided an $80 million loan (the "277 Park
Loan") to entities which own substantially all of the equity interests (the
"Equity Interests") in the entity which owns a 52-story, approximately 1.75
million square foot gross leasable area, class A office building located in
New York City in mid-town Manhattan at 277 Park Avenue (the "277 Park
Property"). The Company and BankBoston have advanced $25 million and $55
million, respectively, pursuant to the 277 Park Loan. The 277 Park Loan is
secured primarily by a pledge of the Equity Interests owned by the
borrowers. The 277 Park Loan is subordinated to a 10-year $345 million
first mortgage loan (the "REMIC Loan") on the 277 Park Property, the
proceeds for which were obtained by the sale of investment grade rated
commercial mortgage pass-through certificates in a real estate mortgage
investment conduit. The notes representing the REMIC Loan bear interest at
different rates which equate to a weighted average interest rate of
approximately 7.67% per annum. The 277 Park Loan bears interest at the
rate of approximately 12% per annum for the first nine years of its term
and at a floating annual rate during the tenth year equal to LIBOR plus
5.15% or BankBoston base rate plus 5.15%, as elected by the borrowers. The
principal amount of the 277 Park Loan and all accrued interest will be
payable in May 2007; the REMIC Loan is also due in May 2007. The 277 Park
Loan is prepayable only in full and then only after the fifth year of the
loan and must be repaid if the REMIC Loan is repaid or the 277 Park
Property is sold. Any prepayment during the sixth through ninth years of
the loan must be accompanied by a yield maintenance payment.
The 277 Park Property is currently 100% leased to 33 tenants, including
Donaldson, Lufkin & Jenrette, Inc. which has leased approximately 47% of
the gross leasable area pursuant to a lease expiring in 2016.
The Abbey Company
On August 28, 1997, the Company and Morgan Guaranty Trust Company of New
York ("MGT") originated a $70 million secured credit facility the ("Abbey
Credit Facility") to affiliates of The Abbey Company, Inc. ("Abbey"), an
owner and operator of office, industrial, and retail properties in Southern
California.
The Abbey Credit Facility will be made available to Abbey until September
2000. Advances under the facility can be made for up to 80% of the value of
the borrowing base collateral which will initially consist of 10
properties, all cross-collateralized, totaling approximately 1.1 million
SF.
As of December 31, 1997, approximately $57.3 million had been advanced
under the Abbey Credit Facility ($28.6 million of which represented the
Company's 50% participation). Under the terms of its participation
agreement with MGT, the Company will fund a 50% junior participation on all
advances under the facility.
The Company is entitled to receive interest on its advances under the
facility at LIBOR plus 4%.
Cabot Industrial Trust
In December 1997, Wellsford Ventures, Inc. ("Ventures"), a wholly-owned
subsidiary of the Company, joined with Fleet Real Estate, Inc. ("FRE"), a
subsidiary of Fleet Financial Group, to issue an approximately $32.5
million subordinated credit facility (the "IPH Mezzanine Facility") to
Industrial Properties Holding, L.P. ("IPH"). Each of Ventures and FRE were
committed to advance up to 50% of the IPH Mezzanine Facility. IPH is a
single purpose entity which was formed to acquire six industrial properties
which were sold to Cabot Industrial Trust, a real estate investment trust,
in February 1998. As of December 31, 1997, approximately $19.6 million had
been advanced to IPH, of which Ventures had advanced approximately $9.8
million. The IPH Mezzanine Facility was repaid in February 1998, at which
time the Company received a total of $0.8 million in interest and fees.
Advances under the IPH Mezzanine Facility bore interest at an annual rate
of LIBOR plus 5%.
Woodlands
In December 1997, BankBoston, Morgan Stanley Senior Funding, Inc. and
certain other lenders made available to the owners and developers of a
master-planned residential community located north of Houston (the
"Woodlands Property"), loans in the aggregate principal amount of $369
million (the "Woodlands Loan"). The Woodlands Loan consists of a revolving
credit loan in the principal amount of $179 million (the "Revolving Loan"),
a secured term loan in the principal amount of $130 million (the "Secured
Loan"), and a second secured term loan in the principal amount of $60
million (the "Second Secured Loan"). The Company has advanced $15 million
pursuant to the Second Secured Loan. The Second Secured Loan is
subordinate to the Revolving Loan and the Secured Loan and bears interest
equal to LIBOR plus 4.40%. Interest on the Second Secured Loan is payable
monthly to the extent there is available cash after payment of interest on
the Revolving Loan and the Secured Loan and provided no event of default
has occurred under the Woodlands Loan. The principal amount of the
Woodlands Loan and all accrued interest thereon will be payable on July 31,
2000, with two, one-year extension options available.
The Woodlands Property, which is located 27 miles north of Houston's
Central Business District, is a master-planned community encompassing more
than 25,000 acres of land. The current population of the Woodlands
Property is in excess of 50,000 residents, and since opening in 1974, over
16,000 single-family homes have been constructed. When fully developed,
the project is expected to have a population exceeding 150,000 and over
37,000 single-family homes. The Woodlands Property is currently home to
more than 740 companies who employ over 17,000 people.
Park 80
In December 1997, the Company originated a $5.1 million loan bearing
interest at LIBOR plus 3% and maturing in March 1998 (the "Park 80 Loan").
The Park 80 Loan is secured by a mortgage on an 80,000SF mid-rise office
building in Saddlebrook, New Jersey.
Value Property Trust
On September 18, 1997, the Company and its subsidiary, Wellsford Capital
Corporation, entered into a definitive agreement with Value Property Trust
(NYSE: "VLP"), a real estate investment trust, pursuant to which the
Company acquired VLP in a merger transaction for cash and stock valued at
approximately $169 million.
Pursuant to the terms of the merger agreement, the Company paid to VLP
shareholders approximately $130 million in cash and issued an aggregate of
approximately 3.35 million shares of its common stock resulting in each VLP
shareholder receiving $11.58 in cash and 0.2984 common shares of the
Company for each share of VLP. VLP primarily owned 20 properties (with 2.1
million SF) and had approximately $60 million in net cash and a $6.2
million note receivable, which is due in July 1998, on the date of merger.
The portfolio is diversified both by property type and geographic location.
The acquisition, which is being accounted for as a purchase, was approved
by the VLP shareholders and completed in February 1998.
The Company contracted to sell, for $65 million, 13 of the VLP properties
to an affiliate of Whitehall ("Whitehall Property Buyer"). As of February
27, 1997, the Company had sold 12 of these properties for $60 million. The
Company intends to retain 7 properties at an average investment of
approximately $60/SF.
Clairborne Investors
In January 1998, the Company acquired a 49% interest in Creamer Realty
Consultants, a real estate advisory and consulting firm with offices in New
York City and Lexington, Kentucky, whose two principals are Frank G.
Creamer, Jr. and Michael J. Vitale, and formed Creamer Vitale Wellsford,
L.L.C. ("Creamer Vitale Wellsford").
Creamer Realty Consultants and Creamer Vitale Wellsford, together with
Prudential Real Estate Investors ("PREI"), a division of Prudential
Investment Corporation, have established the Clairborne Investors Mortgage
Investment Program to make opportunistic investments and to provide
liquidity to participants in large syndicated mortgage loan transactions.
The parties have agreed to contribute up to $150 million to fund
acquisitions approved by the parties, of which a subsidiary of the Company
will fund 10%. Creamer Vitale Wellsford will originate, co-invest, and
manage the investments of the program. Investments will be made through
individual limited partnerships for each PREI client.
The Company's original investment in Creamer Vitale Wellsford was $1.3
million of cash and 148,000 five-year warrants to purchase the Company's
common shares at $15.175 per share, valued at approximately $0.7 million.
Property Development and Land Investments - dba Wellsford Development
Company
The Company engages in selective development activities as opportunities
arise and when justified by expected returns. The Company believes that by
pursuing selective development activities it can achieve returns which are
greater than returns which could be achieved by acquiring stabilized
properties. Certain development activities may be conducted in joint
ventures with local developers who may bear the substantial portion of the
economic risks associated with the construction, development and initial
rent-up of properties. As part of its strategy, the Company may seek to
obtain bond financing from local governmental authorities which generally
bears interest at rates substantially below rates available from
conventional financing.
Palomino Park
From the time of the Spin-off, the Company has owned an approximate 80%
interest in Phases I, II and III of, and in options to acquire (at fixed
prices) and develop phases IV and V of, a 1,880-unit class A multifamily
development ("Palomino Park") in a suburb of Denver, Colorado. The
Company has a related $14.8 million tax exempt mortgage note payable which
requires interest only payments at a variable rate (currently approximately
4%) until it matures in December 2035 (the "Palomino Park Bonds"). The tax
exempt mortgage note payable is security for tax-exempt bonds, which are
backed by a letter of credit from a AAA rated financial institution. The
Company and an affiliate of EQR have guaranteed the reimbursement of the
financial institution in the event that the letter of credit is drawn upon
(the latter guarantee being the "EQR Enhancement").
In December 1997, Phase I, known as Blue Ridge, was completed at a cost of
approximately $41.5 million. At that time, the Company acquired the
remaining interest in Blue Ridge and the related construction loan was
repaid with the proceeds of a $34.5 million permanent loan (the "Blue Ridge
Loan") secured by a mortgage on Blue Ridge. The Blue Ridge Loan matures in
January 2008 and bears interest at a fixed rate of 6.92%. Principal
payments are based on a 30-year amortization schedule.
The Company has invested $16.9 million through December 31, 1997 on the
following multifamily development project, which is a phase of Palomino
Park:
Number Estimated
of Estimated Stabilization
Name Units Location Total Cost Date
- ---- ----- -------- ---------- -------------
Red Canyon 304 Denver $33.6 million First Qtr. 1999
This project is being developed pursuant to a fixed-price contract. The
Company is committed to purchase 100% of this project upon completion and
the achievement of certain occupancy levels, which is anticipated to occur
at the date disclosed above.
Red Canyon is owned by Red Canyon at Palomino Park LLC ("Phase II LLC"), a
limited liability company, the members of which are Wellsford Park
Highlands Corp. (99%), a majority owned and controlled subsidiary of the
Company, and Al Feld ("Feld") (1%). Feld is a Denver-based developer
specializing in the construction of luxury residential properties. Feld
has constructed over 3,000 units since 1984.
The construction loan on Red Canyon is for approximately $29.5 million,
matures on September 29, 1999 (with a 6-month extension at the option of
the Phase II LLC upon fulfillment of certain conditions), and bears
interest at LIBOR plus 1.65%. Feld has guaranteed repayment of this loan.
An affiliate of EQR has agreed to purchase the Phase II construction loan
when due (the "EQR Take-out Commitment"), assuming completion of
construction, if it is not satisfied by the Phase II LLC or by Feld
pursuant to his guarantee, for the lesser of the loan balance or the final
agreed upon budget.
In May 1997, the Company acquired the land for Phase III for approximately
$2.1 million.
Sonterra
From the time of the Spin-off, the Company has held a $17.8 million
mortgage due in July 1999 and bearing interest at 9% per annum (the
"Sonterra Mortgage") on, and option to purchase, a 344-unit class A
residential apartment complex ("Sonterra at Williams Centre") in Tucson,
Arizona.
In January 1998, the Company exercised its option and acquired Sonterra at
Williams Centre for approximately $20.5 million, including the
satisfaction of the Sonterra Mortgage. In February 1998, the Company
closed on $16.4 million of mortgage financing on this property, bearing
interest at 6.87% and having a term of 10 years.
Future Investments
The Company may in the future make equity investments in entities owned
and/or operated by unaffiliated parties and which engage in real estate-
related businesses and activities or businesses that service the real
estate industry. Some of the entities in which the Company may invest may
be start-up companies or companies in need of additional capital. The
Company may also manage and lease properties owned by it or in which it has
an equity or debt investment.
Item 2. Properties.
Wellsford Commercial owns the following commercial properties:
Year December 31,
Gross Area Constructed/ 1997
Property Location (square feet) Rehabilitated Occupancy
- -------- -------- ------------- ------------- ------------
Pointview (2 Wayne, NJ 560,000 1976 N/A*
buildings)
1700 Valley
Road Wayne, NJ 70,600 1979 N/A*
1800 Valley
Road Wayne, NJ 54,800 1980 100%
Greenbrook Greenbrook, NJ 201,000 1987 87%
Chatham Chatham, NJ 63,000 1972/1997 66%
300 Atrium
Drive Somerset, NJ 149,360 1983 77%
400 Atrium
Drive Somerset, NJ 354,670 1985 98%
500 Atrium
Drive Somerset, NJ 167,000 1984 83%
700 Atrium
Drive Somerset, NJ 176,300 1985 100%
1275 K Street Washington, DC 270,000 1983 81%
Mtn. Heights (2
buildings) Berkeley Hts, NJ 267,300 1968/1986 100% / N/A*
Estee Parsippany, NJ 167,000 1963/1977 N/A*
--------- ----------
TOTAL/AVERAGE 2,501,030 90%
========= ==========
* Building under renovation, not included in average.
All of the properties listed above are encumbered by the Wellsford
Commercial Bank Facility as of March 27, 1998.
In addition, the Company directly owned one multifamily apartment property
at December 31, 1997. Blue Ridge is a 456 unit property located in Denver,
Colorado, built in 1997, which had an occupancy rate of approximately 94%
at December 31, 1997 and is encumbered by the $34.5 million Blue Ridge
Loan.
For a description of the Company's investments in multifamily communities,
see "Item 1 - Business -- Property Development and Land Investments - dba
Wellsford Development Company".
Item 3. Legal Proceedings.
Neither the Company nor Wellsford Commercial are presently subject to any
material litigation nor, to the Company's knowledge, is any material
litigation threatened against the Company or Wellsford Commercial other
than routine litigation arising in the ordinary course of business and
which is expected to be covered by liability insurance.
Item 4. Submission of Matters to a Vote of Security-Holders.
None.
<PAGE>
PART II
Item 5. Market for Registrant's Common Equity and Related
Shareholder Matters.
(A) Market Information
The Company's common shares are traded on the American Stock Exchange under
the symbol "WRP". The high and low sales prices for the common shares on
the American Stock Exchange and the dividends declared since the Company's
inception are as follows:
Common Shares
1997 High Low Dividends
- ---- ---- --- ---------
June 2 through June 30 $11.19 $10.50 N/A
3rd Quarter $16.13 $10.81 N/A
4th Quarter $17.25 $14.25 N/A
(B) Holders
The approximate number of holders of record of the common shares and Class
A common shares (collectively, "Common Shares" or " Common Stock") were 299
and 1, respectively, as of March 17, 1998. These holders represent the
interests of approximately 5500 beneficial shareholders.
Dividends
The Company paid no dividends during 1997. The Company does not plan to
distribute dividends for the foreseeable future, which will permit it to
accumulate, for reinvestment, cash flow from investments, disposition of
investments and other business activities.
Item 6. Selected Consolidated Financial Data.
The following table sets forth selected consolidated financial data for the
Company and should be read in conjunction with the consolidated financial
statements included elsewhere in this Form 10-K.
Prior to the Company's 1997 investments, the Company's operations consisted
of earning interest income on the Sonterra Mortgage (originated in July
1996) and the initial phase of construction development activity with
respect to Palomino Park.
Summary
Consolidated Statement of
Operations Data Year Ended December 31,
- -------------------------- -----------------------------------
(in thousands except per share data)
1997 1996
---- ----
Revenues $ 9,070 $ 757
Expenses (3,819) --
Income from joint venture 15 --
-------- -------
Income before taxes $ 5,266 $ 757
======== =======
Net income $ 3,053 $ 757
======== =======
Net income per
common share, basic and diluted $ 0.18 $ 0.04
======== =======
Weighted average number of
common shares outstanding 16,922 16,912
======== =======
Summary Consolidated
Balance Sheet Data December 31,
- -------------------------- ------------------------------------
(in thousands except per share data)
1997 1996 1995
---- ---- ----
Real estate $ 41,564 $ -- $ --
Notes receivable 105,632 17,800 --
Investment in joint venture 44,780 -- --
Total assets 249,974 44,760 18,369
Mortgage notes payable 49,255 14,755 14,755
Credit facility 7,500 -- --
Shareholders' equity 181,158 30,005 3,614
The earnings per share amounts conform with Statement of Financial
Accounting Standards No. 128 "Earnings per share". For further discussion
of earnings per share and the impact of Statement No. 128, see the notes to
the consolidated financial statements beginning on page F-7.
Item 7. Management's Discussion and Analysis of Financial Condition
and Results of Operations.
Overview
The following discussion should be read in conjunction with the "Selected
Consolidated Financial Data" and the Company's Consolidated Financial
Statements and Notes thereto appearing elsewhere in this Form 10-K.
Results of Operations
Prior to the Company's 1997 investments, the Company's operations consisted
of earning interest income on the Sonterra Mortgage (originated in July
1996) and the initial phase of construction development activity with
respect to Palomino Park. Therefore, the increases in operating revenues
and expenses reflected in the financial statements are the result of the
acquisition of primarily all of the Company's operating assets during 1997.
The accompanying consolidated financial statements include the assets and
liabilities contributed to and assumed by the Company from the Trust, from
the time such assets and liabilities were acquired or incurred,
respectively, by the Trust. Such financial statements have been prepared
using the historical basis of the assets and liabilities and the historical
results of operations related to the Company's assets and liabilities.
Liquidity and Capital Resources
The Company expects to meet its short-term liquidity requirements generally
through its working capital and cash flow provided by operations. The
Company considers its ability to generate cash to be adequate and expects
it to continue to be adequate to meet operating requirements both in the
short and long terms.
The Company expects to meet its long-term liquidity requirements such as
refinancing mortgages, financing acquisitions and development, and
financing capital improvements by long-term borrowings, through the
issuance of debt and the offering of additional debt and equity securities.
The Company has (i) the commitment, until May 30, 2000, of an affiliate of
EQR to acquire at the Company's option up to $25 million of the Company's
Series A 8% Convertible Redeemable Preferred Stock ("Series A Preferred"),
each share of which is convertible into shares of common stock at a price
of $11.124 (the "EQR Preferred Commitment") and (ii) a $50 million two-year
line of credit (extendible for one year) from BankBoston, N.A. and Morgan
Guaranty Trust Company of New York (the "Line of Credit") which initially
bears interest at an annual rate equal to LIBOR plus 175 basis points. The
EQR Preferred Commitment is pledged as security for the Line of Credit. If
at May 30, 2000, the affiliate of EQR has purchased less than $25 million
of Series A Preferred, it has the right to purchase the remainder of the
$25 million not purchased prior to that time. As of December 31, 1997, $
7.5 million was outstanding under the Line of Credit.
With respect to its Palomino Park investment, the Company also has the
$14.8 million EQR Enhancement and the $29.5 million EQR Take-out
Commitment.
The Company's long-term debt matures as follows: $0.4 million in 1998, $7.9
million in 1999, $0.4 million in 2000, $0.4 million in 2001, $0.5 million
in 2002 and $47.2 million thereafter.
The Line of Credit contains various customary loan covenants and requires
the Company to maintain a ratio of total consolidated liabilities to total
consolidated assets of not more than 0.6 to 1, to maintain an overall debt
service coverage ratio of at least 1.5 to 1 and to meet certain minimum
borrowing base and equity level requirements. The facility also limits the
amount of undeveloped land the Company may hold.
For a discussion of the Company's development communities and related
capital commitments, see "Item 1. Business - Property Development and Land
Investments - dba Wellsford Development Company."
On June 2, 1997, the Company completed the Private Placement, which was
exempt from the registration requirements of the Securities Act of 1933, as
amended, under Regulation D thereof. Pursuant to a registration rights
agreement executed by the Company and the purchasers of such shares, the
Company has filed a shelf registration statement with the Securities and
Exchange Commission with respect to such shares. The proceeds of the
Private Placement of approximately $123.6 million have been applied to (a)
approximately $53 million to repay the Company's credit facility and other
debt on the date of the Private Placement, (b) $5 million to purchase a
portion of the 277 Park Loan, (c) approximately $7 million on renovations
and tenant fit-out for the WRP Commercial Properties, and (d) the balance
towards the investments described in "Item 1-Business" and towards working
capital.
Wellsford Commercial expects to meet its liquidity requirements, such as
financing renovations to its properties, with operating cash flow from its
properties, equity contributions from the owners of Wellsford Commercial,
and the Wellsford Commercial Bank Facility.
The net cash flow of the Company provided by operating activities increased
from $5.5 million for the year ended December 31, 1996 to $6.0 million for
the year ended December 31, 1997 and increased from $4.3 million for the
year ended December 31, 1995 to $5.5 million for the year ended December
31, 1996. These increases generally resulted from the acquisition of the
Company's investments as described above.
Investing activities of the Company used $156.9 million, $31.2 million and
$8.0 million during the years ended December 31, 1997, 1996 and 1995,
respectively. Investing activities consist primarily of the acquisition
and development of properties and the investments made in certain debt
instruments. The Company currently has one multifamily community under
development.
Financing activities of the Company provided $180.8 million, $25.6 million
and $3.6 million during the years ended December 31, 1997, 1996 and 1995,
respectively. The Spin-off, Private Placement, Blue Ridge Loan and Line of
Credit served as the primary sources of cash flow from financing
activities.
See the accompanying consolidated statements of cash flows included in the
consolidated financial statements for a reconciliation of the Company's
cash position for the years described therein.
Recurring Capital Expenditures
Regarding the Company's Blue Ridge (456 units) and Sonterra at Williams
Centre (344 units, acquired in January 1998) properties, the Company
expects to incur approximately $225 per unit in capital expenditures during
the year ending December 31, 1998.
Wellsford Commercial
Wellsford Commercial is currently involved in several projects to renovate,
expand or reposition certain of its properties. For the year ending
December 31, 1998, Wellsford Commercial expects to incur approximately
$29.1 million in connection with these projects.
In connection with its fully operating properties, Wellsford Commercial
expects to incur approximately $0.7 million of capital expenditures,
approximately $4.0 million of tenant improvement expenditures, and
approximately $1.8 million of leasing costs during the year ending December
31, 1998.
Inflation
Substantially all of Wellsford Commercial's office leases provide for
separate escalations of real estate taxes and operating expenses over a
base amount. In addition, many of the office leases provide for fixed base
rent increases or indexed escalations (based on the CPI or other measures).
The Company believes that inflationary increases in expenses will generally
be offset by the expense reimbursements and contractual rent increases
described above.
Over 70% of the Company's investments in debt securities, after the January
1998 repayment of the Sonterra Loan, bear interest at floating rates. As
such, the Company expects the rates of interest earned to increase in the
event of high inflation.
Year 2000
The Company has developed a plan to modify its information technology to
recognize the year 2000. The Company currently expects the project to be
substantially completed by early 1999 and to cost less than $0.1 million.
The Company does not expect this project to have a significant effect on
its operations. The timing and cost of this project will be closely
monitored and are based on management's best estimates. Actual results,
however, could differ from those anticipated. The Company also has
initiated discussions with its third-party property management companies to
ensure that those parties have appropriate plans to remediate Year 2000
issues that may impact the Company's operations. While the Company
believes its planning efforts are adequate to address its Year 2000
concerns, there can be no guarantee that the systems of other companies on
which the Company's systems and operations rely will be converted on a
timely basis and will not have a material effect on the Company.
Return on Equity Investments
The Company focuses on maximizing its return on the equity it invests
through the strategic acquisition and disposition of assets and the optimal
use of debt and other financing.
The Company's investment in the IPH Mezzanine Facility yielded an 82.5%
annualized pre-tax return on equity during the period it was outstanding;
the IPH Mezzanine Facility was repaid in February 1998. In total the
Company earned $0.8 million in interest and fees over the 37 days this $9.8
million investment was held.
The Company expects to earn an approximately 26% pre-tax return on equity
in 1998 on its approximately $3.3 million equity investment in the
approximately $41.5 million Blue Ridge property. The property is
encumbered by a $34.5 million mortgage bearing interest at 6.92% and by
$3.7 million of the Palomino Park Bonds.
The Company expects to earn an approximately 19.9% pre-tax return on equity
in 1998 on its approximately $4.1 million equity investment in the
approximately $20.5 million Sonterra property, which was acquired in
January 1998. The property is encumbered by a $16.4 million mortgage
bearing interest at 6.87%, which the Company closed in February 1998.
Wellsford Commercial expects to earn an approximately 46.1% pre-tax return
on equity in 1998 on its approximately $1.0 million equity investment in
the approximately $4.0 million 1800 Valley Road property. The property is
encumbered by approximately $3.0 million of the Wellsford Commercial Bank
Facility.
The Company believes that these returns represent the optimal use of equity
in the current real estate merchant banking environment and are indicative
of the ability of management to locate, acquire and/or develop
opportunistic investments. There can be no assurance, however, that the
Company's other investments will achieve similar returns. See "Risks
Associated with Forward-Looking Statements."
Risks Associated with Forward-Looking Statements.
This Form 10-K, together with other statements and information publicly
disseminated by the Company, contains certain forward-looking statements
within the meaning of Section 27A of the Securities Act of 1933, as
amended, and Section 21E of the Securities Exchange Act of 1934, as
amended. Such forward-looking statements involve known and unknown risks,
uncertainties and other factors which may cause the actual results,
performance or achievements of the Company or industry results to be
materially different from any future results, performance or achievements
expressed or implied by such forward-looking statements. Such factors
include, among others, the following, which are discussed in greater detail
in the "Risk Factors" section of the Company's registration statement on
Form S-11 (file No. 333-32445) filed with the Securities and Exchange
Commission ("SEC") on July 30, 1997, as may be amended, which is
incorporated herein by reference: general economic and business conditions,
which will, among other things, affect demand for commercial and
residential properties, availability and credit worthiness of prospective
tenants, lease rents and the availability of financing; difficulty of
locating suitable investments; competition; risks of real estate
acquisition, development, construction and renovation; vacancies at
existing commercial properties; dependence on rental income from real
property; adverse consequences of debt financing; risks of investments in
debt instruments, including possible payment defaults and reductions in the
value of collateral; illiquidity of real estate investments; lack of prior
operating history; and other risks listed from time to time in the
Company's reports filed with the SEC. Therefore, actual results could
differ materially from those projected in such statements.
Item 8. Consolidated Financial Statements and Supplementary Data.
The response to this Item 8 is included as a separate section of this
annual report on Form 10-K.
Item 9. Changes in and Disagreements with Accountants on Accounting
and Financial Disclosure.
None.
<PAGE>
PART III
Item 10. Directors and Executive Officers of the Registrant.
The executive officers and directors of the Company, their ages and their
positions are as follows:
Name Age Positions and Offices Held
Jeffrey H. Lynford. . . . . . . . .50 . .Chairman of the Board, Secretary
and Director **
Edward Lowenthal. . . . . . . . . .53 . .President, Chief Executive Officer
and Director*
Gregory F. Hughes . . . . . . . . .34 . .Chief Financial Officer
David M. Strong . . . . . . . . . .39 . .Vice President for Development
Douglas Crocker II. . . . . . . . .57 . .Director**
Rodney F. Du Bois . . . . . . . . .62 . .Director*
Mark S. Germain . . . . . . . . . .47 . .Director**
Frank J. Hoenemeyer . . . . . . . .78 . .Director***
Frank J. Sixt . . . . . . . . . . .46 . .Director***
________________________
* Term expires 1998.
** Term expires 1999.
*** Term expires 2000.
The information contained in the sections captioned "Nominees for Election
as Directors", "Other Directors", "Executive Officers", and "Key Employees"
of the Company's definitive proxy statement for the 1998 annual meeting of
shareholders is incorporated herein by reference.
Item 11. Executive Compensation.
The information contained in the sections captioned "Executive
Compensation", "Compensation of Directors", "Board Committees", "Employment
Agreements", "1997 Management Incentive Plan", and "Rollover Stock Option
Plan" of the Company's definitive proxy statement for the 1998 annual
meeting of shareholders is incorporated herein by reference.
Item 12. Security Ownership of Certain Beneficial Owners and
Management.
The information contained in the section captioned "Security Ownership of
Certain Beneficial Owners and Management" of the Company's definitive proxy
statement for the 1998 annual meeting of shareholders is incorporated
herein by reference.
Item 13. Certain Relationships and Related Transactions.
The information contained in the section captioned "Certain Transactions"
of the Company's definitive proxy statement for the 1998 annual meeting of
shareholders is incorporated herein by reference.
<PAGE>
PART IV
Item 14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K.
(a) (1) Financial Statements
The following consolidated financial information is included as a
separate section of this annual report on Form 10-K:
Consolidated Balance Sheets as of December 31, 1997 and 1996.
Consolidated Statements of Income for the years ended
December 31, 1997 and 1996.
Consolidated Statements of Changes in Shareholders' Equity for
the years ended December 31, 1997 and 1996 and the Period from
March 22, 1995 (Inception) to December 31, 1995.
Consolidated Statements of Cash Flows for the years ended
December 31, 1997 and 1996 and the Period from March 22, 1995
(Inception) to December 31, 1995.
Notes to Consolidated Financial Statements
(2) Financial Statement Schedules
III. Real Estate and Accumulated Depreciation
IV. Mortgage Loans on Real Estate
All other schedules have been omitted because the required
information of such other schedules is not present, is not
present in amounts sufficient to require submission of the
schedule or is included in the consolidated financial statements.
(3) Exhibits
(a) Exhibit No. Description###
3.1 Articles of Amendment and Restatement of the Company.****
3.2 Articles Supplementary Classifying 335,000 Shares of Common
Stock as Class A Common Stock.****
3.3 Articles Supplementary Classifying 2,000,000 Shares of
Common Stock as Series A 8% Convertible Redeemable
Preferred Stock.****
3.4 Bylaws of the Company.****
4.1 Specimen certificate for Common Stock.***
4.2 Specimen certificate for Class A Common Stock.****
4.3 Specimen certificate for Series A 8% Convertible Redeemable
Preferred Stock.****
4.4 Warrant Agreement, dated as of August 28, 1997, between the
Company and United States Trust Company of New York, as
warrant agent, and Warrant Certificate No. 1 of the Company
for 5,000,000 Warrants registered in the name of WHWEL Real
Estate Limited Partnership.#
4.5 Registration Rights Agreement, dated as of February 23,
1998, among the Company and Franklin Mutual Advisors, Inc.
and Angelo Gordon & Co., L.P.
10.1 Operating Agreement of Red Canyon at Palomino Park LLC
between Wellsford Park Highlands Corp. and Al Feld, dated
as of April 17, 1996, relating to Red Canyon.*
10.2 First Amendment to Operating Agreement of Red Canyon at
Palomino Park LLC between Wellsford Park Highlands Corp.
and Al Feld, dated as of May 19, 1997, relating to Red
Canyon.****
10.3 Tri-Party Agreement by and among NationsBank of Texas,
N.A., Red Canyon at Palomino Park LLC, Wellsford Park
Highlands Corp., Wellsford Residential Property Trust, Al
Feld and The Feld Company, dated May 29, 1997, relating to
Red Canyon.****
10.4 Assignment and Assumption of Tri-Party Agreement by and
among Wellsford Residential Property Trust, ERP Operating
Limited Partnership, Red Canyon at Palomino Park LLC,
Wellsford Park Highlands Corp., The Feld Company, Al Feld
and Nationsbank of Texas, N.A. dated May 30, 1997, relating
to Red Canyon.****
10.5 Agreement and Acknowledgement Regarding Tri-Party Agreement
by and among Nationsbank of Texas, N.A., Red Canyon at
Palomino Park LLC, Wellsford Park Highlands Corp. and ERP
Operating Limited Partnership dated May 30, 1997, relating
to Red Canyon.****
10.6 Second Amended and Restated Vacant Land Purchase and Sale
Agreement between Mission Viejo Company and The Feld
Company dated March 23, 1995, as amended by First
Amendment, dated May 1, 1996, relating to the land
underlying Palomino Park.*
10.7 Trust Indenture, dated as of December 1, 1995, between
Palomino Park Public Improvements Corporation ("PPPIC") and
United States Trust Company of New York, as trustee,
securing Wellsford Residential Property Trust's Assessment
Lien Revenue Bonds Series 1995 - $14,755,000.**
10.8 Letter of Credit Reimbursement Agreement, dated as of
December 1, 1995, between PPPIC, Wellsford Residential
Property Trust and Dresdner Bank AG, New York Branch.**
10.9 First Amendment to Letter of Credit Reimbursement
Agreement, dated as of May 30, 1997, between PPPIC,
Wellsford Residential Property Trust, Dresdner Bank AG, New
York Branch and the Company.****
10.10 Amendment to Wellsford Reimbursement Agreement by and
between PPPIC, Wellsford Residential Property Trust and the
Company, dated as of May 30, 1997.****
10.11 Assignment and Assumption Agreement by and between
Wellsford Residential Property Trust and the Company, dated
as of May 30, 1997.****
10.12 Credit Enhancement Agreement by and between the Company and
ERP Operating Limited Partnership, dated as of May 30,
1997, relating to Palomino Park.****
10.13 Reimbursement and Indemnification Agreement by and among
the Company and ERP Operating Limited Partnership, dated as
of May 30, 1997, relating to Palomino Park.****
10.14 Guaranty by ERP Operating Limited Partnership for the
benefit of Dresdner Bank AG, New York Branch, dated as of
May 30, 1997, relating to Palomino Park.****
10.15 Amended and Restated Promissory Note of the Company to the
order of Dresdner Bank AG, New York Branch, dated May 30,
1997, relating to Palomino Park.****
10.16 Common Stock and Preferred Stock Purchase Agreement by and
between the Company and ERP Operating Limited Partnership
dated as of May 30, 1997.****
10.17 Registration Rights Agreement by and between the Company
and ERP Operating Limited Partnership dated as of May 30,
1997.****
10.18 Credit Agreement, dated as of April 25, 1997, between Park
Avenue Financing Company LLC, PAMC Co-Manager Inc., PAFC
Management, Inc., Stanley Stahl, The First National Bank of
Boston, the Company, Other Banks that may become parties to
the Agreement and The First National Bank of Boston, as
Agent, relating to 277 Park Avenue.**
10.19 Assignment of Member's Interest, dated as of April 25,
1997, by PAFC Management, Inc. and Stanley Stahl to The
First National Bank of Boston, relating to 277 Park Avenue
(relating to interests in the Park Avenue Financing
Company, LLC).**
10.20 Assignment of Member's Interest, dated as of April 25,
1997, by PAMC Co-Manager Inc. and Park Avenue Financing,
LLC to The First National Bank of Boston, relating to 277
Park Avenue (relating to interests in 277 Park Avenue,
LLC).**
10.21 Stock Pledge Agreement, dated as of April 25, 1997, by
Stanley Stahl to The First National Bank of Boston,
relating to 277 Park Avenue (relating to stock in Park
Avenue Management Corporation).**
10.22 Stock Pledge Agreement, dated as of April 25, 1997, by
Stanley Stahl to The First National Bank of Boston,
relating to 277 Park Avenue (relating to stock in PAMC Co-
Manager Inc.).**
10.23 Stock Pledge Agreement, dated as of April 25, 1997, by
Stanley Stahl to The First National Bank of Boston,
relating to 277 Park Avenue (relating to stock in PAFC
Management, Inc.).**
10.24 Conditional Guaranty of Payment and Performance, dated as
of April 25, 1997, by Stanley Stahl, relating to 277 Park
Avenue.**
10.25 Cash Collateral Account Security, Pledge and Assignment
Agreement, dated as of April 25, 1997, between 277 Park
Avenue, LLC, Park Avenue Management Corporation, Park
Avenue Financing Company LLC, PAMC Co-Manager Inc., Stanley
Stahl and The First National Bank of Boston, relating to
277 Park Avenue.**
10.26 Recognition Agreement, dated as of April 25, 1997, between
The First National Bank of Boston, the Company, Column
Financial, Inc., Park Avenue Financing Company LLC, PAMC
Co-Manager, Inc. and 277 Park Avenue, LLC, relating to 277
Park Avenue.**
10.27 Intercreditor Agreement, dated as of April 25, 1997,
between the Company and The First National Bank of Boston,
as Agent, relating to 277 Park Avenue.**
10.28 Assignment and Acceptance Agreement, dated June 19, 1997,
between BankBoston, N.A. (formerly known as The First
National Bank of Boston) ("BankBoston") and the Company,
relating to 277 Park Avenue.****
10.29 Revolving Credit Agreement by and among the Company,
BankBoston, Morgan Guaranty Trust Company of New York
("Morgan Guaranty"), other banks which may become parties
and BankBoston, as agent, and Morgan Guaranty, as co-agent
dated as of May 30, 1997.****
10.30 Agreement Regarding Common Stock and Preferred Stock
Purchase Agreement, dated as of May 30, 1997, among ERP
Operating Limited Partnership, the Company and BankBoston,
as agent.****
10.31 Assignment of Common Stock Agreements, dated as of May 30,
1997, between the Company and BankBoston, as agent.****
10.32 Collateral Assignment of Documents, Rights and Claims
(including Collateral Assignment of Deed of Trust,
Assignment of Leases and Rents, Security Agreement and
Fixture Filing), made as of May 30, 1997, by the Company to
BankBoston, as agent.****
10.33 Limited Liability Company Operating Agreement of
Wellsford/Whitehall Properties, L.L.C., dated as of
August 28, 1997.#
10.34 Amendment No. 1 to the Limited Liability Company Operating
Agreement of Wellsford/Whitehall Properties, L.L.C., dated
as of December 31, 1997.
10.35 Term Loan Agreement between the Company and
Wellsford/Whitehall Properties, L.L.C. dated as of August
28, 1997.#
10.36 $61,699,440 Term Note A, dated August 28, 1997, payable to
the order of the Company by Wellsford/Whitehall Properties,
L.L.C.#
10.37 $17,093,750 Term Note B, dated September 25, 1997, payable
to the order of the Company by Wellsford/Whitehall
Properties, L.L.C.*****
10.38 Letter Agreement, dated as of August 28, 1997, between the
Company and WHWEL Real Estate Limited Partnership, relating
to warrants to be issued to WHWEL Real Estate Limited
Partnership.#
10.39 Revolving Credit Agreement, dated as of December 15, 1997,
among Wellsford/Whitehall Properties, L.L.C., as Borrower,
and BankBoston, N.A., Goldman Sachs Mortgage Company, and
Other Banks, as Banks, and BankBoston, N.A. as
Administrative Agent and Co-Arranger and Co-Syndication
Agent, and Goldman Sachs Mortgage Company, as Co-Arranger
and Co-Syndication Agent.
10.40 Term Loan Agreement, dated as of December 15, 1997, among
WEL/WH 1275 K Street L.L.C., as Borrower, and BankBoston,
N.A., Goldman Sachs Mortgage Company, and Other Banks, as
Banks, and BankBoston, N.A., as Administrative Agent and
Co-Arranger and Co-Syndication Agent, and Goldman Sachs
Mortgage Company, as Co-Arranger and Co-Syndication Agent.
10.41 Indemnity and Guaranty Agreement (Revolver), dated as of
December 15, 1997, by Wellsford Commercial Properties Trust
and WHWEL Real Estate Limited Partnership in favor of
BankBoston, N.A.
10.42 Indemnity Agreement Regarding Hazardous Materials
(Revolver), dated as of December 15, 1997, by
Wellsford/Whitehall Properties, L.L.C., Wellsford
Commercial Properties Trust and WHWEL Real Estate Limited
Partnership for the benefit of BankBoston, N.A.
10.43 Revolving Credit Agreement for $70 million, dated as of
August 28, 1997, between AP-Anaheim LLC, AP-Arlington LLC,
AP-Atlantic LLC, AP-Cityview LLC, AP-Farrell Ramon LLC, AP-
Palmdale LLC, AP-Redlands LLC, AP-Victoria LLC, AP-
Victorville LLC, and AP-Sierra LLC, each a California
limited liability company (collectively, the "Abbey
Affiliates"), as Borrower, and Morgan Guaranty Trust
Company of New York, as Lender.#
10.44 Loan Participation Agreement, dated as of August 28, 1997,
between Morgan Guaranty Trust Company of New York and the
Company.#
10.45 $70 million promissory note, dated August 28, 1997, payable
to the order of Morgan Guaranty Trust Company of New York
by the Abbey Affiliates.#
10.46 Purchase and Sale Agreement, dated as of September 18,
1997, among the Company, Wellsford Capital Corporation and
Whitehall Street Real Estate Limited Partnership VII.##
10.47 First Amended and Restated Master Credit Agreement, dated
December 30, 1997, effective as of July 31, 1997, among The
Woodlands Commercial Properties Company, L.P., The
Woodlands Land Development Company, L.P., and BankBoston,
N.A., Morgan Stanley Senior Funding, Inc., as Documentation
Agent, and Other Banks, and BankBoston, N.A., as Managing
Agent and Syndication Agent.
10.48 Intercreditor Agreement, dated December 30, 1997, effective
as of July 31, 1997, by and between BankBoston, N.A.,
Morgan Stanley Senior Funding, Inc. and the Other Lenders,
relating to Woodlands.
10.49 $4,186,991.87 Commercial Company Second Secured Term Loan
Note, dated December 30, 1997, payable to the order of the
Company by The Woodlands Commercial Properties Company,
L.P. and The Woodlands Land Development Company, L.P.
10.50 $10,813,008.13 Land Company Second Secured Term Loan Note,
dated December 30, 1997, payable to the order of the
Company by The Woodlands Land Development Company, L.P. and
The Woodlands Commercial Properties Company, L.P.
10.51 Program Agreement for Clairborne Investors Mortgage Program
between Creamer Realty Consultants and The Prudential
Investment Corporation, dated as of December 10, 1997.
10.52 Amended and Restated General Partnership Agreement of
Creamer Realty Consultants, dated as of January 1, 1998, by
and between Wellsford CRC Holding Corp. and FGC Realty
Consultants, Inc.
10.53 Limited Liability Company Agreement of Creamer Vitale
Wellsford, L.L.C., dated as of January 20, 1998, by and
between Wellsford CRC Holding Corp. and SX Advisors, LLC.
10.54 Loan Agreement, dated as of February 27, 1998 between
Wellsford Sonterra LLC, as Borrower, and Nationsbank, N.A.,
as Lender.
10.55 $16,400,000 Promissory Note, dated Februry 27, 1998 payable
to the order of Nationsbank, N.A. by Wellsford Sonterra,
L.L.C.
10.56 Deed of Trust, Assignment of Leases and Rents and Security
Agreement, dated February 27, 1998 by Wellsford Sonterra
LLC in favor of Nationsbank, N.A.
10.57 $34,500,000 Multifamily Note, dated December 24, 1997
payable to the order of GMAC Commercial Mortgage
Corporation by Park at Highlands LLC.
10.58 Multifamily Deed of Trust, Assignment of Rents and Security
Agreement, dated December 24, 1997, by Park at Highlands
LLC in favor of GMAC Commerical Mortgage Corporation.
10.59 1997 Management Incentive Plan of the Company.**
10.60 Rollover Stock Option Plan of the Company.**
10.61 Employment Agreement between the Company and Jeffrey H.
Lynford.****
10.62 Employment Agreement between the Company and Edward
Lowenthal.****
10.63 Employment Agreement between the Company and Gregory F.
Hughes.****
10.64 Employment Agreement between the Company and David M.
Strong.****
21.1 Subsidiaries of the Registrant.
27.1 Financial Data Schedule.
99.1 "Risk Factors" section of Amendment No. 2 to the Company's
Registration Statement on Form S-11 (file no. 333-32445),
as may be amended.#####
______________________________
* Previously filed as an exhibit to the Form 10 filed on April 23,
1997.
** Previously filed as an exhibit to the Form 10/A Amendment No. 1 filed
on May 21, 1997.
*** Previously filed as an exhibit to the Form 10/A Amendment No. 2 filed
on May 28, 1997.
**** Previously filed an exhibit to the Form S-11 filed on July 30, 1997.
***** Previously filed as an exhibit to Amendment No. 1 to Form S-11 filed
on November 14, 1997.
# Previously filed as an exhibit to the Form 8-K filed on September 11,
1997.
## Previously filed as an exhibit to the Form 8-K filed on September 23,
1997.
### Wellsford acquired its interest in a number of these documents by
assignment.
#### Previously filed as an exhibit to the Registration Statement on Form
S-4 filed on December 15, 1997.
##### Previously filed as part of Amendment No. 2 to the Registration
Statement on Form S-11 filed on December 3, 1997.
(b) During the last quarter of the period covered by this report, the
Company filed the following reports on Form 8-K:
Form 8-K dated September 11, 1997, and 8-K/A Amendments No. 1 and No.
2 thereto dated November 11, 1997, regarding the Company's joint
venture with Whitehall, the origination of the Abbey Credit Facility,
and the proposed merger with Value Property Trust.
Form 8-K dated September 23, 1997, regarding the execution of an
Agreement and Plan of Merger by the Company, Wellsford Capital
Corporation and Value Property Trust.
Form 8-K dated December 31, 1997, regarding the Company's
subsidiary's acquisition of the Mountain Heights property.
Form 8-K dated December 31, 1997, regarding the Company's acquisition
of the Sonterra at Williams Centre property.
(c) The following exhibits are filed as exhibits to this Form 10-K:
See Item 14 (a) (3) above.
(d) The following documents are filed as a part of this report:
None.
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be
signed on its behalf by the undersigned, thereunto duly authorized.
WELLSFORD REAL PROPERTIES, INC.
By: /s/ Jeffrey H. Lynford
--------------------------
(Jeffrey H. Lynford)
Chairman of the Board, Secretary and Director
Dated: March 27, 1998
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the dates indicated.
/s/ Jeffrey H. Lynford Chairman of the Board March 27, 1998
- --------------------------- and Director
(Jeffrey H. Lynford)
/s/ Edward Lowenthal President, Chief Executive March 27, 1998
- --------------------------- Officer and Director
(Edward Lowenthal) (Principal Executive Officer)
/s/ Gregory F. Hughes Chief Financial Officer March 27, 1998
- --------------------------- (Principal Financial
(Gregory F. Hughes) and Accounting Officer)
/s/ Rodney F. Du Bois Director March 27, 1998
- ---------------------------
(Rodney F. Du Bois)
/s/ Mark S. Germain Director March 27, 1998
- ---------------------------
(Mark S. Germain)
/s/ Frank J. Hoenemeyer Director March 27, 1998
- ---------------------------
(Frank J. Hoenemeyer)
/s/ Frank J. Sixt Director March 27, 1998
- ---------------------------
(Frank J. Sixt)
/s/ Douglas Crocker II Director March 27, 1998
- ---------------------------
(Douglas Crocker II)
<PAGE>
WELLSFORD REAL PROPERTIES, INC. AND SUBSIDIARIES
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
Page No. in
Form 10-K
-----------
Report of Independent Auditors. . . . . . . . . . . . . . . . . . . . F-2
Consolidated Balance Sheets as of December 31, 1997 and 1996. . . . . F-3
Consolidated Statements of Income for the Years Ended
December 31, 1997 and 1996. . . . . . . . . . . . . . . . . . . . . . F-4
Consolidated Statements of Changes in Shareholders' Equity for
the Years Ended December 31, 1997 and 1996 and the Period
from March 22, 1995 (Inception) to December 31, 1995. . . . . . . . . F-5
Consolidated Statements of Cash Flows for the Years Ended
December 31, 1997 and 1996 and the Period from March 22, 1995
(Inception) to December 31, 1995. . . . . . . . . . . . . . . . . . . F-6
Notes to Consolidated Financial Statements. . . . . . . . . . . . . . F-7
FINANCIAL STATEMENT SCHEDULES
III - Real Estate and Accumulated Depreciation. . . . . . . . . . . . S-1
IV - Mortgage Loans on Real Estate. . . . . . . . . . . . . . . . . . S-2
All other schedules have been omitted because the required information for
such other schedules is not present, is not present in amounts sufficient
to require submission of the schedule or because the required information
is included in the consolidated financial statements.
<PAGE>
REPORT OF INDEPENDENT AUDITORS
To the Shareholders and Board of Directors of
Wellsford Real Properties, Inc. and Subsidiaries
We have audited the accompanying consolidated balance sheets of Wellsford
Real Properties, Inc. and subsidiaries (the "Company") as of December 31,
1997 and 1996, and the related consolidated statements of income,
shareholders' equity and cash flows for each of the two years in the period
ended December 31, 1997, and the consolidated statements of shareholders'
equity and cash flows for the period from March 22, 1995 (the date the
assets were acquired and liabilities incurred) to December 31, 1995. Our
audits also included the financial statement schedules listed in the Index
at Item 14(a). These financial statements and schedules are the
responsibility of the Company's management. Our responsibility is to
express an opinion on these financial statements and schedules based on our
audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles
used and significant estimates made by management, as well as evaluating
the overall financial statement presentation. We believe that our audits
provide a reasonable basis for our opinion.
As described in Note 2, no operating revenues or expenses were incurred in
the period from March 22, 1995 through December 31, 1995. Accordingly, the
statement of income for the period ended December 31, 1995 has been
omitted.
In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the consolidated financial
position of Wellsford Real Properties, Inc. and subsidiaries at December
31, 1997 and 1996, and the consolidated results of their operations and
cash flows for the each of the two years in the period ended December 31,
1997, and their cash flows for the period from March 22, 1995 to December
31, 1995, in conformity with generally accepted accounting principles.
Also, in our opinion, the related financial statement schedules, when
considered in relation to the basic financial statements taken as a whole,
present fairly in all material respects the information set forth therein.
ERNST & YOUNG LLP
New York, New York
February 23, 1998
except for the tenth through thirteenth
paragraphs of Note 12, as to which the date is
March 11, 1998
<PAGE>
WELSFORD REAL PROPERTIES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
ASSETS
December 31,
----------------------------
1997 1996
------------ -----------
Real estate assets,
at cost - Note 10
Land $ 5,225,000 $ -
Buildings and improvements 36,338,624 -
------------ -----------
41,563,624 -
Less accumulated depreciation - -
------------ -----------
41,563,624 -
Construction in progress 17,177,824 21,306,000
------------ -----------
58,741,448 21,306,000
Notes receivable - Notes 4,5 and 10 105,631,611 17,800,000
Investment in joint venture - Note 10 44,779,563 -
------------ -----------
Total real estate assets 209,152,622 39,106,000
Cash and cash equivalents 29,895,212 -
Restricted cash - Note 3 7,695,910 5,520,000
Prepaid and other assets 3,229,956 134,000
------------ -----------
Total Assets $249,973,700 $44,760,000
============ ===========
LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities:
Mortgage notes payable - Note 5 $ 49,255,000 $14,755,000
Credit facility - Note 5 7,500,000 -
Accrued expenses and other liabilities 9,763,109 -
------------ -----------
Total Liabilities: 66,518,109 14,755,000
------------ -----------
Commitments and contingencies -
Notes 4, 5, 6, 7, 8, 9, 10 and 12 - -
Minority Interest - Note 10 2,297,295 -
Shareholders' Equity:
Series A 8% Convertible Redeemable
Preferred Stock, $.01 par value per
share, 2,000,000 authorized, no
shares issued and outstanding
at December 31, 1997 - -
Common Stock
197,650,000 shares authorized-
16,656,707 shares, $.01 par value
per share, issued and outstanding
at December 31, 1997 166,567 -
Class A Common Stock, 350,000 shares
authorized - 339,806 shares, $.01
per share, issued and outstanding
at December 31, 1997 3,398 -
Paid in capital in excess of
par value in 1997 179,721,827 29,248,000
Retained earnings 1,941,518 757,000
Deferred compensation - Note 7 (675,014) -
------------ -----------
Total Shareholders' Equity -
Notes 1 and 7 181,158,296 30,005,000
------------ -----------
Total Liabilities and
Shareholders' Equity $249,973,700 $44,760,000
============ ===========
<PAGE>
WELLSFORD REAL PROPERTIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
For the Years Ended December 31,
-------------------------------
1997 1996
--------------- -------------
REVENUE
Rental income $ 1,291,354 $ -
Interest income 7,779,021 757,000
--------------- -------------
Total Revenue 9,070,375 757,000
--------------- -------------
EXPENSES
Property operating and maintenance 241,257 -
Real estate taxes 105,692 -
Depreciation and amortization 294,563 -
Property management 18,356 -
Interest - -
General and administrative 3,159,558 -
--------------- --------------
Total Expenses 3,819,426 -
Income from joint venture 15,135 -
--------------- --------------
Income before taxes 5,266,084 757,000
Income tax expense - Note 2 2,213,007 -
--------------- --------------
Net income $ 3,053,077 $ 757,000
=============== ==============
Net income per common share,
basic and diluted - Note 2 $ 0.18 $ 0.04
=============== ==============
Weighted average number of common
shares outstanding - Note 2 16,922,135 16,911,849
=============== ==============
<PAGE>
<TABLE>
<CAPTION>
WELLSFORD REAL PROPERTIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
FOR THE YEARS ENDED DECEMBER 31, 1997 AND 1996 AND
THE PERIOD FROM MARCH 22, 1995 (INCEPTION) TO DECEMBER 31, 1995
Common Shares* Total
------------------ Paid-in Retained Deferred Shareholders'
Shares Amount Capital Earnings Compensation Equity
-------- -------- ------------- ------------ ------------- ------------
<S> <C> <C> <C> <C> <C> <C>
March 22, 1995
(Inception) - $ - $ - $ - $ - $ -
Equity contributions - - 3,614,000 - - 3,614,000
--------- --------- ------------- ------------ ------------- ------------
December 31, 1995 - - 3,614,000 - - 3,614,000
Equity contributions - - 25,634,000 - - 25,634,000
Net income - - - 757,000 - 757,000
--------- --------- ------------- ------------ ------------- -----------
December 31, 1996 - - 29,248,000 757,000 - 30,005,000
Equity contributions
prior to Spin-off-
Note 1 - - 19,310,633 - - 19,310,633
Net income prior to
Spin-off - Note 1 - - - 1,111,559 - 1,111,559
Spin-off - Note 1 4,887,577 48,875 1,819,684 (1,868,559) - -
Private offering of
common shares (net
of issuance costs)
- Note 7 12,000,000 120,000 121,574,562 - - 121,694,562
Issuance of Warrants
- Note 7 - - 6,198,345 - - 6,198,345
Director and officer
share grants 108,936 1,090 1,570,603 - (675,014) 896,679
Net income subsequent
to Spin-off - - - 1,941,518 - 1,941,518
----------- --------- ------------- ------------ ----------- ------------
December 31, 1997 16,996,513 $169,965 $179,721,827 $1,941,518 $(675,014) $181,158,296
=========== ========= ============= ============ =========== ============
*Includes 339,806 Class A Common Shares.
/TABLE
<PAGE>
<TABLE>
<CAPTION>
WELLSFORD REAL PROPERTIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
Period from
March 22, 1995
For the years Ended December 31, to December 31,
-------------------------------------------------------------
1997 1996 1995
--------------- -------------- --------------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 3,053,077 $ 757,000 $ -
Adjustments to reconcile net income
to net cash provided by operating
activities:
Income from joint venture (15,135) - -
Share grants 896,679 - -
Depreciation and amortization 294,563 - -
Decrease (increase) in assets
Restricted cash accounts (2,175,910) 4,894,000 4,341,000
Prepaid and other assets (3,164,296) (134,000) -
(Decrease) increase in liabilities
Accrued expenses and
other liabilities 7,116,138 - -
------------- ----------- -------------
Net cash provided by operating
activities 6,005,116 5,517,000 4,341,000
------------- ------------ -------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Investments in real estate assets (85,551,813) (13,351,000) (7,955,000)
Investments in joint ventures (13,955,069) - -
Investments in notes receivable (162,845,982) (17,800,000) -
Repayments of notes receivable 105,440,515 - -
------------- -------------------------------------
Net cash (used in)
investing activities (156,912,349) (31,151,000) (7,955,000)
------------- -------------------------------------
CASH FLOWS FROM FINANCING
ACTIVITIES:
Funding of restricted cash accounts - - (14,755,000)
Proceeds from mortgage notes payable 34,500,000 - 14,755,000
Proceeds from credit facilities 64,400,000 - -
Repayment of credit facilities (56,900,000) - -
Proceeds from bridge loan 6,000,000 - -
Repayment of bridge loan (6,000,000) - -
Equity contributions prior to
Spin-off 17,060,633 25,634,000 3,614,000
Equity contributions from
minority interest 47,250 - -
Proceeds from common shares 121,694,562 - -
-------------- ---------------------------------------
Net cash provided by financing
activities 180,802,445 25,634,000 3,614,000
-------------- --------------------------------------
Net increase (decrease) in cash
and cash equivalents 29,895,212 - -
Cash and cash equivalents,
beginning of year - - -
-------------- ---------------------------------------
Cash and cash equivalents,
end of year $ 29,895,212 $ - $ -
============== =======================================
SUPPLEMENTAL INFORMATION:
Cash paid during the year
for interest $ 1,506,508 $ 663,000 $ 335,000
SUPPLEMENTAL SCHEDULE OF NON-CASH
INVESTING AND FINANCING ACTIVITIES:
Properties contributed to
joint venture $ (54,332,555) $ - $ -
Debt contributed to joint venture $ 30,426,144 $ - $ -
Warrants issued in connection with
joint venture $ (6,198,345) $ - $ -
Other assets contributed to
joint venture $ (763,045) $ - $ -
</TABLE>
<PAGE>
WELLSFORD REAL PROPERTIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(1) Organization and Business
Wellsford Real Properties, Inc. (and subsidiaries, collectively the
"Company") was formed on January 8, 1997, as a corporate subsidiary of
Wellsford Residential Property Trust (the "Trust"). The Trust was
formed in 1992 as the successor to Wellsford Group Inc. (and
affiliates) which was formed in 1986. On May 30, 1997, the Trust
merged (the "Merger") with Equity Residential Properties Trust
("EQR"). Immediately prior to the Merger, the Trust contributed
certain of its assets to the Company and the Company assumed certain
liabilities of the Trust. Immediately after the contribution of
assets to the Company and immediately prior to the Merger, the Trust
distributed to its common shareholders all the outstanding shares of
the Company owned by the Trust (the "Spin-off"). The common
shareholders of the Trust received 0.25 common share of the Company
for each common share of the Trust owned. Upon consummation of the
Spin-off and Merger, the Company had issued and outstanding
approximately 4,547,771 shares of common stock and 339,806 shares of
Class A common stock that was issued to an affiliate of EQR. On June
2, 1997, the Company sold 12,000,000 shares of its common stock in a
private placement (the "Private Placement") to a group of
institutional investors at $10.30 per share, the Company's then book
value per share (Note 7).
The Company is a real estate merchant banking firm which acquires,
develops and operates real properties and invests in the debt and
equity securities of private and public real estate companies. The
Company has established three strategic business units ("SBUs") within
which it intends to execute its business plan: an SBU for commercial
property investments which is held in its 99.9% subsidiary, Wellsford
Commercial Properties Trust ("WCPT"), an SBU for debt and equity
investments and an SBU for property development and land investments.
See Note 10 for additional information regarding the Company's
industry segments.
(2) Summary of Significant Accounting Policies
Principles of Consolidation and Financial Statement Presentation. The
accompanying consolidated financial statements include the accounts of
Wellsford Real Properties, Inc. and its majority-owned and controlled
subsidiaries. Investments in entities where the Company does not have
a controlling interest are accounted for under the equity method. All
significant inter-company accounts and transactions among Wellsford
Real Properties, Inc. and its subsidiaries have been eliminated in
consolidation.
The accompanying consolidated financial statements include the assets
and liabilities contributed to and assumed by the Company from the
Trust, from the time such assets and liabilities were acquired or
incurred, respectively, by the Trust. Such financial statements have
been prepared using the historical basis of the assets and liabilities
and the historical results of operations related to the Company's
assets and liabilities.
For the purpose of the Company, the assets were acquired and
liabilities incurred beginning on March 22, 1995. During the period
from March 22, 1995 through December 31, 1995 the Company was
principally involved in the initial phase of construction development
activities with no operating revenues or expenses incurred.
Accordingly, the income statement for the period ended December 31,
1995 has been omitted.
Income Recognition. Commercial properties are leased under operating
leases. Rental revenue is recognized on a straight-line basis over
the terms of the respective leases. Residential communities are leased
under operating leases with terms of generally one year or less.
Rental revenue is recognized monthly as it is earned.
Cash and Cash Equivalents. The Company considers all demand and money
market accounts and short term investments in government funds with an
original maturity of three months or less to be cash and cash
equivalents.
Real Estate and Depreciation. Costs directly related to the
acquisition and improvement of real estate are capitalized, including
all improvements identified during the underwriting of a property
acquisition. Ordinary repairs and maintenance are expensed as
incurred.
Tenant improvements and leasing commissions related to commercial
properties are capitalized and depreciated over the terms of the
related leases.
Depreciation is computed over the expected useful lives of depreciable
property on a straight line basis, principally 27.5 years for
residential buildings and improvements, 40 years for commercial
properties and 5 to 12 years for furnishings and equipment.
Depreciation expense was $0.3 million in 1997 and included $0.1
million of amortization of certain assets capitalized to the Company's
Investment in Joint Venture.
Statement of Financial Accounting Standard ("SFAS") 121 "Accounting
for the Impairment of Long-Lived Assets and for Long-Lived Assets to
Be Disposed of" requires that long-lived assets to be held and used be
reviewed for impairment whenever events or changes in circumstances
indicate that the carrying amount of an asset may not be recoverable.
SFAS 121 has not had an impact on the Company's consolidated financial
statements.
Mortgage Note Receivable Impairment. The Company considers a note
impaired if, based on current information and events, it is probable
that all amounts due under the note agreement are not collectable.
Impairment is measured based upon the fair value of the underlying
collateral. No impairment has been recorded through December 31,
1997.
Share Based Compensation. SFAS 123 "Accounting for Stock-Based
Compensation" establishes a fair value based method of accounting for
share based compensation plans, including share options. The
disclosure requirements of SFAS 123 are effective for financial
statements for fiscal years beginning after December 15, 1995.
However, registrants may elect to continue accounting for share option
plans under Accounting Principles Board Opinion ("APB") 25, but are
required to provide pro forma net income and earnings per share
information "as if" the new fair value approach had been adopted (see
Note 8). Because the Company has elected to continue to account for
its share based compensation plans under APB 25, there has been no
impact on the Company's consolidated financial statements resulting
from SFAS 123.
Segment Reporting. Effective January 1, 1997, the Company adopted
SFAS 131, "Disclosures about Segments of an Enterprise and Related
Information." SFAS 131 superseded SFAS 14 "Financial Reporting for
Segments of a Business Enterprise." SFAS 131 establishes standards
for the way that public business enterprises report information about
operating segments in annual financial statements and requires that
those enterprises report selected information about operating segments
in interim financial reports. SFAS 131 also establishes standards for
related disclosures about products and services, geographic areas, and
major customers. The adoption of SFAS 131 did not affect results of
operations or financial position, but did affect the disclosure of
segment information. See note 10.
Income Taxes. The Company accounts for income taxes under SFAS 109
"Accounting for Income Taxes." Deferred income tax assets and
liabilities are determined based upon differences between financial
reporting and tax bases of assets and liabilities and are measured
using the enacted tax rates and laws that will be in effect when the
differences are expected to reverse.
The components of the income tax provision (benefit) are as follows:
Year Ended
December 31, 1997
-----------------
Current federal tax $ 1,776,595
Current state tax 456,838
Deferred federal tax (16,239)
Deferred state tax (4,187)
-----------
$ 2,213,007
============
The reconciliation of income tax computed at the U.S. federal
statutory rate to income tax expense is as follows:
Year Ended
December 31, 1997
-----------------
Amount Percent
------- -------
Tax at U.S. statutory rate $ 1,454,084 35.00%
State taxes, net of
federal benefit 374,711 9.02%
Non-deductible items 2,722 0.07%
Change in valuation
allowance 381,490 9.18%
------------ -------
$ 2,213,007 53.27%
============ =======
Deferred income taxes reflect the net tax effects of temporary
differences between the carrying amount of assets and liabilities for
financial reporting purposes and the amounts used for income tax
purposes. Significant components of the Company's net deferred income
taxes are as follows:
Year Ended
December 31, 1997
-----------------
Deferred tax assets:
--------------------
Deferred compensation plan $ 3,021,641
Other 32,908
--------------
Subtotal deferred tax assets 3,054,549
Less: valuation allowance (2,361,603)
--------------
Total deferred tax assets 692,946
Deferred tax liabilities:
-------------------------
Built in gain on stock in deferred
compensation plan (660,037)
Other (12,483)
---------------
Total deferred tax liabilities (672,520)
Net deferred tax asset $ 20,426
==============
SFAS 109 requires a valuation allowance to reduce the deferred tax
assets reported if, based on the weight of the evidence, it is more
likely than not that some portion or all of the deferred tax assets
will not be realized. After consideration of all the evidence, both
positive and negative, management has determined that a $2,361,603
valuation allowance at December 31, 1997 is necessary to reduce the
deferred tax assets to the amount that will more likely than not be
realized.
Per Share Data. In 1997, SFAS 128 "Earnings per Share" was issued.
SFAS 128 replaced the calculation of primary and fully diluted
earnings per share. Unlike primary earnings per share, basic earnings
per share excludes any dilutive effects of options, warrants and
convertible securities. Diluted earnings per share is very similar to
fully diluted earnings per share. All earnings per share amounts for
all periods have been presented to conform to the SFAS 128
requirements.
Earnings per common share are computed based upon the weighted average
number of common shares outstanding during the period, including Class
A common shares.
Diluted earnings per common share are based upon the increased number
of common shares that would be outstanding assuming the exercise of
dilutive common share options (169,264) and warrants (256,899), under
the treasury stock method.
The Company was a corporate subsidiary of the Trust prior to the Spin-
off. Earnings per share was calculated using the weighted average
number of shares outstanding assuming that the Spin-off and Private
Placement (Note 7) occurred on January 1, 1996.
Estimates. The preparation of financial statements in conformity with
generally accepted accounting principles requires management to make
estimates and assumptions that affect the reported amounts of assets
and liabilities and disclosure of contingent assets and liabilities at
the date of the financial statements and the reported amounts of
revenues and expenses during the reporting period. Actual results
could differ from those estimates.
<PAGE>
(3) Restricted Cash
Restricted cash primarily consists of retirement plan deposits and
debt service and construction reserve balances. At December 31, 1997
and 1996, retirement plan deposits amounted to $6,017,784 and $0,
respectively, and reserve balances amounted to $1,678,125 and
$5,520,000 respectively. Retirement plan deposits are made solely
by, and at the discretion of, the Company's officers who participate
in the plan.
(4) Notes Receivable
At December 31, 1997 and 1996, notes receivable consisted of the
following:
<TABLE>
<CAPTION>
Stated Maturity
Note Interest Rate Date Payment Terms Balance December 31,
------------- -------- ------------- --------------------------
1997 1996
---- ----
<S> <C> <C> <C> <C>
277 Park Loan 12% 5/2007 Interest Only $ 25,000,000 $ --
Abbey Credit Facility LIBOR +4% 9/2000 Interest Only 28,626,650 --
IPH Mezzanine Facility LIBOR +5% 6/1998* Interest Only 9,821,036 --
Woodlands Loan LIBOR +4.4% 7/2000 Interest Only 15,000,000 --
Park 80 Loan LIBOR +3% 3/1998 Interest Only 5,100,000 --
WEL/WH Bridge Loan LIBOR +4% 2/1998 Interest Only 4,283,925 --
Sonterra Loan** 9% 7/1999** Interest Only 17,800,000 17,800,000
------------ ----------
$105,631,611 $17,800,000
=========== ===========
</TABLE>
* Repaid in February 1998.
**Effectively repaid in January 1998 as part of the Sonterra
acquisition. See Note 12.
For additional information on the Company's notes receivable, see
Note 10.
<PAGE>
(5) Debt
At December 31, 1997 and 1996, the Company's debt consisted of the
following:
Maturity Standard Balance
Debt Date Interest Rate ---------------------
- --------- -------- ------------- 12/31/97 12/31/96
-------- --------
(000s) (000s)
Line of Credit 5/1999 LIBOR +1.75% $ 7,500 $ --
Palomino Park (A) 12/2035 Variable (B) 14,755 14,755
Blue Ridge Mortgage 1/2008 6.92% (C) 34,500 --
-------- -------
$ 56,755 $14,755
======== =======
_____________________
(A) Mortgage secures tax exempt bonds.
(B) Rate approximates the Standard & Poor's / J.J. Kenney index for short-
term high grade tax-exempt bonds (currently approximately 4%).
(C) Principal payments are made based on a 30-year amortization schedule.
In December 1995, the Trust marketed and sold $14.8 million of tax-
exempt bonds to fund construction at Palomino Park. At December 31,
1997, $1.7 million of the bond proceeds were being held in escrow
pending their use for the funding of development. The bonds are
secured by a letter of credit from Dresdner Bank, AG, NY Branch
("Dresdner"). An affiliate of EQR has made its own credit available
to Dresdner in the form of a guaranty.
The Blue Ridge Mortgage is secured by the Blue Ridge property (Note
10).
In May 1997, the Company obtained a $50 million two-year line of
credit (extendable for one year) from BankBoston, N.A. and Morgan
Guaranty Trust Company of New York (the "Line of Credit"). The Line
of Credit is secured by the EQR Preferred Commitment (Note 7) and the
277 Park Loan. The Company is obligated to pay a fee equal to one-
quarter of one percent (0.25%) per annum on the average daily amount
of the unused portion of the Line of Credit until maturity.
The Line of Credit contains various customary loan covenants and
requires the Company to maintain a ratio of total consolidated
liabilities to total consolidated assets of not more than 0.6 to 1, to
maintain an overall debt service coverage ratio of at least 1.5 to 1
and to meet certain minimum borrowing base and equity level
requirements. The Line of Credit also limits the amount of
undeveloped land the Company may hold.
The Company's long-term debt matures as follows: $0.4 million in
1998, $7.9 million in 1999, $0.4 million in 2000, $0.4 million in
2001, $0.5 million in 2002 and $47.2 million thereafter. The $7.5
million balance of the Line of Credit was repaid in January 1998.
The Company capitalizes interest related to buildings under
construction and renovation to the extent such assets qualify for
capitalization. Total interest capitalized during the years ended
December 31, 1997, 1996 and 1995 was $1.7 million, $0.7 million, and
$0.3 million, respectively.
The fair market value of the fixed rate mortgage notes, estimated by
discounting cash flows and adjusting the results for subjective
factors including loan to value ratios, approximates the carrying
amount of the mortgage notes. The fair market value of the variable
rate credit facility is considered to be the carrying amount.
(6) Transactions With Affiliates
In February 1997, the contracts to purchase the WRP Commercial
Properties (Note 10) were transferred to the Company by an entity
("Commercial Partnership") of which Messrs. Lynford and Lowenthal and
the wife of Mark Germain (a director of the Company) are owners, for
218,447 shares of common stock having an aggregate value of
approximately $2.25 million and the Company's agreement to repay a
$1.0 million advance used for the down payment on one of the WRP
Commercial Properties. Upon liquidation of Commercial Partnership,
Mr. Lynford, Mr. Lowenthal and the wife of Mark Germain each received
approximately 16.4%, 16.4% and 13.8%, respectively, of the shares of
common stock issued to Commercial Partnership. The aggregate purchase
price for these commercial properties paid by the Company was
approximately $47.6 million, including the approximately $2.25 million
referred to above.
On May 30, 1997, the Company made short-term loans to Messrs. Lynford
and Lowenthal in the amounts of $590,000 and $119,000, respectively.
The proceeds of these loans, which were repaid on July 1, 1997, were
used to satisfy certain withholding tax obligations.
The Company received approximately $2.1 million in interest income and
$0.1 million in management fees ($0.3 million annually) during 1997
from Wellsford Commercial (Note 10).
(7) Shareholders' Equity
On June 2, 1997, the Company completed the Private Placement. The
Company has filed a shelf registration statement with the Securities
and Exchange Commission with respect to such shares. The proceeds of
the Private Placement of approximately $123.6 million have been
applied to (a) approximately $53 million to repay the Company's Line
of Credit and other debt on the date of the Private Placement, (b) $5
million to purchase a portion of the 277 Park Loan, and (c) the
balance towards the investments described in Note 10 and working
capital.
The Line of Credit (Note 5) is secured by an affiliate of EQR's
commitment, until May 30, 2000, to acquire at the Company's option up
to $25 million of the Company's Series A 8% Convertible Redeemable
Preferred Stock ("Series A Preferred"), each share of which is
convertible into shares of common stock at a price of $11.124 (the
"EQR Preferred Commitment"). If at May 30, 2000, the affiliate of EQR
has purchased less than $25 million of Series A Preferred, it has the
right to purchase the remainder of the $25 million not purchased prior
to that time.
Three of the Company's executive officers each received a grant of
14,286 restricted common shares, of which an aggregate of 28,572
shares were issued to the Company's noqualified deferred compensation
plan. Twenty percent (20%) of each executive officer's restricted
common shares vest on each anniversary date of the grant (December 5,
1997) over a 5-year period provided that the executive officer is
still employed by the Company (otherwise, any unvested restricted
common shares will be redeemed by the Company at $.01 per share).
Based upon the market price on the date of grant of $15.75 per common
share, the restricted common shares granted to each of the executive
officers had a market value of $225,000. The total deferred
compensation is included in "Deferred Compensation" and "General and
Administrative Expense" on the Company's consolidated financial
statements.
Two of the Company's executive officers each received a grant of
19,048 common shares, which were issued to the Company's nonqualified
deferred compensation plan. Based upon the market price on the date
of grant of $15.75 per common share, the common shares granted to each
of the executive officers had a market value of approximately
$300,000.
The Company has Warrants outstanding to issue 4,132,230 shares of
common stock (see Note 10).
The Company did not distribute any dividends during 1997.
(8) Share Option Plan
The Company has adopted certain incentive plans for the purpose of
attracting and retaining the Company's directors, officers and
employees. The Company has established share option and management
incentive plans (the "Incentive Plans") which reserved 3,076,235
common shares for issuance under the Incentive Plans. Options granted
under the Incentive Plans expire ten years from the date of grant and
generally contain the right to receive reload options under certain
conditions. At December 31, 1997, 115,545 of the Company's
outstanding options are exercisable. Options outstanding for the
period ended December 31, 1997, which have a weighted average vesting
period of approximately 3.7 years, are as follows:
Issued in 1997 as replacement options for Trust options
(exercise prices between $6.67 and $10.30 per share,
weighted average fair value of $5.19 per share) 1,326,235
Issued in 1997 (exercise prices between $10.30 and $15.81
per share, weighted average fair value of
$7.31 per share) 1,622,375
Exercised in 1997 --
Forfeited in 1997 (1,000)
Expired in 1997 --
---------
December 31, 1997 (weighted average exercise
price of $12.20) 2,947,610
=========
Pursuant to SFAS 123, described in Note 2, the pro forma 1997 net
income available to common shareholders as if the fair value approach
to accounting for share-based compensation had been applied would be
$2.5 million or $0.14 per common share, basic and diluted. The fair
values of the options used in calculating these amounts were
calculated using the Black-Scholes option pricing model and the
following assumptions: (i) a risk-free interest rate of between
5.84% and 6.27%, depending on the data available on the date of grant,
(ii) an expected life of 10 years, and (iii) an expected volatility
between 20% and 29%, depending on the data available on the date of
grant. The Black-Scholes option pricing model was developed for use in
estimating the fair value of traded options which have no vesting
restrictions and are fully transferable. In addition, option pricing
models require the input of highly subjective assumptions including
the expected share price volatility. Because the Company's employee
share options have characteristics significantly different from those
of traded options, and because changes in the subjective input
assumptions can materially affect the fair value estimate, in
management's opinion, the existing models do not necessarily provide a
reliable single measure of the fair value of its employee share
options.
(9) Commitments and Contingencies
The Company has entered into employment agreements with four of its
officers. Such agreements are for terms which expire between 1999
and 2002, and provide for aggregate annual fixed payments of
approximately $1.0 million, $1.0 million and $0.6 million in 1997,
1998 and 1999 through 2002, respectively.
As a commercial real estate owner, the Company is subject to potential
environmental costs. At this point in time, management of the Company
is not aware of any environmental concerns that would have a material
adverse effect on the Company's financial position or future results
of operations.
In 1997 the Company adopted a defined contribution savings plan
pursuant to Section 401 of the Internal Revenue Code. Under such a
plan there are no prior service costs. All employees are eligible to
participate in the plan after one year of service. Employer
contributions are made based on a discretionary amount
determined by the Company's management. Employer contributions, if
any, are based upon the amount contributed by an employee. During
1997, the Company made contributions of approximately $4,000.
<PAGE>
<TABLE>
<CAPTION>
(10) Segment Information
Wellsford/ | Commercial Debt and Land and
Whitehall | Property Equity Development
Properties, L.L.C.* | Investments Investments Investments Other Consolidated
------------------- | ----------- ----------- ----------- ----- ------------
<S> <C> <C> <C> <C> <C> <C>
December 31, 1997 (000s) |
- ----------------------- |
|
Real estate, net $ 218,846 | $ - $ - $ 58,741 $ - $ 58,741
Notes receivable - | - 87,832 17,800 - 105,632
Investment in joint venture - | 44,780 - - - 44,780
Cash and cash equivalents 2,878 | - - - 29,896 29,896
Other assets 7,311 | - 1,313 3,040 6,572 10,925
---------- | --------- -------- --------- -------- ---------
Total assets $ 229,035 | $ 44,780 $ 89,145 $ 79,581 $ 36,468 $ 249,974
========== | ========= ======== ========= ======== =========
Mortgage notes payable $ 4,284 | $ - $ - $ 49,255 $ - $ 49,255
Credit facilities 146,909 | - - 7,500 - 7,500
Accrued expenses and |
other liabilities 3,717 | - - 1,838 7,925 9,763
Minority interest - | - - 2,297 - 2,297
Equity 74,125 | 44,780 89,145 18,691 28,543 181,159
---------- | --------- -------- --------- -------- ---------
Total liabilities and equity $ 229,035 | $ 44,780 $ 89,145 $ 79,581 $ 36,468 $ 249,974
========== | ========= ======== ========= ======== =========
Year Ended December 31, 1997 (000s)
- ----------------------------------
Rental income $ 8,504 | $ 1,291 $ - $ - $ - $ 1,291
Interest income 24 | - 5,002 1,602 1,175 7,779
---------- | --------- -------- --------- -------- ---------
Total income 8,528 | 1,291 5,002 1,602 1,175 9,070
---------- | --------- -------- --------- -------- ---------
|
Operating expenses 3,494 | 365 - - - 365
Depreciation and amortization 1,220 | 188 - - 106 294
Interest 2,949 | - - - - -
General and administrative 835 | - - - 3,160 3,160
---------- | --------- -------- --------- -------- ---------
Total expenses 8,498 | 553 - - 3,266 3,819
---------- | --------- -------- --------- -------- ---------
|
Income from joint venture - | 15 - - - 15
---------- | --------- -------- --------- -------- ---------
Income (loss) before taxes 30 | 753 5,002 1,602 (2,091) 5,266
Income tax expense - | 269 2,535 493 (1,084) 2,213
---------- | --------- -------- --------- -------- ---------
Net income (loss) $ 30 | $ 484 $ 2,467 $ 1,109 $ (1,007) $ 3,053
========== | ========= ======== ========= ======== =========
</TABLE>
* The Company accounts for its 50.1% investment in this joint venture
under the equity method. This investment is held in the Company's
"Commercial Property Investments" segment.
<PAGE>
(10) Segment Information (continued)
Commercial Property Investments - WCPT
At the time of the Spin-off, the Company owned six commercial office
buildings, five of which were vacant at that time, located in Northern
New Jersey, containing an aggregate of approximately 949,400 square
feet and acquired for an aggregate of approximately $47.6 million (the
"WRP Commercial Properties").
On August 28, 1997, the Company, through its subsidiary Wellsford
Commercial Properties Trust ("WCPT"), in a joint venture with WHWEL
Real Estate Limited Partnership ("Whitehall"), an affiliate of
Goldman, Sachs & Co., formed a private real estate operating company,
Wellsford/Whitehall Properties, L.L.C. ("Wellsford Commercial"). WCPT
manages Wellsford Commercial on a day-to-day basis, and certain major
decisions require the consent of both partners. WCPT intends to
qualify as a real estate investment trust ("REIT") and has a 50.1%
interest in Wellsford Commercial.
Wellsford Commercial owned and operated 13 office buildings containing
approximately 2.3 million square feet ("SF") of office space in New
Jersey and Washington, D.C. as of December 31, 1997 with an aggregate
gross book value of $212.9 million. These buildings consist of the
WRP Commercial Properties, which were contributed by the Company upon
formation of Wellsford Commercial, and 300 Atrium Drive, 400 Atrium
Drive, 500 Atrium Drive and 1275 K Street, which were contributed by
Whitehall upon formation of Wellsford Commercial, as well as 700
Atrium Drive and Mountain Heights (two buildings) which were acquired
in September and December 1997, respectively, for $18.1 million and
$29.1 million, respectively. In addition, Wellsford Commercial
purchased an industrial warehouse in New Jersey in December 1997 for
$7.1 million.
The Wellsford Commercial transactions described above were funded
primarily by capital contributions from the Company and Whitehall, by
$48 million in debt which encumbered certain of the properties
contributed by Whitehall (the "Atrium Loan") which was assumed by
Wellsford Commercial, and by a term loan agreement (the "WRP Loan")
between the Company and Wellsford Commercial.
The Atrium Loan bore interest at LIBOR +3% and was due on May 15,
2000. Wellsford Commercial has an interest rate protection agreement
which was related to this loan which caps LIBOR at 7.69% on a notional
balance of $64 million until June 15, 2000. The lender on this loan
was Goldman Sachs Mortgage Company. This loan was repaid in December
1997. The Company has retained the interest rate protection agreement
to hedge other floating rate borrowings.
Pursuant to the WRP Loan, the Company has agreed to loan Wellsford
Commercial up to approximately $86.3 million bearing interest at LIBOR
plus 3% until November 26, 1997 and at LIBOR plus 4% until maturity on
February 25, 1998. As of December 31, 1997, approximately $4.3
million was outstanding under the WRP Loan.
In December 1997, Wellsford Commercial obtained a $375 million loan
facility (the "Wellsford Commercial Bank Facility") from BankBoston
and Goldman Sachs Mortgage Company, consisting of a secured term loan
facility of up to $225 million and a secured revolving credit facility
of up to $150 million. The term loan facility bears interest at LIBOR
+1.6% and has a term of four years; the revolving credit facility
bears interest at LIBOR +2.5% and has a term of three years, which may
be renewed by Wellsford Commercial for one additional year.
As of December 31, 1997, approximately $146.9 million was outstanding
under the Wellsford Commercial Bank Facility ($107.9 million of which
was under the term loan), the proceeds of which were used primarily to
repay amounts outstanding under the Atrium Loan and the WRP Loan.
WCPT is entitled to incentive compensation equal to (a) 17.5% of
available cash after a return of capital to WCPT and Whitehall and a
17.5% return on equity to each of them, and (b) 22.5% of available
cash after a 22.5% return on equity to WCPT and Whitehall. The
Company and Whitehall have committed to make additional equity
contributions of $50 million each for new acquisitions, capital needs,
and working capital. Whitehall may exchange the membership units it
receives in Wellsford Commercial relating to capital contributions in
excess of an additional $25 million up to an additional $50 million,
for shares of the Company's common stock or, in the Company's sole
discretion, cash, based upon the price paid for such membership units
and the current market value of the Company's common stock.
In connection with the transactions described above, the Company
issued warrants (the "Warrants") to Whitehall to purchase 4,132,230
shares of common stock at an exercise price of $12.10 per share. The
Warrants are exercisable for five years for either, at the Company's
option, shares of the Company's common stock or cash. The exercise
price for the Warrants is payable in cash or, after August 28, 1999,
either with cash or membership units in Wellsford Commercial.
The Company has agreed with Whitehall to conduct its business and
activities relating to office properties (but not other types of
commercial properties) located in North America solely through its
interest in Wellsford Commercial except, in certain circumstances,
where Wellsford Commercial has declined the investment opportunity.
Debt and Equity Investments
At December 31, 1997, the Company had $105.6 million of debt
investments which bore interest at an average yield of 4.4% over
LIBOR.
277 Park
The Company and BankBoston have provided an $80 million loan (the "277
Park Loan") to entities which own substantially all of the equity
interests (the "Equity Interests") in the entity which owns a 52-
story, approximately 1.75 million square foot gross leasable area,
class A office building located in New York City in mid-town Manhattan
at 277 Park Avenue (the "277 Park Property"). The Company has
advanced $25 million pursuant to the 277 Park Loan. The 277 Park Loan
is secured primarily by a pledge of the Equity Interests owned by the
borrowers. The 277 Park Loan is subordinated to a 10-year $345
million first mortgage loan (the "REMIC Loan") on the 277 Park
Property. The notes representing the REMIC Loan bear interest at
different rates which equate to a weighted average interest rate of
approximately 7.67% per annum. The 277 Park Loan bears interest at
the rate of approximately 12% per annum for the first nine years of
its term and at a floating annual rate during the tenth year equal to
LIBOR plus 5.15% or the BankBoston base rate plus 5.15%, as elected by
the borrowers. The principal amount of the 277 Park Loan and all
accrued interest will be payable in May 2007; the REMIC Loan is also
due in May 2007. The 277 Park Loan is prepayable only in full and
then only after the fifth year of the loan and must be repaid if the
REMIC Loan is repaid or the 277 Park Property is sold. Any prepayment
during the sixth through ninth years of the loan must be accompanied
by a yield maintenance payment.
The Abbey Company
On August 28, 1997, the Company and Morgan Guaranty Trust Company of
New York ("MGT") originated a $70 million secured credit facility (the
"Abbey Credit Facility") to affiliates of The Abbey Company, Inc.
("Abbey").
The Abbey Credit Facility will be made available to Abbey until
September 2000. Advances under the facility can be made for up to 80%
of the value of the borrowing base collateral which will initially
consist of 10 properties, all cross-collateralized, totaling
approximately 1.1 million SF.
As of December 31, 1997, approximately $28.6 million had been advanced
by the Company under the Abbey Credit Facility. Under the terms of
its participation agreement with MGT, the Company will fund a 50%
junior participation on all advances under the facility.
The Company is entitled to receive interest on its advances under the
facility at LIBOR plus 4%.
IPH Mezzanine Facility
In December 1997, Wellsford Ventures, Inc. ("Ventures"), a wholly-
owned subsidiary of the Company, joined with Fleet Real Estate, Inc.
("FRE"), a subsidiary of Fleet Financial Group, to issue an
approximately $32.5 million subordinated credit facility (the "IPH
Mezzanine Facility") to Industrial Properties Holding, L.P. ("IPH").
Each of Ventures and FRE were committed to advance up to 50% of the
IPH Mezzanine Facility. As of December 31, 1997, approximately $9.8
million had been advanced by Ventures to IPH. The IPH Mezzanine
Facility was repaid in February 1998, at which time the Company
received a total of $0.8 million in interest and fees. Advances under
the IPH Mezzanine Facility bore interest at an annual rate of LIBOR
plus 5%.
Woodlands
In December 1997, BankBoston, Morgan Stanley Senior Funding, Inc. and
certain other lenders made available to the owners and developers of a
25,000 acre master-planned residential community located north of
Houston (the "Woodlands Property"), loans in the aggregate principal
amount of $369 million (the "Woodlands Loan"). The Woodlands Loan
consists of a revolving credit loan in the principal amount of $179
million (the "Revolving Loan"), a secured term loan in the principal
amount of $130 million (the "Secured Loan"), and a second secured term
loan in the principal amount of $60 million (the "Second Secured
Loan"). The Company has advanced $15 million pursuant to the Second
Secured Loan. The Second Secured Loan is subordinate to the Revolving
Loan and the Secured Loan and bears interest equal to LIBOR plus
4.40%. Interest on the Second Secured Loan is payable monthly to the
extent there is available cash after payment of interest on the
Revolving Loan and the Secured Loan and provided no event of default
has occurred under the Woodlands Loan. The principal amount of the
Woodlands Loan and all accrued interest thereon will be payable on
July 31, 2000, with two, one-year extension options available.
Park 80
In December 1997, the Company originated a $5.1 million loan bearing
interest at LIBOR plus 3% and maturing in March 1998 (the "Park 80
Loan"). The Park 80 Loan is secured by a mortgage on an 80,000SF mid-
rise office building in Saddlebrook, New Jersey.
Value Property Trust
On September 18, 1997, the Company and its subsidiary, Wellsford
Capital Corporation, entered into a definitive agreement with Value
Property Trust (NYSE: "VLP"), a real estate investment trust, pursuant
to which the Company acquired VLP in a merger transaction for cash and
stock valued at approximately $169 million.
Pursuant to the terms of the merger agreement, the Company agreed to
pay to VLP shareholders approximately $130 million in cash and issue
an aggregate of approximately 3.35 million shares of its common stock
resulting in each VLP shareholder receiving $11.58 in cash and 0.2984
common shares of the Company for each share of VLP. VLP primarily
owns 20 properties (with 2.1 million SF, the "VLP Properties") and has
approximately $60 million in net cash and a $6.2 million note
receivable, which is due in July 1998. The portfolio is diversified
both by property type and geographic location.
The acquisition, which is being accounted for as a purchase, was
approved by the VLP shareholders on February 20, 1998 and is expected
to be completed in February 1998 (see Note 12).
The Company has contracted to sell, for $65 million, 13 of the VLP
Properties to an affiliate of Whitehall ("Whitehall Property Buyer").
The Company intends to retain 7 properties.
(10) Segment Information (continued)
Property Development and Land Investments
Palomino Park
From the time of the Spin-off, the Company has owned an approximate
80% interest in Phases I, II and III of, and in options to acquire (at
fixed prices) and develop phases IV and V of, a 1,880-unit class A
multifamily development ("Palomino Park") in a suburb of Denver,
Colorado. The Company has a related $14.8 million tax exempt mortgage
note payable which requires interest only payments at a variable rate
(currently approximately 4%) until it matures in December 2035 (the
"Palomino Park Bonds"). The tax exempt mortgage note payable is
security for tax-exempt bonds, which are backed by a letter of credit
from a AAA rated financial institution. The Company and an affiliate
of EQR have guaranteed the reimbursement of the financial institution
in the event that the letter of credit is drawn upon (the latter
guarantee being the "EQR Enhancement").
In December 1997, Phase I, known as Blue Ridge, was completed at a
cost of approximately $41.5 million. At that time, the Company
acquired the remaining interest in Blue Ridge and the related
construction loan was repaid with the proceeds of a $34.5 million
permanent loan (the "Blue Ridge Loan") secured by a mortgage on Blue
Ridge. The Blue Ridge Loan matures in January 2008 and bears interest
at a fixed rate of 6.92%. Principal payments are based on a 30-year
amortization schedule.
The Company has invested $16.9 million through December 31, 1997 on
one multifamily development project, Red Canyon, which is a phase of
Palomino Park consisting of 304 units. This project is being
developed pursuant to a fixed-price contract. The Company is
committed to purchase 100% of this project upon completion and the
achievement of certain occupancy levels. Red Canyon is owned by Red
Canyon at Palomino Park LLC ("Phase II LLC"), a limited liability
company, the members of which are Wellsford Park Highlands, Corp.
(99%), a majority owned and controlled subsidiary of the Company, and
Al Feld ("Feld") (1%).
In May 1997, the Company acquired the land for Phase III for
approximately $2.1 million.
Sonterra
From the time of the Spin-off, the Company has held a $17.8 million
mortgage due in July 1999 and bearing interest at 9% per annum (the
"Sonterra Mortgage") on, and option to purchase, a 344-unit class A
residential apartment complex ("Sonterra at Williams Centre") in
Tucson, Arizona.
In January 1998, the Company exercised its option and acquired
Sonterra at Williams Centre for approximately $20.5 million.
<PAGE>
(11) Summarized Consolidated Quarterly Information (Unaudited)
Summarized consolidated quarterly financial information for the years
ended December 31, 1997 and 1996 is as follows:
Three Months Ended (Unaudited)
-----------------------------------------------------
March 31 June 30 September 30 December 31
-------- ------- ------------ -----------
1997
- ----------------
Revenue $ 400,500 $ 1,775,359 $ 3,369,120 $ 3,540,531
Expenses -- 475,728 1,631,215 1,712,483
Income before ----------- ----------- ----------- -----------
taxes 400,500 1,299,631 1,737,905 1,828,048
Income tax
expense -- 284,000 719,000 1,210,007
----------- ----------- ----------- -----------
Net income
available for
common
shareholders $ 400,500 $ 1,015,631 $ 1,018,905 $ 618,041
=========== =========== =========== ===========
Net income
per common
share, basic* $ 0.02 $ 0.06 $ 0.06 $ 0.04
=========== =========== =========== ===========
Net income
per common
share, diluted* $ 0.02 $ 0.06 $ 0.06 $ 0.03
=========== =========== =========== ===========
Weighted average
number of
common shares
outstanding 16,911,849 16,911,849 16,911,849 16,935,776
=========== =========== =========== ===========
Three Months Ended (Unaudited)
-----------------------------------------------------
March 31 June 30 September 30 December 31
-------- ------- ------------ -----------
1996
- ----------------
Revenue $ -- $ -- $ 356,500 $ 400,500
Expenses -- -- -- --
----------- ----------- ----------- -----------
Income before
taxes -- -- 356,500 400,500
Income tax
expense -- -- -- --
----------- ----------- ----------- -----------
Net income
available for
common
shareholders $ -- $ -- $ 356,500 $ 400,500
=========== =========== =========== ===========
Net income per
common share,
basic* $ 0.00 $ 0.00 $ 0.02 $ 0.02
=========== =========== =========== ===========
Net income per
common share,
diluted* $ 0.00 $ 0.00 $ 0.02 $ 0.02
=========== =========== =========== ===========
Weighted average
number of
common shares
outstanding 16,911,849 16,911,849 16,911,849 16,911,849
=========== =========== =========== ===========
All earnings per share amounts conform with SFAS 128 requirements (Note 2).
_________________
* Aggregate quarterly earnings per share amounts may not equal annual
amounts presented elsewhere in these consolidated financial statements
due to rounding differences.
(12) Subsequent Events
In January 1998, the Company acquired Sonterra at Williams Centre, a
344-unit class A residential complex in Tuscon, Arizona. The
approximate $20.5 million purchase price was paid using the $17.8
million due on the Sonterra Loan (Note 4), which previously encumbered
the property, and cash.
In January 1998, the Company acquired a 49% interest in Creamer Realty
Consultants general partnership, a real estate advisory and consulting
firm with offices in New York City and Lexington, Kentucky, whose two
principals are Frank G. Creamer, Jr. and Michael J. Vitale, and formed
Creamer Vitale Wellsford, L.L.C. ("Creamer Vitale Wellsford").
Creamer Realty Consultants and Creamer Vitale Wellsford, together with
Prudential Real Estate Investors ("PREI"), a division of Prudential
Investment Corporation, have established the Clairborne Investors
Mortgage Investment Program to make opportunistic investments and to
provide liquidity to participants in large syndicated mortgage loan
transactions. The parties have agreed to contribute up to $150
million to fund acquisitions approved by the parties, of which a
subsidiary of the Company will fund 10%. Creamer Vitale Wellsford
will originate, co-invest, and manage the investments of the program.
The Company's original investment in Creamer Vitale Wellsford was $1.3
million in cash and 148,000 five-year warrants to purchase the
Company's common shares at $15.175 per share valued at approximately
$0.7 million.
In January 1998, the $7.5 million outstanding balance on the Line of
Credit was repaid.
In January 1998, Wellsford Commercial executed an agreement to
purchase an 80,000 SF property for $5.4 million. The purchase may be
completed by March 31, 1998, subject to certain contingencies.
On February 5, 1998, the $9.8 million IPH Mezzanine Facility (Note 4)
was repaid, at which time the Company received a total of $0.8 million
in interest and fees.
On February 12, 1998, Wellsford Commercial entered into an option
agreement to enter into a contribution agreement whereby a 972,000SF
portfolio of thirteen office buildings would be contributed to
Wellsford Commercial for $141.9 million, in the event certain lender
approvals can be obtained.
On February 20, 1998, Wellsford Commercial acquired a 65,000SF office
building in Boston, MA for $5.5 million ("15 Broad Street") and 19
acres of undeveloped land in Somerset, NJ for $2.0 million ("600
Atrium Drive").
On February 25, 1998, the Company and Wellsford Commercial agreed to a
3-month extension of the WEL/WH Bridge Loan (Note 4).
On February 26, 1998, the Company closed on $16.4 million of mortgage
financing on Sonterra at Williams Centre, bearing interest at 6.87%
and having a term of 10 years.
On February 27, 1998, the Company completed the merger with VLP (Note
10) and sold 12 of the 13 VLP Properties under contract to Whitehall
Property Buyer for an aggregate of approximately $60 million.
On March 11, 1998, the Company issued additional options to purchase
common shares of the Company to two of its officers. Each of the two
officers received 100,000 options with an exercise price of $17.50 per
share and 100,000 options with an exercise price of $20.00 per share.
The options have a term of 10 years and vest, in equal amounts, over
five years.
<PAGE>
<TABLE>
<CAPTION>
Schedule III
December 31, 1997 (thousands)
---------------------------------------------
Cost
Initial Cost Capitalized
---------------------------- Subsequent
Date Year # of Bldgs & To
Property Name Acquired Location Built Units Land Improve Total Acquisition
- ------------------------- -------- ---------- ----- ----- ------ -------- -------- -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Blue Ridge - Garden Apts. 12/97 Denver, CO 1997 456 $5,225 $36,339 $41,564 $0
--- ------ ------- ------- --
Total 456 $5,225 $36,339 $41,564 $0
</TABLE>
<TABLE>
<CAPTION>
December 31, 1997 (thousands)
---------------------------------------------------------------
Total Cost (A) Total Cost
----------------------- Net Of
Bldgs & Accum Accumulated
Property Name Land Improve Total Depr Depreciation Encumbrances
- ------------------------- ------- ------- ----- ----- ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
Blue Ridge - Garden Apts. $5,225 $36,339 $41,564 $0 $41,564 $34,500
------ ------- ------- -- ------- -------
$5,225 $36,339 $41,564 $0 $41,564 $34,500
</TABLE>
(A) The aggregate cost for federal income tax purposes is equal
to the total cost in this schedule.<PAGE>
<TABLE>
<CAPTION>
Schedule IV
December 31, 1997 (thousands)
--------------------------------------------
Total
Principal
Subject To
Maturity Payment Prior Face Carrying Delinquent
Note Receivable Interest Rate Date Terms Liens Amount Amount(A) Payments
- ---------------------- ------------- --------- ------------- -------- --------- --------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
277 Park Loan 12.00% 5/07 Interest Only $345,000 $25,000 $25,000 $0
Abbey Credit Facility LIBOR + 4% 9/00 Interest Only $0 $28,627(D) $28,627 $0
IPH Mezzanine Facility LIBOR + 5% (B) Interest Only $31,980 $9,821 $9,821 $0
Woodlands Loan LIBOR + 4.4% 7/00(C) Interest Only $309,000 $15,000 $15,000 $0
Park 80 Loan LIBOR + 3% 3/98 Interest Only $0 $5,100 $5,100 $0
WEL/WH JV bridge loan LIBOR + 4% 5/98 Interest Only $0 $4,284 $4,284 $0
Sonterra Loan 9.00% (B) Interest Only $0 $17,800 $17,800 $0
------- -------- -------- --
Total $685,980 $105,632 $105,632 $0
</TABLE>
(A) The aggregate carrying amount for federal income tax purposes is
equal to the total carrying amount reflected in this schedule.
(B) The IPH Mezzanine Facility was repaid in February 1998; the
Sonterra Loan was repaid in January 1998.
(C) Two one-year extension options are available to the borrower.
(D) The maximum balance of the Company's 50% portion of this
facility is $35 million.
<PAGE>
EXHIBIT INDEX
Exhibit No. Description###
3.1 Articles of Amendment and Restatement of the Company.****
3.2 Articles Supplementary Classifying 335,000 Shares of Common
Stock as Class A Common Stock.****
3.3 Articles Supplementary Classifying 2,000,000 Shares of Common
Stock as Series A 8% Convertible Redeemable Preferred
Stock.****
3.4 Bylaws of the Company.****
4.1 Specimen certificate for Common Stock.***
4.2 Specimen certificate for Class A Common Stock.****
4.3 Specimen certificate for Series A 8% Convertible Redeemable
Preferred Stock.****
4.4 Warrant Agreement, dated as of August 28, 1997, between the
Company and United States Trust Company of New York, as
warrant agent, and Warrant Certificate No. 1 of the Company for
5,000,000 Warrants registered in the name of WHWEL Real Estate
Limited Partnership.#
4.5 Registration Rights Agreement, dated as of February 23, 1998,
among the Company and Franklin Mutual Advisors, Inc. and Angelo
Gordon & Co., L.P.
10.1 Operating Agreement of Red Canyon at Palomino Park LLC between
Wellsford Park Highlands Corp. and Al Feld, dated as of April
17, 1996, relating to Red Canyon.*
10.2 First Amendment to Operating Agreement of Red Canyon at
Palomino Park LLC between Wellsford Park Highlands Corp. and Al
Feld, dated as of May 19, 1997, relating to Red Canyon.****
10.3 Tri-Party Agreement by and among NationsBank of Texas, N.A.,
Red Canyon at Palomino Park LLC, Wellsford Park Highlands
Corp., Wellsford Residential Property Trust, Al Feld and The
Feld Company, dated May 29, 1997, relating to Red Canyon.****
10.4 Assignment and Assumption of Tri-Party Agreement by and among
Wellsford Residential Property Trust, ERP Operating Limited
Partnership, Red Canyon at Palomino Park LLC, Wellsford Park
Highlands Corp., The Feld Company, Al Feld and Nationsbank of
Texas, N.A. dated May 30, 1997, relating to Red Canyon.****
10.5 Agreement and Acknowledgement Regarding Tri-Party Agreement by
and among Nationsbank of Texas, N.A., Red Canyon at Palomino
Park LLC, Wellsford Park Highlands Corp. and ERP Operating
Limited Partnership dated May 30, 1997, relating to Red
Canyon.****
10.6 Second Amended and Restated Vacant Land Purchase and Sale
Agreement between Mission Viejo Company and The Feld Company
dated March 23, 1995, as amended by First Amendment, dated May
1, 1996, relating to the land underlying Palomino Park.*
10.7 Trust Indenture, dated as of December 1, 1995, between Palomino
Park Public Improvements Corporation ("PPPIC") and United
States Trust Company of New York, as trustee, securing
Wellsford Residential Property Trust's Assessment Lien Revenue
Bonds Series 1995 - $14,755,000.**
10.8 Letter of Credit Reimbursement Agreement, dated as of December
1, 1995, between PPPIC, Wellsford Residential Property Trust
and Dresdner Bank AG, New York Branch.**
10.9 First Amendment to Letter of Credit Reimbursement Agreement,
dated as of May 30, 1997, between PPPIC, Wellsford Residential
Property Trust, Dresdner Bank AG, New York Branch and the
Company.****
10.10 Amendment to Wellsford Reimbursement Agreement by and between
PPPIC, Wellsford Residential Property Trust and the Company,
dated as of May 30, 1997.****
10.11 Assignment and Assumption Agreement by and between Wellsford
Residential Property Trust and the Company, dated as of May 30,
1997.****
10.12 Credit Enhancement Agreement by and between the Company and ERP
Operating Limited Partnership, dated as of May 30, 1997,
relating to Palomino Park.****
10.13 Reimbursement and Indemnification Agreement by and among the
Company and ERP Operating Limited Partnership, dated as of May
30, 1997, relating to Palomino Park.****
10.14 Guaranty by ERP Operating Limited Partnership for the benefit
of Dresdner Bank AG, New York Branch, dated as of May 30, 1997,
relating to Palomino Park.****
10.15 Amended and Restated Promissory Note of the Company to the
order of Dresdner Bank AG, New York Branch, dated May 30, 1997,
relating to Palomino Park.****
10.16 Common Stock and Preferred Stock Purchase Agreement by and
between the Company and ERP Operating Limited Partnership dated
as of May 30, 1997.****
10.17 Registration Rights Agreement by and between the Company and
ERP Operating Limited Partnership dated as of May 30, 1997.****
10.18 Credit Agreement, dated as of April 25, 1997, between Park
Avenue Financing Company LLC, PAMC Co-Manager Inc., PAFC
Management, Inc., Stanley Stahl, The First National Bank of
Boston, the Company, Other Banks that may become parties to the
Agreement and The First National Bank of Boston, as Agent,
relating to 277 Park Avenue.**
10.19 Assignment of Member's Interest, dated as of April 25, 1997, by
PAFC Management, Inc. and Stanley Stahl to The First National
Bank of Boston, relating to 277 Park Avenue (relating to
interests in the Park Avenue Financing Company, LLC).**
10.20 Assignment of Member's Interest, dated as of April 25, 1997, by
PAMC Co-Manager Inc. and Park Avenue Financing, LLC to The
First National Bank of Boston, relating to 277 Park Avenue
(relating to interests in 277 Park Avenue, LLC).**
10.21 Stock Pledge Agreement, dated as of April 25, 1997, by Stanley
Stahl to The First National Bank of Boston, relating to 277
Park Avenue (relating to stock in Park Avenue Management
Corporation).**
10.22 Stock Pledge Agreement, dated as of April 25, 1997, by Stanley
Stahl to The First National Bank of Boston, relating to 277
Park Avenue (relating to stock in PAMC Co-Manager Inc.).**
10.23 Stock Pledge Agreement, dated as of April 25, 1997, by Stanley
Stahl to The First National Bank of Boston, relating to 277
Park Avenue (relating to stock in PAFC Management, Inc.).**
10.24 Conditional Guaranty of Payment and Performance, dated as of
April 25, 1997, by Stanley Stahl, relating to 277 Park
Avenue.**
10.25 Cash Collateral Account Security, Pledge and Assignment
Agreement, dated as of April 25, 1997, between 277 Park Avenue,
LLC, Park Avenue Management Corporation, Park Avenue Financing
Company LLC, PAMC Co-Manager Inc., Stanley Stahl and The First
National Bank of Boston, relating to 277 Park Avenue.**
10.26 Recognition Agreement, dated as of April 25, 1997, between The
First National Bank of Boston, the Company, Column Financial,
Inc., Park Avenue Financing Company LLC, PAMC Co-Manager, Inc.
and 277 Park Avenue, LLC, relating to 277 Park Avenue.**
10.27 Intercreditor Agreement, dated as of April 25, 1997, between
the Company and The First National Bank of Boston, as Agent,
relating to 277 Park Avenue.**
10.28 Assignment and Acceptance Agreement, dated June 19, 1997,
between BankBoston, N.A. (formerly known as The First National
Bank of Boston) ("BankBoston") and the Company, relating to 277
Park Avenue.****
10.29 Revolving Credit Agreement by and among the Company,
BankBoston, Morgan Guaranty Trust Company of New York ("Morgan
Guaranty"), other banks which may become parties and
BankBoston, as agent, and Morgan Guaranty, as co-agent dated as
of May 30, 1997.****
10.30 Agreement Regarding Common Stock and Preferred Stock Purchase
Agreement, dated as of May 30, 1997, among ERP Operating
Limited Partnership, the Company and BankBoston, as agent.****
10.31 Assignment of Common Stock Agreements, dated as of May 30,
1997, between the Company and BankBoston, as agent.****
10.32 Collateral Assignment of Documents, Rights and Claims
(including Collateral Assignment of Deed of Trust, Assignment
of Leases and Rents, Security Agreement and Fixture Filing),
made as of May 30, 1997, by the Company to BankBoston, as
agent.****
10.33 Limited Liability Company Operating Agreement of
Wellsford/Whitehall Properties, L.L.C., dated as of August 28,
1997.#
10.34 Amendment No. 1 to the Limited Liability Company Operating
Agreement of Wellsford/Whitehall Properties, L.L.C., dated as
of December 31, 1997.
10.35 Term Loan Agreement between the Company and Wellsford/Whitehall
Properties, L.L.C. dated as of August 28, 1997.#
10.36 $61,699,440 Term Note A, dated August 28, 1997, payable to the
order of the Company by Wellsford/Whitehall Properties, L.L.C.#
10.37 $17,093,750 Term Note B, dated September 25, 1997, payable to
the order of the Company by Wellsford/Whitehall Properties,
L.L.C.*****
10.38 Letter Agreement, dated as of August 28, 1997, between the
Company and WHWEL Real Estate Limited Partnership, relating to
warrants to be issued to WHWEL Real Estate Limited
Partnership.#
10.39 Revolving Credit Agreement, dated as of December 15, 1997,
among Wellsford/Whitehall Properties, L.L.C., as Borrower, and
BankBoston, N.A., Goldman Sachs Mortgage Company, and Other
Banks, as Banks, and BankBoston, N.A. as Administrative Agent
and Co-Arranger and Co-Syndication Agent, and Goldman Sachs
Mortgage Company, as Co-Arranger and Co-Syndication Agent.
10.40 Term Loan Agreement, dated as of December 15, 1997, among
WEL/WH 1275 K Street L.L.C., as Borrower, and BankBoston, N.A.,
Goldman Sachs Mortgage Company, and Other Banks, as Banks, and
BankBoston, N.A., as Administrative Agent and Co-Arranger and
Co-Syndication Agent, and Goldman Sachs Mortgage Company, as
Co-Arranger and Co-Syndication Agent.
10.41 Indemnity and Guaranty Agreement (Revolver), dated as of
December 15, 1997, by Wellsford Commercial Properties Trust and
WHWEL Real Estate Limited Partnership in favor of BankBoston,
N.A.
10.42 Indemnity Agreement Regarding Hazardous Materials (Revolver),
dated as of December 15, 1997, by Wellsford/Whitehall
Properties, L.L.C., Wellsford Commercial Properties Trust and
WHWEL Real Estate Limited Partnership for the benefit of
BankBoston, N.A.
10.43 Revolving Credit Agreement for $70 million, dated as of August
28, 1997, between AP-Anaheim LLC, AP-Arlington LLC, AP-Atlantic
LLC, AP-Cityview LLC, AP-Farrell Ramon LLC, AP-Palmdale LLC,
AP-Redlands LLC, AP-Victoria LLC, AP-Victorville LLC, and AP-
Sierra LLC, each a California limited liability company
(collectively, the "Abbey Affiliates"), as Borrower, and Morgan
Guaranty Trust Company of New York, as Lender.#
10.44 Loan Participation Agreement, dated as of August 28, 1997,
between Morgan Guaranty Trust Company of New York and the
Company.#
10.45 $70 million promissory note, dated August 28, 1997, payable to
the order of Morgan Guaranty Trust Company of New York by the
Abbey Affiliates.#
10.46 Purchase and Sale Agreement, dated as of September 18, 1997,
among the Company, Wellsford Capital Corporation and Whitehall
Street Real Estate Limited Partnership VII.##
10.47 First Amended and Restated Master Credit Agreement, dated
December 30, 1997, effective as of July 31, 1997, among The
Woodlands Commercial Properties Company, L.P., The Woodlands
Land Development Company, L.P., and BankBoston, N.A., Morgan
Stanley Senior Funding, Inc., as Documentation Agent, and Other
Banks, and BankBoston, N.A., as Managing Agent and Syndication
Agent.
10.48 Intercreditor Agreement, dated December 30, 1997, effective as
of July 31, 1997, by and between BankBoston, N.A., Morgan
Stanley Senior Funding, Inc. and the Other Lenders, relating to
Woodlands.
10.49 $4,186,991.87 Commercial Company Second Secured Term Loan Note,
dated December 30, 1997, payable to the order of the Company by
The Woodlands Commercial Properties Company, L.P. and The
Woodlands Land Development Company, L.P.
10.50 $10,813,008.13 Land Company Second Secured Term Loan Note,
dated December 30, 1997, payable to the order of the Company by
The Woodlands Land Development Company, L.P. and The Woodlands
Commercial Properties Company, L.P.
10.51 Program Agreement for Clairborne Investors Mortgage Program
between Creamer Realty Consultants and The Prudential
Investment Corporation, dated as of December 10, 1997.
10.52 Amended and Restated General Partnership Agreement of Creamer
Realty Consultants, dated as of January 1, 1998, by and between
Wellsford CRC Holding Corp. and FGC Realty Consultants, Inc.
10.53 Limited Liability Company Agreement of Creamer Vitale
Wellsford, L.L.C., dated as of January 20, 1998, by and between
Wellsford CRC Holding Corp. and SX Advisors, LLC.
10.54 Loan Agreement, dated as of February 27, 1998 between Wellsford
Sonterra LLC, as Borrower, and Nationsbank, N.A., as Lender.
10.55 $16,400,000 Promissory Note, dated February 27, 1998 payable to
the order of Nationsbank, N.A.. by Wellsford Sonterra, L.L.C.
10.56 Deed of Trust, Assignment of Leases and Rents and Security
Agreement, dated February 27, 1998 by Wellsford Sonterra LLC in
favor of Nationsbank, N.A.
10.57 $34,500,000 Multifamily Note, dated December 24, 1997 payable
to the order of GMAC Commercial Mortgage Corporation by Park at
Highlands LLC.
10.58 Multifamily Deed of Trust, Assignment of Rents and Security
Agreement, dated December 24, 1997, by Park at Highlands LLC in
favor of GMAC Commerical Mortgage Corporation.
10.59 1997 Management Incentive Plan of the Company.**
10.60 Rollover Stock Option Plan of the Company.**
10.61 Employment Agreement between the Company and Jeffrey H.
Lynford.****
10.62 Employment Agreement between the Company and Edward
Lowenthal.****
10.63 Employment Agreement between the Company and Gregory F.
Hughes.****
10.64 Employment Agreement between the Company and David M.
Strong.****
21.1 Subsidiaries of the Registrant.
27.1 Financial Data Schedule.
99.1 "Risk Factors" section of Amendment No. 2 to the Company's
Registration Statement on Form S-11 (file no. 333-32445), as
may be amended.#####
______________________________
* Previously filed as an exhibit to the Form 10 filed on April 23,
1997.
** Previously filed as an exhibit to the Form 10/A Amendment No. 1 filed
on May 21, 1997.
*** Previously filed as an exhibit to the Form 10/A Amendment No. 2 filed
on May 28, 1997.
**** Previously filed an exhibit to the Form S-11 filed on July 30, 1997.
***** Previously filed as an exhibit to Amendment No. 1 to Form S-11 filed
on November 14, 1997.
# Previously filed as an exhibit to the Form 8-K filed on September 11,
1997.
## Previously filed as an exhibit to the Form 8-K filed on September 23,
1997.
### Wellsford acquired its interest in a number of these documents by
assignment.
#### Previously filed as an exhibit to the Registration Statement on Form
S-4 filed on December 15, 1997.
##### Previously filed as part of Amendment No. 2 to the Registration
Statement on Form S-11 filed on December 3, 1997.
REGISTRATION RIGHTS AGREEMENT
Dated as of February 23, 1998
among
WELLSFORD REAL PROPERTIES, INC.
and
FRANKLIN MUTUAL ADVISERS, INC.
and
ANGELO, GORDON & CO., L.P.
<PAGE>
REGISTRATION RIGHTS AGREEMENT
REGISTRATION RIGHTS AGREEMENT, dated as of February __, 1998,
among the Company (as hereinafter defined) and Franklin Mutual Advisers,
Inc., a Delaware corporation, and Angelo, Gordon & Co., L.P., a Delaware
limited partnership.
This Registration Rights Agreement is made pursuant to the Merger
Agreement (as hereinafter defined). The execution of this Registration
Rights Agreement is a condition to the closing of the transactions
contemplated by the Merger Agreement.
The parties hereto hereby agree as follows:
1. Definitions. Capitalized terms used herein without definition
shall have the meanings given such terms in the Merger Agreement. As used
in this Agreement, the following terms shall have the following meanings:
Affiliate: of any specified person shall mean any other person
directly or indirectly controlling or controlled by or under direct or
indirect common control with such specified person. For the purposes of
this definition, "control," when used with respect to any person, means the
power to direct the management and policies of such person, directly or
indirectly, whether through the ownership of voting securities, by contract
or otherwise; and the terms of "affiliated," "controlling" and "controlled"
have meanings correlative to the foregoing.
Agreement: This Registration Rights Agreement, as the same may
be amended, supplemented or modified from time to time in accordance with
the terms hereof.
Common Shares: The Company's shares of Common Stock, par value
$.01 per share.
Company: Wellsford Real Properties, Inc., a Maryland
corporation, and any successor entity thereto.
Effectiveness Date: The 120th day following the Closing Date
under the Merger Agreement.
Effectiveness Period: As defined in Section 2(a) hereof.
Exchange Act: The Securities Exchange Act of 1934, as amended,
and the rules and regulations of the SEC promulgated pursuant thereto.
Filing Date: As soon as practicable following the Closing Date
under the Merger Agreement.
Indemnified Party: As defined in Section 7(c) hereof.
Indemnifying Party: As defined in Section 7(c) hereof.
Losses: As defined in Section 7(a) hereof.
Merger: The merger of Merger Subsidiary with and into VPT
pursuant to the terms of the Merger Agreement.
Merger Agreement: The Agreement and Plan of Merger, dated as of
September 18, 1997, among VPT, the Company and Merger Subsidiary pursuant
to which at the Effective Time the Merger will be consummated.
Merger Subsidiary: Wellsford Capital Corporation, a Maryland
corporation and wholly owned subsidiary of the Company.
Offering Notice: As defined in Section 4(a) hereof.
Piggyback Offering Rights: The rights of the Shareholders to
have their Registrable Securities offered and sold to the underwriters
concurrently with an Underwritten Company Offering by the Company with
respect to the sale of Securities by the Company or by any other
securityholders of the Company in accordance with the provisions of Section
4 hereof.
Proceeding: An action, claim, suit or proceeding (including,
without limitation, an investigation or partial proceeding, such as a
deposition), whether commenced or threatened.
Prospectus: The prospectus included in the Registration
Statement (including, without limitation, a prospectus that includes any
information previously omitted from a prospectus filed as part of an
effective registration statement in reliance upon Rule 430A promulgated
pursuant to the Securities Act), as amended or supplemented by any
prospectus supplement, with respect to the terms of the offering of any
portion of the Registrable Securities covered by the Registration
Statement, and all other amendments and supplements to the Prospectus,
including post-effective amendments, and all material incorporated by
reference or deemed to be incorporated by reference in such Prospectus.
Registrable Securities: The Common Shares acquired by the
Shareholders as their pro rata portion of the Merger Consideration in
connection with the Merger, upon original issuance thereof, and at all
times subsequent thereto, until, in the case of any such Common Shares, (i)
it has been registered pursuant to the Securities Act and disposed of in
accordance with the Registration Statement covering it, (ii) it is sold by
the holder thereof pursuant to Rule 144 (or any similar provisions then in
effect) or (iii) it ceases to be outstanding.
Registration Statement: The registration statement, contemplated
by Section 2(a) hereof, including the Prospectus, amendments and
supplements to such registration statement or Prospectus, including pre-
and post-effective amendments, all exhibits thereto, and all material
incorporated by reference or deemed to be incorporated by reference in such
registration statement.
Rule 144: Rule 144 promulgated by the SEC pursuant to the
Securities Act, as such Rule may be amended from time to time, or any
similar rule or regulation hereafter adopted by the SEC having
substantially the same effect as such Rule.
Rule 415: Rule 415 promulgated by the SEC pursuant to the
Securities Act, as such Rule may be amended from time to time, or any
similar rule or regulation hereafter adopted by the SEC having
substantially the same effect as such Rule.
SEC: The Securities and Exchange Commission.
Securities Act: The Securities Act of 1933, as amended, and the
rules and regulations promulgated by the SEC thereunder.
Shareholders: Franklin Mutual Advisers, Inc., a Delaware
corporation, on behalf of certain of its advisory clients set forth on
Exhibit A hereto, and Angelo, Gordon & Co., L.P., a Delaware limited
partnership, and certain of its affiliates set forth on Exhibit B hereto.
Special Counsel: Any special counsel to the holders of
Registrable Securities of whom the Company has been notified in writing.
UCO Registration Statement: As defined in Section 7(a) hereof.
Underwriter's Representative: As defined in Section 4(a)
hereof.
Underwritten Company Offering: As defined in Section 3(a)(iii).
Underwritten registration or underwritten offering: A
registration in connection with which securities of the Company are sold to
an underwriter for reoffering to the public pursuant to an effective
registration statement.
VPT: Value Property Trust, a Maryland real estate investment
trust.
2. Shelf Registration.
(a) The Company shall prepare and file a "shelf" registration
statement with respect to all Registrable Securities then issued on any
appropriate form for an offering to be made on a continuous basis pursuant
to Rule 415 on or prior to the Filing Date and shall use its reasonable
best efforts to cause such Registration Statement to be declared effective
by the SEC on or prior to the Effectiveness Date and take all other
reasonable actions necessary to keep such Registration Statement
continuously effective under the Securities Act until the date which is two
years after the Closing Date under the Merger Agreement, or in the event
that a holder or holders of not less than such number of Registrable
Securities equal to 7.9% of all of the Registrable Securities originally
subject to this Agreement so request in writing not less than 30 days prior
to the termination of such two-year period, until the date which is five
years after such Closing Date, or such shorter period ending when all
Registrable Securities covered by such Registration Statement have been
sold (the "Effectiveness Period"). The holders of Registrable Securities
may withdraw all or part of such securities from the Registration Statement
prior to or after the effective date of the Registration Statement.
(b) If the holders of a majority of the Registrable Securities
so elect, an offering of Registrable Securities pursuant to the
Registration Statement may be effected in the form of an underwritten
offering. In such event, and if the managing underwriters advise the
Company and the holders of Registrable Securities proposed to be sold in
such offering in writing that in their opinion the amount of Registrable
Securities proposed to be sold in such offering exceeds the amount of
Registrable Securities which can be sold in such offering, there shall be
included in such underwritten offering the amount of such Registrable
Securities which in the opinion of such underwriters can be sold, and such
amount shall be allocated pro rata among the holders of such Registrable
Securities on the basis of the number of shares of Registrable Securities
requested to be included by such holders.
(c) If any of the Registrable Securities are to be sold in an
underwritten offering, the investment banker or investment bankers and
manager or managers that will administer the offering will be selected by
the holders of a majority of the Registrable Securities included in such
offering. No person may participate in any underwritten offering hereunder
unless such person (i) agrees to sell such person's Registrable Securities
on the basis provided in any underwriting agreements approved by the
persons entitled hereunder to approve such arrangements and (ii) completes
and executes all questionnaires, powers of attorney, indemnities,
underwriting agreements and other documents required under the terms of
such underwriting arrangements.
3. Hold-Back Agreements
(a) Restrictions on Public Sale by Holders of Registrable
Securities. Subject to paragraph (b) of this Section 3, the registration
rights of the Shareholders pursuant to Section 2 of this Agreement and the
ability to offer and sell Registrable Securities pursuant to the
Registration Statement are subject to the following conditions and
limitations, and each Shareholder agrees with the Company that:
(i) If the Company determines in its good faith judgment
that the filing of the Registration Statement under Section 2 hereof
or the use of any Prospectus would require the disclosure of
information which the Company has a bona fide business purpose for
preserving as confidential or the disclosure of which would impede the
Company's ability to consummate a significant transaction, upon
written notice of such determination by the Company, the rights of the
Shareholders to offer, sell or distribute any Registrable Securities
pursuant to the Registration Statement or to require the Company to
take action with respect to the registration or sale of any
Registrable Securities pursuant to the Registration Statement
(including any action contemplated by Section 5 hereof) will for up
to 90 days in any 12-month period be suspended until the date upon
which the Company notifies the holders of Registrable Securities in
writing that suspension of such rights for the grounds set forth in
this Section 3(a)(i) is no longer necessary.
(ii) If all reports required to be filed by the Company
pursuant to the Exchange Act have not been filed by the required date
without regard to any extension, or if consummation of any business
combination by the Company has occurred or is probable for purposes of
Rule 3-05 or Article 11 of Regulation S-X under the Securities Act,
with respect to a business combination upon not less than 10 days
written notice thereof and otherwise reasonable notice thereof by the
Company to the Shareholders, the rights of the Shareholders to offer,
sell or distribute any Registrable Securities pursuant to the
Registration Statement or to require the Company to take action with
respect to the registration or sale of any Registrable Securities
pursuant to the Registration Statement (including any action
contemplated by Section 4 hereof) will for up to 90 days in any 12-
month period be suspended until the date on which the Company has
filed such reports or obtained the financial information required by
Rule 3-05 or Article XI of Regulation S-X to be included in the
Registration Statement; provided, however, that in the event that such
rights of the Shareholders are so suspended hereunder as a result of
the Company's failure to so file all reports required to be filed
pursuant to the Exchange Act, then such failure to so file shall be
deemed a breach by the Company of this Agreement entitling the
Shareholders to seek to recover their damages, if any, resulting from
such suspension.
(iii) Subject to Section 4 hereof, in the case of the
registration of any underwritten primary equity offering initiated by
the Company (other than any registration by the Company on Form S-4 or
Form S-8, or a successor or substantially similar form, of (A) an
employee share option, share purchase, share incentive or compensation
plan or of securities issued or issuable pursuant to any such plan, or
(B) a dividend reinvestment plan) (an "Underwritten Company
Offering"), each Shareholder agrees, if requested in writing by the
managing underwriter or underwriters administering such offering, not
to effect any offer, sale or distribution of Registrable Securities
(or any option or right to acquire Registrable Securities) during the
period commencing on the 20th day prior to the effective date of the
registration statement covering such underwritten primary equity
offering and ending on the date specified by such managing underwriter
in such written request to such Shareholder but in any event not later
than the 90th day following such effective date.
(iv) In the event that the Company plans to repurchase or
bid for securities of the Company in the open market, on a private
solicited basis or otherwise, and the Board of Directors of the
Company determines, in its good faith judgment and based upon the
advice of counsel to the Company, that any such repurchase or bid may
not, under Regulation M under the Exchange Act, or any successor or
similar rule ("Regulation M"), be commenced or consummated due to the
existence or the possible commencement of a "distribution" (within the
meaning of Regulation M) as a result of any offers or sales by
Shareholders of any Common Shares under the Registration Statement,
the Company shall be entitled, for a period not to exceed 90 days in
any 12-month period, to request that Shareholders suspend or postpone
such distribution pursuant to the Registration Statement (a
"Regulation M Election"). The Company shall, as promptly as
practicable, give such Shareholder or Shareholders written notice of
such Regulation M Election. The Shareholders agree to comply with any
such request in a Regulation M Election by the Company. As promptly
as practicable following the determination by the Board of Directors
that the Shareholder or Shareholders may commence or recommence their
distribution pursuant to the Registration Statement without causing
the Company to be in violation of Regulation M, the Company shall give
such Shareholder or Shareholders written notice of such determination
(but in any event no later than the 90th day of the continuance of any
Regulation M Election occurring during the most recent 12 months). In
addition, the Company shall, not less than five days prior to the
commencement of any such repurchase or bid for securities, give each
Shareholder written notice thereof.
(b) Limitation on Blackouts. Notwithstanding the provisions of
paragraph (a) above or the last paragraph of Section 5, the aggregate
number of days (whether or not consecutive) during which the Company may
delay the effectiveness of the Registration Statement or prevent offerings,
sales or distributions by the Shareholders pursuant to paragraph (a) or the
last paragraph of Section 5 shall in no event exceed 120 days during any
12-month period. Notwithstanding the number of days during which the
Company may delay such effectiveness pursuant to paragraph (a)(i), (ii),
(iii) and (iv) above, no such delay shall exceed such number of days that
the Company determines in good faith to be reasonably necessary. Nothing
in this Section 3 shall be deemed to grant the Company the right to delay
its obligation to prepare and file a "shelf" registration statement on or
prior to the Filing Date pursuant to Section 2.
4. Piggyback Offering Rights.
(a) If, at any time during the Effectiveness Period, the Company
proposes to commence an Underwritten Company Offering, the Company shall,
not later than 20 days prior to the date of such proposed offering, give
written notice (an "Offering Notice") of such proposed offering to the
Shareholders, which notice shall describe in detail the proposed plan of
distribution. During the Effectiveness Period, Shareholders may elect, by
written notice to the Company (which notice shall specify the aggregate
number of Registrable Securities proposed to be offered and sold by such
Purchaser to the underwriters concurrently with the Underwritten Company
Offering) given within 15 days after receipt of the Offering Notice from
the Company, to have any and all of the Registrable Securities owned by it
included as selling shareholders with the shares to be sold by the Company
to the underwriters in connection with the Underwritten Company Offering,
and the Company shall use its best efforts to cause the underwriters to so
purchase such Registrable Securities. If the representative of the
managing underwriters (the "Underwriter's Representative") should
reasonably determine that the inclusion of such Registrable Securities
would adversely affect the offering as contemplated by the Company, and
based on such determination recommends inclusion in such offering of fewer
or none of the Registrable Securities proposed to be sold by all
Shareholders, then (x) the number of Registrable Securities of the
Shareholders included in such offering shall be reduced pro-rata among such
Shareholders (based upon the number of Registrable Securities requested to
be included in the offering), if the Company after consultation with the
Underwriter's Representative recommends the inclusion of fewer Registrable
Securities, or (y) none of the Registrable Securities of the Shareholders
shall be included in such offering, if the Company after consultation with
the Underwriter's Representative recommends the inclusion of none of such
Registrable Securities; provided, however, that if Securities are being
offered for the account of other persons or entities as well as the
Company, such reduction shall not represent a greater fraction of the
number of Registrable Securities intended to be offered by the Shareholders
than the fraction of similar reductions imposed on such other persons or
entities (other than the Company).
(b) Each Shareholder so proposing to sell Registrable Securities
to the underwriters in an Underwritten Company Offering pursuant to this
Section 4 shall execute and deliver to an underwriting agreement and such
other documents and instruments in form and substance satisfactory to the
Underwriter's Representative. In addition, each Shareholder selling
Registrable Securities to such underwriters shall be liable for any and all
underwriting discounts and commissions with respect to its Registrable
Securities included in such offering.
(c) The rights of the Shareholders under this Section 4 are
solely piggyback in nature, and nothing in this Section 4 shall prevent
the Company from reversing a decision to consummate an Underwritten Company
Offering.
5. Registration Procedures. In connection with the Company's
registration obligations hereunder, the Company shall:
(a) Prepare and file with the SEC a Registration Statement on
the appropriate form available for the sale of the Registrable Securities
by the holders thereof in accordance with the method or methods of
distribution thereof as specified by the holders thereof, and cause the
Registration Statement to become effective and remain effective as provided
herein; provided, however, that no less than three days prior to the filing
of the Registration Statement or any related Prospectus or any amendment or
supplement thereto (including any document that would be incorporated or
deemed to be incorporated therein by reference), the Company shall furnish
to the holders of the Registrable Securities, their Special Counsel and the
managing underwriters, if any, copies of all such documents proposed to be
filed, which documents (other than those incorporated or deemed to be
incorporated by reference) will be subject to the review of such holders,
their Special Counsel and such underwriters, if any; the Company shall not
file the Registration Statement or any such Prospectus or any amendments or
supplements thereto to which the holders of a majority of the Registrable
Securities, their Special Counsel or the managing underwriters, if any,
shall reasonably object, in writing, on a timely basis, and the Company
shall use its best efforts to satisfy any such objection and thereafter
make such filing.
(b) Prepare and file with the SEC such amendments, including
post-effective amendments, to the Registration Statement as may be
necessary to keep the Registration Statement continuously effective for the
applicable time period; cause the related Prospectus to be supplemented by
any required Prospectus supplement, and as so supplemented to be filed
pursuant to Rule 424 (or any similar provisions then in force) under the
Securities Act; and comply with the provisions of the Securities Act and
the Exchange Act with respect to the disposition of all securities covered
by the Registration Statement during such period in accordance with the
intended methods of disposition by the sellers thereof set forth in the
Registration Statement as so amended or in such Prospectus as so
supplemented;
(c) Notify the holders of Registrable Securities to be sold,
their Special Counsel and the managing underwriters, if any, promptly (and
in the case of (i) (A) below, in no event less than three days prior to
such filing) and (if requested by any such person) confirm such notice in
writing no later than one Business Day following the day (i) (A) when a
Prospectus or any Prospectus supplement or post-effective amendment to the
Registration Statement is proposed to be filed and, (B) with respect to the
Registration Statement or any post-effective amendment, when the same has
become effective, (ii) of the issuance by the SEC of any stop order
suspending the effectiveness of the Registration Statement covering any or
all of the Registrable Securities or the initiation of any proceedings for
that purpose, (iii) of the receipt by the Company of any notification with
respect to the suspension of the qualification or exemption from
qualification of any of the Registrable Securities for sale in any
jurisdiction within the United States, or the initiation or threatening of
any proceeding for such purpose and (iv) upon the occurrence of any event
which makes any statement in the Registration Statement or Prospectus
untrue in any material respect;
(d) If requested by the managing underwriters, if any, or the
holders of a majority of the Registrable Securities being sold in
connection with an underwritten offering, (i) promptly incorporate in a
Prospectus supplement or post-effective amendment to the Registration
Statement such information as the managing underwriters, if any, and such
holders reasonably agree should be included therein, and (ii) make all
required filings of such Prospectus supplement or such post-effective
amendment as soon as practicable after the Company has received
notification of the matters to be incorporated in such Prospectus
supplement or post-effective amendment; provided, however, that the Company
shall not be required to take any action pursuant to this Section 5(d)
that would, in the opinion of counsel for the Company, violate applicable
law;
(e) Furnish to each holder of Registrable Securities, their
Special Counsel, each managing underwriter, if any, and each exchange on
which the Common Shares are traded, without charge, such number of
conformed copies as such persons or entities may reasonably request, of
each Registration Statement and each amendment or supplement thereto,
including financial statements and schedules, all documents incorporated or
deemed to be incorporated therein by reference, and all exhibits to the
extent requested by such person (including those previously furnished or
incorporated by reference) as soon as practicable after the filing of such
documents with the SEC;
(f) Deliver to each holder of Registrable Securities, their
Special Counsel, and the underwriters, if any, without charge, as many
copies of the Prospectus or Prospectuses (including each form of
prospectus) and each amendment or supplement thereto as such persons
reasonably request; and the Company hereby consents to the use of such
Prospectus and each amendment or supplement thereto by each of the selling
holders of Registrable Securities and the underwriters, if any, in con-
nection with the offering and sale of the Registrable Securities covered by
such Prospectus and any amendment or supplement thereto;
(g) Prior to any public offering of Registrable Securities, use
its best efforts to register or qualify or cooperate with the holders of
Registrable Securities to be sold, the underwriters, if any, and their
respective counsel in connection with the registration or qualification (or
exemption from such registration or qualification) of such Registrable
Securities for offer and sale under the securities or Blue Sky laws of all
jurisdictions within the United States; keep each such registration or
qualification (or exemption therefrom) effective during the Effectiveness
Period and do any and all other acts or things necessary or advisable to
enable the disposition in such jurisdictions of the Registrable Securities
covered by a Registration Statement; provided, however, that the Company
shall not be required to qualify generally to do business in any
jurisdiction where it is not then so qualified or to take any action that
would subject it to general service of process in any such jurisdiction
where it is not then so subject or subject the Company to any tax in any
such jurisdiction where it is not then so subject;
(h) Cooperate with the holders of Registrable Securities and the
managing underwriters, if any, to facilitate the timely preparation and
delivery of certificates representing Registrable Securities to be sold and
to enable such Registrable Securities to be in such denominations and
registered in such names as the managing underwriters, if any, or holders
may request at least two Business Days prior to any sale of Registrable
Securities;
(i) Promptly file all documents required to be filed under
Section s 13(a), 13(c), 14 or 15(d) of the Exchange Act during any period
when the Prospectus is required to be delivered under the Securities Act;
(j) If the Prospectus contains an untrue statement of a material
fact or omits to state a material fact required to be stated therein or
necessary to make the statements therein, in light of the circumstances
under which they were made, not misleading, prepare a supplement or
amendment, including a post-effective amendment, to the Registration
Statement or a supplement to the related Prospectus or any document
incorporated or deemed to be incorporated therein by reference, and file
any other required document so that, as thereafter delivered, such
Prospectus will not contain an untrue statement of a material fact or omit
to state a material fact required to be stated therein or necessary to make
the statements therein, in light of the circumstances under which they were
made, not misleading;
(k) Cause all Registrable Securities relating to such
Registration Statement to be listed on each securities exchange, if any, on
which similar securities issued by the Company are then listed and make all
other necessary or appropriate filings with each such securities exchange;
(l) Enter into such agreements (including an underwriting
agreement in form, scope and substance as is customary in underwritten
offerings) and take all such other actions in connection therewith
(including those reasonably requested by the managing underwriters, if any,
or the holders of a majority of the Registrable Securities being sold) in
order to expedite or facilitate the disposition of such Registrable
Securities, and in such connection in the event of an underwritten offer-
ing, whether or not an underwriting agreement is entered into, (i) make
such representations and warranties to the holders of such Registrable
Securities and the underwriters, if any, with respect to the business of
the Company, its subsidiaries, and the Registration Statement, Prospectus
and documents, if any, incorporated or deemed to be incorporated by
reference therein, in each case, in form, substance and scope as are
customarily made by issuers to underwriters in underwritten offerings, and
confirm the same if and when requested; (ii) obtain opinions of counsel to
the Company and updates thereof (which counsel and opinions, in form, scope
and substance, shall be reasonably satisfactory to the managing
underwriters, if any, and Special Counsel to the holders of the Registrable
Securities being sold), addressed to each selling holder of Registrable
Securities and each of the underwriters, if any, covering the matters
customarily covered in opinions requested in underwritten offerings and
such other matters as may be reasonably requested by such Special Counsel
and underwriters; (iii) obtain "cold comfort" letters and updates thereof
from the independent certified public accountants of the Company (and, if
necessary, any other independent certified public accountants of any sub-
sidiary of the Company or of any business acquired by the Company for which
financial statements and financial data is, or is required to be, included
in the Registration Statement), addressed to each selling holder of
Registrable Securities and each of the underwriters, if any, such letters
to be in customary form and covering matters of the type customarily
covered in "cold comfort" letters in connection with underwritten
offerings; (iv) if an underwriting agreement is entered into, the same
shall contain indemnification provisions and procedures no less favorable
to the selling holders and the underwriters, if any, than those set forth
in Section 6 hereof (or such other provisions and procedures acceptable to
holders of a majority of Registrable Securities participating in such
underwritten offering and the managing underwriters, if any); and (v)
deliver such documents and certificates as may be reasonably requested by
the holders of a majority of the Registrable Securities being sold, their
Special Counsel and the managing underwriters, if any, to evidence the
continued validity of the representations and warranties made pursuant to
clause (i) above and to evidence compliance with any customary conditions
contained in the underwriting agreement or other agreement entered into by
the Company;
(m) After filing any document incorporated by reference into a
Registration Statement deliver a copy of such document to each holder of
Registrable Securities upon request during the period the Company is
obligated to maintain an effective Registration Statement hereunder;
(n) Make reasonably available to a representative of the holders
of Registrable Securities being sold, any underwriter participating in any
such disposition of Registrable Securities, if any, and any attorney,
accountant, auditor or investment advisor retained by such selling holders
or underwriters that information which such parties would customarily
require to satisfy their due diligence obligations with respect to the
offering and sale of the Registrable Securities; provided, however, that
any information that is designated by the Company in writing as
confidential at the time of delivery of such information shall be kept
confidential by such persons (and each such holder or underwriter, as the
case may be, shall be liable for any such person's failure to so keep such
information confidential), unless (i) disclosure of such information is
required by court or administrative order or is necessary to respond to
inquiries of regulatory authorities or self-regulatory organizations, (ii)
disclosure of such information, in the opinion of counsel to such person,
is required by law or pursuant to this Agreement, (iii) such information
becomes generally available to the public other than as a result of a
disclosure or failure to safeguard by such person, or (iv) such information
becomes available to such person from a source other than the Company and
such source is not bound by a confidentiality agreement; and
(o) Comply with all applicable rules and regulations of the SEC
and make generally available to its securityholders earning statements
satisfying the provisions of Section 11(a) of the Securities Act and Rule
158 thereunder (or any similar rule promulgated under the Securities Act),
no later than 45 days after the end of any 12-month period (or 90 days
after the end of any 12-month period if such period is a fiscal year) (i)
commencing at the end of any fiscal quarter in which Registrable Securities
are sold to underwriters in a firm commitment or best efforts underwritten
offering and (ii) if not sold to underwriters in such an offering,
commencing on the first day of the first fiscal quarter of the Company
after the effective date of the Registration Statement, which statement
shall cover said 12-month period, or shorter periods as is consistent with
the requirements of Rule 158.
The Company may require each seller of Registrable Securities to
furnish to the Company such information regarding the distribution of such
Registrable Securities as is required by law to be disclosed in the
Registration Statement and the Company may exclude from such registration
the Registrable Securities of any seller who unreasonably fails to furnish
such information within a reasonable time after receiving such request.
Each holder of Registrable Securities agrees that such holder
will not offer or sell any Registrable Securities or exercise such holder's
rights hereunder in violation of any foreign or domestic, federal, state or
local law, order, rule or ordinance, other than such violations as a result
of any breach by the Company with any of its obligations hereunder.
Each holder of Registrable Securities agrees by acquisition of
such Registrable Securities that, upon receipt of any notice from the
Company of the happening of any event of the kind described in Section
5(c)(ii), 5(c)(iii) or 5(c)(iv) hereof or any other event as a result of
which the Company has determined that the holders of Registrable Securities
should discontinue disposition thereof, such holder will forthwith discon-
tinue disposition of such Registrable Securities pursuant to the applicable
Prospectus until such holder is advised in writing by the Company that the
use of the applicable Prospectus may be resumed, and, in either case, has
received copies of any additional or supplemental filings that are incorpo-
rated or deemed to be incorporated by reference in such Prospectus or
Registration Statement.
6. Registration Expenses. All fees and expenses incident to the
performance of or compliance with this Agreement by the Company shall be
borne by the Company whether or not the Registration Statement is filed or
becomes effective and whether or not any Registrable Securities are sold
pursuant to the Registration Statement. The fees and expenses referred to
in the foregoing sentence shall include, without limitation, (i) all
registration and filing fees (including, without limitation, fees and
expenses (A) with respect to filings required to be made with the SEC, the
National Association of Securities Dealers, Inc. and any securities
exchange and (B) in compliance with state securities or Blue Sky laws
(including, without limitation, reasonable and customary fees and
disbursements of counsel for the underwriters or holders in connection with
Blue Sky qualifications of the Registrable Securities and determination of
the eligibility of the Registrable Securities for investment under the laws
of such jurisdictions in the United States of America as the managing
underwriters, if any, or holders of a majority of Registrable Securities
may designate)), (ii) printing expenses (including, without limitation,
expenses of printing certificates for Registrable Securities and of
printing a reasonable number of prospectuses if the printing of prospec-
tuses is requested by the managing underwriters, if any, of the Registrable
Securities included in the Registration Statement), (iii) fees and
disbursements of counsel for the Company, (iv) fees and disbursements of
all independent certified public accountants referred to in Section
5(l)(iii) hereof (including, without limitation, the expenses of any
special audit and "cold comfort" letters required by or incident to such
performance), (v) fees and expenses of all other persons retained by the
Company and (vi) fees and disbursements of counsel to all of the holders of
Registrable Securities in an amount not to exceed $10,000 in the aggregate.
In addition, the Company shall pay the fees and expenses incurred in
connection with the listing of the Registrable Securities on the American
Stock Exchange. Except as provided above, the holders of Registrable
Securities shall pay all of their own fees and expenses in connection with
the transaction referred to in or contemplated by this Agreement, including
without limitation, all legal and advisory fees and expenses and all
discounts, commissions, fees and expenses of underwriters (including
underwriters' counsel) involved in the offer and sale of Registrable
Securities whether in an Underwritten Company Offering or otherwise.
7. Indemnification
(a) Indemnification by the Company. The Company shall,
notwithstanding termination of this Agreement and without limitation as to
time, indemnify and hold harmless each holder of Registrable Securities,
the officers, directors, agents, investment advisors and employees of each
of them, each person who controls any such holder (within the meaning of
Section 15 of the Securities Act or Section 20 of the Exchange Act) and
the officers, directors, agents and employees of each such controlling
person, to the fullest extent lawful, from and against any and all losses,
claims, damages, liabilities, costs (including, without limitation, costs
of preparation and reasonable attorneys' fees) and expenses (collectively,
"Losses"), arising out of or based upon any untrue or alleged untrue
statement of a material fact contained in the Registration Statement, any
Prospectus, any form of Prospectus or in any preliminary Prospectus, or the
registration statement in connection with an Underwritten Company Offering
(the "UCO Registration Statement"), any prospectus included therein, any
form of such prospectus or in any such preliminary prospectus, or arising
out of or based upon any omission or alleged omission of a material fact
required to be stated therein or necessary to make the statements therein
(in the case of any such prospectus or form of prospectus or supplement
thereto, in light of the circumstances under which they were made) not mis-
leading, except to the extent, that such are based upon information
regarding such holder furnished in writing to the Company by or on behalf
of such holder or any underwriter expressly for use therein, which
information was reasonably relied on by the Company in the preparation
thereof or upon information reviewed and expressly approved in writing by
such holder or underwriter expressly for use therein.
(b) Indemnification by Holder of Registrable Securities. In
connection with the Registration Statement and each UCO Registration
Statement, each holder of Registrable Securities shall furnish to the
Company in writing such information as the Company reasonably requests for
use in connection with the Registration Statement or any Prospectus and the
UCO Registration Statement and any prospectus included therein and agrees,
severally and not jointly, to indemnify and hold harmless the Company, its
directors, officers, agents and employees, each person who controls the
Company (within the meaning of Section 15 of the Securities Act or Section
20 of the Exchange Act), and the officers, directors, agents and employees
of each such controlling person, to the fullest extent lawful, from and
against all Losses arising out of or based upon any untrue or alleged
untrue statement of a material fact contained in the Registration
Statement, any Prospectus, any form of Prospectus or any preliminary
Prospectus, or any UCO Registration Statement, any prospectus included
therein, any form of such prospectus or any such preliminary prospectus, or
arising out of or based upon any omission or alleged omission of a material
fact required to be stated therein or necessary to make the statements
therein not misleading to the extent that such untrue or alleged untrue
statement or omission or alleged omission is contained in any information
so furnished in writing to the Company by or on behalf of such holder
included in the Registration Statement, such Prospectus, any form of
Prospectus or any preliminary Prospectus, or any UCO Registration
Statement, any prospectus included therein, any form of such prospectus or
any such preliminary prospectus, or to the extent that such information
relates to such holder or such holder's proposed method of distribution of
Registrable Securities and was reviewed and expressly approved in writing
by such holder expressly for use in the Registration Statement, such
Prospectus, such form of Prospectus or such preliminary Prospectus, or any
UCO Registration Statement, any prospectus included therein, any form of
such prospectus or any such preliminary prospectus; provided, however, that
such holder shall not be obligated to provide such indemnification to the
extent liability resulted from the Company's failure to amend or take
action promptly to correct or supplement the Registration Statement, such
Prospectus, any form of Prospectus or any preliminary Prospectus, or any
UCO Registration Statement, any prospectus included therein, any form of
such prospectus or any such preliminary prospectus, after receiving written
notice from such holder of such untrue or alleged untrue statement or
omission or alleged omission. In no event shall the liability of any
selling holder of Registrable Securities hereunder be greater in amount
than the dollar amount of the proceeds received by such holder upon the
sale of the Registrable Securities giving rise to such indemnification
obligation.
(c) Conduct of Indemnification Proceedings. If any Proceeding
shall be brought or asserted against any person entitled to indemnity
hereunder (an "Indemnified Party"), such Indemnified Party promptly shall
so notify the person from whom indemnity is sought (the "Indemnifying
Party") in writing, and the Indemnifying Party shall assume the defense
thereof, including the employment of counsel reasonably satisfactory to the
Indemnified Party and the payment of all fees and expenses incurred in
connection with defense thereof; provided that the failure of any
Indemnified Party to give prompt notice shall not relieve the Indemnifying
Party of its obligations pursuant to this Agreement, except to the extent
that it shall be finally determined by a court of competent jurisdiction
(which determination is not subject to appeal or further review) that such
failure shall have prejudiced the Indemnifying Party.
Any such Indemnified Party shall have the right to employ
separate counsel in any such action, claim or proceeding and to participate
in the defense thereof, but the fees and expenses of such counsel shall be
at the expense of such Indemnified Party or Parties unless: (1) the
Indemnifying Party has agreed to pay such fees and expenses; or (2) the
Indemnifying Party shall have failed to assume the defense of such action,
claim or proceeding; or (3) the named parties to any such action, claim or
proceeding (including any impleaded parties) include both such Indemnified
Party and the Indemnifying Party, and such Indemnified Party shall have
been advised by counsel that a conflict of interest is likely to exist if
the same counsel were to represent such Indemnified Party and the Indem-
nifying Party (in which case, if such Indemnified Party notifies the
Indemnifying Party in writing that it elects to employ separate counsel at
the expense of the Indemnifying Party, the Indemnifying Party shall not
have the right to assume the defense thereof and such counsel shall be at
the expense of the Indemnifying Party), it being understood, however, that,
the Indemnifying Party shall not, in connection with any one such action or
proceeding or separate but substantially similar or related actions or
proceedings in the same jurisdiction arising out of the same general
allegations or circumstances, be liable for the fees and expenses of more
than one separate firm of attorneys (in addition to any local counsel) at
any time for all Indemnified Parties (other than counsel for which the
Indemnifying Party has agreed to pay under clause (1) above), which firm
shall be designated in writing by the Indemnified Parties. The
Indemnifying Party shall not be liable for any settlement of any such
Proceeding effected without its prior written consent. No Indemnifying
Party shall, without the prior written consent of the Indemnified Party,
effect any settlement of any pending proceeding in respect of which any
Indemnified Party is a party and is entitled to indemnity hereunder, unless
such settlement includes an unconditional release of such Indemnified Party
from all liability on claims that are the subject matter of such
proceeding.
(d) Contribution. If a claim by an Indemnified Party for
indemnification under Section 7(a) or 7(b) hereof is found unenforceable
by a court of competent jurisdiction (even though the express provisions
hereof provide for indemnification in such case), then each applicable
Indemnifying Party, in lieu of indemnifying such Indemnified Party, shall
contribute to the amount paid or payable by such Indemnified Party as a
result of such Losses, in such proportion as is appropriate to reflect the
relative fault of the Indemnifying Party and Indemnified Party in
connection with the actions, statements or omissions that resulted in such
Losses as well as any other relevant equitable considerations. The
relative fault of such Indemnifying Party and Indemnified Party shall be
determined by reference to, among other things, whether any action in ques-
tion, including any untrue or alleged untrue statement of a material fact
or omission or alleged omission of a material fact, has been taken or made
by, or relates to information supplied by, such Indemnifying Party or
Indemnified Party, and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such action, statement or
omission. The amount paid or payable by a party as a result of any Losses
shall be deemed to include, subject to the limitations set forth in Section
7(c), any legal or other fees or expenses reasonably incurred by such party
in connection with any investigation or Proceeding.
The parties hereto agree that it would not be just and equitable
if contribution pursuant to this Section 7(d) were determined by pro rata
allocation or by any other method of allocation that does not take into
account the equitable considerations referred to in the immediately
preceding paragraph. Notwithstanding the provisions of this Section 7(d),
an Indemnifying Party that is a holder of Registrable Securities shall not
be required to contribute any amount in excess of the amount of the
proceeds actually received by such Indemnifying Party from the sale of the
Registrable Securities subject to the Proceeding. No person guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of the
Securities Act) shall be entitled to contribution from any person who was
not guilty of such fraudulent misrepresentation.
\E Rule 144. The Company shall use its reasonable best efforts to
file the reports required to be filed by it under the Securities Act and
the Exchange Act in a timely manner and, if at any time the Company is not
required to file such reports, they will, upon the request of any holder of
Registrable Securities, make publicly available other information so long
as necessary to permit sales of its securities pursuant to Rule 144. The
Company further covenants that it will take such further action as any
holder of Registrable Securities may reasonably request, all to the extent
required from time to time to enable such holder to sell Registrable
Securities without registration under the Securities Act within the
limitation of the exemptions provided by Rule 144.
9. Miscellaneous
(a) Remedies. In the event of a breach by the Company or by a
holder of Registrable Securities, of any of their obligations under this
Agreement, each holder of Registrable Securities or the Company, as the
case may be, in addition to being entitled to exercise all rights granted
by law, including recovery of damages, will be entitled to specific
performance of its rights under this Agreement. The Company and each
holder of Registrable Securities agree that monetary damages would not be
adequate compensation for any loss incurred by reason of a breach by it of
any of the provisions of this Agreement and hereby further agrees that, in
the event of any action for specific performance in respect of such breach,
it shall waive the defense that a remedy at law would be adequate.
(b) Amendments and Waivers. The provisions of this Agreement,
including the provisions of this sentence, may not be amended, modified or
supplemented, and waivers or consents to departures from the provisions
hereof may not be given, unless the same shall be in writing and signed by
the Company and the holders of at least a majority of the then outstanding
Registrable Securities. Notwithstanding the foregoing, (i) a waiver or
consent to depart from the provisions hereof with respect to a matter that
relates exclusively to the rights of holders of Registrable Securities and
that does not directly or indirectly affect the rights of other holders of
Registrable Securities may be given by holders of at least a majority of
the Registrable Securities to which such waiver or consent relates;
provided, however, that the provisions of this sentence may not be amended,
modified, or supplemented except in accordance with the provisions of the
immediately preceding sentence, and (ii) so long as any Shareholder holds
not less than 50% of the number of Registrable Securities acquired by such
Shareholder in the Merger and subject to this Agreement, without the
consent of such Shareholder, which consent shall not be unreasonably
withheld or delayed, this Agreement may not be amended, modified or
supplemented and no waiver or consent shall be given so as to adversely
affect in any material respect any of the rights of such Shareholder.
(c) Notices. All notices and other communications provided for
herein shall be made in writing by hand-delivery, next-day air courier,
certified first class mail, return receipt requested, or facsimile to:
(i) If to the Company, at 610 Fifth Avenue, New York, New
York 10020, Attn: Edward Lowenthal, President, (telecopier no.:
(212) 333-2323) with a copy to: Robinson Silverman Pearce Aronsohn &
Berman LLP, 1290 Avenue of the Americas, New York, New York 10104,
Attn: Alan S. Pearce, Esq. (telecopier no.: (212) 541-4630);
(ii) If to a Shareholder, at the address specified below its
name on the signature pages hereof; or
(iii) If to any other person who is then the registered
holder of any Registrable Securities, to the address of such holder as
it appears in the stock transfer books of the Company.
Except as otherwise provided in this Agreement, all such
communications shall be deemed to have been duly given: when delivered by
hand, if personally delivered; one Business Day after being delivered to a
reputable overnight delivery service for delivery on the next Business Day;
five Business Days after being deposited in the mail, postage prepaid, if
mailed; and when receipt is acknowledged by the recipient's telecopier
machine, if telecopied.
(d) Successors and Assigns. This Agreement shall inure to the
benefit of and be binding upon the successors and permitted assigns of each
of the parties. If any transferee of Registrable Securities shall acquire
Registrable Securities in accordance with applicable securities law, such
Registrable Securities shall be held subject to all of the terms and
conditions of this Agreement and shall receive all of the benefits hereof.
(e) Counterparts. This Agreement may be executed in any number
of counterparts and by the parties hereto in separate counterparts, each of
which when so executed shall be deemed to be an original and, all of which
taken together shall constitute one and the same Agreement.
(f) Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK AS APPLIED
TO CONTRACTS MADE AND PERFORMED WITHIN THE STATE OF NEW YORK, WITHOUT
REGARD TO PRINCIPLES OF CONFLICTS OF LAW. By execution of this Agreement,
each Shareholder agrees for the benefit of the Company that any action or
proceeding relating to this Agreement or the Common Shares shall be brought
in the courts of the State of New York or of the United States sitting in
New York City, the Borough of Manhattan, and each Shareholder agrees to
submit to the jurisdiction of such courts in any such action or proceeding.
(g) Severability. The remedies provided herein are cumulative
and not exclusive of any remedies provided by law. If any term, provision,
covenant or restriction of this Agreement is held by a court of competent
jurisdiction to be invalid, illegal, void or unenforceable, the remainder
of the terms, provisions, covenants and restrictions set forth herein shall
remain in full force and effect and shall in no way be affected, impaired
or invalidated, and the parties hereto shall use their reasonable efforts
to find and employ an alternative means to achieve the same or
substantially the same result as that contemplated by such term, provision,
covenant or restriction. It is hereby stipulated and declared to be the
intention of the parties that they would have executed the remaining terms,
provisions, covenants and restrictions without including any of such that
may be hereafter declared invalid, illegal, void or unenforceable.
(h) Headings. The headings in this Agreement are for
convenience of reference only and shall not limit or otherwise affect the
meaning hereof.
(i) Further Assurances. From and after the date hereof, the
Company and each of the Shareholders each covenants and agrees to execute
and deliver all such agreements, instruments and documents and to take all
such further actions as any such respective party may reasonably deem
necessary from time to time (at the requesting party's expense) to carry
out the intent and purposes of this Agreement and to consummate and fully
effect the transactions contemplated hereby.
(j) Entire Agreement; Integration. This Agreement contains the
entire agreement of the parties hereto with respect to its subject matter
and there are no promises or undertakings with respect thereto relative to
the subject matter hereof not expressly set forth or referred to in this
Agreement.
(k) Enforceability. The Company hereby represents that it is
not a party to any agreement which would adversely affect the legality,
validity or enforceability of this Agreement.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first written above.
WELLSFORD REAL PROPERTIES, INC.
By:/s/ Gregory F. Hughes
--------------------------------------
Name: Gregory F. Hughes
Title: Chief Financial Officer
FRANKLIN MUTUAL ADVISERS, INC.
By: /s/ E.N. Cohernour
------------------------------
Name: E.N. Cohernour
Title: Vice President &
General Counsel
Address: 51 John F. Kennedy Parkway
Short Hill, NJ 07078
Attn: Bradley Takahashi
Telephone: 973-912-2152
Telecopy: 973-912-0646
ANGELO, GORDON & CO., L.P.
By AG Partners, L.P., its general
partner
By:/s/ John M. Angelo
------------------------------_
John M. Angelo, Chief
Executive Officer
Address: 245 Park Avenue, 26th Fl.
New York, NY 10167
Attn.: Michael L. Gordon
Telephone: 212-692-2000
Telecopy: 212-867-6448
<PAGE>
Exhibit A
Certain advisory clients of
Franklin Mutual Advisers, Inc.
Advisory Client/ Nominee Name for
Beneficial Owner Physical Shares Record
Owner
Mutual Beacon Fund Erato & Co. CEDE & CO.
Mutual Discovery Fund Launch & Co. CEDE & CO.
Yale University Tellus & Co. CEDE & CO.
Orion Fund Ltd. Gerlach & Co. CEDE & CO.
The Common Fund Bost & Co. CEDE & CO.
Alan L. Gold & Co. PSP Alan L. Gold & Co. PSP CEDE & CO.
Andrew & Lisa Fairclough Andrew & Lisa Fairclough CEDE & CO.
Deborah Milkey Deborah Milkey CEDE & CO.
J.H. Garfunkel Inc. J.H. Garfunkel Inc. CEDE & CO.
Joseph Italiaander Joseph Italiaander CEDE & CO.
Karin Heine Karin Heine CEDE & CO.
Michael R. Grunwald Michael R. Grunwald CEDE & CO.
Steven H. Vendig PSP Steven H. Vendig PSP CEDE & CO.
<PAGE>
Exhibit B
Certain affiliates of
Angelo, Gordon & Co., L.P.
Affiliate/ Nominee Name for
Beneficial Owner Physical Shares Record
Owner
AG Arb Partners, L.P. Bear, Stearns Securities Corp. CEDE & CO.
AG Super Fund, L.P. Bear, Stearns Securities Corp. CEDE & CO.
AG Super Fund International Bear, Stearns Securities Corp. CEDE & CO.
Partners, L.P.
Nutmeg Partners, L.P. Bear, Stearns Securities Corp. CEDE & CO.
GAM Special Situations, L.P. Bear, Stearns Securities Corp. CEDE & CO.
AG Eleven Partners, L.P. Bear, Stearns Securities Corp. CEDE & CO.
GAM Arbitrage Investments
Inc. Bear, Stearns Securities Corp. CEDE & CO.
The Common Fund (Equity
Fund) Bear, Stearns Securities Corp. CEDE & CO.
Treetop Partners, L.P. Bear, Stearns Securities Corp. CEDE & CO.
Northern Trust Company, Bear, Stearns Securities Corp. CEDE & CO.
as Master Trustee of the
Teachers'Retirement System
of the State of Illinois
40153 Partnership Bear, Stearns Securities Corp. CEDE & CO.
The Common Fund (Bond Fund) Bear, Stearns Securities Corp. CEDE & CO.
A.G.C.P., L.P. Bear, Stearns Securities Corp. CEDE & CO.
Montrose Corporation Bear, Stearns Securities Corp. CEDE & CO.
AMENDMENT NO. 1
TO
LIMITED LIABILITY COMPANY OPERATING AGREEMENT
OF
WELLSFORD/WHITEHALL PROPERTIES, L.L.C.
This AMENDMENT NO. 1 TO LIMITED LIABILITY COMPANY OPERATING
AGREEMENT is made and entered into as of December 31, 1997 by and between
WHWEL Real Estate Limited Partnership, a Delaware limited partnership
("Whitehall"), and Wellsford Commercial Properties Trust, a Maryland real
estate investment trust ("WCPT"). All capitalized terms used but not
otherwise defined herein shall have the meaning given to them in the
Original Agreement (as defined below).
R E C I T A L S
WHEREAS, Whitehall and WCPT entered into that certain Limited
Liability Company Operating Agreement of Wellsford/Whitehall Properties,
L.L.C., dated as of August 28, 1997 (the "Original Agreement"); and
WHEREAS, the parties hereto desire to amend the Original
Agreement to reflect certain modifications to the Original Agreement.
NOW, THEREFORE, in order to carry out their intent as expressed
above and in consideration of the mutual agreements hereinafter contained,
and other good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, the parties hereby covenant and agree as
follows:
ARTICLE I.
AMENDMENT
Section 1.1 The following paragraph should be added to Section
6.2(f) immediately after Section 6.2(f)(vii):
(viii) The Members agree that in the absence of any
special allocations or adjustments to the Capital Accounts made
by the Internal Revenue Service, their respective Capital Account
balances (other than with respect to the preferred membership
units) should be in the ratio of their respective number of
Membership Units, and, accordingly, notwithstanding anything to
the contrary in Section 6.2(d), to the extent permissible under
Section s 704(b) and 514(c)(9) of the Code and the Treasury
Regulations promulgated thereunder, for purposes of maintaining
Capital Account balances, book income, gain and loss from the
sale of Company Assets shall be allocated, in a manner that
brings the Member's Capital Account balances into the ratio of
their respective number of Membership Units as quickly as
possible.
Section 1.2 Paragraph 8 of Exhibit A of the Original Agreement
is hereby deleted and is replaced in its entirety by Exhibit A attached
hereto.
Section 1.3 Paragraphs 3 and 12 of Section B of Exhibit E-3
of the Original Agreement are hereby deleted and are replaced in their
entirety by Exhibit B attached hereto.
Section 1.4 Section 2.9 of the Operating Agreement is
hereby supplemented by adding the following subparagraph to the end
thereof:
"(g) Notwithstanding anything to the contrary contained
herein, any capital or other expense necessary to remedy the
violations referred to in the Abatement Order described in
Schedule E3.9 to Exhibit E-3 (including, without limitation,
those certain capital expenditures in respect of 15 Broad Street
in the aggregate amount of $150,395.66 set forth in Schedule E3.5
to Exhibit E-3) shall be payable by, and shall be the
responsibility of, Whitehall. To the extent the Company pays any
such amounts, Whitehall shall promptly reimburse the Company
therefor without any increase in its Capital Account, Percentage
Interests or Membership Units."
Section 1.5 The parties hereby agree that, notwithstanding any
provision of the Operating Agreement, Closing Date Prorations shall occur
with respect to the Whitehall Additional Contributed Assets on the
Additional Closing Date, i.e., February 20, 1998.
ARTICLE II
Miscellaneous
Section 2.1 All references to the "Agreement" in the Original
Agreement shall be deemed to refer to the Original Agreement, as amended by
this Agreement.
Section 2.2 This Agreement may be executed in any number of
counterparts and by the different parties hereto on separate counterparts,
each of which when executed and delivered shall be an original, but all of
which shall together constitute one and the same instrument.
Section 2.3 This Agreement, the Original Agreement, together
with all Exhibits, Schedules, and Annexes hereto and thereto and all letter
agreements executed by the Company, the Initial Members and/or their
respective Affiliates on the date hereof and the date of the Original
Agreement (which are incorporated herein and therein by this reference),
supersedes all prior agreements among the parties with respect to the
subject matter hereof and contains the entire agreement among the parties
with respect to such subject matter.
Section 2.4 The parties agree that the individuals executing
this Agreement on behalf of the Initial Members have done so in their
respective capacities as officers or trustees of the Initial Members (or,
in the case of Whitehall, its general partner) and not individually, and
none of the direct or indirect partners, trustees, officers or shareholders
of either Initial Member shall be bound or have any personal liability
hereunder. Each Initial Member shall look solely to the Interest of the
other Initial Member for satisfaction of any liability of such other
Initial Member in respect of this Agreement and will not seek recourse or
commence any action against any of the direct or indirect partners,
trustees, officers or shareholders of such other Initial Member or any of
their personal assets for the performance or payment of any obligation
hereunder. The foregoing shall also apply to any future documents,
agreements, understandings, arrangements and transactions between the
parties hereto.
Section 2.5 This Agreement shall be construed in accordance
with the laws of the State of Delaware, without regard to conflict of law
provisions thereof.
Section 2.5 Except as expressly set forth herein, all terms,
conditions and provisions of the Original Agreement shall remain unchanged
and in full force and effect and are ratified and reaffirmed in all
respects.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK
SIGNATURE PAGE FOLLOWS]<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement as of the day and year first above written.
WHWEL REAL ESTATE LIMITED PARTNERSHIP
By: WHATR Gen-Par, Inc., General Partner
By: /s/ Stuart M. Rothenberg
---------------------------------------
Name: Stuart M. Rothenberg
Title: Vice President
WELLSFORD COMMERCIAL PROPERTIES TRUST
By: /s/ Edward Lowenthal
----------------------------------------
Name: Edward Lowenthal
Title: President
<PAGE>
EXHIBIT A
CONTRIBUTION OF 15 BROAD AND 600 ATRIUM
TRANSACTION SUMMARY
In connection with the acquisition by Wellsford/Whitehall Properties,
L.L.C. (UWellsford/Whitehall") of the properties known as 15 Broad Street
and 600 Atrium, the following transactions will occur:
(i) Wellsford/Whitehall will borrow $6,000,000 under the Revolving
Credit Facility pursuant to the Revolving Credit Agreement by and
among Wellsford/Whitehall, BankBoston, N.A. and Goldman Sachs
Mortgage Company.
(ii) Wellsford/Whitehall will make a distribution to the Whitehall
Member in the amount of $3,983,076.
(iii) WHCB Real Estate Limited Partnership will distribute pro rata
undivided interests in the property known as 600 Atrium to Stone
Street Chemical Corp., Bridge Street Real Estate Fund 1996, L.P.,
Stone Street Real Estate Fund 1996, L.P., JER WHC-Six Services,
Inc., WHCB Gen-Par, Inc. and Whitehall Street Real Estate Limited
Partnership V ("Whitehall V"); Stone Street Chemical Corp.,
Bridge Street Real Estate Fund 1996, L.P., Stone Street Real
Estate Fund 1996, L.P., JER WHC-Six Services, Inc., WHCB Gen-Par,
Inc. and Whitehall V will contribute their respective undivided
interests in 600 Atrium to Wellsford/Whitehall. The foregoing
distributions and contributions will be made subject to the
existing financing secured by 600 Atrium and will be evidenced by
a deed from WHCB Real Estate Limited Partnership to
Wellsford/Whitehall.
(iv) WHTR Real Estate Limited Partnership will distribute pro rata
undivided interests in the property known as 15 Broad Street to
Stone Street Real Estate Fund 1994, L.P., Bridge Street Real
Estate Fund, 1994, L.P., Stone Street Administrative Corporation
I, JER WHC-Six Services, Inc., WHTR Investors, Inc. and Whitehall
V; Stone Street Real Estate Fund 1994, L.P., Bridge Street Real
Estate Fund 1994, L.P., Stone Street Administrative Corporation
I, JER WHC-Six Services, Inc., WHTR Investors, Inc. and Whitehall
V will contribute their respective undivided interests in 15
Broad Street to Wellsford/Whitehall. The foregoing transactions
will be made subject to the existing financing secured by 15
Broad and will be evidenced by a deed from WHTR Real Estate
Limited Partnership to Wellsford/Whitehall.
(v) In the aggregate, the contributions described in (iii) and (iv)
above represent a $3,983,076 capital contribution to
Wellsford/Whitehall (the "Contribution Interests"). Stone Street
Real Estate Fund 1994, L.P., Stone Street Administrative
Corporation I, Bridge Street Real Estate Fund 1994, L.P., Stone
Street Chemical Corp., Bridge Street Real Estate Fund 1996, L.P.,
Stone Street Real Estate Fund 1996, L.P., JER WHC-Six Services,
Inc., WHCB Gen-Par, Inc. and WHTR Investors, Inc. will contribute
the Contribution Interests to the Whitehall Member in exchange
for a $3,983,076 partnership interest in the Whitehall Member.
(vi) Wellsford/Whitehall will repay the existing financing secured by
600 Atrium and will pay the release price for 15 Broad Street.
(vii) The transactions described in (i) through (vi) above will occur
contemporaneously such that the existing financing on 15 Broad
Street and 600 Atrium will be repaid on the date such properties
are contributed to Wellsford/Whitehall.
<PAGE>
EXHIBIT B
REPRESENTATIONS AND WARRANTIES CONCERNING THE ADDITIONAL
WHITEHALL PROPERTIES
3. Compliance with Laws. Except as set forth on Schedule E3.9,
to Whitehall's knowledge, each Whitehall Additional Current Owner is in
material compliance with all applicable laws and each of them has obtained
and complied with all material consents, approvals, permits and licenses of
governmental authorities required to conduct their respective businesses as
presently operated and such consents, approvals, permits and licenses have
not been terminated. Except as set forth on Schedule E3.9, no Whitehall
Additional Current Owner has received any written notice that it is not in
such compliance. Except as set forth on Schedule E3.9, each Whitehall
Additional Current Owner has delivered to WCPT true and complete copies of
all certificates of occupancy in its possession pertaining to all or any
portion of any Whitehall Additional Property.
12. Assessed Value. Except as set forth on Schedule E3.10, no
Whitehall Additional Current Owner has received any notice of, and
Whitehall does not know of, any proposed change in the assessed value of
all or any portion of any Whitehall Additional Property owned by such
Whitehall Additional Current Owner, other than the customary scheduled
increases in the state, county and city where such Whitehall Additional
Property is located, or such change as would not have a material adverse
effect on the owner of such Whitehall Additional Property. Except as set
forth on Schedule E3. 10, the Whitehall Additional Current Owners have not
received any written notice of any proposed or pending special assessments
which affect any Whitehall Additional Property or any portion thereof,
other than such special assessment that would not have a material adverse
effect on the owner of such Whitehall Additional Current Property.
REVOLVING CREDIT AGREEMENT
DATED AS OF DECEMBER 15, 1997
among
WELLSFORD/WHITEHALL PROPERTIES, L.L.C., as Borrower
and
BANKBOSTON, N.A.,
GOLDMAN SACHS MORTGAGE COMPANY,
and
OTHER BANKS WHICH MAY BECOME
PARTIES TO THIS AGREEMENT, as Banks
and
BANKBOSTON, N.A.,
AS ADMINISTRATIVE AGENT AND CO-ARRANGER
AND CO-SYNDICATION AGENT
and
GOLDMAN SACHS MORTGAGE COMPANY,
AS CO-ARRANGER AND CO-SYNDICATION AGENT
<PAGE>
REVOLVING CREDIT AGREEMENT
THIS REVOLVING CREDIT AGREEMENT is made as of the 15th day of
December, 1997, by and among WELLSFORD/WHITEHALL PROPERTIES, L.L.C., a
Delaware limited liability company having its principal place of business
at 610 Fifth Avenue, Seventh Floor, New York, New York 10020 ("Borrower"),
BANKBOSTON, N.A., a national banking association, GOLDMAN SACHS MORTGAGE
COMPANY, a New York limited partnership, and the other lending institutions
which may become parties hereto pursuant to Section 18 (collectively, the
"Banks"), and BANKBOSTON, N.A., as Agent for the Banks and Co-Arranger and
Co-Syndication Agent (the "Agent"), and GOLDMAN SACHS MORTGAGE COMPANY, as
Co-Arranger and Co-Syndication Agent.
Section 10. DEFINITIONS AND RULES OF INTERPRETATION.
Section 10.1. Definitions. The following terms shall have the
meanings set forth in this Section l or elsewhere in the provisions of
this Agreement referred to below:
Agent. BankBoston, N.A., a national banking association, its
successors and assigns, acting as agent for the Banks.
Agent's Head Office. The Agent's head office located at 100 Federal
Street, Boston, Massachusetts 02110, or at such other location as the Agent
may designate from time to time by notice to the Borrower and the Banks.
Agent's Special Counsel. Long Aldridge & Norman LLP or such other
counsel as may be approved by the Agent.
Agreement. This Revolving Credit Agreement, including the Schedules
and Exhibits hereto.
Agreement Regarding Fees. The Agreement Regarding Fees dated of even
date herewith among Borrower, BKB and Goldman.
Appraisal. An MAI appraisal of the value of a parcel of Mortgaged
Property or Mezzanine Property, determined on an "as-is" fair market value
basis, performed by an independent appraiser selected by the Agent who is
not an employee of the Borrower, any Subsidiary of the Borrower, the Agent
or a Bank, the form and substance of such appraisal and the identity of the
appraiser to be in accordance with regulatory laws and policies (both
regulatory and internal) applicable to the Banks, including, without
limitation, FIRREA, and otherwise acceptable to the Majority Banks.
Appraised Value. The fair market value of a parcel of Mortgaged
Property or Mezzanine Property, determined by the most recent Appraisal of
such parcel or update obtained pursuant to Section 5.2 or Section 10.7,
subject, however, to such changes or adjustments to the value determined
thereby as may be required by the appraisal departments of the Majority
Banks in their good faith business judgment.
Assignment of Interests. An Assignment of Interests from Borrower to
the Agent, as the same may be modified or amended, pursuant to which there
shall be assigned to the Agent for the benefit of the Banks a security
interest in the Equity Interests, such assignment to be in form and
substance satisfactory to the Agent.
Assignment of Leases and Rents. Each of the collateral assignments of
leases and rents from the Borrower to the Agent pursuant to which there
shall be assigned to the Agent for the benefit of the Banks a security
interest in the interest of such party, as lessor with respect to all
Leases of all or any part of a Mortgaged Property, each such collateral
assignment to be in form and substance satisfactory to the Agent.
Balance Sheet Date. September 30, 1997.
Banks. BKB, Goldman and any other Person who becomes an assignee of
any rights of a Bank pursuant to Section 18 (but not including any
Participant, as defined in Section 18).
Base Rate. The higher of (a) the annual rate of interest announced
from time to time by BKB at its head office in Boston, Massachusetts as its
"base rate", and (b) one-half of one percent (0.5%) above the Federal Funds
Effective Rate (rounded upwards, if necessary, to the next one-eighth of
one percent). Any change in the rate of interest payable hereunder
resulting from a change in the Base Rate shall become effective as of the
opening of business on the day on which such change in the Base Rate
becomes effective.
Base Rate Loans. Those Loans bearing interest calculated by reference
to the Base Rate.
BKB. BankBoston, N.A., a national banking association.
Borrower. As defined in the preamble hereto.
Building. All of the buildings, structures and improvements now or
hereafter located on any Mortgaged Property.
Building Service Equipment. All apparatus, fixtures and articles of
personal property owned by the Borrower, now or hereafter attached to or
used or procured for use in connection with the operation or maintenance of
any building, structure or other improvement located on or included in the
Mortgaged Property, including, but without limiting the generality of the
foregoing, all engines, furnaces, boilers, stokers, pumps, heaters, tanks,
dynamos, motors, generators, switchboards, electrical equipment, heating,
plumbing, lifting and ventilating apparatus, air-cooling and
air-conditioning apparatus, gas and electric fixtures, elevators,
escalators, fittings, and machinery and all other equipment of every kind
and description, used or procured for use in the operation of a Building
(except apparatus, fixtures or articles of personal property belonging to
lessees or other occupants of such building or to persons other than the
Borrower, unless the same be abandoned by any such lessee or other occupant
or person and shall become the Borrower's property by reason of such
abandonment), together with any and all replacements thereof and additions
thereto.
Business Day. Any day on which banking institutions in the city in
which the Agent's Head Office is located are open for the transaction of
banking business and, in the case of Eurodollar Rate Loans, which also is a
Eurodollar Business Day.
Capital Improvement Project. With respect to any Real Estate now or
hereafter owned by the Borrower which is utilized principally as commercial
office space, capital improvements consisting of rehabilitation,
refurbishment, replacement and improvements to the existing Buildings on
such Real Estate which may be properly capitalized under generally accepted
accounting principles.
Capital Improvement Reserve. For any period an amount equal to
seventy-five cents ($0.75) per annum multiplied by the weighted average of
rentable square footage of Real Estate owned by the Borrower and its
Subsidiaries and Property Owner (after the inclusion of the Equity
Interests in the Collateral) during such period.
CERCLA. See Section 6.20.
Closing Date. The first date on which all of the conditions set forth
in Section 10 and Section 11 have been satisfied.
Co-Agent. Goldman.
Code. The Internal Revenue Code of 1986, as amended.
Collateral. All of the property, rights and interests of the Borrower
which are or are intended to be subject to the security interests, liens
and mortgages created by the Security Documents, including, without
limitation, the Mortgaged Property.
Commitment. With respect to each Bank, the amount set forth on
Schedule 1.1 hereto as the amount of such Bank's Commitment to make or
maintain Loans to the Borrower, as the same may be reduced from time to
time in accordance with the terms of this Agreement.
Commitment Percentage. With respect to each Bank, the percentage set
forth on Schedule 1.1 hereto as such Bank's percentage of the aggregate
Commitments of all of the Banks.
Compliance Certificate. See Section 7.4(e).
Conditional Guaranty. A Conditional Guaranty of Payment and
Performance made by the Members in favor of Agent and the Banks, as the
same may be modified or amended, such guaranty to be in form and substance
satisfactory to the Agent.
Consolidated or combined. With reference to any term defined herein,
that term as applied to the accounts of the Borrower and its Subsidiaries,
consolidated or combined in accordance with generally accepted accounting
principles.
Consolidated Operating Cash Flow. With respect to any Test Period, an
amount equal to the Operating Cash Flow of the Borrower and its
Subsidiaries for such period consolidated in accordance with generally
accepted accounting principles. The Consolidated Operating Cash Flow of
the Borrower and its Subsidiaries on the consolidated financial statements
of the Borrower and its Subsidiaries shall be adjusted to reflect the
Borrower's allocable share of such Consolidated Operating Cash Flow for the
relevant period or as of the date of determination.
Consolidated Tangible Net Worth. The amount by which Consolidated
Total Assets exceeds Consolidated Total Liabilities.
Consolidated Total Assets. With respect to the Borrower and its
Subsidiaries, the sum of (a) an amount equal to (i) an amount equal to the
difference of (A) the Net Operating Income of the Stabilized Properties for
the period covered by the four previous consecutive fiscal quarters
(treated as a single accounting period) minus (B) the Capital Improvement
Reserve for such period divided by (ii) a nine and one-fourth percent
(9.25%) capitalization rate, (b) the sum of (i) the Appraised Value of the
Non-Stabilized Properties that are Collateral and of the Mezzanine Property
(after the acquisition by the Borrower of the Equity Interests if the
Equity Interests are Collateral) plus (ii) the historic cost of capital
improvements to such Non-Stabilized Properties and the Mezzanine Property
from the date of the most recent Appraisal thereof pursuant to this
Agreement, (c) the sum of (i) the all-in acquisition cost (including
reasonable closing costs) of the Non-Stabilized Properties that are not
Collateral and the Mezzanine Property (after the acquisition by the
Borrower of the Equity Interests if the Equity Interests are not
Collateral) plus (ii) the historic cost of capital improvements to such
Non-Stabilized Properties and the Mezzanine Property (if this clause (c) is
applicable thereto) from the date of acquisition thereof (provided that the
Agent shall have the right to obtain at Borrower's expense an Appraisal
with respect to any of such Non-Stabilized Properties or the Mezzanine
Property, and the Appraised Value determined from such Appraisal shall be
substituted for the amount in clause (c)(i) for the applicable property for
the purposes of such calculation), (d) the historic cost of investments in
Investment Partnerships; and (d) the aggregate cash and Short-term
Investments of such Person; provided that prior to such time as the
Borrower or a Subsidiary has owned and operated any Stabilized Property for
four full fiscal quarters, the Net Operating Income with respect to such
Stabilized Property shall be annualized in such manner as the Agent shall
approve, such approval not to be unreasonably withheld. The assets of the
Borrower and its Subsidiaries shall be adjusted to reflect Borrower's
allocable share of such assets for the relevant period or as of the date of
determination.
Consolidated Total Liabilities. All liabilities of the Borrower and
its Subsidiaries determined on a consolidated basis in accordance with
generally accepted accounting principles and all Indebtedness of the
Borrower and its Subsidiaries, whether or not so classified. In the event
that the Borrower or its Subsidiaries has an ownership or other equity
interest in any other Person, which investment is not consolidated in
accordance with generally accepted accounting principles (that is, such
interest is a "minority interest"), then the liabilities of the Borrower
and its Subsidiaries shall include the Borrower's or its Subsidiaries', as
applicable, allocable share of all indebtedness of such Person in which a
minority interest is owned based on the Borrower's or its Subsidiary's
respective ownership interest in such other Person. Such liabilities of
the Borrower and its Subsidiaries shall be adjusted to reflect the
Borrower's and its Subsidiaries' allocable share of such liabilities for
the relevant period or as of the date of determination. For the purposes
hereof, such liabilities and Indebtedness shall include the liabilities and
Indebtedness of the Property Owner after the acquisition by the Borrower of
the Equity Interests.
Construction Inspector. A firm of professional engineers or architects
selected by the Agent and reasonably acceptable to the Borrower.
Conversion Request. A notice given by the Borrower to the Agent of
its election to convert or continue a Loan in accordance with Section 4.1.
Debt Offering. The issuance and sale by the Borrower or the Guarantor
of any debt securities of the Borrower or the Guarantor.
Debt Service. For any period of four consecutive fiscal quarters, the
sum of actual interest expense (including capitalized interest) and
mandatory or scheduled principal payments due and payable during such
period with respect to all Indebtedness of the Borrower and its
Subsidiaries, excluding any balloon payments due upon maturity of any
Indebtedness and any amortization of loan fees paid as of the Closing Date.
For the initial twelve (12) months following the Closing Date, Debt Service
shall be determined by annualizing the Debt Service from and after the
Closing Date in a manner as reasonably determined by the Borrower and
reasonably acceptable to the Agent (provided that in the event that as of
the date of any determination such amounts shall not have been determined
as so provided, then such amount shall be annualized in a manner reasonably
acceptable to the Agent).
Debt Service Coverage Test Amount. For any period of four consecutive
fiscal quarters then ended, the sum of principal and interest which would
have been payable during such period on a loan in the original principal
amount equal to the outstanding principal balance of the Term Loans as of
the date of such determination bearing interest at a rate per annum equal
to the sum of the then current annual yield on seven (7) year obligations
issued by the United States Treasury most recently prior to the date of
such determination plus one and six-tenths percent (1.6%) and with the
principal thereof being payable based on a 25 year mortgage style
amortization schedule (expressed as a mortgage constant percentage). Such
determination of the Debt Service Coverage Test Amount by the Agent shall
be conclusive and binding absent manifest error. For the initial twelve
(12) months following the Closing Date, such debt service shall be
determined by annualizing the debt service from and after the Closing Date
in a manner as reasonably determined by Borrower and reasonably acceptable
to the Agent (provided that in the event that as of the date of any
determination such amounts shall not have been determined as so provided,
then such amount shall be annualized in a manner reasonably acceptable to
the Agent).
Default. See Section 12.1.
Designated Collateral Value. At the relevant time of reference
thereto, the sum of (a) for each of the initial Mortgaged Properties, the
Initial Collateral Value for such Mortgaged Property, plus (b) the lesser
of (i) seventy-five percent (75%) of the all-in acquisition cost (including
reasonable closing costs) of a Mortgaged Property accepted as a Mortgaged
Property after the date of this Agreement plus the historic cost of
capital improvements to such Mortgaged Property after the date of such
acceptance and (ii) seventy-five percent (75%) of the Appraised Value of a
Mortgaged Property accepted as a Mortgaged Property after the date of this
Agreement as determined in connection with the acceptance of such Mortgaged
Property as Collateral or as most recently determined pursuant to Section
2.8 of this Agreement, subject to the terms of Section 5.4, plus (c) the
current value of cash and Eligible Short-term Investments, if any, at the
time pledged to the Agent as Collateral pursuant to a Pledge Agreement,
plus (d) for so long as the Equity Interests are pledged to the Agent as
Collateral pursuant to the Assignment of Interests, an amount equal to
(i) the Appraised Value of the Mezzanine Property as most recently
determined pursuant to Section 2.8 of this Agreement, subject to the terms
of Section 5.4, or (ii) the all-in acquisition costs (including reasonable
closing costs) of the Mezzanine Property, whichever is less, minus the
principal Indebtedness of the Property Owner (provided that in no event
shall such sum (being the Designated Collateral Value amount with respect
to the Mezzanine Property) plus the principal Indebtedness of the Property
Owner exceed the lesser of (A) seventy-five percent (75%) of the Appraised
Value of the Mezzanine Property as determined above, or (B) seventy-five
percent (75%) of the all-in acquisition cost of the Mezzanine Property as
determined above), plus (d) the current value determined in a manner agreed
to by the Majority Banks of Collateral accepted by the Majority Banks under
clause (v) of Section 5.1. For the purposes of clause (b) above, the
lesser of the amount determined pursuant to clause (b)(i) and (b)(ii) above
shall be the Designated Collateral Value for each such Mortgaged Property
subject thereto, and the aggregate of the amounts determined for each
Mortgaged Property subject thereto shall be the Designated Collateral Value
for all such Mortgaged Properties. For the purposes of clause (d) above,
the acquisition cost of the Mezzanine Property shall be deemed to equal the
sum of the acquisition cost of the Equity Interests plus the principal
amount of the Indebtedness of the Property Owner that is not satisfied in
connection with such acquisition.
Distribution. The declaration or payment of any dividend or
distribution on or in respect of any shares of the Borrower, other than
dividends or distributions payable solely in equity securities of the
Borrower; the purchase, redemption, exchange or other retirement of any
shares of the Borrower, directly or indirectly through a Subsidiary of the
Borrower or otherwise; the return of capital by the Borrower to its
shareholders as such; or any other distribution on or in respect of any
shares of the Borrower.
Dollars or $. Dollars in lawful currency of the United States of
America.
Domestic Lending Office. Initially, the office of each Bank
designated as such in Schedule 1 hereto; thereafter, such other office of
such Bank, if any, located within the United States that will be making or
maintaining Base Rate Loans.
Drawdown Date. The date on which any Loan is made or is to be made,
and the date on which any Loan is converted or combined in accordance with
Section 4.1.
Eligible Real Estate. Real Estate:
(a) which is owned in fee by the Borrower;
(b) which is located within the northeastern United States,
excluding those States which prescribe a "single-action" or similar
rule limiting the rights of creditors secured by real property, except
to the extent such exclusion is waived in writing by the Majority
Banks with respect to a specific parcel of Real Estate;
(c) which is utilized principally for commercial office
purposes;
(d) which is approved by the Majority Banks after the date
hereof in their sole judgment;
(e) as to which all of the representations set forth in Section
6 of this Agreement concerning Mortgaged Property are true and
correct; and
(f) as to which the Agent has received all Eligible Real Estate
Qualification Documents, so long as all of such documents remain in
full force and effect.
Eligible Real Estate Qualification Documents. With respect to any
parcel of Real Estate proposed to be included in the Eligible Real Estate
each of the following:
(a) Security Documents. Such Security Documents relating to
such Real Estate as the Agent shall require, in form and substance
satisfactory to the Agent and duly executed and delivered by the
respective parties thereto.
(b) Enforceability Opinion. The favorable legal opinion of
counsel to the Borrower reasonably acceptable to the Agent qualified
to practice in the State in which such Real Estate is located,
addressed to the Banks and in form and substance satisfactory to the
Agent as to the enforceability of such Security Documents and such
other matters as the Agent shall reasonably request.
(c) Perfection of Liens. Evidence reasonably satisfactory to
the Agent that the Security Documents are effective to create in favor
of the Agent a legal, valid and enforceable first (except for
Permitted Liens entitled to priority under applicable law) lien and
security interest in such Real Estate and that all filings,
recordings, deliveries of instruments and other actions necessary or
desirable to protect and preserve such liens or security interests
have been duly effected.
(d) Survey and Taxes. The Survey of such Real Estate, together
with the Surveyor Certification and evidence of payment of all real
estate taxes, assessments and municipal charges on such Real Estate
which on the date of determination are required to have been paid
under Section 7.8.
(e) Title Insurance; Title Exception Documents. The Title
Policy covering such Real Estate, including all endorsements thereto,
and together with proof of payment of all fees and premiums for such
policy, and true and accurate copies of all documents listed as
exceptions under such policy.
(f) UCC Certification. A certification from the Title Insurance
Company or counsel satisfactory to the Agent that a search of the
public records designated by the Agent disclosed no conditional sales
contracts, security agreements, chattel mortgages, leases of
personalty, financing statements or title retention agreements which
affect any property, rights or interests of the Borrower that are or
are intended to be subject to the security interest, assignments, and
mortgage liens created by the Security Documents relating to such Real
Estate except to the extent that the same are discharged and removed
prior to or simultaneously with the inclusion of the Real Estate in
the Collateral.
(g) Management Agreement. A true copy of the Management
Agreement relating to such Real Estate.
(h) Leases. True and correct copies of all Leases for such
Real Estate and any lease summaries prepared by Borrower with respect
thereto, together with the forms of Lease to be used by the Borrower
in connection with future leasing of such Mortgaged Property, such
forms of Lease to be in form and substance satisfactory to the Agent.
(i) Subordination Agreements. A Subordination, Attornment and
Non-Disturbance Agreement from each tenant of such Real Estate as
required by the Agent, dated not more than sixty (60) days prior to
the inclusion of such Real Estate in the Collateral and satisfactory
in form and substance to the Agent.
(j) Estoppel Certificates. Estoppel certificates from each
tenant of such parcel of Real Estate as required by the Agent, such
certificates to be dated not more than sixty (60) days prior to the
inclusion of such Real Estate in the Collateral and to be satisfactory
in form and substance to the Agent.
(k) Certificates of Insurance. Each of (i) a current
certificate of insurance as to the insurance maintained on such Real
Estate (including flood insurance if necessary) from the insurer or an
independent insurance broker dated as of the date of determination,
identifying insurers, types of insurance, insurance limits, and policy
terms; (ii) certified copies of all policies evidencing such insurance
(or certificates therefor signed by the insurer or an agent authorized
to bind the insurer); and (iii) such further information and
certificates from the Borrower, its insurers and insurance brokers as
the Agent may reasonably request, all of which shall be in compliance
with the requirements of this Agreement.
(l) Hazardous Substance Assessments. A hazardous waste site
assessment report concerning Hazardous Substances and asbestos on such
Real Estate dated or updated not more than three months prior to the
inclusion of such Real Estate in the Collateral unless otherwise
approved by the Agent, from an Environmental Engineer, such report to
contain no qualifications except those that are acceptable to the
Majority Banks in their sole discretion and to otherwise be in form
and substance satisfactory to the Majority Banks.
(m) Certificate of Occupancy. A copy of the certificate(s) of
occupancy issued to the Borrower for such parcel of Real Estate
permitting the use and occupancy of the Building thereon (or evidence
that any previously issued certificate(s) of occupancy is not required
to be reissued to the Borrower), or a legal opinion reasonably
satisfactory to the Agent that no certificates of occupancy are
necessary to the use and occupancy thereof.
(n) Appraisal. An Appraisal of such Real Estate, in form and
substance satisfactory to the Majority Banks and dated not more than
three months prior to the inclusion of such Real Estate in the
Collateral.
(o) Zoning and Land Use Opinion of Counsel. A favorable opinion
concerning the Real Estate addressed to the Agent and dated the date
of the inclusion of such Real Estate in the Collateral, in form and
substance satisfactory to the Agent, from counsel approved by the
Agent admitted to practice in the State in which such parcel is
located, as to zoning and land use compliance, or such other evidence
regarding zoning and land use compliance as the Agent may approve in
its reasonable discretion.
(p) Construction Inspector Report. A report or written
confirmation from the Construction Inspector satisfactory in form and
content to the Majority Banks, dated or updated not more than three
months prior to the inclusion of such Real Estate in the Collateral,
addressing such matters as the Majority Banks may reasonably require,
including without limitation that the Construction Inspector has
reviewed the plans and specifications or other available materials for
all Buildings on the Real Estate, that the condition of the Buildings
is good, that all Buildings were constructed and completed in a good
and workmanlike manner, that the Buildings satisfy all applicable
building, zoning, handicapped access and Environmental Laws applicable
thereto, and whether or not the Real Estate and the Buildings thereon
are a conforming use under applicable zoning laws.
(q) Permit and Legal Compliance Assurances. Evidence
satisfactory to the Agent that all activities being conducted on such
Real Estate which require federal, state or local licenses or permits
have been duly licensed and that such licenses or permits are in full
force and effect, and that the Real Estate, the Buildings and the use
and occupancy thereof are in compliance in all material respects with
all applicable federal, state or local laws, ordinances or
regulations.
(r) Operating Statements. Operating statements for such Real
Estate in the form of such statements delivered to the Banks under
Section 6.4(c) covering each of the four fiscal quarters ending
immediately prior to the addition of such Mortgaged Property to the
Collateral.
(s) Doing Business Opinion. An opinion, dated the date of the
inclusion of such Real Estate in the Collateral, of legal counsel to
the Borrower reasonably acceptable to the Agent qualified to practice
in the State in which such Real Estate is located to the effect that
neither the Agent nor any Bank shall be required to qualify to do
business in such State or any political subdivision thereof or to
become liable to pay any taxes in such State or any political
subdivision thereof solely on account of the receipt of the lien on
such Real Estate securing the Obligation, such opinion to be
satisfactory to the Agent.
(t) Additional Documents. Such other documents, certificates,
reports or assurances as the Agent or the Majority Banks may
reasonably require in their discretion.
Employee Benefit Plan. Any employee benefit plan within the meaning
of Section 3(3) of ERISA maintained or contributed to by the Borrower or
any ERISA Affiliate, other than a Multiemployer Plan.
Environmental Engineer. A firm of independent professional engineers
or other scientists generally recognized as expert in the detection,
analysis and remediation of Hazardous Substances and related environmental
matters and reasonably acceptable to the Agent.
Environmental Laws. See Section 6.20(a).
Equity Interests. One hundred percent (100%) of the direct legal,
equitable and beneficial interests in the Property Owner.
Equity Offering. The issuance and sale by the Borrower or the
Guarantor of any of its equity securities.
ERISA. The Employee Retirement Income Security Act of 1974, as
amended and in effect from time to time.
ERISA Affiliate. Any Person which is treated as a single employer with
the Borrower under Section 414 of the Code.
ERISA Reportable Event. A reportable event with respect to a
Guaranteed Pension Plan within the meaning of Section 4043 of ERISA and
the regulations promulgated thereunder as to which the requirement of
notice has not been waived.
Eurocurrency Reserve Rate. For any day with respect to a Eurodollar
Rate Loan, the maximum rate (expressed as a decimal) at which any lender
subject thereto would be required to maintain reserves under Regulation D
of the Board of Governors of the Federal Reserve System (or any successor
or similar regulations relating to such reserve requirements) against
"Eurocurrency Liabilities" (as that term is used in Regulation D or any
successor or similar regulation), if such liabilities were outstanding.
The Eurocurrency Reserve Rate shall be adjusted automatically on and as of
the effective date of any change in the Eurocurrency Reserve Rate.
Eurodollar Business Day. Any day on which commercial banks are open
for international business (including dealings in Dollar deposits) in
London or such other Eurodollar interbank market as may be selected by the
Agent and the Banks in their sole discretion acting in good faith.
Eurodollar Lending Office. Initially, the office of each Bank
designated as such in Schedule 1 hereto; thereafter, such other office of
such Bank, if any, that shall be making or maintaining Eurodollar Rate
Loans.
Eurodollar Rate. For any Interest Period with respect to a Eurodollar
Rate Loan, the rate per annum equal to the quotient (rounded upwards to the
nearest 1/16 of one percent) of (a) the rate at which the Reference Bank's
Eurodollar Lending Office is offered Dollar deposits two Eurodollar
Business Days prior to the beginning of such Interest Period in whatever
interbank Eurodollar market may be selected by the Reference Bank in its
sole discretion, acting in good faith, for delivery on the first day of
such Interest Period for the number of days comprised therein and in an
amount comparable to the amount of the Eurodollar Rate Loan to which such
Interest Period applies, divided by (b) a number equal to 1.00 minus the
Eurocurrency Reserve Rate.
Eurodollar Rate Loans. Loans bearing interest calculated by reference
to a Eurodollar Rate.
Event of Default. See Section 12.1.
Federal Funds Effective Rate. For any day, the rate per annum equal
to the weighted average of the rates on overnight Federal funds
transactions with members of the Federal Reserve System arranged by Federal
funds brokers, as published for such day (or, if such day is not a Business
Day, for the next preceding Business Day) by the Federal Reserve Bank of
New York, or, if such rate is not so published for any day that is a
Business Day, the average of the quotations for such day on such
transactions received by the Agent from three Federal funds brokers of
recognized standing selected by the Agent.
generally accepted accounting principles. Principles that are (a)
consistent with the principles promulgated or adopted by the Financial
Accounting Standards Board and its predecessors, as in effect from time to
time and (b) consistently applied with past financial statements of the
Borrower adopting the same principles; provided that a certified public
accountant would, insofar as the use of such accounting principles is
pertinent, be in a position to deliver an unqualified opinion (other than a
qualification regarding changes in generally accepted accounting
principles) as to financial statements in which such principles have been
properly applied.
Goldman. Goldman Sachs Mortgage Company.
Goldman Group. Collectively, the partners of WHWEL as of any date
that are affiliates of The Goldman Sachs Group L.P.
Guaranteed Pension Plan. Any employee pension benefit plan within the
meaning of Section 3(2) of ERISA maintained or contributed to by the
Borrower or any ERISA Affiliate the benefits of which are guaranteed on
termination in full or in part by the PBGC pursuant to Title IV of ERISA,
other than a Multiemployer Plan.
Guarantor. Collectively, the Members and any other Person which may
hereafter become a Guarantor, and individually any one of them.
Guaranty. Collectively, the Indemnity and Guaranty Agreement by the
Members in favor of Agent and the Banks, in form and substance satisfactory
to Agent in its sole discretion, the Conditional Guaranty, and any other
guaranty which may hereafter be delivered to the Agent and the Banks in
connection with the Loan.
Hazardous Substances. See Section 6.20(b).
Holdback. See Section 5.5.
Indebtedness. All obligations, contingent and otherwise, that in
accordance with generally accepted accounting principles should be
classified upon the obligor's balance sheet as liabilities, or to which
reference should be made by footnotes thereto, including in any event and
whether or not so classified: (a) all debt and similar monetary
obligations, whether direct or indirect (including, without limitation, all
obligations evidenced by bonds, debentures, notes or similar debt
instruments and subordinated indebtedness); (b) all liabilities secured by
any mortgage, pledge, security interest, lien, charge or other encumbrance
existing on property owned or acquired subject thereto, whether or not the
liability secured thereby shall have been assumed; and (c) all guarantees,
interest rate and currency swap obligations, endorsements and other
contingent obligations whether direct or indirect in respect of
indebtedness of others, including contingent obligations that in accordance
with generally accepted accounting principles are required to be footnoted
on the Borrower's consolidated balance sheets and any obligation to supply
funds to or in any manner to invest directly or indirectly in a Person, to
purchase indebtedness, or to assure the owner of indebtedness against loss
through an agreement to purchase goods, supplies or services for the
purpose of enabling the debtor to make payment of the indebtedness held by
such owner or otherwise, and the obligation to reimburse the issuer in
respect of any letter of credit; (d) any obligation as a lessee or an
obligor under a capitalized lease; and (e) the Borrower's or any of its
Subsidiaries' pro rata share of any of the above-described obligations of
its unconsolidated affiliates.
Indemnity Agreement. Collectively, the Indemnity Agreements Regarding
Hazardous Materials made by the Borrower and the Members in favor of the
Agent and the Banks, pursuant to which such parties agree to indemnify the
Agent and the Banks with respect to Hazardous Substances and Environmental
Laws, such Indemnity Agreement to be in form and substance satisfactory to
the Agent.
Initial Collateral Values. With respect to each initial Mortgaged
Property described on Schedule 1.3 hereto, the corresponding Designated
Collateral Value for such Mortgaged Property as shown on Schedule 1.3.
Interest Payment Date. (a) As to each Loan, the first day of each
January, April, July and October during the term of such Loan (with the
first Interest Payment Date pursuant to this clause (a) being April 1,
1998), and (b) also as to each Eurodollar Rate Loan, the last day of the
Interest Period relating thereto.
Interest Period. With respect to each Eurodollar Rate Loan (a)
initially, the period commencing on the Drawdown Date of such Loan and
ending one, two or three months thereafter, and (b) thereafter, each period
commencing on the day following the last day of the next preceding Interest
Period applicable to such Loan and ending on the last day of one of the
periods set forth above, as selected by the Borrower in a Conversion
Request; provided that all of the foregoing provisions relating to Interest
Periods are subject to the following:
(A) if any Interest Period with respect to a Eurodollar Rate
Loan would otherwise end on a day that is not a Eurodollar Business
Day, that Interest Period shall end and the next Interest Period shall
commence on the next preceding or succeeding Eurodollar Business Day
as determined conclusively by the Reference Bank in accordance with
the then current bank practice in the applicable Eurodollar interbank
market;
(B) if the Borrower shall fail to give notice as provided in
Section 4.1, the Borrower shall be deemed to have requested a
conversion of the affected Eurodollar Rate Loan to a Base Rate Loan on
the last day of the then current Interest Period with respect thereto;
and
(C) no Interest Period relating to any Eurodollar Rate Loan
shall extend beyond the Maturity Date.
Investment Partnerships. Investments in joint ventures, general
partnerships, limited partnerships, limited liability companies or any
other business association formed for the purpose of acquiring fee
interests in income-producing commercial office properties, provided that
Borrower shall have sufficient Voting Interests or other rights to veto or
block any major actions to be taken by any other Person owning an interest
in such Investment Partnership. A wholly-owned Subsidiary of the Borrower
and the Property Owner shall not be an Investment Partnership.
Investments. With respect to any Person, all shares of capital stock,
evidences of Indebtedness and other securities issued by any other Person,
all loans, advances, or extensions of credit to, or contributions to the
capital of, any other Person, all purchases of the securities or business
or integral part of the business of any other Person and commitments and
options to make such purchases, all interests in real property, and all
other investments; provided, however, that the term "Investment" shall not
include (i) equipment, inventory and other tangible personal property
acquired in the ordinary course of business, or (ii) current trade and
customer accounts receivable for services rendered in the ordinary course
of business and payable in accordance with customary trade terms. In
determining the aggregate amount of Investments outstanding at any
particular time: (a) there shall be included as an Investment all interest
accrued with respect to Indebtedness constituting an Investment unless and
until such interest is paid; (b) there shall be deducted in respect of each
such Investment any amount received as a return of capital (but only by
repurchase, redemption, retirement, repayment, liquidating dividend or
liquidating distribution); (c) there shall not be deducted in respect of
any Investment any amounts received as earnings on such Investment, whether
as dividends, interest or otherwise, except that accrued interest included
as provided in the foregoing clause (a) may be deducted when paid; and
(d) there shall not be deducted from the aggregate amount of Investments
any decrease in the value thereof.
Leases. Leases, licenses and agreements whether written or oral,
relating to the use or occupation of space in or on the Building or on the
Real Estate.
Liens. See Section 8.2.
Loan Documents. This Agreement, the Notes, the Security Documents,
the Guaranty, and all other documents, instruments or agreements executed
or delivered by or on behalf of the Borrower or the Guarantor evidencing or
securing the Loans.
Loan Request. See Section 2.6.
Loans. The aggregate Loans to be made by the Banks hereunder.
Majority Banks. As of any date, the Bank or Banks whose aggregate
Commitment Percentage is equal to or greater than sixty-six and two-thirds
percent (66.67%).
Management Agreements. Agreements, whether written or oral, providing
for the management of the Mortgaged Property or any of them.
Maturity Date. December 15, 2000, as the same may be extended as
provided in Section 2.8, or such earlier date on which the Loans shall
become due and payable pursuant to the terms hereof.
Members. Wellsford Commercial and WHWEL.
Mezzanine Property. The Real Estate owned by the Property Owner, to
be more particularly described in the Assignment of Interests.
Mortgaged Property. Collectively, the Eligible Real Estate which is
conveyed to and accepted by the Agent as security for the Obligations
pursuant to the Security Deeds.
Multiemployer Plan. Any multiemployer plan within the meaning of
Section 3(37) of ERISA maintained or contributed to by the Borrower or any
ERISA Affiliate.
Negative Carry. See Section 5.5.
Net Income (or Deficit). With respect to any Person (or any asset of
any Person) for any fiscal period, the net income (or deficit) of such
Person (or attributable to such asset), after deduction of all expenses,
taxes and other proper charges, determined in accordance with generally
accepted accounting principles.
Net Operating Income. With respect to the Borrower and its
Subsidiaries for any period, an amount equal to the sum of (a) the Net
Income of such Persons (attributable to the collateral for the Term Loan)
for such period plus (b) depreciation, amortization and interest deducted
in calculating such Net Income plus (c) any extraordinary or non-recurring
losses deducted in calculating such Net Income plus/minus (d) Rent
Adjustments with respect to Leases for such collateral for the Term Loan
minus (e) any income included in calculating such Net Income from the
collateral for the Term Loan from tenants which are 60 or more days
delinquent in the payment of any rent minus (f) any extraordinary or non-
recurring gains included in calculating such Net Income. Net Operating
Income shall be determined in a manner consistent with the manner in which
it has previously been calculated and provided to the Banks.
Non-Recourse Indebtedness. Indebtedness of the Borrower or a
Subsidiary which is secured by one or more parcels of Real Estate and
related personal property or interests therein and is not a general
obligation of the Borrower or any Subsidiary, the holder of such
Indebtedness having recourse solely to the parcels of Real Estate securing
such Indebtedness, the improvements and leases thereon and the rents and
profits thereof securing such Indebtedness, subject to such exceptions for
fraud, misapplication of rents, environmental issues and other customary
matters as Agent may reasonably approve.
Non-Stabilized Property. Any Real Estate owned by the Borrower or its
Subsidiaries which is not a Stabilized Property.
Notes. See Section 2.4.
Notice. See Section 19.
Obligations. All indebtedness, obligations and liabilities of the
Borrower to any of the Banks and the Agent, individually or collectively,
under this Agreement or any of the other Loan Documents or in respect of
any of the Loans or the Notes, or other instruments at any time evidencing
any of the foregoing, whether existing on the date of this Agreement or
arising or incurred hereafter, direct or indirect, joint or several,
absolute or contingent, matured or unmatured, liquidated or unliquidated,
secured or unsecured, arising by contract, operation of law or otherwise.
Operating Cash Flow. With respect to any Person (or any asset of any
Person) for any period, an amount equal to the sum of (a) the Net Income of
such Person (or attributable to such asset) for such period plus (b)
depreciation and amortization, interest expense, and any extraordinary or
non-recurring losses deducted in calculating such Net Income minus (c) any
extraordinary or nonrecurring gains included in calculating such Net Income
plus/minus (d) Rent Adjustments minus (e) any income included in
calculating such Net Income from tenants which are 60 or more days
delinquent in the payment of any rent.
Outstanding. With respect to the Loans, the aggregate unpaid
principal thereof as of any date of determination.
PBGC. The Pension Benefit Guaranty Corporation created by Section
4002 of ERISA and any successor entity or entities having similar
responsibilities.
Permitted Liens. Liens, security interests and other encumbrances
permitted by Section 8.2.
Person. Any individual, corporation, partnership, limited liability
company, trust, unincorporated association, business, or other legal
entity, and any government or any governmental agency or political
subdivision thereof.
Plan Assets. Assets of any employee benefit plan subject to Part 4,
Subtitle A, Title I of ERISA.
Pledge Agreement. Each agreement from time to time in effect in form
and substance satisfactory to the Agent pursuant to which the Borrower or
the Guarantor may pledge cash, Short-term Investments or other property
referred to in clause (v) of Section 5.1 as part of the Collateral
securing the Obligations.
Potential Collateral. Any property of the Borrower which is not at
the time included in the Collateral and which consists of (i) Eligible Real
Estate which is a Stabilized Property, (ii) Real Estate which is a Non-
Stabilized Property which is capable of becoming Eligible Real Estate
through the approval of all of the Banks and the completion and delivery of
Eligible Real Estate Qualification Documents, (iii) cash, (iv) Short-term
Investments and (v) other property referred to in clause (v) of Section
5.1.
Property Owner. Wells Avenue Senior Holdings LLC.
Real Estate. All real property at any time owned or leased (as lessee
or sublessee) by the Borrower or any of its Subsidiaries.
REIT Status. With respect to Wellsford Commercial, its status as a
real estate investment trust as defined in Section 856(a) of the Code.
Record. The record, including computer records, maintained by the
Agent with respect to any Loan referred to in the Notes.
Reference Bank. BKB.
Register. See Section 18.2.
Release. See Section 6.20(c)(iii).
Rent Adjustments. For any Person, straight line adjustments to rent
payable under Leases, as determined in accordance with generally accepted
accounting principles.
Rent Roll. A report prepared by the Borrower showing for each tenant
its occupancy status, lease expiration date, market rent, lease rent and
other information in such form as may have been approved by the Agent, such
approval not to be unreasonably withheld.
Reportable Event. Any of the events set forth in Section 4043(b) of
ERISA or the regulations thereunder.
SEC. The federal Securities and Exchange Commission.
Security Deeds. The Mortgages, Deeds to Secure Debt and Deeds of
Trust from the Borrower to the Agent for the benefit of the Banks (or to
trustees named therein acting on behalf of the Agent for the benefit of the
Banks) pursuant to which the Borrower has conveyed a Mortgaged Property as
security for the Obligations.
Security Documents. Collectively, the Security Deeds, the Assignments
of Rents and Leases, the Indemnity Agreement, the Guaranty, the Assignment
of Interests, any further collateral assignments to the Agent for the
benefit of the Banks, and each Pledge Agreement, including, without
limitation, U.C.C.-1 financing statements executed and delivered in
connection therewith.
Shareholders' Equity. At any date, the total consolidated
shareholders' equity of the Borrower and its Subsidiaries determined in
accordance with generally accepted accounting principles.
Short-term Investments. Investments described in subsections (a)
through (g), inclusive, of Section 8.3. For all purposes of this
Agreement and the other Loan Documents, the value of Short-term Investments
at any time shall be the current market value thereof determined in a
manner reasonably satisfactory to the Agent.
Stabilized Property. Each parcel of Eligible Real Estate (a) which is
fully operational; (b) which is eighty percent (80%) leased and occupied
pursuant to bona-fide arm's length leases to third parties unaffiliated
with Borrower, any Guarantor or any of the Subsidiaries of Borrower; (c) no
more than thirty-five percent (35%) of the Leases (based on the ratio of
the rentable square footage of such Real Estate that is occupied under such
Leases to the total rentable square footage of such Real Estate) for such
Real Estate are scheduled to expire (without regard to any extension
options not exercised) within two (2) years of the acceptance of such Real
Estate as a Mortgaged Property or as collateral for the Term Loan,
whichever occurs first; (d) less than all of the Leases for such Real
Estate are scheduled to expire (without regard to any extension options not
exercised) within five (5) years of the date of the acceptance of such Real
Estate as a Mortgaged Property or as collateral for the Term Loan,
whichever occurs first; and (e) such Real Estate shall have a projected
annual return to Borrower of not less than 9% on acquisition cost based
upon cash flows in place as of the date of determination.
State. A state of the United States of America.
Subordination, Attornment and Non-Disturbance Agreement. An agreement
among the Agent, the Borrower and a tenant under a Lease pursuant to which
such tenant agrees to subordinate its rights under the Lease to the lien of
the Security Deed and agrees to recognize the Agent or its successor in
interest as landlord under the Lease in the event of a foreclosure under
the Security Deed, such agreement to be in form and substance satisfactory
to the Agent.
Subsidiary. Any corporation, association, partnership, limited
liability company, trust, or other business or other legal entity of which
the designated parent shall at any time own directly or indirectly through
a Subsidiary or Subsidiaries at least a majority (by number of votes or
controlling interests) of the outstanding Voting Interests.
Survey. An instrument survey of Mortgaged Property prepared by a
registered land surveyor which shall show the location of all buildings,
structures, easements and utility lines on such property, shall be
sufficient to remove the standard survey exception from the Title Policy,
shall show that all buildings and structures are within the lot lines of
the Mortgaged Property and shall not show any encroachments by others (or
to the extent any encroachments are shown, such encroachments shall be
acceptable to the Agent in its sole discretion), shall show rights of way,
adjoining sites, establish building lines and street lines, the distance
to, and names of the nearest intersecting streets and such other details as
the Agent may reasonably require; shall show the zoning district or
districts in which the Mortgaged Property is located and shall show whether
or not the Mortgaged Property is located in a flood hazard district as
established by the Federal Emergency Management Agency or any successor
agency or is located in any flood plain, flood hazard or wetland protection
district established under federal, state or local law and shall otherwise
be in form and substance reasonably satisfactory to the Agent.
Surveyor Certification. With respect to each parcel of Mortgaged
Property, a certificate executed by the surveyor who prepared the Survey
with respect thereto, dated as of a recent date and containing such
information relating to such parcel as the Majority Banks or the Title
Insurance Company may reasonably require, such certificate to be reasonably
satisfactory to the Agent in form and substance.
Term Loan Agreement. That certain Term Loan Agreement among Term Loan
Borrower, BankBoston, Goldman, the other lending institutions that are or
become parties thereto and BankBoston, N.A. in its capacity as agent for
itself and the other lending institutions that are or become parties
thereto, dated of even date as this Agreement, as the same may be amended,
modified or restated.
Term Loan Banks. The "Banks" from time to time under the Term Loan
Agreement.
Term Loan Borrower. WEL/WH 1275 K Street, L.L.C., a Delaware limited
liability company.
Term Loans. All loans and other indebtedness or liabilities arising
under the Term Loan Agreement and all other loan documents related thereto.
Test Period. See Section 9.2.
Title Insurance Company. Commonwealth Land Title Insurance Company or
another title insurance company or companies reasonably approved by the
Agent.
Title Policy. With respect to each parcel of Mortgaged Property, an
ALTA standard form title insurance policy (or, if such form is not
available, an equivalent form of or legally promulgated form of mortgagee
title insurance policy reasonably acceptable to the Agent) issued by a
Title Insurance Company (with such reinsurance or co-insurance as the Agent
may require, any such reinsurance to be with direct access endorsements to
the extent available under applicable law) in such amount as the Agent may
require insuring the priority of the Security Deeds and that the Borrower
holds marketable fee simple title (or good and indefeasible fee simple
title to any Real Estate in the State of Texas) to such parcel, subject
only to the encumbrances permitted by the Security Deed and which shall not
contain standard exceptions for mechanics liens, persons in occupancy
(other than tenants as tenants only under Leases) or matters which would be
shown by a survey, shall not insure over any matter except to the extent
that any such affirmative insurance is acceptable to the Agent in its sole
discretion, and shall contain (a) a revolving credit endorsement and (b)
such other endorsements and affirmative insurance as the Agent reasonably
may require and is available in the State in which the Real Estate is
located, including but not limited to (i) a comprehensive endorsement, (ii)
a variable rate of interest endorsement, (iii) a usury endorsement, (iv) a
doing business endorsement, (v) in States where available, an ALTA form 3.1
zoning endorsement, (vi) a "tie-in" endorsement and (vii) a "first loss"
endorsement.
Total Commitment. The sum of the Commitments of the Banks, as in
effect from time to time.
Type. As to any Loan, its nature as a Base Rate Loan or a Eurodollar
Rate Loan.
Under Development. Any Real Estate shall be considered under
development until such time as (a) a certificate of occupancy has been
obtained, (b) seventy-five percent (75%) of the net leasable area is leased
and occupied, and (c) the gross revenue from the operation of such Real
Estate shall have been not less than the operating costs (including amounts
properly allocable to such period for expenses which are not payable on a
regular basis during such period, such as taxes and insurance) for three
(3) consecutive months.
Voting Interests. Stock or similar ownership interests, of any class
or classes (however designated), the holders of which are at the time
entitled, as such holders, (a) to vote for the election of a majority of
the directors (or persons performing similar functions) of the corporation,
association, partnership, trust or other business entity involved, or (b)
to control, manage, or conduct the business of the corporation,
partnership, association, trust or other business entity involved.
Wellsford Commercial. Wellsford Commercial Property Trust, a Maryland
real estate investment trust.
Wellsford Real Properties. Wellsford Real Properties, Inc., a
Maryland corporation.
WHWEL. WHWEL Real Estate Limited Partnership, a Delaware limited
partnership.
Section 10.2. Rules of Interpretation.
(a) A reference to any document or agreement shall include such
document or agreement as amended, modified or supplemented from time to
time in accordance with its terms and the terms of this Agreement.
(b) The singular includes the plural and the plural includes the
singular.
(c) A reference to any law includes any amendment or
modification to such law.
(d) A reference to any Person includes its permitted successors
and permitted assigns.
(e) Accounting terms not otherwise defined herein have the
meanings assigned to them by generally accepted accounting principles
applied on a consistent basis by the accounting entity to which they refer.
(f) The words "include", "includes" and "including" are not
limiting.
(g) The words "approval" and "approved", as the context so
determines, means an approval in writing given to the party seeking
approval after full and fair disclosure to the party giving approval of all
material facts necessary in order to determine whether approval should be
granted.
(h) All terms not specifically defined herein or by generally
accepted accounting principles, which terms are defined in the Uniform
Commercial Code as in effect in the State of New York, have the meanings
assigned to them therein.
(i) Reference to a particular "Section ", refers to that
section of this Agreement unless otherwise indicated.
(j) The words "herein", "hereof", "hereunder" and words of like
import shall refer to this Agreement as a whole and not to any particular
section or subdivision of this Agreement.
Section 11. THE REVOLVING CREDIT FACILITY.
Section 11.1. Commitment to Lend. Subject to the terms and
conditions set forth in this Agreement, each of the Banks severally agrees
to lend to the Borrower, and the Borrower may borrow (and repay and
reborrow) from time to time between the Closing Date and the Maturity Date
upon notice by the Borrower to the Agent given in accordance with Section
2.6, such sums as are requested by the Borrower for the purposes set forth
in Section 7.11 up to the lesser of (a) a maximum aggregate principal
amount outstanding (after giving effect to all amounts requested) at any
one time equal to such Bank's Commitment and (b) such Bank's Commitment
Percentage of the difference of (i) the aggregate Designated Collateral
Value minus (ii) an amount equal to the aggregate Holdback; provided, that,
in all events no Default or Event of Default shall have occurred and be
continuing; and provided, further, that the outstanding principal amount of
the Loans (after giving effect to all amounts requested) shall not at any
time exceed the Total Commitment. The Loans shall be made pro rata in
accordance with each Bank's Commitment Percentage. The Loan Request shall
constitute a representation and warranty by the Borrower that all of the
conditions set forth in Section 10 and Section 11, in the case of the
initial Loan, and Section 11, in the case of all other Loans, have been
satisfied on the date of such funding.
Section 11.2. Facility Fee. The Borrower agrees to pay to the Agent
for the accounts of the Banks in accordance with their respective
Commitment Percentages a facility fee calculated at the rate of one-fourth
of one percent (1/4%) per annum on the average daily amount by which the
Total Commitment exceeds the outstanding principal amount of Loans during
each calendar quarter or portion thereof commencing on the date hereof and
ending on the Maturity Date. The facility fee shall be payable quarterly
in arrears on the first day of each calendar quarter for the immediately
preceding calendar quarter or portion thereof, or on any earlier date on
which the Commitments shall be reduced or shall terminate as provided in
Section 2.3, with a final payment on the Maturity Date.
Section 11.3. Reduction of Commitment. The Borrower shall have the
right at any time and from time to time upon five Business Days' prior
written notice to the Agent to reduce by $1,000,000 or an integral multiple
of $1,000,000 in excess thereof or to terminate entirely the unborrowed
portion of the Commitments, whereupon the Commitments of the Banks shall be
reduced pro rata in accordance with their respective Commitment Percentages
of the amount specified in such notice or, as the case may be, terminated,
any such reduction to be without penalty (unless such reduction requires
repayment of a Eurodollar Rate Loan). Promptly after receiving any notice
of the Borrower delivered pursuant to this Section 2.3, the Agent will
notify the Banks of the substance thereof. Upon the effective date of any
such reduction or termination, the Borrower shall pay to the Agent for the
respective accounts of the Banks the full amount of any facility fee under
Section 2.2 then accrued on the amount of the reduction. No reduction or
termination of the Commitments may be reinstated. Notwithstanding the
foregoing, in no event shall the aggregate Commitments be reduced to less
than $50,000,000.00.
Section 11.4. Notes. The Loans shall be evidenced by a single
promissory note of the Borrower to each Bank in substantially the form of
Exhibit A hereto (collectively, the "Notes"), dated as of the Closing Date
and completed with appropriate insertions. One Note shall be payable to
the order of each Bank in the principal amount equal to such Bank's
Commitment or, if less, the outstanding amount of all Loans made by such
Bank, plus interest accrued thereon, as set forth below. The Borrower
irrevocably authorizes the Agent to make or cause to be made, at or about
the time of the Drawdown Date of any Loan or at the time of receipt of any
payment of principal thereof, an appropriate notation on the Agent's Record
reflecting the making of such Loan or (as the case may be) the receipt of
such payment. The outstanding amount of the Loans set forth on the Agent's
Record shall be prima facie evidence of the principal amount thereof owing
and unpaid to each Bank, but the failure to record, or any error in so
recording, any such amount on the Agent's Record shall not limit or
otherwise affect the obligations of the Borrower hereunder or under any
Note to make payments of principal of or interest on any Note when due.
Section 11.5. Interest on Loans.
SFO Each Base Rate Loan shall bear interest for the period
commencing with the Drawdown Date thereof and ending on the date on which
such Base Rate Loan is converted to a Eurodollar Rate Loan at a rate per
annum equal to the Base Rate.
(b) Each Eurodollar Rate Loan shall bear interest for the period
commencing with the Drawdown Date thereof and ending on the last day of the
Interest Period with respect thereto at a rate per annum equal to the sum
of the Eurodollar Rate determined for such Interest Period plus two and
one-half percent (2.5%).
(c) The Borrower promises to pay interest on each Loan in
arrears on each Interest Payment Date with respect thereto.
(d) Base Rate Loans and Eurodollar Rate Loans may be converted
to Loans of the other Type as provided in Section 4.1.
Section 11.6. Requests for Loans. Except with respect to the
initial Loan, the Borrower shall give to the Agent written notice in the
form of Exhibit B hereto (or telephonic notice confirmed in writing in the
form of Exhibit B hereto) of each Loan requested hereunder (a "Loan
Request") no less than five (5) Business Days prior to the proposed
Drawdown Date. The Borrower shall not make a Loan Request more frequently
than two times each month. Each such notice shall specify with respect to
the requested Loan the proposed principal amount, Drawdown Date, Interest
Period (if applicable) and Type. Each such notice shall also contain (i) a
statement as to the purpose for which such advance shall be used (which
purpose shall be in accordance with the terms of Section 7.11), (ii) in
the case of any advance relating to any Capital Improvement Project for a
Mortgaged Property or Mezzanine Property, a certification from the Borrower
that all materialmen, laborers, subcontractors and any other parties who
might or could claim statutory or common law liens and are furnishing or
have furnished material or labor to the Mortgaged Property or Mezzanine
Property, as applicable, have been paid (or will be paid from the proceeds
of the requested advance) all amounts due for such labor and materials, and
if requested by the Agent, delivery to the Agent of affidavits, lien
waivers or other evidence reasonably satisfactory to the Agent evidencing
the same, and (iii) a certification by the chief financial or chief
accounting officer of the Borrower that the Borrower and the Guarantor are
and will be in compliance with all covenants under the Loan Documents after
giving effect to the making of such Loan. Promptly upon receipt of any
such notice, the Agent shall notify each of the Banks thereof. Except as
provided in this Section 2.6, each such Loan Request shall be irrevocable
and binding on the Borrower and shall obligate the Borrower to accept the
Loan requested from the Banks on the proposed Drawdown Date, provided that,
in addition to the Borrower's other remedies against any Bank which fails
to advance its proportionate share of a requested Loan, such Loan Request
may be revoked by the Borrower by notice received by the Agent no later
than the Drawdown Date if any Bank fails to advance its proportionate share
of the requested Loan in accordance with the terms of this Agreement,
provided further that the Borrower shall be liable in accordance with the
terms of this Agreement (including, without limitation, amounts due
pursuant to Section 4.8) to any Bank which is prepared to advance its
proportionate share of the requested Loan for any costs, expenses or
damages incurred by such Bank as a result of the Borrower's election to
revoke such Loan Request. Nothing herein shall prevent the Borrower or the
funding Banks from seeking recourse against any Bank that fails to advance
its proportionate share of a requested Loan (but not any other Bank) as
required by this Agreement for the actual and consequential damages
incurred by the Borrower (including, without limitation, amounts required
to be paid under this Agreement by the Borrower to any Bank) and such
funding Banks proximately caused by such Bank that has failed to advance
its proportionate share, provided that in no event shall such Bank be
liable for punitive or exemplary damages. The Borrower may without cost or
penalty revoke a Loan Request by delivering notice thereof to each of the
Banks no later than three (3) Business Days prior to the Drawdown Date.
Each Loan Request shall be (a) for a Base Rate Loan in a minimum aggregate
amount of $1,000,000 or an integral multiple of $100,000 in excess thereof,
or (b) for a Eurodollar Rate Loan in a minimum aggregate amount of
$2,000,000 or an integral multiple of $100,000 in excess thereof; provided,
however, that there shall be no more than five (5) Eurodollar Rate Loans
outstanding at any one time. In the event that the proceeds from such Loan
are to be used for a purpose other than a Capital Improvement Project, then
the Borrower shall provide to the Agent as soon as practicable thereafter
such evidence as the Agent shall reasonably require to evidence that such
funds have been used for such purpose (which evidence may include, without
limitation, a closing statement).
Section 11.7. Funds for Loans.
(a) Not later than 11:00 a.m. (Boston time) on the proposed
Drawdown Date of any Loans, each of the Banks will make available to the
Agent, at the Agent's Head Office, in immediately available funds, the
amount of such Bank's Commitment Percentage of the amount of the requested
Loans which may be disbursed pursuant to Section 2.1. Upon receipt from
each Bank of such amount, and upon receipt of the documents required by
Section 10 and Section 11 and the satisfaction of the other conditions
set forth therein, to the extent applicable, the Agent will make available
to the Borrower the aggregate amount of such Loans made available to the
Agent by the Banks by crediting such amount to the account of the Borrower
maintained at the Agent's Head Office. The failure or refusal of any Bank
to make available to the Agent at the aforesaid time and place on any
Drawdown Date the amount of its Commitment Percentage of the requested
Loans shall not relieve any other Bank from its several obligation
hereunder to make available to the Agent the amount of such other Bank's
Commitment Percentage of any requested Loans, including any additional
Loans that may be requested subject to the terms and conditions hereof to
provide funds to replace those not advanced by the Bank so failing or
refusing, provided that the Borrower may by notice received by the Agent no
later than the Drawdown Date refuse to accept any Loan which is not fully
funded in accordance with the Borrower's Loan Request subject to the terms
of Section 2.6. In the event of any such failure or refusal, the Banks
not so failing or refusing shall be entitled to a priority secured position
as against the Bank or Banks so failing or refusing for such Loans as
provided in Section 12.4.
(b) Unless Agent shall have been notified by any Bank prior to
the applicable Drawdown Date that such Bank will not make available to
Agent such Bank's pro rata share of a proposed Loan, Agent may in its
discretion assume that such Bank has made such Loan available to Agent in
accordance with the provisions of this Agreement and Agent may, if it
chooses, in reliance upon such assumption make such Loan available to
Borrower, and such Bank shall be liable to the Agent for the amount of such
advance.
Section 11.8. Extension of Maturity Date.
(a) Provided that no Default or Event of Default shall have
occurred and be continuing, the Borrower shall have the option, to be
exercised by giving written notice to the Agent in the form of Exhibit D
hereto at least 90 days prior to the Maturity Date, subject to the terms
and conditions set forth in this Agreement, to extend the Maturity Date by
one (1) year. The request by the Borrower for extension of the Maturity
Date shall constitute a representation and warranty by the Borrower that
all of the conditions set forth in this Section shall have been satisfied
on the date of such request or shall be satisfied prior to the then
existing Maturity Date.
(b) The obligations of the Agent and the Banks to extend the
Maturity Date shall be subject to the satisfaction of the following
conditions precedent on or prior to the Maturity Date (without regard to
any extension):
(i) Payment of Extension Fee. The Borrower shall pay to
the Agent for the pro rata accounts of the Banks in accordance with
their respective Commitment Percentages an extension fee equal to one-
fourth of one percent (0.25%) of the Total Commitment, which fee
shall, when paid, be fully earned and non-refundable under any
circumstances.
(ii) No Default. On the date the Extension Request is given
and on the Maturity Date (as determined without regard to such
extension) there shall exist no Default or Event of Default.
(iii) Representations and Warranties. The representations
and warranties made by the Borrower or the Guarantors in the Loan
Documents or otherwise made by or on behalf of the Borrower, the
Guarantors, the Members or any of the their respective Subsidiaries in
connection therewith or after the date thereof shall have been true
and correct in all material respects when made and (other than
representations as to the Guarantors or Members) shall also be true
and correct in all material respects on the Maturity Date (as
determined without regard to such extension) other than for changes in
the ordinary course of business permitted by this Agreement that have
not had any materially adverse affect on the business of the Borrower,
the Guarantors or any of their respective Subsidiaries.
(iv) Covenant Compliance. On the Maturity Date (as
determined without regard to such extension request), the Borrower
would be in compliance with the covenants set forth in Section 9.1
and Section 9.2 at the levels set forth in such covenants as would be
applicable during the extension period.
(v) Appraisals. At the option of the Majority Banks, the
Agent shall have received at Borrower's expense Appraisals or updates
of prior Appraisals to determine the current Appraised Value and
Designated Collateral Value of the Mortgaged Property and the
Mezzanine Property, which Appraisals shall be ordered, reviewed and
approved as provided in Section 5.2(a). The aggregate outstanding
principal amount of the Loans shall be reduced to an amount such that
the aggregate outstanding principal amount of the Loans does not
exceed the Designated Collateral Value (as most recently determined
based upon the Appraisals obtained pursuant to this Section 2.8).
Section 12. REPAYMENT OF THE LOANS.
Section 12.1. Stated Maturity. The Borrower promises to pay on the
Maturity Date, and there shall become absolutely due and payable on the
Maturity Date, all of the Loans outstanding on such date, together with any
and all accrued and unpaid interest thereon.
Section 12.2. Intentionally omitted.
Section 12.3. Optional Prepayments. The Borrower shall have the
right, at the Borrower's election, to prepay the outstanding amount of the
Loans, as a whole or in part, at any time without penalty or premium;
provided, that the full or partial prepayment of the outstanding amount of
any Eurodollar Rate Loans pursuant to this Section 3.3 may be made only on
the last day of the Interest Period relating thereto except as otherwise
required pursuant to Section 4.7, unless payment is first made of any
amounts payable pursuant to Section 4.8. The Borrower shall give the
Agent, no later than 10:00 a.m., Boston time, at least three Business Days
prior written notice of any prepayment pursuant to this Section 3.3 of any
Base Rate Loans and at least four Eurodollar Business Days notice of any
proposed repayment pursuant to this Section 3.3 of Eurodollar Rate Loans,
in each case specifying the proposed date of payment of Loans and the
principal amount to be paid.
Section 12.4. Partial Prepayments. Each partial prepayment of the
Loans under Section 3.2(a) and Section 3.3 shall be in an integral
multiple of $100,000, shall be accompanied by the payment of accrued
interest on the principal prepaid to the date of payment and, after payment
of such interest, shall be applied, in the absence of instruction by the
Borrower, first to the principal of Base Rate Loans and then to the
principal of Eurodollar Rate Loans.
Section 12.5. Effect of Prepayments. Amounts of the Loans prepaid
under Section 3.2 and Section 3.3 prior to the Maturity Date may be
reborrowed as provided in Section 2.
Section 13. CERTAIN GENERAL PROVISIONS.
Section 13.1. Conversion Options.
(a) The Borrower may elect from time to time to convert any
outstanding Loan to a Loan of another Type and such Loan shall thereafter
bear interest as a Base Rate Loan or a Eurodollar Rate Loan, as applicable;
provided that (i) with respect to any such conversion of a Eurodollar Rate
Loan to a Base Rate Loan, the Borrower shall give the Agent at least three
Business Days' prior written notice of such election, and such conversion
shall only be made on the last day of the Interest Period with respect to
such Eurodollar Rate Loan; (ii) with respect to any such conversion of a
Base Rate Loan to a Eurodollar Rate Loan, the Borrower shall give the Agent
at least four Eurodollar Business Days' prior written notice of such
election and the Interest Period requested for such Loan, the principal
amount of the Loan so converted shall be in a minimum aggregate amount of
$2,000,000 or an integral multiple of $100,000 in excess thereof and, after
giving effect to the making of such Loan, there shall be no more than five
(5) Eurodollar Rate Loans outstanding at any one time; and (iii) no Loan
may be converted into a Eurodollar Rate Loan when any Default or Event of
Default has occurred and is continuing. All or any part of the outstanding
Loans of any Type may be converted as provided herein, provided that no
partial conversion shall result in a Base Rate Loan in an aggregate
principal amount of less than $1,000,000 or a Eurodollar Rate Loan in an
aggregate principal amount of less than $2,000,000 and that the aggregate
principal amount of each Loan shall be in an integral multiple of $100,000.
On the date on which such conversion is being made, each Bank shall take
such action as is necessary to transfer its Commitment Percentage of such
Loans to its Domestic Lending Office or its Eurodollar Lending Office, as
the case may be. Each Conversion Request relating to the conversion of a
Base Rate Loan to a Eurodollar Rate Loan shall be irrevocable by the
Borrower.
(b) Any Loan may be continued as such Type upon the expiration
of an Interest Period with respect thereto by compliance by the Borrower
with the terms of Section 4.1; provided that no Eurodollar Rate Loan may
be continued as such when any Default of the type described in subsections
(a), (b), (c) or (d) of Section 12.1 or Event of Default has occurred and
is continuing, but shall be automatically converted to a Base Rate Loan on
the last day of the Interest Period relating thereto ending during the
continuance of any Default or Event of Default.
(c) In the event that the Borrower does not notify the Agent of
its election hereunder with respect to any Loan, such Loan shall be
automatically converted to a Base Rate Loan at the end of the applicable
Interest Period.
Section 13.2. Closing Fee. The Borrower agrees to pay, on or before
the Closing Date, to the Agent for the ratable account of the Banks a
closing fee as specified in the Agreement Regarding Fees.
Section 13.3. Agent's Fee. The Borrower shall pay to the Agent, for
the Agent's own account, an Agent's fee as specified in the Agreement
Regarding Fees.
Section 13.4. Funds for Payments.
(a) All payments of principal, interest, facility fees, Agent's
fees, closing fees and any other amounts due hereunder or under any of the
other Loan Documents shall be made to the Agent, for the respective
accounts of the Banks and the Agent, as the case may be, at the Agent's
Head Office, not later than 12:00 noon (Boston time) on the day when due,
in each case in immediately available funds. The Agent is hereby
authorized to charge the account of the Borrower with BKB, on the dates
when the amount thereof shall become due and payable, with the amounts of
the principal of and interest on the Loans and all fees, charges, expenses
and other amounts owing to the Agent and/or the Banks under the Loan
Documents.
(b) All payments by the Borrower hereunder and under any of the
other Loan Documents shall be made without setoff or counterclaim and free
and clear of and without deduction for any taxes, levies, imposts, duties,
charges, fees, deductions, withholdings, compulsory loans, restrictions or
conditions of any nature now or hereafter imposed or levied by any
jurisdiction or any political subdivision thereof or taxing or other
authority therein unless the Borrower is compelled by law to make such
deduction or withholding. If any such obligation is imposed upon the
Borrower with respect to any amount payable by it hereunder or under any of
the other Loan Documents, the Borrower will pay to the Agent, for the
account of the Banks or (as the case may be) the Agent, on the date on
which such amount is due and payable hereunder or under such other Loan
Document, such additional amount in Dollars as shall be necessary to enable
the Banks or the Agent to receive the same net amount which the Banks or
the Agent would have received on such due date had no such obligation been
imposed upon the Borrower. The Borrower will deliver promptly to the Agent
certificates or other valid vouchers for all taxes or other charges
deducted from or paid with respect to payments made by the Borrower
hereunder or under such other Loan Document.
Section 13.5. Computations. All computations of interest on the
Loans and of other fees to the extent applicable shall be based on a
360-day year and paid for the actual number of days elapsed. Except as
otherwise provided in the definition of the term "Interest Period" with
respect to Eurodollar Rate Loans, whenever a payment hereunder or under any
of the other Loan Documents becomes due on a day that is not a Business
Day, the due date for such payment shall be extended to the next succeeding
Business Day, and interest shall accrue during such extension. The
outstanding amount of the Loans as reflected on the records of the Agent
from time to time shall be considered prima facie evidence of such amount.
Section 13.6. Inability to Determine Eurodollar Rate. In the event
that, prior to the commencement of any Interest Period relating to any
Eurodollar Rate Loan, the Agent shall determine that adequate and
reasonable methods do not exist for ascertaining the Eurodollar Rate for
such Interest Period, the Agent shall forthwith give notice of such
determination (which shall be conclusive and binding on the Borrower and
the Banks) to the Borrower and the Banks. In such event (a) any Loan
Request with respect to Eurodollar Rate Loans shall be automatically
withdrawn and shall be deemed a request for Base Rate Loans and (b) each
Eurodollar Rate Loan will automatically, on the last day of the then
current Interest Period thereof, become a Base Rate Loan, and the
obligations of the Banks to make Eurodollar Rate Loans shall be suspended
until the Agent determines that the circumstances giving rise to such
suspension no longer exist, whereupon the Agent shall so notify the
Borrower and the Banks.
Section 13.7. Illegality. Notwithstanding any other provisions
herein, if any present or future law, regulation, treaty or directive or
the interpretation or application thereof shall make it unlawful, or any
central bank or other governmental authority having jurisdiction over a
Bank or its Eurodollar Lending Office shall assert that it is unlawful, for
any Bank to make or maintain Eurodollar Rate Loans, such Bank shall
forthwith give notice of such circumstances to the Agent and the Borrower
and thereupon (a) the commitment of the Banks to make Eurodollar Rate Loans
or convert Loans of another type to Eurodollar Rate Loans shall forthwith
be suspended and (b) the Eurodollar Rate Loans then outstanding shall be
converted automatically to Base Rate Loans on the last day of each Interest
Period applicable to such Eurodollar Rate Loans or within such earlier
period as may be required by law.
Section 13.8. Additional Interest. If any Eurodollar Rate Loan or
any portion thereof is repaid or is converted to a Base Rate Loan for any
reason on a date which is prior to the last day of the Interest Period
applicable to such Eurodollar Rate Loan, the Borrower will pay to the Agent
upon demand for the account of the Banks in accordance with their
respective Commitment Percentages, in addition to any amounts of interest
otherwise payable hereunder, any amounts required to compensate the Banks
for any losses, costs or expenses which may reasonably be incurred as a
result of such payment or conversion, including, without limitation, an
amount equal to daily interest for the unexpired portion of such Interest
Period on the Eurodollar Rate Loan or portion thereof so repaid or
converted at a per annum rate equal to the excess, if any, of (a) the
interest rate calculated on the basis of the Eurodollar Rate applicable to
such Eurodollar Rate Loan minus (b) the yield obtainable by the Agent upon
the purchase of debt securities customarily issued by the Treasury of the
United States of America which have a maturity date most closely
approximating the last day of such Interest Period (it being understood
that the purchase of such securities shall not be required in order for
such amounts to be payable and that a Bank shall not be obligated or
required to have actually obtained funds at the Eurodollar Rate).
Section 13.9. Additional Costs, Etc. Notwithstanding anything
herein to the contrary, if any future applicable law or any amendment or
modification of present applicable law which expression, as used herein,
includes statutes, rules and regulations thereunder and legally binding
interpretations thereof by any competent court or by any governmental or
other regulatory body or official with appropriate jurisdiction charged
with the administration or the interpretation thereof and requests,
directives, instructions and notices at any time or from time to time
hereafter made upon or otherwise issued to any Bank or the Agent by any
central bank or other fiscal, monetary or other authority (whether or not
having the force of law), shall:
(a) subject any Bank or the Agent to any tax, levy, impost,
duty, charge, fee, deduction or withholding of any nature with respect to
this Agreement, the other Loan Documents, such Bank's Commitment or the
Loans (other than taxes based upon or measured by the income or profits of
such Bank or the Agent), or
(b) materially change the basis of taxation (except for changes
in taxes on income or profits) of payments to any Bank of the principal of
or the interest on any Loans or any other amounts payable to any Bank under
this Agreement or the other Loan Documents, or
(c) impose or increase or render applicable any special deposit,
reserve, assessment, liquidity, capital adequacy or other similar
requirements (whether or not having the force of law) against assets held
by, or deposits in or for the account of, or loans by, or commitments of an
office of any Bank beyond those in effect as of the date hereof, or
(d) impose on any Bank or the Agent any other conditions or
requirements with respect to this Agreement, the other Loan Documents, the
Loans, such Bank's Commitment, or any class of loans or commitments of
which any of the Loans or such Bank's Commitment forms a part; and the
result of any of the foregoing is
(i) to increase the cost to any Bank of making, funding,
issuing, renewing, extending or maintaining any of the Loans or such
Bank's Commitment, or
(ii) to reduce the amount of principal, interest or other
amount payable to such Bank or the Agent hereunder on account of such
Bank's Commitment or any of the Loans, or
(iii) to require such Bank or the Agent to make any
payment or to forego any interest or other sum payable hereunder, the
amount of which payment or foregone interest or other sum is
calculated by reference to the gross amount of any sum receivable or
deemed received by such Bank or the Agent from the Borrower hereunder,
then, and in each such case, the Borrower will, within fifteen (15) days of
demand made by such Bank or (as the case may be) the Agent at any time and
from time to time and as often as the occasion therefor may arise, pay to
such Bank or the Agent such additional amounts as such Bank or the Agent
shall determine in good faith to be sufficient to compensate such Bank or
the Agent for such additional cost, reduction, payment or foregone interest
or other sum. Each Bank and the Agent in determining such amounts may use
any reasonable averaging and attribution methods, generally applied by such
Bank or the Agent.
Section 13.10. Capital Adequacy. If after the date hereof any Bank
determines that (a) the adoption of or change in any law, rule, regulation
or guideline regarding capital requirements of general application for
banks or bank holding companies or any change in the interpretation or
application thereof by any governmental authority charged with the
administration thereof, or (b) compliance by such Bank or its parent bank
holding company with any future guideline, request or directive of any such
entity regarding capital adequacy or any amendment or change in
interpretation of any existing guideline, request or directive (whether or
not having the force of law), has the effect of reducing the return on such
Bank's or such holding company's capital as a consequence of such Bank's
commitment to make Loans hereunder to a level below that which such Bank or
holding company could have achieved but for such adoption, change or
compliance (taking into consideration such Bank's or such holding company's
then existing policies with respect to capital adequacy and assuming the
full utilization of such entity's capital) by any amount deemed by such
Bank to be material, then such Bank may notify the Borrower thereof. The
Borrower agrees to pay to such Bank the amount of such reduction in the
return on capital as and when such reduction is determined, upon
presentation by such Bank of a statement of the amount setting for the
Bank's calculation thereof. In determining such amount, such Bank may use
any reasonable averaging and attribution methods, generally applied by such
Bank or the Agent.
Section 13.11. Indemnity of Borrower. The Borrower agrees to
indemnify each Bank and to hold each Bank harmless from and against any
loss, cost or expense that such Bank may sustain or incur as a consequence
of (a) default by the Borrower in payment of the principal amount of or any
interest on any Eurodollar Rate Loans as and when due and payable,
including any such loss or expense arising from interest or fees payable by
such Bank to lenders of funds obtained by it in order to maintain its
Eurodollar Rate Loans, or (b) default by the Borrower in making a borrowing
or conversion after the Borrower has given (or is deemed to have given) a
Loan Request or a Conversion Request; provided, however, that the Borrower
shall not be required to so indemnify any Bank pursuant to clause (b) above
which fails or refuses to fund its proportionate share of a Loan in
accordance with the terms of this Agreement.
Section 13.12. Interest on Overdue Amounts; Late Charge. Overdue
principal and (to the extent permitted by applicable law) interest on the
Loans and all other overdue amounts payable hereunder or under any of the
other Loan Documents shall bear interest payable on demand at a rate per
annum equal to four percent (4.0%) above the Base Rate from the date due
until such amount shall be paid in full (after as well as before judgment).
In addition, the Borrower shall pay a late charge equal to three percent
(3.0%) of any amount of interest and/or principal payable on the Loans or
any other amounts payable hereunder or under the Loan Documents, which is
not paid within ten days of the date when due.
Section 13.13. Intentionally Omitted.
Section 13.14. Certificate. A certificate setting forth any amounts
payable pursuant to Section 4.8, Section 4.9, Section 4.10, Section
4.11 or Section 4.12 and a brief explanation of such amounts which are
due, submitted by any Bank or the Agent to the Borrower, shall be
conclusive in the absence of manifest error.
Section 13.15. Limitation on Interest. Notwithstanding anything in
this Agreement to the contrary, all agreements between the Borrower and the
Banks and the Agent, whether now existing or hereafter arising and whether
written or oral, are hereby limited so that in no contingency, whether by
reason of acceleration of the maturity of any of the Obligations or
otherwise, shall the interest contracted for, charged or received by the
Banks exceed the maximum amount permissible under applicable law. If, from
any circumstance whatsoever, interest would otherwise be payable to the
Banks in excess of the maximum lawful amount, the interest payable to the
Banks shall be reduced to the maximum amount permitted under applicable
law; and if from any circumstance the Banks shall ever receive anything of
value deemed interest by applicable law in excess of the maximum lawful
amount, an amount equal to any excessive interest shall be applied to the
reduction of the principal balance of the Obligations and to the payment of
interest or, if such excessive interest exceeds the unpaid balance of
principal of the Obligations, such excess shall be refunded to the
Borrower. All interest paid or agreed to be paid to the Banks shall, to
the extent permitted by applicable law, be amortized, prorated, allocated
and spread throughout the full period until payment in full of the
principal of the Obligations (including the period of any renewal or
extension thereof) so that the interest thereon for such full period shall
not exceed the maximum amount permitted by applicable law. This section
shall control all agreements between the Borrower and the Banks and the
Agent.
Section 13.16. Certain Provisions Relating to Increased Costs. If
any Bank requests compensation for any losses or costs to be reimbursed
pursuant to any one or more of the provisions of Section 4.9 or Section
4.10, then, upon request of Borrower, such Bank shall use reasonable
efforts in a manner consistent with such institution's practice in
connection with loans like the Loan to eliminate, mitigate or reduce
amounts that would otherwise be payable by Borrower under the foregoing
provisions, provided that such action would not be otherwise prejudicial to
such Bank, including, without limitation, by designating another of such
Bank's offices, branches or affiliates; the Borrower agreeing to pay all
reasonably incurred costs and expenses incurred by such Bank in connection
with any such action. Notwithstanding anything to the contrary contained
herein, if no Default or Event of Default shall have occurred and be
continuing, and if any Bank has requested payment or compensation for any
losses or costs to be reimbursed pursuant to any one or more of the
provisions of Section 4.9 or Section 4.10 (each, an "Affected Bank"),
then, within thirty (30) days after such request for payment or
compensation, Borrower shall have the one-time right as to such Affected
Bank, to be exercised by delivery of written notice delivered to the Agent
and the Affected Bank within thirty (30) days of receipt of such notice, to
elect to cause the Affected Bank to transfer its Commitment. The Agent
shall promptly notify the remaining Banks that each of such Banks shall
have the right, but not the obligation, to acquire a portion of the
Commitment, pro rata based upon their relevant Commitment Percentages, of
the Commitment of the Affected Bank (or if any of such Banks does not elect
to purchase its pro rata share, then to such remaining Banks in such
proportion as approved by the Agent). In the event that the Banks do not
elect to acquire all of the Affected Bank's Commitment, then the Agent
shall endeavor to obtain a new Bank to acquire such remaining Commitment.
Upon any such purchase of the Commitment of the Affected Bank, the Affected
Bank's interest in the Obligations and its rights hereunder and under the
Loan Documents shall terminate at the date of purchase, and the Affected
Bank shall promptly execute all documents reasonably requested to surrender
and transfer such interest. The purchase price for the Affected Bank's
Commitment shall equal any and all amounts outstanding and owed by Borrower
to the Affected Bank, including principal and all accrued and unpaid
interest or fees.
Section 14. COLLATERAL SECURITY.
Section 14.1. Collateral. The Obligations shall be secured by (i) a
perfected first priority lien or security title to be held by the Agent for
the benefit of the Banks in the Mortgaged Property pursuant to the terms of
the Security Deeds, (ii) a perfected first priority security interest to be
held by the Agent for the benefit of the Banks in the Leases pursuant to
the Assignments of Rents and Leases, (iii) the Indemnity Agreement, (iv) a
perfected first priority lien to be held by the Agent for the benefit of
the Banks in cash and Short-term Investments of the Borrower from time to
time pledged to the Agent pursuant to one or more Pledge Agreements and
(v) such additional collateral, if any (including without limitation the
Equity Interests), as the Agent for the benefit of the Banks from time to
time may accept as security for the Obligations with the consent of the
Majority Banks, whether pursuant to Section 5.4 or Section 5.7 hereof or
otherwise, which consent may be given or withheld in the sole discretion of
the Majority Banks. The Obligations shall also be guaranteed pursuant to
the Guaranty.
Section 14.2. Appraisals.
(a) The Agent on behalf of the Banks shall require biennial
Appraisals of each of the Mortgaged Property and the Mezzanine Property,
which will be ordered by the Agent and reviewed and approved by the
appraisal departments of the Majority Banks, in order to determine the
current Appraised Value of the Mortgaged Property and the Mezzanine
Property, and the Borrower shall pay to the Agent on demand all reasonable
costs of all such Appraisals; provided, however, that so long as no Default
or Event of Default shall have occurred and be continuing and regulatory
requirements of any Bank generally applicable to real estate loans of the
category made under this Agreement as reasonably interpreted by such Bank
shall not require more frequent Appraisals, the Borrower shall not be
required to pay for Appraisals more often than once in any 24-month period,
with the result that unless such condition shall occur the first Appraisals
for which the Borrower shall be financially responsible after the Closing
Date shall not be required prior to the second anniversary of the date of
this Agreement.
(b) Notwithstanding the provisions of Section 5.2(a), the Agent
may obtain Appraisals or perform internal studies updating and revising
prior Appraisals with respect to the Mortgaged Property and the Mezzanine
Property or such portion thereof as the Majority Banks shall determine, for
the purpose of determining the current Appraised Value of the Mortgaged
Property and the Mezzanine Property at any time following a partial
condemnation of or uninsured casualty to a Mortgaged Property or the
Mezzanine Property (provided that such Appraisal shall be limited to the
affected property). The expense of such Appraisals and updates performed
pursuant to this Section 5.2(b) shall be borne by the Borrower.
Section 14.3. Release of Collateral. Provided no Default or Event
of Default shall have occurred hereunder and be continuing (or would exist
immediately after giving effect to the transactions contemplated by this
Section 5.3 except as provided in this Section 5.3), the Agent shall
release a Mortgaged Property or other Collateral from the lien of the
Security Documents encumbering the same upon the request of the Borrower
and upon the following terms and conditions:
(a) The Borrower shall deliver to the Agent written notice of
its desire to obtain each such release no later than fifteen (15) days
prior to the date on which each such release is to be effected together
with evidence satisfactory to the Agent that such release is to facilitate
a sale of such Mortgaged Property or other Collateral to an unrelated third
party in a bona-fide arms-length transaction for a cash sales price
(provided that such transfer may be to Term Loan Borrower in connection
with a refinance pursuant to the Term Loan Agreement) or a bona-fide
refinance; and
(b) The Borrower shall submit to the Agent with such request a
Compliance Certificate prepared using the financial statements of the
Borrower most recently provided or required to be provided to the Agent
under Section 6.4 or Section 7.4 adjusted in the best good faith estimate
of the Borrower to give effect to the proposed release and demonstrating
that no Default or Event of Default with respect to the covenants referred
to therein shall exist after giving effect to such release; and
(c) The Borrower shall pay all reasonable costs and expenses of
the Agent in connection with such release, including without limitation,
reasonable attorney's fees; and
(d) The Borrower shall pay to the Agent for the account of the
Banks, which payment shall be applied to reduce the outstanding principal
balance of the Loans, a release price as follows: (i) if such Collateral
was a Stabilized Property at the time such property became Collateral and
such Collateral is being refinanced by proceeds of the Term Loan or such
property is refused as collateral for the Term Loan as described in Section
8.1(g), the release price shall equal one hundred percent (100%) of the
Designated Collateral Value of such Collateral; or (ii) in connection with
a release of such Collateral for any other reason (as a result of a sale or
refinance), the release price shall be equal to one hundred twenty percent
(120%) of the Designated Collateral Value of such Collateral. In the event
of a release pursuant to Section 5.3(d)(ii), the amount available to be
borrowed against the Collateral remaining after such release shall be
reduced by an amount equal to twenty percent (20%) of the Designated
Collateral Value of the Collateral so released without reducing the
Designated Collateral Value of such remaining collateral for the purposes
of calculating release prices. Notwithstanding the foregoing, the vacant
land located at the Mortgaged Property commonly known as Point View
described on Schedule 5.3 hereto shall be released upon the payment to the
Agent for the account of the Banks an amount (without premium) equal to the
amount allocated to such vacant land in the Appraisal of such Mortgaged
Property (as most recently determined pursuant to this Agreement) upon the
sale of such land to an unrelated third party, provided that the Borrower
shall submit to the Agent with the request for the release of such land
(A) a survey satisfactory to Agent showing such land that Borrower desires
to release from the Security Documents and such other evidence as Agent may
reasonably require to show the availability of unrestricted (whether by
private agreement or governmental provision) direct access to public roads
and utilities from all unreleased portions of such Mortgaged Property,
(B) a certification from Borrower that the conveyance by Borrower of such
land which is requested to be released will not violate the terms of any
lease, agreement, ordinance or restriction by which such Mortgaged Property
is subject, and (C) evidence of the proper subdivision of the property to
be released. Such payments shall be applied to reduce the outstanding
principal balance of the Loans; provided, that the Borrower shall not be
required to make a payment which would reduce the principal balance below
zero.
Section 14.4. Additional Collateral.
(a) The Borrower shall have the right subject to the terms
hereof to add to the Collateral any other Real Estate that is owned by the
Borrower and which is not security for any other Indebtedness. Such
addition shall be completed by the execution and delivery to the Agent of
each of the Eligible Real Estate Qualification Documents. Notwithstanding
the foregoing, the addition of such Collateral shall not increase the
Designated Collateral Value or the amounts available to be borrowed by the
Borrower unless each of the following conditions shall be satisfied:
(i) if such proposed collateral is Real Estate, such Real
Estate shall be Eligible Real Estate;
(ii) no Default or Event of Default has occurred or would
occur if such asset were included within the Collateral;
(iii) the Borrower shall have executed and delivered to
the Agent all Eligible Real Estate Qualification Documents or other
instruments, documents, or agreements, including Uniform Commercial
Code financing statements, as the Agent shall deem necessary or
desirable to perfect a first priority security interest in, or lien
on, such Collateral, all of which instruments, documents or agreements
shall be in form and substance satisfactory to the Agent in its sole
discretion; and
(iv) the Agent, on behalf of the Banks, shall have received
any other appraisals, surveys, rent rolls, environmental reports,
title insurance reports, certificates, opinions or other information
or documentation with respect to the Collateral as the Agent, in its
sole discretion, shall deem necessary or desirable.
The Borrower acknowledges that the decision of all of the Banks to
grant or withhold their consent to the acceptance of additional Collateral
under this Section 5.4 shall be based entirely on such factors as the
Majority Banks deem relevant in their sole discretion, including, without
limitation, those enumerated in clauses (i) through (iv) hereinabove, and
such consent may be granted or withheld solely at the discretion of the
Majority Banks; provided, however, that if the such Real Estate is a
Stabilized Property, acceptance of such Real Estate shall be subject only
to the satisfaction of the terms of Section 5.4(a)(ii), (iii) and (iv).
(b) In connection with each such addition, the Borrower shall
pay to the Agent the reasonable out-of-pocket costs and expenses (including
reasonable attorney's fees and expenses) of the Agent in connection with
the addition of such Collateral.
(c) In the event that the Borrower requests an advance as a
result of the addition of Real Estate which is eligible to cause an
increase in the Designated Collateral Values but the Appraisal for such
Real Estate has not yet been received and approved pursuant to this
Agreement, then notwithstanding the definition of the term "Designated
Collateral Value", the Designated Collateral Value for such Real Estate
shall equal seventy-five percent (75%) of the all-in acquisition cost
(including reasonable closing costs) of such Real Estate until such time as
the Appraised Value for such Real Estate is determined as provided herein,
at which time the Designated Collateral Value for such Real Estate shall be
determined as provided in the definition of such term.
(d) In no event shall the acquisition cost of any Mortgaged
Property exceed $40,000,000.00.
Section 14.5. Holdback. The Banks have required that Borrower
reserve from the amounts available to be borrowed under this Agreement an
amount necessary to cover (a) the corporate general and administrative
costs of the Borrower, and (b) operating expenses for each Non-Stabilized
Property for which net operating income from such property is insufficient
to cover (such amount pursuant to clause (b) is hereinafter referred to as
the "Negative Carry") as reasonably determined by the Borrower subject to
the approval of the Agent in an amount to cover all such costs for a period
of eighteen (18) months; provided that in the event that as of any date of
determination such amount shall not have been determined as so provided,
then such amount shall be as reasonably determined by Agent (such amount is
hereafter referred to as the "Holdback"). Amounts reserved under the
Holdback shall not bear interest until disbursed. The Borrower may request
a disbursement of amounts reserved pursuant to the Holdback to pay such
costs as such costs are incurred, but at no time shall the amount of the
Holdback be less than an amount sufficient to cover such cost and expenses
for period of six (6) months, and the Borrower shall take such actions as
are necessary (including the prepayment of the Loan to reinstate the
Holdback to such minimum level if it should ever fall below such level).
At such time as a Non-Stabilized Property shall become a Stabilized
Property, the Holdback for such Non-Stabilized Property shall be
eliminated. As of the date of this Agreement, the Holdback is
$6,600,000.00. The Holdback shall be determined by the Agent for each
additional Mortgaged Property that is included as Collateral which is a
Non-Stabilized Property at the time such property is added to the
Collateral. At such time as the Borrower is able to comply with the
covenants set forth in Section 9.1 and 9.2 assuming that general and
administrative costs of the Borrower and the uncapitalized Negative Carry
are added back (with respect to the calculation in Section 9.2) and that
the Holdback has been fully disbursed, the Holdback shall no longer be
required.
Section 14.6. [Intentionally omitted. ]
Section 14.7. Mezzanine Properties.
(a) The Borrower has advised the Agent and the Banks of its
pending acquisition of the Equity Interests, and has requested that the
Agent and the Banks accept the Equity Interests as Collateral upon
consummation of such acquisition by the Borrower. The Agent and the Banks
have agreed that the Equity Interests, subject to terms hereof, may
constitute Potential Collateral, provided that the same shall not
constitute Collateral and shall not increase the Designated Collateral
Value and the amounts available to be borrowed by the Borrower unless each
of the following conditions shall be satisfied:
(i) The Borrower shall execute and deliver to the Agent the
Assignment of Interests, an Indemnity Agreement, a Conditional
Guaranty and all other instruments, documents or agreements, including
Uniform Commercial Code financing statements, as the Agent shall deem
necessary or desirable to perfect the first priority security interest
and, lien on, such Collateral, all of which instruments, documents or
agreements shall be in form and substance satisfactory to the Agent in
its sole discretion;
(ii) No Default or Event of Default has occurred or will
occur if such assets were included within the Collateral;
(iii) The Borrower shall have delivered to the Agent all
Eligible Real Estate Qualification Documents concerning the Mezzanine
Property (assuming for the purposes hereof that the Mezzanine Property
constitutes "Eligible Real Estate" for the purposes of the definition
of the term "Eligible Real Estate Qualification Documents") as Agent
deems necessary;
(iv) the Agent shall have received true and correct copies
of all mortgages, loan agreements or other loan documents affecting
the Property Owner or the Mezzanine Property and approved the same;
(v) the Agent, on behalf of the Banks, shall receive any
other reports, certificates, opinions, rating agency consents,
mortgagee consents and estoppels or other information or documentation
with respect to the Mezzanine Property or the Collateral, and the
Borrower and the Guarantor shall have executed and delivered such
amendments to the Loan Documents, as the Agent, in its sole
discretion, shall deem necessary or desirable; and
(vi) such Collateral is approved by all of the Banks in
their sole judgment.
(b) The Borrower acknowledges that the decision of the Banks to
grant or withhold their consent to the acceptance of such Collateral under
this Section 5.7 shall be based entirely on such factors as the Banks deem
relevant in their sole discretion, including, without limitation, those
enumerated in clauses (a)(i) through (a)(vi) herein above. It shall
further be a condition to the admission of such asset as Collateral that
the Mezzanine Property and the Equity Interests shall otherwise satisfy the
conditions applicable to the Mortgaged Properties in the Loan Documents and
that each and every covenant contained in, and each and every warranty and
representation made in, the Loan Documents with respect to Real Estate
shall be satisfied and true and correct as if the same were applicable to
the Mezzanine Property and the Equity Interests.
(c) In connection with such addition, the Borrower shall pay to
the Agent the reasonable out-of-pocket expenses (including reasonable
attorney's fees and expenses) of the Agent in connection with the addition
of such Collateral.
(d) In no event shall the Designated Collateral Value of the
Equity Interests exceed $40,000,000.00.
Section 15. REPRESENTATIONS AND WARRANTIES.
The Borrower represents and warrants to the Agent and the Banks as
follows.
Section 15.1. Corporate Authority, Etc.
(a) Incorporation; Good Standing. The Borrower is a limited
liability company duly organized pursuant to its organizational documents
and amendments thereto filed with the Secretary of State of Delaware and is
validly existing and in good standing under the laws of the State of
Delaware. Wellsford Commercial is a Maryland real estate investment trust
duly organized pursuant to its organizational documents and amendments
thereto filed with the Secretary of State of Maryland and is validly
existing and in good standing under the laws of the State of Maryland.
WHWEL is a limited partnership duly organized pursuant to its
organizational documents and amendments thereto filed with the Secretary of
State of Delaware and is validly existing and in good standing under the
laws of the State of Delaware. Each of the Borrower and the Members (i)
has all requisite power to own its property and conduct its business as now
conducted and as presently contemplated, and (ii) is in good standing as a
foreign entity and is duly authorized to do business in the jurisdictions
where the Mortgaged Property and other Collateral is located and in each
other jurisdiction where a failure to be so qualified in such other
jurisdiction could have a materially adverse effect on the business, assets
or financial condition of such Person. Wellsford Commercial is a real
estate investment trust in full compliance with and entitled to the
benefits of Section 856 of the Code. The Borrower is a qualified
subsidiary of a real estate investment trust within the meaning of the
Code.
(b) Subsidiaries. Each of the Subsidiaries of the Borrower and
the Guarantor (i) is a corporation, limited partnership, limited liability
company or trust duly organized under the laws of its State of organization
and is validly existing and in good standing under the laws thereof, (ii)
has all requisite power to own its property and conduct its business as now
conducted and as presently contemplated and (iii) is in good standing and
is duly authorized to do business in each jurisdiction where Mortgaged
Property and other Collateral held by it is located and in each other
jurisdiction where a failure to be so qualified could have a materially
adverse effect on the business, assets or financial condition of the
Borrower or such Subsidiary or any Guarantor.
(c) Authorization. The execution, delivery and performance of
this Agreement and the other Loan Documents to which the Borrower, the
Members or the Guarantor are or are to become a party and the transactions
contemplated hereby and thereby (i) are within the authority of the such
Person, (ii) have been duly authorized by all necessary proceedings on the
part of such Person, (iii) do not and will not conflict with or result in
any breach or contravention of any provision of law, statute, rule or
regulation to which such Person is subject or any judgment, order, writ,
injunction, license or permit applicable to such Person, (iv) do not and
will not conflict with or constitute a default (whether with the passage of
time or the giving of notice, or both) under any provision of the articles
of incorporation , bylaws, or other charter documents of, or any agreement
or other instrument binding upon, such Person, or any of its properties,
and (v) do not and will not result in or require the imposition of any lien
or other encumbrance on any of the properties, assets or rights of the
Borrower or the Guarantor, as applicable.
(d) Enforceability. The execution and delivery of this
Agreement and the other Loan Documents to which the Borrower, the Members
or the Guarantor are or are to become a party are valid and legally binding
obligations of such Person enforceable in accordance with the respective
terms and provisions hereof and thereof, except as enforceability is
limited by bankruptcy, insolvency, reorganization, moratorium or other laws
relating to or affecting generally the enforcement of creditors' rights and
except to the extent that availability of the remedy of specific
performance or injunctive relief is subject to the discretion of the court
before which any proceeding therefor may be brought.
Section 15.2. Governmental Approvals. The execution, delivery and
performance by the Borrower, the Members and the Guarantor of this
Agreement and the other Loan Documents and the transactions contemplated
hereby and thereby do not require the approval or consent of, or filing
with, any governmental agency or authority other than those already
obtained and the filing of the Security Documents in the appropriate
records office with respect thereto.
Section 15.3. Title to Properties: Leases. Except as indicated on
Schedule 6.3 hereto, the Borrower and its Subsidiaries own all of the
assets reflected in the consolidated balance sheet of the Borrower as at
the Balance Sheet Date or acquired since that date (except property and
assets sold or otherwise disposed of in the ordinary course of business
since that date), subject to no rights of others, including any mortgages,
leases, conditional sales agreements, title retention agreements, liens or
other encumbrances except Permitted Liens.
Section 15.4. Financial Statements. The Borrower has furnished to
each of the Banks: (a) an unaudited consolidated balance sheet and an
unaudited consolidated statement of income and cash flows of the Borrower
and its Subsidiaries as of the Balance Sheet Date certified by Borrower's
chief financial or chief accounting officer to have been prepared in
accordance with generally accepted accounting principles and to fairly
present the financial condition of the Borrower and its Subsidiaries as at
the close of business on the dates thereof (subject to year-end
adjustments), and (b) to the extent there is any Mortgaged Property, an
unaudited consolidated statement of operating income for the Mortgaged
Property satisfactory in form to the Agent and certified by the Borrower's
chief financial or accounting officer as fairly presenting the operating
income for such parcels for such periods. Such balance sheet and
statements of income, stockholder's equity and cash flows have been
prepared in accordance with generally accepted accounting principles and
fairly present the financial condition of the Borrower and its Subsidiaries
as of such dates and the results of the operations of the Borrower and its
Subsidiaries for such periods. There are no liabilities, contingent or
otherwise, of the Borrower or any of its Subsidiaries involving material
amounts not disclosed in said financial statements and the related notes
thereto. The all-in acquisition costs of the initial Mortgaged Properties
are as set forth on Schedule 6.4 hereto. The all-in acquisition costs of
the Real Estate of the Term Loan Borrower as of the date hereof are as set
forth on Schedule 6.4 hereto.
Section 15.5. No Material Changes. Since the Balance Sheet Date,
there has occurred no materially adverse change in the financial condition
or business of the Borrower and its Subsidiaries taken as a whole as shown
on or reflected in the consolidated balance sheet of the Borrower as of the
Balance Sheet Date, or its consolidated statement of income or cash flows
for the fiscal year then ended, other than changes in the ordinary course
of business that have not had any materially adverse effect either
individually or in the aggregate on the business or financial condition of
the Borrower and its Subsidiaries taken as a whole.
Section 15.6. Franchises, Patents, Copyrights, Etc. The Borrower,
its Subsidiaries, the Members and the Guarantor possess all franchises,
patents, copyrights, trademarks, trade names, service marks, licenses and
permits, and rights in respect of the foregoing, adequate for the conduct
of their business substantially as now conducted without known conflict
with any rights of others.
Section 15.7. Litigation. Except as stated on Schedule 6.7 there
are no actions, suits, proceedings or investigations of any kind pending or
threatened against the Borrower or any of its Subsidiaries, any Member or
any Guarantor before any court, tribunal or administrative agency or board
that, if adversely determined, might, either in any case or in the
aggregate, materially adversely affect the properties, assets, financial
condition or business of such Person or materially impair the right of such
Person to carry on business substantially as now conducted by it, or result
in any liability not adequately covered by insurance, or for which adequate
reserves are not maintained on the balance sheet of such Person, or which
question the validity of this Agreement or any of the other Loan Documents,
any action taken or to be taken pursuant hereto or thereto or any lien or
security interest created or intended to be created pursuant hereto or
thereto, or which will adversely affect the ability of such Person to pay
and perform the Obligations in the manner contemplated by this Agreement
and the other Loan Documents.
Section 15.8. No Materially Adverse Contracts, Etc. None of the
Borrower, any of its Subsidiaries, any Member nor any Guarantor is subject
to any charter, corporate or other legal restriction, or any judgment,
decree, order, rule or regulation that has or is expected in the future to
have a materially adverse effect on the business, assets or financial
condition of the Borrower or any Guarantor. None of the Borrower, any of
its Subsidiaries, any Member nor any Guarantor is a party to any contract
or agreement that has or is expected, in the judgment of the officers of
such Person, to have any materially adverse effect on the business of any
of them.
Section 15.9. Compliance with Other Instruments, Laws, Etc. None of
the Borrower, any of its Subsidiaries, any Member nor any Guarantor is in
violation of any provision of its charter or other organizational
documents, by-laws, or any agreement or instrument to which it may be
subject or by which it or any of its properties may be bound or any decree,
order, judgment, statute, license, rule or regulation, in any of the
foregoing cases in a manner that could result in the imposition of
substantial penalties or materially and adversely affect the financial
condition, properties or business of such Person.
Section 15.10. Tax Status. The Borrower, each of its Subsidiaries,
the Members and the Guarantor (a) has made or filed all federal and state
income and all other tax returns, reports and declarations required by any
jurisdiction to which it is subject, (b) has paid all taxes and other
governmental assessments and charges shown or determined to be due on such
returns, reports and declarations, except those being contested in good
faith and by appropriate proceedings and (c) has set aside on its books
provisions reasonably adequate for the payment of all taxes for periods
subsequent to the periods to which such returns, reports or declarations
apply. There are no unpaid taxes in any material amount claimed to be due
by the taxing authority of any jurisdiction, and the officers of such
Person know of no basis for any such claim.
Section 15.11. No Event of Default. No Default or Event of Default
has occurred and is continuing.
Section 15.12. Holding Company and Investment Company Acts. None of
the Borrower, any of its Subsidiaries, any Member nor any Guarantor is a
"holding company", or a "subsidiary company" of a "holding company", or an
"affiliate" of a "holding company", as such terms are defined in the Public
Utility Holding Company Act of 1935; nor is it an "investment company", or
an "affiliated company" or a "principal underwriter" of an "investment
company", as such terms are defined in the Investment Company Act of 1940.
Section 15.13. Absence of UCC Financing Statements, Etc. Except
with respect to Permitted Liens, there is no financing statement, security
agreement, chattel mortgage, real estate mortgage or other document filed
or recorded with any filing records, registry, or other public office, that
purports to cover, affect or give notice of any present or possible future
lien on, or security interest or security title in, any property of the
Borrower or its Subsidiaries or rights thereunder.
Section 15.14. Setoff, Etc. The Collateral and the rights of the
Agent and the Banks with respect to the Collateral are not subject to any
setoff, claims, withholdings or other defenses. The Borrower is the owner
of the Collateral free from any lien, security interest, encumbrance or
other claim or demand, except Permitted Liens.
Section 15.15. Certain Transactions. None of the officers,
trustees, directors, or employees of the Borrower, any of its Subsidiaries,
any Member or any Guarantor is a party to any transaction with the Borrower
or any of its Subsidiaries (other than for services as employees, officers
and directors), including any contract, agreement or other arrangement
providing for the furnishing of services to or by, providing for rental of
real or personal property to or from, or otherwise requiring payments to or
from any officer, trustee, director or such employee or, to the knowledge
of the Borrower, any corporation, partnership, trust or other entity in
which any officer, trustee, director, or any such employee has a
substantial interest or is an officer, director, trustee or partner.
Section 15.16. Employee Benefit Plans. The Borrower and each ERISA
Affiliate are in compliance in all material respects with ERISA. There has
been no Reportable Event with respect to any Employee Benefit Plan,
Multiemployer Plan or Guaranteed Pension Plan. There has been no
institution of proceedings or any other action by PBGC, the Borrower or any
ERISA Affiliate to terminate or withdraw or partially withdraw from any
such Plan under any circumstances which could lead to material liabilities
to PBGC or, with respect to a Multiemployer Plan, the "Reorganization" or
"Insolvency" (as each such term is defined in ERISA) of any such Plan. To
the best of the Borrower's knowledge, no "prohibited transaction" (within
the meaning of Section 406 of ERISA or Section 4975 of the Code) has
occurred with respect to any such Plan, and neither the consummation of the
transactions provided for in this Agreement and compliance by the Borrower
with the provisions hereof and the other Loan Documents will involve any
prohibited transaction.
Section 15.17. ERISA Taxes. Neither the Borrower nor any ERISA
Affiliate thereof is currently and the Borrower has no reason to believe
that the Borrower or any ERISA Affiliate thereof will become subject to any
liability (other than routine expenses or contributions relating to the
Plans set forth on Schedule 6.17, if timely paid), tax or penalty
whatsoever to any person whomsoever, which liability, tax or penalty is
directly or indirectly related to any Plans set forth on Schedule 6.17
including, but not limited to, any penalty or liability arising under Title
I or Title IV of ERISA, any tax or penalty resulting from a loss of
deduction under Section s 404 and 419 of the Code, or any tax or penalty
under Chapter 43 of the Code, except such liabilities, taxes or penalties
(when taken as a whole) as will not have a material adverse effect on the
Borrower or upon its financial condition, assets, business, operations,
liabilities or prospects.
Section 15.18. Plan Payments. The Borrower and each ERISA Affiliate
has made full and timely payment of all amounts (i) required to be
contributed under the terms of each Plan set forth on Schedule 6.17 and
applicable law and (ii) required to be paid as expenses of each Plan set
forth on Schedule 6.17. No Plan set forth on Schedule 6.17 would have an
"amount of unfunded benefit liabilities" (as defined in Section
4001(a)(18) of ERISA) if such Plan were terminated as of the date on which
this representation and warranty is made.
Section 15.19. Regulations U and X. No portion of any Loan is to be
used for the purpose of purchasing or carrying any "margin security" or
"margin stock" as such terms are used in Regulations U and X of the Board
of Governors of the Federal Reserve System, 12 C.F.R. Parts 221 and 224.
Section 15.20. Environmental Compliance. The Borrower or an
affiliate or agent thereof has conducted or caused to be conducted Phase I
environmental site assessments with respect to the past usage and condition
of the Real Estate and the operations conducted thereon, and the Borrower
is familiar with the present condition and usage of the Real Estate and the
operations conducted thereon and, based upon such reports and knowledge,
makes the following representations and warranties.
(a) With respect to the Mortgaged Property, and to the best of
the Borrower's knowledge with respect to any other Real Estate, none of the
Borrower, its Subsidiaries, any Member, any Guarantor or any operator of
the Real Estate, or any operations thereon is in violation, or alleged
violation, of any judgment, decree, order, law, license, rule or regulation
pertaining to environmental matters, including without limitation, those
arising under the Resource Conservation and Recovery Act ("RCRA"), the
Comprehensive Environmental Response, Compensation and Liability Act of
1980 as amended ("CERCLA"), the Superfund Amendments and Reauthorization
Act of 1986 ("SARA"), the Federal Clean Water Act, the Federal Clean Air
Act, the Toxic Substances Control Act, or any state or local statute,
regulation, ordinance, order or decree relating to the environment
(hereinafter "Environmental Laws"), which violation involves the Mortgaged
Property or involves other Real Estate and would have a material adverse
effect on the environment or the business, assets or financial condition of
the Borrower, any of its Subsidiaries, any Member or any Guarantor.
(b) None of the Borrower, any of its Subsidiaries. any Member
nor any Guarantor has received any notice from any third party including,
without limitation, any federal, state or local governmental authority, (i)
that it has been identified by the United States Environmental Protection
Agency ("EPA") as a potentially responsible party under CERCLA with respect
to a site listed on the National Priorities List, 40 C.F.R. Part 300
Appendix B (1986); (ii) that any hazardous waste, as defined by 42 U.S.C.
Section 9601(5), any hazardous substances as defined by 42 U.S.C. Section
9601(14), any pollutant or contaminant as defined by 42 U.S.C. Section
9601(33) or any toxic substances, oil or hazardous materials or other
chemicals or substances regulated by any Environmental Laws ("Hazardous
Substances") which it has generated, transported or disposed of have been
found at any site at which a federal, state or local agency or other third
party has conducted or has ordered that the Borrower, any of its
Subsidiaries, any Member or any Guarantor conduct a remedial investigation,
removal or other response action pursuant to any Environmental Law; or
(iii) that it is or shall be a named party to any claim, action, cause of
action, complaint, or legal or administrative proceeding (in each case,
contingent or otherwise) arising out of any third party's incurrence of
costs, expenses, losses or damages of any kind whatsoever in connection
with the release of Hazardous Substances.
(c) With respect to the Mortgaged Property, and to the best of
the Borrower's knowledge with respect to any other Real Estate, except as
specifically set forth in the environmental site assessment reports for the
initial Mortgaged Properties, each of which has been provided to the Agent
on or about the date hereof or, in the case of Real Estate acquired after
the date hereof, the environmental site assessment reports with respect
thereto provided to the Agent under Section 7.4(h): (i) no portion of the
Real Estate has been used for the handling, processing, storage or disposal
of Hazardous Substances except in accordance with applicable Environmental
Laws, and no underground tank or other underground storage receptacle for
Hazardous Substances is located on any portion of the Mortgaged Property;
(ii) in the course of any activities conducted by the Borrower, its
Subsidiaries, the Members, the Guarantor or the operators of its
properties, no Hazardous Substances have been generated or are being used
on the Real Estate except in the ordinary course of business and in
accordance with applicable Environmental Laws; (iii) there has been no past
or present releasing, spilling, leaking, pumping, pouring, emitting,
emptying, discharging, injecting, escaping, disposing or dumping (a
"Release") or threatened Release of Hazardous Substances on, upon, into or
from the Mortgaged Property, or, to the best of the Borrower's knowledge,
on, upon, into or from the other properties of the Borrower, its
Subsidiaries or the Guarantor, which Release would have a material adverse
effect on the value of any of the Real Estate or adjacent properties or the
environment; (iv) to the best of the Borrower's knowledge, there have been
no Releases on, upon, from or into any real property in the vicinity of any
of the Real Estate which, through soil or groundwater contamination, may
have come to be located on, and which would have a material adverse effect
on the value of, the Real Estate; and (v) to the best of Borrower's
knowledge and belief, any Hazardous Substances that have been generated on
any of the Real Estate have been transported off-site only by carriers
having an identification number issued by the EPA or approved by a state or
local environmental regulatory authority having jurisdiction regarding the
transportation of such substance and, to the best knowledge of the Borrower
without independent investigation, treated or disposed of only by treatment
or disposal facilities maintaining valid permits as required under all
applicable Environmental Laws, which transporters and facilities have been
and are, to the best of the Borrower's knowledge, operating in compliance
with such permits and applicable Environmental Laws.
(d) Neither the Borrower, its Subsidiaries, the Members, the
Guarantor, the Mortgaged Property nor any other Real Estate is required by
any applicable Environmental Law to perform Hazardous Substances site
assessments, or remove or remediate Hazardous Substances, or give notice to
any governmental agency or record or deliver to other Persons an
environmental disclosure document or statement by virtue of the
transactions set forth herein and contemplated hereby, or as a condition to
the recording of the Security Deed or to the effectiveness of any other
transactions contemplated hereby.
Section 15.21. Subsidiaries. Schedule 6.21 sets forth all of the
Subsidiaries of the Borrower. The form and jurisdiction of organization of
each of the Subsidiaries, and the Borrower's ownership interest therein, is
set forth in said Schedule 6.21.
Section 15.22. Leases. The Borrower has delivered to the Agent true
copies of the Leases and any amendments thereto relating to the Mortgaged
Property.
Section 15.23. Loan Documents. All of the representations and
warranties made by or on behalf of the Borrower, its Subsidiaries, the
Members or the Guarantor made in the Loan Documents to which it is a party
or any document or instrument delivered to the Agent or the Banks pursuant
to or in connection with any of such Loan Documents are true and correct in
all material respects, and no such party has failed to disclose such
information as is necessary to make such representations and warranties not
misleading.
Section 15.24. Mortgaged Property. The Borrower makes the following
representations and warranties concerning each Mortgaged Property:
(a) Off-Site Utilities. All water, sewer, electric, gas,
telephone and other utilities necessary for the use and operation of the
Mortgaged Property are installed to the property lines of the Mortgaged
Property through dedicated public rights-of-way or through perpetual
private easements approved by the Agent with respect to which the
applicable Security Deed creates a valid and enforceable first lien and,
except in the case of drainage facilities, are connected to the Building
located thereon with valid permits and are adequate to service the Building
in compliance with applicable law.
(b) Access, Etc. The streets abutting the Mortgaged Property
are dedicated and accepted public roads, to which the Mortgaged Property
has direct access by trucks and other motor vehicles and by foot, or are
perpetual private ways (with direct access by trucks and other motor
vehicles and by foot to public roads) to which the Mortgaged Property has
direct access approved by the Agent and with respect to which the
applicable Security Deed creates a valid and enforceable first lien. All
private ways providing access to the Mortgaged Property are zoned in a
manner which will permit access to the Building over such ways by trucks
and other commercial and industrial vehicles.
(c) Independent Building. The Building is fully independent in
all respects including, without limitation, in respect of structural
integrity, heating, ventilating and air conditioning, plumbing, mechanical
and other operating and mechanical systems, and electrical, sanitation and
water systems, all of which are connected directly to off-site utilities
located in public streets or ways or through insured perpetual private
easements approved by the Agent. The Building is located on a lot which is
separately assessed for purposes of real estate tax assessment and payment.
The Building, all Building Service Equipment and all paved or landscaped
areas related to or used in connection with the Building are, except as
specifically disclosed on a Survey delivered to the Agent prior to the date
hereof, located wholly within the perimeter lines of the lot or lots on
which the Mortgaged Property is located.
(d) Condition of Building; No Asbestos. Except as may otherwise
be specifically disclosed in any written engineering report furnished or
caused to be furnished by the Borrower to the Agent prior to the date
hereof, the Building is structurally sound, in good repair and free of
material defects in materials and workmanship. All major building systems
located within the Building, including without limitation heating,
ventilating and air conditioning, electrical, sprinkler, plumbing or other
mechanical systems, are in good working order and condition. No asbestos
is located in or on the Building, except for nonfriable asbestos or
contained friable asbestos which is being monitored and/or remediated in
accordance with the recommendations of an Environmental Engineer.
(e) Building Compliance with Law. Except as may otherwise be
specifically disclosed on the face of any certificate of occupancy
delivered to the Agent prior to the date hereof, the Building as presently
constructed, used, occupied and operated does not violate any applicable
federal or state law or governmental regulation, or any local ordinance,
order or regulation, including but not limited to laws, regulations, or
ordinances relating to zoning, building use and occupancy, subdivision
control, fire protection, health, sanitation, safety, handicapped access,
historic preservation and protection, tidelands, wetlands, flood control
and Environmental Laws. The Building complies with applicable zoning laws
and regulations and is not a so-called non-conforming use. The zoning laws
permit use of the Building for its current use. There is such number of
parking spaces on the lot or lots on which the Mortgaged Property is
located as is adequate under the zoning laws and regulations to permit use
of the Building for its current use.
(f) No Required Mortgaged Property Consents, Permits, Etc.
Neither the Borrower, any of its Subsidiaries nor the Guarantor, as
applicable, has received notice of, or has knowledge of, any approvals,
consents, licenses, permits, utility installations and connections
(including, without limitation, drainage facilities), curb cuts and street
openings, required by applicable laws, rules, ordinances or regulations or
any agreement affecting the Mortgaged Property for the maintenance,
operation, servicing and use of the Mortgaged Property or the Building for
its current use which have not been granted, effected, or performed and
completed (as the case may be), or any fees or charges therefor which have
not been fully paid, or which are no longer in full force and effect. No
such approvals, consents, permits or licenses (including, without
limitation, any railway siding agreements) will terminate, or become void
or voidable or terminable on any foreclosure sale of the Mortgaged Property
pursuant to the Security Deed. To the best knowledge of the Borrower,
there are no outstanding notices, suits, orders, decrees or judgments
relating to zoning, building use and occupancy, fire, health, sanitation or
other violations affecting, against, or with respect to, the Mortgaged
Property or any part thereof.
(g) Insurance. Neither the Borrower, any of its Subsidiaries
nor the Guarantor has received any notice from any insurer or its agent
requiring performance of any work with respect to the Mortgaged Property or
canceling or threatening to cancel any policy of insurance, and the
Mortgaged Property complies with the requirements of all carriers of
insurance on the Mortgaged Property.
(h) Real Property Taxes; Special Assessments. There are no
unpaid or outstanding real estate or other taxes or assessments on or
against the Mortgaged Property or any part thereof which are payable by the
Borrower, any Subsidiary of the Borrower or the Guarantor (except only real
estate or other taxes or assessments, that are not yet due and payable).
The Borrower has delivered or caused to be delivered to the Agent, or has
requested from the appropriate authorities and will deliver to the Agent
promptly upon receipt, true and correct copies of real estate tax bills for
the Mortgaged Property for the past three fiscal tax years. No abatement
proceedings are pending with reference to any real estate taxes assessed
against the Mortgaged Property. There are no betterment assessments or
other special assessments presently pending with respect to any portion of
the Mortgaged Property, and none of Borrower, any of its Subsidiaries nor
the Guarantor has received any notice of any such special assessment being
contemplated.
(i) Historic Status. The Building is not a historic structure
or landmark and neither the Building nor the Mortgaged Property is located
within any historic district pursuant to any federal, state or local law or
governmental regulation.
(j) Eminent Domain; Casualty. There are no pending eminent
domain proceedings against the Mortgaged Property or any part thereof, and,
to the knowledge of the Borrower, no such proceedings are presently
threatened or contemplated by any taking authority. Neither the Mortgaged
Property, the Building nor any part thereof is now damaged or injured as a
result of any fire, explosion, accident, flood or other casualty.
(k) Leases. An accurate and complete Rent Roll and summary
thereof in a form reasonably satisfactory to the Agent as of the date of
inclusion of each Mortgaged Property in the Collateral (or such other
recent date as may be acceptable to the Agent) with respect to all Leases
of any portion of the Mortgaged Property has been provided to the Agent.
The Leases reflected on such Rent Roll constitute as of the date thereof
the sole agreements and understandings relating to leasing or licensing of
space at such Mortgaged Property and in the Building relating thereto.
There are no occupancies, rights, privileges or licenses in or to any
Mortgaged Property or portion thereof other than pursuant to the Leases
reflected in Rent Rolls previously furnished to the Agent for such
Mortgaged Property. Except as set forth in each Rent Roll, the Leases
reflected therein are in full force and effect in accordance with their
respective terms, without any payment default or any other material default
thereunder, nor are there any defenses, counterclaims, offsets, concessions
or rebates available to any tenant thereunder, and none of the Borrower,
any of its Subsidiaries nor the Guarantor has given or made, any notice of
any payment or other material default, or any claim, which remains uncured
or unsatisfied, with respect to any of the Leases. The Rent Rolls
furnished to the Banks accurately and completely set forth all rents
payable by and security, if any, deposited by tenants, no tenant having
paid more than one month's rent in advance. The Borrower has reviewed the
estoppel certificates delivered by the tenants of the Mortgaged Property to
the Agent and such estoppel certificates are true and correct in all
material respects. All tenant improvements or work to be done, furnished
or paid for by the Borrower, any of its Subsidiaries or the Guarantor, as
applicable, or credited or allowed to a tenant, for, or in connection with,
the Building pursuant to any Lease has been completed and paid for or
provided for in a manner satisfactory to the Agent. No material leasing,
brokerage or like commissions, fees or payments are due from the Borrower,
any of its Subsidiaries or the Guarantor in respect of the Leases.
(l) Management Agreements. Borrower has delivered to Agent
true, correct and complete copies of the Management Agreements for the
Mortgaged Property. To the best knowledge of the Borrower, there are no
material claims or any bases for material claims in respect of the
Mortgaged Property or its operation by any party to any Management
Agreement.
(m) Other Material Real Property Agreements; No Options. There
are no material agreements pertaining to the Mortgaged Property, any
Building thereon or the operation or maintenance of either thereof other
than as described in this Agreement (including the Schedules hereto) or
otherwise disclosed in writing to the Agent and the Banks by the Borrower;
and no person or entity has any right or option to acquire the Mortgaged
Property on any Building thereon or any portion thereof or interest
therein.
Section 15.25. Brokers. Neither the Borrower nor any of its
Subsidiaries has engaged or otherwise dealt with any broker, finder or
similar entity in connection with this Agreement or the Loans contemplated
hereunder.
Section 15.26. Fair Consideration. The Borrower (and, as
applicable, the Guarantor), by receiving the benefits under this Agreement
is receiving "reasonably equivalent value" within the meaning of Section
548 of the Bankruptcy Code, Title 11, U.S.C.A. and "fair consideration"
within the meaning of Consolidated Laws of New York Annotated, Chapter 12,
Article 10, Section 272 in exchange for the delivery of the Security
Documents to Agent, and but for the willingness of the Guarantors to
guaranty the Loan, Borrower would be unable to obtain the financing
contemplated hereunder which financing will enable Borrower and its
Subsidiaries (including the Guarantors) to have available financing to
conduct and expand their business. The transaction evidenced by this
Agreement and the other Loan Documents is in the best interests of the
Borrower, the Members and the Guarantors and the creditors of such Persons.
Section 15.27. Solvency. As of the Closing Date and after giving
affect to the transactions contemplated by this Agreement and the other
Loan Documents, including all of the Loans made or to be made hereunder
neither the Borrower nor any Guarantor is insolvent on a balance sheet
basis, the sum of such Person's assets exceeds the sum of such Person's
liabilities, the Borrower and each Guarantor is able to pay its debts as
they become due, and the Borrower and each Guarantor has sufficient capital
to carry on its business.
Section 15.28. No Bankruptcy Filing. None of the Borrower, the
Members nor the Guarantors is contemplating either the filing of a petition
by it under any state or federal bankruptcy or insolvency laws or the
liquidation 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
such other Persons.
Section 15.29. No Fraudulent Intent. Neither the execution and
delivery of this Agreement or any of the other Loan Documents nor the
performance of any actions required hereunder or thereunder is being
undertaken by the Borrower, any Member or any Guarantor with or as a result
of any actual intent by any of such Persons to hinder, delay or defraud any
entity to which any of such Persons is now or will hereafter become
indebted.
Section 15.30. Other Debt. None of the Borrower, the Guarantor nor
any of their respective Subsidiaries is in default in the payment of any
other Indebtedness or under any agreement, mortgage, deed of trust,
security agreement, financing agreement, indenture or lease to which any of
them is a party. The Borrower is not a party to or bound by any agreement,
instrument or indenture that may require the subordination in right or time
of payment of any of the Obligations to any other indebtedness or
obligation of the Borrower. The Borrower has provided to the Agent copies
of all agreements, mortgages, deeds of trust, financing agreements or other
material agreements binding upon Borrower, the Guarantor or their
respective properties and entered into by such Person as of the date of
this Agreement with respect to any Indebtedness of such Person.
Section 15.31. Members. Wellsford Commercial and WHWEL are the sole
members of the Borrower. Wellsford Real Properties is the sole legal,
equitable and beneficial owner of Wellsford Commercial.
Section 16. AFFIRMATIVE COVENANTS OF THE BORROWER.
The Borrower covenants and agrees that, so long as any Loan or Note is
outstanding or any Bank has any obligation to make any Loans:
Section 16.1. Punctual Payment. The Borrower will duly and
punctually pay or cause to be paid the principal and interest on the Loans
and all interest and fees provided for in this Agreement, all in accordance
with the terms of this Agreement and the Notes as well as all other sums
owing pursuant to the Loan Documents.
Section 16.2. Maintenance of Office. The Borrower will maintain its
chief executive office at 610 Fifth Avenue, 7th Floor, New York County, New
York, New York, or at such other place in the United States of America as
the Borrower shall designate upon prior written notice to the Agent and the
Banks, where notices, presentations and demands to or upon the Borrower in
respect of the Loan Documents may be given or made.
Section 16.3. Records and Accounts. The Borrower will (a) keep, and
cause each of its Subsidiaries to keep, true and accurate records and books
of account in which full, true and correct entries will be made in
accordance with generally accepted accounting principles and (b) maintain
adequate accounts and reserves for all taxes (including income taxes),
depreciation and amortization of its properties and the properties of its
Subsidiaries, contingencies and other reserves. Neither the Borrower nor
any of its Subsidiaries shall, without the prior written consent of the
Majority Banks, (x) make any material changes to the accounting procedures
used by such Person in preparing the financial statements and other
information described in Section 6.4 (excluding the conversion of a
Subsidiary's accounting procedures such that they are consistent with the
Borrower's accounting procedures) or (y) change its fiscal year.
Section 16.4. Financial Statements, Certificates and Information.
The Borrower will deliver or cause to be delivered to each of the Banks:
(a) as soon as practicable, but in any event not later than 90
days after the end of each fiscal year of the Borrower, the audited
consolidated balance sheet of the Borrower and its Subsidiaries at the end
of such year, and the related audited consolidated statements of income,
changes in shareholders' equity and cash flows for such year, each setting
forth in comparative form the figures for the previous fiscal year and all
such statements to be in reasonable detail, prepared in accordance with
generally accepted accounting principles, and accompanied by an auditor's
report prepared without qualification by Ernst & Young LLP or by another
"Big Six" accounting firm, together with the unaudited annual operating
statement of each Mortgaged Property and the Mezzanine Property (which
statement shall also be reconciled to the budget for the Mortgaged Property
and the Mezzanine Property), together with a certification by Borrower's
chief financial or chief accounting officer that the information contain in
such statement fairly presents the operations of the Mortgaged Property and
the Mezzanine Property for such period, and any other information the Banks
may reasonably need to complete a financial analysis of the Borrower;
(b) as soon as practicable, but in any event not later than 45
days after the end of each fiscal quarter of the Borrower (including the
fourth quarter), copies of the unaudited consolidated balance sheet of the
Borrower and its Subsidiaries as at the end of such quarter, and the
related unaudited consolidated statements of income, changes in
shareholders' equity and cash flows for the portion of the Borrower's
fiscal year then elapsed, and the unaudited operating statement for the
Mortgaged Property and the Mezzanine Property for such quarter and year-to-
date (which statement shall also be reconciled to the budget for the
Mortgaged Property and the Mezzanine Property), all in reasonable detail
and prepared in accordance with generally accepted accounting principles,
together with a certification by the principal financial or accounting
officer of the Borrower that the information contained in such financial
statements fairly presents the financial position of the Borrower and its
Subsidiaries and the operations of the Mortgaged Property and the Mezzanine
Property on the date thereof (subject to year-end adjustments);
(c) [Intentionally omitted];
(d) as soon as practicable, but in any event not later than 45
days after the end of each fiscal quarter of the Borrower (including the
fourth fiscal quarter in each year), copies of a consolidated statement of
Operating Cash Flow for such fiscal quarter and year-to-date for the
Borrower and its Subsidiaries and a statement of Net Operating Income for
such fiscal quarter and year-to-date for each of the Mortgaged Properties
and the Mezzanine Property, prepared in a manner reasonable satisfactory to
the Agent, together with a certification by the Borrower's chief financial
or chief accounting officer that the information contained in such
statement fairly presents the Operating Cash Flow of the Borrower and its
Subsidiaries and the Net Operating Income of the Mortgaged Property and the
Mezzanine Property for such period;
(e) simultaneously with the delivery of the financial statements
referred to in subsections (a) and (b) above, a statement (a "Compliance
Certificate") certified by the principal financial or accounting officer of
the Borrower in the form of Exhibit C hereto setting forth in reasonable
detail computations evidencing compliance with the covenants contained in
Section 9, and (if applicable) reconciliations to reflect changes in
generally accepted accounting principles since the Balance Sheet Date;
(f) concurrently with the delivery of the financial statements
described in subsections (b) and (c) above, a certificate signed by the
President or Chief Financial Officer of the Borrower to the effect that,
having read this Agreement, and based upon an examination which they deem
sufficient to enable them to make an informed statement, there does not
exist any Default or Event of Default, or if such Default or Event of
Default has occurred, specifying the facts with respect thereto;
(g) contemporaneously with the filing, mailing or releasing
thereof, copies of all press releases and all material of a financial
nature filed with the SEC, if applicable, or sent to all of the members of
the Borrower;
(h) as soon as practicable but in any event not later than 45
days after the end of each fiscal quarter of the Borrower (including the
fourth fiscal quarter in each year), updated Rent Rolls with respect to the
Mortgaged Property and the Mezzanine Property and a summary of each Rent
Roll in form reasonably satisfactory to the Agent;
(i) not later than 30 days following each acquisition of an
interest in Real Estate by the Borrower or any of its Subsidiaries (which
for the purposes of this Section 7.4(i) shall include the Investments
described in Section 8.3(j)), each of the following: (i) a description of
the property acquired, (ii) an environmental site assessment prepared by an
Environmental Engineer stating no material qualification with respect to
such Real Estate or property, and (iii) a Compliance Certificate prepared
using the financial statements of the Borrower most recently provided or
required to be provided to the Banks under Section 6.4 or this Section
7.4 adjusted in the best good-faith estimate of the Borrower to give effect
to such acquisition and demonstrating that no Default or Event of Default
with respect to the covenants referred to therein shall exist after giving
effect to such acquisition;
(j) as soon as practicable, but in any event not later than 30
days prior to the beginning of each calendar year, the annual operating
budget for each of the Mortgaged Property and the Mezzanine Property, in
form and substance satisfactory to the Majority Banks;
(k) promptly after they are filed with the Internal Revenue
Service, copies of all annual federal income tax returns and amendments
thereto of the Borrower, its Members and the Guarantor;
(l) not later than 45 days after the end of each fiscal quarter
of the Borrower (including the fourth fiscal quarter in each year), the
market comparable study conducted by the Borrower's internal staff or its
property managers, and at other times copies of such market studies
relating to the Mortgaged Property and the Mezzanine Property as are from
time to time prepared by or on behalf of the Borrower; and
(m) from time to time such other financial data and information
in the possession of the Borrower (including without limitation auditors'
management letters, property inspection and environmental reports and
information as to zoning and other legal and regulatory changes affecting
the Borrower) as the Agent may reasonably request.
Section 16.5. Notices.
(a) Defaults. The Borrower will promptly notify the Agent in
writing of the occurrence of any Default or Event of Default. If any
Person shall give any notice or take any other action in respect of a
claimed default (whether or not constituting an Event of Default) under
this Agreement or under any note, evidence of indebtedness, indenture or
other obligation to which or with respect to which the Borrower, any of its
Subsidiaries, any Member or any Guarantor is a party or obligor, whether as
principal or surety, and such default would permit the holder of such note
or obligation or other evidence of indebtedness to accelerate the maturity
thereof, which acceleration would have a material adverse effect on the
Borrower, any Member or any Guarantor, the Borrower shall forthwith give
written notice thereof to the Agent and each of the Banks, describing the
notice or action and the nature of the claimed default.
(b) Environmental Events. The Borrower will promptly give
notice to the Agent (i) upon the Borrower or the Guarantor obtaining
knowledge of any potential or known Release, or threat of Release, of any
Hazardous Substances at or from the Mortgaged Property or the Mezzanine
Property; (ii) of any violation of any Environmental Law that the Borrower,
any of its Subsidiaries, any Member or any Guarantor, reports in writing or
is reportable by such Person in writing (or for which any written report
supplemental to any oral report is made) to any federal, state or local
environmental agency and (iii) upon becoming aware thereof, of any inquiry,
proceeding, investigation, or other action, including a notice from any
agency of potential environmental liability, of any federal, state or local
environmental agency or board, that in either case involves the Mortgaged
Property or the Mezzanine Property or has the potential to materially
affect the assets, liabilities, financial conditions or operations of such
Person or the Agent's liens on the Collateral pursuant to the Security
Documents.
(c) Notification of Claims Against Collateral. The Borrower
will, immediately upon becoming aware thereof, notify the Agent in writing
of any setoff, claims (including, with respect to the Mortgaged Property,
environmental claims), withholdings or other defenses to which any of the
Collateral, or the rights of the Agent or the Banks with respect to the
Collateral, are subject.
(d) Notice of Litigation and Judgments. The Borrower will give
notice to the Agent in writing within 15 days of becoming aware of any
litigation or proceedings threatened in writing or any pending litigation
and proceedings affecting the Borrower or any of its Subsidiaries or any
Member or any Guarantor or to which any of such Persons is or is to become
a party involving an uninsured claim against any of such Persons that could
reasonably be expected to have a materially adverse effect on any of such
Persons and stating the nature and status of such litigation or
proceedings. The Borrower will give notice to the Agent, in writing, in
form and detail satisfactory to the Agent and each of the Banks, within ten
days of any judgment not covered by insurance, whether final or otherwise,
against the Borrower, any of its Subsidiaries, any Member or any Guarantor
in an amount in excess of $250,000.
(e) Notice of Proposed Sales, Encumbrances, Refinance or
Transfer of Non-Mortgaged Property. The Borrower will give notice to the
Agent of any proposed or completed sale, encumbrance, refinance or transfer
of any Real Estate or other Investment described in Section 8.3 (j) of the
Borrower or its Subsidiaries other than Mortgaged Property within any
fiscal quarter of the Borrower, such notice to be submitted together with
the Compliance Certificate provided or required to be provided to the Banks
under Section 7.4 with respect to such fiscal quarter. The Compliance
Certificate shall with respect to any proposed or completed sale,
encumbrance, refinance or transfer be adjusted in the best good-faith
estimate of the Borrower to give effect to such sale, encumbrance,
refinance or transfer and demonstrate that no Default or Event of Default
with respect to the covenants referred to therein shall exist after giving
effect to such sale, encumbrance, refinance or transfer. Notwithstanding
the foregoing, in the event of any sale, encumbrance, refinance or transfer
of any Real Estate or other Investment described in Section 8.3(j) of the
Borrower or its Subsidiaries other than the Mortgaged Property involving an
amount in excess of $10,000,000.00, the Borrower shall promptly give notice
to the Agent of such transaction, which notice shall be accompanied by a
Compliance Certificate prepared using the financial statements of the
Borrower most recently provided or required to be provided to the Banks
under Section 6.4 or Section 7.4 adjusted as provided in the preceding
sentence.
(f) Notification of Banks. Promptly after receiving any notice
under this Section 7.5, the Agent will forward a copy thereof to each of
the Banks, together with copies of any certificates or other written
information that accompanied such notice.
Section 16.6. Existence; Maintenance of Properties.
(a) The Borrower will do or cause to be done all things
necessary to preserve and keep in full force and effect its existence as a
Delaware limited liability company. The Borrower will cause each of its
Subsidiaries to do or cause to be done all things necessary to preserve and
keep in full force and effect its legal existence. The Borrower will do or
cause to be done all things necessary to preserve and keep in full force
all of its rights and franchises and those of its Subsidiaries. The
Borrower will, and will cause each of its Subsidiaries to, continue to
engage primarily in the respective businesses now conducted by each of them
and in related businesses.
(b) The Borrower (i) will cause all of its properties and those
of its Subsidiaries used or useful in the conduct of its business or the
business of its Subsidiaries to be maintained and kept in good condition,
repair and working order (ordinary wear and tear excepted) and supplied
with all necessary equipment, and (ii) will cause to be made all necessary
repairs, renewals, replacements, betterments and improvements thereof in
all cases in which the failure so to do would have a material adverse
effect on the condition of the applicable Mortgaged Property or other
Collateral or on the financial condition, assets or operations of the
Borrower or any Guarantor.
Section 16.7. Insurance.
(a) The Borrower will, at its expense, procure and maintain, or
cause to be procured and maintained, for the benefit of the Borrower and
the Agent, insurance policies issued by such insurance companies, in such
amounts, in such form and substance, and with such coverages, endorsements,
deductibles and expiration dates as are acceptable to the Agent, providing
the following types of insurance covering the Mortgaged Property:
(i) "All Risks" property insurance (including broad form
flood, broad form earthquake and comprehensive boiler and machinery
coverages) on each Building and the contents therein of the Borrower
and its Subsidiaries in an amount not less than one hundred percent
(100%) of the full replacement cost of each Building and the contents
therein of the Borrower and its Subsidiaries, with deductibles not to
exceed $50,000 for any one occurrence, with a replacement cost
coverage endorsement, and, if requested by the Agent, a contingent
liability from operation of building laws endorsement in such amounts
as the Agent may require. Full replacement cost as used herein means
the cost of replacing the Building (exclusive of the cost of
excavations, foundations and footings below the lowest basement floor)
and the contents therein of the Borrower and its Subsidiaries without
deduction for physical depreciation thereof;
(ii) During the course of construction or repair of any
Building having a cost in excess of $1,000,000, the insurance required
by clause (i) above shall be written on a builders risk, completed
value, non-reporting form, meeting all of the terms required by clause
(i) above, covering the total value of work performed, materials,
equipment, machinery and supplies furnished, existing structures, and
temporary structures being erected on or near the Real Estate,
including coverage against collapse and damage during transit or while
being stored off-site, and containing a soft costs (including loss of
rents) coverage endorsement and a permission to occupy endorsement;
(iii) Flood insurance if at any time any Building is
located in any federally designated "special hazard area" (including
any area having special flood, mudslide and/or flood-related erosion
hazards, and shown on a Flood Hazard Boundary Map or a Flood Insurance
Rate Map published by the Federal Emergency Management Agency as Zone
A, AO, Al-30, AE, A99, AH, VO, Vl-30, VE, V, M or E) and the broad
form flood coverage required by clause (i) above is not available, in
an amount equal to the full replacement cost or the maximum amount
then available under the National Flood Insurance Program;
(iv) Rent loss insurance in an amount sufficient to recover
at least the total estimated gross receipts from all sources of
income, including without limitation, rental income, for the Real
Estate for a twelve month period;
(v) Commercial general liability insurance against claims
for personal injury (to include, without limitation, bodily injury and
personal and advertising injury) and property damage liability, all on
an occurrence basis, if commercially available, with such coverages as
the Agent may reasonably request (including, without limitation,
contractual liability coverage, completed operations coverage for a
period of two years following completion of construction of any
improvements on the Real Estate, and coverages equivalent to an ISO
broad form endorsement), with a general aggregate limit of not less
than $1,000,000, a completed operations aggregate limit of not less
than $1,000,000, and a combined single "per occurrence" limit of not
less than $1,000,000 for bodily injury, property damage and medical
payments;
(vi) During the course of construction or repair of any
improvements on the Real Estate in excess of $1,000,000, owner's
contingent or protective liability insurance covering claims not
covered by or under the terms or provisions of the insurance required
by clause (v) above;
(vii) Employers liability insurance (with respect to the
Borrower's employees only);
(viii) Umbrella liability insurance with limits of not
less than $50,000,000 to be in excess of the limits of the insurance
required by clauses (v), (vi) and (vii) above, with coverage at least
as broad as the primary coverages of the insurance required by clauses
(v), (vi) and (vii) above, with any excess liability insurance to be
at least as broad as the coverages of the lead umbrella policy. All
such policies shall be endorsed to provide defense coverage
obligations;
(ix) Workers' compensation insurance for all employees of
the Borrower or its Subsidiaries engaged on or with respect to the
Real Estate; and
(x) Such other insurance in such form and in such amounts
as may from time to time be required by the Majority Banks against
other insurable hazards and casualties which at the time are commonly
insured against in the case of properties of similar character and
location to the Real Estate.
The Borrower shall pay or cause to be paid all premiums on insurance
policies. The insurance policies with respect to all Mortgaged Property
provided for in clauses (v), (vi) and (viii) above with respect to all
Mortgaged Property shall name the Agent and each Bank as an additional
insured. The insurance policies provided for in clauses (i), (ii), (iii)
and (iv) above shall name the Agent as mortgagee and loss payee, shall be
first payable in case of loss to the Agent, and shall contain mortgage
clauses and lender's loss payable endorsements in form and substance
acceptable to the Agent. The Borrower shall deliver duplicate originals or
certified copies of all such policies to the Agent, and the Borrower shall
promptly furnish to the Agent all renewal notices and evidence that all
premiums or portions thereof then due and payable have been paid. At least
15 days prior to the expiration date of the policies, the Borrower shall
deliver to the Banks evidence of continued coverage, including a
certificate of insurance, as may be satisfactory to the Agent.
(b) All policies of insurance required by this Agreement shall
contain clauses or endorsements to the effect that (i) no act or omission
of either the Borrower or any Subsidiary of the Borrower or anyone acting
for the Borrower or any Subsidiary of the Borrower shall affect the
validity or enforceability of such insurance insofar as the Agent is
concerned, (ii) the insurer waives any right of setoff, counterclaim,
subrogation, or any deduction in respect of any liability of the Borrower
or any Subsidiary of the Borrower and the Agent, (iii) such insurance is
primary and without right of contribution from any other insurance which
may be available, (iv) such policies shall not be modified, canceled or
terminated prior to the scheduled expiration date thereof without the
insurer thereunder giving at least 15 days prior written notice to the
Agent by certified or registered mail, and (v) that the Agent or the Banks
shall not be liable for any premiums thereon or subject to any assessments
thereunder, and shall in all events be in amounts sufficient to avoid any
coinsurance liability.
(c) The insurance required by this Agreement may be effected
through a blanket policy or policies covering additional locations and
property of the Borrower, its Subsidiaries, and other Persons not included
in the Mortgaged Property, provided that such blanket policy or policies
comply with all of the terms and provisions of this Section 7.7 and
contain endorsements or clauses reasonably satisfactory to the Agent.
(d) All policies of insurance required by this Agreement shall
be issued by companies licensed to do business in the State where the
policy is issued and also in the states where the Real Estate is located
and having a rating in Best's Key Rating Guide of at least "A" and a
financial size category of at least "VIII".
(e) Neither the Borrower nor any Subsidiary of the Borrower
shall carry separate insurance, concurrent in kind or form or contributing
in the event of loss, with any insurance required under this Agreement
unless such insurance complies with the terms and provisions of this
Section 7.7.
(f) In the event of any loss or damage to the Mortgaged
Property, the Borrower shall give immediate written notice to the insurance
carrier and the Agent, and the Agent shall furnish a copy of such notice
promptly to each of the Banks. The Borrower may make proof of loss and
adjust and compromise any claim under insurance policies which is of an
amount not more than $1,000,000.00 so long as no Event of Default has
occurred and is continuing and so long as such claim is pursued diligently
and in good faith. The Borrower hereby irrevocably authorizes and empowers
the Agent, at the Agent's option in the Agent's sole discretion or at the
request of the Majority Banks in their sole discretion, as attorney in fact
for the Borrower, to make proof of any loss except as provided in the
preceding sentence, to adjust and compromise any claim under insurance
policies, to appear in and prosecute any action arising from such insurance
policies, to collect and receive insurance proceeds, and to deduct
therefrom the Agent's expenses incurred in the collection of such proceeds.
If the Mortgaged Property is acquired by the Agent or any nominee through
foreclosure, deed in lieu of foreclosure or otherwise is acquired from the
owner thereof, all right, title and interest of the owner of such Mortgaged
Property in and to any insurance policies and unearned premiums thereon and
in and to the proceeds thereof resulting from loss or damage to the
Mortgaged Property prior to such sale or acquisition shall pass to the
Agent or any other successor in interest to the owner or purchaser or
grantee of the Mortgaged Property.
(g) Subject to the terms of the following sentence, the Borrower
authorizes the Agent, at the Agent's option or at the request of the
Majority Bank's in their sole discretion, to (i) apply the balance of such
proceeds to the payment of the Obligations whether or not then due, or
(ii) if the Agent or the Majority Banks shall require the reconstruction or
repair of the Mortgaged Property, to hold the balance of such proceeds to
be used to pay all taxes, charges, sewer use fees, water rates and
assessments which may be imposed upon the Mortgaged Property and the
Obligations as they become due during the course of reconstruction or
repair of the Mortgaged Property and to reimburse the Borrower, in
accordance with such terms and conditions as Agent may prescribe, for the
cost of such reconstruction or repair of the Mortgaged Property, and on
completion of such reconstruction or repair to pay any excess funds to the
Borrower so long as no Default or Event of Default has occurred and is
continuing, or if a Default or Event of Default has occurred and is
continuing, to apply any of the excess to the payment of the Obligations.
Notwithstanding the foregoing, the Agent shall make such net proceeds
available to the Borrower to reconstruct and repair the Mortgaged Property,
in accordance with such terms and conditions as the Agent may prescribe for
the disbursement of such proceeds to assure completion of such
reconstruction or repair provided that (A) no Default or Event of Default
shall have occurred and be continuing, (B) the Borrower shall have provided
to Agent additional cash security in an amount equal to the amount
reasonably estimated by the Agent to be the amount in excess of such
proceeds which will be required to complete such repair or restoration, and
(C) the Agent shall determine that such repair or reconstruction can be
completed prior to the Maturity Date, (D) the cost of such reconstruction
or repair is not estimated by the Agent to exceed fifty percent (50%) of
the Appraised Value of such Mortgaged Property, (E) the Agent shall have
approved the plans and specifications for such repair or restoration and
determined that the repaired or restored Mortgaged Property will provide
the Banks with adequate security for the Obligations, and (F) the Borrower
shall have delivered to the Agent written agreements binding upon all
tenants or other parties having present or future rights to possession of
any portion of the Mortgaged Property or having any right to require
repair, restoration or completion of the Mortgaged Property or any portion
thereof, agreeing upon a date for delivery of possession of the Mortgaged
Property or their respective portions thereof, or for such required repair,
restoration or completion, to permit time which is sufficient in the
judgment of the Agent for such repair or restoration and approving the
plans and specifications for such repair or restoration, or other evidence
satisfactory to the Agent that none of such tenants or other parties may
terminate their Leases as a result of such casualty or have a right to
approve the plans and specifications for such repair or restoration.
(h) The Borrower, at its expense, will procure and maintain or
cause to be procured and maintained, insurance covering the Borrower and
the Real Estate other than the Mortgaged Property in such amounts and
against such risks and casualties as are customary for properties of
similar character and location, due regard being given to the type of
improvements thereon, their construction, location, use and occupancy.
(i) The Borrower shall provide or cause to be provided to the
Agent for the benefit of the Banks Title Policies for all of the Mortgaged
Property which shall at all times be in an aggregate amount of not less
than the initial Designated Collateral Value attributable to such Mortgaged
Property (provided that a Title Policy for an individual Mortgaged Property
need not equal the aggregate Designated Collateral Value). Each Title
Policy shall also contain, to the extent available, a tie-in endorsement
aggregating the insurance coverage provided under all of the policies with
tie-in endorsements.
Section 16.8. Taxes. The Borrower and each Subsidiary will duly pay
and discharge, or cause to be paid and discharged, before the same shall
become overdue, all taxes, assessments and other governmental charges
imposed upon it and upon the Mortgaged Property and the other Real Estate
and Collateral, sales and activities, or any part thereof, or upon the
income or profits therefrom, as well as all claims for labor, materials, or
supplies that if unpaid might by law become a lien or charge upon any of
its property; provided that any such tax, assessment, charge, levy or claim
need not be paid if the validity or amount thereof shall currently be
contested in good faith by appropriate proceedings and if the Borrower or
such Subsidiary shall have set aside on its books adequate reserves with
respect thereto; and provided, further, that forthwith upon the
commencement of proceedings to foreclose any lien that may have attached as
security therefor, the Borrower and each Subsidiary of the Borrower either
(i) will provide a bond issued by a surety reasonably acceptable to the
Majority Banks and sufficient to stay all such proceedings or (ii) if no
such bond is provided, will pay each such tax, assessment, charge, levy or
claim.
Section 16.9. Inspection of Properties and Books. The Borrower
shall permit the Banks, through the Agent or any representative designated
by the Agent, at the Borrower's expense to visit and inspect any of the
properties of the Borrower or any of its Subsidiaries, to examine the books
of account of the Borrower and its Subsidiaries (and to make copies thereof
and extracts therefrom) and to discuss the affairs, finances and accounts
of the Borrower and its Subsidiaries with, and to be advised as to the same
by, its officers, all at such reasonable times and intervals as the Agent
or any Bank may reasonably request. The Banks shall use good faith efforts
to coordinate such visits and inspections so as to minimize the
interference with and disruption to the Borrower's normal business
operations.
Section 16.10. Compliance with Laws, Contracts, Licenses, and
Permits. The Borrower will comply with, and will cause each of its
Subsidiaries to comply in all respects with (i) all applicable laws and
regulations now or hereafter in effect wherever its business is conducted,
including all Environmental Laws, (ii) the provisions of its corporate
charter, and other charter documents and bylaws, (iii) all agreements and
instruments to which it is a party or by which it or any of its properties
may be bound, (iv) all applicable decrees, orders, and judgments, and
(v) all licenses and permits required by applicable laws and regulations
for the conduct of its business or the ownership, use or operation of its
properties. If at any time while any Loan or Note is outstanding or the
Banks have any obligation to make Loans hereunder, any authorization,
consent, approval, permit or license from any officer, agency or
instrumentality of any government shall become necessary or required in
order that the Borrower may fulfill any of its obligations hereunder, the
Borrower will immediately take or cause to be taken all steps necessary to
obtain such authorization, consent, approval, permit or license and furnish
the Agent and the Banks with evidence thereof.
Section 16.11. Use of Proceeds. The Borrower will use the proceeds
of the Loans solely to provide short-term financing (a) for the acquisition
of fee interests by Borrower or, subject to the approval of the Majority
Banks, by a Subsidiary of the Borrower in Real Estate which is located in
the northeastern United States and utilized principally as commercial
office space, (b) for Capital Improvement Projects to Real Estate owned by
the Borrower, (c) for the repayment of Indebtedness incurred or assumed by
the Borrower or any Subsidiary of the Borrower in connection with the
acquisitions and investments described in Section 7.11(a), and to repay
third party indebtedness of the Borrower or its Subsidiaries incurred or
assumed in connection with assets acquired prior to the Closing Date,
(d) subject to the terms of this Agreement, for the acquisition of the
Equity Interests, (e) for reasonable transaction costs related to the
transactions referred to in the preceding clause (a) and (d), (f) up to
$10,000,000 for general working capital purposes, (g) to repay the
indebtedness permitted by Section 8.1(j); and (h) for such other purposes
as the Majority Banks may approve. Notwithstanding the foregoing, in no
event shall the proceeds of the Loan be used to acquire any asset that as a
part of such transaction or in a related transaction will be or is to
become subject to a lien against such asset other than a lien in favor of
the Agent and the Banks under the Loan Documents. All of the proceeds of
the advance for the property commonly known as Mountain Heights shall be
used to reduce the Indebtedness described in Section 8.1(j).
Section 16.12. Further Assurances. The Borrower will cooperate
with, and will cause each of its Subsidiaries and the Guarantor to
cooperate with, the Agent and the Banks and execute such further
instruments and documents as the Banks or the Agent shall reasonably
request to carry out to their satisfaction the transactions contemplated by
this Agreement and the other Loan Documents.
Section 16.13. Management Agreements. The Borrower shall provide
prompt written notice to the Agent of any termination or material
modification or amendment of any Management Agreement, provided that,
without the prior consent of the Majority Banks, none of the Management
Agreements shall be modified or amended to increase the fees payable
thereunder. The Borrower shall not enter into any Management Agreement or
otherwise manage any of the Mortgaged Property except with property and
leasing managers having sufficient expertise and resources to manage such
properties as class A office buildings (or if such buildings are Non-
Stabilized Properties, as class B office buildings), and on leasing terms
and conditions no less favorable to the Borrower than are contained in the
Management Agreements delivered to the Agent prior to the date hereof or
are otherwise on then commercially reasonable terms.
Section 16.14. ERISA Compliance. The Borrower will not permit the
present value of all employee benefits vested in all Employee Benefit
Plans, Multiemployer Plans and Guaranteed Pension Plans maintained by the
Borrower and any ERISA Affiliate thereof to exceed the present value of the
assets allocable to such vested benefits by an amount greater than
$500,000.00 in the aggregate. Neither the Borrower nor any ERISA Affiliate
thereof will at any time permit any such Plan maintained by it to engage in
any "prohibited transaction" as such term is defined in Section 4975 of
the Code or Section 406 of ERISA, incur any "accumulated funding
deficiency" as such term is defined in Section 302 of ERISA, whether or
not waived, or terminate any such Plan in any manner which could result in
the imposition of a lien on the property of the Borrower or the Guarantor
pursuant to Section 4068 of ERISA.
Section 16.15. Distribution of Income to the Borrower. The Borrower
shall cause all of its Subsidiaries to promptly distribute to the Borrower
(but not less frequently than once each fiscal quarter of the Borrower),
whether in the form of dividends, distributions or otherwise, all profits,
proceeds or other income relating to or arising from its Subsidiaries' use,
operation, financing, refinancing, sale or other disposition of their
respective assets and properties after (a) the payment by each Subsidiary
of its operating expenses and debt service for such quarter and (b) the
establishment of reasonable reserves for the payment of operating expenses
not paid on at least a quarterly basis and capital improvements to be made
to such Subsidiary's assets and properties approved by such Subsidiary in
the ordinary course of business consistent with its past practices.
Section 16.16. More Restrictive Agreements. Without limiting the
terms of Section 8.1, should the Borrower or any Guarantor enter into or
modify any agreements or documents pertaining to any existing or future
Indebtedness, Debt Offering or Equity Offering, which agreements or
documents include covenants (whether affirmative or negative), warranties,
representations, defaults or events of default (or any other provision
which may have the same practical effect as any of the foregoing) which are
individually or in the aggregate more restrictive against the Borrower, the
Guarantor or their respective Subsidiaries than those set forth herein or
in any of the other Loan Documents, the Borrower shall promptly notify the
Agent and, if requested by the Majority Banks, the Borrower, the Agent, and
the Majority Banks shall (and if applicable, the Borrower shall cause the
Guarantor to) promptly amend this Agreement and the other Loan Documents to
include some or all of such more restrictive provisions as determined by
the Majority Banks in their sole discretion. Notwithstanding the
foregoing, this Section 7.16 shall not apply to covenants contained in any
agreements or documents evidencing or securing Non-Recourse Indebtedness or
covenants in agreements or documents relating to recourse Indebtedness that
relate only to specific Real Estate that is collateral for such
Indebtedness.
Section 16.17. Compliance. The Borrower shall operate its business,
and shall cause each of its Subsidiaries to operate its business, in
compliance with the terms and conditions of this Agreement and the other
Loan Documents. Wellsford Commercial shall at all times comply with all
requirements of applicable laws necessary to maintain REIT Status.
Section 16.18. [Intentionally Omitted].
Section 16.19. Leasing. The Borrower will take or cause to be taken
all reasonable steps within the power of the Borrower to market and lease
the leasable area of the Mortgaged Properties. The Borrower will not lease
all or any portion of the Mortgaged Property or amend, supplement or
otherwise modify, terminate or cancel, or accept the surrender of, or
consent to the assignment or subletting of, or grant any concessions to or
waive the performance of any obligations of any tenant, lessee or licensee
under, any now existing or future Lease without the prior written consent
of the Agent; provided, however, with respect to any Lease which covers
less than 25,000 square feet or provides less than three percent (3%) of
the Operating Cash Flow of the Mortgaged Properties, whichever is less, the
Borrower may amend, supplement or otherwise modify, terminate or cancel, or
accept the surrender of, or consent to the assignment or subletting of, or
granting concessions to or waive the performance of any obligations of any
tenant, lessee or licensee under any such Lease in the ordinary course of
business consistent with sound leasing and management practices for similar
properties. The Borrower shall furnish the Agent with executed copies of
all Leases hereafter made, and all Leases now or hereafter entered into
will be in form and substance subject to the approval of the Agent. Upon
the Agent's request, the Borrower shall make a separate and distinct
assignment to the Agent as additional security, of all Leases hereafter
made. Notwithstanding the foregoing, following the Agent's approval of the
"Leasing Parameters" (as hereinafter defined) for the Mortgaged Property,
then the Borrower may, without the prior approval of the Agent and (prior
to the initial syndication) Goldman, enter into any Lease provided that the
Lease covers less than 25,000 square feet or provides less than three
percent (3%) of the Operating Cash Flow of the Mortgaged Properties, is a
bona fide arm's length lease entered into in the ordinary course of
business with a party unaffiliated with the Borrower, Guarantor or any
Member, falls within the Leasing Parameters and is on the standard lease
form (without material modification or addition). In connection with any
Lease to be approved by the Agent as provided herein, the Borrower shall
submit to the Agent for its approval the identity of the tenant and a
summary of the major terms of the Lease (which terms shall include without
limitation those matters included within the Leasing Parameters)
(collectively the "Major Terms"), and Agent's approval shall be limited to
the approval of the Major Terms, and provided further that any such terms
submitted to the Agent for approval shall be deemed approved by the Agent
unless the Agent expressly disapproves the same by written notice delivered
to the Borrower (which shall state the reasons for disapproval) within five
(5) business days after the date of the delivery of such Lease to the Agent
for approval and all other information reasonably requested by the Agent in
order to make such determination. Following the approval by the Agent of
the Major Terms, the Borrower shall be permitted to enter into a lease to
such tenant which falls within the Major Terms. As used herein, "Leasing
Parameters" means leasing parameters for the Mortgaged Property approved by
the Agent and (prior to the initial syndication) Goldman. Leasing
Parameters shall include, without limitation, the minimum and maximum term,
the minimum rent, tax and operating stops, tenant standard improvements,
tenant allowances and other tenant inducements and leasing commissions, and
shall be approved by the Agent prior to the commencement of each calendar
year during the term of the Notes. The Borrower will require, and each
Lease will require, each tenant to enter into a Nondisturbance, Attornment
and Subordination Agreement and to provide an estoppel certificate
satisfactory to the Agent upon the request of the Agent. The Agent shall
have the right, and the Borrower hereby authorizes the Agent, to
communicate directly with any tenant under a Lease to verify any
information delivered to the Agent by the Borrower concerning such tenant
or such tenant's Lease.
Section 16.20. Plan Assets, etc. The Borrower will do, or cause to
be done, all things necessary to ensure that it will not be deemed to hold
Plan Assets at any time. Each owner of an equity interest in Borrower has
certified to Borrower and the Banks, and Borrower shall require each
proposed transferee of any equity interest in Borrower, as a condition
precedent to such transfer, to certify to Borrower and the Banks, that the
source of funds used or to be used by it to acquire its interest in
Borrower are not assets of any plan subject to Title I of ERISA or Section
4975 of the Code and are not deemed to be assets of any such plan under the
U.S. Department of Labor's plan asset regulations. Borrower has provided
the Agent with a copy of each such certification from each owner of an
equity interest in Borrower and will promptly provide the Agent with a copy
of each such certification from each proposed transferee.
Section 17. CERTAIN NEGATIVE COVENANTS OF THE BORROWER.
The Borrower covenants and agrees that, so long as any Loan or Note is
outstanding or any of the Banks has any obligation to make any Loans:
Section 17.1. Restrictions on Indebtedness. The Borrower will not,
and will not permit any of its Subsidiaries to, create, incur, assume,
guarantee or be or remain liable, contingently or otherwise, with respect
to any Indebtedness other than:
(a) Indebtedness to the Banks arising under any of the Loan
Documents;
(b) current liabilities of the Borrower or its Subsidiaries
incurred in the ordinary course of business but not incurred through (i)
the borrowing of money, or (ii) the obtaining of credit except for credit
on an open account basis customarily extended and in fact extended in
connection with normal purchases of goods and services;
(c) Indebtedness in respect of taxes, assessments, governmental
charges or levies and claims for labor, materials and supplies to the
extent that payment therefor shall not at the time be required to be made
in accordance with the provisions of Section 7.8;
(d) Indebtedness in respect of judgments or awards that have
been in force for less than the applicable period for taking an appeal so
long as execution is not levied thereunder or in respect of which the
Borrower or the relevant Subsidiary shall at the time in good faith be
prosecuting an appeal or proceedings for review and in respect of which a
stay of execution shall have been obtained pending such appeal or review;
(e) endorsements for collection, deposit or negotiation and
warranties of products or services, in each case incurred in the ordinary
course of business;
(f) Subject to Section 9, recourse Indebtedness (other than the
Obligations) of the Borrower or any Subsidiary of the Borrower (other than
Term Loan Borrower) in the aggregate principal amount not greater than
$15,000,000.00, provided that neither the Borrower nor any of such
Subsidiaries shall incur any Indebtedness pursuant to this Section 8.1(f)
unless it shall have provided to the Agent a statement that no Default or
Event of Default exists and a Compliance Certificate demonstrating that the
Borrower will be in compliance with its covenants referred to therein after
giving effect to such incurrence. At such time as the amount determined by
performing the calculation set forth in Section 9.4 exceeds
$75,000,000.00, the $15,000,000.00 threshold in this Section 8.1(f) shall
be increased to $20,000,000.00;
(g) Non-recourse Indebtedness of the Borrower or any Subsidiary
of the Borrower (other than Term Loan Borrower), provided that:
(i) in the event that the property to be financed is a Non-
Stabilized Property, such Indebtedness is incurred in connection
with the acquisition of such Non-Stabilized Property and the
credit facility established pursuant to this Agreement is fully
funded, or if not fully funded, the Indebtedness to be incurred
in connection with an acquisition or refinance is in excess of
the remaining amounts available to be funded pursuant to this
Agreement (assuming such Real Estate was to become a Mortgaged
Property) or the Banks do not approve the addition of such
property as a Mortgaged Property; or
(ii) in the event that the property to be financed is a
Stabilized Property, such Indebtedness is incurred when (A) the
credit facility established pursuant to the Term Loan Agreement
is fully funded, or (B) if not fully funded, the Indebtedness to
be incurred in connection with the refinance of such Stabilized
Property (1) is in excess of the amounts remaining to be funded
under the Term Loan Agreement (assuming such Real Estate was to
become collateral for the Term Loan) and the "Banks" under the
Term Loan Agreement shall have been afforded a reasonable
opportunity to increase the amounts available under the Term Loan
Agreement to accommodate such funding (provided that the "Banks"
under the Term Loan Agreement need not be afforded an opportunity
to increase the amount of the Term Loan to accommodate a funding
in the event that such "Banks" shall have previously been
afforded an opportunity to increase the Term Loan to accommodate
a funding), or if the "Banks" under the Term Loan Agreement have
approved such increase, the Banks have not approved such
increase, or (2) the Term Loan Banks have rejected the request to
include such property as collateral for the Term Loan Agreement;
provided that neither the Borrower nor any of its Subsidiaries shall incur
any Indebtedness pursuant to this Section 8.1(g) unless it shall have
provided to the Agent a statement that no Default or Event of Default
exists and a Compliance Certificate demonstrating that the Borrower will be
in compliance with its covenants referred to therein and the covenants set
forth in Section 9 of the Term Loan Agreement after giving effect to such
incurrence;
(h) Subject to Section 9, Non-recourse Indebtedness existing
prior to an acquisition of Real Estate by the Borrower of its Subsidiaries
(other than the Term Loan Borrower) that is assumed by Borrower or any of
its Subsidiaries (other than Term Loan Borrower) in connection with the
acquisition of Real Estate, provided that neither the Borrower nor any of
such Subsidiaries shall incur any Indebtedness pursuant to this Section
8.1(h) unless it shall have provided to the Agent a statement that no
Default or Event of Default exists and a Compliance Certificate
demonstrating that the Borrower will be in compliance with its covenants
referred to therein after giving effect to such incurrence;
(i) Subject to Section 9, Indebtedness of the Term Loan
Borrower under the Term Loan Agreement not to exceed $225,000,000.00;
provided that in no event shall the principal Indebtedness under the Term
Loan Agreement and the Total Commitment exceed $375,000,000.00; and
(j) Indebtedness of the Borrower to Wellsford Real Properties in
a principal amount not to exceed $4,253,087.00 after the initial funding of
the Loans, which Indebtedness shall be subordinate to the repayment of the
Obligations pursuant to a subordination agreement satisfactory to the
Agent.
Section 17.2. Restrictions on Liens, Etc. The Borrower will not,
and will not permit any of its Subsidiaries to, (a) create or incur or
suffer to be created or incurred or to exist any lien, encumbrance,
mortgage, pledge, negative pledge, charge, restriction or other security
interest of any kind upon any of its property or assets of any character
whether now owned or hereafter acquired, or upon the income or profits
therefrom; (b) transfer any of its property or assets or the income or
profits therefrom for the purpose of subjecting the same to the payment of
Indebtedness or performance of any other obligation in priority to payment
of its general creditors; (c) acquire, or agree or have an option to
acquire, any property or assets upon conditional sale or other title
retention or purchase money security agreement, device or arrangement;
(d) suffer to exist for a period of more than 30 days after the same shall
have been incurred any Indebtedness or claim or demand against it that if
unpaid might by law or upon bankruptcy or insolvency, or otherwise, be
given any priority whatsoever over its general creditors; (e) sell, assign,
pledge or otherwise transfer any accounts, contract rights, general
intangibles, chattel paper or instruments, with or without recourse; or (f)
incur or maintain any obligation to any holder of Indebtedness of the
Borrower or such Subsidiary which prohibits the creation or maintenance of
any lien securing the Obligations (collectively "Liens"); provided that the
Borrower and any Subsidiary of the Borrower owning Collateral may create or
incur or suffer to be created or incurred or to exist:
(i) liens in favor of the Borrower on all or part of the assets
of Subsidiaries of the Borrower securing Indebtedness owing by
Subsidiaries of the Borrower to the Borrower (provided that no such
liens shall be permitted with respect to any of the Collateral);
(ii) liens on properties to secure taxes, assessments and other
governmental charges or claims for labor, material or supplies in
respect of obligations not overdue;
(iii) deposits or pledges made in connection with, or to
secure payment of, workers' compensation, unemployment insurance, old
age pensions or other social security obligations;
(iv) liens on properties other than the Mortgaged Property or any
other Collateral in respect of judgments, awards or indebtedness, the
Indebtedness with respect to which is permitted by Section 8.1(d),
(f), (g), (h) or (i);
(v) encumbrances on properties other than the Mortgaged Property
and Mezzanine Property consisting of easements, rights of way, zoning
restrictions, restrictions on the use of real property and defects and
irregularities in the title thereto, landlord's or lessor's liens
under leases to which the Borrower or a Subsidiary of the Borrower is
a party, and other minor non-monetary liens or encumbrances none of
which interferes materially with the use of the property affected in
the ordinary conduct of the business of the Borrower and its
Subsidiaries, which defects do not individually or in the aggregate
have a materially adverse effect on the business of the Borrower
individually or of the Borrower and its Subsidiaries on a consolidated
basis;
(vi) liens in favor of the Agent and the Banks under the Loan
Documents; and
(vii) liens and encumbrances on a Mortgaged Property
expressly permitted under the terms of the Security Deed relating
thereto.
Section 17.3. Restrictions on Investments. The Borrower will not,
and will not permit any of its Subsidiaries to, make or permit to exist or
to remain outstanding any Investment except Investments in:
(a) marketable direct or guaranteed obligations of the United
States of America that mature within one (1) year from the date of purchase
by the Borrower or its Subsidiary;
(b) marketable direct obligations of any of the following:
Federal Home Loan Mortgage Corporation, Student Loan Marketing Association,
Federal Home Loan Banks, Federal National Mortgage Association, Government
National Mortgage Association, Bank for Cooperatives, Federal Intermediate
Credit Banks, Federal Financing Banks, Export-Import Bank of the United
States, Federal Land Banks, or any other agency or instrumentality of the
United States of America;
(c) demand deposits, certificates of deposit, bankers
acceptances and time deposits of United States banks having total assets in
excess of $100,000,000; provided, however, that the aggregate amount at any
time so invested with any single bank having total assets of less than
$1,000,000,000 will not exceed $200,000;
(d) securities commonly known as "commercial paper" issued by a
corporation organized and existing under the laws of the United States of
America or any State which at the time of purchase are rated by Moody's
Investors Service, Inc. or by Standard & Poor's Corporation at not less
than "P 1" if then rated by Moody's Investors Service, Inc., and not less
than "A 1", if then rated by Standard & Poor's Corporation;
(e) mortgage-backed securities guaranteed by the Government
National Mortgage Association, the Federal National Mortgage Association or
the Federal Home Loan Mortgage Corporation and other mortgage-backed bonds
which at the time of purchase are rated by Moody's Investors Service, Inc.
or by Standard & Poor's Corporation at not less than "Aa" if then rated by
Moody's Investors Service, Inc. and not less than "AA" if then rated by
Standard & Poor's Corporation;
(f) repurchase agreements having a term not greater than 90 days
and fully secured by securities described in the foregoing subsection (a),
(b) or (e) with banks described in the foregoing subsection (c) or with
financial institutions or other corporations having total assets in excess
of $500,000,000;
(g) shares of so-called "money market funds" registered with the
SEC under the Investment Company Act of 1940 which maintain a level
per-share value, invest principally in investments described in the
foregoing subsections (a) through (f) and have total assets in excess of
$50,000,000;
(h) Investments in fee interests in Real Estate located in the
northeastern United States utilized principally for commercial office
space, including earnest money deposits relating thereto and transaction
costs;
(i) Investments in Term Loan Borrower provided it is wholly-
owned by the Borrower and other wholly-owned Subsidiaries of the Borrower
which own Investments of the type described in Section 8.3(h) or (j);
provided that in no event shall the aggregate value of such Investments
(excluding Real Estate transferred by Borrower to Term Loan Borrower in
connection with a refinancing of the Indebtedness secured thereby in
accordance with this Agreement) exceed fifteen percent (15%) of the
Borrower's Consolidated Total Assets;
(j) Investments in leasehold interests in properties located in
the northeastern United States which are used principally for commercial
office purposes under ground leases having not less than fifty (50) years
of the leasehold term remaining at the time of acquisition thereof by the
Borrower;
(k) Investments in Investment Partnerships which own Investments
of the type described in Section 8.3(h) or (j); provided that the
aggregate value of such Investments shall not exceed ten percent (10%) of
Borrower's Consolidated Total Assets; and
(l) Subject to the term of this Agreement, Investments in the
Equity Interests.
Section 17.4. Merger, Consolidation. The Borrower will not, and
will not permit any of its Subsidiaries to, become a party to any merger,
consolidation or other business combination, or agree to effect any asset
acquisition, stock acquisition or other acquisition without the prior
written consent of the Majority Banks except (i) the merger or
consolidation of one or more of the Subsidiaries of the Borrower with and
into the Borrower, (ii) the merger or consolidation of two or more
Subsidiaries of the Borrower, and (iii) the merger or consolidation of one
or more unaffiliated corporations or other entities with and into the
Borrower where (a) the Borrower is the surviving entity, (b) immediately
after the merger or consolidation, the original shareholders of the
Borrower at the time of such consolidation or merger own at least fifty-one
percent (51%) of the Voting Interests in the Borrower (which for the
purposes hereof shall include satisfaction of the provisions of clauses (a)
and (b) of the definition of the term "Voting Interests"), (c) the purpose
of the consolidation or merger is the acquisition of Real Estate used for
commercial office purposes located in the northeastern United States,
(d) the assets of such other entity do not exceed fifty percent (50%) of
the Consolidated Total Assets of the Borrower as determined prior to such
merger, and (e) immediately prior to such merger the Borrower shall have
provided to the Agent a written statement that no Default or Event of
Default exists and a Compliance Certificate demonstrating that the Borrower
will be in compliance with the covenants referred to therein after giving
effect to said merger.
Section 17.5. Sale and Leaseback. The Borrower will not, and will
not permit any of its Subsidiaries to, enter into any arrangement, directly
or indirectly, whereby the Borrower or any Subsidiary of the Borrower shall
sell or transfer any Real Estate owned by it in order that then or
thereafter the Borrower or any Subsidiary shall lease back such Real
Estate.
Section 17.6. Compliance with Environmental Laws. The Borrower will
not, and will not permit any of its Subsidiaries, to do any of the
following: (a) use any of the Real Estate or Mezzanine Property or any
portion thereof as a facility for the handling, processing, storage or
disposal of Hazardous Substances, except for small quantities of Hazardous
Substances used in the ordinary course of business and in compliance with
all applicable Environmental Laws, (b) cause or permit to be located on any
of the Real Estate or Mezzanine Property any underground tank or other
underground storage receptacle for Hazardous Substances except in full
compliance with Environmental Laws, (c) generate any Hazardous Substances
on any of the Real Estate or Mezzanine Property except in full compliance
with Environmental Laws, (d) conduct any activity at any Real Estate or
Mezzanine Property or use any Real Estate or Mezzanine Property in any
manner so as to cause a Release of Hazardous Substances on, upon or into
the Real Estate or Mezzanine Property or any surrounding properties or any
threatened Release of Hazardous Substances which might give rise to
liability under CERCLA or any other Environmental Law, or (e) directly or
indirectly transport or arrange for the transport of any Hazardous
Substances (except in compliance with all Environmental Laws).
The Borrower shall:
(i) in the event of any change in Environmental Laws governing
the assessment, release or removal of Hazardous Substances, which change
would lead a prudent lender to require additional testing to avail itself
of any statutory insurance or limited liability, take all action
(including, without limitation, the conducting of engineering tests at the
sole expense of the Borrower) to confirm that no Hazardous Substances have
been Released or disposed of on the Mortgaged Property or Mezzanine
Property in violation of any Environmental Laws; and
(ii) if any Release or disposal of Hazardous Substances shall
occur or shall have occurred on the Mortgaged Property or Mezzanine
Property (including without limitation any such Release or disposal
occurring prior to the acquisition of such Mortgaged Property or Mezzanine
Property by the Borrower), cause the prompt containment and removal of such
Hazardous Substances and remediation of the Mortgaged Property or Mezzanine
Property in full compliance with all applicable laws and regulations and to
the satisfaction of the Majority Banks; provided, that the Borrower shall
be deemed to be in compliance with Environmental Laws for the purpose of
this clause (ii) so long as it or a responsible third party with sufficient
financial resources is taking reasonable action to remediate or manage any
event of noncompliance to the satisfaction of the Majority Banks and no
action shall have been commenced by any enforcement agency. The Majority
Banks may engage their own Environmental Engineer to review the
environmental assessments and the Borrower's compliance with the covenants
contained herein.
At any time after an Event of Default shall have occurred hereunder,
or, whether or not an Event of Default shall have occurred, at any time
that the Agent or the Majority Banks shall have reasonable grounds to
believe that a Release or threatened Release of Hazardous Substances may
have occurred, relating to any Mortgaged Property or Mezzanine Property, or
that any of the Mortgaged Property or Mezzanine Property is not in
compliance with the Environmental Laws, the Agent may at its election (and
will at the request of the Majority Banks) obtain such environmental
assessments of such Mortgaged Property or Mezzanine Property prepared by an
Environmental Engineer as may be necessary or advisable for the purpose of
evaluating or confirming (i) whether any Hazardous Substances are present
in the soil or water at or adjacent to such Mortgaged Property or Mezzanine
Property and (ii) whether the use and operation of such Mortgaged Property
or Mezzanine Property comply with all Environmental Laws. Environmental
assessments may include detailed visual inspections of such Mortgaged
Property or Mezzanine Property including, without limitation, any and all
storage areas, storage tanks, drains, dry wells and leaching areas, and the
taking of soil samples, as well as such other investigations or analyses as
are necessary or appropriate for a complete determination of the compliance
of such Mortgaged Property or Mezzanine Property and the use and operation
thereof with all applicable Environmental Laws. All such environmental
assessments shall be at the sole cost and expense of the Borrower.
Section 17.7. Distributions. The Borrower will not make any
Distributions which would cause it to violate any of the following
covenants:
(a) The Borrower shall not pay any Distribution to the members
of the Borrower in excess of the amount (assuming that Distributions are
made pro rata to the Members in accordance with their respective ownership
interests) which is sufficient to allow Wellsford Commercial to receive
from the Borrower the minimum distributions required under the Code to
maintain the REIT Status of Wellsford Commercial (assuming for the purposes
hereof that such Distributions are the only income of Wellsford
Commercial), as evidenced by a certification of the principal financial or
accounting officer of the Borrower containing calculations in detail
reasonably satisfactory in form and substance to the Agent; provided that
in all events Distributions of not less than $1,250,000.00 per annum shall
be permitted pursuant to this Section 8.7(a); and
(b) The Borrower shall make no Distributions in the event that
an Event of Default shall have occurred and be continuing or a Default or
Event of Default would be created after giving effect to such Distribution.
Section 17.8. Asset Sales. Neither the Borrower nor any Subsidiary
of the Borrower shall sell, transfer or otherwise dispose of any Real
Estate or other Investment described in Section 8.3(j), Section 8.3(k)
or Section 8.3(l) (except as the result of a condemnation or casualty and
except for the granting of Permitted Liens) unless there shall have been
delivered to the Banks a statement that no Default or Event of Default
exists and a Compliance Certificate demonstrating that the Borrower will be
in compliance with its covenants referred to therein after giving effect to
such sale, transfer or other disposition.
Section 17.9. Development Activity. Neither the Borrower nor any
Subsidiary of the Borrower shall, without the prior written consent of the
Majority Banks, engage, directly or indirectly, in the development of
properties to be used principally for commercial office purposes or
otherwise, except that Borrower and its Subsidiaries may engage in the
development of Real Estate to be used principally for commercial office
purposes provided that the aggregate costs of acquisition and development
of all such properties Under Development (assuming the full cost of
developing such property) at any time shall not exceed the greater of
(i) ten percent (10%) of the Borrower's Consolidated Total Assets or
(ii) $25,000,000.00. For purposes of this Section 8.9, the term
"development" shall include the new construction of an office building or
office park, but shall not include Capital Improvement Projects to existing
Real Estate which is already used principally for commercial office
purposes. Without limiting the foregoing, the Borrower acknowledges that
for the purposes of this Agreement, (a) any interest by the Borrower or any
Subsidiary in a property which is proposed to be developed, or any interest
therein pursuant to which the Borrower or any Subsidiary has the right to
approve site plans or other plans and specifications or pursuant to which
such parties' obligations are conditioned upon the achievement of certain
leasing levels, (b) any agreement by the Borrower or any Subsidiary which
obligates such party to contribute or otherwise advance funds in connection
with or upon completion of the development of a property, or (c) any
acquisition of a property which is proposed to be developed or which is
under development and lease-up at the time such agreement is entered into,
shall be considered a "development" for the purposes of this Section 8.9.
The Borrower acknowledges that the decision of the Majority Banks to grant
or withhold such consent shall be based on such factors as the Majority
Banks deem relevant in their sole discretion, including without limitation,
evidence of sufficient funds both from borrowings and equity to complete
such development and evidence that the Borrower or its Subsidiary has the
resources and expertise necessary to complete such project. Nothing herein
shall prohibit the Borrower or any Subsidiary of the Borrower from entering
into an agreement to acquire Real Estate which has been developed and
initially leased by another Person.
Section 17.10. Sources of Capital. The Borrower shall, at all times
that the Borrower or any of its Subsidiaries is engaging in any development
as provided in Section 8.9 or has entered into any agreement to provide
funds with respect to a development, maintain or have identified available
sources of capital equal to the total cost to acquire and complete such
developments and to satisfy such funding obligations, which sources of
capital shall be acceptable to the Agent in its reasonable discretion.
Amounts available to be disbursed for such purposes pursuant to this
Agreement may be considered as a source of capital for the purposes of this
Section 8.10.
Section 17.11. Transfers. The Borrower shall not permit any sale,
transfer, disposition, pledge, mortgage, hypothecation or encumbering of
any direct or indirect interest (a) of Wellsford Commercial in Borrower,
(b) of Wellsford Real Properties in Wellsford Commercial, (c) of WHWEL in
Borrower, or (d) of any Person or Persons directly or indirectly holding
the ownership interests in WHWEL, provided that sales, transfers or other
dispositions (but not pledges, mortgages, hypothecations or encumbrances)
of interests in WHWEL shall be permitted if after giving effect thereto the
Goldman Group, directly or indirectly, owns and controls at least seventy
percent (70%) of the ownership interests in WHWEL. Notwithstanding
anything herein to the contrary, (x) WHWEL shall be permitted at any time
and from time to time to convert all or any of its interest in the Borrower
into an interest in Wellsford Commercial and/or Wellsford Real Properties,
and (y) WHWEL and Wellsford Commercial may transfer, or pledge their
interests in Borrower to one another as may be permitted in the operating
agreement of the Borrower.
Section 18. FINANCIAL COVENANTS OF BORROWER.
The Borrower covenants and agrees that, so long as any Loan or Note is
outstanding or any Bank has any obligation to make any Loans it will comply
with the following:
Section 18.1. Liabilities to Assets Ratio. The Borrower will not,
at the end of any fiscal quarter as set forth below, permit the ratio of
Consolidated Total Liabilities to Consolidated Total Assets of the Borrower
to exceed the ratio set forth below:
Fiscal Quarter Ending
On or Before: Ratio
December 31, 1999 0.75 to 1
December 31, 1999 0.70 to 1
Thereafter 0.65 to 1
Section 18.2. Consolidated Operating Cash Flow Coverage. The
Borrower will not, at the end of any fiscal quarter set forth below permit
(a) the sum of (i) its Consolidated Operating Cash Flow for any period of
four consecutive fiscal quarters then ended (treated as a single accounting
period) (the "Test Period"), plus (ii) the general and administrative costs
of the Borrower and its Subsidiaries for such Test Period plus (iii) the
aggregate Negative Carry for such Test Period minus (iv) the Capital
Improvement Reserve for such Test Period minus (v) any capitalized Negative
Carry for such Test Period to be less than (b) the multiple of Debt Service
for such Test Period as set forth below:
Fiscal Quarter Ending Multiple of
On or Before: Debt Service:
December 31, 1999 1.15
December 31, 2000 1.25
Thereafter 1.35
In the event that the Borrower shall not have any of the foregoing
components for four (4) consecutive fiscal quarters, then such components
shall be annualized in a manner reasonably satisfactory to the Agent.
Notwithstanding the foregoing, the amounts set forth in clauses (a)(ii) and
(a)(iii) above shall be added in such calculation only so long as the
Borrower is in compliance with the terms of Section 5.5, and shall not be
added back in such calculation for any periods during which the Holdback is
not required.
Section 18.3. Term Loan Debt Service. The Borrower will not, at
the end of any fiscal quarter permit (a) the difference of (i) the Net
Operating Income of the Term Loan Borrower for any Test Period minus
(ii) the Capital Improvement Reserve (as applied only to the collateral for
the Term Loan) for such Test Period to be less than the multiple of 1.3
times (b) the Debt Service Coverage Test Amount for the Test Period. In
the event that the Term Loan Borrower shall not have owned any of such
collateral properties for four (4) consecutive fiscal quarters, then the
Net Operating Income of the Term Loan Borrower for such collateral
properties shall be annualized based upon historical information with
respect to such collateral properties in a manner reasonably satisfactory
to the Agent.
Section 18.4. Minimum Shareholders Equity. The Borrower will not,
at the end of any fiscal quarter, permit the Shareholders Equity to be less
than the sum of (a) $45,000,000 plus (b) eighty percent (80%) of the net
proceeds from any Equity Offering after the Closing Date plus (c) one
hundred percent (100%) of (i) the sum of (A) all Net Income (or Deficit)
from the Closing Date plus (B) depreciation deducted in calculating such
Net Income (or Deficit) less (ii) the aggregate amount of all Distributions
made by Borrower from the Closing Date pursuant to the terms of Section
8.7(a).
Section 18.5. Real Estate Assets. The Borrower shall not permit
its direct or indirect interest in (i) undeveloped land and (ii) non-income
producing land assets to exceed, in the aggregate, five percent (5%) of the
Borrower's Consolidated Total Assets.
Section 18.6. Required Equity. The Borrower shall not permit the
ratio of the (a) aggregate Indebtedness without duplication of the Borrower
and its Subsidiaries pursuant to Section 8.1(a), (f), (g), (h) and (i) to
(b) the sum of (i) the aggregate all-in acquisition cost of the Real Estate
and the Equity Interests (as determined as provided in the definition of
the term "Designated Collateral Value") of the Borrower and its
Subsidiaries plus (ii) the historic cost of capital improvements to the
Real Estate and the Mezzanine Property after the respective acquisitions of
such assets on a consolidated basis, to exceed 0.75 to 1. For the purposes
hereof, the Indebtedness of the Property Owner shall be included as
Indebtedness of the Borrower from and after the acquisition of the Equity
Interests.
Section 19. CLOSING CONDITIONS.
The obligations of the Agent and the Banks to make the initial
Loans shall be subject to the satisfaction of the following conditions
precedent on or prior to December 15, 1997:
Section 19.1. Loan Documents. Each of the Loan Documents shall have
been duly executed and delivered by the respective parties thereto, shall
be in full force and effect and shall be in form and substance satisfactory
to the Majority Banks. The Agent shall have received a fully executed copy
of each such document, except that each Bank shall have received a fully
executed counterpart of its Note.
Section 19.2. Certified Copies of Organizational Documents. The
Agent shall have received from the Borrower a copy, certified as of a
recent date by the appropriate officer of the State in which the Borrower
and the Members are organized or in which the Mortgaged Property is
located, and by a duly authorized officer of such Person to be true and
complete, of the articles of incorporation or other organizational
documents of the Borrower and the Members or their respective qualification
to do business, as applicable, as in effect on such date of certification.
Section 19.3. Bylaws; Resolutions. All action on the part of the
Borrower and the Members necessary for the valid execution, delivery and
performance by the Borrower and the Members of the Loan Documents to which
it is or is to become a party shall have been duly and effectively taken,
and evidence thereof satisfactory to the Agent shall have been provided to
the Agent. The Agent shall have received from the Borrower and the
Members, as applicable, true copies of its bylaws and the resolutions
adopted by its board of directors or other governing body authorizing the
transactions described herein, each certified by its secretary or other
duly authorized officer as of a recent date to be true and complete.
Section 19.4. Incumbency Certificate; Authorized Signers. The Agent
shall have received from the Borrower an incumbency certificate, dated as
of the Closing Date, signed by a duly authorized officer of the Members and
giving the name and bearing a specimen signature of each individual who
shall be authorized: (a) to sign, in the name and on behalf of the Borrower
and the Members, each of the Loan Documents to which the Borrower or the
Members is or is to become a party; (b) in the case of the Borrower to make
Loan and Conversion Requests; and (c) to give notices and to take other
action on behalf of the Borrower under the Loan Documents.
Section 19.5. Opinion of Counsel. The Agent shall have received a
favorable opinion addressed to the Banks and the Agent and dated as of the
Closing Date, in form and substance satisfactory to the Banks and the
Agent, from Robinson, Silverman, Pearce, Aronsohn & Berman, and other
counsel of the Borrower and the Members, as to such matters as the Agent
shall reasonably request.
Section 19.6. Payment of Fees. The Borrower shall have paid to the
Agent the closing fee pursuant to Section 4.2.
Section 19.7. Appraisals. The Agent shall have received Appraisals
of the Mortgaged Property in form and substance satisfactory to the
Majority Banks prior to the Closing Date demonstrating that the initial
Collateral has a Designated Collateral Value that is in compliance with the
terms of this Agreement.
Section 19.8. Environmental Reports. The Agent shall have received
environmental site assessment reports for the Mortgaged Property prepared
by an Environmental Engineer no more than three months prior to the Closing
Date, which indicate the condition of the Mortgaged Property and such other
properties and any Buildings thereon and which set forth no qualifications
except those that are acceptable to the Majority Banks in their sole
discretion, and disclosing that each piece of Mortgaged Property and any
Building thereon is free of oil, underground storage tanks, asbestos or
asbestos containing material, lead paint and other Hazardous Substances
(except to the extent acceptable to the Majority Banks in their sole
discretion), and which reports are otherwise in form and substance
satisfactory to the Majority Banks).
Section 19.9. Insurance. The Agent shall have received duplicate
originals or certified copies of all policies of insurance required by this
Agreement.
Section 19.10. Performance; No Default. The Borrower shall have
performed and complied with all terms and conditions herein required to be
performed or complied with by it on or prior to the Closing Date, and on
the Closing Date there shall exist no Default or Event of Default.
Section 19.11. Representations and Warranties. The representations
and warranties made by the Borrower and the Guarantor in the Loan Documents
or otherwise made by or on behalf of any Borrower, any Guarantor, any
Member or any Subsidiary thereof, in connection therewith or after the date
thereof shall have been true and correct in all material respects when made
and shall also be true and correct in all material respects on the Closing
Date.
Section 19.12. Proceedings and Documents. All proceedings in
connection with the transactions contemplated by this Agreement and the
other Loan Documents shall be reasonably satisfactory to the Agent and the
Agent's Special Counsel in form and substance, and the Agent shall have
received all information and such counterpart originals or certified copies
of such documents and such other certificates, opinions or documents as the
Agent and the Agent's Special Counsel may reasonably require.
Section 19.13. Eligible Real Estate Qualification Documents. The
Eligible Real Estate Qualification Documents for each parcel of Mortgaged
Property included in the Collateral as of the Closing Date shall have been
delivered to the Agent.
Section 19.14. Compliance Certificate. A Compliance Certificate
dated as of the date of the Closing Date demonstrating compliance with each
of the covenants calculated therein as of the most recent fiscal quarter
end for which the Borrower has provided financial statements under Section
6.4 adjusted in the best good faith estimate of the Borrower dated as of
the date of the Closing Date shall have been delivered to the Agent.
Section 19.15. Other Documents. To the extent requested by the
Agent, executed copies of all material agreements of any nature whatsoever
to which the Borrower or any Subsidiary of the Borrower is a party
affecting or relating to the use, operation, development, construction or
management of the Mortgaged Property or the other Collateral.
Section 19.16. No Condemnation/Taking. The Agent shall have
received written confirmation from the Borrower that no condemnation
proceedings are pending or to the Borrower's knowledge threatened against
any Mortgaged Property or other Collateral or, if any such proceedings are
pending or threatened, identifying the same and the Real Estate affected
thereby and the Agent shall have determined that none of such proceedings
is or will be material to the Mortgaged Property or other Collateral
affected thereby.
Section 19.17. Governmental Policy. Each Bank shall have determined
that there have been no material changes in governmental regulations or
policy affecting the Banks, the Borrower or the Guarantor.
Section 19.18. Other. The Agent shall have reviewed such other
documents, instruments, certificates, opinions, assurances, consents and
approvals as the Agent or the Agent's Special Counsel may reasonably have
requested.
Section 20. CONDITIONS TO ALL BORROWINGS.
The obligations of the Banks to make any Loan, whether on or
after the Closing Date, shall also be subject to the satisfaction of the
following conditions precedent:
Section 20.1. Prior Conditions Satisfied. All conditions set forth
in Section 10 shall continue to be satisfied as of the date upon which any
Loan is to be made.
Section 20.2. Representations True; No Default. Each of the
representations and warranties contained in this Agreement, the other Loan
Documents or in any document or instrument delivered pursuant to or in
connection with this Agreement shall be true as of the date as of which
they were made and shall also be true at and as of the time of the making
of such Loan (except that representations and warranties as to the Members
and Guarantors shall not be deemed to have been repeated), with the same
effect as if made at and as of that time (except to the extent of changes
resulting from transactions contemplated or permitted by this Agreement and
the other Loan Documents and changes occurring in the ordinary course of
business that singly or in the aggregate are not materially adverse, and
except to the extent that such representations and warranties relate
expressly to an earlier date) and no Default or Event of Default shall have
occurred and be continuing. Agent shall have received a certificate of the
Borrower signed by an authorized officer of the Borrower to such effect.
Section 20.3. No Legal Impediment. No change shall have occurred in
any law or regulations thereunder or interpretations thereof that in the
reasonable opinion of any Bank would make it illegal for such Bank to make
such Loan.
Section 20.4. Governmental Regulation. Each Bank shall have
received such statements in substance and form reasonably satisfactory to
such Bank as such Bank shall require for the purpose of compliance with any
applicable regulations of the Comptroller of the Currency or the Board of
Governors of the Federal Reserve System.
Section 20.5. Proceedings and Documents. All proceedings in
connection with the Loan shall be satisfactory in substance and in form to
the Majority Banks, and the Majority Banks shall have received all
information and such counterpart originals or certified or other copies of
such documents as the Majority Banks may reasonably request.
Section 20.6. Borrowing Documents. In the case of any request for a
Loan, the Agent shall have received a copy of each of the request for a
Loan required by Section 2.6 in the form of Exhibit B hereto, fully
completed.
Section 20.7. Endorsement to Title Policy. At such time as the
Agent shall determine in its discretion, to the extent available under
applicable law, a "date down" endorsement to each Title Policy indicating
no change in the state of title and containing no survey exceptions not
approved by the Agent, which endorsement shall, expressly or by virtue of a
proper "revolving credit" clause or endorsement in the Title Policy,
increase the coverage of the Title Policy to the aggregate amount of all
Loans advanced and outstanding on or before the effective date of such
endorsement, other than the Designated Collateral Value Amount for the
Equity Interests, if applicable (provided that the amount of coverage under
an individual Title Policy for an individual Mortgaged Property need not
equal the aggregate amount of all Loans), or if such endorsement is not
available, such other evidence and assurances as the Agent may reasonably
require (which evidence may include, without limitation, an affidavit from
the Borrower stating that there have been no changes in title from the date
of the last effective date of the Title Policy).
Section 20.8. Future Advances Tax Payment. As a condition precedent
to any Bank's obligations to make any Loans, the Borrower will pay or cause
to be paid to the Agent any mortgage, recording, intangible, documentary
stamp or other similar taxes and charges which the Agent reasonably
determines to be payable as a result of such Loan to any state or any
county or municipality thereof in which any of the Mortgaged Property is
located and deliver to the Agent such affidavits or other information which
the Agent reasonably determines to be necessary in connection with the
payment of such tax, in order to insure that the Security Deeds on
Mortgaged Property located in such state secure the Borrower's obligation
with respect to the Loans then being requested. The provisions of this
Section 11.8 shall be without limitation of the Borrower's obligations
under other provisions of the Loan Documents, including without limitation
Section 15 hereof.
Section 21. EVENTS OF DEFAULT; ACCELERATION; ETC.
Section 21.1. Events of Default and Acceleration. If any of the
following events ("Events of Default" or, if the giving of notice or the
lapse of time or both is required, then, prior to such notice or lapse of
time, "Defaults") shall occur:
(a) the Borrower shall fail to pay any principal of the Loans
when the same shall become due and payable, whether at the stated date of
maturity or any accelerated date of maturity or at any other date fixed for
payment;
(b) the Borrower shall fail to pay any interest on the Loans or
any other sums due hereunder or under any of the other Loan Documents, when
the same shall become due and payable, whether at the stated date of
maturity or any accelerated date of maturity or at any other date fixed for
payment;
(c) [Intentionally omitted];
(d) the Borrower shall fail to comply with any covenant
contained in Section 9.1, Section 9.2, Section 9.3, Section 9.4 or
Section 9.5 and such failure shall continue for 30 Business Days after
written notice thereof shall have been given to the Borrower by the Agent;
(e) the Borrower, any of its Subsidiaries, any Guarantor or any
other party shall fail to perform any other term, covenant or agreement
contained herein or in any of the other Loan Documents (other than those
specified above in this Section 12.1);
(f) any representation or warranty of the Borrower or any of its
Subsidiaries or any Guarantor or any Member in this Agreement or any other
Loan Document, or in any report, certificate, financial statement, request
for a Loan, or in any other document or instrument delivered pursuant to or
in connection with this Agreement, any advance of a Loan or any of the
other Loan Documents shall prove to have been false in any material respect
upon the date when made or deemed to have been made or repeated;
(g) the Borrower or any of its Subsidiaries or any Member or any
Guarantor shall fail to pay at maturity, or within any applicable period of
grace, any obligation for borrowed money or credit received, or fail to
observe or perform any material term, covenant or agreement contained in
any agreement (including without limitation the Term Loan Agreement) by
which it is bound, evidencing or securing any such borrowed money or credit
received for such period of time as would permit (assuming the giving of
appropriate notice if required) the holder or holders thereof or of any
obligations issued thereunder to accelerate the maturity thereof; provided
that the events described in this Section 12.1(g) shall not constitute an
Event of Default unless such failure to perform, together with other
failures to perform as described in this Section 12.1(g), involve singly
or in the aggregate obligations for borrowed money or credit received
totaling in excess of $10,000,000;
(h) the Borrower or any of its Subsidiaries or any Member or any
Guarantor, (A) shall make an assignment for the benefit of creditors, or
admit in writing its general inability to pay or generally fail to pay its
debts as they mature or become due, or shall petition or apply for the
appointment of a trustee or other custodian, liquidator or receiver of the
Borrower or any of its Subsidiaries or any Member or any Guarantor or of
any substantial part of the assets of any thereof, (B) shall commence any
case or other proceeding relating to the Borrower or any of its
Subsidiaries or any Member or any Guarantor under any bankruptcy,
reorganization, arrangement, insolvency, readjustment of debt, dissolution
or liquidation or similar law of any jurisdiction, now or hereafter in
effect, or (C) shall take any action to authorize or in furtherance of any
of the foregoing;
(i) a petition or application shall be filed for the appointment
of a trustee or other custodian, liquidator or receiver of the Borrower or
any of its Subsidiaries or any Member or any Guarantor or any substantial
part of the assets of any thereof, or a case or other proceeding shall be
commenced against the Borrower or any of its Subsidiaries or any Member or
any Guarantor under any bankruptcy, reorganization, arrangement,
insolvency, readjustment of debt, dissolution or liquidation or similar law
of any jurisdiction, now or hereafter in effect, and the Borrower or any of
its Subsidiaries or any Member or any Guarantor shall indicate its approval
thereof, consent thereto or acquiescence therein or such petition,
application, case or proceeding shall not have been dismissed within 60
days following the filing or commencement thereof;
(j) a decree or order is entered appointing any such trustee,
custodian, liquidator or receiver or adjudicating the Borrower or any of
its Subsidiaries or any Member or any Guarantor bankrupt or insolvent, or
approving a petition in any such case or other proceeding, or a decree or
order for relief is entered in respect of the Borrower or any of its
Subsidiaries or any Member or any Guarantor, in each case of the foregoing
in an involuntary case under federal bankruptcy laws as now or hereafter
constituted;
(k) there shall remain in force, undischarged, unsatisfied and
unstayed, for more than 60 days, whether or not consecutive, any uninsured
final judgment against the Borrower or any of its Subsidiaries or any
Member or any Guarantor that, with other outstanding uninsured final
judgments, undischarged, against the Borrower or any of its Subsidiaries or
any Member or any Guarantor exceeds in the aggregate $5,000,000.00;
(l) if any of the Loan Documents shall be canceled, terminated,
revoked or rescinded otherwise than in accordance with the terms thereof or
with the express prior written agreement, consent or approval of the Banks,
or any action at law, suit in equity or other legal proceeding to cancel,
revoke or rescind any of the Loan Documents shall be commenced by or on
behalf of the Borrower, any of its Subsidiaries, any Member or any
Guarantor or any of their respective holders of Voting Interests, or any
court or any other governmental or regulatory authority or agency of
competent jurisdiction shall make a determination that, or issue a
judgment, order, decree or ruling to the effect that, any one or more of
the Loan Documents is illegal, invalid or unenforceable in accordance with
the terms thereof in any material respect as determined by the Majority
Banks;
(m) any dissolution, termination, partial or complete
liquidation, merger or consolidation of the Borrower or any of its
Subsidiaries or any Member or any Guarantor, or any sale, transfer or other
disposition of the assets of the Borrower or any of its Subsidiaries or any
Member or any Guarantor, other than as permitted under the terms of this
Agreement or the other Loan Documents;
(n) any suit or proceeding shall be filed against the Borrower,
any of its Subsidiaries, any Member, any Guarantor, any of the Mortgaged
Property or any other Collateral which in the good faith business judgment
of the Majority Banks after giving consideration to the likelihood of
success of such suit or proceeding and the availability of insurance to
cover any judgment with respect thereto and based on the information
available to them, if adversely determined, would have a materially adverse
affect on the ability of the Borrower or any Guarantor to perform each and
every one of their respective obligations under and by virtue of the Loan
Documents;
(o) the Borrower shall be indicted for a federal crime, a
punishment for which could include the forfeiture of any assets of the
Borrower or such Guarantor included in the Mortgaged Property or other
Collateral;
(p) Jeffrey H. Lynford shall cease to be the Chairman of the
Board of, or Edward Lowenthal shall cease to be the President of, Wellsford
Commercial, and a competent and experienced successor for such Person shall
not be approved by the Majority Banks within six (6) months of such event;
(q) Any violation of the covenant set forth in Section 8.11
shall occur;
(r) with respect to any Guaranteed Pension Plan, an ERISA
Reportable Event shall have occurred and the Majority Banks shall have
determined in their reasonable discretion that such event reasonably could
be expected to result in liability of any of the Borrower or a Guarantor to
the PBGC or such Guaranteed Pension Plan in an aggregate amount exceeding
$1,000,000 and such event in the circumstances occurring reasonably could
constitute grounds for the termination of such Guaranteed Pension Plan by
the PBGC or for the appointment by the appropriate United States District
Court of a trustee to administer such Guaranteed Pension Plan; or a trustee
shall have been appointed by the United States District Court to administer
such Plan; or the PBGC shall have instituted proceedings to terminate such
Guaranteed Pension Plan; or
(s) any Guarantor denies that such Guarantor has any liability
or obligation under the Guaranty or the Indemnity Agreement, or shall
notify the Agent or any of the Banks of such Guarantor's intention to
attempt to cancel or terminate the Guaranty or the Indemnity Agreement, or
shall fail to observe or comply with any term, covenant, condition or
agreement under the Guaranty or the Indemnity Agreement;
then, and in any such event, the Agent may, and upon the request of the
Majority Banks shall, by notice in writing to the Borrower declare all
amounts owing with respect to this Agreement, the Notes and the other Loan
Documents to be, and they shall thereupon forthwith become, immediately due
and payable without presentment, demand, protest or other notice of any
kind, all of which are hereby expressly waived by the Borrower; provided
that in the event of any Event of Default specified in Section 12.1(h),
Section 12.1(i) or Section 12.1(j), all such amounts shall become
immediately due and payable automatically and without any requirement of
notice from any of the Banks or the Agent.
Section 12.lA. Limitation of Cure Periods.
(a) Notwithstanding anything contained in Section 12.1 to the
contrary, (i) no Event of Default shall exist hereunder upon the occurrence
of any failure described in Section 12.1(b) in the event that the Borrower
cures such default within five (5) days following receipt of written notice
of such default, provided, however, that Borrower shall not be entitled to
receive more than two (2) notices in the aggregate pursuant to this clause
(i) in any period of 365 days ending on the date of any such occurrence of
default, and provided further that no such cure period shall apply to any
payments due upon the maturity of the Notes, and (ii) no Event of Default
shall exist hereunder upon the occurrence of any failure described in
Section 12.1(e) in the event that the Borrower cures such default with
thirty (30) days following receipt of written notice of such default,
provided that the provisions of this clause (ii) shall not pertain to
defaults consisting of a failure to provide insurance as required by
Section 7.7, to any default consisting of a failure to comply with Section
7.4(e), or to any default excluded from any provision of cure of defaults
contained in any other of the Loan Documents.
(b) Notwithstanding the provisions of subsections (c) and (d) of
Section 12.1 or of Section 12.1B, the cure periods provided therein shall
not be allowed and the occurrence of a Default thereunder immediately shall
constitute an Event of Default for all purposes of this Agreement and the
other Loan Documents if, within the period of twelve months immediately
preceding the occurrence of such Default, there shall have occurred two
periods of cure or portions thereof under any one or more than one of said
subsections.
Section 12.lB. Certain Cure Periods.
(a) In the event that there shall occur any Default under
Section 12.1(c), then within five Business Days after receipt of notice of
such Default from the Agent or the Majority Banks the Borrower may elect to
cure such Default by providing additional Collateral consisting of
Potential Collateral, and/or to reduce the Total Commitment and reduce the
outstanding Loans, in which event such actions shall be completed not later
than 15 days following the date on which the Borrower is notified that the
Majority Banks have approved the Borrower's proposed actions (or 60 days in
the event that the Borrower intends to provide additional Mortgaged
Property). The Borrower's notice of its election pursuant to the preceding
sentence shall be delivered to the Agent within the period of five Business
Days provided above. Within five Business Days after receipt of such
advice, the Majority Banks shall advise the Borrower as to whether in their
good faith judgment the actions proposed by the Borrower are sufficient to
cure such Default without the creation of any other Default hereunder. In
the event that the Majority Banks determine that Borrower's proposal is
insufficient to cure such Default or is otherwise not in accordance with
the terms of this Agreement, the Borrower within an additional three
Business Days after such negative notice may submit to the Agent an
alternative plan or evidence establishing that the Borrower's original
election was sufficient. In the event that within the times provided
herein the Borrower shall have failed to provide evidence satisfactory to
the Majority Banks that Borrower's proposed actions are sufficient to cure
such Default in accordance with the terms hereof, the cure period shall
terminate and such Default immediately shall constitute an Event of
Default.
(b) In the event that the Borrower shall elect in whole or in
part under subsection 12.1B(a) to provide additional Collateral, the Real
Estate to be added to the Collateral shall be Eligible Real Estate, and on
or prior to the expiration of the 60-day period each of the Eligible Real
Estate Qualification Documents shall have been completed and provided to
the Agent for the benefit of the Banks.
Section 21.2. Termination of Commitments. If any one or more Events
of Default specified in Section 12.1(h), Section 12.1(i) or Section
12.1(j) shall occur, then immediately and without any action on the part of
the Agent or any Bank any unused portion of the credit hereunder shall
terminate and the Banks shall be relieved of all obligations to make Loans
to the Borrower. If any other Event of Default shall have occurred and be
continuing, the Agent, upon the election of the Majority Banks, may by
notice to the Borrower terminate the obligation to make Loans to the
Borrower. No termination under this Section 12.2 shall relieve the
Borrower of its obligations to the Banks arising under this Agreement or
the other Loan Documents.
Section 21.3. Remedies. In case any one or more of the Events of
Default shall have occurred and be continuing, and whether or not the Banks
shall have accelerated the maturity of the Loans pursuant to Section 12.1,
the Agent on behalf of the Banks, may, with the consent of the Majority
Banks but not otherwise, proceed to protect and enforce their rights and
remedies under this Agreement, the Notes or any of the other Loan Documents
by suit in equity, action at law or other appropriate proceeding, whether
for the specific performance of any covenant or agreement contained in this
Agreement and the other Loan Documents or any instrument pursuant to which
the Obligations are evidenced, including to the full extent permitted by
applicable law the obtaining of the ex parte appointment of a receiver,
and, if such amount shall have become due, by declaration or otherwise,
proceed to enforce the payment thereof or any other legal or equitable
right. No remedy herein conferred upon the Agent or the holder of any Note
is intended to be exclusive of any other remedy and each and every remedy
shall be cumulative and shall be in addition to every other remedy given
hereunder or now or hereafter existing at law or in equity or by statute or
any other provision of law. In the event that all or any portion of the
Obligations is collected by or through an attorney-at-law, the Borrower
shall pay all costs of collection including, but not limited to, reasonable
attorney's fees not to exceed fifteen percent (15%) of such portion of the
Obligations.
Section 21.4. Distribution of Collateral Proceeds. In the event
that, following the occurrence or during the continuance of any Event of
Default, any monies are received in connection with the enforcement of any
of the Security Documents, or otherwise with respect to the realization
upon any of the Collateral, such monies shall be distributed for
application as follows:
(a) First, to the payment of, or (as the case may be) the
reimbursement of, the Agent for or in respect of all reasonable costs,
expenses, disbursements and losses which shall have been incurred or
sustained by the Agent to protect or preserve the collateral or in
connection with the collection of such monies by the Agent, for the
exercise, protection or enforcement by the Agent of all or any of the
rights, remedies, powers and privileges of the Agent under this Agreement
or any of the other Loan Documents or in respect of the Collateral or in
support of any provision of adequate indemnity to the Agent against any
taxes or liens which by law shall have, or may have, priority over the
rights of the Agent to such monies;
(b) Second, to all other Obligations in such order or preference
as the Majority Banks shall determine; provided, however, that (i)
distributions in respect of such Obligations shall be made pari passu among
Obligations with respect to the Agent's fee payable pursuant to Section
4.3 and all other Obligations, (ii) in the event that any Bank shall have
wrongfully failed or refused to make an advance under Section 2.7 and such
failure or refusal shall be continuing, advances made by other Banks during
the pendency of such failure or refusal shall be entitled to be repaid as
to principal and accrued interest in priority to the other Obligations
described in this subsection (b), and (iii) Obligations owing to the Banks
with respect to each type of Obligation such as interest, principal, fees
and expenses, shall be made among the Banks pro rata; and provided,
further, that the Majority Banks may in their discretion make proper
allowance to take into account any Obligations not then due and payable;
and
(c) Third, the excess, if any, shall be returned to the Borrower
or to such other Persons as are entitled thereto.
Section 22. SETOFF.
Regardless of the adequacy of any collateral, during the
continuance of any Event of Default, any deposits (general or specific,
time or demand, provisional or final, regardless of currency, maturity, or
the branch of where such deposits are held) or other sums credited by or
due from any of the Banks to the Borrower or any Guarantor and any
securities or other property of the Borrower or any Guarantor in the
possession of such Bank may be applied to or set off against the payment of
Obligations and any and all other liabilities, direct, or indirect,
absolute or contingent, due or to become due, now existing or hereafter
arising, of the Borrower or any Guarantor to such Bank. Each of the Banks
agrees with each other Bank that if such Bank shall receive from the
Borrower or any Guarantor, whether by voluntary payment, exercise of the
right of setoff, or otherwise, and shall retain and apply to the payment of
the Note or Notes held by such Bank any amount in excess of its ratable
portion of the payments received by all of the Banks with respect to the
Notes held by all of the Banks, such Bank will make such disposition and
arrangements with the other Banks with respect to such excess, either by
way of distribution, pro tanto assignment of claims, subrogation or
otherwise as shall result in each Bank receiving in respect of the Notes
held by it its proportionate payment as contemplated by this Agreement;
provided that if all or any part of such excess payment is thereafter
recovered from such Bank, such disposition and arrangements shall be
rescinded and the amount restored to the extent of such recovery, but
without interest.
Section 23. THE AGENT.
Section 23.1. Authorization. The Agent is authorized to take such
action on behalf of each of the Banks and to exercise all such powers as
are hereunder and under any of the other Loan Documents and any related
documents delegated to the Agent, together with such powers as are
reasonably incident thereto, provided that no duties or responsibilities
not expressly assumed herein or therein shall be implied to have been
assumed by the Agent. The obligations of Agent hereunder are primarily
administrative in nature, and nothing contained in this Agreement or any of
the other Loan Documents shall be construed to constitute the Agent as a
trustee for any Bank or to create any agency or fiduciary relationship.
The Borrower and any other Person shall be entitled to conclusively rely on
a statement from the Agent that it has the authority to act for and bind
the Banks pursuant to this Agreement and the other Loan Documents.
Section 23.2. Employees and Agents. The Agent may exercise its
powers and execute its duties by or through employees or agents and shall
be entitled to take, and to rely on, advice of counsel concerning all
matters pertaining to its rights and duties under this Agreement and the
other Loan Documents. The Agent may utilize the services of such Persons as
the Agent may reasonably determine, and all reasonable fees and expenses of
any such Persons shall be paid by the Borrower.
Section 23.3. No Liability. Neither the Agent nor any of its
shareholders, directors, officers or employees nor any other Person
assisting them in their duties nor any agent, or employee thereof, shall be
liable for any waiver, consent or approval given or any action taken, or
omitted to be taken, in good faith by it or them hereunder or under any of
the other Loan Documents, or in connection herewith or therewith, or be
responsible for the consequences of any oversight or error of judgment
whatsoever, except that the Agent or such other Person, as the case may be,
may be liable for losses due to its willful misconduct or gross negligence.
Section 23.4. No Representations. The Agent shall not be
responsible for the execution or validity or enforceability of this
Agreement, the Notes, any of the other Loan Documents or any instrument at
any time constituting, or intended to constitute, collateral security for
the Notes, or for the value of any such collateral security or for the
validity, enforceability or collectability of any such amounts owing with
respect to the Notes, or for any recitals or statements, warranties or
representations made herein or in any of the other Loan Documents or in any
certificate or instrument hereafter furnished to it by or on behalf of the
Borrower or any of its Subsidiaries or the Guarantor, or be bound to
ascertain or inquire as to the performance or observance of any of the
terms, conditions, covenants or agreements herein or in any other of the
Loan Documents. The Agent shall not be bound to ascertain whether any
notice, consent, waiver or request delivered to it by the Borrower or the
Guarantor or any holder of any of the Notes shall have been duly authorized
or is true, accurate and complete. The Agent has not made nor does it now
make any representations or warranties, express or implied, nor does it
assume any liability to the Banks, with respect to the creditworthiness or
financial condition of the Borrower or any of its Subsidiaries or the
Guarantor. Each Bank acknowledges that it has, independently and without
reliance upon the Agent or any other Bank, and based upon such information
and documents as it has deemed appropriate, made its own credit analysis
and decision to enter into this Agreement. Each Bank also acknowledges
that it will, independently and without reliance upon the Agent or any
other Bank, based upon such information and documents as it deems
appropriate at the time, continue to make its own credit analysis and
decisions in taking or not taking action under this Agreement and the other
Loan Documents.
Section 23.5. Payments.
(a) A payment by the Borrower or the Guarantor to the Agent
hereunder or under any of the other Loan Documents for the account of any
Bank shall constitute a payment to such Bank. The Agent agrees to
distribute to each Bank not later than one Business Day after the Agent's
receipt of good funds, determined in accordance with the Agent's customary
practices, such Bank's pro rata share of payments received by the Agent for
the account of the Banks except as otherwise expressly provided herein or
in any of the other Loan Documents.
(b) If in the opinion of the Agent the distribution of any
amount received by it in such capacity hereunder, under the Notes or under
any of the other Loan Documents might involve it in liability, it may
refrain from making distribution until its right to make distribution shall
have been adjudicated by a court of competent jurisdiction. If a court of
competent jurisdiction shall adjudge that any amount received and
distributed by the Agent is to be repaid, each Person to whom any such
distribution shall have been made shall either repay to the Agent its
proportionate share of the amount so adjudged to be repaid or shall pay
over the same in such manner and to such Persons as shall be determined by
such court.
(c) Notwithstanding anything to the contrary contained in this
Agreement or any of the other Loan Documents, any Bank that fails (i) to
make available to the Agent its pro rata share of any Loan or (ii) to
comply with the provisions of Section 13 with respect to making
dispositions and arrangements with the other Banks, where such Bank's share
of any payment received, whether by setoff or otherwise, is in excess of
its pro rata share of such payments due and payable to all of the Banks, in
each case as, when and to the full extent required by the provisions of
this Agreement, shall be deemed delinquent (a "Delinquent Bank") and shall
be deemed a Delinquent Bank until such time as such delinquency is
satisfied. A Delinquent Bank shall be deemed to have assigned any and all
payments due to it from the Borrower and the Guarantor, whether on account
of outstanding Loans, interest, fees or otherwise, to the remaining
nondelinquent Banks for application to, and reduction of, their respective
pro rata shares of all outstanding Loans. The Delinquent Bank hereby
authorizes the Agent to distribute such payments to the nondelinquent Banks
in proportion to their respective pro rata shares of all outstanding Loans.
A Delinquent Bank shall be deemed to have satisfied in full a delinquency
when and if, as a result of application of the assigned payments to all
outstanding Loans of the nondelinquent Banks or as a result of other
payments by the Delinquent Banks to the nondelinquent Banks, the Banks'
respective pro rata shares of all outstanding Loans have returned to those
in effect immediately prior to such delinquency and without giving effect
to the nonpayment causing such delinquency.
Section 23.6. Holders of Notes. Subject to the terms of Article 18,
the Agent may deem and treat the payee of any Note as the absolute owner or
purchaser thereof for all purposes hereof until it shall have been
furnished in writing with a different name by such payee or by a subsequent
holder, assignee or transferee.
Section 23.7. Indemnity. The Banks ratably agree hereby to
indemnify and hold harmless the Agent from and against any and all claims,
actions and suits (whether groundless or otherwise), losses, damages,
costs, expenses (including any expenses for which the Agent has not been
reimbursed by the Borrower as required by Section 15), and liabilities of
every nature and character arising out of or related to this Agreement, the
Notes, or any of the other Loan Documents or the transactions contemplated
or evidenced hereby or thereby, or the Agent's actions taken hereunder or
thereunder, except to the extent that any of the same shall be directly
caused by the Agent's willful misconduct or gross negligence.
Section 23.8. Agent as Bank. In its individual capacity, BKB shall
have the same obligations and the same rights, powers and privileges in
respect to its Commitment and the Loans made by it, and as the holder of
any of the Notes as it would have were it not also the Agent.
Section 23.9. Resignation. The Agent may resign at any time by
giving 60 days' prior written notice thereof to the Banks and the Borrower.
Upon any such resignation, the Majority Banks shall have the right to
appoint as a successor Agent any Bank or any bank whose senior debt
obligations are rated not less than "A" or its equivalent by Moody's
Investors Service, Inc. or not less than "A" or its equivalent by Standard
& Poor's corporation and which has total assets in excess of $10 billion.
Unless a Default or Event of Default shall have occurred and be continuing,
such successor Agent shall be reasonably acceptable to the Borrower. If no
successor Agent shall have been so appointed by the Majority Banks and
shall have accepted such appointment within 30 days after the retiring
Agent's giving of notice of resignation, then the retiring Agent may, on
behalf of the Banks, appoint a successor Agent, which shall be a Bank or
any bank whose debt obligations are rated not less than "A" or its
equivalent by Moody's Investors Service, Inc. or not less than "A" or its
equivalent by Standard & Poor's Corporation and which has total assets in
excess of $10 billion. Upon the acceptance of any appointment as Agent
hereunder by a successor Agent, such successor Agent shall thereupon
succeed to and become vested with all the rights, powers, privileges and
duties of the retiring Agent, and the retiring Agent shall be discharged
from its duties and obligations hereunder as Agent. After any retiring
Agent's resignation, the provisions of this Agreement and the other Loan
Documents shall continue in effect for its benefit in respect of any
actions taken or omitted to be taken by it while it was acting as Agent.
Section 23.10. Duties in the Case of Enforcement. In case one or
more Events of Default have occurred and shall be continuing, and whether
or not acceleration of the Obligations shall have occurred, the Agent
shall, if (a) so requested by the Majority Banks and (b) the Banks have
provided to the Agent such additional indemnities and assurances against
expenses and liabilities as the Agent may reasonably request, proceed to
enforce the provisions of the Security Documents authorizing the sale or
other disposition of all or any part of the Collateral and exercise all or
any such other legal and equitable and other rights or remedies as it may
have in respect of such Collateral. The Majority Banks may direct the
Agent in writing as to the method and the extent of any such sale or other
disposition, the Banks hereby agreeing to indemnify and hold the Agent
harmless from all liabilities incurred in respect of all actions taken or
omitted in accordance with such directions, provided that the Agent need
not comply with any such direction to the extent that the Agent reasonably
believes the Agent's compliance with such direction to be unlawful or
commercially unreasonable in any applicable jurisdiction.
Section 24. EXPENSES.
The Borrower agrees to pay (a) the reasonable costs of producing
and reproducing this Agreement, the other Loan Documents and the other
agreements and instruments mentioned herein, (b) any taxes (including any
interest and penalties in respect thereto) payable by the Agent or any of
the Banks (other than taxes based upon the Agent's or any Bank's gross or
net income, except that the Agent and the Banks shall be entitled to
indemnification for any and all amounts paid by them in respect of taxes
based on income or other taxes assessed by any State in which Mortgaged
Property or other Collateral is located, such indemnification to be limited
to taxes due solely on account of the granting of Collateral under the
Security Documents and to be net of any credit allowed to the indemnified
party from any other State on account of the payment or incurrence of such
tax by such indemnified party), including any recording, mortgage,
documentary or intangibles taxes in connection with the Security Deeds and
other Loan Documents, or other taxes payable on or with respect to the
transactions contemplated by this Agreement, including any such taxes
payable by the Agent or any of the Banks after the Closing Date (the
Borrower hereby agreeing to indemnify the Agent and each Bank with respect
thereto), (c) all title insurance premiums, appraisal fees, engineer's
fees, reasonable internal charges of the Agent (determined in good faith
and in accordance with the Agent's internal policies applicable generally
to its customers) for commercial finance exams and engineering and
environmental reviews and the reasonable fees, expenses and disbursements
of the counsel to the Agent, counsel for the Majority Banks and any local
counsel to the Agent incurred in connection with the preparation,
administration or interpretation of the Loan Documents and other
instruments mentioned herein (excluding, however, the preparation of
agreements evidencing participations granted under Section 18.4), the
review of any additional or substitute Collateral, the addition of any
Guarantor, each closing hereunder, and amendments, modifications,
approvals, consents or waivers hereto or hereunder, (d) the reasonable
fees, expenses and disbursements of the Agent incurred by the Agent in
connection with the preparation, administration or interpretation of the
Loan Documents and other instruments mentioned herein, and the making of
each advance hereunder, (e) all reasonable out-of-pocket expenses
(including reasonable attorneys' fees and costs, which attorneys may be
employees of any Bank or the Agent and the fees and costs of appraisers,
engineers, investment bankers or other experts retained by any Bank or the
Agent) incurred by any Bank or the Agent in connection with (i) the
enforcement of or preservation of rights under any of the Loan Documents
against the Borrower or any Guarantor or any Member or the administration
thereof after the occurrence of a Default or Event of Default and (ii) any
litigation, proceeding or dispute whether arising hereunder or otherwise,
in any way related to the Agent's or any of the Bank's relationship with
the Borrower or any Guarantor or any Member, (f) all reasonable fees,
expenses and disbursements of any Bank or the Agent incurred in connection
with U.C.C. searches, U.C.C. filings, title rundowns, title searches or
mortgage recordings, (g) all reasonable fees and expenses of Goldman and
its counsel incurred in connection with the initial closing under this
Agreement, and (h) all reasonable fees and expenses (including reasonable
attorney's fees and costs) incurred by BankBoston and Goldman in connection
with the assignment of Commitments and interests in the Loans pursuant to
Section 18.1. The covenants of this Section 15 shall survive payment or
satisfaction of payment of amounts owing with respect to the Notes.
Section 25. INDEMNIFICATION.
The Borrower agrees to indemnify and hold harmless the Agent and
the Banks and each director, officer, employee, agent and Person who
controls the Agent or any Bank from and against any and all claims, actions
and suits, whether groundless or otherwise, and from and against any and
all liabilities, losses, damages and expenses of every nature and character
arising out of or relating to this Agreement or any of the other Loan
Documents or the transactions contemplated hereby and thereby including,
without limitation, (a) any leasing fees and any brokerage, finders or
similar fees asserted against any Person indemnified under this Section 16
based upon any agreement, arrangement or action made or taken, or alleged
to have been made or taken, by the Borrower or any of its Subsidiaries or
any Guarantor or any Member, (b) any condition of the Mortgaged Property or
other Collateral, (c) any actual or proposed use by the Borrower of the
proceeds of any of the Loans, (d) any actual or alleged infringement of any
patent, copyright, trademark, service mark or similar right of the
Borrower, any of its Subsidiaries or the Guarantor comprised in the
Collateral, (e) the Borrower and the Guarantor and the Members entering
into or performing this Agreement or any of the other Loan Documents,
(f) any actual or alleged violation of any law, ordinance, code, order,
rule, regulation, approval, consent, permit or license relating to the
Mortgaged Property or other Collateral, or (g) with respect to the
Borrower, its Subsidiaries, the Guarantor and the Members and their
respective properties and assets, the violation of any Environmental Law,
the Release or threatened Release of any Hazardous Substances or any
action, suit, proceeding or investigation brought or threatened with
respect to any Hazardous Substances (including, but not limited to claims
with respect to wrongful death, personal injury or damage to property), in
each case including, without limitation, the reasonable fees and
disbursements of counsel and allocated costs of internal counsel incurred
in connection with any such investigation, litigation or other proceeding;
provided, however, that the Borrower shall not be obligated under this
Section 16 to indemnify any Person for liabilities arising from such
Person's own gross negligence or willful misconduct. In litigation, or the
preparation therefor, the Banks and the Agent shall be entitled to select a
single law firm as their own counsel and, in addition to the foregoing
indemnity, the Borrower agrees to pay promptly the reasonable fees and
expenses of such counsel. If, and to the extent that the obligations of
the Borrower under this Section 16 are unenforceable for any reason, the
Borrower hereby agrees to make the maximum contribution to the payment in
satisfaction of such obligations which is permissible under applicable law.
The provisions of this Section 16 shall survive the repayment of the Loans
and the termination of the obligations of the Banks hereunder.
Section 26. SURVIVAL OF COVENANTS, ETC.
All covenants, agreements, representations and warranties made
herein, in the Notes, in any of the other Loan Documents or in any
documents or other papers delivered by or on behalf of the Borrower, any of
its Subsidiaries, any Member or any Guarantor pursuant hereto or thereto
shall be deemed to have been relied upon by the Banks and the Agent,
notwithstanding any investigation heretofore or hereafter made by any of
them, and shall survive the making by the Banks of any of the Loans, as
herein contemplated, and shall continue in full force and effect so long as
any amount due under this Agreement or the Notes or any of the other Loan
Documents remains outstanding or any Bank has any obligation to make any
Loans. The indemnification obligations of the Borrower provided herein and
the other Loan Documents shall survive the full repayment of amounts due
and the termination of the obligations of the Banks hereunder and
thereunder to the extent provided herein and therein. All statements
contained in any certificate or other paper delivered to any Bank or the
Agent at any time by or on behalf of the Borrower, any of its Subsidiaries,
any Member or any Guarantor pursuant hereto or in connection with the
transactions contemplated hereby shall constitute representations and
warranties by the Borrower or such Subsidiary or the Member or the
Guarantor hereunder.
Section 27. ASSIGNMENT AND PARTICIPATION.
Section 27.1. Conditions to Assignment by Banks. Except as provided
herein, each Bank may assign to one or more banks or other entities all or
a portion of its interests, rights and obligations under this Agreement
(including all or a portion of its Commitment Percentage and Commitment and
the same portion of the Loans at the time owing to it, and the Notes held
by it); provided that (a) the Agent shall have given its prior written
consent to such assignment, which consent shall not be unreasonably
withheld (provided that such consent shall not be required for any
assignment to another Bank, to a bank which is under common control with
the assigning Bank or to a wholly-owned Subsidiary of such Bank provided
that such assignee shall remain a wholly-owned Subsidiary of such Bank),
(b) each such assignment shall be of a constant, and not a varying,
percentage of all the assigning Bank's rights and obligations under this
Agreement, (c) the parties to such assignment shall execute and deliver to
the Agent, for recording in the Register (as hereinafter defined), a notice
of such assignment, together with any Notes subject to such assignment,
(d) in no event shall any voting, consent or approval rights of a Bank be
assigned to any Person controlling, controlled by or under common control
with, or which is not otherwise free from influence or control by, the
Borrower or any of its Subsidiaries, any Member or any Guarantor, which
rights shall instead be allocated pro rata among the other remaining Banks,
(e) such assignee shall have a net worth as of the date of such assignment
of not less than $500,000,000 and (f) such assignee shall acquire an
interest in the Loans of not less than $10,000,000.00. No such assignment
shall be made without the prior consent of the Borrower, which consent
shall not be unreasonably withheld or delayed; provided that such consent
shall not be required in the event that a Default or Event of Default shall
have occurred. Upon such execution, delivery, acceptance and recording, of
such notice of assignment, (i) the assignee thereunder shall be a party
hereto and all other Loan Documents executed by the Banks and, to the
extent provided in such assignment, have the rights and obligations of a
Bank hereunder, (ii) the assigning Bank shall, to the extent provided in
such assignment and upon payment to the Agent of the registration fee
referred to in Section 18.2, be released from its obligations under this
Agreement, and (iii) the Agent may unilaterally amend Schedule 1.1 to
reflect such assignment. In connection with each assignment, the assignee
shall represent and warrant to the Agent, the assignor and each other Bank
as to whether such assignee is controlling, controlled by, under common
control with or is not otherwise free from influence or control by, the
Borrower or any of its Subsidiaries, any Member or any Guarantor.
Section 27.2. Register. The Agent shall maintain a copy of each
assignment delivered to it and a register or similar list (the "Register")
for the recordation of the names and addresses of the Banks and the
Commitment Percentages of, and principal amount of the Loans owing to the
Banks from time to time. The entries in the Register shall be conclusive,
in the absence of manifest error, and the Borrower, the Agent and the Banks
may treat each Person whose name is recorded in the Register as a Bank
hereunder for all purposes of this Agreement. The Register shall be
available for inspection by the Borrower and the Banks at any reasonable
time and from time to time upon reasonable prior notice. Upon each such
recordation, the assigning Bank agrees to pay to the Agent a registration
fee in the sum of $2,000.
Section 27.3. New Notes. Upon its receipt of an assignment executed
by the parties to such assignment, together with each Note subject to such
assignment, the Agent shall (a) record the information contained therein in
the Register, and (b) give prompt notice thereof to the Borrower and the
Banks (other than the assigning Bank). Within five Business Days after
receipt of such notice, the Borrower, at its own expense, shall execute and
deliver to the Agent, in exchange for each surrendered Note, a new Note to
the order of such assignee in an amount equal to the amount assumed by such
assignee pursuant to such assignment and, if the assigning Bank has
retained some portion of its obligations hereunder, a new Note to the order
of the assigning Bank in an amount equal to the amount retained by it
hereunder, and shall cause the Guarantor to deliver to Agent an
acknowledgment in form and substance satisfactory to the Agent to the
effect that the Guaranty extends and is applicable to each new Note. Such
new Notes shall provide that they are replacements for the surrendered
Notes, shall be in an aggregate principal amount equal to the aggregate
principal amount of the surrendered Notes, shall be dated the effective
date of such assignment and shall otherwise be in substantially the form of
the assigned Notes. The surrendered Notes shall be canceled and returned
to the Borrower.
Section 27.4. Participations. Each Bank may sell participations to
one or more banks or other entities in all or a portion of such Bank's
rights and obligations under this Agreement and the other Loan Documents;
provided that (a) any such sale or participation shall not affect the
rights and duties of the selling Bank hereunder to the Borrower, (b) such
sale and participation shall not entitle such participant any rights or
privileges under this Agreement or the Loan Documents (including, without
limitation, the right to approve waivers, amendments or modifications),
(c) such participant shall have no direct rights against the Borrower or
the Guarantor except the rights granted to the Banks pursuant to Section
13, (d) such sale is effected in accordance with all applicable laws, and
(e) such participant shall not be a Person controlling, controlled by or
under common control with, or which is not otherwise free from influence or
control by, the Borrower, any of its Subsidiaries or any Member or any
Guarantor.
Section 27.5. Pledge by Bank. Any Bank may at any time pledge all
or any portion of its interest and rights under this Agreement (including
all or any portion of its Note) to any of the twelve Federal Reserve Banks
organized under Section 4 of the Federal Reserve Act, 12 U.S.C. Section
341. No such pledge or the enforcement thereof shall release the pledgor
Bank from its obligations hereunder or under any of the other Loan
Documents.
Section 27.6. No Assignment by Borrower. The Borrower shall not
assign or transfer any of its rights or obligations under any of the Loan
Documents without the prior written consent of each of the Banks.
Section 27.7. Disclosure. The Borrower agrees that in addition to
disclosures made in accordance with standard banking practices any Bank may
disclose information obtained by such Bank pursuant to this Agreement to
assignees or participants and potential assignees or participants
hereunder.
Section 28. NOTICES.
Each notice, demand, election or request provided for or permitted to
be given pursuant to this Agreement (hereinafter in this Section 19
referred to as "Notice"), but specifically excluding to the maximum extent
permitted by law any notices of the institution or commencement of
foreclosure proceedings, must be in writing and shall be deemed to have
been properly given or served by personal delivery or by sending same by
overnight courier or by depositing same in the United States Mail, postpaid
and registered or certified, return receipt requested, or as expressly
permitted herein, by telegraph, telecopy, telefax or telex, and addressed
as follows:
If to the Agent or BKB:
BankBoston, N.A.
100 Federal Street
Boston, Massachusetts 02110
Attn: Real Estate Division
With a copy to:
BankBoston, N.A.
115 Perimeter Center Place, N.E.
Suite 500
Atlanta, Georgia 30346
Attn: Mr. Jay Johns
Telecopy No.: 770/390-8434
If to the Borrower:
Wellsford/Whitehall Properties, L.L.C.
620 Fifth Avenue
7th Floor
New York, New York 10020
Attn: Gregory F. Hughes
With a copy to:
Alan S. Pearce, Esq.
Robinson Silverman Pearce Aronsohn & Berman LLP
1290 Avenue of the Americas
New York, New York 10104
if to another Bank now a party to this Agreement, to the address set forth
on the signature page hereto, and to each other Bank which may hereafter
become a party to this Agreement at such address as may be designated by
such Bank. Each Notice shall be effective upon being personally delivered
or upon being sent by overnight courier or upon being deposited in the
United States Mail as aforesaid. The time period in which a response to
such Notice must be given or any action taken with respect thereto (if
any), however, shall commence to run from the date of receipt if personally
delivered or sent by overnight courier, or if so deposited in the United
States Mail, the earlier of three (3) Business Days following such deposit
or the date of receipt as disclosed on the return receipt. Rejection or
other refusal to accept or the inability to deliver because of changed
address for which no notice was given shall be deemed to be receipt of the
Notice sent. By giving at least fifteen (15) days prior Notice thereof,
the Borrower, a Bank or Agent shall have the right from time to time and at
any time during the term of this Agreement to change their respective
addresses and each shall have the right to specify as its address any other
address within the United States of America.
Section 29. RELATIONSHIP.
Neither the Agent nor any Bank has any fiduciary relationship with or
fiduciary duty to Borrower arising out of or in connection with this
Agreement or the other Loan Documents, or the transactions contemplated
hereunder or thereunder, and the relationship between each Bank and the
Borrower is solely that of a lender and borrower, and nothing contained
herein or in any of the other Loan Documents shall in any manner be
construed as making the parties hereto partners, joint venturers or any
other relationship other than lender and borrower.
Section 30. GOVERNING LAW; CONSENT TO JURISDICTION AND SERVICE.
THIS AGREEMENT AND EACH OF THE OTHER LOAN DOCUMENTS EXCEPT AS
OTHERWISE SPECIFICALLY PROVIDED THEREIN, ARE CONTRACTS UNDER THE LAWS OF
THE STATE OF NEW YORK AND SHALL FOR ALL PURPOSES BE CONSTRUED IN ACCORDANCE
WITH AND GOVERNED BY THE LAWS OF SUCH STATE (EXCLUDING THE LAWS APPLICABLE
TO CONFLICTS OR CHOICE OF LAW). THE BORROWER AGREES THAT ANY SUIT FOR THE
ENFORCEMENT OF THIS AGREEMENT OR ANY OF THE OTHER LOAN DOCUMENTS MAY BE
BROUGHT IN THE COURTS OF THE STATE OF NEW YORK OR ANY FEDERAL COURT SITTING
THEREIN AND CONSENTS TO THE NONEXCLUSIVE JURISDICTION OF SUCH COURT AND THE
SERVICE OF PROCESS IN ANY SUCH SUIT BEING MADE UPON THE BORROWER BY MAIL AT
THE ADDRESS SPECIFIED IN Section 19. THE BORROWER HEREBY WAIVES ANY
OBJECTION THAT IT MAY NOW OR HEREAFTER HAVE TO THE VENUE OF ANY SUCH SUIT
OR ANY SUCH COURT OR THAT SUCH SUIT IS BROUGHT IN AN INCONVENIENT COURT.
Section 31. HEADINGS.
The captions in this Agreement are for convenience of reference only
and shall not define or limit the provisions hereof.
Section 32. COUNTERPARTS.
This Agreement and any amendment hereof may be executed in several
counterparts and by each party on a separate counterpart, each of which
when so executed and delivered shall be an original, and all of which
together shall constitute one instrument. In proving this Agreement it
shall not be necessary to produce or account for more than one such
counterpart signed by the party against whom enforcement is sought.
Section 33. ENTIRE AGREEMENT, ETC.
The Loan Documents and any other documents executed in connection
herewith or therewith express the entire understanding of the parties with
respect to the transactions contemplated hereby. Neither this Agreement
nor any term hereof may be changed, waived, discharged or terminated,
except as provided in Section 27.
Section 34. WAIVER OF JURY TRIAL.
EACH OF THE BORROWER, THE AGENT AND THE BANKS HEREBY WAIVES ITS
RIGHT TO A JURY TRIAL WITH RESPECT TO ANY ACTION OR CLAIM ARISING OUT OF
ANY DISPUTE IN CONNECTION WITH THIS AGREEMENT, ANY NOTE OR ANY OF THE OTHER
LOAN DOCUMENTS, ANY RIGHTS OR OBLIGATIONS HEREUNDER OR THEREUNDER OR THE
PERFORMANCE OF SUCH RIGHTS AND OBLIGATIONS. THE BORROWER (A) CERTIFIES
THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY BANK OR THE AGENT HAS
REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH BANK OR THE AGENT WOULD NOT,
IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (B)
ACKNOWLEDGES THAT THE AGENT AND THE BANKS HAVE BEEN INDUCED TO ENTER INTO
THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS TO WHICH THEY ARE PARTIES BY,
AMONG OTHER THINGS, THE WAIVER AND CERTIFICATIONS CONTAINED IN THIS Section
25.
Section 35. DEALINGS WITH THE BORROWER.
The Banks and their affiliates may accept deposits from, extend credit
to and generally engage in any kind of banking, trust or other business
with the Borrower, its Subsidiaries, the Guarantor or any of their
affiliates regardless of the capacity of the Bank hereunder.
Section 36. CONSENTS, AMENDMENTS, WAIVERS, ETC.
Except as otherwise expressly provided in this Agreement, any consent
or approval required or permitted by this Agreement may be given, and any
term of this Agreement or of any other instrument related hereto or
mentioned herein may be amended, and the performance or observance by the
Borrower or the Guarantor of any terms of this Agreement or such other
instrument or the continuance of any Default or Event of Default may be
waived (either generally or in a particular instance and either
retroactively or prospectively) with, but only with, the written consent of
the Majority Banks. Notwithstanding the foregoing, none of the following
may occur without the written consent of each Bank: a change in the rate
of interest on and the term of the Notes; a change in the amount of the
Commitments of the Banks; a forgiveness, reduction or waiver of the
principal of any unpaid Loan or any interest thereon or fee payable under
the Loan Documents; a change in the amount of any fee payable to a Bank
hereunder; the postponement of any date fixed for any payment of principal
of or interest on the Loan; an extension of the Maturity Date (except as
provided in Section 2.8); a change in the manner of distribution of any
payments to the Banks or the Agent; the release of the Borrower or the
Guarantor or any Collateral except as otherwise provided herein; an
amendment of the definition of Majority Banks or of any requirement for
consent by all of the Banks; any modification to require a Bank to fund a
pro rata share of a request for an advance of the Loan made by the Borrower
other than based on its Commitment Percentage; an amendment to this Section
27; an amendment of the definition of Majority Banks; or an amendment of
any provision of this Agreement or the Loan Documents which requires the
approval of all of the Banks or the Majority Banks to require a lesser
number of Banks to approve such action. The amount of the Agent's fee
payable for the Agent's account and the provisions of Section 14 may not
be amended without the written consent of the Agent. No waiver shall
extend to or affect any obligation not expressly waived or impair any right
consequent thereon. No course of dealing or delay or omission on the part
of the Agent or any Bank in exercising any right shall operate as a waiver
thereof or otherwise be prejudicial thereto. No notice to or demand upon
the Borrower shall entitle the Borrower to other or further notice or
demand in similar or other circumstances.
Section 37. SEVERABILITY.
The provisions of this Agreement are severable, and if any one
clause or provision hereof shall be held invalid or unenforceable in whole
or in part in any jurisdiction, then such invalidity or unenforceability
shall affect only such clause or provision, or part thereof, in such
jurisdiction, and shall not in any manner affect such clause or provision
in any other jurisdiction, or any other clause or provision of this
Agreement in any jurisdiction.
Section 38. LIMITATION ON LIABILITY.
NO OBLIGATION OR LIABILITY WHATSOEVER OF THE BORROWER WHICH MAY ARISE
AT ANY TIME UNDER THIS AGREEMENT OR ANY OBLIGATION OR LIABILITY WHICH MAY
BE INCURRED BY IT PURSUANT TO ANY OTHER LOAN DOCUMENT SHALL BE PERSONALLY
BINDING UPON, NOR SHALL RESORT FOR THE ENFORCEMENT THEREOF BE HAD TO, THE
PRIVATE PROPERTY OF ANY OF THE BORROWER'S MEMBERS REGARDLESS OF WHETHER
SUCH OBLIGATION OR LIABILITY IS IN THE NATURE OF CONTRACT, TORT OR
OTHERWISE; PROVIDED, HOWEVER, NOTHING HEREIN SHALL DIMINISH OR IMPAIR THE
RIGHTS OF AGENT AND THE BANKS TO PURSUE ANY REMEDY AGAINST ANY ASSETS OF
THE BORROWER OR RELIEVE, REDUCE OR IMPAIR ANY OBLIGATION OF ANY GUARANTOR
UNDER ITS RESPECTIVE GUARANTY OR INDEMNITY AGREEMENT.
Section 39. NO UNWRITTEN AGREEMENTS.
THE WRITTEN LOAN DOCUMENTS REPRESENT THE FINAL AGREEMENT BETWEEN THE
PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS
OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES. THERE ARE NO UNWRITTEN ORAL
AGREEMENTS BETWEEN THE PARTIES.
Section 40. TIME OF THE ESSENCE.
Time is of the essence with respect to each and every covenant,
agreement and obligation of the Borrower under this Agreement and the other
Loan Documents.
[Remainder of page intentionally left blank]
<PAGE>
IN WITNESS WHEREOF, the undersigned have duly executed this Agreement
as a sealed instrument as of the date first set forth above.
WELLSFORD/WHITEHALL PROPERTIES, L.L.C., a
Delaware limited liability company, by its
managing member
By: Wellsford Commercial Property Trust, a
Maryland real estate investment trust,
manager
By:/s/ Edward Lowenthal
Edward Lowenthal, President
[SEAL]
<PAGE>
BANKBOSTON, N.A., a national banking
association, individually and as Agent
By:/s/ Mark Basham
Title: Managing Director
[BANK SEAL]
<PAGE>
GOLDMAN SACHS MORTGAGE COMPANY, a New York
limited partnership, individually and as Co-
Arranger and Co-Syndication Agent
By: Goldman Sachs Real Estate Funding Corp.,
general partner
By:/s/ Robert R. Foley
Name: Robert R. Foley
Title: Authorized Signatory
[CORPORATE SEAL]
Goldman Sachs Mortgage Company
85 Broad Street
New York, New York 10004
Attn: Mr. Bob Foley<PAGE>
EXHIBIT A
FORM OF NOTE
$______________ December __, 1997
FOR VALUE RECEIVED, the undersigned WELLSFORD/WHITEHALL PROPERTIES,
L.L.C., a Delaware limited liability company, hereby promises to pay to
____________________________________ or order, in accordance with the terms
of that certain Revolving Credit Agreement dated as of December 15, 1997
(the "Credit Agreement"), as from time to time in effect, among the
undersigned, BankBoston, N.A., for itself and as Agent, Goldman Sachs
Mortgage Company, and such other Banks as may be from time to time named
therein, to the extent not sooner paid, on or before the Maturity Date, the
principal sum of ____________________________ DOLLARS ($______________), or
such amount as may be advanced by the payee hereof under the Credit
Agreement with daily interest from the date hereof, computed as provided in
the Credit Agreement, on the principal amount hereof from time to time
unpaid, at a rate per annum on each portion of the principal amount which
shall at all times be equal to the rate of interest applicable to such
portion in accordance with the Credit Agreement, and with interest on
overdue principal and, to the extent permitted by applicable law, on
overdue installments of interest and late charges at the rates provided in
the Credit Agreement. Interest shall be payable on the dates specified in
the Credit Agreement, except that all accrued interest shall be paid at the
stated or accelerated maturity hereof or upon the prepayment in full
hereof. Capitalized terms used herein and not otherwise defined herein
shall have the meanings set forth in the Credit Agreement.
Payments hereunder shall be made to BankBoston, N.A., as Agent for the
payee hereof, 100 Federal Street, Boston, Massachusetts 02110.
This Note is one of one or more Notes evidencing borrowings under and
is entitled to the benefits and subject to the provisions of the Credit
Agreement. The principal of this Note may be due and payable in whole or
in part prior to the maturity date stated above and is subject to mandatory
prepayment in the amounts and under the circumstances set forth in the
Credit Agreement, and may be prepaid in whole or from time to time in part,
all as set forth in the Credit Agreement.
Notwithstanding anything in this Note to the contrary, all agreements
between the Borrower and the Banks and the Agent, whether now existing or
hereafter arising and whether written or oral, are hereby limited so that
in no contingency, whether by reason of acceleration of the maturity of any
of the Obligations or otherwise, shall the interest contracted for, charged
or received by the Banks exceed the maximum amount permissible under
applicable law. If, from any circumstance whatsoever, interest would
otherwise be payable to the Banks in excess of the maximum lawful amount,
the interest payable to the Banks shall be reduced to the maximum amount
permitted under applicable law; and if from any circumstance the Banks
shall ever receive anything of value deemed interest by applicable law in
excess of the maximum lawful amount, an amount equal to any excessive
interest shall be applied to the reduction of the principal balance of the
Obligations and to the payment of interest or, if such excessive interest
exceeds the unpaid balance of principal of the Obligations, such excess
shall be refunded to the Borrower. All interest paid or agreed to be paid
to the Banks shall, to the extent permitted by applicable law, be
amortized, prorated, allocated and spread throughout the full period until
payment in full of the principal of the Obligations (including the period
of any renewal or extension thereof) so that the interest thereon for such
full period shall not exceed the maximum amount permitted by applicable
law. This paragraph shall control all agreements between the Borrower and
the Banks and the Agent.
In case an Event of Default shall occur, the entire principal amount
of this Note may become or be declared due and payable in the manner and
with the effect provided in said Credit Agreement.
This Note shall be governed by and construed in accordance with the
laws of the State of New York (without giving effect to the conflict of
laws rules of any jurisdiction).
The undersigned maker and all guarantors and endorsers, hereby waive
presentment, demand, notice, protest, notice of intention to accelerate the
indebtedness evidenced hereby, notice of acceleration of the indebtedness
evidenced hereby and all other demands and notices in connection with the
delivery, acceptance, performance and enforcement of this Note, except as
specifically otherwise provided in the Credit Agreement, and assent to
extensions of time of payment or forbearance or other indulgence without
notice.
IN WITNESS WHEREOF the undersigned has by its duly authorized
officers, executed this Note under seal as of the day and year first above
written.
WELLSFORD/WHITEHALL PROPERTIES, L.L.C., a
Delaware limited liability company, by its
managing member
By: Wellsford Commercial Properties Trust, a
Maryland real estate investment trust,
manager
By: ______________________________
Title:
[SEAL]
<PAGE>
EXHIBIT B
FORM OF REQUEST FOR LOAN
BankBoston, N.A.,as Agent
115 Perimeter Center Place, N.E.
Suite 500
Atlanta, Georgia 30346
Attn: Mr. Jay Johns
Ladies and Gentlemen:
Pursuant to the provisions of Section 2.6 of the Revolving Credit
Agreement dated December 15, 1997, as from time to time in effect (the
"Credit Agreement"), among Wellsford/Whitehall Properties, L.L.C. (the
"Borrower"), BankBoston, N.A., for itself and as Agent, Goldman Sachs
Mortgage Company, and the other Banks from time to time party thereto, the
Borrower hereby requests and certifies as follows:
1. Loan. The Borrower hereby requests a Loan under Section 2.1 of
the Credit Agreement:
Principal Amount: $
Type (Eurodollar, Base Rate):
Drawdown Date: _____________, 19__
Interest Period:
by credit to the general account of the Borrower with the Agent at the
Agent's Head Office.
2. Use of Proceeds. Such Loan shall be used for the following
purposes permitted by Section 7.11 of the Credit Agreement:
[Describe]
3. Capital Improvement Project. In the event that such Loan relates
to any Capital Improvement Project or portion thereof, the Borrower
represents and warrants that such Loan will reimburse the Borrower for or
pay costs incurred for work on the Capital Improvement Project identified
above, which work covered by this request is in place or is for stored
materials which are properly secured. The Borrower further certifies that
all materialmen, laborers, subcontractors and any other parties who might
or could claim statutory or common law liens and are furnishing or have
furnished material or labor to the Mortgaged Property in connection with
such Capital Improvement Project have been paid (or will be paid from the
proceeds of the requested advance) all amounts due for such labor and
materials.
4. No Default. The undersigned chief financial or chief accounting
officer of the Borrower certifies that the Borrower is and will be in
compliance with all covenants under the Loan Documents after giving effect
to the making of the Loan requested hereby. No condemnation proceedings
are pending or to the Borrower's knowledge threatened against any Mortgaged
Property or other Collateral.
5. Representations True. Each of the representations and warranties
made by or on behalf of the Borrower and its Subsidiaries and the Guarantor
contained in the Credit Agreement, in the other Loan Documents or in any
document or instrument delivered pursuant to or in connection with the
Credit Agreement was true as of the date as of which it was made and shall
also be true at and as of the Drawdown Date for the Loan requested hereby
(except that representations as to the Guarantors and Members shall not be
deemed to have been repeated), with the same effect as if made at and as of
such Drawdown Date (except to the extent of changes resulting from
transactions contemplated or permitted by the Credit Agreement and the
other Loan Documents and changes occurring in the ordinary course of
business that singly or in the aggregate are not materially adverse, and
except to the extent that such representations and warranties relate
expressly to an earlier date) and no Default or Event of Default has
occurred and is continuing.
6. Other Conditions. All other conditions to the making of the Loan
requested hereby set forth in Section 11 of the Credit Agreement have been
satisfied. (Reference title insurance "date down", if applicable.)
7. Drawdown Date. Except to the extent, if any, specified by notice
actually received by the Agent prior to the Drawdown Date specified above,
the foregoing representations and warranties shall be deemed to have been
made by the Borrower on and as of such Drawdown Date.
8. Definitions. Terms defined in the Credit Agreement are used
herein with the meanings so defined.
IN WITNESS WHEREOF, I have hereunto set my hand this _____ day of
_______________, 199___.
WELLSFORD/WHITEHALL PROPERTIES, L.L.C., a
Delaware limited liability company, by its
managing member
By: Wellsford Commercial Property Trust, a
Maryland real estate investment trust,
manager
By: ________________________________
Title:
[SEAL]
<PAGE>
EXHIBIT C
FORM OF
COMPLIANCE CERTIFICATE
BankBoston, N.A.,
for itself and as Agent
115 Perimeter Center Place, N.E.
Suite 500
Atlanta, Georgia 30346
Attn: Mr. Jay Johns
Ladies and Gentlemen:
Reference is made to the Revolving Credit Agreement dated as of
December 15, 1997 (the "Credit Agreement") by and among Wellsford/Whitehall
Properties, L.L.C. (the "Borrower"), BankBoston, N.A., for itself and as
Agent, Goldman Sachs Mortgage Company, and the other Banks from time to
time party thereto. Terms defined in the Credit Agreement and not
otherwise defined herein are used herein as defined in the Credit
Agreement.
Pursuant to the Credit Agreement, the Borrower is furnishing to you
herewith (or has most recently furnished to you) the financial statements
of the Borrower and its Subsidiaries for the fiscal period ended
_______________ (the "Balance Sheet Date"). Such financial statements have
been prepared in accordance with generally accepted accounting principles
and present fairly the financial position of the Borrower and the
Subsidiaries covered thereby at the date thereof and the results of their
operations for the periods covered thereby, subject in the case of interim
statements only to normal year-end audit adjustments.
This certificate is submitted in compliance with requirements of
Section 2.6(iv), Section 5.3(b), Section 7.4(i), Section 7.5(e),
Section 8.8, Section 10.14 or Section 11.6(b) of the Credit Agreement.
If this certificate is provided under a provision other than Section
7.4(i), the calculations provided below are made using the financial
statements of the Borrower and its Subsidiaries as of the Balance Sheet
Date adjusted in the best good-faith estimate of the Borrower to give
effect to the making of a Loan, extension of the Maturity Date, acquisition
or disposition of property or other event that occasions the preparation of
this certificate; and the nature of such event and the Borrower's estimate
of its effects are set forth in reasonable detail in an attachment hereto.
The undersigned officer of the Borrower is its chief financial or chief
accounting officer.
The undersigned officer has caused the provisions of the Credit
Agreement to be reviewed and has no knowledge of any Default or Event of
Default. (Note: If the signer does have knowledge of any Default or Event
of Default, the form of certificate should be revised to specify the
Default or Event of Default, the nature thereof and the actions taken,
being taken or proposed to be taken by the Borrower with respect thereto.]
The Borrower is providing the following information to demonstrate
compliance as of the date hereof with the following covenants:
I. Section 9.1. Liabilities to Assets Ratio.
A. Consolidated Total Liabilities
per balance sheet $____________
B. Consolidated Total Assets per
balance sheet $____________
Ratio of A to B may not exceed 0.75 to 1
prior to the second anniversary, 0.70 to 1 for
the period thereafter through the third
anniversary, 0.65 to 1 for the period thereafter.
II. Section 9.2. Consolidated Operating Cash
Flow Coverage.
A. Consolidated Operating Cash Flow =
Consolidated Net Income for
most recent quarter $____________
Plus depreciation and amortization $____________
Plus interest expense $____________
Plus extraordinary or non-recurring
losses $____________
Minus extraordinary or non-
recurring gains
($____________)
Plus/Minus Rent Adjustments $____________
Minus Rents included in Net Income from
tenants delinquent in excess of 60 days
($____________)
Subtotal for most recent quarter
$_____________
Consolidated Operating Cash Flow
for three prior quarters:
Quarter ended __________
$_____________
Quarter ended __________
$_____________
Quarter ended __________
$_____________
Total
$_____________
Plus General and Administrative Costs
for four prior Quarters $____________
Plus Negative Carry for four prior Quarters $____________
Minus Capital Improvement Reserve for four
prior quarters ($___________)
Minus Capitalized Negative Carry for four
prior quarters ($___________)
Total $____________
B. Debt Service for four prior
quarters $____________
A must equal or exceed 115% of B for the period
prior to the second anniversary; A must equal or
exceed 125% of B for the period thereafter
through the third anniversary; A must equal
or exceed 135% of B thereafter.
III. Section 9.3. Term Loan Debt Service Coverage.
A. Net Operating Income
Net Income for most recent quarter $____________
from Stabilized Properties collateral for
the Term Loan
Plus depreciation and amortization $____________
Plus Capital Expenditures (including tenant $____________
improvements and leasing commissions)
Plus/Minus Rent Adjustments $____________
Minus Rents included in Net Income from
($____________)
tenants delinquent in excess of 60 days
Net Operating Income for three prior quarters:
Quarter ended __________ $____________
Quarter ended __________
$_____________
Quarter ended _________
$_____________
Total
$_____________
B. Capital Improvement Reserve for
$_____________
Stabilized Properties that are Collateral
for the Term Loan
C. Debt Service Coverage Test Amount
$_____________
[A minus B must equal or exceed 1.3 times C]
IV. Section 9.4. Minimum Shareholder's Equity
A. Shareholders' Equity
$_____________
B. $45,000,000.00
$45,000,000.00
Plus 80% of net proceeds from any Equity Offering
after Closing Date
$_____________
Plus 100% of Net Income (or Deficit) after Closing
Date
$_____________
plus Depreciation deducted in calculating Net Income
(or Deficit) after Closing Date
$_____________
Minus Aggregate Distributions pursuant to
Section 8.7(a)after Closing Date
$_____________
Total
$_____________
A must equal or exceed B
V. Section 9.5. Real Estate Assets
A. Consolidated Total Assets
$_____________
B. Value of direct or indirect interests
in undeveloped land assets
$______________
Plus Value of direct or indirect interests
in non-income producing land assets or
mortgages secured by non-income producing
land assets
$______________
Total
$______________
B may not exceed 5% of A
VI. Section 9.6. Required Equity
A. Indebtedness pursuant to this Agreement
(Section 8.1(a))
$______________
Plus Recourse Indebtedness (Section 8.1(f))
$______________
(Amount may not exceed $15,000,000.00, or
$20,000,000 after result of Section 9.4 test
exceeds $75,000,000.00)
Plus Non-Recourse Indebtedness (Section 8.1(g))
$_____________
Plus Non-Recourse Indebtedness (Section 8.1(h))
$_____________
Plus Indebtedness under Term Loan Agreement
(Section 8.1(i))
$_____________
Total
$_____________
B. Aggregate all-in acquisition cost of Real Estate
$_____________
and Equity Interests of Borrower and its
Subsidiaries and historic cost of capital
improvements
Ratio of A to B
______________
A may not exceed 0.75 of B
IN WITNESS WHEREOF, I have hereunto set my hand this _____ day of
_______________, 199___.
WELLSFORD/WHITEHALL PROPERTIES, L.L.C., a
Delaware limited liability company, by its
managing member
By: Wellsford Commercial Property Trust, a
Maryland real estate investment trust,
manager
By: ________________________________
Title:
[SEAL]
<PAGE>
EXHIBIT D
FORM OF REQUEST FOR EXTENSION OF LOAN
BankBoston, N.A., as Agent
115 Perimeter Center Place, N.E.
Suite 500
Atlanta, Georgia 30346
Attn: Jay Johns
Ladies and Gentlemen:
Pursuant to the provisions of Section 2.8 of the Revolving Credit
Agreement dated December 15, 1997, as from time to time in effect (the
"Credit Agreement"), among Wellsford/Whitehall Properties, L.L.C. (the
"Borrower"), BankBoston, for itself and as Agent, Goldman Sachs Mortgage
Company, and the other Banks from time to time party thereto, the Borrower
hereby requests and certifies as follows:
1. Extension Request. The Borrower hereby irrevocably requests that
the Maturity Date be extended as provided in Section 2.8 of the Credit
Agreement.
2. Extension Fee. The Borrower undertakes to pay the extension fee
as required by Section 2.8 (b)(i) of the Credit Agreement as required
therein.
3. No Default. The undersigned chief financial or chief accounting
officer of the Borrower certifies that the Borrower is and will be in
compliance with all covenants under the Loan Documents after giving effect
to the extension requested hereby.
4. Representations True. Each of the representations and warranties
made by or on behalf of the Borrower, its Subsidiaries, the Members and the
Guarantors contained in the Credit Agreement, in the other Loan Documents
or in any document or instrument delivered pursuant to or in connection
with the Credit Agreement was true and correct in all material respect as
of the date as of which it was made and shall also be true and correct in
all material respects at and as of the Maturity Date (without regard to
such extension request) with the same effect as if made at and as of the
Maturity Date (without regard to such extension request) (except to the
extent of changes occurring in the ordinary course of business that have
not had any materially adverse affect on the business of the Borrower, any
of its Subsidiaries, any of the Members or any Guarantor).
5. Other Conditions. All other conditions to the extension to the
Loan requested hereby set forth in Section 2.8 of the Credit Agreement
have been satisfied.
6. Date. Except to the extent, if any, specified by notice actually
received by the Agent prior to the Maturity Date (without regard to such
extension request) specified above, the foregoing representations and
warranties shall be deemed to have been made by the Borrower on and as of
the Maturity Date (without regard to such extension request).
7. Definitions. Terms defined in the Credit Agreement are used
herein with the meanings so defined.
IN WITNESS WHEREOF, I have hereunto set my hand this _____ day of
______________, 199__.
WELLSFORD/WHITEHALL PROPERTIES, L.L.C., a
Delaware limited liability company, by its
managing member
By: Wellsford Commercial Property Trust, a
Maryland real estate investment trust,
manager
By: _______________________________
Title:
[SEAL]
<PAGE>
SCHEDULE 1.1
BANKS AND COMMITMENTS
Name and Address Commitment Commitment Percentage
BankBoston, N.A. $ 75,000,000 50%
100 Federal Street
Boston, Massachusetts 02110
Attn: Real Estate Division
Eurodollar Lending Office
Same as above
Goldman Sachs Mortgage Company $ 75,000,000 50%
85 Broad Street
New York, New York 10004
Attn: Mr. Bob Foley
Eurodollar Lending Office
Same as above
Total Commitment $150,000,000 100%
<PAGE>
SCHEDULE 1.3
INITIAL COLLATERAL VALUES
Mortgaged Property Initial Collateral Value
1. Chatham $ 6,089,674.00
2. 1700 Valley Road $ 886,489.00
3. Pointview $16,735,668.00<PAGE>
SCHEDULE 5.3
POINT VIEW LAND
<PAGE>
SCHEDULE 6.3
TITLE TO PROPERTIES; LEASES
None.
<PAGE>
SCHEDULE 6.4
ALL-IN ACQUISITION COSTS
BORROWER
Collateral Acquisition Cost
1. Chatham $ 8,119,566.00
2. 1700 Valley Road $ 1,181,985.00
3. Pointview $22,314,224.00
TERM LOAN BORROWER
Real Estate Acquisition Cost
1. 300 Atrium $17,660,418.00
2. 400 Atrium $32,731,152.00
3. 500 Atrium $20,024,753.00
4. 700 Atrium $18,159,775.00
5. 1275 K Street $32,832,508.00
6. Greenbrook Corporate Center $23,871,815.00
7. 1800 Valley Road $ 2,909,695.00
<PAGE>
SCHEDULE 6.7
LITIGATION
None.
<PAGE>
SCHEDULE 6.17
ERISA PLANS
None.
<PAGE>
SCHEDULE 6.21
SUBSIDIARIES OF THE BORROWER
1. WEL/WH 1275 K Street Holding, L.L.C.
2. WEL/WH 1275 K Street, L.L.C.
3. WEL/WH Chatham, L.L.C.
4. WEL/WH 1700 Valley, L.L.C.
5. WEL/WH Convention, L.L.C.
6. WEL/WH Berkeley, L.L.C.
7. WEL/WH Lackawanna, L.L.C.
<PAGE>
TABLE OF CONTENTS
Section 1. DEFINITIONS AND RULES OF INTERPRETATION.. . . . . . . . . . . 1
Section 1.1. Definitions. . . . . . . . . . . . . . . . . 1
Section 1.2. Rules of Interpretation. . . . . . . . . . . .20
Section 2. THE REVOLVING CREDIT FACILITY.. . . . . . . . . . . . . . . .21
Section 2.1. Commitment to Lend. . . . . . . . . . . . . .21
Section 2.2. Facility Fee. . . . . . . . . . . . . . . . .22
Section 2.3. Reduction of Commitment. . . . . . . . . . . .22
Section 2.4. Notes. . . . . . . . . . . . . . . . . . . . .22
Section 2.5. Interest on Loans. . . . . . . . . . . . . . .23
Section 2.6. Requests for Loans. . . . . . . . . . . . . .23
Section 2.7. Funds for Loans. . . . . . . . . . . . . . . .24
Section 2.8. Extension of Maturity Date . . . . . . . . . .25
Section 3. REPAYMENT OF THE LOANS. . . . . . . . . . . . . . . . . . . .26
Section 3.1. Stated Maturity. . . . . . . . . . . . . . . .26
Section 3.2. Intentionally omitted.. . . . . . . . . . . . .26
Section 3.3. Optional Prepayments. . . . . . . . . . . . .26
Section 3.4. Partial Prepayments. . . . . . . . . . . . . .26
Section 3.5. Effect of Prepayments. . . . . . . . . . . . .26
Section 4. CERTAIN GENERAL PROVISIONS. . . . . . . . . . . . . . . . . .27
Section 4.1. Conversion Options.. . . . . . . . . . . . . .27
Section 4.2. Closing Fee. . . . . . . . . . . . . . . . . .27
Section 4.3. Agent's Fee. . . . . . . . . . . . . . . . . .27
Section 4.4. Funds for Payments.. . . . . . . . . . . . . .28
Section 4.5. Computations. . . . . . . . . . . . . . . . .28
Section 4.6. Inability to Determine Eurodollar Rate. . . .28
Section 4.7. Illegality. . . . . . . . . . . . . . . . . .29
Section 4.8. Additional Interest. . . . . . . . . . . . . .29
Section 4.9. Additional Costs, Etc. . . . . . . . . . . . .29
Section 4.10. Capital Adequacy. . . . . . . . . . . . . . .30
Section 4.11. Indemnity of Borrower. . . . . . . . . . . . .31
Section 4.12. Interest on Overdue Amounts; Late Charge. . .31
Section 4.13. Intentionally Omitted. . . . . . . . . . . . .31
Section 4.14. Certificate. . . . . . . . . . . . . . . . . .31
Section 4.15. Limitation on Interest. . . . . . . . . . . .31
Section 4.16. Certain Provisions Relating to
Increased Costs. . . . . . . . . . . . . .32
Section 5. COLLATERAL SECURITY.. . . . . . . . . . . . . . . . . . . . .32
Section 5.1. Collateral . . . . . . . . . . . . . . . . . .32
Section 5.2. Appraisals . . . . . . . . . . . . . . . . . .33
Section 5.3. Release of Collateral. . . . . . . . . . . . .33
Section 5.4. Additional Collateral. . . . . . . . . . . . .35
Section 5.5. Holdback. . . . . . . . . . . . . . . . . . .36
Section 5.6. [Intentionally omitted]. . . . . . . . . . . .36
Section 5.7. Mezzanine Properties. . . . . . . . . . . . .36
<PAGE>
Section 6. REPRESENTATIONS AND WARRANTIES. . . . . . . . . . . . . . . .38
Section 6.1. Corporate Authority, Etc.. . . . . . . . . . .38
Section 6.2. Governmental Approvals. . . . . . . . . . . .39
Section 6.3. Title to Properties: Leases. . . . . . . . . .39
Section 6.4. Financial Statements. . . . . . . . . . . . .39
Section 6.5. No Material Changes. . . . . . . . . . . . . .40
Section 6.6. Franchises, Patents, Copyrights, Etc. . . . .40
Section 6.7. Litigation. . . . . . . . . . . . . . . . . .40
Section 6.8. No Materially Adverse Contracts, Etc. . . . .40
Section 6.9. Compliance with Other Instruments, Laws, Etc. 40
Section 6.10. Tax Status. . . . . . . . . . . . . . . . . .41
Section 6.11. No Event of Default. . . . . . . . . . . . . .41
Section 6.12. Holding Company and Investment Company Acts. .41
Section 6.13. Absence of UCC Financing Statements, Etc. . .41
Section 6.14. Setoff, Etc. . . . . . . . . . . . . . . . . .41
Section 6.15. Certain Transactions. . . . . . . . . . . . .41
Section 6.16. Employee Benefit Plans. . . . . . . . . . . .41
Section 6.17. ERISA Taxes. . . . . . . . . . . . . . . . .42
Section 6.18. Plan Payments. . . . . . . . . . . . . . . . .42
Section 6.19. Regulations U and X. . . . . . . . . . . . . .42
Section 6.20. Environmental Compliance. . . . . . . . . . .42
Section 6.21. Subsidiaries. . . . . . . . . . . . . . . . .44
Section 6.22. Leases. . . . . . . . . . . . . . . . . . . .44
Section 6.23. Loan Documents. . . . . . . . . . . . . . . .44
Section 6.24. Mortgaged Property. . . . . . . . . . . . . .44
Section 6.25. Brokers. . . . . . . . . . . . . . . . . . . .47
Section 6.26. Fair Consideration. . . . . . . . . . . . . .48
Section 6.27. Solvency. . . . . . . . . . . . . . . . . . .48
Section 6.28. No Bankruptcy Filing. . . . . . . . . . . . .48
Section 6.29. No Fraudulent Intent. . . . . . . . . . . . .48
Section 6.30. Other Debt. . . . . . . . . . . . . . . . . .48
Section 6.31. Members. . . . . . . . . . . . . . . . . . . .48
Section 7. AFFIRMATIVE COVENANTS OF THE BORROWER.. . . . . . . . . . . .49
Section 7.1. Punctual Payment. . . . . . . . . . . . . . .49
Section 7.2. Maintenance of Office. . . . . . . . . . . . .49
Section 7.3. Records and Accounts. . . . . . . . . . . . .49
Section 7.4. Financial Statements, Certificates
and Information. . . . . . . . . . . . . . . .49
Section 7.5. Notices. . . . . . . . . . . . . . . . . . . .51
Section 7.6. Existence; Maintenance of Properties.. . . . .53
Section 7.7. Insurance. . . . . . . . . . . . . . . . . . .53
Section 7.8. Taxes. . . . . . . . . . . . . . . . . . . . .58
Section 7.9. Inspection of Properties and Books. . . . . .58
Section 7.10. Compliance with Laws, Contracts,
Licenses, and Permits. . . . . . . . . . . . .58
Section 7.11. Use of Proceeds. . . . . . . . . . . . . . . .58
Section 7.12. Further Assurances. . . . . . . . . . . . . .59
Section 7.13. Management Agreements. . . . . . . . . . . . .59
Section 7.14. ERISA Compliance. . . . . . . . . . . . . . .59
Section 7.15. Distribution of Income to the Borrower. . . .59
Section 7.16. More Restrictive Agreements. . . . . . . . . .60
Section 7.17. Compliance . . . . . . . . . . . . . . . . . .60
Section 7.18. [Intentionally Omitted . . . . . . . . . . . .60
Section 7.19. Leasing. . . . . . . . . . . . . . . . . . . .60
Section 7.20. Plan Assets, etc . . . . . . . . . . . . . . .61
Section 8. CERTAIN NEGATIVE COVENANTS OF THE BORROWER. . . . . . . . . .61
Section 8.1. Restrictions on Indebtedness. . . . . . . . .62
Section 8.2. Restrictions on Liens, Etc. . . . . . . . . .64
Section 8.3. Restrictions on Investments. . . . . . . . . .65
Section 8.4. Merger, Consolidation. . . . . . . . . . . . .66
Section 8.5. Sale and Leaseback. . . . . . . . . . . . . .67
Section 8.6. Compliance with Environmental Laws. . . . . .67
Section 8.7. Distributions. . . . . . . . . . . . . . . . .68
Section 8.8. Asset Sales. . . . . . . . . . . . . . . . . .69
Section 8.9. Development Activity. . . . . . . . . . . . .69
Section 8.10. Sources of Capital. . . . . . . . . . . . . .69
Section 8.11. Transfers. . . . . . . . . . . . . . . . . . .70
Section 9. FINANCIAL COVENANTS OF BORROWER.. . . . . . . . . . . . . . .70
Section 9.1. Liabilities to Assets Ratio. . . . . . . . . .70
Section 9.2. Consolidated Operating Cash Flow Coverage. . .70
Section 9.3. Term Loan Debt Service.. . . . . . . . . . . .71
Section 9.4. Minimum Shareholders Equity. . . . . . . . . .71
Section 9.5. Real Estate Assets. . . . . . . . . . . . . .71
Section 9.6. Required Equity. . . . . . . . . . . . . . . .71
Section 10. CLOSING CONDITIONS.. . . . . . . . . . . . . . . . . . . .72
Section 10.1. Loan Documents. . . . . . . . . . . . . . . .72
Section 10.2. Certified Copies of Organizational Documents. 72
Section 10.3. Bylaws; Resolutions. . . . . . . . . . . . . .72
Section 10.4. Incumbency Certificate; Authorized Signers. .72
Section 10.5. Opinion of Counsel. . . . . . . . . . . . . .72
Section 10.6. Payment of Fees. . . . . . . . . . . . . . . .73
Section 10.7. Appraisals. . . . . . . . . . . . . . . . . .73
Section 10.8. Environmental Reports. . . . . . . . . . . . .73
Section 10.9. Insurance. . . . . . . . . . . . . . . . . . .73
Section 10.10. Performance; No Default. . . . . . . . . .73
Section 10.11. Representations and Warranties. . . . . . .73
Section 10.12. Proceedings and Documents. . . . . . . . .73
Section 10.13. Eligible Real Estate Qualification Documents.
. . . . . . . . . . . . . . . . . . . . . .74
Section 10.14. Compliance Certificate. . . . . . . . . . .74
Section 10.15. Other Documents. . . . . . . . . . . . . .74
Section 10.16. No Condemnation/Taking. . . . . . . . . . .74
Section 10.17. Governmental Policy. . . . . . . . . . . .74
Section 10.18. Other. . . . . . . . . . . . . . . . . . .74
Section 11. CONDITIONS TO ALL BORROWINGS. . . . . . . . . . . . . . . .74
Section 11.1. Prior Conditions Satisfied. . . . . . . . . .74
Section 11.2. Representations True; No Default. . . . . . .74
Section 11.3. No Legal Impediment. . . . . . . . . . . . . .75
Section 11.4. Governmental Regulation. . . . . . . . . . . .75
Section 11.5. Proceedings and Documents. . . . . . . . . . .75
Section 11.6. Borrowing Documents. . . . . . . . . . . . . .75
Section 11.7. Endorsement to Title Policy. . . . . . . . . .75
Section 11.8. Future Advances Tax Payment. . . . . . . . . .75
Section 12. EVENTS OF DEFAULT; ACCELERATION; ETC. . . . . . . . . .76
Section 12.1. Events of Default and Acceleration. . . . . .76
Section 12.lA. Limitation of Cure Periods. . . . . . . . .79
Section 12.lB. Certain Cure Periods. . . . . . . . . .79
Section 12.2. Termination of Commitments. . . . . . . . . .80
Section 12.3. Remedies.. . . . . . . . . . . . . . . . . . .80
Section 12.4. Distribution of Collateral Proceeds. . . . . .81
Section 13. SETOFF.. . . . . . . . . . . . . . . . . . . . . . . . . .81
Section 14. THE AGENT. . . . . . . . . . . . . . . . . . . . . . . . . .82
Section 14.1. Authorization. . . . . . . . . . . . . . . . .82
Section 14.2. Employees and Agents. . . . . . . . . . . . .82
Section 14.3. No Liability. . . . . . . . . . . . . . . . .82
Section 14.4. No Representations. . . . . . . . . . . . . .82
Section 14.5. Payments.. . . . . . . . . . . . . . . . . . .83
Section 14.6. Holders of Notes. . . . . . . . . . . . . . .84
Section 14.7. Indemnity. . . . . . . . . . . . . . . . . . .84
Section 14.8. Agent as Bank. . . . . . . . . . . . . . . . .84
Section 14.9. Resignation. . . . . . . . . . . . . . . . . .84
Section 14.10. Duties in the Case of Enforcement. . . . .85
Section 15. EXPENSES.. . . . . . . . . . . . . . . . . . . . . . . . .85
Section 16. INDEMNIFICATION. . . . . . . . . . . . . . . . . . . . . .86
Section 17. SURVIVAL OF COVENANTS, ETC. . . . . . . . . . . . . . . .87
Section 18. ASSIGNMENT AND PARTICIPATION.. . . . . . . . . . . . . . .87
Section 18.1. Conditions to Assignment by Banks. . . . . . .87
Section 18.2. Register. . . . . . . . . . . . . . . . . . .88
Section 18.3. New Notes. . . . . . . . . . . . . . . . . . .88
Section 18.4. Participations. . . . . . . . . . . . . . . .89
Section 18.5. Pledge by Bank. . . . . . . . . . . . . . . .89
Section 18.6. No Assignment by Borrower. . . . . . . . . . .89
Section 18.7. Disclosure. . . . . . . . . . . . . . . . . .89
Section 19. NOTICES. . . . . . . . . . . . . . . . . . . . . . . . . .89
Section 20. RELATIONSHIP. . . . . . . . . . . . . . . . . . . . . . .91
Section 21. GOVERNING LAW; CONSENT TO JURISDICTION AND SERVICE. . .91
Section 22. HEADINGS.. . . . . . . . . . . . . . . . . . . . . . . . .91
Section 23. COUNTERPARTS.. . . . . . . . . . . . . . . . . . . . . . .91
Section 24. ENTIRE AGREEMENT, ETC. . . . . . . . . . . . . . . . . . .92
Section 25. WAIVER OF JURY TRIAL.. . . . . . . . . . . . . . . . . . .92
Section 26. DEALINGS WITH THE BORROWER. . . . . . . . . . . . . . . .92
Section 27. CONSENTS, AMENDMENTS, WAIVERS, ETC. . . . . . . . . .92
Section 28. SEVERABILITY.. . . . . . . . . . . . . . . . . . . . . . .93
Section 29. LIMITATION ON LIABILITY. . . . . . . . . . . . . . . . . .93
Section 30. NO UNWRITTEN AGREEMENTS. . . . . . . . . . . . . . . . . .94
Section 31. TIME OF THE ESSENCE. . . . . . . . . . . . . . . . . . . .94
LIST OF EXHIBITS
Exhibit A - Form of Note
Exhibit B - Form of Request for Loan
Exhibit C - Form of Compliance Certificate
Exhibit D - Form of Request for Extension of Loan
LIST OF SCHEDULES
Schedule 1.1 - Banks and Commitments
Schedule 1.3 - Initial Collateral Values
Schedule 5.3 - [Point View] Land
Schedule 6.3 - Title to Property; Leases
Schedule 6.4 - All-In Acquisition Costs
Schedule 6.7 - Litigation
Schedule 6.17 - ERISA Plans
Schedule 6.21 - Subsidiaries of Borrower
TERM LOAN AGREEMENT
DATED AS OF DECEMBER 15, 1997
among
WEL/WH 1275 K STREET L.L.C., as Borrower
and
BANKBOSTON, N.A.,
GOLDMAN SACHS MORTGAGE COMPANY,
and
OTHER BANKS WHICH MAY BECOME
PARTIES TO THIS AGREEMENT, as Banks
and
BANKBOSTON, N.A.,
AS ADMINISTRATIVE AGENT AND CO-ARRANGER
AND CO-SYNDICATION AGENT
and
GOLDMAN SACHS MORTGAGE COMPANY,
AS CO-ARRANGER AND CO-SYNDICATION AGENT
<PAGE>
TERM LOAN AGREEMENT
___________________
THIS TERM LOAN AGREEMENT is made as of the 15th day of December, 1997,
by and among WEL/WH 1275 K STREET, L.L.C., a Delaware limited liability
company, having its principal place of business at 610 Fifth Avenue, 7th
Floor, New York, New York ("Borrower"), BANKBOSTON, N.A., a national
banking association, GOLDMAN SACHS MORTGAGE COMPANY, a New York limited
partnership, and the other lending institutions which may become parties
hereto pursuant to Section 18 (collectively, the "Banks"), and BANKBOSTON,
N.A., as Agent for the Banks and Co-Arranger and Co-Syndication Agent (the
"Agent"), and GOLDMAN SACHS MORTGAGE COMPANY, as Co-Arranger and Co-
Syndication Agent.
Section 1. DEFINITIONS AND RULES OF INTERPRETATION.
Section 1.1. Definitions. The following terms shall have the
meanings set forth in this Section l or elsewhere in the provisions of
this Agreement referred to below:
Agent. BankBoston, N.A., a national banking association, its
successors and assigns, acting as agent for the Banks.
Agent's Head Office. The Agent's head office located at 100 Federal
Street, Boston, Massachusetts 02110, or at such other location as the Agent
may designate from time to time by notice to the Borrower and the Banks.
Agent's Special Counsel. Long Aldridge & Norman LLP or such other
counsel as may be approved by the Agent.
Agreement. This Term Loan Agreement, including the Schedules and
Exhibits hereto.
Agreement Regarding Fees. The Agreement Regarding Fees dated of even
date herewith among Borrower, BKB and Goldman.
Appraisal. An MAI appraisal of the value of a parcel of Mortgaged
Property, determined on a fair market value basis, performed by an
independent appraiser selected by the Agent who is not an employee of the
Borrower, the Revolver Borrower, the Agent or a Bank, the form and
substance of such appraisal and the identity of the appraiser to be in
accordance with regulatory laws and policies (both regulatory and internal)
applicable to the Banks, including, without limitation, FIRREA, and
otherwise acceptable to the Majority Banks.
Appraised Value. The fair market value of a parcel of Mortgaged
Property, determined by the most recent Appraisal of such parcel or update
obtained pursuant to Section 5.2 or Section 10.7, subject, however, to
such changes or adjustments to the value determined thereby as may be
required by the appraisal departments of the Majority Banks in their good
faith business judgment.
Assignment of Leases and Rents. Each of the collateral assignments of
leases and rents from the Borrower to the Agent pursuant to which there
shall be assigned to the Agent for the benefit of the Banks a security
interest in the interest of such party, as lessor with respect to all
Leases of all or any part of a Mortgaged Property, each such collateral
assignment to be in form and substance satisfactory to the Agent.
Balance Sheet Date. September 30, 1997.
Banks. BKB, Goldman and any other Person who becomes an assignee of
any rights of a Bank pursuant to Section 18 (but not including any
Participant, as defined in Section 18).
Base Rate. The higher of (a) the annual rate of interest announced
from time to time by BKB at its head office in Boston, Massachusetts as its
"base rate", and (b) one-half of one percent (0.5%) above the Federal Funds
Effective Rate (rounded upwards, if necessary, to the next one-eighth of
one percent). Any change in the rate of interest payable hereunder
resulting from a change in the Base Rate shall become effective as of the
opening of business on the day on which such change in the Base Rate
becomes effective.
Base Rate Loans. Those Loans bearing interest calculated by reference
to the Base Rate.
BKB. BankBoston, N.A., a national banking association.
Borrower. As defined in the preamble hereto.
Building. All of the buildings, structures and improvements now or
hereafter located on any Mortgaged Property.
Building Service Equipment. All apparatus, fixtures and articles of
personal property owned by the Borrower, now or hereafter attached to or
used or procured for use in connection with the operation or maintenance of
any building, structure or other improvement located on or included in the
Mortgaged Property, including, but without limiting the generality of the
foregoing, all engines, furnaces, boilers, stokers, pumps, heaters, tanks,
dynamos, motors, generators, switchboards, electrical equipment, heating,
plumbing, lifting and ventilating apparatus, air-cooling and
air-conditioning apparatus, gas and electric fixtures, elevators,
escalators, fittings, and machinery and all other equipment of every kind
and description, used or procured for use in the operation of a Building
(except apparatus, fixtures or articles of personal property belonging to
lessees or other occupants of such building or to persons other than the
Borrower, unless the same be abandoned by any such lessee or other occupant
or person and shall become the Borrower's property by reason of such
abandonment), together with any and all replacements thereof and additions
thereto.
Business Day. Any day on which banking institutions in the city in
which the Agent's Head Office is located are open for the transaction of
banking business and, in the case of Eurodollar Rate Loans, which also is a
Eurodollar Business Day.
Capital Improvement Project. With respect to any Mortgaged Property,
capital improvements consisting of rehabilitation, refurbishment,
replacement and improvements to the existing Buildings on such Mortgaged
Property which may be properly capitalized under generally accepted
accounting principles.
Capital Improvement Reserve. For any period an amount equal to
seventy-five cents ($0.75) per annum multiplied by the weighted average of
rentable square footage of the Mortgaged Property during such period.
CERCLA. See Section 6.20.
Closing Date. The first date on which all of the conditions set forth
in Section 10 and Section 11 have been satisfied.
Co-Agent. Goldman
Code. The Internal Revenue Code of 1986, as amended.
Collateral. All of the property, rights and interests of the Borrower
which are or are intended to be subject to the security interests, liens
and mortgages created by the Security Documents, including, without
limitation, the Mortgaged Property.
Commitment. With respect to each Bank, the amount set forth on
Schedule 1.1 hereto as the amount of such Bank's Commitment to make or
maintain Loans to the Borrower, as the same may be reduced from time to
time in accordance with the terms of this Agreement.
Commitment Percentage. With respect to each Bank, the percentage set
forth on Schedule 1.1 hereto as such Bank's percentage of the aggregate
Commitments of all of the Banks.
Compliance Certificate. See Section 7.4(e).
Construction Inspector. A firm of professional engineers or architects
selected by the Agent and reasonably acceptable to the Borrower.
Conversion Request. A notice given by the Borrower to the Agent of
its election to convert or continue a Loan in accordance with Section 4.1.
Debt Offering. The issuance and sale by the Borrower or the Guarantor
of any debt securities of the Borrower or the Guarantor.
Default. See Section 12.1.
Designated Collateral Value. Seventy-five percent (75%) of the
Appraised Value of a Mortgaged Property as determined in connection with
the acceptance of such Mortgaged Property as Collateral. The aggregate of
the amounts determined for each Mortgaged Property shall be the Designated
Collateral Value for all of such Mortgaged Properties.
Distribution. The declaration or payment of any dividend or
distribution on or in respect of any shares of the Borrower, other than
dividends or distributions payable solely in equity securities of the
Borrower, the purchase, redemption, exchange or other retirement of any
shares of the Borrower; directly or indirectly; the return of capital by
the Borrower to its shareholders as such; or any other distribution on or
in respect of any shares of the Borrower.
Dollars or $. Dollars in lawful currency of the United States of
America.
Domestic Lending Office. Initially, the office of each Bank
designated as such in Schedule 1 hereto; thereafter, such other office of
such Bank, if any, located within the United States that will be making or
maintaining Base Rate Loans.
Drawdown Date. The date on which any Loan is made or is to be made,
and the date on which any Loan is converted or combined in accordance with
Section 4.1.
Eligible Real Estate. Real estate:
(a) which is owned in fee by the Borrower;
(b) which is located within the northeastern United States,
excluding those States which prescribe a "single-action" or similar
rule limiting the rights of creditors secured by real property, except
to the extent such exclusion is waived in writing by the Majority
Banks with respect to a specific parcel of real estate;
(c) which is utilized principally for commercial office
purposes;
(d) which is approved by the Majority Banks after the date
hereof in their sole judgment;
(e) as to which all of the representations set forth in Section
6 of this Agreement concerning Mortgaged Property are true and
correct; and
(f) as to which the Agent has received all Eligible Real Estate
Qualification Documents, so long as all of such documents remain in
full force and effect.
Eligible Real Estate Qualification Documents. With respect to any
parcel of Eligible Real Estate proposed to be included in the Mortgaged
Properties each of the following:
(a) Security Documents. Such Security Documents relating to
such Eligible Real Estate as the Agent shall require, in form and
substance satisfactory to the Agent and duly executed and delivered by
the respective parties thereto.
(b) Enforceability Opinion. The favorable legal opinion of
counsel to the Borrower reasonably acceptable to the Agent qualified
to practice in the State in which such Eligible Real Estate is
located, addressed to the Banks and in form and substance satisfactory
to the Agent as to the enforceability of such Security Documents and
such other matters as the Agent shall reasonably request.
(c) Perfection of Liens. Evidence reasonably satisfactory to
the Agent that the Security Documents are effective to create in favor
of the Agent a legal, valid and enforceable first (except for
Permitted Liens entitled to priority under applicable law) lien and
security interest in such Eligible Real Estate and that all filings,
recordings, deliveries of instruments and other actions necessary or
desirable to protect and preserve such liens or security interests
have been duly effected.
(d) Survey and Taxes. The Survey of such Eligible Real Estate,
together with the Surveyor Certification and evidence of payment of
all real estate taxes, assessments and municipal charges on such
Eligible Real Estate which on the date of determination are required
to have been paid under Section 7.8.
(e) Title Insurance; Title Exception Documents. The Title
Policy covering such Eligible Real Estate, including all endorsements
thereto, and together with proof of payment of all fees and premiums
for such policy, and true and accurate copies of all documents listed
as exceptions under such policy.
(f) UCC Certification. A certification from the Title Insurance
Company or counsel satisfactory to the Agent that a search of the
public records designated by the Agent disclosed no conditional sales
contracts, security agreements, chattel mortgages, leases of
personalty, financing statements or title retention agreements which
affect any property, rights or interests of the Borrower that are or
are intended to be subject to the security interest, assignments, and
mortgage liens created by the Security Documents relating to such
Eligible Real Estate except to the extent that the same are discharged
and removed prior to or simultaneously with the inclusion of the
Eligible Real Estate in the Collateral.
(g) Management Agreement. A true copy of the Management
Agreement relating to such Eligible Real Estate.
(h) Leases. True and correct copies of all Leases for such
Eligible Real Estate and any lease summaries prepared by Borrower with
respect thereto, together with the forms of Lease to be used by the
Borrower in connection with future leasing of such Mortgaged Property,
such forms of Lease to be in form and substance satisfactory to the
Agent.
(i) Subordination Agreements. A Subordination, Attornment and
Non-Disturbance Agreement from each tenant of such Eligible Real
Estate as required by the Agent, dated not more than sixty (60) days
prior to the inclusion of such Eligible Real Estate in the Collateral
and satisfactory in form and substance to the Agent.
(j) Estoppel Certificates. Estoppel certificates from each
tenant of such parcel of Eligible Real Estate as required by Agent,
such certificates to be dated not more than sixty (60) days prior to
the inclusion of such Eligible Real Estate in the Collateral and to be
satisfactory in form and substance to the Agent.
(k) Certificates of Insurance. Each of (i) a current
certificate of insurance as to the insurance maintained on such
Eligible Real Estate (including flood insurance if necessary) from the
insurer or an independent insurance broker dated as of the date of
determination, identifying insurers, types of insurance, insurance
limits, and policy terms; (ii) certified copies of all policies
evidencing such insurance (or certificates therefor signed by the
insurer or an agent authorized to bind the insurer); and (iii) such
further information and certificates from the Borrower, its insurers
and insurance brokers as the Agent may reasonably request, all of
which shall be in compliance with the requirements of this Agreement.
(l) Hazardous Substance Assessments. A hazardous waste site
assessment report concerning Hazardous Substances and asbestos on such
Eligible Real Estate dated or updated not more than three months prior
to the inclusion of such Eligible Real Estate in the Collateral unless
otherwise approved by the Agent, from an Environmental Engineer, such
report to contain no qualifications except those that are acceptable
to the Majority Banks in their sole discretion and to otherwise be in
form and substance satisfactory to the Majority Banks.
(m) Certificate of Occupancy. A copy of the certificate(s) of
occupancy issued to the Borrower for such parcel of Eligible Real
Estate permitting the use and occupancy of the Building thereon (or
evidence that any previously issued certificate(s) of occupancy is not
required to be reissued to the Borrower), or a legal opinion
reasonably satisfactory to the Agent that no certificates of occupancy
are necessary to the use and occupancy thereof.
(n) Appraisal. An Appraisal of such Eligible Real Estate, in
form and substance satisfactory to the Majority Banks and dated not
more than three months prior to the inclusion of such Eligible Real
Estate in the Collateral.
(o) Zoning and Land Use Opinion of Counsel. A favorable opinion
concerning the Eligible Real Estate addressed to the Agent and dated
the date of the inclusion of such Eligible Real Estate in the
Collateral, in form and substance satisfactory to the Agent, from
counsel approved by the Agent admitted to practice in the State in
which such parcel is located, as to zoning and land use compliance, or
such other evidence regarding zoning and land use compliance as the
Agent may approve in its reasonable discretion.
(p) Construction Inspector Report. A report or written
confirmation from the Construction Inspector satisfactory in form and
content to the Majority Banks, dated or updated not more than three
months prior to the inclusion of such Eligible Real Estate in the
Collateral, addressing such matters as the Majority Banks may
reasonably require, including without limitation that the Construction
Inspector has reviewed the plans and specifications or other available
materials for all Buildings on the Eligible Real Estate, that the
condition of the Buildings is good, that all Buildings were
constructed and completed in a good and workmanlike manner, that the
Buildings satisfy all applicable building, zoning, handicapped access
and Environmental Laws applicable thereto, and whether or not the
Eligible Real Estate and the Buildings thereon are a conforming use
under applicable zoning laws.
(q) Permit and Legal Compliance Assurances. Evidence
satisfactory to the Agent that all activities being conducted on such
Eligible Real Estate which require federal, state or local licenses or
permits have been duly licensed and that such licenses or permits are
in full force and effect, and that the Eligible Real Estate, the
Buildings and the use and occupancy thereof are in compliance in all
material respects with all applicable federal, state or local laws,
ordinances or regulations.
(r) Operating Statements. Operating statements for such
Eligible Real Estate in the form of such statements delivered to the
Banks under Section 6.4(c) covering each of the four fiscal quarters
ending immediately prior to the addition of such Mortgaged Property to
the Collateral.
(s) Doing Business Opinion. An opinion, dated the date of the
inclusion of such Eligible Real Estate in the Collateral, of legal
counsel to the Borrower reasonably acceptable to the Agent qualified
to practice in the State in which such Eligible Real Estate is located
to the effect that neither the Agent nor any Bank shall be required to
qualify to do business in such State or any political subdivision
thereof or to become liable to pay any taxes in such State or any
political subdivision thereof solely on account of the receipt of the
lien on such Eligible Real Estate securing the Obligation, such
opinion to be satisfactory to the Agent.
(t) Additional Documents. Such other documents, certificates,
reports or assurances as the Agent or the Majority Banks may
reasonably require in their discretion.
Employee Benefit Plan. Any employee benefit plan within the meaning
of Section 3(3) of ERISA maintained or contributed to by the Borrower or
any ERISA Affiliate, other than a Multiemployer Plan.
Environmental Engineer. A firm of independent professional engineers
or other scientists generally recognized as expert in the detection,
analysis and remediation of Hazardous Substances and related environmental
matters and reasonably acceptable to the Agent.
Environmental Laws. See Section 6.20(a).
ERISA. The Employee Retirement Income Security Act of 1974, as
amended and in effect from time to time.
ERISA Affiliate. Any Person which is treated as a single employer with
the Borrower under Section 414 of the Code.
ERISA Reportable Event. A reportable event with respect to a
Guaranteed Pension Plan within the meaning of Section 4043 of ERISA and
the regulations promulgated thereunder as to which the requirement of
notice has not been waived.
Eurocurrency Reserve Rate. For any day with respect to a Eurodollar
Rate Loan, the maximum rate (expressed as a decimal) at which any lender
subject thereto would be required to maintain reserves under Regulation D
of the Board of Governors of the Federal Reserve System (or any successor
or similar regulations relating to such reserve requirements) against
"Eurocurrency Liabilities" (as that term is used in Regulation D or any
successor or similar regulation), if such liabilities were outstanding.
The Eurocurrency Reserve Rate shall be adjusted automatically on and as of
the effective date of any change in the Eurocurrency Reserve Rate.
Eurodollar Business Day. Any day on which commercial banks are open
for international business (including dealings in Dollar deposits) in
London or such other Eurodollar interbank market as may be selected by the
Agent and the Banks in their sole discretion acting in good faith.
Eurodollar Lending Office. Initially, the office of each Bank
designated as such in Schedule 1 hereto; thereafter, such other office of
such Bank, if any, that shall be making or maintaining Eurodollar Rate
Loans.
Eurodollar Rate. For any Interest Period with respect to a Eurodollar
Rate Loan, the rate per annum equal to the quotient (rounded upwards to the
nearest 1/16 of one percent) of (a) the rate at which the Reference Bank's
Eurodollar Lending Office is offered Dollar deposits two Eurodollar
Business Days prior to the beginning of such Interest Period in whatever
interbank Eurodollar market may be selected by the Reference Bank in its
sole discretion, acting in good faith, for delivery on the first day of
such Interest Period for the number of days comprised therein and in an
amount comparable to the amount of the Eurodollar Rate Loan to which such
Interest Period applies, divided by (b) a number equal to 1.00 minus the
Eurocurrency Reserve Rate.
Eurodollar Rate Loans. Loans bearing interest calculated by reference
to a Eurodollar Rate.
Event of Default. See Section 12.1.
Federal Funds Effective Rate. For any day, the rate per annum equal
to the weighted average of the rates on overnight Federal funds
transactions with members of the Federal Reserve System arranged by Federal
funds brokers, as published for such day (or, if such day is not a Business
Day, for the next preceding Business Day) by the Federal Reserve Bank of
New York, or, if such rate is not so published for any day that is a
Business Day, the average of the quotations for such day on such
transactions received by the Agent from three Federal funds brokers of
recognized standing selected by the Agent.
generally accepted accounting principles. Principles that are (a)
consistent with the principles promulgated or adopted by the Financial
Accounting Standards Board and its predecessors, as in effect from time to
time and (b) consistently applied with past financial statements of the
Borrower adopting the same principles; provided that a certified public
accountant would, insofar as the use of such accounting principles is
pertinent, be in a position to deliver an unqualified opinion (other than a
qualification regarding changes in generally accepted accounting
principles) as to financial statements in which such principles have been
properly applied.
Goldman. Goldman Sachs Mortgage Company.
Goldman Group. Collectively, the partners of WHWEL as of any date
that are affiliates of The Goldman Sachs Group L.P.
Guaranteed Pension Plan. Any employee pension benefit plan within the
meaning of Section 3(2) of ERISA maintained or contributed to by the
Borrower or any ERISA Affiliate the benefits of which are guaranteed on
termination in full or in part by the PBGC pursuant to Title IV of ERISA,
other than a Multiemployer Plan.
Guarantor. Revolver Borrower, in its capacity as guarantor under the
Guaranty.
Guaranty. The Indemnity and Guaranty Agreement by the Revolver
Borrower in favor of Agent and the Banks, in form and substance
satisfactory to Agent in its sole discretion.
Hazardous Substances. See Section 6.20(b).
Indebtedness. All obligations, contingent and otherwise, that in
accordance with generally accepted accounting principles should be
classified upon the obligor's balance sheet as liabilities, or to which
reference should be made by footnotes thereto, including in any event and
whether or not so classified: (a) all debt and similar monetary
obligations, whether direct or indirect (including, without limitation, all
obligations evidenced by bonds, debentures, notes or similar debt
instruments and subordinated indebtedness); (b) all liabilities secured by
any mortgage, pledge, security interest, lien, charge or other encumbrance
existing on property owned or acquired subject thereto, whether or not the
liability secured thereby shall have been assumed; and (c) all guarantees,
interest rate and currency swap obligations, endorsements and other
contingent obligations whether direct or indirect in respect of
indebtedness of others, including contingent obligations that in accordance
with generally accepted accounting principles are required to be footnoted
on the Borrower's balance sheet and any obligation to supply funds to or in
any manner to invest directly or indirectly in a Person, to purchase
indebtedness, or to assure the owner of indebtedness against loss through
an agreement to purchase goods, supplies or services for the purpose of
enabling the debtor to make payment of the indebtedness held by such owner
or otherwise, and the obligation to reimburse the issuer in respect of any
letter of credit; and (d) any obligation as a lessee or an obligor under a
capitalized lease.
Indemnity Agreement. Collectively, the Indemnity Agreements Regarding
Hazardous Materials made by the Borrower and the Revolver Borrower in favor
of the Agent and the Banks, pursuant to which such parties agree to
indemnify the Agent and the Banks with respect to Hazardous Substances and
Environmental Laws, such Indemnity Agreement to be in form and substance
satisfactory to the Agent.
Interest Payment Date. (a) As to each Loan, the first day of each
January, April, July and October during the term of such Loan (with the
first Interest Payment Date pursuant to this clause (a) being April 1,
1998), and (b) also as to each Eurodollar Rate Loan, the last day of the
Interest Period relating thereto.
Interest Period. With respect to each Eurodollar Rate Loan:
(a)(i) initially, for each Loan the Drawdown Date of which is
the Closing Date, a period of two months; and
(b)(i) for the period commencing with the date two months
after the Closing Date and ending on the second anniversary of the
Closing Date, the period commencing on the Drawdown Date of such Loan
and ending one, three, six or twelve months or, with respect only to a
Eurodollar Rate Loan the Drawdown Date of which is a date during the
period commencing on the date two months after the Closing Date and
ending three months after the Closing Date, also twenty-four months,
and (ii) thereafter, each period commencing on the day following the
last day of the next preceding Interest Period applicable to such Loan
and ending on the last day of one of the periods set forth above, as
selected by the Borrower in a Conversion Request; and
(c)(i) from and after the last day of the first Interest
Period to end on or after the second anniversary of the Closing Date,
the period commencing on the Drawdown Date of such Loan and ending one
month thereafter; and (ii) thereafter, each period commencing on the
day following the last day of the next preceding Interest Period
applicable to such Loan and ending on the last day of the then next
one month period; provided that all of the foregoing provisions
relating to Interest Periods are subject to the following:
(A) if any Interest Period with respect to a Eurodollar
Rate Loan would otherwise end on a day that is not a Eurodollar
Business Day, that Interest Period shall end and the next
Interest Period shall commence on the next preceding or
succeeding Eurodollar Business Day as determined conclusively by
the Reference Bank in accordance with the then current bank
practice in the applicable Eurodollar interbank market;
(B) if the Borrower shall fail to give notice as provided
in Section 4.1, the Borrower shall be deemed to have requested a
conversion of the affected Eurodollar Rate Loan to a Base Rate
Loan on the last day of the then current Interest Period with
respect thereto;
(C) no Interest Period relating to any Eurodollar Rate Loan
shall extend beyond the Maturity Date; and
(D) no Interest Period commencing prior to the second
anniversary date of the Closing Date shall extend beyond such
second anniversary date of the Closing Date except for any
twenty-four month period allowed to be selected by the Borrower
in accordance with clause (d) of this definition and so selected.
Leases. Leases, licenses and agreements whether written or oral,
relating to the use or occupation of space in or on the Building or on the
Eligible Real Estate.
Liens. See Section 8.2.
Loan Documents. This Agreement, the Notes, the Security Documents,
the Guaranty, and all other documents, instruments or agreements executed
or delivered by or on behalf of the Borrower or the Guarantor evidencing or
securing the Loans.
Loan Request. See Section 2.6.
Loans. The aggregate Loans to be made by the Banks hereunder.
Majority Banks. As of any date, the Bank or Banks whose aggregate
Commitment Percentage is equal to or greater than sixty-six and two-thirds
percent (66.67%).
Management Agreements. Agreements, whether written or oral, providing
for the management of the Mortgaged Property or any of them.
Maturity Date. December 15, 2001, or such earlier date on which the
Loans shall become due and payable pursuant to the terms hereof.
Mortgaged Property. Collectively, the Eligible Real Estate which is
conveyed to and accepted by the Agent as security for the Obligations
pursuant to the Security Deeds.
Multiemployer Plan. Any multiemployer plan within the meaning of
Section 3(37) of ERISA maintained or contributed to by the Borrower or any
ERISA Affiliate.
Net Income (or Deficit). With respect to any Person (or any asset of
any Person) for any fiscal period, the net income (or deficit) of such
Person (or attributable to such asset), after deduction of all expenses,
taxes and other proper charges, determined in accordance with generally
accepted accounting principles.
Net Operating Income. With respect to the Borrower for any period, an
amount equal to the sum of (a) the Net Income of Borrower (attributable to
the Mortgaged Property for such period) plus (b) depreciation, amortization
and interest deducted in calculating such Net Income plus (c) any
extraordinary or non-recurring losses deducted in calculating Net Income
plus/minus (d) Rent Adjustments with respect to Leases for the Mortgaged
Properties minus (e) any income included in calculating such Net Income
from the Mortgaged Properties from tenants which are 60 or more days
delinquent in the payment of any rent minus (f) any extraordinary or non-
recurring gains included in calculating Net Income. Net Operating Income
shall be determined in a manner consistent with the manner in which it has
previously been calculated and provided to the Banks.
Notes. See Section 2.4.
Notice. See Section 19.
Obligations. All indebtedness, obligations and liabilities of the
Borrower to any of the Banks and the Agent, individually or collectively,
under this Agreement or any of the other Loan Documents or in respect of
any of the Loans or the Notes, or other instruments at any time evidencing
any of the foregoing, whether existing on the date of this Agreement or
arising or incurred hereafter, direct or indirect, joint or several,
absolute or contingent, matured or unmatured, liquidated or unliquidated,
secured or unsecured, arising by contract, operation of law or otherwise.
Operating Agreement. That certain Amended and Restated Limited
Liability Company Operating Agreement of WEL/WH 1275 K Street L.L.C., dated
as of December 10, 1997, being the operating agreement of the Borrower.
Outstanding. With respect to the Loans, the aggregate unpaid
principal thereof as of any date of determination.
PBGC. The Pension Benefit Guaranty Corporation created by Section
4002 of ERISA and any successor entity or entities having similar
responsibilities.
Permitted Indirect Transfer. (a) Sales, transfers or other
dispositions (but not pledges, mortgages, hypothecations or encumbrances)
of interests in WHWEL if, after giving effect thereto, the Goldman Group,
directly or indirectly, owns and controls at least seventy percent (70%) of
the ownership interests in WHWEL;
(b) notwithstanding anything herein to the contrary, any conversion
at any time and from time to time by WHWEL of all or any of its interest in
the Revolver Borrower into an interest in Wellsford Commercial or Wellsford
Real Properties, Inc., a Maryland corporation; or
(c) any transfer or pledge by WHWEL or Wellsford Commercial in the
Revolver Borrower to one another as may be permitted in the operating
agreement of the Revolver Borrower.
Permitted Liens. Liens, security interests and other encumbrances
permitted by Section 8.2.
Person. Any individual, corporation, partnership, limited liability
company, trust, unincorporated association, business, or other legal
entity, and any government or any governmental agency or political
subdivision thereof.
Plan Assets. Assets of any employee benefit plan subject to Part 4,
Subtitle A, Title I of ERISA.
REIT Status. With respect to Wellsford Commercial, its status as a
real estate investment trust as defined in Section 856(a) of the Code.
Record. The record, including computer records, maintained by the
Agent with respect to any Loan referred to in the Notes.
Reference Bank. BKB.
Register. See Section 18.2.
Release. See Section 6.20(c)(iii).
Rent Adjustment. For any Person, straight line adjustments to rent
payable under Leases, as determined in accordance with generally accepted
accounting principles.
Rent Roll. A report prepared by the Borrower showing for each tenant
its occupancy status, lease expiration date, market rent, lease rent and
other information in such form as may have been approved by the Agent, such
approval not to be unreasonably withheld.
Reportable Event. Any of the events set forth in Section 4043(b) of
ERISA or the regulations thereunder.
Revolver Borrower. Wellsford/Whitehall Properties, L.L.C., a Delaware
limited liability company.
Revolving Credit Agreement. That certain Revolving Credit Agreement
by and among the Revolver Borrower, BankBoston, Goldman, the other lending
institutions that are or become parties thereto and BankBoston, N.A. in its
capacity as agent for itself and the other lending institutions that are or
become parties thereto, dated of even date as this Agreement, as the same
may be amended, modified or restated.
SEC. The federal Securities and Exchange Commission.
Security Deeds. The Mortgages, Deeds to Secure Debt and Deeds of
Trust from the Borrower to the Agent for the benefit of the Banks (or to
trustees named therein acting on behalf of the Agent for the benefit of the
Banks) pursuant to which the Borrower has conveyed a Mortgaged Property as
security for the Obligations.
Security Documents. Collectively, the Security Deeds, the Assignments
of Rents and Leases, the Indemnity Agreement, the Guaranty, any further
collateral assignments to the Agent for the benefit of the Banks,
including, without limitation, U.C.C.-1 financing statements executed and
delivered in connection therewith.
Special Member. 1275 K Street Holding, L.L.C., a Delaware limited
liability company.
Special Member Operating Agreement. That certain Limited Liability
Company Operating Agreement of 1275 K Street Holding, L.L.C., dated as of
December 10, 1997, being the operating agreement of the Special Member.
State. A state of the United States of America.
Subordination, Attornment and Non-Disturbance Agreement. An agreement
among the Agent, the Borrower and a tenant under a Lease pursuant to which
such tenant agrees to subordinate its rights under the Lease to the lien of
the Security Deed and agrees to recognize the Agent or its successor in
interest as landlord under the Lease in the event of a foreclosure under
the Security Deed, such agreement to be in form and substance satisfactory
to the Agent.
Subsidiary. Any corporation, association, partnership, limited
liability company, trust, or other business or other legal entity of which
the designated parent shall at any time own directly or indirectly through
a Subsidiary or Subsidiaries at least a majority (by number of votes or
controlling interests) of the outstanding Voting Interests.
Survey. An instrument survey of Mortgaged Property prepared by a
registered land surveyor which shall show the location of all buildings,
structures, easements and utility lines on such property, shall be
sufficient to remove the standard survey exception from the Title Policy,
shall show that all buildings and structures are within the lot lines of
the Mortgaged Property and shall not show any encroachments by others (or
to the extent any encroachments are shown, such encroachments shall be
acceptable to the Agent in its sole discretion), shall show rights of way,
adjoining sites, establish building lines and street lines, the distance
to, and names of the nearest intersecting streets and such other details as
the Agent may reasonably require; shall show the zoning district or
districts in which the Mortgaged Property is located and shall show whether
or not the Mortgaged Property is located in a flood hazard district as
established by the Federal Emergency Management Agency or any successor
agency or is located in any flood plain, flood hazard or wetland protection
district established under federal, state or local law and shall otherwise
be in form and substance reasonably satisfactory to the Agent.
Surveyor Certification. With respect to each parcel of Mortgaged
Property, a certificate executed by the surveyor who prepared the Survey
with respect thereto, dated as of a recent date and containing such
information relating to such parcel as the Majority Banks or the Title
Insurance Company may reasonably require, such certificate to be reasonably
satisfactory to the Agent in form and substance.
Title Insurance Company. Commonwealth Land Title Insurance Company or
another title insurance company or companies reasonably approved by the
Agent.
Title Policy. With respect to each parcel of Mortgaged Property, an
ALTA standard form title insurance policy (or, if such form is not
available, an equivalent form of or legally promulgated form of mortgagee
title insurance policy reasonably acceptable to the Agent) issued by a
Title Insurance Company (with such reinsurance or co-insurance as the Agent
may require, any such reinsurance to be with direct access endorsements to
the extent available under applicable law) in such amount as the Agent may
require insuring the priority of the Security Deeds and that the Borrower
holds marketable fee simple title to such parcel, subject only to the
encumbrances permitted by the Security Deed and which shall not contain
standard exceptions for mechanics liens, persons in occupancy (other than
tenants as tenants only under Leases) or matters which would be shown by a
survey, shall not insure over any matter except to the extent that any such
affirmative insurance is acceptable to the Agent in its sole discretion,
and shall contain such endorsements and affirmative insurance as the Agent
reasonably may require and is available in the State in which the Mortgaged
Property is located, including but not limited to (i) a comprehensive
endorsement, (ii) a "pending disbursements" clause, (iii) a usury
endorsement, (iv) a doing business endorsement, (v) in States where
available, an ALTA form 3.1 zoning endorsement, (vi) a "tie-in"
endorsement, and (vii) a "first loss" endorsement.
Total Commitment. The sum of the Commitments of the Banks, as in
effect from time to time.
Type. As to any Loan, its nature as a Base Rate Loan or a Eurodollar
Rate Loan.
Voting Interests. Stock or similar ownership interests, of any class
or classes (however designated), the holders of which are at the time
entitled, as such holders, (a) to vote for the election of a majority of
the directors (or persons performing similar functions) of the corporation,
association, partnership, trust or other business entity involved, or (b)
to control, manage, or conduct the business of the corporation,
partnership, association, trust or other business entity involved.
Wellsford Commercial. Wellsford Commercial Property Trust, a Maryland
real estate investment trust.
WHWEL. WHWEL Real Estate Limited Partnership, a Delaware limited
partnership.
Section 1.2. Rules of Interpretation.
(a) A reference to any document or agreement shall include such
document or agreement as amended, modified or supplemented from time to
time in accordance with its terms and the terms of this Agreement.
(b) The singular includes the plural and the plural includes the
singular.
(c) A reference to any law includes any amendment or
modification to such law.
(d) A reference to any Person includes its permitted successors
and permitted assigns.
(e) Accounting terms not otherwise defined herein have the
meanings assigned to them by generally accepted accounting principles
applied on a consistent basis by the accounting entity to which they refer.
(f) The words "include", "includes" and "including" are not
limiting.
(g) The words "approval" and "approved", as the context so
determines, means an approval in writing given to the party seeking
approval after full and fair disclosure to the party giving approval of all
material facts necessary in order to determine whether approval should be
granted.
(h) All terms not specifically defined herein or by generally
accepted accounting principles, which terms are defined in the Uniform
Commercial Code as in effect in the State of New York, have the meanings
assigned to them therein.
(i) Reference to a particular "Section ", refers to that
section of this Agreement unless otherwise indicated.
(j) The words "herein", "hereof", "hereunder" and words of like
import shall refer to this Agreement as a whole and not to any particular
section or subdivision of this Agreement.
Section 2. THE TERM LOAN.
Section 2.1. Commitment to Lend. Subject to the terms and
conditions set forth in this Agreement, each of the Banks severally agrees
to lend to the Borrower, and the Borrower may borrow (but shall not be able
to repay and reborrow) from time to time between the Closing Date and the
date two hundred and seventy (270) days following the Closing Date upon
notice by the Borrower to the Agent given in accordance with Section 2.6
and Section 5.4, such sums as are requested by the Borrower for the
purposes set forth in Section 7.11 up to the lesser of (a) a maximum
aggregate principal amount outstanding (after giving effect to all amounts
requested) at any one time equal to such Bank's Commitment and (b) such
Bank's Commitment Percentage of the aggregate Designated Collateral Value;
provided, that, in all events no Default or Event of Default shall have
occurred and be continuing; and provided, further, that the outstanding
principal amount of the Loans (after giving effect to all amounts
requested) shall not at any time exceed the Total Commitment. The Loans
shall be made pro rata in accordance with each Bank's Commitment
Percentage. The Loan Request shall constitute a representation and
warranty by the Borrower that all of the conditions set forth in Section
10 and Section 11, in the case of the initial Loan, and Section 11, in
the case of all other Loans, have been satisfied on the date of such
funding.
Section 2.2. Intentionally Omitted.
Section 2.3. Intentionally Omitted.
Section 2.4. Notes. The Loans shall be evidenced by a single
promissory note of the Borrower to each Bank in substantially the form of
Exhibit A hereto (collectively, the "Notes"), dated as of the Closing Date
and completed with appropriate insertions. One Note shall be payable to
the order of each Bank in the principal amount equal to such Bank's
Commitment or, if less, the outstanding amount of all Loans made by such
Bank, plus interest accrued thereon, as set forth below. The Borrower
irrevocably authorizes the Agent to make or cause to be made, at or about
the time of the Drawdown Date of any Loan or at the time of receipt of any
payment of principal thereof, an appropriate notation on the Agent's Record
reflecting the making of such Loan or (as the case may be) the receipt of
such payment. The outstanding amount of the Loans set forth on the Agent's
Record shall be prima facie evidence of the principal amount thereof owing
and unpaid to each Bank, but the failure to record, or any error in so
recording, any such amount on the Agent's Record shall not limit or
otherwise affect the obligations of the Borrower hereunder or under any
Note to make payments of principal of or interest on any Note when due.
Section 2.5. Interest on Loans.
(a) Each Base Rate Loan shall bear interest for the period
commencing with the Drawdown Date thereof and ending on the date on which
such Base Rate Loan is converted to a Eurodollar Rate Loan at a rate per
annum equal to the Base Rate.
(b) Each Eurodollar Rate Loan shall bear interest for the period
commencing with the Drawdown Date thereof and ending on the last day of the
Interest Period with respect thereto at a rate per annum equal to the sum
of the Eurodollar Rate determined for such Interest Period plus one and
six-tenths percent (1.6%).
(c) The Borrower promises to pay interest on each Loan in
arrears on each Interest Payment Date with respect thereto.
(d) Base Rate Loans and Eurodollar Rate Loans may be converted
to Loans of the other Type as provided in Section 4.1.
Section 2.6. Requests for Loans. (a) With respect to each Loan,
including the initial Loan funded at the Closing Date, the Borrower shall
give to the Agent written notice in the form of Exhibit B hereto (or
telephonic notice confirmed in writing in the form of Exhibit B hereto) of
each Loan requested hereunder (a "Loan Request") no less than five (5)
Business Days prior to the proposed Drawdown Date. Each such notice shall
specify with respect to the requested Loan the proposed principal amount,
Drawdown Date, Interest Period (if applicable) and Type. Each such notice
shall also contain (i) a statement as to the purpose for which such advance
shall be used (which purpose shall be in accordance with the terms of
Section 7.11), (ii) in the case of any advance relating to any Capital
Improvement Project for a Mortgaged Property, a certification from the
Borrower that all materialmen, laborers, subcontractors and any other
parties who might or could claim statutory or common law liens and are
furnishing or have furnished material or labor to the Mortgaged Property,
as applicable, have been paid (or will be paid from the proceeds of the
requested advance) all amounts due for such labor and materials, and if
requested by the Agent, delivery to the Agent of affidavits, lien waivers
or other evidence reasonably satisfactory to the Agent evidencing the same,
and (iii) a certification by the chief financial or chief accounting
officer of the Borrower that the Borrower and the Guarantor are and will be
in compliance with all covenants under the Loan Documents after giving
effect to the making of such Loan. With respect to any Loan proposed to be
funded after the initial Loan funded at the Closing Date, the Borrower
shall have complied with all requirements set forth in Section 5.4 and the
Banks shall have granted their consent to and accepted the additional
Collateral for such Loan in accordance with the terms and conditions of
Section 5.4.
(b) Promptly upon receipt of any such notice, the Agent shall
notify each of the Banks thereof. Except as provided in this Section 2.6,
each such Loan Request shall be irrevocable and binding on the Borrower and
shall obligate the Borrower to accept the Loan requested from the Banks on
the proposed Drawdown Date, provided that, in addition to the Borrower's
other remedies against any Bank which fails to advance its proportionate
share of a requested Loan, such Loan Request may be revoked by the Borrower
by notice received by the Agent no later than the Drawdown Date if any Bank
fails to advance its proportionate share of the requested Loan in
accordance with the terms of this Agreement, provided further that the
Borrower shall be liable in accordance with the terms of this Agreement
(including, without limitation, amounts due pursuant to Section 4.8) to
any Bank which is prepared to advance its proportionate share of the
requested Loan for any costs, expenses or damages incurred by such Bank as
a result of the Borrower's election to revoke such Loan Request. Nothing
herein shall prevent the Borrower or the funding Banks from seeking
recourse against any Bank that fails to advance its proportionate share of
a requested Loan (but not any other Bank) as required by this Agreement for
the actual and consequential damages incurred by the Borrower (including,
without limitation, amounts required to be paid under this Agreement by the
Borrower to any Bank) and such funding Banks proximately caused by such
Bank that has failed to advance its proportionate share, provided that in
no event shall such Bank be liable for punitive or exemplary damages. The
Borrower may without cost or penalty revoke a Loan Request by delivering
notice thereof to each of the Banks no later than three (3) Business Days
prior to the Drawdown Date. Each Loan Request shall be (a) for a Base Rate
Loan in a minimum aggregate amount of $1,000,000 or an integral multiple of
$100,000 in excess thereof, or (b) for a Eurodollar Rate Loan in a minimum
aggregate amount of $2,000,000 or an integral multiple of $100,000 in
excess thereof; provided, however, that there shall be no more than five
(5) Eurodollar Rate Loans outstanding at any one time. In the event that
the proceeds from such Loan are to be used for a purpose other than a
Capital Improvement Project, then the Borrower shall provide to the Agent
as soon as practicable thereafter such evidence as the Agent shall
reasonably require to evidence that such funds have been used for such
purpose (which evidence may include, without limitation, a closing
statement).
Section 2.7. Funds for Loans.
(a) Not later than 11:00 a.m. (Boston time) on the proposed
Drawdown Date of any Loans, each of the Banks will make available to the
Agent, at the Agent's Head Office, in immediately available funds, the
amount of such Bank's Commitment Percentage of the amount of the requested
Loans which may be disbursed pursuant to Section 2.1. Upon receipt from
each Bank of such amount, and upon receipt of the documents required by
Section 10 and Section 11 and the satisfaction of the other conditions
set forth therein, to the extent applicable, the Agent will make available
to the Borrower the aggregate amount of such Loans made available to the
Agent by the Banks by crediting such amount to the account of the Borrower
maintained at the Agent's Head Office. The failure or refusal of any Bank
to make available to the Agent at the aforesaid time and place on any
Drawdown Date the amount of its Commitment Percentage of the requested
Loans shall not relieve any other Bank from its several obligation
hereunder to make available to the Agent the amount of such other Bank's
Commitment Percentage of any requested Loans, including any additional
Loans that may be requested subject to the terms and conditions hereof to
provide funds to replace those not advanced by the Bank so failing or
refusing, provided that the Borrower may by notice received by the Agent no
later than the Drawdown Date refuse to accept any Loan which is not fully
funded in accordance with the Borrower's Loan Request subject to the terms
of Section 2.6. In the event of any such failure or refusal, the Banks
not so failing or refusing shall be entitled to a priority secured position
as against the Bank or Banks so failing or refusing for such Loans as
provided in Section 12.4.
(b) Unless Agent shall have been notified by any Bank prior to
the applicable Drawdown Date that such Bank will not make available to
Agent such Bank's pro rata share of a proposed Loan, Agent may in its
discretion assume that such Bank has made such Loan available to Agent in
accordance with the provisions of this Agreement and Agent may, if it
chooses, in reliance upon such assumption make such Loan available to
Borrower, and such Bank shall be liable to the Agent for the amount of such
advance.
Section 3. REPAYMENT OF THE LOANS.
Section 3.1. Stated Maturity. The Borrower promises to pay on the
Maturity Date, and there shall become absolutely due and payable on the
Maturity Date, all of the Loans outstanding on such date, together with any
and all accrued and unpaid interest thereon.
Section 3.2. Intentionally Omitted.
Section 3.3. Optional Prepayments. The Borrower shall not have the
right at any time prior to the first (1st) anniversary of the Closing Date
to prepay the Loans, as a whole or in part. At any time after the first
(1st) anniversary of the Closing Date, the Borrower shall have the right,
at the Borrower's election, to prepay the outstanding amount of the Loans,
as a whole or in part, at any time without penalty or premium; provided,
that the full or partial prepayment of the outstanding amount of any
Eurodollar Rate Loans pursuant to this Section 3.3 may be made only on the
last day of the Interest Period relating thereto except as otherwise
required pursuant to Section 4.7 unless payment is first made of any
amounts payable pursuant to Section 4.8. The Borrower shall give the
Agent, no later than 10:00 a.m., Boston time, at least three (3) Business
Days prior written notice of any prepayment pursuant to this Section 3.3
of any Base Rate Loans and at least four Eurodollar Business Days notice of
any proposed repayment pursuant to this Section 3.3 of Eurodollar Rate
Loans, in each case specifying the proposed date of payment of Loans and
the principal amount to be paid.
Section 3.4. Partial Prepayments. Each partial prepayment of the
Loans under Section 3.3 shall be in an integral multiple of $100,000,
shall be accompanied by the payment of accrued interest on the principal
prepaid to the date of payment and, after payment of such interest, shall
be applied, in the absence of instruction by the Borrower, first to the
principal of Base Rate Loans and then to the principal of Eurodollar Rate
Loans.
Section 3.5. Effect of Prepayments. No amounts of the Loans prepaid
under Section 3.3 prior to the Maturity Date may be reborrowed.
Section 4. CERTAIN GENERAL PROVISIONS.
Section 4.1. Conversion Options.
(a) The Borrower may elect from time to time to convert any
outstanding Loan to a Loan of another Type and such Loan shall thereafter
bear interest as a Base Rate Loan or a Eurodollar Rate Loan, as applicable;
provided that (i) with respect to any such conversion of a Eurodollar Rate
Loan to a Base Rate Loan, the Borrower shall give the Agent at least three
Business Days' prior written notice of such election, and such conversion
shall only be made on the last day of the Interest Period with respect to
such Eurodollar Rate Loan; (ii) with respect to any such conversion of a
Base Rate Loan to a Eurodollar Rate Loan, the Borrower shall give the Agent
at least four Eurodollar Business Days' prior written notice of such
election and the Interest Period requested for such Loan, the principal
amount of the Loan so converted shall be in a minimum aggregate amount of
$2,000,000 or an integral multiple of $100,000 in excess thereof and, after
giving effect to the making of such Loan, there shall be no more than five
(5) Eurodollar Rate Loans outstanding at any one time; and (iii) no Loan
may be converted into a Eurodollar Rate Loan when any Default or Event of
Default has occurred and is continuing. All or any part of the outstanding
Loans of any Type may be converted as provided herein, provided that no
partial conversion shall result in a Base Rate Loan in an aggregate
principal amount of less than $1,000,000 or a Eurodollar Rate Loan in an
aggregate principal amount of less than $2,000,000 and that the aggregate
principal amount of each Loan shall be in an integral multiple of $100,000.
On the date on which such conversion is being made, each Bank shall take
such action as is necessary to transfer its Commitment Percentage of such
Loans to its Domestic Lending Office or its Eurodollar Lending Office, as
the case may be. Each Conversion Request relating to the conversion of a
Base Rate Loan to a Eurodollar Rate Loan shall be irrevocable by the
Borrower.
(b) Any Loan may be continued as such Type upon the expiration
of an Interest Period with respect thereto by compliance by the Borrower
with the terms of Section 4.1; provided that no Eurodollar Rate Loan may
be continued as such when any Default of the type described in subsections
(a), (b), (c) or (d) of Section 12.1 or Event of Default has occurred and
is continuing, but shall be automatically converted to a Base Rate Loan on
the last day of the Interest Period relating thereto ending during the
continuance of any Default or Event of Default.
(c) In the event that the Borrower does not notify the Agent of
its election hereunder with respect to any Loan, such Loan shall be
automatically converted to a Base Rate Loan at the end of the applicable
Interest Period.
Section 4.2. Closing Fee. The Borrower agrees to pay, on or before
the Closing Date, to the Agent for the ratable account of the Banks a
closing fee as specified in the Agreement Regarding Fees.
Section 4.3. Agent's Fee. The Borrower shall pay to the Agent, for
the Agent's own account, an Agent's fee as specified in the Agreement
Regarding Fees.
Section 4.4. Funds for Payments.
(a) All payments of principal, interest, facility fees, Agent's
fees, closing fees and any other amounts due hereunder or under any of the
other Loan Documents shall be made to the Agent, for the respective
accounts of the Banks and the Agent, as the case may be, at the Agent's
Head Office, not later than 12:00 Noon (Boston time) on the day when due,
in each case in immediately available funds. The Agent is hereby
authorized to charge the account of the Borrower with BKB, on the dates
when the amount thereof shall become due and payable, with the amounts of
the principal of and interest on the Loans and all fees, charges, expenses
and other amounts owing to the Agent and/or the Banks under the Loan
Documents.
(b) All payments by the Borrower hereunder and under any of the
other Loan Documents shall be made without setoff or counterclaim and free
and clear of and without deduction for any taxes, levies, imposts, duties,
charges, fees, deductions, withholdings, compulsory loans, restrictions or
conditions of any nature now or hereafter imposed or levied by any
jurisdiction or any political subdivision thereof or taxing or other
authority therein unless the Borrower is compelled by law to make such
deduction or withholding. If any such obligation is imposed upon the
Borrower with respect to any amount payable by it hereunder or under any of
the other Loan Documents, the Borrower will pay to the Agent, for the
account of the Banks or (as the case may be) the Agent, on the date on
which such amount is due and payable hereunder or under such other Loan
Document, such additional amount in Dollars as shall be necessary to enable
the Banks or the Agent to receive the same net amount which the Banks or
the Agent would have received on such due date had no such obligation been
imposed upon the Borrower. The Borrower will deliver promptly to the Agent
certificates or other valid vouchers for all taxes or other charges
deducted from or paid with respect to payments made by the Borrower
hereunder or under such other Loan Document.
Section 4.5. Computations. All computations of interest on the
Loans and of other fees to the extent applicable shall be based on a
360-day year and paid for the actual number of days elapsed. Except as
otherwise provided in the definition of the term "Interest Period" with
respect to Eurodollar Rate Loans, whenever a payment hereunder or under any
of the other Loan Documents becomes due on a day that is not a Business
Day, the due date for such payment shall be extended to the next succeeding
Business Day, and interest shall accrue during such extension. The
outstanding amount of the Loans as reflected on the records of the Agent
from time to time shall be considered prima facie evidence of such amount.
Section 4.6. Inability to Determine Eurodollar Rate. In the event
that, prior to the commencement of any Interest Period relating to any
Eurodollar Rate Loan, the Agent shall determine that adequate and
reasonable methods do not exist for ascertaining the Eurodollar Rate for
such Interest Period, the Agent shall forthwith give notice of such
determination (which shall be conclusive and binding on the Borrower and
the Banks) to the Borrower and the Banks. In such event (a) any Loan
Request with respect to Eurodollar Rate Loans shall be automatically
withdrawn and shall be deemed a request for Base Rate Loans and (b) each
Eurodollar Rate Loan will automatically, on the last day of the then
current Interest Period thereof, become a Base Rate Loan, and the
obligations of the Banks to make Eurodollar Rate Loans shall be suspended
until the Agent determines that the circumstances giving rise to such
suspension no longer exist, whereupon the Agent shall so notify the
Borrower and the Banks.
Section 4.7. Illegality. Notwithstanding any other provisions
herein, if any present or future law, regulation, treaty or directive or
the interpretation or application thereof shall make it unlawful, or any
central bank or other governmental authority having jurisdiction over a
Bank or its Eurodollar Lending Office shall assert that it is unlawful, for
any Bank to make or maintain Eurodollar Rate Loans, such Bank shall
forthwith give notice of such circumstances to the Agent and the Borrower
and thereupon (a) the commitment of the Banks to make Eurodollar Rate Loans
or convert Loans of another type to Eurodollar Rate Loans shall forthwith
be suspended and (b) the Eurodollar Rate Loans then outstanding shall be
converted automatically to Base Rate Loans on the last day of each Interest
Period applicable to such Eurodollar Rate Loans or within such earlier
period as may be required by law.
Section 4.8. Additional Interest. If any Eurodollar Rate Loan or
any portion thereof is repaid or is converted to a Base Rate Loan for any
reason on a date which is prior to the last day of the Interest Period
applicable to such Eurodollar Rate Loan, the Borrower will pay to the Agent
upon demand for the account of the Banks in accordance with their
respective Commitment Percentages, in addition to any amounts of interest
otherwise payable hereunder, any amounts required to compensate the Banks
for any losses, costs or expenses which may reasonably be incurred as a
result of such payment or conversion, including, without limitation, an
amount equal to daily interest for the unexpired portion of such Interest
Period on the Eurodollar Rate Loan or portion thereof so repaid or
converted at a per annum rate equal to the excess, if any, of (a) the
interest rate calculated on the basis of the Eurodollar Rate applicable to
such Eurodollar Rate Loan minus (b) the yield obtainable by the Agent upon
the purchase of debt securities customarily issued by the Treasury of the
United States of America which have a maturity date most closely
approximating the last day of such Interest Period (it being understood
that the purchase of such securities shall not be required in order for
such amounts to be payable and that a Bank shall not be obligated or
required to have actually obtained funds at the Eurodollar Rate).
Section 4.9. Additional Costs, Etc. Notwithstanding anything herein
to the contrary, if any future applicable law or any amendment or
modification of present applicable law which expression, as used herein,
includes statutes, rules and regulations thereunder and legally binding
interpretations thereof by any competent court or by any governmental or
other regulatory body or official with appropriate jurisdiction charged
with the administration or the interpretation thereof and requests,
directives, instructions and notices at any time or from time to time
hereafter made upon or otherwise issued to any Bank or the Agent by any
central bank or other fiscal, monetary or other authority (whether or not
having the force of law), shall:
(a) subject any Bank or the Agent to any tax, levy, impost,
duty, charge, fee, deduction or withholding of any nature with respect to
this Agreement, the other Loan Documents, such Bank's Commitment or the
Loans (other than taxes based upon or measured by the income or profits of
such Bank or the Agent), or
(b) materially change the basis of taxation (except for changes
in taxes on income or profits) of payments to any Bank of the principal of
or the interest on any Loans or any other amounts payable to any Bank under
this Agreement or the other Loan Documents, or
(c) impose or increase or render applicable any special deposit,
reserve, assessment, liquidity, capital adequacy or other similar
requirements (whether or not having the force of law) against assets held
by, or deposits in or for the account of, or loans by, or commitments of an
office of any Bank beyond those in effect as of the date hereof, or
(d) impose on any Bank or the Agent any other conditions or
requirements with respect to this Agreement, the other Loan Documents, the
Loans, such Bank's Commitment, or any class of loans or commitments of
which any of the Loans or such Bank's Commitment forms a part; and the
result of any of the foregoing is
(i) to increase the cost to any Bank of making, funding,
issuing, renewing, extending or maintaining any of the Loans or such
Bank's Commitment, or
(ii) to reduce the amount of principal, interest or other
amount payable to such Bank or the Agent hereunder on account of such
Bank's Commitment or any of the Loans, or
(iii) to require such Bank or the Agent to make any
payment or to forego any interest or other sum payable hereunder, the
amount of which payment or foregone interest or other sum is
calculated by reference to the gross amount of any sum receivable or
deemed received by such Bank or the Agent from the Borrower hereunder,
then, and in each such case, the Borrower will, within fifteen (15) days of
demand made by such Bank or (as the case may be) the Agent at any time and
from time to time and as often as the occasion therefor may arise, pay to
such Bank or the Agent such additional amounts as such Bank or the Agent
shall determine in good faith to be sufficient to compensate such Bank or
the Agent for such additional cost, reduction, payment or foregone interest
or other sum. Each Bank and the Agent in determining such amounts may use
any reasonable averaging and attribution methods, generally applied by such
Bank or the Agent.
Section 4.10. Capital Adequacy. If after the date hereof any Bank
determines that (a) the adoption of or change in any law, rule, regulation
or guideline regarding capital requirements of general application for
banks or bank holding companies or any change in the interpretation or
application thereof by any governmental authority charged with the
administration thereof, or (b) compliance by such Bank or its parent bank
holding company with any future guideline, request or directive of any such
entity regarding capital adequacy or any amendment or change in
interpretation of any existing guideline, request or directive (whether or
not having the force of law), has the effect of reducing the return on such
Bank's or such holding company's capital as a consequence of such Bank's
commitment to make Loans hereunder to a level below that which such Bank or
holding company could have achieved but for such adoption, change or
compliance (taking into consideration such Bank's or such holding company's
then existing policies with respect to capital adequacy and assuming the
full utilization of such entity's capital) by any amount deemed by such
Bank to be material, then such Bank may notify the Borrower thereof. The
Borrower agrees to pay to such Bank the amount of such reduction in the
return on capital as and when such reduction is determined, upon
presentation by such Bank of a statement of the amount setting for the
Bank's calculation thereof. In determining such amount, such Bank may use
any reasonable averaging and attribution methods, generally applied by such
Bank or the Agent.
Section 4.11. Indemnity of Borrower. The Borrower agrees to
indemnify each Bank and to hold each Bank harmless from and against any
loss, cost or expense that such Bank may sustain or incur as a consequence
of (a) default by the Borrower in payment of the principal amount of or any
interest on any Eurodollar Rate Loans as and when due and payable,
including any such loss or expense arising from interest or fees payable by
such Bank to lenders of funds obtained by it in order to maintain its
Eurodollar Rate Loans, or (b) default by the Borrower in making a borrowing
or conversion after the Borrower has given (or is deemed to have given) a
Loan Request or a Conversion Request; provided, however, that the Borrower
shall not be required to so indemnify any Bank pursuant to clause (b) above
which fails or refuses to fund its proportionate share of a Loan in
accordance with the terms of this Agreement.
Section 4.12. Interest on Overdue Amounts; Late Charge. Overdue
principal and (to the extent permitted by applicable law) interest on the
Loans and all other overdue amounts payable hereunder or under any of the
other Loan Documents shall bear interest payable on demand at a rate per
annum equal to four percent (4.0%) above the Base Rate from the date due
until such amount shall be paid in full (after as well as before judgment).
In addition, the Borrower shall pay a late charge equal to three percent
(3.0%) of any amount of interest and/or principal payable on the Loans or
any other amounts payable hereunder or under the Loan Documents, which is
not paid within ten days of the date when due.
Section 4.13. Intentionally Omitted.
Section 4.14. Certificate. A certificate setting forth any amounts
payable pursuant to Section 4.8, Section 4.9, Section 4.10, Section
4.11 or Section 4.12 and a brief explanation of such amounts which are
due, submitted by any Bank or the Agent to the Borrower, shall be
conclusive in the absence of manifest error.
Section 4.15. Limitation on Interest. Notwithstanding anything in
this Agreement to the contrary, all agreements between the Borrower and the
Banks and the Agent, whether now existing or hereafter arising and whether
written or oral, are hereby limited so that in no contingency, whether by
reason of acceleration of the maturity of any of the Obligations or
otherwise, shall the interest contracted for, charged or received by the
Banks exceed the maximum amount permissible under applicable law. If, from
any circumstance whatsoever, interest would otherwise be payable to the
Banks in excess of the maximum lawful amount, the interest payable to the
Banks shall be reduced to the maximum amount permitted under applicable
law; and if from any circumstance the Banks shall ever receive anything of
value deemed interest by applicable law in excess of the maximum lawful
amount, an amount equal to any excessive interest shall be applied to the
reduction of the principal balance of the Obligations and to the payment of
interest or, if such excessive interest exceeds the unpaid balance of
principal of the Obligations, such excess shall be refunded to the
Borrower. All interest paid or agreed to be paid to the Banks shall, to
the extent permitted by applicable law, be amortized, prorated, allocated
and spread throughout the full period until payment in full of the
principal of the Obligations (including the period of any renewal or
extension thereof) so that the interest thereon for such full period shall
not exceed the maximum amount permitted by applicable law. This section
shall control all agreements between the Borrower and the Banks and the
Agent.
Section 4.16. Certain Provisions Relating to Increased Costs. If
any Bank requests compensation for any losses or costs to be reimbursed
pursuant to any one or more of the provisions of Section 4.9 or Section
4.10, then, upon request of Borrower, such Bank shall use reasonable
efforts in a manner consistent with such institution's practice in
connection with loans like the Loan to eliminate, mitigate or reduce
amounts that would otherwise be payable by Borrower under the foregoing
provisions, provided that such action would not be otherwise prejudicial to
such Bank, including, without limitation, by designating another of such
Bank's offices, branches or affiliates; the Borrower agreeing to pay all
reasonably incurred costs and expenses incurred by such Bank in connection
with any such action. Notwithstanding anything to the contrary contained
herein, if no Default or Event of Default shall have occurred and be
continuing, and if any Bank has requested payment or compensation for any
losses or costs to be reimbursed pursuant to any one or more of the
provisions of Section 4.9 or Section 4.10 (each, an "Affected Bank"),
then, within thirty (30) days after such request for payment or
compensation, Borrower shall have the one-time right as to such Affected
Bank, to be exercised by delivery of written notice delivered to the Agent
and the Affected Bank within thirty (30) days of receipt of such notice, to
elect to cause the Affected Bank to transfer its Commitment. The Agent
shall promptly notify the remaining Banks that each of such Banks shall
have the right, but not the obligation, to acquire a portion of the
Commitment, pro rata based upon their relevant Commitment Percentages, of
the Commitment of the Affected Bank (or if any of such Banks does not elect
to purchase its pro rata share, then to such remaining Banks in such
proportion as approved by the Agent). In the event that the Banks do not
elect to acquire all of the Affected Bank's Commitment, then the Agent
shall endeavor to obtain a new Bank to acquire such remaining Commitment.
Upon any such purchase of the Commitment of the Affected Bank, the Affected
Bank's interest in the Obligations and its rights hereunder and under the
Loan Documents shall terminate at the date of purchase, and the Affected
Bank shall promptly execute all documents reasonably requested to surrender
and transfer such interest. The purchase price for the Affected Bank's
Commitment shall equal any and all amounts outstanding and owed by Borrower
to the Affected Bank, including principal and all accrued and unpaid
interest or fees.
Section 5. COLLATERAL SECURITY.
Section 5.1. Collateral. The Obligations shall be secured by (i) a
perfected first priority lien or security title to be held by the Agent for
the benefit of the Banks in the Mortgaged Property pursuant to the terms of
the Security Deeds, (ii) a perfected first priority security interest to be
held by the Agent for the benefit of the Banks in the Leases pursuant to
the Assignments of Rents and Leases, (iii) the Indemnity Agreement, and
(iv) such additional collateral, if any, as the Agent for the benefit of
the Banks from time to time may accept as security for the Obligations with
the consent of the Majority Banks, which consent may be given or withheld
in the sole discretion of the Majority Banks. The Obligations shall also
be guaranteed pursuant to the Guaranty.
Section 5.2. Appraisals.
(a) The Agent on behalf of the Banks shall require biennial
Appraisals of each of the Mortgaged Property, which will be ordered by the
Agent and reviewed and approved by the appraisal departments of the
Majority Banks, in order to determine the current Appraised Value of the
Mortgaged Property, and the Borrower shall pay to the Agent on demand all
reasonable costs of all such Appraisals; provided, however, that so long as
no Default or Event of Default shall have occurred and be continuing and
regulatory requirements of any Bank generally applicable to real estate
loans of the category made under this Agreement as reasonably interpreted
by such Bank shall not require more frequent Appraisals, and except as
required with respect to the addition of Eligible Real Estate as a
Mortgaged Property under Section 5.4, the Borrower shall not be required
to pay for Appraisals more often than once in any 24-month period, with the
result that unless such condition shall occur the first Appraisals for
which the Borrower shall be financially responsible after the Closing Date
shall not be required prior to the second anniversary of the date of this
Agreement.
(b) Notwithstanding the provisions of Section 5.2(a), the Agent
may obtain Appraisals or perform internal studies updating and revising
prior Appraisals with respect to the Mortgaged Property or such portion
thereof as the Majority Banks shall determine, for the purpose of
determining the current Appraised Value of the Mortgaged Property (i) at
any time following a partial condemnation of or uninsured casualty to a
Mortgaged Property (provided that such Appraisal shall be limited to the
affected property). The expense of such Appraisals and updates performed
pursuant to this Section 5.2(b) shall be borne by the Borrower.
Section 5.3. Release of Collateral. Provided no Default or Event of
Default shall have occurred hereunder and be continuing (or would exist
immediately after giving effect to the transactions contemplated by this
Section 5.3 except as provided in this Section 5.3), the Agent shall
release a Mortgaged Property from the lien of the Security Documents
encumbering the same upon the request of the Borrower and upon the
following terms and conditions:
(a) The Borrower shall deliver to the Agent written notice of
its desire to obtain each such release no later than fifteen (15) days
prior to the date on which each such release is to be effected together
with evidence satisfactory to the Agent that such release is to facilitate
a sale of such Mortgaged Property to an unrelated third party in a bona-
fide arms-length transaction for a cash sales price; and
(b) The Borrower shall submit to the Agent with such request a
Compliance Certificate prepared using the financial statements of the
Borrower most recently provided or required to be provided to the Agent
under Section 6.4 or Section 7.4 adjusted in the best good faith estimate
of the Borrower to give effect to the proposed release and demonstrating
that no Default or Event of Default with respect to the covenants referred
to therein shall exist after giving effect to such release; and
(c) The Borrower shall pay all reasonable costs and expenses of
the Agent in connection with such release, including without limitation,
reasonable attorney's fees; and
(d) The Borrower shall pay to the Agent for the account of the
Banks, which payment shall be applied to reduce the outstanding principal
balance of the Loans, a release price equal to one hundred twenty percent
(120%) of the Designated Collateral Value of such Mortgaged Property. In
the event of a release pursuant to this 5.3, the amount of the Total
Commitment shall be reduced by an amount equal to twenty percent (20%) of
the Designated Collateral Value of the Mortgaged Property so released
without reducing the Designated Collateral Value of the remaining Mortgaged
Properties for purposes of calculating release prices. Notwithstanding the
foregoing, the vacant land described on Schedule 5.3 hereto comprising part
of the Mortgaged Property commonly known as Greenbrook Corporate Center
shall be released upon the payment to the Agent for the account of the
Banks an amount (without premium) equal to the amount allocated to such
vacant land in the Appraisal of such Mortgaged Property (as most recently
determined pursuant to this Agreement) upon the sale of such land to an
unrelated third party, provided that the Borrower shall submit to the Agent
with the request for the release of such land (A) a survey satisfactory to
Agent showing such land that Borrower desires to release from the Security
Documents and such other evidence as Agent may reasonably require to show
the availability of unrestricted (whether by private agreement or
governmental provision) direct access to public roads and utilities from
all unreleased portions of such Mortgaged Property, (B) a certification
from Borrower that the conveyance by Borrower of such land which is
requested to be released will not violate the terms of any lease,
agreement, ordinance or restriction by which such Mortgaged Property is
subject, and (C) evidence of the proper subdivision of the property to be
released. Such payments shall be applied to reduce the outstanding
principal balance of the Loans; provided, that the Borrower shall not be
required to make a payment which would reduce the principal balance below
zero.
(e) No release of a Mortgaged Property from the lien of the
Security Documents encumbering the same shall be granted by Lender prior to
the first anniversary of the Closing Date, unless the release payment
applicable thereto pursuant to Section 5.3(d) hereinabove shall be
deposited into an account of the Agent or other cash collateral vehicle
acceptable to Agent in its sole discretion, which shall be pledged to the
Agent, pursuant to documentation acceptable to Agent in its sole
discretion, for the account of the Banks as security for the Obligations
and which shall not be applied against or reduce the Outstanding Loans,
unless the Agent shall otherwise so elect in its sole discretion.
Section 5.4. Subsequent Loans; Additional Collateral.
(a) In the event the Borrower wishes to borrow any sums
hereunder after the Closing Date, the Borrower may request such Loan upon
the following terms and conditions and the addition of such Collateral for
such requested Loan shall not increase the Designated Collateral Value and
the amounts available to be borrowed by the Borrower unless each of the
following conditions shall be satisfied:
(i) the proposed additional Collateral for such Loan shall
be Eligible Real Estate to be purchased by the Borrower from the
Revolver Borrower or a third party and upon funding of such Loan shall
become a Mortgaged Property;
(ii) no Default or Event of Default shall have occurred or
exist or would occur or exist if such proposed additional Collateral
were included within the Collateral and the requested Loan fully
funded, including, without limitation, under Section 9.4;
(iii) the Borrower shall have executed and delivered to
the Agent all Eligible Real Estate Qualification Documents or other
instruments, documents, or agreements, including Uniform Commercial
Code financing statements, as the Agent shall deem necessary or
desirable to perfect a first priority security interest in, or lien
on, such Collateral, all of which instruments, documents or agreements
shall be in form and substance satisfactory to the Agent in its sole
discretion; and
(iv) the Agent, on behalf of the Banks, shall have received
any other appraisals, surveys, rent rolls, environmental reports,
title insurance reports, certificates, opinions or other information
or documentation with respect to the Collateral as the Agent, in its
sole discretion, shall deem necessary or desirable.
The Borrower acknowledges that the decision of all of the Banks to
grant or withhold their consent to the acceptance of additional Collateral
under this Section 5.4 and the funding of such requested Loan shall be
based entirely on such factors as the Majority Banks deem relevant in their
sole discretion, including, without limitation, those enumerated in clauses
(i) through (iv) hereinabove, and such consent may be granted or withheld
solely at the discretion of the Majority Banks. The Borrower further
acknowledges that no such requests for fundings of additional Loans after
the initial Loan funded at the Closing Date shall be approved or funded by
the Banks unless the Banks shall have received all required information and
shall have had sufficient time prior to the expiry of the time period
during which such additional Loans are available under Section 2.1 to
complete all underwriting matters and reviewed all materials and
information required to be delivered by Borrower with respect to the
Eligible Real Estate proposed as additional Collateral for the Loans.
(b) In connection with each such item of Eligible Real Estate,
the Borrower shall pay to the Agent the reasonable out-of-pocket costs and
expenses (including reasonable attorney's fees and expenses) of the Agent
in connection with the addition of such Collateral.
(c) In no event shall the acquisition cost of any Mortgaged
Property exceed $40,000,000.00.
Section 6. REPRESENTATIONS AND WARRANTIES.
The Borrower represents and warrants to the Agent and the Banks as
follows.
Section 6.1. Corporate Authority, Etc.
(a) Incorporation; Good Standing. The Borrower is a limited
liability company duly organized pursuant to its organizational documents
and amendments thereto filed with the Secretary of State of Delaware and is
validly existing and in good standing under the laws of the State of
Delaware. The Revolver Borrower is a limited liability company duly
organized pursuant to its organizational documents and amendments thereto
filed with the Secretary of State of Delaware and is validly existing and
in good standing under the laws of the State of Delaware. Borrower (i) has
all requisite power to own its property and conduct its business as now
conducted and as presently contemplated, and (ii) is in good standing as a
foreign entity and is duly authorized to do business in the jurisdictions
where the Mortgaged Property is located and in each other jurisdiction
where a failure to be so qualified in such other jurisdiction could have a
materially adverse effect on the business, assets or financial condition of
such Person. Borrower is a qualified subsidiary of a real estate
investment trust within the meaning of the Code.
(b) Intentionally Omitted.
(c) Authorization. The execution, delivery and performance of
this Agreement and the other Loan Documents to which the Borrower or the
Guarantor is or is to become a party and the transactions contemplated
hereby and thereby (i) are within the authority of the such Person, (ii)
have been duly authorized by all necessary proceedings on the part of such
Person, (iii) do not and will not conflict with or result in any breach or
contravention of any provision of law, statute, rule or regulation to which
such Person is subject or any judgment, order, writ, injunction, license or
permit applicable to such Person, (iv) do not and will not conflict with or
constitute a default (whether with the passage of time or the giving of
notice, or both) under any provision of the articles of incorporation ,
bylaws, or other charter documents of, or any agreement or other instrument
binding upon, such Person, or any of its properties, and (v) do not and
will not result in or require the imposition of any lien or other
encumbrance on any of the properties, assets or rights of the Borrower or
the Guarantor, as applicable.
(d) Enforceability. The execution and delivery of this
Agreement and the other Loan Documents to which the Borrower or the
Guarantor is or is to become a party are valid and legally binding
obligations of such Person enforceable in accordance with the respective
terms and provisions hereof and thereof, except as enforceability is
limited by bankruptcy, insolvency, reorganization, moratorium or other laws
relating to or affecting generally the enforcement of creditors' rights and
except to the extent that availability of the remedy of specific
performance or injunctive relief is subject to the discretion of the court
before which any proceeding therefor may be brought.
Section 6.2. Governmental Approvals. The execution, delivery and
performance by the Borrower of this Agreement and the other Loan Documents
and the transactions contemplated hereby and thereby do not require the
approval or consent of, or filing with, any governmental agency or
authority other than those already obtained and the filing of the Security
Documents in the appropriate records office with respect thereto.
Section 6.3. Title to Properties; Leases. The Borrower owns all of
the Mortgaged Properties, subject to no rights of others, including any
mortgages, leases, conditional sales agreements, title retention
agreements, liens or other encumbrances except Permitted Liens.
Section 6.4. Financial Statements. The Borrower has furnished to
each of the Banks: (a) an unaudited consolidated balance sheet and an
unaudited consolidated statement of income and cash flows of the Revolver
Borrower and its Subsidiaries (including the Borrower) as of the Balance
Sheet Date certified by Revolver Borrower's chief financial or chief
accounting officer to have been prepared in accordance with generally
accepted accounting principles and to fairly present the financial
condition of the Revolver Borrower and its Subsidiaries (including the
Borrower) as at the close of business on the dates thereof (subject to
year-end adjustments), and (b) an unaudited consolidated statement of
operating income for the Mortgaged Property satisfactory in form to the
Agent and certified by the Borrower's chief financial or accounting officer
as fairly presenting the operating income for such parcels for such
periods. Such balance sheet and statements of income, stockholder's equity
and cash flows have been prepared in accordance with generally accepted
accounting principles and fairly present the financial condition of the
Revolver Borrower and its Subsidiaries (including the Borrower) as of such
dates and the results of the operations of the Revolver Borrower and its
Subsidiaries (including the Borrower) for such periods. There are no
liabilities, contingent or otherwise, of the Revolver Borrower or any of
its Subsidiaries (including the Borrower) involving material amounts not
disclosed in said financial statements and the related notes thereto as of
their respective dates.
Section 6.5. No Material Adverse Changes. Since the Balance Sheet
Date, there has occurred no materially adverse change in the financial
condition or business of the Borrower, as shown on or reflected in the
consolidated balance sheet of the Revolver Borrower and its Subsidiaries
(including the Borrower) as of the Balance Sheet Date, other than changes
in the ordinary course of business that have not had any materially adverse
effect either individually or in the aggregate on the business or financial
condition of the Borrower taken as a whole.
Section 6.6. Franchises, Patents, Copyrights, Etc. The Borrower
possesses all franchises, patents, copyrights, trademarks, trade names,
service marks, licenses and permits, and rights in respect of the
foregoing, adequate for the conduct of their business substantially as now
conducted without known conflict with any rights of others.
Section 6.7. Litigation. Except as stated on Schedule 6.7 there are
no actions, suits, proceedings or investigations of any kind pending or
threatened against the Borrower before any court, tribunal or
administrative agency or board that, if adversely determined, might, either
in any case or in the aggregate, materially adversely affect the
properties, assets, financial condition or business of the Borrower or
materially impair the right of the Borrower to carry on business
substantially as now conducted by it, or result in any liability not
adequately covered by insurance, or for which adequate reserves are not
maintained on the balance sheet of the Borrower, or which question the
validity of this Agreement or any of the other Loan Documents, any action
taken or to be taken pursuant hereto or thereto or any lien or security
interest created or intended to be created pursuant hereto or thereto, or
which will adversely affect the ability of the Borrower to pay and perform
the Obligations in the manner contemplated by this Agreement and the other
Loan Documents.
Section 6.8. No Materially Adverse Contracts, Etc. The Borrower is
not subject to any charter, corporate or other legal restriction, or any
judgment, decree, order, rule or regulation that has or is expected in the
future to have a materially adverse effect on the business, assets or
financial condition of the Borrower. The Borrower is not a party to any
contract or agreement that has or is expected, in the judgment of the
officers of the Borrower, to have any materially adverse effect on the
business of the Borrower.
Section 6.9. Compliance with Other Instruments, Laws, Etc. The
Borrower is not in violation of any provision of its charter or other
organizational documents, by-laws, or any agreement or instrument to which
it may be subject or by which it or any of its properties may be bound or
any decree, order, judgment, statute, license, rule or regulation, in any
of the foregoing cases in a manner that could result in the imposition of
substantial penalties or materially and adversely affect the financial
condition, properties or business of the Borrower.
Section 6.10. Tax Status. The Borrower (a) has made or filed all
federal and state income and all other tax returns, reports and
declarations required by any jurisdiction to which it is subject, (b) has
paid all taxes and other governmental assessments and charges shown or
determined to be due on such returns, reports and declarations, except
those being contested in good faith and by appropriate proceedings and (c)
has set aside on its books provisions reasonably adequate for the payment
of all taxes for periods subsequent to the periods to which such returns,
reports or declarations apply. There are no unpaid taxes in any material
amount claimed to be due by the taxing authority of any jurisdiction, and
the officers of the Borrower know of no basis for any such claim.
Section 6.11. No Event of Default. No Default or Event of Default
has occurred and is continuing.
Section 6.12. Holding Company and Investment Company Acts. The
Borrower is not a "holding company", or a "subsidiary company" of a
"holding company", or an "affiliate" of a "holding company", as such terms
are defined in the Public Utility Holding Company Act of 1935; nor is it an
"investment company", or an "affiliated company" or a "principal
underwriter" of an "investment company", as such terms are defined in the
Investment Company Act of 1940.
Section 6.13. Absence of UCC Financing Statements, Etc. Except with
respect to Permitted Liens, there is no financing statement, security
agreement, chattel mortgage, real estate mortgage or other document filed
or recorded with any filing records, registry, or other public office, that
purports to cover, affect or give notice of any present or possible future
lien on, or security interest or security title in, any of the Mortgaged
Property.
Section 6.14. Setoff, Etc. The Collateral and the rights of the
Agent and the Banks with respect to the Collateral are not subject to any
setoff, claims, withholdings or other defenses. The Borrower is the owner
of the Collateral free from any lien, security interest, encumbrance or
other claim or demand, except Permitted Liens.
Section 6.15. Certain Transactions. None of the officers, trustees,
directors, or employees of the Borrower is a party to any transaction with
the Borrower (other than for services as employees, officers and
directors), including any contract, agreement or other arrangement
providing for the furnishing of services to or by, providing for rental of
real or personal property to or from, or otherwise requiring payments to or
from any officer, trustee, director or such employee or, to the knowledge
of the Borrower, any corporation, partnership, trust or other entity in
which any officer, trustee, director, or any such employee has a
substantial interest or is an officer, director, trustee or partner.
Section 6.16. Employee Benefit Plans. The Borrower and each ERISA
Affiliate are in compliance in all material respects with ERISA. There has
been no Reportable Event with respect to any Employee Benefit Plan,
Multiemployer Plan or Guaranteed Pension Plan. There has been no
institution of proceedings or any other action by PBGC, the Borrower or any
ERISA Affiliate to terminate or withdraw or partially withdraw from any
such Plan under any circumstances which could lead to material liabilities
to PBGC or, with respect to a Multiemployer Plan, the "Reorganization" or
"Insolvency" (as each such term is defined in ERISA) of any such Plan. To
the best of the Borrower's knowledge, no "prohibited transaction" (within
the meaning of Section 406 of ERISA or Section 4975 of the Code) has
occurred with respect to any such Plan, and neither the consummation of the
transactions provided for in this Agreement and compliance by the Borrower
with the provisions hereof and the other Loan Documents will involve any
prohibited transaction.
Section 6.17. ERISA Taxes. Neither the Borrower nor any ERISA
Affiliate thereof is currently and the Borrower has no reason to believe
that the Borrower or any ERISA Affiliate thereof will become subject to any
liability (other than routine expenses or contributions relating to the
Plans set forth on Schedule 6.17, if timely paid), tax or penalty
whatsoever to any person whomsoever, which liability, tax or penalty is
directly or indirectly related to any Plans set forth on Schedule 6.17
including, but not limited to, any penalty or liability arising under Title
I or Title IV of ERISA, any tax or penalty resulting from a loss of
deduction under Section s 404 and 419 of the Code, or any tax or penalty
under Chapter 43 of the Code, except such liabilities, taxes or penalties
(when taken as a whole) as will not have a material adverse effect on the
Borrower or upon its financial condition, assets, business, operations,
liabilities or prospects.
Section 6.18. Plan Payments. The Borrower and each ERISA Affiliate
has made full and timely payment of all amounts (i) required to be
contributed under the terms of each Plan set forth on Schedule 6.17 and
applicable law and (ii) required to be paid as expenses of each Plan set
forth on Schedule 6.17. No Plan set forth on Schedule 6.17 would have an
"amount of unfunded benefit liabilities" (as defined in Section
4001(a)(18) of ERISA) if such Plan were terminated as of the date on which
this representation and warranty is made.
Section 6.19. Regulations U and X. No portion of any Loan is to be
used for the purpose of purchasing or carrying any "margin security" or
"margin stock" as such terms are used in Regulations U and X of the Board
of Governors of the Federal Reserve System, 12 C.F.R. Parts 221 and 224.
Section 6.20. Environmental Compliance. The Borrower has conducted
or caused to be conducted Phase I environmental site assessments with
respect to the past usage and condition of the Mortgaged Property and the
operations conducted thereon, and is familiar with the present condition
and usage of the Mortgaged Property and the operations conducted thereon
and, based upon such reports and knowledge, makes the following
representations and warranties.
(a) With respect to the Mortgaged Property, none of the Borrower
or any operator of the Mortgaged Property, or any operations thereon is in
violation, or alleged violation, of any judgment, decree, order, law,
license, rule or regulation pertaining to environmental matters, including
without limitation, those arising under the Resource Conservation and
Recovery Act ("RCRA"), the Comprehensive Environmental Response,
Compensation and Liability Act of 1980 as amended ("CERCLA"), the Superfund
Amendments and Reauthorization Act of 1986 ("SARA"), the Federal Clean
Water Act, the Federal Clean Air Act, the Toxic Substances Control Act, or
any state or local statute, regulation, ordinance, order or decree relating
to the environment (hereinafter "Environmental Laws"), which violation
involves the Mortgaged Property and would have a material adverse effect on
the environment or the business, assets or financial condition of the
Borrower.
(b) The Borrower has not received any notice from any third
party including, without limitation, any federal, state or local
governmental authority, (i) that it has been identified by the United
States Environmental Protection Agency ("EPA") as a potentially responsible
party under CERCLA with respect to a site listed on the National Priorities
List, 40 C.F.R. Part 300 Appendix B (1986); (ii) that any hazardous waste,
as defined by 42 U.S.C. Section 9601(5), any hazardous substances as
defined by 42 U.S.C. Section 9601(14), any pollutant or contaminant as
defined by 42 U.S.C. Section 9601(33) or any toxic substances, oil or
hazardous materials or other chemicals or substances regulated by any
Environmental Laws ("Hazardous Substances") which it has generated,
transported or disposed of have been found at any site at which a federal,
state or local agency or other third party has conducted or has ordered
that the Borrower, conduct a remedial investigation, removal or other
response action pursuant to any Environmental Law; or (iii) that it is or
shall be a named party to any claim, action, cause of action, complaint, or
legal or administrative proceeding (in each case, contingent or otherwise)
arising out of any third party's incurrence of costs, expenses, losses or
damages of any kind whatsoever in connection with the release of Hazardous
Substances.
(c) With respect to the Mortgaged Property, except as
specifically set forth in the environmental site assessment reports for the
initial Mortgaged Properties, each of which has been provided to the Agent
on or about the date hereof or, in the case of any Mortgaged Properties
which become Collateral after the date hereof, the environmental site
assessment reports with respect thereto provided to the Agent under Section
5.4: (i) no portion of the Mortgaged Property has been used for the
handling, processing, storage or disposal of Hazardous Substances except in
accordance with applicable Environmental Laws, and no underground tank or
other underground storage receptacle for Hazardous Substances is located on
any portion of the Mortgaged Property; (ii) in the course of any activities
conducted by the Borrower, or the operators of its properties, no Hazardous
Substances have been generated or are being used on the Mortgaged Property
except in the ordinary course of business and in accordance with applicable
Environmental Laws; (iii) there has been no past or present releasing,
spilling, leaking, pumping, pouring, emitting, emptying, discharging,
injecting, escaping, disposing or dumping (a "Release") or threatened
Release of Hazardous Substances on, upon, into or from the Mortgaged
Property, which Release would have a material adverse effect on the value
of any of the Mortgaged Property or adjacent properties or the environment;
(iv) to the best of the Borrower's knowledge, there have been no Releases
on, upon, from or into any real property in the vicinity of any of the
Mortgaged Property which, through soil or groundwater contamination, may
have come to be located on, and which would have a material adverse effect
on the value of, the Mortgaged Property; and (v) to the best of Borrower's
knowledge and belief, any Hazardous Substances that have been generated on
any of the Mortgaged Property have been transported off-site only by
carriers having an identification number issued by the EPA or approved by a
state or local environmental regulatory authority having jurisdiction
regarding the transportation of such substance and, to the best knowledge
of the Borrower without independent investigation, treated or disposed of
only by treatment or disposal facilities maintaining valid permits as
required under all applicable Environmental Laws, which transporters and
facilities have been and are, to the best of the Borrower's knowledge,
operating in compliance with such permits and applicable Environmental
Laws.
(d) Neither the Borrower nor the Mortgaged Property is required
by any applicable Environmental Law to perform Hazardous Substances site
assessments, or remove or remediate Hazardous Substances, or give notice to
any governmental agency or to record or deliver to other Persons of
environmental disclosure document or statement by virtue of the
transactions set forth herein and contemplated hereby, or as a condition to
the recording of the Security Deed or to the effectiveness of any other
transactions contemplated hereby.
Section 6.21. Intentionally Omitted.
Section 6.22. Leases. The Borrower has delivered to the Agent true
copies of the Leases and any amendments thereto relating to the Mortgaged
Property.
Section 6.23. Loan Documents. All of the representations and
warranties made by or on behalf of the Borrower or the Guarantor made in
the Loan Documents to which it is a party or any document or instrument
delivered to the Agent or the Banks pursuant to or in connection with any
of such Loan Documents are true and correct in all material respects, and
no such party has failed to disclose such information as is necessary to
make such representations and warranties not misleading.
Section 6.24. Mortgaged Property. The Borrower makes the following
representations and warranties concerning each Mortgaged Property:
(a) Off-Site Utilities. All water, sewer, electric, gas,
telephone and other utilities necessary for the use and operation of the
Mortgaged Property are installed to the property lines of the Mortgaged
Property through dedicated public rights-of-way or through perpetual
private easements approved by the Agent with respect to which the
applicable Security Deed creates a valid and enforceable first lien and,
except in the case of drainage facilities, are connected to the Building
located thereon with valid permits and are adequate to service the Building
in compliance with applicable law.
(b) Access, Etc. The streets abutting the Mortgaged Property
are dedicated and accepted public roads, to which the Mortgaged Property
has direct access by trucks and other motor vehicles and by foot, or are
perpetual private ways (with direct access by trucks and other motor
vehicles and by foot to public roads) to which the Mortgaged Property has
direct access approved by the Agent and with respect to which the
applicable Security Deed creates a valid and enforceable first lien. All
private ways providing access to the Mortgaged Property are zoned in a
manner which will permit access to the Building over such ways by trucks
and other commercial and industrial vehicles.
(c) Independent Building. The Building is fully independent in
all respects including, without limitation, in respect of structural
integrity, heating, ventilating and air conditioning, plumbing, mechanical
and other operating and mechanical systems, and electrical, sanitation and
water systems, all of which are connected directly to off-site utilities
located in public streets or ways or through insured perpetual private
easements approved by the Agent. The Building is located on a lot which is
separately assessed for purposes of real estate tax assessment and payment.
The Building, all Building Service Equipment and all paved or landscaped
areas related to or used in connection with the Building are, except as
specifically disclosed on a Survey delivered to the Agent prior to the date
hereof, located wholly within the perimeter lines of the lot or lots on
which the Mortgaged Property is located.
(d) Condition of Building; No Asbestos. Except as may otherwise
be specifically disclosed in any written engineering report furnished or
caused to be furnished by the Borrower to the Agent prior to the date
hereof, the Building is structurally sound, in good repair and free of
material defects in materials and workmanship. All major building systems
located within the Building, including without limitation heating,
ventilating and air conditioning, electrical, sprinkler, plumbing or other
mechanical systems, are in good working order and condition. No asbestos
is located in or on the Building, except for nonfriable asbestos or
contained friable asbestos which is being monitored and/or remediated in
accordance with the recommendations of an Environmental Engineer.
(e) Building Compliance with Law. Except as may otherwise be
specifically disclosed on the face of any certificate of occupancy
delivered to the Agent prior to the date hereof, the Building as presently
constructed, used, occupied and operated does not violate any applicable
federal or state law or governmental regulation, or any local ordinance,
order or regulation, including but not limited to laws, regulations, or
ordinances relating to zoning, building use and occupancy, subdivision
control, fire protection, health, sanitation, safety, handicapped access,
historic preservation and protection, tidelands, wetlands, flood control
and Environmental Laws. The Building complies with applicable zoning laws
and regulations and is not a so-called non-conforming use. The zoning laws
permit use of the Building for its current use. There is such number of
parking spaces on the lot or lots on which the Mortgaged Property is
located as is adequate under the zoning laws and regulations to permit use
of the Building for its current use.
(f) No Required Mortgaged Property Consents, Permits, Etc. The
Borrower
has not received notice of, and has no knowledge of, any approvals,
consents, licenses, permits, utility installations and connections
(including, without limitation, drainage facilities), curb cuts and street
openings, required by applicable laws, rules, ordinances or regulations or
any agreement affecting the Mortgaged Property for the maintenance,
operation, servicing and use of the Mortgaged Property or the Building for
its current use which have not been granted, effected, or performed and
completed (as the case may be), or any fees or charges therefor which have
not been fully paid, or which are no longer in full force and effect. No
such approvals, consents, permits or licenses (including, without
limitation, any railway siding agreements) will terminate, or become void
or voidable or terminable on any foreclosure sale of the Mortgaged Property
pursuant to the Security Deed. To the best knowledge of the Borrower,
there are no outstanding notices, suits, orders, decrees or judgments
relating to zoning, building use and occupancy, fire, health, sanitation or
other violations affecting, against, or with respect to, the Mortgaged
Property or any part thereof.
(g) Insurance. The Borrower has not received any notice from
any insurer or its agent requiring performance of any work with respect to
the Mortgaged Property or canceling or threatening to cancel any policy of
insurance, and the Mortgaged Property complies with the requirements of all
carriers of insurance on the Mortgaged Property.
(h) Real Property Taxes; Special Assessments. There are no
unpaid or outstanding real estate or other taxes or assessments on or
against the Mortgaged Property or any part thereof which are payable by the
Borrower (except only real estate or other taxes or assessments, that are
not yet due and payable). The Borrower has delivered or caused to be
delivered to the Agent, or has requested from the appropriate authorities
and will deliver to the Agent promptly upon receipt, true and correct
copies of real estate tax bills for the Mortgaged Property for the past
three fiscal tax years. No abatement proceedings are pending with
reference to any real estate taxes assessed against the Mortgaged Property.
There are no betterment assessments or other special assessments presently
pending with respect to any portion of the Mortgaged Property, and the
Borrower has not received any notice of any such special assessment being
contemplated.
(i) Historic Status. The Building is not a historic structure
or landmark and neither the Building nor the Mortgaged Property is located
within any historic district pursuant to any federal, state or local law or
governmental regulation.
(j) Eminent Domain; Casualty. There are no pending eminent
domain proceedings against the Mortgaged Property or any part thereof, and,
to the knowledge of the Borrower, no such proceedings are presently
threatened or contemplated by any taking authority. Neither the Mortgaged
Property, the Building nor any part thereof is now damaged or injured as a
result of any fire, explosion, accident, flood or other casualty.
(k) Leases. An accurate and complete Rent Roll and summary
thereof in a form reasonably satisfactory to the Agent as of the date of
inclusion of each Mortgaged Property (or such other recent date as may be
acceptable to the Agent) with respect to all Leases of any portion of the
Mortgaged Property has been provided to the Agent. The Leases reflected on
such Rent Roll constitute as of the date thereof the sole agreements and
understandings relating to leasing or licensing of space at such Mortgaged
Property and in the Building relating thereto. There are no occupancies,
rights, privileges or licenses in or to any Mortgaged Property or portion
thereof other than pursuant to the Leases reflected in Rent Rolls
previously furnished to the Agent for such Mortgaged Property. Except as
set forth in each Rent Roll, the Leases reflected therein are in full force
and effect in accordance with their respective terms, without any payment
default or any other material default thereunder, nor are there any
defenses, counterclaims, offsets, concessions or rebates available to any
tenant thereunder, and the Borrower has not given or made any notice of any
payment or other material default, or any claim, which remains uncured or
unsatisfied, with respect to any of the Leases. The Rent Rolls furnished
to the Banks accurately and completely set forth all rents payable by and
security, if any, deposited by tenants, no tenant having paid more than one
month's rent in advance. The Borrower has reviewed the estoppel
certificates delivered by the tenants of the Mortgaged Property to the
Agent and such estoppel certificates are true and correct in all material
respects. All tenant improvements or work to be done, furnished or paid
for by the Borrower or credited or allowed to a tenant, for, or in
connection with, the Building pursuant to any Lease has been completed and
paid for or provided for in a manner satisfactory to the Agent. No
material leasing, brokerage or like commissions, fees or payments are due
from the Borrower in respect of the Leases.
(l) Management Agreements. Borrower has delivered to Agent
true, correct and complete copies of the Management Agreements for the
Mortgaged Property. To the best knowledge of the Borrower, there are no
material claims or any bases for material claims in respect of the
Mortgaged Property or its operation by any party to any Management
Agreement.
(m) Other Material Real Property Agreements; No Options. There
are no material agreements pertaining to the Mortgaged Property, any
Building thereon or the operation or maintenance of either thereof other
than as described in this Agreement (including the Schedules hereto) or
otherwise disclosed in writing to the Agent and the Banks by the Borrower;
and no person or entity has any right or option to acquire the Mortgaged
Property on any Building thereon or any portion thereof or interest
therein.
Section 6.25. Brokers. The Borrower has not engaged or otherwise
dealt with any broker, finder or similar entity in connection with this
Agreement or the Loans contemplated hereunder.
Section 6.26. Fair Consideration. The Borrower (and, as applicable,
the Guarantor), by receiving the benefits under this Agreement is receiving
"reasonably equivalent value" within the meaning of Section 548 of the
Bankruptcy Code, Title 11, U.S.C.A. and "fair consideration" within the
meaning of Consolidated Laws of New York Annotated, Chapter 12, Article 10,
Section 272 in exchange for the delivery of the Security Documents to
Agent, and but for the willingness of the Guarantor to provide the guaranty
of the Loan, Borrower would be unable to obtain the financing contemplated
hereunder which financing will enable Borrower (including the Guarantor) to
have available financing to conduct and expand its business. The
transaction evidenced by this Agreement and the other Loan Documents is in
the best interests of the Borrower and the Guarantor and the creditors of
such Persons.
Section 6.27. Solvency. As of the Closing Date and after giving
affect to the transactions contemplated by this Agreement and the other
Loan Documents, including all of the Loans made or to be made hereunder the
Borrower is not insolvent on a balance sheet basis, the sum of the
Borrower's assets exceeds the sum of the Borrower's liabilities, the
Borrower is able to pay its debts as they become due, and the Borrower has
sufficient capital to carry on its business.
Section 6.28. No Bankruptcy Filing. The Borrower is not
contemplating either the filing of a petition by it under any state or
federal bankruptcy or insolvency laws or the liquidation of its assets or
property, and Borrower has no knowledge of any Person contemplating the
filing of any such petition against it.
Section 6.29. No Fraudulent Intent. Neither the execution and
delivery of this Agreement or any of the other Loan Documents nor the
performance of any actions required hereunder or thereunder is being
undertaken by the Borrower or the Guarantor with or as a result of any
actual intent by any of such Persons to hinder, delay or defraud any entity
to which any of such Persons is now or will hereafter become indebted.
Section 6.30. Other Debt. Neither the Borrower or the Guarantor nor
any of the Subsidiaries of Guarantor is in default in the payment of any
other Indebtedness or under any agreement, mortgage, deed of trust,
security agreement, financing agreement, indenture or lease to which any of
them is a party. The Borrower is not a party to or bound by any agreement,
instrument or indenture that may require the subordination in right or time
of payment of any of the Obligations to any other indebtedness or
obligation of the Borrower. The Borrower has provided to the Agent copies
of all agreements, mortgages, deeds of trust, financing agreements or other
material agreements binding upon Borrower, the Guarantor or their
respective properties and entered into by such Person as of the date of
this Agreement with respect to any Indebtedness of such Person.
Section 6.31. Ownership of Borrower. The Revolver Borrower and the
Special Member are the sole members of the Borrower.
Section 6.32. Special Purpose Entity. The Borrower is in full and
complete compliance with the Operating Agreement.
Section 7. AFFIRMATIVE COVENANTS OF THE BORROWER.
The Borrower covenants and agrees that, so long as any Loan or Note is
outstanding or any Bank has any obligation to make any Loans:
Section 7.1. Punctual Payment. The Borrower will duly and
punctually pay or cause to be paid the principal and interest on the Loans
and all interest and fees provided for in this Agreement, all in accordance
with the terms of this Agreement and the Notes as well as all other sums
owing pursuant to the Loan Documents.
Section 7.2. Maintenance of Office. The Borrower will maintain its
chief executive office at 610 Fifth Avenue, 7th Floor, New York County, New
York, New York, or at such other place in the United States of America as
the Borrower shall designate upon prior written notice to the Agent and the
Banks, where notices, presentations and demands to or upon the Borrower in
respect of the Loan Documents may be given or made.
Section 7.3. Records and Accounts. The Borrower will (a) keep true
and accurate records and books of account in which full, true and correct
entries will be made in accordance with generally accepted accounting
principles and (b) maintain adequate accounts and reserves for all taxes
(including income taxes), depreciation and amortization of its properties,
contingencies and other reserves. The Borrower shall not, without the
prior written consent of the Majority Banks, (x) make any material changes
to the accounting procedures used by Borrower in preparing the financial
statements and other information described in Section 6.4 or (y) change
its fiscal year.
Section 7.4. Financial Statements, Certificates and Information.
The Borrower will deliver or cause to be delivered to each of the Banks:
(a) as soon as practicable, but in any event not later than 90
days after the end of each fiscal year of the Borrower, the audited balance
sheet of the Borrower at the end of such year, and the related audited
statements of income, changes in shareholders' equity and cash flows for
such year, each setting forth in comparative form the figures for the
previous fiscal year (other than the fiscal year ending prior to the
Closing Date for which such statements of Borrower were not separately
prepared) and all such statements to be in reasonable detail, prepared in
accordance with generally accepted accounting principles, and accompanied
by an auditor's report prepared without qualification by Ernst & Young LLP
or by another "Big Six" accounting firm, together with the unaudited annual
operating statement of each Mortgaged Property (which statement shall also
be reconciled to the budget for the Mortgaged Property), together with a
certification by Borrower's chief financial or chief accounting officer
that the information contain in such statement fairly presents the
operations of the Mortgaged Property for such period, and any other
information the Banks may need reasonably to complete a financial analysis
of the Borrower;
(b) as soon as practicable, but in any event not later than 45
days after the end of each fiscal quarter of the Borrower (including the
fourth quarter), copies of the unaudited balance sheet of the Borrower as
at the end of such quarter, and the related unaudited consolidated
statements of income, changes in shareholders' equity and cash flows for
the portion of the Borrower's fiscal year then elapsed, and the unaudited
operating statement for the Mortgaged Property for such quarter and year-
to-date (which statement shall also be reconciled to the budget for the
Mortgaged Property), all in reasonable detail and prepared in accordance
with generally accepted accounting principles, together with a
certification by the principal financial or accounting officer of the
Borrower that the information contained in such financial statements fairly
presents the financial position of the Borrower and the operations of the
Mortgaged Property on the date thereof (subject to year-end adjustments);
(c) as soon as practicable, but in any event not later than 45
days after the end of each fiscal quarter of the Borrower (including the
fourth fiscal quarter in each year), copies of a statement of Net Operating
Income for such fiscal quarter and year-to-date for each of the Mortgaged
Properties, prepared in a manner reasonable satisfactory to the Agent,
together with a certification by the Borrower's chief financial or chief
accounting officer that the information contained in such statement fairly
presents the Net Operating Income of the Mortgaged Property for such
period;
(d) simultaneously with the delivery of the financial statements
referred to in subsections (a) and (b) above, a statement (a "Compliance
Certificate") certified by the principal financial or accounting officer of
the Borrower in the form of Exhibit C hereto setting forth in reasonable
detail computations evidencing compliance with the covenants contained in
Section 9, and (if applicable) reconciliations to reflect changes in
generally accepted accounting principles since the Closing Date;
(e) concurrently with the delivery of the financial statements
described in subsections (b) and (c) above, a certificate signed by the
President or Chief Financial Officer of the Borrower to the effect that,
having read this Agreement, and based upon an examination which they deem
sufficient to enable them to make an informed statement, there does not
exist any Default or Event of Default, or if such Default or Event of
Default has occurred, specifying the facts with respect thereto;
(f) contemporaneously with the filing, mailing or releasing
thereof, copies of all press releases and all material of a financial
nature filed with the SEC, if applicable, or sent to all of the members of
the Borrower;
(g) as soon as practicable but in any event not later than 45
days after the end of each fiscal quarter of the Borrower (including the
fourth fiscal quarter in each year), updated Rent Rolls with respect to the
Mortgaged Property and a summary of each Rent Roll in form reasonably
satisfactory to the Agent;
(h) as soon as practicable, but in any event not later than 30
days prior to the beginning of each calendar year, the annual operating
budget for each of the Mortgaged Property, in form and substance
satisfactory to the Majority Banks;
(i) promptly after they are filed with the Internal Revenue
Service, copies of all annual federal income tax returns and amendments
thereto of the Borrower;
(j) not later than 45 days after the end of each fiscal quarter
of the Borrower (including the fourth fiscal quarter in each year), the
market comparable study conducted by the Borrower's internal staff or its
property managers, and at other times copies of such market studies
relating to the Mortgaged Property as are from time to time prepared by or
on behalf of the Borrower; and
(k) from time to time such other financial data and information
in the possession of the Borrower (including without limitation auditors'
management letters, property inspection and environmental reports and
information as to zoning and other legal and regulatory changes affecting
the Borrower) as the Agent may reasonably request.
Section 7.5. Notices.
(a) Defaults. The Borrower will promptly notify the Agent in
writing of the occurrence of any Default or Event of Default. If any
Person shall give any notice or take any other action in respect of a
claimed default (whether or not constituting an Event of Default) under
this Agreement or under any note, evidence of indebtedness, indenture or
other obligation to which or with respect to which the Borrower is a party
or obligor, whether as principal or surety, and such default would permit
the holder of such note or obligation or other evidence of indebtedness to
accelerate the maturity thereof, which acceleration would have a material
adverse effect on the Borrower, the Borrower shall forthwith give written
notice thereof to the Agent and each of the Banks, describing the notice or
action and the nature of the claimed default.
(b) Environmental Events. The Borrower will promptly give
notice to the Agent (i) upon the Borrower obtaining knowledge of any
potential or known Release, or threat of Release, of any Hazardous
Substances at or from the Mortgaged Property; (ii) of any violation of any
Environmental Law that the Borrower reports in writing or is reportable by
the Borrower in writing (or for which any written report supplemental to
any oral report is made) to any federal, state or local environmental
agency and (iii) upon becoming aware thereof, of any inquiry, proceeding,
investigation, or other action, including a notice from any agency of
potential environmental liability, of any federal, state or local
environmental agency or board, that in either case involves the Mortgaged
Property or has the potential to materially affect the assets, liabilities,
financial conditions or operations of the Borrower or the Agent's liens on
the Collateral pursuant to the Security Documents.
(c) Notification of Claims Against Collateral. The Borrower
will, immediately upon becoming aware thereof, notify the Agent in writing
of any setoff, claims (including, with respect to the Mortgaged Property,
environmental claims), withholdings or other defenses to which any of the
Collateral, or the rights of the Agent or the Banks with respect to the
Collateral, are subject.
(d) Notice of Litigation and Judgments. The Borrower will give
notice to the Agent in writing within 15 days of becoming aware of any
litigation or proceedings threatened in writing or any pending litigation
and proceedings affecting the Borrower or to which the Borrower is or is to
become a party involving an uninsured claim against the Borrower that could
reasonably be expected to have a materially adverse effect on the Borrower
and stating the nature and status of such litigation or proceedings. The
Borrower will give notice to the Agent, in writing, in form and detail
satisfactory to the Agent and each of the Banks, within ten days of any
judgment not covered by insurance, whether final or otherwise, against the
Borrower in an amount in excess of $250,000.
(e) Intentionally Omitted.
(f) Notification of Banks. Promptly after receiving any notice
under this Section 7.5, the Agent will forward a copy thereof to each of
the Banks, together with copies of any certificates or other written
information that accompanied such notice.
Section 7.6. Existence; Maintenance of Properties.
(a) The Borrower will do or cause to be done all things
necessary to preserve and keep in full force and effect its existence as a
Delaware limited liability company and shall not amend or modify the
Operating Agreement in any manner without the prior written consent of the
Agent. The Borrower will do or cause to be done all things necessary to
preserve and keep in full force all of its rights and franchises.
(b) The Borrower (i) will cause all of its properties used or
useful in the conduct of its business to be maintained and kept in good
condition, repair and working order (ordinary wear and tear excepted) and
supplied with all necessary equipment, and (ii) will cause to be made all
necessary repairs, renewals, replacements, betterments and improvements
thereof in all cases in which the failure so to do would have a material
adverse effect on the condition of the applicable Mortgaged Property or on
the financial condition, assets or operations of the Borrower.
Section 7.7. Insurance.
(a) The Borrower will, at its expense, procure and maintain, or
cause to be procured and maintained, for the benefit of the Borrower and
the Agent, insurance policies issued by such insurance companies, in such
amounts, in such form and substance, and with such coverages, endorsements,
deductibles and expiration dates as are acceptable to the Agent, providing
the following types of insurance covering the Mortgaged Property:
(i) "All Risks" property insurance (including broad form
flood, broad form earthquake and comprehensive boiler and machinery
coverages) on each Building and the contents therein of the Borrower
in an amount not less than one hundred percent (100%) of the full
replacement cost of each Building and the contents therein of the
Borrower, with deductibles not to exceed $50,000 for any one
occurrence, with a replacement cost coverage endorsement, and, if
requested by the Agent, a contingent liability from operation of
building laws endorsement in such amounts as the Agent may require.
Full replacement cost as used herein means the cost of replacing the
Building (exclusive of the cost of excavations, foundations and
footings below the lowest basement floor) and the contents therein of
the Borrower without deduction for physical depreciation thereof;
(ii) During the course of construction or repair of any
Building having a cost in excess of $1,000,000, the insurance required
by clause (i) above shall be written on a builders risk, completed
value, non-reporting form, meeting all of the terms required by clause
(i) above, covering the total value of work performed, materials,
equipment, machinery and supplies furnished, existing structures, and
temporary structures being erected on or near the Mortgaged Property,
including coverage against collapse and damage during transit or while
being stored off-site, and containing a soft costs (including loss of
rents) coverage endorsement and a permission to occupy endorsement;
(iii) Flood insurance if at any time any Building is
located in any federally designated "special hazard area" (including
any area having special flood, mudslide and/or flood-related erosion
hazards, and shown on a Flood Hazard Boundary Map or a Flood Insurance
Rate Map published by the Federal Emergency Management Agency as Zone
A, AO, Al-30, AE, A99, AH, VO, Vl-30, VE, V, M or E) and the broad
form flood coverage required by clause (i) above is not available, in
an amount equal to the full replacement cost or the maximum amount
then available under the National Flood Insurance Program;
(iv) Rent loss insurance in an amount sufficient to recover
at least the total estimated gross receipts from all sources of
income, including without limitation, rental income, for the Mortgaged
Property for a twelve month period;
(v) Commercial general liability insurance against claims
for personal injury (to include, without limitation, bodily injury and
personal and advertising injury) and property damage liability, all on
an occurrence basis, if commercially available, with such coverages as
the Agent may reasonably request (including, without limitation,
contractual liability coverage, completed operations coverage for a
period of two years following completion of construction of any
improvements on the Mortgaged Property, and coverages equivalent to an
ISO broad form endorsement), with a general aggregate limit of not
less than $1,000,000, a completed operations aggregate limit of not
less than $1,000,000, and a combined single "per occurrence" limit of
not less than $1,000,000 for bodily injury, property damage and
medical payments;
(vi) During the course of construction or repair of any
improvements on the Mortgaged Property in excess of $1,000,000,
owner's contingent or protective liability insurance covering claims
not covered by or under the terms or provisions of the insurance
required by clause (v) above;
(vii) Employers liability insurance (with respect to the
Borrower's employees only);
(viii) Umbrella liability insurance with limits of not
less than $50,000,000 to be in excess of the limits of the insurance
required by clauses (v), (vi) and (vii) above, with coverage at least
as broad as the primary coverages of the insurance required by clauses
(v), (vi) and (vii) above, with any excess liability insurance to be
at least as broad as the coverages of the lead umbrella policy. All
such policies shall be endorsed to provide defense coverage
obligations;
(ix) Workers' compensation insurance for all employees of
the Borrower engaged on or with respect to the Mortgaged Property; and
(x) Such other insurance in such form and in such amounts
as may from time to time be required by the Majority Banks against
other insurable hazards and casualties which at the time are commonly
insured against in the case of properties of similar character and
location to the Mortgaged Property.
The Borrower shall pay or cause to be paid all premiums on insurance
policies. The insurance policies with respect to all Mortgaged Property
provided for in clauses (v), (vi) and (viii) above with respect to all
Mortgaged Property shall name the Agent and each Bank as an additional
insured. The insurance policies provided for in clauses (i), (ii), (iii)
and (iv) above shall name the Agent as mortgagee and loss payee, shall be
first payable in case of loss to the Agent, and shall contain mortgage
clauses and lender's loss payable endorsements in form and substance
acceptable to the Agent. The Borrower shall deliver duplicate originals or
certified copies of all such policies to the Agent, and the Borrower shall
promptly furnish to the Agent all renewal notices and evidence that all
premiums or portions thereof then due and payable have been paid. At least
15 days prior to the expiration date of the policies, the Borrower shall
deliver to the Banks evidence of continued coverage, including a
certificate of insurance, as may be satisfactory to the Agent.
(b) All policies of insurance required by this Agreement shall
contain clauses or endorsements to the effect that (i) no act or omission
of either the Borrower or anyone acting for the Borrower shall affect the
validity or enforceability of such insurance insofar as the Agent is
concerned, (ii) the insurer waives any right of setoff, counterclaim,
subrogation, or any deduction in respect of any liability of the Borrower
and the Agent, (iii) such insurance is primary and without right of
contribution from any other insurance which may be available, (iv) such
policies shall not be modified, canceled or terminated prior to the
scheduled expiration date thereof without the insurer thereunder giving at
least 15 days prior written notice to the Agent by certified or registered
mail, and (v) that the Agent or the Banks shall not be liable for any
premiums thereon or subject to any assessments thereunder, and shall in all
events be in amounts sufficient to avoid any coinsurance liability.
(c) The insurance required by this Agreement may be effected
through a blanket policy or policies covering additional locations and
property of the Borrower and other Persons not included in the Mortgaged
Property, provided that such blanket policy or policies comply with all of
the terms and provisions of this Section 7.7 and contain endorsements or
clauses reasonably satisfactory to the Agent.
(d) All policies of insurance required by this Agreement shall
be issued by companies licensed to do business in the State where the
policy is issued and also in the states where the Mortgaged Property is
located and having a rating in Best's Key Rating Guide of at least "A" and
a financial size category of at least "VIII".
(e) The Borrower shall not carry separate insurance, concurrent
in kind or form or contributing in the event of loss, with any insurance
required under this Agreement unless such insurance complies with the terms
and provisions of this Section 7.7.
(f) In the event of any loss or damage to the Mortgaged
Property, the Borrower shall give immediate written notice to the insurance
carrier and the Agent, and the Agent shall furnish a copy of such notice
promptly to each of the Banks. The Borrower may make proof of loss and
adjust and compromise any claim under insurance policies which is of an
amount not more than $1,000,000.00 so long as no Event of Default has
occurred and is continuing and so long as such claim is pursued diligently
and in good faith. The Borrower hereby irrevocably authorizes and empowers
the Agent, at the Agent's option in the Agent's sole discretion or at the
request of the Majority Banks in their sole discretion, as attorney in fact
for the Borrower, to make proof of any loss except as provided in the
preceding sentence, to adjust and compromise any claim under insurance
policies, to appear in and prosecute any action arising from such insurance
policies, to collect and receive insurance proceeds, and to deduct
therefrom the Agent's expenses incurred in the collection of such proceeds.
If the Mortgaged Property is acquired by the Agent or any nominee through
foreclosure, deed in lieu of foreclosure or otherwise is acquired from the
owner thereof, all right, title and interest of the owner of such Mortgaged
Property in and to any insurance policies and unearned premiums thereon and
in and to the proceeds thereof resulting from loss or damage to the
Mortgaged Property prior to such sale or acquisition shall pass to the
Agent or any other successor in interest to the owner or purchaser or
grantee of the Mortgaged Property.
(g) Subject to the terms of the following sentence, the Borrower
authorizes the Agent, at the Agent's option or at the request of the
Majority Bank's in their sole discretion, to (i) apply the balance of such
proceeds to the payment of the Obligations whether or not then due, or
(ii) if the Agent or the Majority Banks shall require the reconstruction or
repair of the Mortgaged Property, to hold the balance of such proceeds to
be used to pay all taxes, charges, sewer use fees, water rates and
assessments which may be imposed upon the Mortgaged Property and the
Obligations as they become due during the course of reconstruction or
repair of the Mortgaged Property and to reimburse the Borrower, in
accordance with such terms and conditions as Agent may prescribe, for the
cost of such reconstruction or repair of the Mortgaged Property, and on
completion of such reconstruction or repair to pay any excess funds to the
Borrower so long as no Default or Event of Default has occurred and is
continuing, or if a Default or Event of Default has occurred and is
continuing, to apply any of the excess to the payment of the Obligations.
Notwithstanding the foregoing, the Agent shall make such net proceeds
available to the Borrower to reconstruct and repair the Mortgaged Property,
in accordance with such terms and conditions as the Agent may prescribe for
the disbursement of such proceeds to assure completion of such
reconstruction or repair provided that (A) no Default or Event of Default
shall have occurred and be continuing, (B) the Borrower shall have provided
to Agent additional cash security in an amount equal to the amount
reasonably estimated by the Agent to be the amount in excess of such
proceeds which will be required to complete such repair or restoration, and
(C) the Agent shall determine that such repair or reconstruction can be
completed prior to the Maturity Date, (D) the cost of such reconstruction
or repair is not estimated by the Agent to exceed fifty percent (50%) of
the Appraised Value of such Mortgaged Property, (E) the Agent shall have
approved the plans and specifications for such repair or restoration and
determined that the repaired or restored Mortgaged Property will provide
the Banks with adequate security for the Obligations, and (F) the Borrower
shall have delivered to the Agent written agreements binding upon all
tenants or other parties having present or future rights to possession of
any portion of the Mortgaged Property or having any right to require
repair, restoration or completion of the Mortgaged Property or any portion
thereof, agreeing upon a date for delivery of possession of the Mortgaged
Property or their respective portions thereof, or for such required repair,
restoration or completion, to permit time which is sufficient in the
judgment of the Agent for such repair or restoration and approving the
plans and specifications for such repair or restoration, or other evidence
satisfactory to the Agent that none of such tenants or other parties may
terminate their Leases as a result of such casualty or have a right to
approve the plans and specifications for such repair or restoration.
(h) The Borrower, at its expense, will procure and maintain or
cause to be procured and maintained, insurance covering the Borrower and
the Mortgaged Property in such amounts and against such risks and
casualties as are customary for properties of similar character and
location, due regard being given to the type of improvements thereon, their
construction, location, use and occupancy.
(i) The Borrower shall provide or cause to be provided to the
Agent for the benefit of the Banks Title Policies for all of the Mortgaged
Property which shall at all times be in an aggregate amount of not less
than the initial Designated Collateral Value attributable to such Mortgaged
Property (provided that a Title Policy for an individual Mortgaged Property
need not equal the aggregate Designated Collateral Value). Each Title
Policy shall also contain, to the extent available, a tie-in endorsement
aggregating the insurance coverage provided under all of the policies with
tie-in endorsements.
Section 7.8. Taxes. The Borrower will duly pay and discharge, or
cause to be paid and discharged, before the same shall become overdue, all
taxes, assessments and other governmental charges imposed upon it and upon
the Mortgaged Property, sales and activities, or any part thereof, or upon
the income or profits therefrom, as well as all claims for labor,
materials, or supplies that if unpaid might by law become a lien or charge
upon any of its property; provided that any such tax, assessment, charge,
levy or claim need not be paid if the validity or amount thereof shall
currently be contested in good faith by appropriate proceedings and if the
Borrower shall have set aside on its books adequate reserves with respect
thereto; and provided, further, that forthwith upon the commencement of
proceedings to foreclose any lien that may have attached as security
therefor, the Borrower either (i) will provide a bond issued by a surety
reasonably acceptable to the Majority Banks and sufficient to stay all such
proceedings or (ii) if no such bond is provided, will pay each such tax,
assessment, charge, levy or claim.
Section 7.9. Inspection of Properties and Books. The Borrower shall
permit the Banks, through the Agent or any representative designated by the
Agent, at the Borrower's expense to visit and inspect any of the Mortgaged
Properties, to examine the books of account of the Borrower (and to make
copies thereof and extracts therefrom) and to discuss the affairs, finances
and accounts of the Borrower with, and to be advised as to the same by, its
officers, all at such reasonable times and intervals as the Agent or any
Bank may reasonably request. The Banks shall use good faith efforts to
coordinate such visits and inspections so as to minimize the interference
with and disruption to the Borrower's normal business operations.
Section 7.10. Compliance with Laws, Contracts, Licenses, and
Permits. The Borrower will comply in all respects with (i) all applicable
laws and regulations now or hereafter in effect wherever its business is
conducted, including all Environmental Laws, (ii) the provisions of its
corporate charter, and other charter documents and bylaws, (iii) all
agreements and instruments to which it is a party or by which it or any of
its properties may be bound, (iv) all applicable decrees, orders, and
judgments, and (v) all licenses and permits required by applicable laws and
regulations for the conduct of its business or the ownership, use or
operation of its properties. If at any time while any Loan or Note is
outstanding or the Banks have any obligation to make Loans hereunder, any
authorization, consent, approval, permit or license from any officer,
agency or instrumentality of any government shall become necessary or
required in order that the Borrower may fulfill any of its obligations
hereunder, the Borrower will immediately take or cause to be taken all
steps necessary to obtain such authorization, consent, approval, permit or
license and furnish the Agent and the Banks with evidence thereof.
Section 7.11. Use of Proceeds. The Borrower will use the proceeds
of the Loans solely (a) for the acquisition of fee interests by Borrower in
Eligible Real Estate which immediately upon such acquisition by the
Borrower becomes a Mortgaged Property, including, without limitation,
acquisition of properties from the Revolver Borrower as contemplated by the
Revolving Credit Agreement, (b) for Capital Improvement Projects to
Mortgaged Property (but not in excess of $5,000,000.00 of the proceeds of
the Loans may be used by Borrower for such purpose), and (c) for reasonable
transaction costs related to the transactions referred to in the preceding
clause (a).
Section 7.12. Further Assurances. The Borrower will cooperate with
the Agent and the Banks and execute such further instruments and documents
as the Banks or the Agent shall reasonably request to carry out to their
satisfaction the transactions contemplated by this Agreement and the other
Loan Documents.
Section 7.13. Management Agreements. The Borrower shall provide
prompt written notice to the Agent of any termination or material
modification or amendment of any Management Agreement, provided that,
without the prior consent of the Majority Banks, none of the Management
Agreements shall be modified or amended to increase the fees payable
thereunder. The Borrower shall not enter into any Management Agreement or
otherwise manage any of the Mortgaged Property except with property and
leasing managers having sufficient expertise and resources to manage such
properties as class A office buildings, and on leasing terms and conditions
no less favorable to the Borrower than are contained in the Management
Agreements delivered to the Agent prior to the date hereof or are otherwise
on then commercially reasonable terms.
Section 7.14. ERISA Compliance. The Borrower will not permit the
present value of all employee benefits vested in all Employee Benefit
Plans, Multiemployer Plans and Guaranteed Pension Plans maintained by the
Borrower and any ERISA Affiliate thereof to exceed the present value of the
assets allocable to such vested benefits by an amount greater than
$500,000.00 in the aggregate. Neither the Borrower nor any ERISA Affiliate
thereof will at any time permit any such Plan maintained by it to engage in
any "prohibited transaction" as such term is defined in Section 4975 of
the Code or Section 406 of ERISA, incur any "accumulated funding
deficiency" as such term is defined in Section 302 of ERISA, whether or
not waived, or terminate any such Plan in any manner which could result in
the imposition of a lien on the property of the Borrower or the Guarantor
pursuant to Section 4068 of ERISA.
Section 7.15. Intentionally Deleted.
Section 7.16. Intentionally Omitted.
Section 7.17. Compliance. The Borrower shall operate its business
in compliance with the terms and conditions of this Agreement and the other
Loan Documents.
Section 7.18. Intentionally Omitted.
Section 7.19. Leasing. The Borrower will take or cause to be taken
all reasonable steps within the power of the Borrower to market and lease
the leasable area of the Mortgaged Properties in accordance with sound and
customary leasing and management practices for similar properties. The
Borrower will not lease all or any portion of the Mortgaged Property or
amend, supplement or otherwise modify, terminate or cancel, or accept the
surrender of, or consent to the assignment or subletting of, or grant any
concessions to or waive the performance of any obligations of any tenant,
lessee or licensee under, any now existing or future Lease without the
prior written consent of the Agent; provided, however, with respect to any
Lease which covers less than the 25,000 square feet or provides less than
three percent (3%) of the Net Operating Income of the Mortgaged Property,
the Borrower may amend, supplement or otherwise modify, terminate or
cancel, or accept the surrender of, or consent to the assignment or
subletting of, or granting concessions to or waive the performance of any
obligations of any tenant, lessee or licensee under any such Lease in the
ordinary course of business consistent with sound leasing and management
practices for similar properties. The Borrower shall furnish the Agent
with executed copies of all Leases hereafter made, and all Leases now or
hereafter entered into will be in form and substance subject to the
approval of the Agent. Upon the Agent's request, the Borrower shall make a
separate and distinct assignment to the Agent as additional security, of
all Leases hereafter made. Notwithstanding the foregoing, following the
Agent's approval of the "Leasing Parameters" (as hereinafter defined) for
the Mortgaged Property, then the Borrower may, without the prior approval
of the Agent and (prior to the initial syndication) Goldman, enter into any
Lease provided that the Lease covers less than 25,000 square feet or
provides less than three percent (3%) of the Net Operating Income of the
Mortgaged Property, is a bona fide arm's length lease entered into in the
ordinary course of business with a party unaffiliated with the Borrower,
Guarantor or any member of Borrower, falls within the Leasing Parameters
and is on the standard lease form (without material modification or
addition). In connection with any Lease to be approved by the Agent as
provided herein, the Borrower shall submit to the Agent for its approval
the identity of the tenant and a summary of the major terms of the Lease
(which terms shall include without limitation those matters included within
the Leasing Parameters) (collectively the "Major Terms"), and Agent's
approval shall be limited to the approval of the Major Terms, and provided
further than any such terms submitted to the Agent for approval shall be
deemed approved by the Agent unless the Agent expressly disapproves the
same by written notice delivered to the Borrower (which shall state the
reasons for disapproval) within five (5) business days after the date of
the delivery of such Lease to the Agent for approval and all other
information reasonably requested by the Agent in order to make such
determination. Following the approval by the Agent of the Major Terms, the
Borrower shall be permitted to enter into a lease to such tenant which
falls within the Major Terms. As used herein, "Leasing Parameters" means
leasing parameters for the Mortgaged Property approved by the Agent and
(prior to the initial syndication) Goldman. Leasing Parameters shall
include, without limitation, the minimum and maximum term, the minimum
rent, tax and operating stops, tenant standard improvements, tenant
allowances and other tenant inducements and leasing commissions, and shall
be approved by the Agent prior to the commencement of each calendar year
during the term of the Notes. The Borrower will require, and each Lease
will require, each tenant to enter into a Nondisturbance, Attornment and
Subordination Agreement and to provide an estoppel certificate satisfactory
to the Agent upon the request of the Agent. The Agent shall have the
right, and the Borrower hereby authorizes the Agent, to communicate
directly with any tenant under a Lease to verify any information delivered
to the Agent by the Borrower concerning such tenant or such tenant's Lease.
Section 7.20 Special Purpose Entity. The Borrower shall conduct its
business in full compliance with and shall not violate the terms and
conditions of the Operating Agreement.
Section 7.21 Plan Assets, etc. The Borrower will do, or cause to be
done, all things necessary to ensure that it will not be deemed to hold
Plan Assets at any time. Each owner of an equity interest in Borrower has
certified to Borrower and the Banks, and Borrower shall require each
proposed transferee of any equity interest in Borrower, as a condition
precedent to such transfer, to certify to Borrower and the Banks, that the
source of funds used or to be used by it to acquire its interest in
Borrower are not assets of any plan subject to Title I of ERISA or Section
4975 of the Code and are not deemed to be assets of any such plan under the
U.S. Department of Labor's plan asset regulations. Borrower has provided
the Agent with a copy of each such certification from each owner of an
equity interest in Borrower and will promptly provide the Agent with a copy
of each such certification from each proposed transferee.
Section 8. CERTAIN NEGATIVE COVENANTS OF THE BORROWER.
The Borrower covenants and agrees that, so long as any Loan or Note is
outstanding or any of the Banks has any obligation to make any Loans:
Section 8.1. Restrictions on Indebtedness. The Borrower will not
create, incur, assume, guarantee or be or remain liable, contingently or
otherwise, with respect to any Indebtedness other than:
(a) Indebtedness to the Banks arising under any of the Loan
Documents;
(b) current liabilities of the Borrower incurred in the ordinary
course of business and relating to the Mortgaged Property but not incurred
through (i) the borrowing of money, or (ii) the obtaining of credit except
for credit on an open account basis customarily extended and in fact
extended in connection with normal purchases of goods and services relating
to the Mortgaged Property;
(c) Indebtedness in respect of taxes, assessments, governmental
charges or levies and claims for labor, materials and supplies relating to
the Mortgaged Property to the extent that payment therefor shall not at the
time be required to be made in accordance with the provisions of Section
7.8;
(d) Indebtedness in respect of judgments or awards relating to
the operation and maintenance of the Mortgaged Property in accordance with
this Agreement that have been in force for less than the applicable period
for taking an appeal so long as execution is not levied thereunder or in
respect of which the Borrower shall at the time in good faith be
prosecuting an appeal or proceedings for review and in respect of which a
stay of execution shall have been obtained pending such appeal or review;
or
(e) endorsements for collection, deposit or negotiation and
warranties of products or services, in each case incurred in the ordinary
course of business and relating to the Mortgaged Property.
Section 8.2. Restrictions on Liens, Etc. Without limiting the terms
of Section 8.1, the Borrower will not (a) create or incur or suffer to be
created or incurred or to exist any lien, encumbrance, mortgage, pledge,
negative pledge, charge, restriction or other security interest of any kind
upon any of its property or assets of any character whether now owned or
hereafter acquired, or upon the income or profits therefrom; (b) transfer
any of its property or assets or the income or profits therefrom for the
purpose of subjecting the same to the payment of Indebtedness or
performance of any other obligation in priority to payment of its general
creditors; (c) acquire, or agree or have an option to acquire, any property
or assets upon conditional sale or other title retention or purchase money
security agreement, device or arrangement; (d) suffer to exist for a period
of more than 30 days after the same shall have been incurred any
Indebtedness or claim or demand against it that if unpaid might by law or
upon bankruptcy or insolvency, or otherwise, be given any priority
whatsoever over its general creditors; (e) sell, assign, pledge or
otherwise transfer any accounts, contract rights, general intangibles,
chattel paper or instruments, with or without recourse; or (f) incur or
maintain any obligation to any holder of Indebtedness of the Borrower which
prohibits the creation or maintenance of any lien securing the Obligations
(collectively "Liens"); provided that the Borrower may create or incur or
suffer to be created or incurred or to exist:
(i) Leases permitted under this Agreement;
(ii) liens on properties to secure taxes, assessments and other
governmental charges or claims for labor, material or supplies
relating to the Mortgaged Property in respect of obligations not
overdue;
(iii) deposits or pledge made in connection with, or to
secure payment of, worker's compensation, unemployment insurance, old
age pensions or other social security obligations;
(iv) liens in favor of the Agent and the Banks under the Loan
Documents; and
(v) liens and encumbrances on a Mortgaged Property, if any,
expressly permitted under the terms of the Security Deed relating
thereto.
Section 8.3. Intentionally Omitted.
Section 8.4. Merger, Consolidation. The Borrower will not become a
party to any merger, consolidation or other business combination, or agree
to effect any asset acquisition, stock acquisition or other acquisition
without the prior written consent of the Majority Banks.
Section 8.5. Intentionally Omitted.
Section 8.6. Compliance with Environmental Laws. The Borrower will
not: (a) use any of the Mortgaged Property or any portion thereof as a
facility for the handling, processing, storage or disposal of Hazardous
Substances, except for small quantities of Hazardous Substances used in the
ordinary course of business and in compliance with all applicable
Environmental Laws, (b) cause or permit to be located on any of the
Mortgaged Property any underground tank or other underground storage
receptacle for Hazardous Substances except in full compliance with
Environmental Laws, (c) generate any Hazardous Substances on any of the
Mortgaged Property except in full compliance with Environmental Laws, (d)
conduct any activity at any Mortgaged Property or use any Mortgaged
Property in any manner so as to cause a Release of Hazardous Substances on,
upon or into the Mortgaged Property or any surrounding properties or any
threatened Release of Hazardous Substances which might give rise to
liability under CERCLA or any other Environmental Law, or (e) directly or
indirectly transport or arrange for the transport of any Hazardous
Substances (except in compliance with all Environmental Laws).
The Borrower shall:
(i) in the event of any change in Environmental Laws governing
the assessment, release or removal of Hazardous Substances, which change
would lead a prudent lender to require additional testing to avail itself
of any statutory insurance or limited liability, take all action
(including, without limitation, the conducting of engineering tests at the
sole expense of the Borrower) to confirm that no Hazardous Substances have
been Released or disposed of on the Mortgaged Property in violation of any
Environmental Laws; and
(ii) if any Release or disposal of Hazardous Substances shall
occur or shall have occurred on the Mortgaged Property (including without
limitation any such Release or disposal occurring prior to the acquisition
of such Mortgaged Property by the Borrower), cause the prompt containment
and removal of such Hazardous Substances and remediation of the Mortgaged
Property in full compliance with all applicable laws and regulations and to
the satisfaction of the Majority Banks; provided, that the Borrower shall
be deemed to be in compliance with Environmental Laws for the purpose of
this clause (ii) so long as it or a responsible third party with sufficient
financial resources is taking reasonable action to remediate or manage any
event of noncompliance to the satisfaction of the Majority Banks and no
action shall have been commenced by any enforcement agency. The Majority
Banks may engage their own Environmental Engineer to review the
environmental assessments and the Borrower's compliance with the covenants
contained herein.
At any time after an Event of Default shall have occurred hereunder,
or, whether or not an Event of Default shall have occurred, at any time
that the Agent or the Majority Banks shall have reasonable grounds to
believe that a Release or threatened Release of Hazardous Substances may
have occurred, relating to any Mortgaged Property, or that any of the
Mortgaged Property is not in compliance with the Environmental Laws, the
Agent may at its election (and will at the request of the Majority Banks)
obtain such environmental assessments of such Mortgaged Property prepared
by an Environmental Engineer as may be necessary or advisable for the
purpose of evaluating or confirming (i) whether any Hazardous Substances
are present in the soil or water at or adjacent to such Mortgaged Property
and (ii) whether the use and operation of such Mortgaged Property comply
with all Environmental Laws. Environmental assessments may include
detailed visual inspections of such Mortgaged Property including, without
limitation, any and all storage areas, storage tanks, drains, dry wells and
leaching areas, and the taking of soil samples, as well as such other
investigations or analyses as are necessary or appropriate for a complete
determination of the compliance of such Mortgaged Property and the use and
operation thereof with all applicable Environmental Laws. All such
environmental assessments shall be at the sole cost and expense of the
Borrower.
Section 8.7. Distributions. The Borrower shall make no
Distributions in the event that an Event of Default shall have occurred
and be continuing or a Default or Event of Default would be created after
giving effect to such Distribution.
Section 8.8. Intentionally Omitted.
Section 8.9. Development Activity. The Borrower shall not, without
the prior written consent of the Majority Banks, engage, directly or
indirectly, in the development of properties to be used for commercial
office purposes or otherwise.
Section 8.10. Intentionally Omitted.
Section 8.11. Transfers. The Borrower shall not permit any pledge,
mortgage, hypothecation or encumbering of any direct interest in Borrower
or, other than a Permitted Indirect Transfer, any indirect interest in
Borrower.
Section 8.12. Additional Covenants with Respect to Indebtedness,
Operations, Fundamental Changes. The Borrower represents, warrants and
covenants as of the date hereof and until such time as the Obligations are
paid in full, that Borrower:
(a) does not own and will not own any asset other than the
Collateral;
(b) is not engaged and will not engage in any business other
than the ownership, operation and sale of the Collateral;
(c) does not and will not have any subsidiaries (whether the
same would constitute an entity that could be consolidated on any of
such Person's financial statements or a minority interest);
(d) will not enter into any contract or agreement with any
partner, member, shareholder, principal or affiliate of any Guarantor,
or any affiliate of any such partner, member, shareholder, principal
or affiliate, except upon terms and conditions that are intrinsically
fair and substantially similar to those that would be available on an
arms-length basis with third parties other than an affiliate;
(e) has not incurred and will not incur any Indebtedness, other
than the Obligations, and other than current liabilities incurred in
the ordinary course of business in connection with normal purchases of
goods and services in connection with the ownership and operation of
the Collateral;
(f) has not made and will not make any loans or advances to any
third party ;
(g) is and will remain solvent and pay its debts and liabilities
(including, without limitation, employment and overhead expenses) from
its own assets as the same shall become due;
(h) has done or caused to be done and will do all things
necessary to observe limited liability company, corporate and
partnership formalities (as applicable) and to preserve its existence,
and will not, nor will any partner, member or shareholder thereof,
amend, modify or otherwise change its partnership agreement, operating
agreement, articles of incorporation, by-laws or other organizational
documents in a manner which adversely affects the Borrower's or such
partners, member's or shareholder's existence as a single purpose
entity;
(i) will conduct and operate its business as presently conducted
and operated;
(j) will maintain books and records and bank accounts separate
from those of its affiliates, including its partners, members and
shareholders;
(k) will be, and at all times will hold itself out to the public
as, a legal entity separate and distinct from any other entity
(including any affiliate thereof, including any partner, member,
shareholder or any affiliate of any partner, member or shareholder of
the Borrower) and shall maintain and use separate stationery, invoices
and checks;
(l) will file its own separate tax returns;
(m) will maintain adequate capital for the normal obligations
reasonably foreseeable in a business of its size and character and in
light of its contemplated business operations;
(n) will not, nor shall any partner, member, shareholder or
affiliate, seek the dissolution or winding up, in whole or in part,
the Borrower;
(o) will not enter into any transaction of merger, consolidation
or other business combination, or acquire by purchase or otherwise all
or substantially all of the business or assets of, or any stock or
beneficial ownership of, any entity;
(p) will not commingle the funds and other assets of the
Borrower, with those of any partner, member, shareholder, any
affiliate or any other Person;
(q) has and will maintain its assets in such a manner that it is
not costly or difficult to segregate, ascertain or identify its
individual assets from those of any affiliate or any other Person; and
(r) does not and will not hold itself out to be responsible for
the debts or obligations of any other Person.
Section 9. FINANCIAL COVENANTS OF BORROWER.
The Borrower covenants and agrees that, so long as any Loan or Note is
outstanding or any Bank has any obligation to make any Loans it will comply
with the following:
Section 9.1. Intentionally Omitted.
Section 9.2. Intentionally Omitted.
Section 9.3. Intentionally Omitted.
Section 9.4. Net Operating Income. The Borrower will not, as of any
December 31 or June 30 during the term of the Loan, permit the ratio of (a)
the outstanding principal balance of the Loans to (b) an amount equal to
(i) an amount equal to the difference of (A) the Net Operating Income of
the Mortgaged Properties for the period covered by the four previous
consecutive fiscal quarters (treated as a single accounting period) minus
(B) the Capital Improvement Reserve for such period divided by (ii) a nine
and one-fourth percent (9.25%) capitalization rate, to exceed 0.75 to 1.
Notwithstanding the foregoing, in the event that a Mortgaged Property has
not been stabilized for the previous four consecutive fiscal quarters upon
its acceptance as a Mortgaged Property as Collateral as determined by the
Borrower and the Majority Banks upon such acceptance, then the Borrower and
the Majority Banks shall in connection with the acceptance of such
Mortgaged Property as Collateral agree upon a method of annualizing Net
Operating Income for such Mortgaged Property.
Section 10. CLOSING CONDITIONS.
The obligations of the Agent and the Banks to make the initial
Loans shall be subject to the satisfaction of the following conditions
precedent on or prior to December 15, 1997:
Section 10.1. Loan Documents. Each of the Loan Documents shall have
been duly executed and delivered by the respective parties thereto, shall
be in full force and effect and shall be in form and substance satisfactory
to the Majority Banks. The Agent shall have received a fully executed copy
of each such document, except that each Bank shall have received a fully
executed counterpart of its Note.
Section 10.2. Certified Copies of Organizational Documents. The
Agent shall have received from the Borrower a copy, certified as of a
recent date by the appropriate officer of the State in which the Borrower
and the Guarantor are organized or in which the Mortgaged Property is
located, and by a duly authorized officer of such Person to be true and
complete, of the articles of incorporation or other organizational
documents of the Borrower and any Guarantor or their respective
qualification to do business, as applicable, as in effect on such date of
certification.
Section 10.3. Bylaws; Resolutions. All action on the part of the
Borrower and the Guarantor necessary for the valid execution, delivery and
performance by the Borrower and the Guarantor of the Loan Documents to
which it is or is to become a party shall have been duly and effectively
taken, and evidence thereof satisfactory to the Agent shall have been
provided to the Agent. The Agent shall have received from the Borrower and
the Guarantor, as applicable, true copies of its bylaws and the resolutions
adopted by its board of directors or other governing body authorizing the
transactions described herein, each certified by its secretary or other
duly authorized officer as of a recent date to be true and complete.
Section 10.4. Incumbency Certificate; Authorized Signers. The Agent
shall have received from the Borrower and Guarantor an incumbency
certificate, dated as of the Closing Date, signed by a duly authorized
officer of the Borrower and Guarantor and giving the name and bearing a
specimen signature of each individual who shall be authorized: (a) to sign,
in the name and on behalf of the Borrower and the Guarantor, each of the
Loan Documents to which the Borrower or the Guarantor is or is to become a
party; (b) in the case of the Borrower to make Loan and Conversion
Requests; and (c) to give notices and to take other action on behalf of the
Borrower under the Loan Documents.
Section 10.5. Opinion of Counsel. The Agent shall have received a
favorable opinion addressed to the Banks and the Agent and dated as of the
Closing Date, in form and substance satisfactory to the Banks and the
Agent, from Robinson, Silverman, Pearce, Aronsohn & Berman, counsel of the
Borrower and the Guarantor, as to such matters as the Agent shall
reasonably request.
Section 10.6. Payment of Fees. The Borrower shall have paid to the
Agent the commitment fee pursuant to Section 4.2.
Section 10.7. Appraisals. The Agent shall have received Appraisals
of the Mortgaged Property in form and substance satisfactory to the
Majority Banks prior to the Closing Date demonstrating that the initial
Collateral has a Designated Collateral Value that is in compliance with the
terms of this Agreement.
Section 10.8. Environmental Reports. The Agent shall have received
environmental site assessment reports for the Mortgaged Property prepared
by an Environmental Engineer no more than three months prior to the Closing
Date, which indicate the condition of the Mortgaged Property and such other
properties and any Buildings thereon and which set forth no qualifications
except those that are acceptable to the Majority Banks in their sole
discretion, and disclosing that each piece of Mortgaged Property and any
Building thereon is free of oil, underground storage tanks, asbestos or
asbestos containing material, lead paint and other Hazardous Substances
(except to the extent acceptable to the Majority Banks in their sole
discretion), and which reports are otherwise in form and substance
satisfactory to the Majority Banks).
Section 10.9. Insurance. The Agent shall have received duplicate
originals or certified copies of all policies of insurance required by this
Agreement.
Section 10.10. Performance; No Default. The Borrower shall have
performed and complied with all terms and conditions herein required to be
performed or complied with by it on or prior to the Closing Date, and on
the Closing Date there shall exist no Default or Event of Default.
Section 10.11. Representations and Warranties. The representations
and warranties made by the Borrower and the Guarantor in the Loan Documents
or otherwise made by or on behalf of any Borrower and Guarantor, or any
Subsidiary thereof, in connection therewith or after the date thereof shall
have been true and correct in all material respects when made and shall
also be true and correct in all material respects on the Closing Date.
Section 10.12. Proceedings and Documents. All proceedings in
connection with the transactions contemplated by this Agreement and the
other Loan Documents shall be reasonably satisfactory to the Agent and the
Agent's Special Counsel in form and substance, and the Agent shall have
received all information and such counterpart originals or certified copies
of such documents and such other certificates, opinions or documents as the
Agent and the Agent's Special Counsel may reasonably require.
Section 10.13. Eligible Real Estate Qualification Documents. The
Eligible Real Estate Qualification Documents for each parcel of Mortgaged
Property shall have been delivered to the Agent.
Section 10.14. Compliance Certificate. A Compliance Certificate
dated as of the date of the Closing Date demonstrating compliance with each
of the covenants calculated therein as of the most recent fiscal quarter
end for which the Borrower has provided financial statements under Section
6.4 adjusted in the best good faith estimate of the Borrower dated as of
the date of the Closing Date shall have been delivered to the Agent.
Section 10.15. Other Documents. To the extent requested by the
Agent, executed copies of all material agreements of any nature whatsoever
to which the Borrower is a party affecting or relating to the use,
operation, development, construction or management of the Mortgaged
Property.
Section 10.16. No Condemnation/Taking. The Agent shall have
received written confirmation from the Borrower that no condemnation
proceedings are pending or to the Borrower's knowledge threatened against
any Mortgaged Property or, if any such proceedings are pending or
threatened, identifying the same and the Mortgaged Property affected
thereby and the Agent shall have determined that none of such proceedings
is or will be material to the Mortgaged Property affected thereby.
Section 10.17. Governmental Policy. Each Bank shall have determined
that there have been no material changes in governmental regulations or
policy affecting the Banks, the Borrower or the Guarantor.
Section 10.18. Other. The Agent shall have reviewed such other
documents, instruments, certificates, opinions, assurances, consents and
approvals as the Agent or the Agent's Special Counsel may reasonably have
requested.
Section 11. CONDITIONS TO ALL BORROWINGS.
The obligations of the Banks to make any Loan, whether on or
after the Closing Date, shall also be subject to the satisfaction of the
following conditions precedent:
Section 11.1. Prior Conditions Satisfied. All conditions set forth
in Section 10 shall continue to be satisfied as of the date upon which any
Loan is to be made.
Section 11.2. Representations True; No Default. Each of the
representations and warranties contained in this Agreement, the other Loan
Documents or in any document or instrument delivered pursuant to or in
connection with this Agreement shall be true as of the date as of which
they were made and shall also be true at and as of the time of the making
of such Loan (except that representations and warranties as to any
Guarantors shall not be deemed to have been repeated), with the same effect
as if made at and as of that time (except to the extent of changes
resulting from transactions contemplated or permitted by this Agreement and
the other Loan Documents and changes occurring in the ordinary course of
business that singly or in the aggregate are not materially adverse, and
except to the extent that such representations and warranties relate
expressly to an earlier date) and no Default or Event of Default shall have
occurred and be continuing. Agent shall have received a certificate of the
Borrower signed by an authorized officer of the Borrower to such effect.
Section 11.3. No Legal Impediment. No change shall have occurred in
any law or regulations thereunder or interpretations thereof that in the
reasonable opinion of any Bank would make it illegal for such Bank to make
such Loan.
Section 11.4. Governmental Regulation. Each Bank shall have
received such statements in substance and form reasonably satisfactory to
such Bank as such Bank shall require for the purpose of compliance with any
applicable regulations of the Comptroller of the Currency or the Board of
Governors of the Federal Reserve System.
Section 11.5. Proceedings and Documents. All proceedings in
connection with the Loan shall be satisfactory in substance and in form to
the Majority Banks, and the Majority Banks shall have received all
information and such counterpart originals or certified or other copies of
such documents as the Majority Banks may reasonably request.
Section 11.6. Borrowing Documents. In the case of any request for a
Loan, the Agent shall have received a copy of each of the request for a
Loan required by Section 2.6 in the form of Exhibit B hereto, fully
completed.
Section 11.7. Endorsement to Title Policy. At such time as the
Agent shall determine in its discretion, to the extent available under
applicable law, a "date down" endorsement to each Title Policy indicating
no change in the state of title and containing no survey exceptions not
approved by the Agent, which endorsement shall, expressly or by virtue of a
proper "pending disbursements" clause or endorsement in the Title Policy,
increase the coverage of the Title Policy to the aggregate amount of all
Loans advanced and outstanding on or before the effective date of such
endorsement (provided that the amount of coverage under an individual Title
Policy for an individual Mortgaged Property need not equal the aggregate
amount of all Loans), or if such endorsement is not available, such other
evidence and assurances as the Agent may reasonably require (which evidence
may include, without limitation, an affidavit from the Borrower stating
that there have been no changes in title from the date of the last
effective date of the Title Policy).
Section 11.8. Future Advances Tax Payment. As a condition precedent
to any Bank's obligations to make any Loans, the Borrower will pay or cause
to be paid to the Agent any mortgage, recording, intangible, documentary
stamp or other similar taxes and charges which the Agent reasonably
determines to be payable as a result of such Loan to any state or any
county or municipality thereof in which any of the Mortgaged Property is
located and deliver to the Agent such affidavits or other information which
the Agent reasonably determines to be necessary in connection with the
payment of such tax, in order to insure that the Security Deeds on
Mortgaged Property located in such state secure the Borrower's obligation
with respect to the Loans then being requested. The provisions of this
Section 11.8 shall be without limitation of the Borrower's obligations
under other provisions of the Loan Documents, including without limitation
Section 15 hereof.
Section 12. EVENTS OF DEFAULT; ACCELERATION; ETC.
Section 12.1. Events of Default and Acceleration. If any of the
following events ("Events of Default" or, if the giving of notice or the
lapse of time or both is required, then, prior to such notice or lapse of
time, "Defaults") shall occur:
(a) the Borrower shall fail to pay any principal of the Loans
when the same shall become due and payable, whether at the stated date of
maturity or any accelerated date of maturity or at any other date fixed for
payment;
(b) the Borrower shall fail to pay any interest on the Loans or
any other sums due hereunder or under any of the other Loan Documents, when
the same shall become due and payable, whether at the stated date of
maturity or any accelerated date of maturity or at any other date fixed for
payment;
(c) Intentionally Omitted.
(d) Intentionally Omitted.
(e) the Borrower or Guarantor or any other party shall fail to
perform any other term, covenant or agreement contained herein or in any of
the other Loan Documents (other than those specified above in this Section
12.1);
(f) any representation or warranty of the Borrower or Guarantor
in this Agreement or any other Loan Document, or in any report,
certificate, financial statement, request for a Loan, or in any other
document or instrument delivered pursuant to or in connection with this
Agreement, any advance of a Loan or any of the other Loan Documents shall
prove to have been false in any material respect upon the date when made or
deemed to have been made or repeated;
(g) the Borrower shall fail to pay at maturity, or within any
applicable period of grace, any obligation for borrowed money or credit
received, or fail to observe or perform any material term, covenant or
agreement contained in any agreement by which it is bound, evidencing or
securing any such borrowed money or credit received for such period of time
as would permit (assuming the giving of appropriate notice if required) the
holder or holders thereof or of any obligations issued thereunder to
accelerate the maturity thereof;
(h) the Borrower (A) shall make an assignment for the benefit of
creditors, or admit in writing its general inability to pay or generally
fail to pay its debts as they mature or become due, or shall petition or
apply for the appointment of a trustee or other custodian, liquidator or
receiver of the Borrower of any substantial part of the assets of any
thereof, (B) shall commence any case or other proceeding relating to the
Borrower under any bankruptcy, reorganization, arrangement, insolvency,
readjustment of debt, dissolution or liquidation or similar law of any
jurisdiction, now or hereafter in effect, or (C) shall take any action to
authorize or in furtherance of any of the foregoing;
(i) a petition or application shall be filed for the appointment
of a trustee or other custodian, liquidator or receiver of the Borrower or
any substantial part of the assets of any thereof, or a case or other
proceeding shall be commenced against the Borrower under any bankruptcy,
reorganization, arrangement, insolvency, readjustment of debt, dissolution
or liquidation or similar law of any jurisdiction, now or hereafter in
effect, and the Borrower shall indicate its approval thereof, consent
thereto or acquiescence therein or such petition, application, case or
proceeding shall not have been dismissed within 60 days following the
filing or commencement thereof;
(j) a decree or order is entered appointing any such trustee,
custodian, liquidator or receiver or adjudicating the Borrower bankrupt or
insolvent, or approving a petition in any such case or other proceeding, or
a decree or order for relief is entered in respect of the Borrower, in each
case of the foregoing in an involuntary case under federal bankruptcy laws
as now or hereafter constituted;
(k) there shall remain in force, undischarged, unsatisfied and
unstayed, for more than 60 days, whether or not consecutive, any uninsured
final judgment against the Borrower that, with other outstanding uninsured
final judgments, undischarged, against the Borrower exceeds in the
aggregate $5,000,000.00;
(l) if any of the Loan Documents shall be canceled, terminated,
revoked or rescinded otherwise than in accordance with the terms thereof or
with the express prior written agreement, consent or approval of the Banks,
or any action at law, suit in equity or other legal proceeding to cancel,
revoke or rescind any of the Loan Documents shall be commenced by or on
behalf of the Borrower or Guarantor or any of their respective holders of
Voting Interests, or any court or any other governmental or regulatory
authority or agency of competent jurisdiction shall make a determination
that, or issue a judgment, order, decree or ruling to the effect that, any
one or more of the Loan Documents is illegal, invalid or unenforceable in
accordance with the terms thereof in any material respect as determined by
the Majority Banks;
(m) any dissolution, termination, partial or complete
liquidation, merger or consolidation of the Borrower or Guarantor, or any
sale, transfer or other disposition of the assets of the Borrower, other
than as permitted under the terms of this Agreement or the other Loan
Documents;
(n) any suit or proceeding shall be filed against the Borrower
or any of the Mortgaged Property which in the good faith business judgment
of the Majority Banks after giving consideration to the likelihood of
success of such suit or proceeding and the availability of insurance to
cover any judgment with respect thereto and based on the information
available to them, if adversely determined, would have a materially adverse
affect on the ability of the Borrower to perform each and every one of
their respective obligations under and by virtue of the Loan Documents;
(o) the Borrower shall be indicted for a federal crime, a
punishment for which could include the forfeiture of any assets of the
Borrower included in the Mortgaged Property;
(p) Jeffrey H. Lynford shall cease to be the Chairman of the
Board of, or Edward Lowenthal shall cease to be the President of Wellsford
Commercial, and a competent and experienced successor for such Person shall
not be approved by the Majority Banks within six (6) months of such event;
(q) Any change in the legal or beneficial ownership of the
Borrower other than any Permitted Indirect Transfer;
(r) with respect to any Guaranteed Pension Plan, an ERISA
Reportable Event shall have occurred and the Majority Banks shall have
determined in their reasonable discretion that such event reasonably could
be expected to result in liability of any of the Borrower or Guarantor to
the PBGC or such Guaranteed Pension Plan in an aggregate amount exceeding
$1,000,000 and such event in the circumstances occurring reasonably could
constitute grounds for the termination of such Guaranteed Pension Plan by
the PBGC or for the appointment by the appropriate United States District
Court of a trustee to administer such Guaranteed Pension Plan; or a trustee
shall have been appointed by the United States District Court to administer
such Plan; or the PBGC shall have instituted proceedings to terminate such
Guaranteed Pension Plan;
(s) Guarantor denies that it has any liability or obligation
under the Guaranty or the Indemnity Agreement, or shall notify the Agent or
any of the Banks of such Guarantor's intention to attempt to cancel or
terminate the Guaranty or the Indemnity Agreement, or shall fail to observe
or comply with any term, covenant, condition or agreement under the
Guaranty or the Indemnity Agreement; or
(t) the Special Member shall fail to be in full and complete
compliance with the Special Member Operating Agreement or the Special
Member Operating Agreement shall be amended or modified without the written
consent of the Agent.
then, and in any such event, the Agent may, and upon the request of the
Majority Banks shall, by notice in writing to the Borrower declare all
amounts owing with respect to this Agreement, the Notes and the other Loan
Documents to be, and they shall thereupon forthwith become, immediately due
and payable without presentment, demand, protest or other notice of any
kind, all of which are hereby expressly waived by the Borrower; provided
that in the event of any Event of Default specified in Section 12.1(h),
Section 12.1(i) or Section 12.1(j), all such amounts shall become
immediately due and payable automatically and without any requirement of
notice from any of the Banks or the Agent.
Section 12.lA. Limitation of Cure Periods.
(a) Notwithstanding anything contained in Section 12.1 to the
contrary, (i) no Event of Default shall exist hereunder upon the occurrence
of any failure described in Section 12.1(b) in the event that the Borrower
cures such default within five (5) days following receipt of written notice
of such default, provided, however, that Borrower shall not be entitled to
receive more than two (2) notices in the aggregate pursuant to this clause
(i) in any period of 365 days ending on the date of any such occurrence of
default, and provided further that no such cure period shall apply to any
payments due upon the maturity of the Notes, and (ii) no Event of Default
shall exist hereunder upon the occurrence of any failure described in
Section 12.1(e) in the event that the Borrower cures such default with
thirty (30) days following receipt of written notice of such default,
provided that the provisions of this clause (ii) shall not pertain to
defaults consisting of a failure to provide insurance as required by
Section 7.7, to any default consisting of a failure to comply with Section
7.4(e), or to any default excluded from any provision of cure of defaults
contained in any other of the Loan Documents.
(b) Notwithstanding the provisions of subsections (c) and (d) of
Section 12.1 or of Section 12.1B, the cure periods provided therein shall
not be allowed and the occurrence of a Default thereunder immediately shall
constitute an Event of Default for all purposes of this Agreement and the
other Loan Documents if, within the period of twelve months immediately
preceding the occurrence of such Default, there shall have occurred two
periods of cure or portions thereof under any one or more than one of said
subsections.
Section 12.lB. Certain Cure Periods.
(a) In the event that there shall occur any Default under
Section 12.1(c), then within five Business Days after receipt of notice of
such Default from the Agent or the Majority Banks the Borrower may elect to
cure such Default by providing additional Eligible Real Estate as
additional Mortgaged Property or reducing the outstanding Loans, in which
event such actions shall be completed not later than 15 days following the
date on which the Borrower is notified that the Majority Banks have
approved the Borrower's proposed actions (or 60 days in the event that the
Borrower intends to provide additional Mortgaged Property). The Borrower's
notice of its election pursuant to the preceding sentence shall be
delivered to the Agent within the period of five Business Days provided
above. Within five Business Days after receipt of such advice, the
Majority Banks shall advise the Borrower as to whether in their good faith
judgment the actions proposed by the Borrower are sufficient to cure such
Default without the creation of any other Default hereunder. In the event
that the Majority Banks determine that Borrower's proposal is insufficient
to cure such Default or is otherwise not in accordance with the terms of
this Agreement, the Borrower within an additional three Business Days after
such negative notice may submit to the Agent an alternative plan or
evidence establishing that the Borrower's original election was sufficient.
In the event that within the times provided herein the Borrower shall have
failed to provide evidence satisfactory to the Majority Banks that
Borrower's proposed actions are sufficient to cure such Default in
accordance with the terms hereof, the cure period shall terminate and such
Default immediately shall constitute an Event of Default.
(b) In the event that the Borrower shall elect in whole or in
part under subsection 12.1B(a) to provide Eligible Real Estate as
additional Mortgaged Property, the acceptance by the Banks of such Eligible
Real Estate as Mortgaged Property shall be subject to all conditions set
forth in Section 5.4 and on or prior to the expiration of the 60-day
period each of the Eligible Real Estate Qualification Documents shall have
been completed and provided to the Agent for the benefit of the Banks.
Section 12.2. Termination of Commitments. If any one or more Events
of Default specified in Section 12.1(h), Section 12.1(i) or Section
12.1(j) shall occur, then immediately and without any action on the part of
the Agent or any Bank any unused portion of the credit hereunder shall
terminate and the Banks shall be relieved of all obligations to make Loans
to the Borrower. If any other Event of Default shall have occurred and be
continuing, the Agent, upon the election of the Majority Banks, may by
notice to the Borrower terminate the obligation to make Loans to the
Borrower. No termination under this Section 12.2 shall relieve the
Borrower of its obligations to the Banks arising under this Agreement or
the other Loan Documents.
Section 12.3. Remedies. In case any one or more of the Events of
Default shall have occurred and be continuing, and whether or not the Banks
shall have accelerated the maturity of the Loans pursuant to Section 12.1,
the Agent on behalf of the Banks, may, with the consent of the Majority
Banks but not otherwise, proceed to protect and enforce their rights and
remedies under this Agreement, the Notes or any of the other Loan Documents
by suit in equity, action at law or other appropriate proceeding, whether
for the specific performance of any covenant or agreement contained in this
Agreement and the other Loan Documents or any instrument pursuant to which
the Obligations are evidenced, including to the full extent permitted by
applicable law the obtaining of the ex parte appointment of a receiver,
and, if such amount shall have become due, by declaration or otherwise,
proceed to enforce the payment thereof or any other legal or equitable
right. No remedy herein conferred upon the Agent or the holder of any Note
is intended to be exclusive of any other remedy and each and every remedy
shall be cumulative and shall be in addition to every other remedy given
hereunder or now or hereafter existing at law or in equity or by statute or
any other provision of law. In the event that all or any portion of the
Obligations is collected by or through an attorney-at-law, the Borrower
shall pay all costs of collection including, but not limited to, reasonable
attorney's fees not to exceed fifteen percent (15%) of such portion of the
Obligations.
Section 12.4. Distribution of Collateral Proceeds. In the event
that, following the occurrence or during the continuance of any Event of
Default, any monies are received in connection with the enforcement of any
of the Security Documents, or otherwise with respect to the realization
upon any of the Collateral, such monies shall be distributed for
application as follows:
(a) First, to the payment of, or (as the case may be) the
reimbursement of, the Agent for or in respect of all reasonable costs,
expenses, disbursements and losses which shall have been incurred or
sustained by the Agent to protect or preserve the collateral or in
connection with the collection of such monies by the Agent, for the
exercise, protection or enforcement by the Agent of all or any of the
rights, remedies, powers and privileges of the Agent under this Agreement
or any of the other Loan Documents or in respect of the Collateral or in
support of any provision of adequate indemnity to the Agent against any
taxes or liens which by law shall have, or may have, priority over the
rights of the Agent to such monies;
(b) Second, to all other Obligations in such order or preference
as the Majority Banks shall determine; provided, however, that (i)
distributions in respect of such Obligations shall be made pari passu among
Obligations with respect to the Agent's fee payable pursuant to Section
4.3 and all other Obligations, (ii) in the event that any Bank shall have
wrongfully failed or refused to make an advance under Section 2.7 and such
failure or refusal shall be continuing, advances made by other Banks during
the pendency of such failure or refusal shall be entitled to be repaid as
to principal and accrued interest in priority to the other Obligations
described in this subsection (b), and (iii) Obligations owing to the Banks
with respect to each type of Obligation such as interest, principal, fees
and expenses, shall be made among the Banks pro rata; and provided,
further, that the Majority Banks may in their discretion make proper
allowance to take into account any Obligations not then due and payable;
and
(c) Third, the excess, if any, shall be returned to the Borrower
or to such other Persons as are entitled thereto.
Section 13. SETOFF.
Regardless of the adequacy of any collateral, during the
continuance of any Event of Default, any deposits (general or specific,
time or demand, provisional or final, regardless of currency, maturity, or
the branch of where such deposits are held) or other sums credited by or
due from any of the Banks to the Borrower or any Guarantor and any
securities or other property of the Borrower or any Guarantor in the
possession of such Bank may be applied to or set off against the payment of
Obligations and any and all other liabilities, direct, or indirect,
absolute or contingent, due or to become due, now existing or hereafter
arising, of the Borrower or any Guarantor to such Bank. Each of the Banks
agrees with each other Bank that if such Bank shall receive from the
Borrower or any Guarantor, whether by voluntary payment, exercise of the
right of setoff, or otherwise, and shall retain and apply to the payment of
the Note or Notes held by such Bank any amount in excess of its ratable
portion of the payments received by all of the Banks with respect to the
Notes held by all of the Banks, such Bank will make such disposition and
arrangements with the other Banks with respect to such excess, either by
way of distribution, pro tanto assignment of claims, subrogation or
otherwise as shall result in each Bank receiving in respect of the Notes
held by it its proportionate payment as contemplated by this Agreement;
provided that if all or any part of such excess payment is thereafter
recovered from such Bank, such disposition and arrangements shall be
rescinded and the amount restored to the extent of such recovery, but
without interest.
Section 14. THE AGENT.
Section 14.1. Authorization. The Agent is authorized to take such
action on behalf of each of the Banks and to exercise all such powers as
are hereunder and under any of the other Loan Documents and any related
documents delegated to the Agent, together with such powers as are
reasonably incident thereto, provided that no duties or responsibilities
not expressly assumed herein or therein shall be implied to have been
assumed by the Agent. The obligations of Agent hereunder are primarily
administrative in nature, and nothing contained in this Agreement or any of
the other Loan Documents shall be construed to constitute the Agent as a
trustee for any Bank or to create any agency or fiduciary relationship.
The Borrower and any other Person shall be entitled to conclusively rely on
a statement from the Agent that it has the authority to act for and bind
the Banks pursuant to this Agreement and the other Loan Documents.
Section 14.2. Employees and Agents. The Agent may exercise its
powers and execute its duties by or through employees or agents and shall
be entitled to take, and to rely on, advice of counsel concerning all
matters pertaining to its rights and duties under this Agreement and the
other Loan Documents. The Agent may utilize the services of such Persons as
the Agent may reasonably determine, and all reasonable fees and expenses of
any such Persons shall be paid by the Borrower.
Section 14.3. No Liability. Neither the Agent nor any of its
shareholders, directors, officers or employees nor any other Person
assisting them in their duties nor any agent, or employee thereof, shall be
liable for any waiver, consent or approval given or any action taken, or
omitted to be taken, in good faith by it or them hereunder or under any of
the other Loan Documents, or in connection herewith or therewith, or be
responsible for the consequences of any oversight or error of judgment
whatsoever, except that the Agent or such other Person, as the case may be,
may be liable for losses due to its willful misconduct or gross negligence.
Section 14.4. No Representations. The Agent shall not be
responsible for the execution or validity or enforceability of this
Agreement, the Notes, any of the other Loan Documents or any instrument at
any time constituting, or intended to constitute, collateral security for
the Notes, or for the value of any such collateral security or for the
validity, enforceability or collectability of any such amounts owing with
respect to the Notes, or for any recitals or statements, warranties or
representations made herein or in any of the other Loan Documents or in any
certificate or instrument hereafter furnished to it by or on behalf of the
Borrower or the Guarantor, or be bound to ascertain or inquire as to the
performance or observance of any of the terms, conditions, covenants or
agreements herein or in any other of the Loan Documents. The Agent shall
not be bound to ascertain whether any notice, consent, waiver or request
delivered to it by the Borrower or the Guarantor or any holder of any of
the Notes shall have been duly authorized or is true, accurate and
complete. The Agent has not made nor does it now make any representations
or warranties, express or implied, nor does it assume any liability to the
Banks, with respect to the creditworthiness or financial condition of the
Borrower or the Guarantor. Each Bank acknowledges that it has,
independently and without reliance upon the Agent or any other Bank, and
based upon such information and documents as it has deemed appropriate,
made its own credit analysis and decision to enter into this Agreement.
Each Bank also acknowledges that it will, independently and without
reliance upon the Agent or any other Bank, based upon such information and
documents as it deems appropriate at the time, continue to make its own
credit analysis and decisions in taking or not taking action under this
Agreement and the other Loan Documents.
Section 14.5. Payments.
(a) A payment by the Borrower or the Guarantor to the Agent
hereunder or under any of the other Loan Documents for the account of any
Bank shall constitute a payment to such Bank. The Agent agrees to
distribute to each Bank not later than one Business Day after the Agent's
receipt of good funds, determined in accordance with the Agent's customary
practices, such Bank's pro rata share of payments received by the Agent for
the account of the Banks except as otherwise expressly provided herein or
in any of the other Loan Documents.
(b) If in the opinion of the Agent the distribution of any
amount received by it in such capacity hereunder, under the Notes or under
any of the other Loan Documents might involve it in liability, it may
refrain from making distribution until its right to make distribution shall
have been adjudicated by a court of competent jurisdiction. If a court of
competent jurisdiction shall adjudge that any amount received and
distributed by the Agent is to be repaid, each Person to whom any such
distribution shall have been made shall either repay to the Agent its
proportionate share of the amount so adjudged to be repaid or shall pay
over the same in such manner and to such Persons as shall be determined by
such court.
(c) Notwithstanding anything to the contrary contained in this
Agreement or any of the other Loan Documents, any Bank that fails (i) to
make available to the Agent its pro rata share of any Loan or (ii) to
comply with the provisions of Section 13 with respect to making
dispositions and arrangements with the other Banks, where such Bank's share
of any payment received, whether by setoff or otherwise, is in excess of
its pro rata share of such payments due and payable to all of the Banks, in
each case as, when and to the full extent required by the provisions of
this Agreement, shall be deemed delinquent (a "Delinquent Bank") and shall
be deemed a Delinquent Bank until such time as such delinquency is
satisfied. A Delinquent Bank shall be deemed to have assigned any and all
payments due to it from the Borrower and the Guarantor, whether on account
of outstanding Loans, interest, fees or otherwise, to the remaining
nondelinquent Banks for application to, and reduction of, their respective
pro rata shares of all outstanding Loans. The Delinquent Bank hereby
authorizes the Agent to distribute such payments to the nondelinquent Banks
in proportion to their respective pro rata shares of all outstanding Loans.
A Delinquent Bank shall be deemed to have satisfied in full a delinquency
when and if, as a result of application of the assigned payments to all
outstanding Loans of the nondelinquent Banks or as a result of other
payments by the Delinquent Banks to the nondelinquent Banks, the Banks'
respective pro rata shares of all outstanding Loans have returned to those
in effect immediately prior to such delinquency and without giving effect
to the nonpayment causing such delinquency.
Section 14.6. Holders of Notes. Subject to the terms of Article 18,
the Agent may deem and treat the payee of any Note as the absolute owner or
purchaser thereof for all purposes hereof until it shall have been
furnished in writing with a different name by such payee or by a subsequent
holder, assignee or transferee.
Section 14.7. Indemnity. The Banks ratably agree hereby to
indemnify and hold harmless the Agent from and against any and all claims,
actions and suits (whether groundless or otherwise), losses, damages,
costs, expenses (including any expenses for which the Agent has not been
reimbursed by the Borrower as required by Section 15), and liabilities of
every nature and character arising out of or related to this Agreement, the
Notes, or any of the other Loan Documents or the transactions contemplated
or evidenced hereby or thereby, or the Agent's actions taken hereunder or
thereunder, except to the extent that any of the same shall be directly
caused by the Agent's willful misconduct or gross negligence.
Section 14.8. Agent as Bank. In its individual capacity, BKB shall
have the same obligations and the same rights, powers and privileges in
respect to its Commitment and the Loans made by it, and as the holder of
any of the Notes as it would have were it not also the Agent.
Section 14.9. Resignation. The Agent may resign at any time by
giving 60 days' prior written notice thereof to the Banks and the Borrower.
Upon any such resignation, the Majority Banks shall have the right to
appoint as a successor Agent any Bank or any bank whose senior debt
obligations are rated not less than "A" or its equivalent by Moody's
Investors Service, Inc. or not less than "A" or its equivalent by Standard
& Poor's corporation and which has total assets in excess of $10 billion.
Unless a Default or Event of Default shall have occurred and be continuing,
such successor Agent shall be reasonably acceptable to the Borrower. If no
successor Agent shall have been so appointed by the Majority Banks and
shall have accepted such appointment within 30 days after the retiring
Agent's giving of notice of resignation, then the retiring Agent may, on
behalf of the Banks, appoint a successor Agent, which shall be a Bank or
any bank whose debt obligations are rated not less than "A" or its
equivalent by Moody's Investors Service, Inc. or not less than "A" or its
equivalent by Standard & Poor's Corporation and which has total assets in
excess of $10 billion. Upon the acceptance of any appointment as Agent
hereunder by a successor Agent, such successor Agent shall thereupon
succeed to and become vested with all the rights, powers, privileges and
duties of the retiring Agent, and the retiring Agent shall be discharged
from its duties and obligations hereunder as Agent. After any retiring
Agent's resignation, the provisions of this Agreement and the other Loan
Documents shall continue in effect for its benefit in respect of any
actions taken or omitted to be taken by it while it was acting as Agent.
Section 14.10. Duties in the Case of Enforcement. In case one or
more Events of Default have occurred and shall be continuing, and whether
or not acceleration of the Obligations shall have occurred, the Agent
shall, if (a) so requested by the Majority Banks and (b) the Banks have
provided to the Agent such additional indemnities and assurances against
expenses and liabilities as the Agent may reasonably request, proceed to
enforce the provisions of the Security Documents authorizing the sale or
other disposition of all or any part of the Collateral and exercise all or
any such other legal and equitable and other rights or remedies as it may
have in respect of such Collateral. The Majority Banks may direct the
Agent in writing as to the method and the extent of any such sale or other
disposition, the Banks hereby agreeing to indemnify and hold the Agent
harmless from all liabilities incurred in respect of all actions taken or
omitted in accordance with such directions, provided that the Agent need
not comply with any such direction to the extent that the Agent reasonably
believes the Agent's compliance with such direction to be unlawful or
commercially unreasonable in any applicable jurisdiction.
Section 15. EXPENSES.
The Borrower agrees to pay (a) the reasonable costs of producing
and reproducing this Agreement, the other Loan Documents and the other
agreements and instruments mentioned herein, (b) any taxes (including any
interest and penalties in respect thereto) payable by the Agent or any of
the Banks (other than taxes based upon the Agent's or any Bank's gross or
net income, except that the Agent and the Banks shall be entitled to
indemnification for any and all amounts paid by them in respect of taxes
based on income or other taxes assessed by any State in which Mortgaged
Property or other Collateral is located, such indemnification to be limited
to taxes due solely on account of the granting of Collateral under the
Security Documents and to be net of any credit allowed to the indemnified
party from any other State on account of the payment or incurrence of such
tax by such indemnified party), including any recording, mortgage,
documentary or intangibles taxes in connection with the Security Deeds and
other Loan Documents, or other taxes payable on or with respect to the
transactions contemplated by this Agreement, including any such taxes
payable by the Agent or any of the Banks after the Closing Date (the
Borrower hereby agreeing to indemnify the Agent and each Bank with respect
thereto), (c) all title insurance premiums, appraisal fees, engineer's
fees, reasonable internal charges of the Agent (determined in good faith
and in accordance with the Agent's internal policies applicable generally
to its customers) for commercial finance exams and engineering and
environmental reviews and the reasonable fees, expenses and disbursements
of the counsel to the Agent, counsel for the Majority Banks and any local
counsel to the Agent incurred in connection with the preparation,
administration or interpretation of the Loan Documents and other
instruments mentioned herein (excluding, however, the preparation of
agreements evidencing participations granted under Section 18.4), the
review of any additional or substitute Collateral, the addition of any
guarantor, each closing hereunder, and amendments, modifications,
approvals, consents or waivers hereto or hereunder, (d) the reasonable
fees, expenses and disbursements of the Agent incurred by the Agent in
connection with the preparation, administration or interpretation of the
Loan Documents and other instruments mentioned herein, and the making of
each advance hereunder, (e) all reasonable out-of-pocket expenses
(including reasonable attorneys' fees and costs, which attorneys may be
employees of any Bank or the Agent and the fees and costs of appraisers,
engineers, investment bankers or other experts retained by any Bank or the
Agent) incurred by any Bank or the Agent in connection with (i) the
enforcement of or preservation of rights under any of the Loan Documents
against the Borrower or any guarantor or the administration thereof after
the occurrence of a Default or Event of Default and (ii) any litigation,
proceeding or dispute whether arising hereunder or otherwise, in any way
related to the Agent's or any of the Bank's relationship with the Borrower
or any guarantor, (f) all reasonable fees, expenses and disbursements of
any Bank or the Agent incurred in connection with U.C.C. searches, U.C.C.
filings, title rundowns, title searches or mortgage recordings, and (g) all
reasonable fees and expenses of Goldman and its counsel incurred in
connection with the initial closing under this Agreement, and (h) all
reasonable fees and expenses (including reasonable attorney's fees and
costs) incurred by BankBoston and Goldman in connection with the assignment
of Commitments and interests in the Loans pursuant to Section 18.1. The
covenants of this Section 15 shall survive payment or satisfaction of
payment of amounts owing with respect to the Notes.
Section 16. INDEMNIFICATION.
The Borrower agrees to indemnify and hold harmless the Agent and
the Banks and each director, officer, employee, agent and Person who
controls the Agent or any Bank from and against any and all claims, actions
and suits, whether groundless or otherwise, and from and against any and
all liabilities, losses, damages and expenses of every nature and character
arising out of or relating to this Agreement or any of the other Loan
Documents or the transactions contemplated hereby and thereby including,
without limitation, (a) any leasing fees and any brokerage, finders or
similar fees asserted against any Person indemnified under this Section 16
based upon any agreement, arrangement or action made or taken, or alleged
to have been made or taken, by the Borrower or Guarantor, (b) any condition
of the Mortgaged Property, (c) any actual or proposed use by the Borrower
of the proceeds of any of the Loans, (d) any actual or alleged infringement
of any patent, copyright, trademark, service mark or similar right of the
Borrower, or Guarantor comprised in the Collateral, (e) the Borrower and
the Guarantor entering into or performing this Agreement or any of the
other Loan Documents, (f) any actual or alleged violation of any law,
ordinance, code, order, rule, regulation, approval, consent, permit or
license relating to the Mortgaged Property, or (g) with respect to the
Borrower, or Guarantor and their respective properties and assets, the
violation of any Environmental Law, the Release or threatened Release of
any Hazardous Substances or any action, suit, proceeding or investigation
brought or threatened with respect to any Hazardous Substances (including,
but not limited to claims with respect to wrongful death, personal injury
or damage to property), in each case including, without limitation, the
reasonable fees and disbursements of counsel and allocated costs of
internal counsel incurred in connection with any such investigation,
litigation or other proceeding; provided, however, that the Borrower shall
not be obligated under this Section 16 to indemnify any Person for
liabilities arising from such Person's own gross negligence or willful
misconduct. In litigation, or the preparation therefor, the Banks and the
Agent shall be entitled to select a single law firm as their own counsel
and, in addition to the foregoing indemnity, the Borrower agrees to pay
promptly the reasonable fees and expenses of such counsel. If, and to the
extent that the obligations of the Borrower under this Section 16 are
unenforceable for any reason, the Borrower hereby agrees to make the
maximum contribution to the payment in satisfaction of such obligations
which is permissible under applicable law. The provisions of this Section
16 shall survive the repayment of the Loans and the termination of the
obligations of the Banks hereunder.
Section 17. SURVIVAL OF COVENANTS, ETC.
All covenants, agreements, representations and warranties made
herein, in the Notes, in any of the other Loan Documents or in any
documents or other papers delivered by or on behalf of the Borrower or
Guarantor pursuant hereto or thereto shall be deemed to have been relied
upon by the Banks and the Agent, notwithstanding any investigation
heretofore or hereafter made by any of them, and shall survive the making
by the Banks of any of the Loans, as herein contemplated, and shall
continue in full force and effect so long as any amount due under this
Agreement or the Notes or any of the other Loan Documents remains
outstanding or any Bank has any obligation to make any Loans. The
indemnification obligations of the Borrower provided herein and the other
Loan Documents shall survive the full repayment of amounts due and the
termination of the obligations of the Banks hereunder and thereunder to the
extent provided herein and therein. All statements contained in any
certificate or other paper delivered to any Bank or the Agent at any time
by or on behalf of the Borrower or Guarantor pursuant hereto or in
connection with the transactions contemplated hereby shall constitute
representations and warranties by the Borrower or the Guarantor hereunder.
Section 18. ASSIGNMENT AND PARTICIPATION.
Section 18.1. Conditions to Assignment by Banks. Except as provided
herein, each Bank may assign to one or more banks or other entities all or
a portion of its interests, rights and obligations under this Agreement
(including all or a portion of its Commitment Percentage and Commitment and
the same portion of the Loans at the time owing to it, and the Notes held
by it); provided that (a) the Agent shall have given its prior written
consent to such assignment, which consent shall not be unreasonably
withheld (provided that such consent shall not be required for any
assignment to another Bank, to a bank which is under common control with
the assigning Bank or to a wholly-owned Subsidiary of such Bank provided
that such assignee shall remain a wholly-owned Subsidiary of such Bank),
(b) each such assignment shall be of a constant, and not a varying,
percentage of all the assigning Bank's rights and obligations under this
Agreement, (c) the parties to such assignment shall execute and deliver to
the Agent, for recording in the Register (as hereinafter defined), a notice
of such assignment, together with any Notes subject to such assignment,
(d) in no event shall any voting, consent or approval rights of a Bank be
assigned to any Person controlling, controlled by or under common control
with, or which is not otherwise free from influence or control by, the
Borrower or Guarantor, which rights shall instead be allocated pro rata
among the other remaining Banks, (e) such assignee shall have a net worth
as of the date of such assignment of not less than $500,000,000 and (f)
such assignee shall acquire an interest in the Loans of not less than
$10,000,000.00. No such assignment shall be made without the prior consent
of the Borrower, which consent shall not be unreasonably withheld or
delayed; provided that such consent shall not be required in the event that
a Default or Event of Default shall have occurred. Upon such execution,
delivery, acceptance and recording, of such notice of assignment, (i) the
assignee thereunder shall be a party hereto and all other Loan Documents
executed by the Banks and, to the extent provided in such assignment, have
the rights and obligations of a Bank hereunder, (ii) the assigning Bank
shall, to the extent provided in such assignment and upon payment to the
Agent of the registration fee referred to in Section 18.2, be released
from its obligations under this Agreement, and (iii) the Agent may
unilaterally amend Schedule 1.1 to reflect such assignment. In connection
with each assignment, the assignee shall represent and warrant to the
Agent, the assignor and each other Bank as to whether such assignee is
controlling, controlled by, under common control with or is not otherwise
free from influence or control by, the Borrower or Guarantor.
Section 18.2. Register. The Agent shall maintain a copy of each
assignment delivered to it and a register or similar list (the "Register")
for the recordation of the names and addresses of the Banks and the
Commitment Percentages of, and principal amount of the Loans owing to the
Banks from time to time. The entries in the Register shall be conclusive,
in the absence of manifest error, and the Borrower, the Agent and the Banks
may treat each Person whose name is recorded in the Register as a Bank
hereunder for all purposes of this Agreement. The Register shall be
available for inspection by the Borrower and the Banks at any reasonable
time and from time to time upon reasonable prior notice. Upon each such
recordation, the assigning Bank agrees to pay to the Agent a registration
fee in the sum of $2,000.
Section 18.3. New Notes. Upon its receipt of an assignment executed
by the parties to such assignment, together with each Note subject to such
assignment, the Agent shall (a) record the information contained therein in
the Register, and (b) give prompt notice thereof to the Borrower and the
Banks (other than the assigning Bank). Within five Business Days after
receipt of such notice, the Borrower, at its own expense, shall execute and
deliver to the Agent, in exchange for each surrendered Note, a new Note to
the order of such assignee in an amount equal to the amount assumed by such
assignee pursuant to such assignment and, if the assigning Bank has
retained some portion of its obligations hereunder, a new Note to the order
of the assigning Bank in an amount equal to the amount retained by it
hereunder, and shall cause the Guarantor to deliver to Agent an
acknowledgment in form and substance satisfactory to the Agent to the
effect that the Guaranty extends and is applicable to each new Note. Such
new Notes shall provide that they are replacements for the surrendered
Notes, shall be in an aggregate principal amount equal to the aggregate
principal amount of the surrendered Notes, shall be dated the effective
date of such assignment and shall otherwise be in substantially the form of
the assigned Notes. The surrendered Notes shall be canceled and returned
to the Borrower.
Section 18.4. Participations. Each Bank may sell participations to
one or more banks or other entities in all or a portion of such Bank's
rights and obligations under this Agreement and the other Loan Documents;
provided that (a) any such sale or participation shall not affect the
rights and duties of the selling Bank hereunder to the Borrower, (b) such
sale and participation shall not entitle such participant any rights or
privileges under this Agreement or the Loan Documents (including, without
limitation, the right to approve waivers, amendments or modifications),
(c) such participant shall have no direct rights against the Borrower or
the Guarantor except the rights granted to the Banks pursuant to Section
13, (d) such sale is effected in accordance with all applicable laws, and
(e) such participant shall not be a Person controlling, controlled by or
under common control with, or which is not otherwise free from influence or
control by, the Borrower or Guarantor.
Section 18.5. Pledge by Bank. Any Bank may at any time pledge all
or any portion of its interest and rights under this Agreement (including
all or any portion of its Note) to any of the twelve Federal Reserve Banks
organized under Section 4 of the Federal Reserve Act, 12 U.S.C. Section
341. No such pledge or the enforcement thereof shall release the pledgor
Bank from its obligations hereunder or under any of the other Loan
Documents.
Section 18.6. No Assignment by Borrower. The Borrower shall not
assign or transfer any of its rights or obligations under any of the Loan
Documents without the prior written consent of each of the Banks.
Section 18.7. Disclosure. The Borrower agrees that in addition to
disclosures made in accordance with standard banking practices any Bank may
disclose information obtained by such Bank pursuant to this Agreement to
assignees or participants and potential assignees or participants
hereunder.
Section 19. NOTICES.
Each notice, demand, election or request provided for or permitted to
be given pursuant to this Agreement (hereinafter in this Section 19
referred to as "Notice"), but specifically excluding to the maximum extent
permitted by law any notices of the institution or commencement of
foreclosure proceedings, must be in writing and shall be deemed to have
been properly given or served by personal delivery or by sending same by
overnight courier or by depositing same in the United States Mail, postpaid
and registered or certified, return receipt requested, or as expressly
permitted herein, by telegraph, telecopy, telefax or telex, and addressed
as follows:
If to the Agent or BKB:
BankBoston, N.A.
100 Federal Street
Boston, Massachusetts 02110
Attn: Real Estate Division
With a copy to:
BankBoston, N.A.
115 Perimeter Center Place, N.E.
Suite 500
Atlanta, Georgia 30346
Attn: Mr. Jay Johns
Telecopy No.: 770/390-8434
If to the Borrower:
WEL/WH 1275 K Street, L.L.C.
620 Fifth Avenue
7th Floor
New York, New York 10020
Attn: Mr. Gregory F. Hughes
With a copy to:
Alan S. Pearce, Esq.
Robinson Silverman Pearce Aronsohn & Berman LLP
1290 Avenue of the Americas
New York, New York 10104
if to another Bank now a party to this Agreement, to the address set forth
on the signature page hereto, and to each other Bank which may hereafter
become a party to this Agreement at such address as may be designated by
such Bank. Each Notice shall be effective upon being personally delivered
or upon being sent by overnight courier or upon being deposited in the
United States Mail as aforesaid. The time period in which a response to
such Notice must be given or any action taken with respect thereto (if
any), however, shall commence to run from the date of receipt if personally
delivered or sent by overnight courier, or if so deposited in the United
States Mail, the earlier of three (3) Business Days following such deposit
or the date of receipt as disclosed on the return receipt. Rejection or
other refusal to accept or the inability to deliver because of changed
address for which no notice was given shall be deemed to be receipt of the
Notice sent. By giving at least fifteen (15) days prior Notice thereof,
the Borrower, a Bank or Agent shall have the right from time to time and at
any time during the term of this Agreement to change their respective
addresses and each shall have the right to specify as its address any other
address within the United States of America.
Section 20. RELATIONSHIP.
Neither the Agent nor any Bank has any fiduciary relationship with or
fiduciary duty to Borrower arising out of or in connection with this
Agreement or the other Loan Documents, or the transactions contemplated
hereunder or thereunder, and the relationship between each Bank and the
Borrower is solely that of a lender and borrower, and nothing contained
herein or in any of the other Loan Documents shall in any manner be
construed as making the parties hereto partners, joint venturers or any
other relationship other than lender and borrower.
Section 21. GOVERNING LAW; CONSENT TO JURISDICTION AND SERVICE.
THIS AGREEMENT AND EACH OF THE OTHER LOAN DOCUMENTS EXCEPT AS
OTHERWISE SPECIFICALLY PROVIDED THEREIN, ARE CONTRACTS UNDER THE LAWS OF
THE STATE OF NEW YORK AND SHALL FOR ALL PURPOSES BE CONSTRUED IN ACCORDANCE
WITH AND GOVERNED BY THE LAWS OF SUCH STATE (EXCLUDING THE LAWS APPLICABLE
TO CONFLICTS OR CHOICE OF LAW). THE BORROWER AGREES THAT ANY SUIT FOR THE
ENFORCEMENT OF THIS AGREEMENT OR ANY OF THE OTHER LOAN DOCUMENTS MAY BE
BROUGHT IN THE COURTS OF THE STATE OF NEW YORK OR ANY FEDERAL COURT SITTING
THEREIN AND CONSENTS TO THE NONEXCLUSIVE JURISDICTION OF SUCH COURT AND THE
SERVICE OF PROCESS IN ANY SUCH SUIT BEING MADE UPON THE BORROWER BY MAIL AT
THE ADDRESS SPECIFIED IN Section 19. THE BORROWER HEREBY WAIVES ANY
OBJECTION THAT IT MAY NOW OR HEREAFTER HAVE TO THE VENUE OF ANY SUCH SUIT
OR ANY SUCH COURT OR THAT SUCH SUIT IS BROUGHT IN AN INCONVENIENT COURT.
Section 22. HEADINGS.
The captions in this Agreement are for convenience of reference only
and shall not define or limit the provisions hereof.
Section 23. COUNTERPARTS.
This Agreement and any amendment hereof may be executed in several
counterparts and by each party on a separate counterpart, each of which
when so executed and delivered shall be an original, and all of which
together shall constitute one instrument. In proving this Agreement it
shall not be necessary to produce or account for more than one such
counterpart signed by the party against whom enforcement is sought.
Section 24. ENTIRE AGREEMENT, ETC.
The Loan Documents and any other documents executed in connection
herewith or therewith express the entire understanding of the parties with
respect to the transactions contemplated hereby. Neither this Agreement
nor any term hereof may be changed, waived, discharged or terminated,
except as provided in Section 27.
Section 25. WAIVER OF JURY TRIAL.
EACH OF THE BORROWER, THE AGENT AND THE BANKS HEREBY WAIVES ITS
RIGHT TO A JURY TRIAL WITH RESPECT TO ANY ACTION OR CLAIM ARISING OUT OF
ANY DISPUTE IN CONNECTION WITH THIS AGREEMENT, ANY NOTE OR ANY OF THE OTHER
LOAN DOCUMENTS, ANY RIGHTS OR OBLIGATIONS HEREUNDER OR THEREUNDER OR THE
PERFORMANCE OF SUCH RIGHTS AND OBLIGATIONS. THE BORROWER (A) CERTIFIES
THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY BANK OR THE AGENT HAS
REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH BANK OR THE AGENT WOULD NOT,
IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (B)
ACKNOWLEDGES THAT THE AGENT AND THE BANKS HAVE BEEN INDUCED TO ENTER INTO
THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS TO WHICH THEY ARE PARTIES BY,
AMONG OTHER THINGS, THE WAIVER AND CERTIFICATIONS CONTAINED IN THIS Section
25.
Section 26. DEALINGS WITH THE BORROWER.
The Banks and their affiliates may accept deposits from, extend credit
to and generally engage in any kind of banking, trust or other business
with the Borrower or the Guarantor or any of their affiliates regardless of
the capacity of the Bank hereunder.
Section 27. CONSENTS, AMENDMENTS, WAIVERS, ETC.
Except as otherwise expressly provided in this Agreement, any consent
or approval required or permitted by this Agreement may be given, and any
term of this Agreement or of any other instrument related hereto or
mentioned herein may be amended, and the performance or observance by the
Borrower or the Guarantor of any terms of this Agreement or such other
instrument or the continuance of any Default or Event of Default may be
waived (either generally or in a particular instance and either
retroactively or prospectively) with, but only with, the written consent of
the Majority Banks. Notwithstanding the foregoing, none of the following
may occur without the written consent of each Bank: a change in the rate
of interest on and the term of the Notes; a change in the amount of the
Commitments of the Banks; a forgiveness, reduction or waiver of the
principal of any unpaid Loan or any interest thereon or fee payable under
the Loan Documents; a change in the amount of any fee payable to a Bank
hereunder; the postponement of any date fixed for any payment of principal
of or interest on the Loan; an extension of the Maturity Date; a change in
the manner of distribution of any payments to the Banks or the Agent; the
release of the Borrower or the Guarantor or any Collateral except as
otherwise provided herein; an amendment of the definition of Majority Banks
or of any requirement for consent by all of the Banks; any modification to
require a Bank to fund a pro rata share of a request for an advance of the
Loan made by the Borrower other than based on its Commitment Percentage; an
amendment to this Section 27; an amendment of the definition of Majority
Banks; or an amendment of any provision of this Agreement or the Loan
Documents which requires the approval of all of the Banks or the Majority
Banks to require a lesser number of Banks to approve such action. The
amount of the Agent's fee payable for the Agent's account and the
provisions of Section 14 may not be amended without the written consent of
the Agent. No waiver shall extend to or affect any obligation not
expressly waived or impair any right consequent thereon. No course of
dealing or delay or omission on the part of the Agent or any Bank in
exercising any right shall operate as a waiver thereof or otherwise be
prejudicial thereto. No notice to or demand upon the Borrower shall
entitle the Borrower to other or further notice or demand in similar or
other circumstances.
Section 28. SEVERABILITY.
The provisions of this Agreement are severable, and if any one
clause or provision hereof shall be held invalid or unenforceable in whole
or in part in any jurisdiction, then such invalidity or unenforceability
shall affect only such clause or provision, or part thereof, in such
jurisdiction, and shall not in any manner affect such clause or provision
in any other jurisdiction, or any other clause or provision of this
Agreement in any jurisdiction.
Section 29. NO UNWRITTEN AGREEMENTS.
THE WRITTEN LOAN DOCUMENTS REPRESENT THE FINAL AGREEMENT BETWEEN THE
PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS
OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES. THERE ARE NO ORAL AGREEMENTS
BETWEEN THE PARTIES.
Section 30. TIME OF THE ESSENCE.
Time is of the essence with respect to each and every covenant,
agreement and obligation of the Borrower under this Agreement and the other
Loan Documents.
Section 31. LIMITATION ON LIABILITY.
NO OBLIGATION OR LIABILITY WHATSOEVER OF THE BORROWER WHICH MAY ARISE
AT ANY TIME UNDER THIS AGREEMENT OR ANY OBLIGATION OR LIABILITY WHICH MAY
BE INCURRED BY IT PURSUANT TO ANY OTHER LOAN DOCUMENT SHALL BE PERSONALLY
BINDING UPON, NOR SHALL RESORT FOR THE ENFORCEMENT THEREOF BE HAD TO, THE
PRIVATE PROPERTY OF ANY OF THE BORROWER'S MEMBERS REGARDLESS OF WHETHER
SUCH OBLIGATION OR LIABILITY IS IN THE NATURE OF CONTRACT, TORT OR
OTHERWISE; PROVIDED, HOWEVER, NOTHING HEREIN SHALL DIMINISH OR IMPAIR THE
RIGHTS OF AGENT AND THE BANKS TO PURSUE ANY REMEDY AGAINST ANY ASSETS OF
THE BORROWER OR RELIEVE, REDUCE OR IMPAIR ANY OBLIGATION OF ANY GUARANTOR
UNDER ITS GUARANTY OR INDEMNITY AGREEMENT.
IN WITNESS WHEREOF, the undersigned have duly executed this Agreement
as a sealed instrument as of the date first set forth above.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
<PAGE>
WEL/WH 1275 K STREET, L.L.C.
By: WELLSFORD/WHITEHALL PROPERTIES, L.L.C.,
Managing Member
By: WELLSFORD COMMERCIAL PROPERTIES
TRUST, Manager
By: /s/ Edward Lowenthal
Edward Lowenthal
President
<PAGE>
BANKBOSTON, N.A., a national banking
association, individually and as Agent
By:/s/ Mark Basham
------------------------------
Title: Managing Director
[BANK SEAL]
<PAGE>
GOLDMAN SACHS MORTGAGE COMPANY, a New
York limited partnership, individually
and as Co-Arranger and Co-Syndication
Agent
By: Goldman Sachs Real Estate Funding
Corp., general partner
By: /s/ Robert R. Foley
Name: Robert R. Foley
Title: Authorized Signatory
[CORPORATE SEAL]
Goldman Sachs Mortgage Company
85 Broad Street
New York, New York 10004
Attn: Mr. Bob Foley<PAGE>
EXHIBIT A
FORM OF NOTE
$______________ _______________
FOR VALUE RECEIVED, the undersigned ___________________________, a
_______________________, hereby promises to pay to
_______________________________ or order, in accordance with the terms of
that certain Term Loan Agreement dated as of December 15, 1997 (the "Credit
Agreement"), as from time to time in effect, among the undersigned,
BankBoston, N.A., for itself and as Agent, Goldman Sachs Mortgage Company,
and such other Banks as may be from time to time named therein, to the
extent not sooner paid, on or before the Maturity Date, the principal sum
of ____________________________ DOLLARS ($______________), or such amount
as may be advanced by the payee hereof under the Credit Agreement with
daily interest from the date hereof, computed as provided in the Credit
Agreement, on the principal amount hereof from time to time unpaid, at a
rate per annum on each portion of the principal amount which shall at all
times be equal to the rate of interest applicable to such portion in
accordance with the Credit Agreement, and with interest on overdue
principal and, to the extent permitted by applicable law, on overdue
installments of interest and late charges at the rates provided in the
Credit Agreement. Interest shall be payable on the dates specified in the
Credit Agreement, except that all accrued interest shall be paid at the
stated or accelerated maturity hereof or upon the prepayment in full
hereof. Capitalized terms used herein and not otherwise defined herein
shall have the meanings set forth in the Credit Agreement.
Payments hereunder shall be made to BankBoston, N.A., as Agent for the
payee hereof, 100 Federal Street, Boston, Massachusetts 02110.
This Note is one of one or more Notes evidencing borrowings under and
is entitled to the benefits and subject to the provisions of the Credit
Agreement. The principal of this Note may be due and payable in whole or
in part prior to the maturity date stated above and is subject to mandatory
prepayment in the amounts and under the circumstances set forth in the
Credit Agreement, and prepayment is permitted or prohibited in whole or
from time to time in part, all as set forth in the Credit Agreement.
Notwithstanding anything in this Note to the contrary, all agreements
between the Borrower and the Banks and the Agent, whether now existing or
hereafter arising and whether written or oral, are hereby limited so that
in no contingency, whether by reason of acceleration of the maturity of any
of the Obligations or otherwise, shall the interest contracted for, charged
or received by the Banks exceed the maximum amount permissible under
applicable law. If, from any circumstance whatsoever, interest would
otherwise be payable to the Banks in excess of the maximum lawful amount,
the interest payable to the Banks shall be reduced to the maximum amount
permitted under applicable law; and if from any circumstance the Banks
shall ever receive anything of value deemed interest by applicable law in
excess of the maximum lawful amount, an amount equal to any excessive
interest shall be applied to the reduction of the principal balance of the
Obligations and to the payment of interest or, if such excessive interest
exceeds the unpaid balance of principal of the Obligations, such excess
shall be refunded to the Borrower. All interest paid or agreed to be paid
to the Banks shall, to the extent permitted by applicable law, be
amortized, prorated, allocated and spread throughout the full period until
payment in full of the principal of the Obligations (including the period
of any renewal or extension thereof) so that the interest thereon for such
full period shall not exceed the maximum amount permitted by applicable
law. This paragraph shall control all agreements between the Borrower and
the Banks and the Agent.
In case an Event of Default shall occur, the entire principal amount
of this Note may become or be declared due and payable in the manner and
with the effect provided in said Credit Agreement.
This Note shall be governed by and construed in accordance with the
laws of the State of New York (without giving effect to the conflict of
laws rules of any jurisdiction).
The undersigned maker and all guarantors and endorsers, hereby waive
presentment, demand, notice, protest, notice of intention to accelerate the
indebtedness evidenced hereby, notice of acceleration of the indebtedness
evidenced hereby and all other demands and notices in connection with the
delivery, acceptance, performance and enforcement of this Note, except as
specifically otherwise provided in the Credit Agreement, and assent to
extensions of time of payment or forbearance or other indulgence without
notice.
IN WITNESS WHEREOF the undersigned has by its duly authorized
officers, executed this Note under seal as of the day and year first above
written.
WEL/WH 1275 K STREET, L.L.C.
By: WELLSFORD/WHITEHALL PROPERTIES, L.L.C.,
Managing Member
By: WELLSFORD COMMERCIAL PROPERTIES
TRUST, Manager
By:___________________________
Edward Lowenthal
President
<PAGE>
EXHIBIT B
FORM OF REQUEST FOR LOAN
BankBoston, N.A.,as Agent
115 Perimeter Center Place, N.E.
Suite 500
Atlanta, Georgia 30346
Attn: Mr. Jay Johns
Ladies and Gentlemen:
Pursuant to the provisions of Section 2.6 of the Term Loan Agreement
dated December 15, 1997, as from time to time in effect (the "Credit
Agreement"), among WEL/WH 1275 K Street, L.L.C. (the "Borrower"),
BankBoston, N.A., for itself and as Agent, Goldman Sachs Mortgage Company,
and the other Banks from time to time party thereto, the Borrower hereby
requests and certifies as follows:
1. Loan. The Borrower hereby requests a Loan under Section 2.1 of
the Credit Agreement:
Principal Amount: $
Type (Eurodollar, Base Rate):
Drawdown Date: _____________, 19__
Interest Period:
by credit to the general account of the Borrower with the Agent at the
Agent's Head Office.
2. Use of Proceeds. Such Loan shall be used for the following
purposes permitted by Section 7.11 of the Credit Agreement:
[Describe]
3. Capital Improvement Project. In the event that such Loan relates
to any Capital Improvement Project or portion thereof, the Borrower
represents and warrants that such Loan will reimburse the Borrower for or
pay costs incurred for work on the Capital Improvement Project identified
above, which work covered by this request is in place or is for stored
materials which are properly secured. The Borrower further certifies that
all materialmen, laborers, subcontractors and any other parties who might
or could claim statutory or common law liens and are furnishing or have
furnished material or labor to the Mortgaged Property in connection with
such Capital Improvement Project have been paid (or will be paid from the
proceeds of the requested advance) all amounts due for such labor and
materials. The total amount heretofore borrowed under the Loans for
Capital Improvement Projects, exclusive of the amount requested hereby, is
$______________, leaving $___________ available for disbursements under
Section ____ of the Credit Agreement for Capital Improvement Projects.
4. No Default. The undersigned chief financial or chief accounting
officer of the Borrower certifies that the Borrower is and will be in
compliance with all covenants under the Loan Documents after giving effect
to the making of the Loan requested hereby. No condemnation proceedings
are pending or to the Borrower's knowledge threatened against any Mortgaged
Property.
5. Representations True. Each of the representations and warranties
made by or on behalf of the Borrower and the Guarantor contained in the
Credit Agreement, in the other Loan Documents or in any document or
instrument delivered pursuant to or in connection with the Credit Agreement
was true as of the date as of which it was made and shall also be true at
and as of the Drawdown Date for the Loan requested hereby, with the same
effect as if made at and as of such Drawdown Date (except to the extent of
changes resulting from transactions contemplated or permitted by the Credit
Agreement and the other Loan Documents and changes occurring in the
ordinary course of business that singly or in the aggregate are not
materially adverse, and except to the extent that such representations and
warranties relate expressly to an earlier date) and no Default or Event of
Default has occurred and is continuing.
6. Other Conditions. All other conditions to the making of the Loan
requested hereby set forth in Section 11 of the Credit Agreement have been
satisfied. (Reference title insurance "date down", if applicable.)
7. Drawdown Date. Except to the extent, if any, specified by notice
actually received by the Agent prior to the Drawdown Date specified above,
the foregoing representations and warranties shall be deemed to have been
made by the Borrower on and as of such Drawdown Date.
8. Definitions. Terms defined in the Credit Agreement are used
herein with the meanings so defined.
IN WITNESS WHEREOF, I have hereunto set my hand this _____ day of
_______________, 199___.
WEL/WH 1275 K STREET, L.L.C.
By: WELLSFORD/WHITEHALL PROPERTIES, L.L.C.,
Managing Member
By: WELLSFORD COMMERCIAL PROPERTIES
TRUST, Manager
By:___________________________
Edward Lowenthal
President<PAGE>
EXHIBIT C
FORM OF
COMPLIANCE CERTIFICATE
BankBoston, N.A.,
for itself and as Agent
115 Perimeter Center Place, N.E.
Suite 500
Atlanta, Georgia 30346
Attn: Mr. Jay Johns
Ladies and Gentlemen:
Reference is made to the Term Loan Agreement dated as of December 15,
1997 (the "Credit Agreement") by and among WEL/WH 1275 K Street, L.L.C.
(the "Borrower"), BankBoston, N.A., for itself and as Agent, Goldman Sachs
Mortgage Company, and the other Banks from time to time party thereto.
Terms defined in the Credit Agreement and not otherwise defined herein are
used herein as defined in the Credit Agreement.
Pursuant to the Credit Agreement, the Borrower is furnishing to you
herewith (or has most recently furnished to you) the financial statements
of the Borrower for the fiscal period ended September 30, 1997 (the
"Balance Sheet Date"). Such financial statements have been prepared in
accordance with generally accepted accounting principles and present fairly
the financial position of the Borrower covered thereby at the date thereof
and the results of their operations for the periods covered thereby,
subject in the case of interim statements only to normal year-end audit
adjustments.
This certificate is submitted in compliance with requirements of
Section 9.4 of the Credit Agreement. The calculations provided below are
made using the financial statements of the Revolver Borrower as of the
Balance Sheet Date adjusted in the best good-faith estimate of the Borrower
to give effect to the making of a Loan, or other event that occasions the
preparation of this certificate; and the nature of such event and the
Borrower's estimate of its effects are set forth in reasonable detail in an
attachment hereto. The undersigned officer of the Borrower is its chief
financial or chief accounting officer.
The undersigned officer has caused the provisions of the Credit
Agreement to be reviewed and has no knowledge of any Default or Event of
Default. (Note: If the signer does have knowledge of any Default or Event
of Default, the form of certificate should be revised to specify the
Default or Event of Default, the nature thereof and the actions taken,
being taken or proposed to be taken by the Borrower with respect thereto.)
The Borrower is providing the following information to demonstrate
compliance as of the date hereof with the following covenants:
I. Section 9.4 Net Operating Income
A. Total outstanding principal balance of Loans
(after giving effect to any Loan Request) $__________
B. Net Operating Income
(for previous four quarters) $__________
Minus Capital Improvement $__________
Reserve (for such period)
Divided by 9.5% capitalization rate $__________
[B may not exceed 0.75 of A]
IN WITNESS WHEREOF, I have hereunto set may hand this __ day
____________, _______.
WEL/WH 1275 K STREET, L.L.C.
By: WELLSFORD/WHITEHALL PROPERTIES, L.L.C.,
Managing Member
By: WELLSFORD COMMERCIAL PROPERTIES
TRUST, Manager
By:___________________________
Edward Lowenthal
President
<PAGE>
SCHEDULE 1.1
BANKS AND COMMITMENTS
Name and Address Commitment Commitment Percentage
BankBoston, N.A. $112,500,000 50%
100 Federal Street
Boston, Massachusetts 02110
Attn: Real Estate Division
Eurodollar Lending Office
Same as above
Goldman Sachs Mortgage Company $112,500,000 50%
85 Broad Street
New York, New York 10004
Attn: Mr. Bob Foley
Eurodollar Lending Office
Same as above
Total Commitment $225,000,000 100%
<PAGE>
SCHEDULE 5.3
DESCRIPTION OF GREENBROOK CORPORATE
CENTER VACANT LAND
<PAGE>
SCHEDULE 6.7
LITIGATION
None.
<PAGE>
SCHEDULE 6.17
ERISA PLANS
None.
<PAGE>
SCHEDULE 6.24
AGREEMENTS
NONE
<PAGE>
TABLE OF CONTENTS
Section 1. DEFINITIONS AND RULES OF INTERPRETATION. . . . . . . . . . . 1
Section 1.1. Definitions. . . . . . . . . . . . . . . . . . . . . 1
Section 1.2. Rules of Interpretation.. . . . . . . . . . . . . . .15
Section 2. THE TERM LOAN. . . . . . . . . . . . . . . . . . . . . . . .15
Section 2.1. Commitment to Lend. . . . . . . . . . . . . . . . . .15
Section 2.2. Intentionally Omitted. . . . . . . . . . . . . . . .16
Section 2.3. Intentionally Omitted. . . . . . . . . . . . . . . . .16
Section 2.4. Notes. . . . . . . . . . . . . . . . . . . . . . . .16
Section 2.5. Interest on Loans.. . . . . . . . . . . . . . . . . .16
Section 2.6. Requests for Loans. . . . . . . . . . . . . . . . . .16
Section 2.7. Funds for Loans.. . . . . . . . . . . . . . . . . . .18
Section 3. REPAYMENT OF THE LOANS.. . . . . . . . . . . . . . . . . . .18
Section 3.1. Stated Maturity. . . . . . . . . . . . . . . . . . .18
Section 3.2. Intentionally Omitted . . . . . . . . . . . . . . . .18
Section 3.3. Optional Prepayments. . . . . . . . . . . . . . . . .18
Section 3.4. Partial Prepayments. . . . . . . . . . . . . . . . .19
Section 3.5. Effect of Prepayments. . . . . . . . . . . . . . . .19
Section 4. CERTAIN GENERAL PROVISIONS.. . . . . . . . . . . . . . . . .19
Section 4.1. Conversion Options. . . . . . . . . . . . . . . . . .19
Section 4.2. Closing Fee. . . . . . . . . . . . . . . . . . . . .20
Section 4.3. Agent's Fee. . . . . . . . . . . . . . . . . . . . .20
Section 4.4. Funds for Payments. . . . . . . . . . . . . . . . . .20
Section 4.5. Computations. . . . . . . . . . . . . . . . . . . . .20
Section 4.6. Inability to Determine Eurodollar Rate. . . . . . . .20
Section 4.7. Illegality. . . . . . . . . . . . . . . . . . . . . .21
Section 4.8. Additional Interest. . . . . . . . . . . . . . . . .21
Section 4.9. Additional Costs, Etc. . . . . . . . . . . . . . . .21
Section 4.10. Capital Adequacy. . . . . . . . . . . . . . . . . .22
Section 4.11. Indemnity of Borrower. . . . . . . . . . . . . . . .23
Section 4.12. Interest on Overdue Amounts; Late Charge. . . . . .23
Section 4.13. Intentionally Omitted.. . . . . . . . . . . . . . . .23
Section 4.14. Certificate. . . . . . . . . . . . . . . . . . . . .23
Section 4.15. Limitation on Interest. . . . . . . . . . . . . . .23
Section 5. COLLATERAL SECURITY. . . . . . . . . . . . . . . . . . . . .24
Section 5.1. Collateral. . . . . . . . . . . . . . . . . . . . . .24
Section 5.2. Appraisals. . . . . . . . . . . . . . . . . . . . . .24
Section 5.3. Release of Collateral. . . . . . . . . . . . . . . .25
Section 5.4. Subsequent Loans; Additional Collateral . . . . . . .26
Section 6. REPRESENTATIONS AND WARRANTIES.. . . . . . . . . . . . . . .28
Section 6.1. Corporate Authority, Etc. . . . . . . . . . . . . . .28
Section 6.2. Governmental Approvals. . . . . . . . . . . . . . . .28
Section 6.3. Title to Properties; Leases. . . . . . . . . . . . . .28
Section 6.4. Financial Statements. . . . . . . . . . . . . . . . .28
Section 6.5. No Material Adverse Changes. . . . . . . . . . . . .29
Section 6.6. Franchises, Patents, Copyrights, Etc. . . . . . . . .29
Section 6.7. Litigation. . . . . . . . . . . . . . . . . . . . . .29
Section 6.8. No Materially Adverse Contracts, Etc. . . . . . . . .29
Section 6.9. Compliance with Other Instruments, Laws, Etc. . . . .29
Section 6.10. Tax Status. . . . . . . . . . . . . . . . . . . . .29
Section 6.11. No Event of Default. . . . . . . . . . . . . . . . .30
Section 6.12. Holding Company and Investment Company Acts. . . . .30
Section 6.13. Absence of UCC Financing Statements, Etc. . . . . .30
Section 6.14. Setoff, Etc. . . . . . . . . . . . . . . . . . . . .30
Section 6.15. Certain Transactions. . . . . . . . . . . . . . . .30
Section 6.16. Employee Benefit Plans. . . . . . . . . . . . . . .30
Section 6.17. ERISA Taxes. . . . . . . . . . . . . . . . . . . . .30
Section 6.18. Plan Payments. . . . . . . . . . . . . . . . . . . .31
Section 6.19. Regulations U and X. . . . . . . . . . . . . . . . .31
Section 6.20. Environmental Compliance. . . . . . . . . . . . . .31
Section 6.21. Intentionally Omitted.. . . . . . . . . . . . . . . .32
Section 6.22. Leases. . . . . . . . . . . . . . . . . . . . . . .32
Section 6.23. Loan Documents. . . . . . . . . . . . . . . . . . .33
Section 6.24. Mortgaged Property. . . . . . . . . . . . . . . . .33
Section 6.25. Brokers. . . . . . . . . . . . . . . . . . . . . . .35
Section 6.26. Fair Consideration. . . . . . . . . . . . . . . . .35
Section 6.27. Solvency. . . . . . . . . . . . . . . . . . . . . .36
Section 6.28. No Bankruptcy Filing. . . . . . . . . . . . . . . .36
Section 6.29. No Fraudulent Intent. . . . . . . . . . . . . . . .36
Section 6.30. Other Debt. . . . . . . . . . . . . . . . . . . . . .36
Section 6.31. Ownership of Borrower. . . . . . . . . . . . . . . .36
Section 6.32. Special Purpose Entity.. . . . . . . . . . . . . . .36
Section 7. AFFIRMATIVE COVENANTS OF THE BORROWER. . . . . . . . . . . .36
Section 7.1. Punctual Payment. . . . . . . . . . . . . . . . . . .36
Section 7.2. Maintenance of Office. . . . . . . . . . . . . . . .37
Section 7.3. Records and Accounts. . . . . . . . . . . . . . . . .37
Section 7.4. Financial Statements, Certificates and Information. .37
Section 7.5. Notices.. . . . . . . . . . . . . . . . . . . . . . .39
Section 7.6. Existence; Maintenance of Properties. . . . . . . . .40
Section 7.7. Insurance. . . . . . . . . . . . . . . . . . . . . .40
Section 7.8. Taxes. . . . . . . . . . . . . . . . . . . . . . . .44
Section 7.9. Inspection of Properties and Books. . . . . . . . . .44
Section 7.10. Compliance with Laws, Contracts, Licenses, and
Permits. . . . . . . . . . . . . . . . . . . . . . . . . . . .44
Section 7.11. Use of Proceeds. . . . . . . . . . . . . . . . . . .44
Section 7.12. Further Assurances. . . . . . . . . . . . . . . . .45
Section 7.13. Management Agreements. . . . . . . . . . . . . . . .45
Section 7.14. ERISA Compliance. . . . . . . . . . . . . . . . . .45
Section 7.15. Intentionally Deleted.. . . . . . . . . . . . . . . .45
Section 7.16. Intentionally Omitted. . . . . . . . . . . . . . . .45
Section 7.17. Compliance . . . . . . . . . . . . . . . . . . . . .45
Section 7.18. Intentionally Omitted.. . . . . . . . . . . . . . . .45
Section 7.19. Leasing. . . . . . . . . . . . . . . . . . . . . . .45
Section 7.20 Special Purpose Entity. . . . . . . . . . . . . . . .47
Section 8. CERTAIN NEGATIVE COVENANTS OF THE BORROWER.. . . . . . . . .47
Section 8.1. Restrictions on Indebtedness. . . . . . . . . . . . .47
Section 8.2. Restrictions on Liens, Etc. . . . . . . . . . . . . .47
Section 8.3. Intentionally Omitted. . . . . . . . . . . . . . . . .48
Section 8.4. Merger, Consolidation. . . . . . . . . . . . . . . .48
Section 8.5. Intentionally Omitted . . . . . . . . . . . . . . . .48
Section 8.6. Compliance with Environmental Laws. . . . . . . . . .48
Section 8.7. Distributions. T . . . . . . . . . . . . . . . . . .49
Section 8.8. Intentionally Omitted.. . . . . . . . . . . . . . . .49
Section 8.9. Development Activity.. . . . . . . . . . . . . . . . .50
Section 8.10. Intentionally Omitted.. . . . . . . . . . . . . . . .50
Section 8.11. Transfers. . . . . . . . . . . . . . . . . . . . . .50
Section 8.12. Additional Covenants with Respect to Indebtedness,
Operations, Fundamental Changes.. . . . . . . . . . . . . . . .50
Section 9. FINANCIAL COVENANTS OF BORROWER. . . . . . . . . . . . . . .51
Section 9.1. Intentionally Omitted.. . . . . . . . . . . . . . . .51
Section 9.2. Intentionally Omitted.. . . . . . . . . . . . . . . .51
Section 9.3. Intentionally Omitted.. . . . . . . . . . . . . . . .51
Section 9.4. Net Operating Income. . . . . . . . . . . . . . . . .51
Section 10. CLOSING CONDITIONS. . . . . . . . . . . . . . . . . . . . .52
Section 10.1. Loan Documents. . . . . . . . . . . . . . . . . . .52
Section 10.2. Certified Copies of Organizational Documents. . . .52
Section 10.3. Bylaws; Resolutions. . . . . . . . . . . . . . . . .52
Section 10.4. Incumbency Certificate; Authorized Signers. . . . .52
Section 10.5. Opinion of Counsel. . . . . . . . . . . . . . . . .52
Section 10.6. Payment of Fees. . . . . . . . . . . . . . . . . . .53
Section 10.7. Appraisals. . . . . . . . . . . . . . . . . . . . .53
Section 10.8. Environmental Reports. . . . . . . . . . . . . . . .53
Section 10.9. Insurance. . . . . . . . . . . . . . . . . . . . . .53
Section 10.10. Performance; No Default. . . . . . . . . . . . . .53
Section 10.11. Representations and Warranties. . . . . . . . . . .53
Section 10.12. Proceedings and Documents. . . . . . . . . . . . .53
Section 10.13. Eligible Real Estate Qualification Documents. . . .53
Section 10.14. Compliance Certificate. . . . . . . . . . . . . . .53
Section 10.15. Other Documents. . . . . . . . . . . . . . . . . .54
Section 10.16. No Condemnation/Taking. . . . . . . . . . . . . . .54
Section 10.17. Governmental Policy. . . . . . . . . . . . . . . .54
Section 10.18. Other. . . . . . . . . . . . . . . . . . . . . . .54
Section 11. CONDITIONS TO ALL BORROWINGS. . . . . . . . . . . . . . . .54
Section 11.1. Prior Conditions Satisfied. . . . . . . . . . . . .54
Section 11.2. Representations True; No Default. . . . . . . . . .54
Section 11.3. No Legal Impediment. . . . . . . . . . . . . . . . .54
Section 11.4. Governmental Regulation. . . . . . . . . . . . . . .54
Section 11.5. Proceedings and Documents. . . . . . . . . . . . . .55
Section 11.6. Borrowing Documents. . . . . . . . . . . . . . . . .55
Section 11.7. Endorsement to Title Policy. . . . . . . . . . . . .55
Section 11.8. Future Advances Tax Payment. . . . . . . . . . . . .55
Section 12. EVENTS OF DEFAULT; ACCELERATION; ETC. . . . . . . . . . . .55
Section 12.1. Events of Default and Acceleration. . . . . . . . .55
Section 12.lA. Limitation of Cure Periods. . . . . . . . . . . . .58
Section 12.lB. Certain Cure Periods. . . . . . . . . . . . . . . .58
Section 12.2. Termination of Commitments. . . . . . . . . . . . .59
Section 12.3. Remedies.. . . . . . . . . . . . . . . . . . . . . .59
Section 12.4. Distribution of Collateral Proceeds. . . . . . . . .60
Section 13. SETOFF. . . . . . . . . . . . . . . . . . . . . . . . . . .60
Section 14. THE AGENT. . . . . . . . . . . . . . . . . . . . . . . . . .61
Section 14.1. Authorization. . . . . . . . . . . . . . . . . . . .61
Section 14.2. Employees and Agents. . . . . . . . . . . . . . . .61
Section 14.3. No Liability. . . . . . . . . . . . . . . . . . . .61
Section 14.4. No Representations. . . . . . . . . . . . . . . . .61
Section 14.5. Payments.. . . . . . . . . . . . . . . . . . . . . .62
Section 14.6. Holders of Notes. . . . . . . . . . . . . . . . . .63
Section 14.7. Indemnity. . . . . . . . . . . . . . . . . . . . . .63
Section 14.8. Agent as Bank. . . . . . . . . . . . . . . . . . . .63
Section 14.9. Resignation. . . . . . . . . . . . . . . . . . . . .63
Section 14.10. Duties in the Case of Enforcement. . . . . . . . .63
Section 15. EXPENSES. . . . . . . . . . . . . . . . . . . . . . . . . .64
Section 16. INDEMNIFICATION.. . . . . . . . . . . . . . . . . . . . . .65
Section 17. SURVIVAL OF COVENANTS, ETC. . . . . . . . . . . . . . . .65
Section 18. ASSIGNMENT AND PARTICIPATION. . . . . . . . . . . . . . . .66
Section 18.1. Conditions to Assignment by Banks. . . . . . . . . .66
Section 18.2. Register. . . . . . . . . . . . . . . . . . . . . .66
Section 18.3. New Notes. . . . . . . . . . . . . . . . . . . . . .66
Section 18.4. Participations. . . . . . . . . . . . . . . . . . .67
Section 18.5. Pledge by Bank. . . . . . . . . . . . . . . . . . .67
Section 18.6. No Assignment by Borrower. . . . . . . . . . . . . .67
Section 18.7. Disclosure. . . . . . . . . . . . . . . . . . . . .67
Section 19. NOTICES.. . . . . . . . . . . . . . . . . . . . . . . . . .67
Section 20. RELATIONSHIP. . . . . . . . . . . . . . . . . . . . . . .69
Section 21. GOVERNING LAW; CONSENT TO JURISDICTION AND SERVICE. . . .69
Section 22. HEADINGS. . . . . . . . . . . . . . . . . . . . . . . . . .69
Section 23. COUNTERPARTS. . . . . . . . . . . . . . . . . . . . . . . .69
Section 24. ENTIRE AGREEMENT, ETC.. . . . . . . . . . . . . . . . . . .69
Section 25. WAIVER OF JURY TRIAL. . . . . . . . . . . . . . . . . . . .70
Section 26. DEALINGS WITH THE BORROWER. . . . . . . . . . . . . . . .70
Section 27. CONSENTS, AMENDMENTS, WAIVERS, ETC. . . . . . . . . . . . .70
Section 28. SEVERABILITY. . . . . . . . . . . . . . . . . . . . . . . .71
Section 29. NO UNWRITTEN AGREEMENTS.. . . . . . . . . . . . . . . . . .71
Section 30. TIME OF THE ESSENCE.. . . . . . . . . . . . . . . . . . . .71
Section 31. LIMITATION ON LIABILITY.. . . . . . . . . . . . . . . . . .71
INDEMNITY AND GUARANTY AGREEMENT
(Revolver)
THIS INDEMNITY AND GUARANTY AGREEMENT (this "Agreement"), made as of
the _____ day of December, 1997, by WELLSFORD COMMERCIAL PROPERTIES TRUST,
a Maryland real estate investment trust, and WHWEL REAL ESTATE LIMITED
PARTNERSHIP, jointly and severally (said entities being collectively
referred to herein as "Indemnitor"), whose address is 610 Fifth Avenue,
Seventh Floor, New York, New York 10020, in favor of BANKBOSTON, N.A., a
national banking association, individually and as Agent for itself and the
other banks which may become parties to the "Loan Agreement" (as
hereinafter defined), GOLDMAN SACHS MORTGAGE COMPANY, and each other lender
which may now or hereafter become party to the Loan Agreement (together,
"Lender").
W I T N E S S E T H:
WHEREAS, Wellsford/Whitehall Properties, L.L.C. ("Borrower"), has
obtained a revolving credit loan in the principal amount of One Hundred
Fifty Million and No/100 Dollars ($150,000,000.00) (the "Loan") from
Lender;
WHEREAS, the Loan has been made pursuant to the terms and conditions
of that certain Revolving Credit Agreement, of even date herewith, by and
between Borrower and Lender (the "Loan Agreement");
WHEREAS, the Loan is evidenced by one or more promissory notes
(collectively, the "Note"), and executed by Borrower and payable to the
order of Lender and is secured by among other things, the "Security
Documents" (as defined in the Loan Agreement and being referred to herein
as the "Security Documents"), encumbering the "Collateral" (as defined in
the Loan Agreement and being herein referred to as the "Collateral") (the
Note, the Security Documents and all other documents and instruments
evidencing or securing the Loan, as the same may from time to time be
amended, consolidated, restated, extended, renewed or replaced (including
without limitation any notes delivered by Borrower pursuant to Section
18.3 of the Loan Agreement), being collectively referred to herein as the
"Loan Documents"); and
WHEREAS, as a condition to making the Loan to Borrower, Lender has
required that Indemnitor indemnify Lender from and against and guarantee
payment to Lender of certain matters as set forth herein; and
WHEREAS, each of the parties comprising Indemnitor is an owner of a
beneficial interest in Borrower, the extension of the Loan to Borrower is
of substantial benefit to Indemnitor and, therefore, Indemnitor desires to
indemnify Lender from and against and guarantee payment to Lender of such
matters.
NOW, THEREFORE, to induce Lender to extend the Loan to Borrower and in
consideration of the foregoing premises and for other good and valuable
consideration, the receipt and sufficiency of which are hereby
acknowledged, Indemnitor hereby covenants and agrees for the benefit of
Lender, as follows:
1. Indemnity and Guaranty. Indemnitor hereby assumes liability for,
hereby guarantees payment to Lender of, hereby agrees to pay, protect,
defend and save Lender harmless from and against, and hereby indemnifies
Lender from and against any and all liabilities, obligations, losses,
damages, costs and expenses (including, without limitation, attorneys'
fees), causes of action, suits, claims, demands and judgments of any nature
or description whatsoever (collectively, "Costs") which may at any time be
imposed upon, incurred by or awarded against Lender as a result of:
(a) Proceeds paid under any insurance policies (or paid as a
result of any other claim or cause of action against any person or entity)
by reason of damage, loss or destruction to all or any portion of the
Collateral, to the full extent of such proceeds not previously delivered to
Lender, but which, under the terms of the Loan Documents, should have been
delivered to Lender;
(b) Proceeds or awards resulting from the condemnation or other
taking in lieu of condemnation of all or any portion of the Collateral, to
the full extent of such proceeds or awards not previously delivered to
Lender, but which, under the terms of the Loan Documents, should have been
delivered to Lender;
(c) All tenant security deposits or other refundable deposits
paid to or held by Borrower or any other person or entity in connection
with leases of all or any portion of the Collateral which are not applied
in accordance with the terms of the applicable lease or other agreement;
(d) Rent and other payments received from tenants under leases
of all or any portion of the Collateral paid more than one month in
advance;
(e) Rents, issues, profits and revenues of all or any portion of
the Collateral received or applicable to a period after any notice of
Default from Lender under the Loan Documents in the event of any Default by
Borrower thereunder which are not either applied to the ordinary and
necessary expenses of owning and operating the Collateral or paid to
Lender;
(f) Damage to the Collateral as a result of the intentional
misconduct or gross negligence of Borrower or any of its principals,
officers or general partners, or any property manager that controls, is
controlled by or is under common control with any of such persons, or any
removal of the Collateral in violation of the terms of the Loan Documents,
to the full extent of the losses or damages incurred by Lender on account
of such damage or removal;
(g) Borrower retaining funds directly or indirectly or making
distributions to its members as a result of which Borrower is unable to pay
any valid taxes, assessments, mechanic's liens, materialmen's liens or
other liens which could create liens on any portion of the Collateral which
would be superior to the lien or security title of the Security Documents
or the other Loan Documents; and
(h) Fraud or intentional misrepresentation by Borrower or any of
its principals, officers or general partners, any guarantor, any indemnitor
or any agent, employee or other person authorized or apparently authorized
to make statements or representations on behalf of Borrower, any principal,
officer or partner of Borrower, or any guarantor or any indemnitor, to the
full extent of any losses, damages and expenses of Lender on account
thereof.
This is a guaranty of payment and performance of the matters within
the scope of this Agreement and not of collection. The liability of
Indemnitor under this Agreement shall be direct and immediate and not
conditional or contingent upon the pursuit of any remedies against Borrower
or any other person (including, without limitation, other guarantors, if
any), nor against the collateral for the Loan. Indemnitor waives any right
to require that an action be brought against Borrower or any other person
or to require that resort be had to any collateral for the Loan or to any
balance of any deposit account or credit on the books of Lender in favor of
Borrower or any other person. In the event, on account of the Bankruptcy
Reform Act of 1978, as amended, or any other debtor relief law (whether
statutory, common law, case law or otherwise) of any jurisdiction
whatsoever, now or hereafter in effect, which may be or become applicable,
Borrower shall be relieved of or fail to incur any debt, obligation or
liability as provided in the Loan Documents which is the subject matter of
this Agreement, Indemnitor shall nevertheless be fully liable therefor to
the extent provided in this Agreement. In the event of a default under the
Loan Documents which is not cured within any applicable grace or cure
period, Lender shall have the right to enforce its rights, powers and
remedies (including, without limitation, foreclosure of all or any portion
of the collateral for the Loan) thereunder or hereunder, in any order, and
all rights, powers and remedies available to Lender in such event shall be
non-exclusive and cumulative of all other rights, powers and remedies
provided thereunder or hereunder or by law or in equity. If the
indebtedness and obligations guaranteed hereby are partially paid or
discharged by reason of the exercise of any of the remedies available to
Lender, this Agreement shall nevertheless remain in full force and effect,
and Indemnitor shall remain liable for all remaining indebtedness and
obligations guaranteed hereby to the extent provided in this Agreement,
even though any rights which Indemnitor may have against Borrower may be
destroyed or diminished by the exercise of any such remedy. Terms used in
this Agreement that are not otherwise defined herein shall have the
meanings set forth in the Loan Agreement.
2. Indemnification Procedures.
(a) If any action shall be brought against Lender based upon any
of the matters for which Lender is indemnified hereunder, Lender shall
notify Indemnitor in writing thereof and Indemnitor shall promptly assume
the defense thereof, including, without limitation, the employment of
counsel reasonably acceptable to Lender and the negotiation of any
settlement; provided, however, that any failure of Lender to notify
Indemnitor of such matter shall not impair or reduce the obligations of
Indemnitor hereunder. Lender shall have the right, at the expense of
Indemnitor (which expense shall be included in Costs in the event that
Lender shall conclude in good faith that a conflict of interest exists), to
employ separate counsel in any such action and to participate in the
defense thereof. In the event Indemnitor shall fail to discharge or
undertake to defend Lender against any claim, loss or liability for which
Lender is indemnified hereunder, Lender may, at its sole option and
election, defend or settle such claim, loss or liability. The liability of
Indemnitor to Lender hereunder shall be conclusively established by such
settlement, provided such settlement is made in good faith, the amount of
such liability to include both the settlement consideration and the costs
and expenses, including, without limitation, attorneys' fees and
disbursements, incurred by Lender in effecting such settlement. In such
event, such settlement consideration, costs and expenses shall be included
in Costs and Indemnitor shall pay the same as hereinafter provided.
(b) Indemnitor shall not, without the prior written consent of
Lender: (i) settle or compromise any action, suit, proceeding or claim or
consent to the entry of any judgment that does not include as an
unconditional term thereof the delivery by the claimant or plaintiff to
Lender of a full and complete written release of Lender (in form, scope and
substance reasonably satisfactory to Lender in its sole discretion) from
all liability in respect of such action, suit, proceeding or claim and a
dismissal with prejudice of such action, suit, proceeding or claim; or (ii)
settle or compromise any action, suit, proceeding or claim in any manner
that may adversely affect Lender or obligate Lender to pay any sum or
perform any obligation as determined by Lender in its sole discretion.
(c) All Costs shall be immediately reimbursable to Lender when
and as incurred and, in the event of any litigation, claim or other
proceeding, without any requirement of waiting for the ultimate outcome of
such litigation, claim or other proceeding, and Indemnitor shall pay to
Lender any and all Costs within ten (10) Business Days after written notice
from Lender itemizing the amounts thereof incurred to the date of such
notice. In addition to any other remedy available for the failure of
Indemnitor to periodically pay such Costs, such Costs, if not paid within
said ten-day period, shall bear interest at the rate for overdue payments
in the Loan Agreement.
3. Reinstatement of Obligations. If at any time all or any part of
any payment made by Indemnitor or received by Lender from Indemnitor under
or with respect to this Agreement is or must be rescinded or returned for
any reason whatsoever (including, but not limited to, the insolvency,
bankruptcy or reorganization of Indemnitor or Borrower), then the
obligations of Indemnitor hereunder shall, to the extent of the payment
rescinded or returned, be deemed to have continued in existence,
notwithstanding such previous payment made by Indemnitor, or receipt of
payment by Lender, and the obligations of Indemnitor hereunder shall
continue to be effective or be reinstated, as the case may be, as to such
payment, all as though such previous payment by Indemnitor had never been
made.
4. Waivers by Indemnitor. To the extent permitted by law and with
respect to matters relating to liabilities arising under this Agreement,
Indemnitor hereby waives and agrees not to assert or take advantage of:
(a) Any right to require Lender to proceed against Borrower or
any other person or to proceed against or exhaust any security held by
Lender at any time or to pursue any other remedy in Lender's power or under
any other agreement before proceeding against Indemnitor hereunder;
EDG Any defense that may arise by reason of the incapacity, lack
of authority, death or disability of any other person or persons or the
failure of Lender to file or enforce a claim against the estate (in
administration, bankruptcy or any other proceeding) of any other person or
persons;
(c) Demand, presentment for payment, notice of nonpayment,
protest, notice of protest and all other notices of any kind, or the lack
of any thereof, including, without limiting the generality of the
foregoing, notice of the existence, creation or incurring of any new or
additional indebtedness or obligation or of any action or non-action on the
part of Borrower, Lender, any endorser or creditor of Borrower or of
Indemnitor or on the part of any other person whomsoever under this or any
other instrument in connection with any obligation or evidence of
indebtedness held by Lender;
(d) Any defense based upon an election of remedies by Lender;
(e) Any right or claim or right to cause a marshaling of the
assets of Indemnitor;
(f) Any principle or provision of law, statutory or otherwise,
which is or might be in conflict with the terms and provisions of this
Agreement;
(g) Any duty on the part of Lender to disclose to Indemnitor any
facts Lender may now or hereafter know about Borrower or the Collateral,
regardless of whether Lender has reason to believe that any such facts
materially increase the risk beyond that which Indemnitor intends to assume
or has reason to believe that such facts are unknown to Indemnitor or has a
reasonable opportunity to communicate such facts to Indemnitor, it being
understood and agreed that Indemnitor is fully responsible for being and
keeping informed of the financial condition of Borrower, of the condition
of the Collateral and of any and all circumstances bearing on the risk that
liability may be incurred by Indemnitor hereunder;
(h) Any lack of notice of disposition or of manner of
disposition of any collateral for the Loan;
(i) Any invalidity, irregularity or unenforceability, in whole
or in part, of any one or more of the Loan Documents;
(j) Any deficiencies in the collateral for the Loan or any
deficiency in the ability of Lender to collect or to obtain performance
from any persons or entities now or hereafter liable for the payment and
performance of any obligation hereby guaranteed;
(k) An assertion or claim that the automatic stay provided by 11
U.S.C. Section 362 (arising upon the voluntary or involuntary bankruptcy
proceeding of Borrower) or any other stay provided under any other debtor
relief law (whether statutory, common law, case law or otherwise) of any
jurisdiction whatsoever, now or hereafter in effect, which may be or become
applicable, shall operate or be interpreted to stay, interdict, condition,
reduce or inhibit the ability of Lender to enforce any of its rights,
whether now or hereafter required, which Lender may have against Indemnitor
or the collateral for the Loan;
(l) Any modifications of the Loan Documents or any obligation of
Borrower relating to the Loan by operation of law or by action of any
court, whether pursuant to the Bankruptcy Reform Act of 1978, as amended,
or any other debtor relief law (whether statutory, common law, case law or
otherwise) of any jurisdiction whatsoever, now or hereafter in effect, or
otherwise; and
(m) Any action, occurrence, event or matter consented to by
Indemnitor under Section 5(h) hereof, under any other provision hereof, or
otherwise.
5. General Provisions.
(a) Fully Recourse. All of the terms and provisions of this
Agreement are recourse obligations of Indemnitor and not restricted by any
limitation on personal liability. Notwithstanding anything to the contrary
contained herein or in any other Loan Document, the obligations of WHWEL
Real Estate Limited Partnership under this Agreement whether arising under
this Agreement or otherwise in connection with any of the Loan Documents,
shall be without recourse to any limited partner of WHWEL Real Estate
Limited Partnership and no such person shall have any liability with
respect thereto.
(b) Unsecured Obligations. Indemnitor hereby acknowledges that
Lender's appraisal of the Collateral is such that Lender is not willing to
accept the consequences of the inclusion of Indemnitor's indemnity set
forth herein among the obligations secured by the Security Documents and
the other Loan Documents and that Lender would not make the Loan but for
the unsecured personal liability undertaken by Indemnitor herein.
(c) Survival. This Agreement shall be deemed to be continuing
in nature and shall remain in full force and effect with respect to the
matters covered by this Agreement and shall survive the exercise of any
remedy by Lender under the Security Documents or any of the other Loan
Documents, including, without limitation, any foreclosure or deed in lieu
thereof, even if, as a part of such remedy, the Loan is paid or satisfied
in full.
(d) No Subrogation; No Recourse Against Lender. Notwithstanding
the satisfaction by Indemnitor of any liability hereunder, Indemnitor shall
not have any right of subrogation, contribution, reimbursement or indemnity
whatsoever or any right of recourse to or with respect to the assets or
property of Borrower or to any collateral for the Loan. In connection with
the foregoing, Indemnitor expressly waives any and all rights of
subrogation to Lender against Borrower, and Indemnitor hereby waives any
rights to enforce any remedy which Lender may have against Borrower and any
right to participate in any collateral for the Loan. In addition to and
without in any way limiting the foregoing, Indemnitor hereby subordinates
any and all indebtedness of Borrower now or hereafter owed to Indemnitor to
all indebtedness of Borrower to Lender, and agrees with Lender that
Indemnitor (i) from and after the occurrence and during the continuance of
an Event of Default shall not demand or accept any payment of principal or
interest from Borrower, (ii) shall not claim any offset or other reduction
of Indemnitor's obligations hereunder because of any such indebtedness and
(iii) shall not take any action to obtain any of the collateral from the
Loan. Further, Indemnitor shall not have any right of recourse against
Lender by reason of any action Lender may take or omit to take under the
provisions of this Agreement or under the provisions of any of the Loan
Documents.
(e) Reservation of Rights. Nothing contained in this Agreement
shall prevent or in any way diminish or interfere with any rights or
remedies, including, without limitation, the right to contribution, which
Lender may have against Borrower, Indemnitor or any other party under the
Comprehensive Environmental Response, Compensation and Liability Act of
1980 (codified at Title 42 U.S.C. Section 9601 et seq.), as it may be
amended from time to time, or any other applicable federal, state or local
laws, all such rights being hereby expressly reserved.
(f) Financial Statements. Indemnitor hereby agrees, as a
material inducement to Lender to make the Loan to Borrower, to furnish to
Lender promptly upon demand by Lender current and dated financial
statements detailing the assets and liabilities of Indemnitor certified by
Indemnitor, in form and substance acceptable to Lender. Indemnitor hereby
warrants and represents unto Lender that any and all balance sheets, net
worth statements and other financial data which have heretofore been given
or may hereafter be given to Lender with respect to Indemnitor did or will
at the time of such delivery fairly and accurately present the financial
condition of Indemnitor in all material respects.
(g) Rights Cumulative; Payments. Lender's rights under this
Agreement shall be in addition to all rights of Lender under the Note, the
Security Documents and the other Loan Documents. FURTHER, PAYMENTS MADE BY
INDEMNITOR UNDER THIS AGREEMENT SHALL NOT REDUCE IN ANY RESPECT BORROWER'S
OBLIGATIONS AND LIABILITIES UNDER THE NOTE, THE SECURITY DOCUMENTS AND THE
OTHER LOAN DOCUMENTS SHOULD SUCH PAYMENT BE EVER RESCINDED OR RETURNED BY
LENDER FOR ANY REASON WHATSOEVER (INCLUDING, BUT NOT LIMITED TO, THE
INSOLVENCY, BANKRUPTCY OR REORGANIZATION OF INDEMNITOR).
(h) No Limitation on Liability. Indemnitor hereby consents and
agrees that Lender may at any time and from time to time without further
consent from Indemnitor do any of the following events, and the liability
of Indemnitor under this Agreement shall be unconditional and absolute and
shall in no way be impaired or limited by any of the following events,
whether occurring with or without notice to Indemnitor or with or without
consideration: (i) any extensions of time for performance required by any
of the Loan Documents or extension or renewal of the Note; (ii) any sale,
assignment or foreclosure of the Note, the Security Documents or any of the
other Loan Documents or any sale or transfer of the Collateral; (iii) any
change in the composition of Borrower, including, without limitation, the
withdrawal or removal of Indemnitor from any current or future position of
ownership, management or control of Borrower; (iv) the accuracy or
inaccuracy of the representations and warranties made by Indemnitor herein
or by Borrower in any of the Loan Documents; (v) the release of Borrower or
of any other person or entity from performance or observance of any of the
agreements, covenants, terms or conditions contained in any of the Loan
Documents by operation of law, Lender's voluntary act or otherwise;
(vi) the release or substitution in whole or in part of any security for
the Loan; (vii) Lender's failure to record the Security Documents or to
file any financing statement (or Lender's improper recording or filing
thereof) or to otherwise perfect, protect, secure or insure any lien or
security interest given as security for the Loan; (viii) the modification
of the terms of any one or more of the Loan Documents; or (ix) the taking
or failure to take any action of any type whatsoever. No such action which
Lender shall take or fail to take in connection with the Loan Documents or
any collateral for the Loan, nor any course or dealing with Borrower or any
other person, shall limit, impair or release Indemnitor's obligations
hereunder, effect this Agreement in any way or afford Indemnitor any
recourse against Lender. Nothing contained in Section shall be construed
to require Lender to take or refrain from taking any action referred to
herein.
(i) Entire Agreement; Amendment; Severability. This Agreement
contains the entire agreement between the parties respecting the matters
herein set forth and supersedes all prior agreements, whether written or
oral, between the parties respecting such matters. Any amendments or
modifications hereto, in order to be effective, shall be in writing and
executed by the parties hereto. A determination that any provision of this
Agreement is unenforceable or invalid shall not affect the enforceability
or validity of any other provision, and any determination that the
application of any provision of this Agreement to any person or
circumstance is illegal or unenforceable shall not affect the
enforceability or validity of such provision as it may apply to any other
persons or circumstances.
(j) Governing Law; Binding Effect; Waiver of Acceptance. This
Agreement shall be governed by and construed in accordance with the laws of
the State of New York, except to the extent that the applicability of any
of such laws may now or hereafter be preempted by Federal law, in which
case such Federal law shall so govern and be controlling. This Agreement
shall bind Indemnitor and the heirs, personal representatives, successors
and assigns of Indemnitor and shall inure to the benefit of Lender and the
officers, directors, shareholders, agents and employees of Lender and their
respective heirs, successors and assigns. Without limiting the foregoing,
this Agreement is assignable by Lender in whole or in part in conjunction
with any assignment of the Note or portions thereof, and any assignment
hereof or any transfer or assignment of the Note or portions thereof by
Lender shall operate to vest in any such assignee the rights and powers, in
whole or in part, as appropriate, herein conferred upon and granted to
Lender. Notwithstanding the foregoing, Indemnitor shall not assign any of
its rights or obligations under this Agreement without the prior written
consent of Lender, which consent may be withheld by Lender in its sole
discretion. Indemnitor hereby waives any acceptance of this Agreement by
Lender, and this Agreement shall immediately be binding upon Indemnitor.
(k) Notice. All notices, demands, requests or other
communications to be sent by one party to the other hereunder or required
by law shall be in writing and shall be deemed to have been validly given
or served by delivery of the same in person to the intended addressee, or
by depositing the same with Federal Express or another reputable private
courier service for next business day delivery to the intended addressee at
its address set forth on the first page of this Agreement or at such other
address as may be designated by such party as herein provided, or by
depositing the same in the United States mail, postage prepaid, registered
or certified mail, return receipt requested, addressed to the intended
addressee at its address set forth on the first page of this Agreement or
at such other address as may be designated by such party as herein
provided. All notices, demands and requests shall be effective upon such
personal delivery, or one (1) business day after being deposited with the
private courier service, or two (2) business days after being deposited in
the United States mail as required above. Rejection or other refusal to
accept or the inability to deliver because of changed address of which no
notice was given as herein required shall be deemed to be receipt of the
notice, demand or request sent. By giving to the other party hereto at
least fifteen (15) days' prior written notice thereof in accordance with
the provisions hereof, the parties hereto shall have the right from time to
time to change their respective addresses and each shall have the right to
specify as its address any other address within the United States of
America.
(l) No Waiver; Time of Essence; Business Day. The failure of
any party hereto to enforce any right or remedy hereunder, or to promptly
enforce any such right or remedy, shall not constitute a waiver thereof nor
give rise to any estoppel against such party nor excuse any of the parties
hereto from their respective obligations hereunder. Any waiver of such
right or remedy must be in writing and signed by the party to be bound.
This Agreement is subject to enforcement at law or in equity, including
actions for damages or specific performance. Time is of the essence
hereof.
(m) Captions for Convenience. The captions and headings of the
sections and paragraphs of this Agreement are for convenience of reference
only and shall not be construed in interpreting the provisions hereof.
(n) Attorneys' Fees. In the event it is necessary for Lender to
retain the services of an attorney or any other consultants in order to
enforce this Agreement, or any portion thereof, Indemnitor agrees to pay to
Lender any and all reasonable costs and expenses, including, without
limitation, reasonable attorneys' fees, incurred by Lender as a result
thereof and such costs, fees and expenses shall be included in Costs.
(o) Successive Actions. A separate right of action hereunder
shall arise each time Lender acquires knowledge of any matter indemnified
or guaranteed by Indemnitor under this Agreement. Separate and successive
actions may be brought hereunder to enforce any of the provisions hereof at
any time and from time to time. No action hereunder shall preclude any
subsequent action, and Indemnitor hereby waives and covenants not to assert
any defense in the nature of splitting of causes of action or merger of
judgments.
(p) Reliance. Lender would not make the Loan to Borrower
without this Agreement. Accordingly, Indemnitor intentionally and
unconditionally enters into the covenants and agreements as set forth above
and understands that, in reliance upon and in consideration of such
covenants and agreements, the Loan shall be made and, as part and parcel
thereof, specific monetary and other obligations have been, are being and
shall be entered into which would not be made or entered into but for such
reliance.
(q) SUBMISSION TO JURISDICTION; WAIVER OF JURY TRIAL.
(1) INDEMNITOR, TO THE FULL EXTENT PERMITTED BY LAW, HEREBY
KNOWINGLY, INTENTIONALLY AND VOLUNTARILY, WITH AND UPON THE ADVICE OF
COMPETENT COUNSEL, (A) SUBMITS TO PERSONAL JURISDICTION IN THE STATE OF NEW
YORK OVER ANY SUIT, ACTION OR PROCEEDING BY ANY PERSON ARISING FROM OR
RELATING TO THIS AGREEMENT, (B) AGREES THAT ANY SUCH ACTION, SUIT OR
PROCEEDING MAY BE BROUGHT IN THE STATE OF NEW YORK OR ANY FEDERAL COURT OF
COMPETENT JURISDICTION SITTING THEREIN, (C) SUBMITS TO THE JURISDICTION OF
SUCH COURTS, AND, (D) TO THE FULLEST EXTENT PERMITTED BY LAW, AGREES THAT
NEITHER OF THEM WILL BRING ANY ACTION, SUIT OR PROCEEDING IN ANY OTHER
FORUM (BUT NOTHING HEREIN SHALL AFFECT THE RIGHT OF LENDER TO BRING ANY
ACTION, SUIT OR PROCEEDING IN ANY OTHER PROPER FORUM). INDEMNITOR FURTHER
CONSENTS AND AGREES TO SERVICE OF ANY SUMMONS, COMPLAINT OR OTHER LEGAL
PROCESS IN ANY SUCH SUIT, ACTION OR PROCEEDING BY REGISTERED OR CERTIFIED
U.S. MAIL, POSTAGE PREPAID, TO THE INDEMNITOR AT THE ADDRESS FOR NOTICES
DESCRIBED IN Section 5(k) HEREOF, AND CONSENTS AND AGREES THAT SUCH
SERVICE SHALL CONSTITUTE IN EVERY RESPECT VALID AND EFFECTIVE SERVICE (BUT
NOTHING HEREIN SHALL AFFECT THE VALIDITY OR EFFECTIVENESS OF PROCESS SERVED
IN ANY OTHER MANNER PERMITTED BY LAW).
(2) INDEMNITOR, TO THE FULL EXTENT PERMITTED BY LAW, HEREBY
KNOWINGLY, INTENTIONALLY AND VOLUNTARILY, WITH AND UPON THE ADVICE OF
COMPETENT COUNSEL, WAIVES, RELINQUISHES AND FOREVER FORGOES THE RIGHT TO A
TRIAL BY JURY IN ANY ACTION OR PROCEEDING BASED UPON, ARISING OUT OF, OR IN
ANY WAY RELATING TO THIS AGREEMENT OR ANY CONDUCT, ACT OR OMISSION OF
LENDER OR INDEMNITOR, OR ANY OF THEIR DIRECTORS, OFFICERS, PARTNERS,
MEMBERS, EMPLOYEES, AGENTS OR ATTORNEYS, OR ANY OTHER PERSONS AFFILIATED
WITH LENDER OR INDEMNITOR, IN EACH OR THE FOREGOING CASES, WHETHER SOUNDING
IN CONTRACT, TORT OR OTHERWISE.
(r) Waiver by Indemnitor. Indemnitor covenants and agrees that,
upon the commencement of a voluntary or involuntary bankruptcy proceeding
by or against Borrower, Indemnitor shall not seek or cause Borrower or any
other person or entity to seek a supplemental stay or other relief, whether
injunctive or otherwise, pursuant to 11 U.S.C. Section 105 or any other
provision of the Bankruptcy Reform Act of 1978, as amended, or any other
debtor relief law, (whether statutory, common law, case law or otherwise)
of any jurisdiction whatsoever, now or hereafter in effect, which may be or
become applicable, to stay, interdict, condition, reduce or inhibit the
ability of Lender to enforce any rights of Lender against Indemnitor by
virtue of this Agreement or otherwise.
(s) Joint and Several Liability. Notwithstanding anything to
the contrary herein, the representations, warranties, covenants and
agreements made by each of the persons comprising Indemnitor herein, and
the liability of each of the persons comprising Indemnitor hereunder, is
joint and several.
IN WITNESS WHEREOF, Indemnitor has executed this Indemnity Agreement
under seal as of the day and year first above written.
WELLSFORD COMMERCIAL PROPERTIES TRUST, a
Maryland real estate investment trust
By:/s/Edward Lowenthal
______________________________
Edward Lowenthal, President
WHWEL REAL ESTATE LIMITED PARTNERSHIP
By: WHATR Gen-Par, Inc., General Partner
By:/s/ Alan S. Kava
_______________________________
Name: Alan S. Kava
Title: Vice President
INDEMNITY AGREEMENT REGARDING HAZARDOUS MATERIALS
(Revolver)
THIS INDEMNITY AGREEMENT (this "Agreement"),
is made as of this ___ day of December, 1997, by WELLSFORD/WHITEHALL
PROPERTIES, L.L.C., a Delaware limited liability company ("Borrower"), and
WELLSFORD COMMERCIAL PROPERTIES TRUST, a Maryland real estate investment
trust ("Trust"), and WHWEL REAL ESTATE LIMITED PARTNERSHIP, ("WHWEL"; WHWEL
and Trust, collectively "Guarantor"), for the benefit of BANKBOSTON, N.A.,
a national banking association ("BankBoston"), as Administrative Agent for
itself, Goldman Sachs Mortgage Company and certain other lenders which may
now or hereafter become parties to the "Loan Agreement" (as hereinafter
defined) (BankBoston and such other lenders are hereinafter referred to
collectively as the "Lenders").
W I T N E S S E T H:
WHEREAS, Borrower is the owner of certain
real property more particularly described in Exhibit A attached hereto and
incorporated herein by this reference (the "Land"; the Land, together with
all improvements now or hereafter located in, on or under the Land,
collectively, the "Property");
WHEREAS, Lenders have agreed to provide to
Borrower a revolving loan in the amount of up to $150,000,000.00 (the
"Loan") pursuant to that certain Revolving Credit Agreement, dated of even
date herewith between Lenders, Borrower, Goldman Sachs Mortgage Company, as
Co-Arranger and Co-Syndication Agent, and BankBoston, as Administrative
Agent, Co-Arranger and Co-Syndication Agent (the "Loan Agreement"), which
Loan is evidenced by certain Notes of even date from Borrower to Lenders as
described in the Loan Agreement (collectively, together with all
amendments, modifications, consolidations, increases, supplements and
extensions thereof, the "Note"), and secured by, among other things, those
certain mortgages and deeds of trust of even date from Borrower to
BankBoston as Administrative Agent (the "Agent") conveying the Property and
to be recorded in the appropriate public records of the jurisdictions in
which the Property is located (collectively, together with all amendments,
modifications, consolidations, increases, supplements and extensions
thereof, the "Security Deed");
WHEREAS, as a condition to making the Loan,
Lenders require Borrower and Guarantor to provide certain indemnities
concerning Hazardous Materials (as hereinafter defined) presently upon, in
or under the Property, or hereafter placed or otherwise located thereon or
therein;
WHEREAS, to induce Lenders to make the Loan
to Borrower, Borrower and Guarantor have agreed to provide this Agreement
for Lenders' benefit.
NOW, THEREFORE, for and in consideration of
the sum of Ten and No/100 ($10.00) Dollars and other good and valuable
consideration, the receipt and sufficiency of which are hereby
acknowledged, Lenders, by their acceptance of delivery hereof, and Borrower
and Guarantor hereby agree as follows:
8. Definitions. The following definitions
shall apply for purposes of this Agreement:
(a) "Environmental Law" shall mean any
federal, state or local statute, regulation or ordinance or any judicial or
administrative decree or decision, whether now existing or hereinafter
enacted, promulgated or issued, with respect to any Hazardous Materials,
drinking water, groundwater, wetlands, landfills, open dumps, storage
tanks, underground storage tanks, solid waste, waste water, storm water
run-off, waste emissions or wells. Without limiting the generality of the
foregoing, the term shall encompass each of the following statutes, and
regulations promulgated thereunder, and amendments and successors to such
statutes and regulations, as may be enacted and promulgated from time to
time: (i) the Comprehensive Environmental Response, Compensation and
Liability Act of 1980 (codified in scattered sections of 26 U.S.C.; 33
U.S.C.; 42 U.S.C. and 42 U.S.C. Section 9601 et seq.); (ii) the Resource
Conservation and Recovery Act of 1976 (42 U.S.C. Section 6901 et seq.);
(iii) the Toxic Substances Control Act (15 U.S.C. et seq.); (iv) the Clean
Water Act (33 U.S.C. Section 1251 et seq.); (v) the Clean Air Act (42
U.S.C. Section 7401 et seq.); (vi) the Safe Drinking Water Act (21 U.S.C.
Section 349; 42 U.S.C. Section 201 and Section 300f et seq.); (vii) the
National Environmental Policy Act of 1969 (42 U.S.C. Section 4321); and
(viii) the Superfund Amendment and Reauthorization Act of 1986 (codified in
scattered sections of 10 U.S.C., 29 U.S.C., 33 U.S.C. and 42 U.S.C.).
(b) "Hazardous Materials" shall mean
each and every element, compound, chemical mixture, contaminant, pollutant,
material, waste or other substance which is defined, determined or
identified as hazardous or toxic under any Environmental Law. Without
limiting the generality of the foregoing, the term shall mean and include:
(i) "hazardous substances" as defined in the Comprehensive
Environmental Response, Compensation and Liability Act of 1980, the
Superfund Amendment and Reauthorization Act of 1986, or Title III of the
Superfund Amendment and Reauthorization Act, each as amended, and
regulations promulgated thereunder;
(ii) "hazardous waste" as defined in the Resource
Conservation and Recovery Act of 1976, as amended, and regulations
promulgated thereunder;
(iii) "hazardous materials" as defined in the Hazardous
Materials Transportation Act, as amended, and regulations promulgated
thereunder; and
(iv) "chemical substance or mixture" as defined in the Toxic
Substances Control Act, as amended, and regulations promulgated thereunder.
(c) "Indemnified Parties" shall mean each of the Lenders,
their respective parents, subsidiaries and affiliates, each of their
respective shareholders, directors, officers, employees and agents, and the
successors and assigns of any of them; and "Indemnified Party" shall mean
any one of the Indemnified Parties.
(d) "Release" shall mean any spilling, leaking, pumping,
pouring, emitting, emptying, discharging, injecting, storing, escaping,
leaching, dumping, or discarding, burying, abandoning, or disposing into
the environment.
(e) "Threat of Release" shall mean a substantial likelihood
of a Release which requires action to prevent or mitigate damage to the
environment which may result from such Release.
9. Indemnity Agreement. Borrower and Guarantor, each jointly
and severally, covenant and agree, at their sole cost and expense, to
indemnify, defend (at trial and appellate levels and with attorneys,
consultants and experts acceptable to Lenders) and hold each Indemnified
Party harmless against and from any and all liens, damages, losses,
liabilities, obligations, settlement payments, penalties, assessments,
citations, directives, claims, litigation, demands, defenses, judgments,
suits, proceedings, costs, disbursements or expenses of any kind or of any
nature whatsoever (including, without limitation, reasonable attorneys',
consultants' and experts' fees and disbursements incurred in investigating,
defending against, settling or prosecuting any claim, litigation or
proceeding) which may at any time be imposed upon, incurred by or asserted
or awarded against such Indemnified Party or the Property and, and arising
directly or indirectly from or out of: (A) the Release or Threat of
Release of any Hazardous Materials on, in, under or affecting all or any
portion of the Property or any surrounding areas, regardless of whether or
not caused by or within the control of Borrower, first occurring prior to
the payment in full of the "Obligations" (as defined in the Loan
Agreement); (B) the violation of any Environmental Laws relating to or
affecting the Property or the Borrower, whether or not caused by or within
the control of Borrower, first occurring prior to the payment in full of
the "Obligations" (as defined in the Loan Agreement); (C) the failure of
Borrower or Guarantor to comply fully with the terms and conditions of this
Agreement; (D) the violation of any Environmental Laws in connection with
other real property of Borrower which gives or may give rise to any rights
whatsoever in any party with respect to the Property by virtue of any
Environmental Laws, first occurring prior to the payment in full of the
"Obligations" (as defined in the Loan Agreement); or (E) the enforcement of
this Agreement, including, without limitation, (i) the costs of assessment,
containment and/or removal of any and all Hazardous Materials from all or
any portion of the Property or any surrounding areas, (ii) the costs of any
actions taken in response to a Release or Threat of Release of any
Hazardous Materials on, in, under or affecting all or any portion of the
Property or any surrounding areas to prevent or minimize such Release or
Threat of Release so that it does not migrate or otherwise cause or
threaten danger to present or future public health, safety, welfare or the
environment, and (iii) costs incurred to comply with the Environmental Laws
in connection with all or any portion of the Property or any surrounding
areas. Borrower's and Guarantor's obligations hereunder are separate and
distinct from Borrower's and Guarantor's obligations under the "Loan
Documents" (as hereinafter defined), and Lenders' and the other Indemnified
Parties' rights under this Agreement shall be in addition to all rights of
Agent and Lenders under the Security Deed, the Note, the Loan Agreement,
that certain Indemnity and Guaranty Agreement dated of even date herewith
made by Guarantor in favor of Lenders (the "Guaranty") and under any other
documents or instruments evidencing, securing or relating to the Loan (the
Security Deed, the Note, the Loan Agreement, the Guaranty and such other
documents or instruments, as amended or modified from time to time, being
herein referred to as the "Loan Documents"), and payments by Borrower or
Guarantor under this Agreement shall not reduce Borrower's or Guarantor's
obligations and liabilities under any of the Loan Documents.
10. Survival.
(a) The indemnity set forth above in Paragraph 2 shall
survive the repayment of the Loan and any exercise of any remedies under
the Security Deed, including without limitation, the power of sale, or any
other remedy in the nature of foreclosure, and shall not merge with any
deed given by Borrower to Agent or Lenders in lieu of foreclosure or any
deed under a power of sale.
(b) It is agreed and intended by Borrower, Guarantor and
Lenders that the indemnity set forth above in Paragraph 2 may be assigned
or otherwise transferred by each Lender to its successors and assigns and
to any subsequent purchaser of all or any portion of the Property by,
through or under Agent or Lenders, without notice to Borrower or Guarantor
and without any further consent of Borrower or Guarantor. To the extent
consent of any such assignment or transfer is required by law, advance
consent to any such assignment or transfer is hereby given by Borrower and
Guarantor in order to maximize the extent and effect of the indemnity given
hereby.
11. No Waiver. The liabilities of Borrower and Guarantor under
this Agreement shall in no way be limited or impaired by, and Borrower and
Guarantor hereby consent to and agree to be bound by, any amendment or
modification of the provisions of the Loan Documents to or with Lenders by
Borrower or Guarantor or any person who succeeds Borrower as owner of the
Property. In addition, notwithstanding any terms of any of the Loan
Documents to the contrary, the liability of Borrower and Guarantor under
this Agreement shall in no way be limited or impaired by: (i) any
extensions of time for performance required by any of the Loan Documents;
(ii) any sale, assignment or foreclosure of the Note or the Security Deed
or any sale or transfer of all or part of the Property; (iii) any
exculpatory provision in any of the Loan Documents limiting Lenders'
recourse to property encumbered by the Security Deed or to any other
security, or limiting Lenders' rights to a deficiency judgment against
Borrower; (iv) the accuracy or inaccuracy of the representations and
warranties made by Borrower or Guarantor under any of the Loan Documents;
(v) the release of Borrower or Guarantor or any other person from
performance or observance of any of the agreements, covenants, terms or
conditions contained in the Loan Documents by operation of law, Lenders'
voluntary act, or otherwise; (vi) the release or substitution, in whole or
in part, of any security for the Note; or (vii) Lenders' failure to record
the Security Deed or file any UCC-1 financing statements (or Lenders'
improper recording or filing of any thereof) or to otherwise perfect,
protect, secure or insure any security interest or lien given as security
for the Note; and, in any such case, whether with or without notice to
Borrower or Guarantor and with or without consideration.
12. Waiver by Borrower. BORROWER AND GUARANTOR WAIVE ANY RIGHT
OR CLAIM OF RIGHT TO CAUSE A MARSHALING OF BORROWER'S OR GUARANTOR'S ASSETS
OR TO CAUSE LENDERS TO PROCEED AGAINST ANY OF THE SECURITY FOR THE LOAN
BEFORE PROCEEDING UNDER THIS AGREEMENT AGAINST BORROWER AND GUARANTOR OR TO
PROCEED AGAINST BORROWER AND GUARANTOR IN ANY PARTICULAR ORDER. BORROWER
AND GUARANTOR AGREE THAT ANY PAYMENTS REQUIRED TO BE MADE HEREUNDER SHALL
BECOME DUE ON DEMAND. BORROWER AND GUARANTOR EXPRESSLY WAIVE AND
RELINQUISH ALL RIGHTS AND REMEDIES (INCLUDING ANY RIGHTS OF SUBROGATION)
ACCORDED BY APPLICABLE LAW TO INDEMNITORS.
13. Delay. No delay on Lenders' part in exercising any right,
power or privilege under any of the Loan Documents shall operate as a
waiver of any privilege, power or right hereunder.
14. Releases. Any one or more of Borrower and Guarantor or any
other party liable upon or in respect of this Agreement or the Loan may be
released without affecting the liability of any party not so released.
15. Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original. Said counterparts
shall constitute but one and the same instrument and shall be binding upon
each of the undersigned individually as fully and completely as if all had
signed but one instrument so that the joint and several liability of each
of the undersigned hereunder shall be unaffected by the failure of any of
the undersigned to execute any or all of the said counterparts.
DGA Notices. Each notice, demand, election or request provided
for or permitted to be given pursuant to this Agreement shall be given in
the manner provided in the Loan Agreement.
17. Amendments. No provision of this Agreement may be changed,
waived, discharged or terminated orally, by telephone or by any other means
except by an instrument in writing signed by the party against whom
enforcement of the change, waiver, discharge or termination is sought.
18. Binding Effect. Except as herein provided, this Agreement
shall be binding upon Borrower and Guarantor and their respective
successors, successors-in-title and assigns, and shall inure to the benefit
of Lenders, the other Indemnified Parties, and their respective successors
and assigns. Notwithstanding the foregoing, Borrower and Guarantor,
without the prior written consent of Lenders in each instance, may not
assign, transfer or set over to another, in whole or in part, all or any
part of its or their benefits, rights, duties and obligations hereunder,
including, but not limited to, performance of and compliance with
conditions hereof.
19. GOVERNING LAW; CONSENT TO JURISDICTION. THIS AGREEMENT AND
THE RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER SHALL IN ALL RESPECTS
BE GOVERNED BY, AND INTERPRETED AND DETERMINED IN ACCORDANCE WITH, THE LAWS
OF THE COMMONWEALTH OF MASSACHUSETTS (EXCLUDING THE LAWS APPLICABLE TO
CONFLICTS OR CHOICE OF LAW). BORROWER AND GUARANTOR HEREBY IRREVOCABLY AND
UNCONDITIONALLY (A) SUBMIT TO PERSONAL JURISDICTION IN THE COMMONWEALTH OF
MASSACHUSETTS OVER ANY SUIT, ACTION OR PROCEEDING ARISING OUT OF OR
RELATING TO THIS AGREEMENT, AND (B) WAIVE ANY AND ALL PERSONAL RIGHTS UNDER
THE LAWS OF ANY STATE (I) TO THE RIGHT, IF ANY, TO TRIAL BY JURY, OR (II)
TO OBJECT TO JURISDICTION WITHIN THE COMMONWEALTH OF MASSACHUSETTS OR VENUE
IN ANY PARTICULAR FORUM (INCLUDING FEDERAL) WITHIN THE COMMONWEALTH OF
MASSACHUSETTS. BORROWER AND GUARANTOR AGREE THAT, IN ADDITION TO ANY
METHODS OF SERVICE OF PROCESS PROVIDED FOR UNDER APPLICABLE LAW, ALL
SERVICE OF PROCESS IN ANY SUCH SUIT, ACTION OR PROCEEDING MAY BE MADE BY
CERTIFIED OR REGISTERED MAIL, RETURN RECEIPT REQUESTED, DIRECTED TO
BORROWER AND GUARANTOR AT THE ADDRESSES SET FORTH IN THE LOAN AGREEMENT,
AND SERVICE SO MADE SHALL BE COMPLETE FIVE (5) DAYS AFTER THE SAME SHALL BE
SO MAILED. NOTHING CONTAINED HEREIN, HOWEVER, SHALL PREVENT LENDERS FROM
BRINGING ANY SUIT, ACTION OR PROCEEDING OR EXERCISING ANY RIGHTS AGAINST
ANY SECURITY AND AGAINST BORROWER OR GUARANTOR PERSONALLY, AND AGAINST ANY
PROPERTY OF BORROWER, WITHIN ANY OTHER STATE. INITIATING SUCH SUIT, ACTION
OR PROCEEDING OR TAKING SUCH ACTION IN ANY STATE SHALL IN NO EVENT
CONSTITUTE A WAIVER OF THE AGREEMENT CONTAINED HEREIN THAT THE LAWS OF THE
STATE OF NEW YORK SHALL GOVERN THE RIGHTS AND OBLIGATIONS OF BORROWER, AND
GUARANTOR AND LENDERS HEREUNDER OR OF THE SUBMISSION HEREIN MADE BY
BORROWER AND GUARANTOR TO PERSONAL JURISDICTION WITHIN THE STATE OF NEW
YORK.
20. Recourse. Notwithstanding anything to the contrary
contained herein or in any other Loan Document, the obligations of WHWEL
Real Estate Limited Partnership under this Agreement whether arising under
this Agreement or otherwise in connection with any of the Loan Documents,
shall be without recourse to any limited partner of WHWEL Real Estate
Limited Partnership and no such person shall have any liability with
respect thereto.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
<PAGE>
IN WITNESS WHEREOF, Borrower and Guarantor have caused this
Agreement to be executed under seal as of the day and year first written
above.
BORROWER:
WELLSFORD WHITEHALL PROPERTIES, L.L.C.,
a Delaware limited liability company
By: Wellsford Commercial Properties
Trust, a Maryland real estate
investment trust, its manager
By: /s/ Edward Lowenthal,
________________________
Edward Lowenthal,
President
GUARANTOR:
WELLSFORD COMMERCIAL PROPERTIES TRUST, a
Maryland real estate investment trust
By: /s/ Edward Lowenthal,
________________________
Edward Lowenthal,
President
WHWEL REAL ESTATE LIMITED PARTNERSHIP
By: WHATR Gen-Par, Inc., General
Partner
By: /s/ Alan S. Kava
__________________________
Name: Alan S. Kava
Title: Vice President
FIRST AMENDED AND RESTATED MASTER CREDIT AGREEMENT
DATED DECEMBER 30, 1997,
EFFECTIVE AS OF JULY 31, 1997,
among
THE WOODLANDS COMMERCIAL PROPERTIES COMPANY, L.P.,
THE WOODLANDS LAND DEVELOPMENT COMPANY, L.P.,
and
BANKBOSTON, N.A.,
MORGAN STANLEY SENIOR FUNDING, INC.,
AS DOCUMENTATION AGENT,
and
THE OTHER BANKS THAT ARE A PARTY
TO THIS AGREEMENT
and
OTHER BANKS WHICH MAY BECOME
PARTIES TO THIS AGREEMENT
AND
BANKBOSTON, N.A.,
AS MANAGING AGENT AND SYNDICATION AGENT
<PAGE>
FIRST AMENDED AND RESTATED MASTER CREDIT AGREEMENT
THIS FIRST AMENDED AND RESTATED MASTER CREDIT AGREEMENT is made
the 30th day of December, 1997, effective as of July 31, 1997, by and among
THE WOODLANDS COMMERCIAL PROPERTIES COMPANY, L.P. ("Commercial Company"), a
Texas limited partnership having its principal place of business at 777
Main Street, Suite 2100, Fort Worth, Texas 76102-5325, THE WOODLANDS LAND
DEVELOPMENT COMPANY, L.P. ("Land Company"; Commercial Company and Land
Company are hereafter referred to collectively as "Borrowers"), a Texas
limited partnership having its principal place of business at 777 Main
Street, Suite 2100, Fort Worth, Texas 76102-5325, BANKBOSTON, N.A., MORGAN
STANLEY SENIOR FUNDING, INC., individually and as Documentation Agent, the
other lenders that are a party to this Agreement, and the other lending
institutions which may become parties hereto pursuant to Section 18 (the
"Banks"), and BANKBOSTON, N.A., as Administrative Agent, Managing Agent and
Syndication Agent for the Banks (the "Agent").
RECITALS
WHEREAS, Commercial Company, BKB, MSSF and Agent have entered
into that certain Credit Agreement dated July 31, 1997 (the "Original
Credit Agreement); and
WHEREAS, following the closing of the transactions contemplated
by the Original Credit Agreement, the assets of Commercial Company were
divided between Commercial Company and Land Company pursuant to that
certain Certificate of Merger of The Woodlands Commercial Properties
Company, L.P. and The Woodlands Land Development Company, L.P. dated July
31, 1997 and the Plan of Merger attached thereto (the "Division
Agreement"), and the primary liability as between Commercial Company and
Land Company under the Original Credit Agreement was divided between
Commercial Company and Land Company pursuant to the Division Agreement; and
WHEREAS, the Banks and the Agent consented to such division of
assets and assumption of liabilities subject to the terms of the Original
Credit Agreement; and
WHEREAS, as a condition to such consent, Land Company assumed the
obligations of Commercial Company under the Original Credit Agreement and
the other documents relating thereto pursuant to that certain Assumption
Agreement dated July 31, 1997 (the "Assumption Agreement"), such that
Commercial Company and Land Company were jointly and severally liable for
such obligations; and
WHEREAS, the parties desire to recast the "Revolving Credit
Loans", as such term is defined in the Original Credit Agreement, as the
Revolving Credit Loans and Secured Term Loans, as such terms are
hereinafter defined, and to recast the "Term Loans", as such term is
defined in the Original Credit Agreement, as the Second Secured Term Loans,
as such term is hereinafter defined; and
WHEREAS, the parties desire to enter into this Agreement to
reflect such recasting of such Indebtedness and reallocation of same among
the Banks, to further evidence the agreement of the parties with respect to
the division of the loans contemplated by the Original Credit Agreement,
the Division Agreement and the Assumption Agreement and to make certain
other modifications to the Original Credit Agreement;
NOW, THEREFORE, in consideration of the recitals herein and the
mutual covenants contained herein, the parties hereto hereby amend and
restate the Original Credit Agreement in its entirety as follows:
Section 21. DEFINITIONS AND RULES OF INTERPRETATION
Section 21.1. Definitions The following terms shall have the
meanings set forth in this Section 1 or elsewhere in the provisions of
this Agreement referred to below:
Account Debtor. Any person who is obligated on any of the
Accounts Receivable.
Accounts Receivable. All accounts, whether now owned or
hereafter acquired by the respective Borrowers and whether now existing or
hereafter arising, and all proceeds of the foregoing, from the Municipal
Utility District Contracts and the Note Receivables, as more particularly
described in the Security Agreements.
Adjusted Cash Flow. With respect to the Borrowers on a
combined basis for any fiscal period, an amount equal to the Operating Cash
Flow of the Borrowers, less the sum of all interest due and payable with
respect to the Loans for such period, and less mandatory interest and
principal payments due and payable during such period on other permitted
Indebtedness of the Borrowers for such period.
Adjusted Net Amount. The outstanding principal amount
payable pursuant to the Eligible Accounts Receivable, as adjusted as
provided in the Borrowing Base worksheet attached hereto as Exhibit E.
Adjusted Value. As of any Quarterly Measurement Date, the
Appraised Value as most recently determined under Section 5.2(a), (c) or
(d) of a Borrowing Base Asset (other than Eligible Accounts Receivable), as
adjusted as of such Quarterly Measurement Date by the Borrowers to reflect
any sales, changes in leasing status, transfers, new Indebtedness, changes
in Partial Interests, new development or other circumstance affecting the
Borrowing Base Assets, as provided in Section 5.2(b).
Affiliates. As applied to any Person, any other Person
directly or indirectly controlling, controlled by, or under common control
with, that Person. For purposes of this definition, "control" (including,
with correlative meanings, the terms "controlling", "controlled by" and
"under common control with"), as applied to any Person, means (a) the
possession, directly or indirectly, of the power to vote ten percent (10%)
or more of the stock, shares, voting trust certificates, beneficial
interests, partnership interests, member interests or other interests
having voting power for the election of directors of such Person or
otherwise to direct or cause the direction of the management and policies
of that Person, whether through the ownership of voting securities or by
contract or otherwise, or (b) the ownership of (i) a general partnership
interest, (ii) a managing member's interest in a limited liability company
or (iii) a limited partnership interest or preferred stock (or other
ownership interest) representing ten percent (10%) or more of the
outstanding limited or general partnership interests, preferred stock or
other ownership interests of such Person. An Affiliate shall not include a
Controlled Subsidiary or a Non-Controlled Subsidiary.
Agent. BKB, acting as Administrative Agent, Managing Agent
and Syndication Agent for the Banks, its successors and assigns.
Agent's Head Office. The Agent's head office located at 100
Federal Street, Boston, Massachusetts 02110, or at such other location as
the Agent may designate from time to time by notice to the Borrowers and
the Banks.
Agent's Special Counsel. Long Aldridge & Norman LLP or such
other counsel as may be approved by the Agent.
Agreement. This First Amended and Restated Master Credit
Agreement, including the Schedules and Exhibits hereto.
Agreement Regarding Fees. See Section 4.2.
Agreement Regarding Negative Pledge. The Amended and
Restated Agreement Regarding Negative Pledge dated of even date herewith
made by the parties named herein in favor of the Agent and the Banks, as
the same may be modified or amended.
Appraisal. An MAI appraisal of the value of a parcel of
Real Estate, determined on a fair market value basis, performed by an
independent appraiser selected by the Agent who is not an employee of the
Borrowers, the Agent or a Bank, the form and substance of such appraisal
and the identity of the appraiser to be in accordance with regulatory laws
and policies (both regulatory and internal) applicable to the Banks and
otherwise acceptable to the Agent.
Appraised Value. The fair market value of a parcel of Real
Estate determined by the most recent Appraisal of such parcel or update
obtained pursuant to Section 5.2(c) or (d) subject, however, to such
changes or adjustments to the value determined thereby as may be required
by the appraisal department of the Agent in its good faith business
judgment, or the valuation proposed by the Borrowers and approved by the
Agent as provided in Section 5.2(c) or (d), whichever is applicable. With
respect to Land Assets, the Appraised Value may be determined on a per lot
or per acre basis and then multiplied by the number of lots or acres.
Assignment of Leases and Rents. Each of the collateral
assignments of leases and rents from a Borrower to the Agent, as the same
may be modified or amended, pursuant to which there shall be assigned to
the Agent for the benefit of the Banks a security interest in the interest
of such Borrower as lessor with respect to all Leases of all or any part of
a Mortgaged Property, each such collateral assignment to be in form and
substance satisfactory to the Agent.
Assignment of Management Agreement and Subordination. The
collateral assignment of the Management Agreements from a Borrower to the
Agent, as the same may be modified or amended, pursuant to which there
shall be collaterally assigned to the Agent for the benefit of the Banks a
security interest in the interest of such Borrower or such Guarantor with
respect to the Management Agreements, together with the consent of the
manager thereunder to such assignment and a subordination of the manager's
rights with respect to the Mortgaged Properties to the rights of the Agent
with respect thereto.
Assignment of Interests. Each of the collateral assignments
of partner's or limited liability company member's interest or rights to
distributions from a Borrower to the Agent, as the same may be modified or
amended, pursuant to which there shall be collaterally assigned to the
Agent a security interest in the interest of such Person in certain of the
Partnerships or in rights to distributions as more particularly described
therein, each such assignment to be in form and substance satisfactory to
the Agent.
Associations. Collectively, The Woodlands Association and
Woodlands Commercial Owners Association.
Balance Sheet Date. July 31, 1997.
Banks. BKB, MSSF, the other Banks a party hereto, and any
other Person who becomes an assignee of any rights of a Bank pursuant to
Section 18; and collectively, the Revolving Credit Banks, the Secured Term
Loan Banks and the Second Secured Term Loan Banks.
Base Rate. The greater of (a) the annual rate of interest
announced from time to time by BKB at its head office in Boston,
Massachusetts as its "base rate" or (b) one-half of one percent (0.5%)
above the Federal Funds Effective Rate (rounded upwards, if necessary, to
the next one-eighth of one percent). Any change in the rate of interest
payable hereunder resulting from a change in the Base Rate shall become
effective as of the opening of business on the day on which such change in
the Base Rate becomes effective.
Base Rate Loans. Collectively, the Revolving Credit Base
Rate Loans, the Secured Term Base Rate Loans and the Second Secured Term
Base Rate Loans.
BKB. BankBoston, N.A., a national banking association.
Borrowers. As defined in the preamble hereto.
Borrowing Base. At any time, the Borrowing Base for the
Borrowers on a combined basis shall be an amount equal to the sum of:
(a) sixty-five percent (65%) of the Adjusted Value of the
Developed Residential Land;
(b) forty percent (40%) of the Adjusted Value of the
Developed Commercial Land;
(c) forty-five percent (45%) of the Adjusted Value of the
Undeveloped Residential Land;
(d) thirty percent (30%) of the Adjusted Value of the
Undeveloped Commercial Land;
(e) seventy-five percent (75%) of the Adjusted Value of the
Conference Center;
(f) for each Income Property, an amount equal to the sum of
(i) the product obtained by multiplying (x) the advance percentage for the
Income Property set forth on Schedule 1.2 hereto (the advance percentage
for new Income Properties to be determined and approved by the Majority
Banks pursuant to Section 5.2(i)), by (y) the Adjusted Value of such
Income Property, minus (ii) the outstanding principal amount of any
Indebtedness that is secured by such Income Property (but not less than
zero);
(g) for each Partial Interest, an amount equal to the
product obtained by multiplying (x) the sum of (i) the product obtained by
multiplying (A) the sum of the Adjusted Value of each Income Property
underlying the Partial Interest and (B) the advance percentage for the
Income Property underlying the Partial Interest set forth on Schedule 1.2
hereto (the advance percentage for new Income Properties to be determined
and approved by the Majority Banks pursuant to Section 5.2(i)), minus (ii)
the outstanding principal amount of any Indebtedness that is secured by
such Income Property, and (y) the Partial Interest (expressed as a
percentage) (but not less than zero);
(h) ninety percent (90%) of the Adjusted Net Amount of the
Eligible Accounts Receivable; and
(i) seventy percent (70%) of the historic costs (including
land at its Borrowing Base value) of unencumbered Properties under
Construction owned by Commercial Company provided that such aggregate
historic costs shall not exceed $20,000,000.00 at any time.
The advance percentage for the Partial Interests and Income
Properties as of July 31,1997 is set forth as Schedule 1.2 hereto. A form
showing the computation of the Borrowing Base as of a Quarterly Measurement
Date is set forth on Exhibit E hereto. The Borrowing Base must satisfy the
conditions of Section 7.19 at all times.
Notwithstanding the foregoing, the Adjusted Value of a
Partial Interest or Income Property shall be zero if material Indebtedness
of the applicable entity is subject to acceleration or is thereafter
accelerated.
Borrowing Base Assets. Collectively, the Developed
Residential Land, the Developed Commercial Land, the Undeveloped
Residential Land, the Undeveloped Commercial Land, the Conference Center,
the Income Properties, the Partial Interests, the Eligible Accounts
Receivable and Properties under Construction.
Budget. The annual budgets of the Borrowers, which Budget
shall be a detailed estimate of projected income, cash flow, land
development costs and other capital expenditures of the Borrowers for each
quarter of the calendar year in question, the projected cash flows and net
income for such year, and a summary of the significant assumptions upon
which such projections are based. In addition, the Budget shall include
the annual income and expenditures for the management, leasing,
maintenance, supervision, direction and operation of each Income Property
(including those owned by Controlled Subsidiaries to the extent reasonably
available from such entities) included within the Property for the calendar
year in question. The budget shall also include a budget of significant
capital improvements, repairs, replacements, tenant improvements and
leasing commissions and other similar tenant-related expenses with respect
to each Income Property (including those owned by Controlled Subsidiaries
to the extent reasonably available from such entities) included within the
Property for the calendar year in question, which shall be a complete and
reasonable estimate of the capital expenditures, and expenditures for
tenant improvements and leasing commissions and other similar tenant-
related expenses, for such Property for the period covered thereby. Each
Budget shall be a reasonable estimate of the Borrowers of the income and
expenditures for the Property for the period covered thereby and shall be
prepared by the Borrowers in good faith and in accordance with sound cash
basis accounting practices applied on a consistent basis (except that net
income shall be prepared in accordance with generally accepted accounting
principals applied on a consistent basis). Notwithstanding anything herein
to the contrary, any fees or expenses to be paid to the Borrowers, any
General Partner or any affiliate of any of such Persons shall not exceed an
amount which would be paid to an unaffiliated entity in any arms-length
transaction.
Building. All of the buildings, structures and improvements
now or hereafter located on a parcel of Real Estate.
Build-To-Suit Properties. Properties owned by Commercial
Company or its Controlled Subsidiaries which are each 85% preleased under a
net lease having a term of not less than five (5) years and with respect to
which Vertical Commercial Improvements are to be constructed.
Business Day. Any day on which banking institutions in
Boston, Massachusetts are open for the transaction of banking business and,
in the case of Eurodollar Rate Loans, which also is a Eurodollar Business
Day.
Capitalized Lease. A lease under which a Person is the
lessee or obligor, the discounted future rental payment obligations under
which are required to be capitalized on the balance sheet of the lessee or
obligor in accordance with generally accepted accounting principles.
Cash Collateral Account Agreement. The First Amended and
Restated Cash Collateral Account Agreement between the Borrowers and the
Agent, as the same may be modified or amended, such agreement to be in form
and substance satisfactory to the Agent.
Cash Flow Excess Amount. As defined in the Cash Collateral
Account Agreement.
CERCLA. See Section 6.20.
Change of Control. A Change of Control shall be deemed to
occur upon the occurrence of any of the following events: (a) there shall
occur any sale, transfer or other disposition of any of the ownership
interests in a Borrower, or any sale, transfer or other disposition of any
of the direct or indirect ownership interests in any Person or Persons
directly or indirectly holding the ownership interests in a Borrower if
after giving effect thereto either of the Crescent Group or the MSREF Group
does not, directly or indirectly, own and control at least their percentage
of ownership interests in such Borrower as of July 31,1997, or the Crescent
Group and the MSREF Group collectively do not, directly or indirectly, own
and control at least seventy percent (70%) of the ownership interests in
such Borrower; or (b) the addition of a new general partner or shareholder
of a Borrower that is not a member of the Crescent Group or the MSREF
Group; or (c) any Person other than a member of the Crescent Group or the
MSREF Group shall be the managing partner of a Borrower. A "Change of
Control" shall not include the sale, transfer or assignment of interests
between the existing partners of a Borrower, between the members of the
Crescent Group and the MSREF Group, or the sale, transfer or assignments of
interests among the members of the Crescent Group or the MSREF Group.
Closing Date. The first date on which all of the conditions
set forth in Section 10 and Section 11 have been satisfied or waived in
writing.
Code. The Internal Revenue Code of 1986, as amended.
Collateral. All of (a) the property, rights and interests
of the Borrowers and the Guarantors which are subject to the security
interests, liens and mortgages created by the Security Documents and the
New Collateral Documents, including, without limitation, the Mortgaged
Property, and (b) the Guaranty.
Commercial Company Revolving Credit Commitment. With
respect to each Revolving Credit Bank, the amount set forth on Schedule 1.1
hereto as the amount of such Revolving Credit Bank's Commercial Company
Revolving Credit Commitment to make or maintain Commercial Company
Revolving Credit Loans to Commercial Company, as the same may be changed
from time to time in accordance with the terms of this Agreement.
Commercial Company Revolving Credit Commitment Percentage.
With respect to each Revolving Credit Bank, the percentage set forth on
Schedule 1.1 hereto as such Revolving Credit Bank's percentage of the
aggregate Commercial Company Revolving Credit Commitments of all of the
Revolving Credit Banks.
Commercial Company Revolving Credit Loan or Loans. An
individual Revolving Credit Loan or the aggregate Revolving Credit Loans,
as the case may be, made by the Revolving Credit Banks hereunder to
Commercial Company and evidenced by Commercial Company Revolving Credit
Notes.
Commercial Company Revolving Credit Notes. See Section
2.4.
Commercial Company Second Secured Term Loan Commitment. As
to each Second Secured Term Loan Bank, the amount equal to such Second
Secured Term Loan Bank's Commercial Company Second Secured Term Loan
Commitment Percentage of the aggregate principal amount of the Second
Secured Term Loans from time to time outstanding to Commercial Company.
Commercial Company Second Secured Term Loan Commitment
Percentage. With respect to each Second Secured Term Loan Bank, the
percentage set forth on Schedule 1.1 hereto as such Second Secured Term
Loan Bank's percentage of the aggregate Second Secured Term Loan to
Commercial Company.
Commercial Company Second Secured Term Loan or Second
Secured Term Loans. An individual Second Secured Term Loan or the
aggregate Second Secured Term Loans, as the case may be, made by the Second
Secured Term Loan Banks hereunder to Commercial Company and evidenced by
Commercial Company Second Secured Term Loan Notes.
Commercial Company Second Secured Term Loan Note. See
Section 2A.2.
Commercial Company Secured Term Loan Commitment. As to each
Secured Term Loan Bank, the amount equal to such Secured Term Loan Bank's
Commercial Company Secured Term Loan Commitment Percentage of the aggregate
principal amount of the Secured Term Loans from time to time outstanding to
Commercial Company.
Commercial Company Secured Term Loan Commitment Percentage.
With respect to each Secured Term Loan Bank, the percentage set forth on
Schedule 1.1 hereto as such Secured Term Loan Bank's percentage of the
aggregate Secured Term Loan to Commercial Company.
Commercial Company Secured Term Loan or Secured Term Loans.
An individual Secured Term Loan or the aggregate Secured Term Loans, as
the case may be, made by the Secured Term Loan Banks hereunder to
Commercial Company and evidenced by Commercial Company Secured Term Loan
Notes.
Commercial Company Secured Term Loan Note. See Section
2A.2.
Commercial Land. Collectively, the Developed Commercial Land
and the Undeveloped Commercial Land. The Commercial Land shall not include
any of the Common Area Land.
Commitment. With respect to each Bank, the aggregate of (a)
the Revolving Credit Commitment, (b) the Secured Term Loan Commitment and
(c) the Second Secured Term Loan Commitment, as set forth on Schedule 1.1
hereto.
Commitment Percentage. With respect to each Bank, the
percentage set forth on Schedule 1.1 hereto as such Bank's percentage of
the aggregate Commitments of all of the Banks.
Common Area Land. The Common Area Land shall be all land
located within the Woodlands Project and Wood Trace which are now or
hereafter used, designated or reserved for amenities, green space, open
space and infrastructure. As of the date hereof, the Woodlands Project
includes approximately 4,602 acres of Common Area Land.
Compliance Certificate. See Section 7.4(e).
Conference Center. The Woodlands Executive Conference
Center Resort & Country Club, including approximately 364 guestrooms, 34
meeting rooms, 6 restaurants, 81 holes of golf and related facilities, and
being more particularly described as the "Property" in Schedule B attached
to the Security Deed relating thereto.
Consolidated or combined. With reference to any term
defined herein, that term as applied to the accounts of a Person and its
Controlled Subsidiaries, consolidated or combined in accordance with
generally accepted accounting principles.
Consolidated Tangible Net Worth. The amount by which
Consolidated Total Assets exceeds Consolidated Total Liabilities and less
to the extent included in Total Assets the sum of:
(j) the total book value of all assets of the Borrowers and
their interests in their respective subsidiaries properly classified as
intangible assets under generally accepted accounting principles, including
such items as good will, the purchase price of acquired assets in excess of
the fair market value thereof, trademarks, trade names, service marks,
brand names, copyrights, patents and licenses, and rights with respect to
the foregoing; plus
(k) all amounts representing any write-up in the book value
of any assets of the Borrowers or their respective subsidiaries resulting
from a revaluation thereof subsequent to the Balance Sheet Date.
Consolidated Total Assets. All assets of the Borrowers and
their respective subsidiaries determined on a combined basis in accordance
with generally accepted accounting principles. All real estate assets
shall be valued on an undepreciated cost basis. The assets of the
Borrowers and their respective subsidiaries on the consolidated financial
statements of the Borrowers and their respective subsidiaries shall be
adjusted to reflect the applicable Borrower's allocable share of such
asset, for the relevant period or as of the date of determination, taking
into account (a) the relative proportion of each such item derived from
assets directly owned by such Borrower and from assets owned by the
respective subsidiaries, and (b) such Borrower's respective ownership
interest in its subsidiaries.
Consolidated Total Liabilities. All liabilities of the
Borrowers and each Borrower's allocable share of liabilities of its
subsidiaries determined on a combined basis in accordance with generally
accepted accounting principles.
Construction Inspector. Carter & Burgess, or another firm of
professional engineers or architects selected by Borrowers and reasonably
acceptable to the Agent.
Contribution Agreement. The Cross Reimbursement and
Indemnity Agreement dated as of July 31, 1997, between Commercial Company
and Land Company, as amended, such Agreement to be in form and substance
satisfactory to the Agent.
Controlled Subsidiary. A Controlled Subsidiary shall
include each of the following: (a) Any corporation, association,
partnership, trust, or other business entity of which the designated parent
shall at any time own directly or indirectly through a Person or Persons at
least fifty percent (50%) (by number of votes or controlling interests) of
the outstanding Voting Interests or of which the designated parent shall
have control over day-to-day operations of such entity, (b) any
corporation, association, partnership, trust or other business entity of
which the designated parent shall at any time own directly or indirectly
through a Person or Persons an ownership interest and which a Borrower
designates as a Controlled Subsidiary by notice to the Agent pursuant to
Section 7.5, and (c) any other entity the accounts of which are
consolidated with the accounts of a Borrower in accordance with generally
accepted accounting principles. Notwithstanding the foregoing, neither
Mitchell Mortgage Company, LLC nor Stewart Title of Montgomery County, Inc.
shall constitute a Controlled Subsidiary.
Crescent. Crescent Real Estate Equities Limited
Partnership, a Delaware limited partnership.
Crescent Group. Crescent, CresWood and Woodlands Land.
CresWood. CresWood Development, L.L.C., a Delaware limited
liability company.
Debt Service. For any period, the sum of all Interest
Expense and mandatory principal payments due and payable by the Borrowers
during such period excluding any balloon payments due upon maturity of any
indebtedness (including the "Stipulated Amortization Amount" but not any
"Special Amortization Amount" (as such terms are defined in the Cash
Collateral Account Agreement)).
Default. See Section 12.1
Developed Commercial Land. Developed Commercial Land shall
mean the land designated for commercial or multifamily use under the Master
Plan of the Woodlands Project and Wood Trace with respect to which
infrastructure development has been substantially completed to such an
extent that permits construction of Vertical Commercial Improvements, and
with respect to which the commencement of the construction of Vertical
Commercial Improvements has not yet commenced.
Developed Residential Land. Developed Residential Land
shall mean that portion of the Woodlands Project and Wood Trace designated
under the applicable Master Plan for single-family residential or
institutional use, schools, churches, nurseries or day care centers or
designated for gas stations, convenience stores or similar retail uses or
apartment use and other commercial uses and designated as part of the
Residential Land under the applicable Master Plan, for which a Municipal
Utility District has been established, with respect to which infrastructure
development has been substantially completed, and as to which the
commencement of construction of such single family housing, institutional
facilities or other improvements described above has not yet commenced.
Distribution. With respect to any Person, the declaration
or payment of any cash, cash flow, dividend or distribution on or in
respect of any shares of any class of capital stock, partner's interest,
member's interest or other beneficial interest of such Person; the
purchase, redemption, exchange or other retirement of any shares of any
class of capital stock, partner's interest, member's interest or other
beneficial interest of such Person, directly or indirectly through a
Controlled Subsidiary of such Person or otherwise; the return of capital
by a Person to its shareholders, partners, members or other beneficial
owners as such; or any other distribution on or in respect of any shares of
any class of capital stock, partner's interest, member's interest or other
beneficial interest of such Person.
Documentation Agent. MSSF, acting as Documentation Agent
for the Banks, its successors and assigns.
Dollars or $. Dollars in lawful currency of the United
States of America.
Domestic Lending Office. Initially, the office of each Bank
designated as such in Schedule 1.1 hereto; thereafter, such other office of
such Bank, if any, located within the United States that will be making or
maintaining Base Rate Loans.
Drawdown Date. The date on which any Loan is made or is to
be made, and the date on which any Revolving Credit Loan, Secured Term Loan
or Second Secured Term Loan which is made prior to the Maturity Date is
converted to a Loan of the other Type.
Eligible Accounts Receivables. That portion of the Accounts
Receivable which is owned by a Borrower, subject to a Security Agreement,
in which Agent has a perfected first priority security interest, subject to
no other security interest, lien, charge or other encumbrance of any
nature, evidenced by promissory notes or other documentation acceptable to
Agent, and consisting of accounts which have payment terms acceptable to
the Agent and which: (i) are and shall be created in the ordinary course
of business of the Borrowers, except with respect to Accounts Receivable
described in (ix) below so long as Land Company and Account Debtor are in
compliance with (A) through (D) described therein; (ii) arises from a
complete bona fide transaction and which require no further act under any
circumstances on the part of any Borrower to make such receivable payable
by the Account Debtor; (iii) are not subject to dispute, offset or
counterclaim; (iv) do not arise out of any transaction with an Account
Debtor which is insolvent or the subject of any bankruptcy or insolvency
proceedings of any kind or of any other proceeding or action, threatened or
pending, which might have a material adverse effect on the financial
condition of such Account Debtors; (v) conform to all representations and
warranties made by Borrowers in this Agreement and the other Loan
Documents; (vi) have not remained unpaid for more than 30 days from any
payment date; (vii) do not arise out of any transaction with any affiliate
of either Borrower, the General Partners, any Guarantor or any affiliate
thereof; (viii) are owed by Account Debtors located within the United
States of America; (ix) with respect to each Municipal Utility District
Contract, (A) Land Company is in full compliance with the applicable CON-10
necessary to give rise to the obligation of the applicable Municipal
Utility District to purchase the relevant facilities in accordance with the
applicable CON-10, including without limitation the terms and conditions
set forth in the applicable Policy Manual for Construction or Acquisition
of Facilities, (B) except with respect to Accounts Receivable related to
the San Jacinto River Authority contracts, Land Company has obtained and
delivered to the Agent a copy of the executed confirmatory letter of such
Municipal Utility District's obligation contemplated by the applicable
Policy, (C) the obligation of the applicable Municipal Utility District to
acquire the "facility" has not lapsed or expired, and (D) Land Company has
delivered satisfactory evidence to the Agent that each Municipal Utility
District Contract does not exceed the applicable Municipal Utility
District's authority to issue bond indebtedness to satisfy the Municipal
Utility District's obligations under the applicable Municipal Utility
District Contract; and (x) are not determined by the Majority Banks in
their sole discretion to be otherwise ineligible for any other reason (it
nevertheless being understood that the receivables described in (i) through
(ix) above shall be included as part of the Collateral).
Eligible Real Estate Qualification Documents. With respect
to the Conference Center, each of the following:
(l) Security Documents. Such Security Documents relating
to the Conference Center as the Agent shall require, in form and substance
satisfactory to the Agent and duly executed and delivered by the respective
parties thereto.
(m) Perfection of Liens. Evidence reasonably satisfactory
to the Agent that the Security Documents are effective to create in favor
of the Agent a legal, valid and enforceable first lien and security
interest in the Conference Center and that all filings, recordings,
deliveries of instruments and other actions necessary or desirable to
protect and preserve such liens or security interests have been duly
effected.
(n) Survey and Taxes. The Survey of the Conference Center,
together with the Surveyor Certification and evidence of payment of all
real estate taxes, assessments and municipal charges on the Conference
Center which on the date of determination are required to have been paid
under Section 7.8.
(o) Title Insurance; Title Exception Documents. The Title
Policy covering the Conference Center, including all endorsements thereto,
and together with proof of payment of all fees and premiums for such
policy, and true and accurate copies of all documents listed as exceptions
under such policy.
(p) UCC Certification. A certification from the Title
Insurance Company or other person to the Agent that a search of the public
records designated by the Agent disclosed no conditional sales contracts,
security agreements, chattel mortgages, leases of personalty, financing
statements or title retention agreements which affect any property, rights
or interests of such Borrower that are or are intended to be subject to the
security interest, assignments, and mortgage liens created by the Security
Documents relating to the Conference Center except to the extent that the
same are discharged as of July 31,1997.
(q) Management Agreement. A true copy of any Management
Agreement relating to the Conference Center.
(r) Service Agreements. True copies of all Service
Agreements relating to the Conference Center.
(s) Leases. True copies of all Leases relating to the
Conference Center together with a Rent Roll for the Conference Center
certified by Commercial Company as accurate and complete as of a recent
date.
(t) Subordination Agreements. A Subordination, Attornment
and Non-Disturbance Agreement from WECCR satisfactory in form and substance
to the Agent.
(u) Certificates of Insurance. Each of (i) a current
certificate of insurance as to the insurance maintained by Commercial
Company and WECCR on the Conference Center (including flood insurance if
necessary) from the insurer or an independent insurance broker, identifying
insurers, types of insurance, insurance limits, and policy terms; (ii)
certified copies of all policies evidencing such insurance (or certificates
therefor signed by the insurer or an agent authorized to bind the insurer);
and (iii) such further information and certificates from Commercial
Company, its insurers and insurance brokers as the Agent may reasonably
request, all of which shall be in compliance with the requirements of this
Agreement.
(v) Hazardous Substance Assessments. A hazardous waste
site assessment report concerning Hazardous Substances and asbestos on the
Conference Center dated or updated not more than three months prior to the
inclusion of the Conference Center in the Collateral, from an Environmental
Engineer, such report to contain no qualification except those that are
acceptable to the Majority Banks in their sole discretion and to otherwise
be in form and substance satisfactory to the Majority Banks.
(w) Certificate of Occupancy. If available, a copy of the
certificate(s) of occupancy issued for the Conference Center permitting the
use and occupancy of the Building thereon (or a copy of the certificates of
occupancy issued for the Conference Center and evidence reasonably
satisfactory to the Agent that any previously issued certificate(s) of
occupancy are not required to be reissued to Commercial Company), or a
legal opinion or other evidence reasonably satisfactory to the Agent that
no certificates of occupancy are necessary to the use and occupancy
thereof.
(x) Construction Inspector Report. A report or written
confirmation from the Construction Inspector satisfactory in form and
content to the Majority Banks, dated or updated not more than three months
prior to the inclusion of the Conference Center in the Collateral,
addressing such matters as the Majority Banks may reasonably require.
(y) Permit and Legal Compliance Assurances. Evidence
satisfactory to the Agent that all activities being conducted on the
Conference Center which require federal, state or local licenses or permits
have been duly licensed and that such licenses or permits are in full force
and effect, and that the Conference Center, the Buildings and the use and
occupancy thereof are in compliance with all applicable federal, state or
local laws, ordinances or regulations (including, without limitation, the
Americans with Disabilities Act and any laws of the State in which such
property is located regarding disability requirements).
(z) Operating Statements. Operating statements for the
Conference Center covering each of the four fiscal quarters ending
immediately prior to the addition of the Conference Center to the
Collateral in form and substance satisfactory to the Agent.
(aa) Additional Documents. Such other documents,
certificates, reports or assurances as the Agent may reasonably require in
their discretion.
Employee Benefit Plan. Any employee benefit plan within the
meaning of Section 3(3) of ERISA maintained or contributed to by a
Borrower or any ERISA Affiliate, other than a Multiemployer Plan.
Environmental Engineer. ENSR, or for any services of an
environmental engineer required after the date hereof, another firm of
independent professional engineers or other scientists generally recognized
as expert in the detection, analysis and remediation of the Hazardous
Substances and related environmental matters and reasonably acceptable to
the Agent.
Environmental Laws. See Section 6.20(a).
Equity Offering. The issuance and sale by a Borrower
subsequent to the date of this Agreement of any partnership interests or
equity securities of such Borrower to investors other than the then current
partners.
ERISA. The Employee Retirement Income Security Act of 1974,
as amended and in effect from time to time.
ERISA Affiliate. Any Person which is treated as a single
employer with a Borrower under Section 414 of the Code.
ERISA Reportable Event. A reportable event with respect to
a Guaranteed Pension Plan within the meaning of Section 4043 of ERISA and
the regulations promulgated thereunder as to which the requirement of
notice has not been waived.
Eurocurrency Reserve Rate. For any day with respect to a
Eurodollar Rate Loan, the maximum rate (expressed as a decimal) at which
any lender subject thereto would be required to maintain reserves under
Regulation D of the Board of Governors of the Federal Reserve System (or
any successor or similar regulations relating to such reserve requirements)
against "Eurocurrency Liabilities" (as that term is used in Regulation D or
any successor or similar regulation), if such liabilities were outstanding.
The Eurocurrency Reserve Rate shall be adjusted automatically on and as of
the effective date of any change in the Eurocurrency Reserve Rate.
Eurodollar Business Day. Any day on which commercial banks
are open for international business (including dealings in Dollar deposits)
in the London interbank market.
Eurodollar Lending Office. Initially, the office of each
Bank designated as such in Schedule 1.1 hereto; thereafter, such other
office of such Bank, if any, that shall be making or maintaining Eurodollar
Rate Loans.
Eurodollar Rate. For each day during any period with
respect to a Revolving Credit Eurodollar Rate Loan or a Term Eurodollar
Rate Loan, as applicable, the rate per annum equal to the quotient (rounded
upwards to the nearest 1/16th of one percent) of (a) the rate per annum as
determined by the Reference Bank's Eurodollar Lending Office to be the rate
at which Dollar deposits are offered to prime banks by such banks in the
London Interbank Market as selected by the Reference Bank at approximately
11:00 a.m. London time on such day for delivery two Eurodollar Business
Days thereafter for a period of one month and in an amount comparable to
the amount of the Revolving Credit Eurodollar Rate Loan or Term Eurodollar
Rate Loan, as applicable, divided by (b) a number equal to 1.00 minus the
Eurocurrency Reserve Rate. Any change in the Eurodollar Rate shall become
effective as of the opening of business on the day on which such change in
the Eurodollar Rate becomes effective.
Eurodollar Rate Loans. Collectively, the Revolving Credit
Eurodollar Rate Loans and the Term Eurodollar Rate Loans.
Event of Default. See Section 12.1
Federal Funds Effective Rate. For any day, the rate per
annum equal to the weighted average of the rates on overnight Federal funds
transactions with members of the Federal Reserve System arranged by Federal
funds brokers, as published for such day (or, if such day is not a Business
Day, for the next preceding Business Day) by the Federal Reserve Bank of
New York, or, if such rate is not so published for any day that is a
Business Day, the average of the quotations for such day on such
transactions received by the Agent from three (3) Federal funds brokers of
recognized standing selected by the Agent.
Fees. The fees payable to either Borrower pursuant to any
management agreements relating to the Woodlands Project or any part
thereof, and easement usage fees payable to Commercial Company pursuant to
the agreements commonly known as the TCI Easement Agreement.
Funding Agreement. An agreement between Borrowers regarding
contributions, distributions and loans, provided that such agreement shall
be in form and substance satisfactory to the Agent.
Generally Accepted Accounting Principles. Principles that
are (a) consistent with the principles promulgated or adopted by the
Financial Accounting Standards Board and its predecessors, as in effect
from time to time and (b) consistently applied with past financial
statements of the Borrower adopting the same principles; provided that a
certified public accountant would, insofar as the use of such accounting
principles is pertinent, be in a position to deliver an unqualified opinion
(other than a qualification regarding changes in generally accepted
accounting principles) as to financial statements in which such principles
have been properly applied.
General Partners. Collectively, CresWood and MS TWC, Inc.
as the general partners of Commercial Company, and Woodlands Land and MS
TWC, Inc. as the general partners of Land Company, and WECCR, Inc. as the
General Partner of WECCR.
Guaranteed Pension Plan. Any employee pension benefit plan
within the meaning of Section 3(2) of ERISA maintained or contributed to by
a Borrower of any ERISA Affiliate the benefits of which are guaranteed on
termination in full or in part by the PBGC pursuant to Title IV of ERISA,
other than a Multiemployer Plan.
Guarantors. Any Person which may become a guarantor of the
Obligations.
Guaranty. Each Unconditional Guaranty of Payment and
Performance made by a Guarantor in favor of the Agent and the Banks, as the
same may be modified or amended, such Guaranty to be in form and substance
satisfactory to the Agent.
Hazardous Substances. See Section 6.20(b).
Income Producing Properties. Income producing properties
owned by Commercial Company or Land Company or their Controlled
Subsidiaries located within the Woodlands Project.
Income Properties. Income Producing Properties that satisfy
the terms of Section 5.2 and Section 7.19. The initial Income Properties
are more particularly described in Schedule 1.3 hereto.
Indebtedness. All obligations, contingent and otherwise
that in accordance with generally accepted accounting principles should be
classified upon the obligor's balance sheet as liabilities, or to which
reference should be made by footnotes thereto, including in any event and
whether or not so classified: (a) all debt and similar monetary
obligations, whether direct or indirect; (b) all liabilities secured by any
mortgage, pledge, security interest, lien, charge or other encumbrance
existing on property owned or acquired subject thereto, whether or not the
liability secured thereby shall have been assumed; and (c) all guarantees,
endorsements and other contingent obligations whether direct or indirect in
respect of indebtedness of others, including any obligation to supply funds
to or in any manner to invest directly or indirectly in a Person, to
purchase indebtedness , or to assure the owner of indebtedness against loss
through an agreement to purchase goods, supplies or services for the
purpose of enabling the debtor to make payment of the indebtedness held by
such owner or otherwise, and the obligation to reimburse the issuer in
respect of any letter of credit; (d) any obligation as a lessee or obligor
under a Capitalized Lease; (e) all obligations with respect to letters of
credit or similar instruments issued by a Person; (f) all subordinated
debt; and (g) all indebtedness, obligations or other liabilities under or
with respect to (i) interest rate swap, collar, cap or similar agreements
providing interest rate protection and (ii) foreign currency exchange
agreements. Indebtedness shall not include current liabilities of the
Borrowers or their respective Controlled Subsidiaries or Non-Controlled
Subsidiaries incurred in the ordinary course of business but not incurred
through (i) the borrowing of money, or (ii) the obtaining of credit except
for credit on an open account basis customarily extended and in fact
extended in connection with normal purchases of goods and services.
Indemnity Agreement. The Indemnity Agreement Regarding
Hazardous Materials, made by the Borrowers in favor of the Agent and the
Banks, pursuant to which the Borrowers agree to indemnify the Agent and the
Banks with respect to Hazardous Substances and Environmental Laws, such
Indemnity Agreement to be in form and substance satisfactory to the Agent.
Interest Cap. See Section 10.7.
Interest Expense. For any period, the sum of all interest
(excluding interest on Indebtedness permitted pursuant to Section 8.1(i)
and capitalized interest funded pursuant to a construction loan but
including all other capitalized interest) due and payable by the Borrowers
during such period.
Interest Payment Date. The first day of each calendar month
during the term of such Loan.
Investment. With respect to any Person, all shares of
capital stock, evidences of Indebtedness and other securities issued by any
other Person, all loans, advances, or extension of credit to, or
contributions to the capital of, any other Person, all purchases of the
securities or business or integral part of the business of any other Person
and commitments to make such purchases, all interests in real property, and
all other investments; provided, however, that the term "Investment" shall
not include (i) equipment, inventory and other tangible personal property
acquired in the ordinary course of business, or (ii) current trade and
customer accounts receivable for services rendered in the ordinary course
of business and payable in accordance with customary trade terms. In
determining the aggregate amount of Investments outstanding at any
particular time: (a) the amount of any investment represented as a
guaranty shall be taken at not less than the principal amount of the
obligations guaranteed and still outstanding; (b) there shall be included
as an Investment all interest accrued with respect to Indebtedness
constituting an Investment unless and until such interest is paid; (c)
there shall be deducted in respect of each such Investment any amount
received as a return of capital (but only by repurchase, redemption,
retirement, repayment, liquidating dividend or liquidating distribution);
(d) there shall not be deducted in respect of any Investment any amounts
received as earning on such Investment, whether as dividends, interest or
otherwise, except that accrued interest included as provided in the
foregoing clause (b) may be deducted when paid; and (e) there shall not be
deducted from the aggregate amount of Investments any decrease in the value
thereof.
Land Assets. Collectively, the Residential Land and the
Commercial Land.
Land Company. As defined in the preamble hereto.
Land Company Revolving Credit Commitment. With respect to
each Revolving Credit Bank, the amount set forth on Schedule 1.1 hereto as
the amount of such Revolving Credit Bank's Land Company Revolving Credit
Commitment to make or maintain Land Company Revolving Credit Loans to Land
Company, as the same may be reduced from time to time in accordance with
the terms of this Agreement.
Land Company Revolving Credit Commitment Percentage. With
respect to each Revolving Credit Bank, the percentage set forth on Schedule
1.1 hereto as such Revolving Credit Bank's percentage of the aggregate Land
Company Revolving Credit Commitments of all the Revolving Credit Banks.
Land Company Revolving Credit Loan or Loans. An individual
Revolving Credit Loan or the aggregate Revolving Credit Loans, as the case
may be, made by the Revolving Credit Banks hereunder to Land Company and
evidenced by Land Company Revolving Credit Notes.
Land Company Revolving Credit Notes. See Section 2.4A.
Land Company Second Secured Term Loan Commitment. As to
each Second Secured Term Loan Bank, the amount equal to such Second Secured
Term Loan Bank's Land Company Second Secured Term Loan Commitment
Percentage of the aggregate principal amount of the Second Secured Term
Loans to Land Company from time to time outstanding.
Land Company Second Secured Term Loan Commitment Percentage.
With respect to each Second Secured Term Loan Bank, the percentage set
forth on Schedule 1.1 hereto as such Second Secured Term Loan Bank's
percentage of the aggregate Second Secured Term Loans to Land Company.
Land Company Second Secured Term Loan or Loans. An
individual Second Secured Term Loan or the aggregate Second Secured Term
Loans, as the case may be, made by the Second Secured Term Loan Banks
hereunder to Land Company and evidenced by Land Company Second Secured Term
Loan Notes.
Land Company Second Secured Term Loan Notes. See Section
2B.2A.
Land Company Secured Term Loan Commitment. As to each
Secured Term Loan Bank, the amount equal to such Secured Term Loan Bank's
Land Company Secured Term Loan Commitment Percentage of the aggregate
principal amount of the Secured Term Loans to Land Company from time to
time outstanding.
Land Company Secured Term Loan Commitment Percentage. With
respect to each Secured Term Loan Bank, the percentage set forth on
Schedule 1.1 hereto as such Secured Term Loan Bank's percentage of the
aggregate Secured Term Loans to Land Company.
Land Company Secured Term Loan or Loans. An individual
Secured Term Loan or the aggregate Secured Term Loans, as the case may be,
made by the Secured Term Loan Banks hereunder to Land Company and evidenced
by Land Company Secured Term Loan Notes.
Land Company Secured Term Loan Notes. See Section 2A.2A.
Leases. Leases, licenses and agreements whether written or
oral, relating to the use of occupation of space in or on the Building or
on the Real Estate.
Lease Summaries. Summaries of the material terms of the
Leases.
Liens. See Section 8.2.
Loan Documents. This Agreement, the Notes, the Agreement
Regarding Negative Pledge, the Security Documents and all other documents,
instruments or agreements now or hereafter executed or delivered by or on
behalf of any Borrower, any Guarantor or the parties to the Negative Pledge
Agreement in connection with the Loans.
Loan or Loans. Collectively, the Revolving Credit Loans,
the Secured Term Loans and the Second Secured Term Loans.
Loan Request. See Section 2.6.
Majority Banks. As of any date, the Bank or Banks whose
aggregate Commitment Percentage is more than the required percentage, as
determined by the Banks required to approve such matter, as disclosed by
the Agent to the Borrowers from time to time (provided that such required
percentage determined by the Banks shall not exceed sixty-six and two-
thirds percent (66 2/3%)).
Mall. The interest in the Woodlands Mall currently owned by
The Woodlands Mall Associates, a partnership between Commercial Company and
GGP/Homart, Inc., which interest includes approximately 350,000 square feet
of gross leasable area, adjoining land and related improvements.
Management Agreements. Agreements, whether written or oral,
providing for the management of all or any portion of the Conference
Center.
Managing Agent. BKB, acting as managing agent for the
Banks, its successors and assigns.
Master Plan. Individually, the Master Plan for the
Woodlands Project and the Master Plan for Wood Trace, and collectively, the
Master Plans for the Woodlands Project and Wood Trace.
Material Agreements. Collectively, the Master Plan, the
documents and agreements governing the Associations, and, to the extent any
rights thereunder are a part of the Collateral, any of the Municipal
Utility District Contracts, the Note Receivables and the partnership
agreements or other organizational documents pursuant to which rights have
been pledged to Agent pursuant to an Assignment of Interests.
Material Assets. Collectively, the Mall, the Conference
Center, Wood Trace, Commercial Land sold in one transaction or a series of
related transactions for an aggregate purchase price of $20,000,000.00 or
more, and Residential Land sold in one transaction or a series of related
transactions involving 500 or more lots or 100 or more acres.
Maturity Date. July 31, 2000, as the same may be extended
by the Borrowers as provided in Section 4.15, or such earlier date on
which the Loans shall become due and payable pursuant to the terms hereof.
Merger Agreement. The Agreement and Plan of Merger dated
June 12, 1997 among Mitchell Energy & Development Corp., Woodlands and
Commercial Company, as amended.
Mortgaged Property or Mortgaged Properties. The Conference
Center.
MSREF. The Morgan Stanley Real Estate Fund II, L.P., a
Delaware limited partnership.
MSREF Group. MSREF, MS/TWC Joint Venture, MS TWC, Inc.,
Morgan Stanley Real Estate Investors, L.P., MSREF II 892 Investors - B,
L.P. and any co-investment partnership between an Affiliate of the general
partner of MSREF and a major limited partner of MSREF formed to co-invest
alongside MSREF pursuant to an existing co-investment agreement.
Multiemployer Plan. Any multiemployer plan within the
meaning of Section 3(37) of ERISA maintained or contributed to by a
Borrower or any ERISA Affiliate.
Municipal Utility District Contracts. The Municipal Utility
District Contracts and the Road Utility District Contracts more
particularly described in Schedule 1.2 hereto.
Negative Pledge Covenants. Collectively, the covenants set
forth in Section s 8.2, 8.12(a) (as to the Merger Agreement) and 8.13
prohibiting or restricting the Borrowers, their respective Controlled
Subsidiaries or the other Persons subject thereto from creating or
incurring or suffering to be created or incurred or existing any lien,
encumbrance, hypothecation, mortgage, pledge, negative pledge, charge,
restriction, or other security interest upon any of the property or assets
described therein.
Net Earnings from Miscellaneous Operations. For the twelve
(12) month period ended on the most recent Quarterly Measurement Date, the
sum of Land Company's share of the Net Income of (a) Mitchell Mortgage
Company, (b) Stewart Title of Montgomery County, Inc. and (c) Woodlands New
Homes Realty, plus the revenues received by the Borrowers for property
management, development and leasing services, net of associated expenses.
Such amount shall be determined on the basis of generally accepted
accounting principles applied on a consistent basis and consistent with the
manner in which they have previously been calculated and provided to the
Banks. In the event that as of a Quarterly Measurement Date the applicable
Borrower shall not have any of such components for a twelve month period,
such amounts shall be annualized based on such amounts from and after July
31,1997.
Net Income (or Deficit). With respect to any Person, for
any fiscal period, the net income (or deficit) of such Person, after
deduction of all expenses, taxes and other proper charges, determined in
accordance with Generally Accepted Accounting Principles.
New Collateral Documents. See Section 5.3.
Non-Controlled Subsidiaries. Any corporation, association,
partnership, trust, or other business entity of which the designated parent
shall at any time own directly or indirectly through a Person or Persons an
ownership interest but which is not a Controlled Subsidiary.
Note Receivables. The notes payable to Commercial Company
or Land Company and all proceeds of the foregoing, as more particularly
described in the Security Agreement to which Commercial Company or Land
Company is a party.
Notes. Collectively, the Revolving Credit Notes, the
Secured Term Loan Notes and the Second Secured Term Loan Notes.
Notice. See Section 19.
Obligations. All indebtedness, obligations and liabilities
of the Borrowers and the Guarantors to any of the Banks and the Agent,
individually or collectively, under this Agreement or any of the other Loan
Documents or in respect of any of the Loans or the Notes, or other
instruments at any time evidencing any of the foregoing, whether existing
on the date of this Agreement or arising or incurred hereafter, direct or
indirect, joint or several, absolute or contingent, matured or unmatured,
liquidated or unliquidated, secured or unsecured, arising by contract,
operation of law or otherwise.
Operating Cash Flow. For any period, an amount equal to the
sum of (a) the Operating Income of a Borrower for such period minus (b) the
Operating Expenses of a Borrower for such period.
Operating Expenses. For any period, all expenses of a
Borrower directly attributable to the operation of such Borrower or the
operation, repair and/or maintenance of the Property (if applicable)
including, without limitation, taxes, insurance premiums, management fees,
payments to third party suppliers, marketing and operating expenses,
capital expenditures for maintenance or improvement of income producing
properties, general and administrative expenses and all land and lot
development expenditures (other than the amounts expended in respect of
construction of Vertical Commercial Improvements) including, without
limitation, amounts reimbursable under Municipal Utility District
Contracts. For the purposes of this Agreement, Operating Expenses shall
not include any Foreign, U.S., state and local income taxes, franchise
taxes or other taxes based on the income imposed on a Borrower generally
and not as owner of the Property, depreciation and any other non-cash
expenditures of a Borrower, or any payment of principal or interest under
the Notes or other Indebtedness or other fees or charges payable under the
Loan Documents (except that appraisals and cost reimbursements to the Agent
or the Banks shall be Operating Expenses). Operating Expenses shall be
determined on the basis of sound cash basis accounting practices applied on
a consistent basis, modified as described above, and consistent with the
manner in which they have previously been calculated and provided to the
Banks. Operating Expenses shall not include expenses of a Borrower's
Controlled Subsidiaries and Non-Controlled Subsidiaries or costs of
Vertical Commercial Improvements.
Operating Income. For any period, all revenue or receipts
derived by a Borrower from any source, including, without limitation (as
applicable), net proceeds of refinancings or sales, exchanges or transfers
of Residential Land, Commercial Land and income-producing properties or
interests therein, partnership distributions, dividends, management and
other fees or similar payments, payments received on Accounts Receivable,
interest income, rents and profits, operating expense and real estate tax
expense reimbursements, escalations, percentage rents, administrative and
supervisory fees, insurance proceeds and condemnation awards (other than
proceeds and condemnation awards that are applied to Indebtedness by a
lender or are used to restore and rebuild improvements) and any other
extraordinary, non-recurring or miscellaneous revenues, but excluding
capital contributions from a Borrower's partners and net proceeds of
Permitted Financings or any borrowings of the Loans. Operating Income
shall be determined on the basis of sound cash basis accounting practices
applied on a consistent basis, modified as provided above and consistent
with the manner in which they have previously been calculated and provided
to the Banks. Operating Income shall not include gross income of
Controlled Subsidiaries and Non-Controlled Subsidiaries of a Borrower, but
instead the amount distributed to such Borrower.
Original Credit Agreement. As defined in the preamble
hereto.
Outstanding. With respect to the Loans, the aggregate
unpaid principal thereof as of any date of determination.
Partial Interest. The ownership interest (determined based
on its right to receive cash flow and other distributions) of Land Company
or Commercial Company, whether such interest is evidenced by a partnership
interest or otherwise, in certain Persons which own office, retail,
research/industrial and multifamily properties more particularly described
in Schedule 1.4 hereto, together with such additional interests as may
hereafter be approved as provided in Section 5.2. For the purposes of
calculating the Borrowing Base or compliance with financial covenants, a
Partial Interest shall sometimes be expressed as a percentage interest in
the underlying Income Property as set forth in Schedule 1.2 hereto with
respect to the Partial Interests existing as of the date of this Agreement
or as established pursuant to Section 5.2(h) with respect to new Partial
Interests.
Partnerships. The Persons described on Schedule 1.5 hereto
in which Commercial Company has an ownership interest, together with each
other Person in which Commercial Company may hereafter obtain an ownership
interest which is a Controlled Subsidiary.
PBGC. The Pension Benefit Guaranty Corporation created by
Section 4002 of ERISA and any successor entity or entities having similar
responsibilities.
Permitted Liens. Liens, security interests and other
encumbrances permitted by Section 8.2.
Permitted Financings. Indebtedness of Commercial Company or
Land Company or any of their respective Controlled Subsidiaries (including
without limitation obligations under completion guaranties but excluding
the Loans and Indebtedness permitted pursuant to Section 8.1(h) incurred to
a Person unrelated or unaffiliated with any Borrower, any of the General
Partners, any Guarantor or any of a Borrower's Controlled Subsidiaries in a
bona fide transaction), provided such Indebtedness:
(ab) does not exceed $125,000,000.00 in the aggregate, of
which amount the amount which is recourse to Commercial Company or Land
Company or any of their respective Controlled Subsidiaries does not exceed
$50,000,000.00 in the aggregate (in calculating such $125,000,000.00 limit,
only Commercial Company's or Land Company's allocable share of Indebtedness
of its respective Controlled Subsidiaries shall be included);
(ac) which constitutes completion guaranties (with respect
to developments the Indebtedness for which Commercial Company or Land
Company or such Controlled Subsidiary otherwise has no recourse) does not
exceed $20,000,000.00 in the aggregate (in addition to the $125,000,000.00
and $50,000,000.00 limits set forth in (a), above);
(ad) is incurred solely to finance the construction by
Commercial Company or Land Company or any of their respective Controlled
Subsidiaries of Vertical Commercial Improvements to the Commercial Land or
Residential Land, if applicable, or permanent refinancing thereof (it being
agreed that the proceeds of a permanent refinancing of such improvements
may exceed the amount of the applicable construction loan);
(ae) with respect to any property on which Vertical
Commercial Improvements are constructed, does not exceed eighty percent
(80%) of the fair market value of such property; provided that (i) with
respect to the Speculative Development of Vertical Commercial Improvements
on any single parcel of Commercial Land or Residential Land, if applicable,
such Indebtedness does not exceed seventy-five percent (75%) of the costs
for such development (including the cost of the subject Commercial Land or
Residential Land, if applicable) (in each instance the balance of the
acquisition and development costs to be covered by equity), and (ii) with
respect to the development of Build-To-Suit Properties, such Indebtedness
does not exceed ninety percent (90%) of the costs for such development
(including the cost of the subject Commercial Land or Residential Land, if
applicable) (in each instance the balance of the acquisition and
development costs to be covered by equity); and
(af) does not cause the Borrowers to fail to comply with the
financial covenants contained in Section 9.2 and Section 9.5 below after
recalculating the interest and fixed charge coverage ratio for the most
recent Quarterly Measurement Date on a pro forma basis to give effect to
such Indebtedness, and the maximum ratio permitted by Section 9.1 is not
exceeded.
Person. Any individual, corporation, partnership, limited
liability company, trust, unincorporated association, business, or other
legal entity, and any government or any governmental agency or political
subdivision thereof.
Principal Financial Officer. The primary officer of the
Borrowers or their General Partners responsible for the preparation and
certification of financial statements.
Property. Collectively, the Accounts Receivable, the
Residential Land, the Commercial Land, the Common Area Land, the Conference
Center, the Income Properties, the Partial Interests and the Fees.
Properties under Construction. Vertical Commercial
Improvements under construction; provided that a property shall cease to be
under construction and eligible for inclusion in the Borrowing Base as a
Property Under Construction upon the earlier to occur of (a) eighteen
months following the commencement of construction and (b) six (6) months
after the issuance of a shell certificate of occupancy or an equivalent
thereto for such improvements.
Quarterly Measurement Date. Each September 30, December 31,
March 31 and June 30 during the term of the Agreement, with the first
Quarterly Measurement Date occurring December 31, 1997.
Real Estate. All real property at any time owned or leased
(as lessee or sublessee) by the Borrowers, any of their respective
Controlled Subsidiaries, a Guarantor or any of the Partnerships.
Record. The grid attached to any Note, or the continuation
of such grid, or any other similar record, including computer records,
maintained by the Agent with respect to any Loan referred to in such Note.
Recurring Operating Cash Flow. With respect to a Borrower
for any fiscal period, an amount equal to the Operating Cash Flow of such
Person, less the Specified Non-Recurring Amount.
Reference Bank. BKB.
Register. See Section 18.2.
Release. See Section 6.20(c) (iii).
Rent Roll. A report prepared and certified by a Borrower
showing for each property its type, occupancy status, lease expiration
date, lease rent and other information in substantially the form presented
to the Banks prior to the date hereof or in such other form as may have
been approved by the Agent, such approval not to be unreasonably withheld.
Residential Land. Collectively, the Developed Residential
Land and the Undeveloped Residential Land. The Residential Land shall not
include any of the Common Area Land.
Revolving Credit Banks. Collectively, the Banks which are
the holders of the Revolving Credit Notes, such Revolving Credit Banks
being identified on Schedule 1.1 hereto.
Revolving Credit Base Rate Loans. Revolving Credit Loans
bearing interest calculated by reference to the Base Rate.
Revolving Credit Commitment. With respect to each Revolving
Credit Bank, the amount set forth on Schedule 1.1 hereto as the aggregate
amount of such Revolving Credit Bank's Commercial Company Revolving Credit
Commitment and Land Company Revolving Credit Commitment, as the same may be
reduced from time to time in accordance with the terms of this Agreement.
Revolving Credit Commitment Percentage. With respect to
each Revolving Credit Bank, the percentage set forth on Schedule 1.1 hereto
as such Revolving Credit Bank's percentage of the aggregate Revolving
Credit Commitments of all of the Revolving Credit Banks.
Revolving Credit Eurodollar Rate Loans. Revolving Credit
Loans bearing interest calculated by reference to the Eurodollar Rate.
Revolving Credit Loan or Loans. An individual Revolving
Credit Loan or the aggregate Revolving Credit Loans, as the case may be, to
be made by the Revolving Credit Banks hereunder as more particularly
described in Section 2.
Revolving Credit Notes. Collectively the Commercial Company
Revolving Credit Notes and the Land Company Revolving Credit Notes.
Second Secured Term Loan Banks. Collectively, the Banks
which are the holders of the Second Secured Term Loan Notes, such Second
Secured Term Loan Banks being identified on Schedule 1.1 hereto.
Second Secured Term Base Rate Loans. The Second Secured
Term Loans bearing interest by reference to the Base Rate.
Second Secured Term Eurodollar Rate Loans. The Second
Secured Term Loans bearing interest by reference to the Eurodollar Rate.
Second Secured Term Loan or Second Secured Term Loans. An
individual Second Secured Term Loan or the aggregate Second Secured Term
Loans, as the case may be, in the maximum principal amount of
$60,000,000.00 made by the Second Secured Term Loan Banks hereunder and
evidenced by the Second Secured Term Loan Notes.
Second Secured Term Loan Commitment. As to each Second
Secured Term Loan Bank, the amount equal to such Second Secured Term Loan
Bank's percentage set forth on Schedule 1.1 of the aggregate principal
amount of the Second Secured Term Loans from time to time outstanding.
Second Secured Term Loan Commitment Percentage. With
respect to each Second Secured Term Loan Bank, the percentage set forth on
Schedule 1.1 hereto as such Second Secured Term Loan Bank's percentage of
the aggregate Second Secured Term Loans.
Second Secured Term Loan Notes. Collectively, the
Commercial Company Second Secured Term Loan Notes and the Land Company
Second Secured Term Loan Notes.
Secured Term Loan Banks. Collectively, the Banks which are
the holders of the Secured Term Loan Notes, such Secured Term Loan Banks
being identified on Schedule 1.1 hereto.
Secured Term Base Rate Loans. The Secured Term Loans
bearing interest by reference to the Base Rate.
Secured Term Eurodollar Rate Loans. The Secured Term Loans
bearing interest by reference to the Eurodollar Rate.
Secured Term Loan or Secured Term Loans. An individual
Secured Term Loan or the aggregate Secured Term Loans, as the case may be,
in the maximum principal amount of $130,000,000.00 made by the Secured Term
Loan Banks hereunder and evidenced by the Secured Term Loan Notes.
Secured Term Loan Commitment. As to each Secured Term Loan
Bank, the amount equal to such Secured Term Loan Bank's percentage set
forth on Schedule 1.1 of the aggregate principal amount of the Secured Term
Loans from time to time outstanding.
Secured Term Loan Commitment Percentage. With respect to
each Secured Term Loan Bank, the percentage set forth on Schedule 1.1
hereto as such Secured Term Loan Bank's percentage of the aggregate Secured
Term Loans.
Secured Term Loan Notes. Collectively, the Commercial
Company Secured Term Loan Notes and the Land Company Secured Term Loan
Notes.
Security Agreements. Collectively the Amended and Restated
Collateral Assignment of Documents from Commercial Company to the Agent for
the benefit of the Banks and the Collateral Assignment of Documents from
Land Company to the Agents for the benefit of the Banks, as the same may be
modified or amended, pursuant to which the Accounts Receivable and the Fees
have been pledged as security for the Obligations, such Security Agreements
to be in form and substance satisfactory to the Agent.
Security Deeds. The Deeds of Trust from a Borrower to the
Agent for the benefit of the Banks (or to trustees named therein acting on
behalf of the Agent for the benefit of the Banks), as the same may be
modified or amended, pursuant to which a Borrower has conveyed a Mortgaged
Property as security for the Obligations, such Security Deeds to be in form
and substance satisfactory to the Agent.
Security Documents. The Security Deeds, the Assignments of
Rents and Leases, the Assignment of Management Agreements and
Subordination, the Assignment of Interests, the Security Agreements, the
Cash Collateral Account Agreement, the Indemnity Agreement, the Guaranty,
the New Collateral Documents, any further collateral assignments to the
Agent for the benefit of the Banks, including, without limitation, UCC-1
financing statements executed and delivered in connection therewith.
Security Event. Each of the following shall be a Security
Event hereunder unless waived by the Majority Banks in writing:
(a) the occurrence of an Event of Default hereunder under
Section 12.1(a) or (b); or
(b) the occurrence of an Event of Default by reason of a
breach of any of the covenants set forth in Section s 9.1, 9.2, 9.3, 9.4 or
9.5.
Service Agreement. Agreements with third parties, whether
written or oral, relating to the operation, maintenance, security, finance
or insurance of a Mortgaged Property, which involve obligations in excess
of $500,000.00 per year.
Short-term Investments. Investments described in
subsections (a) through (g), inclusive, of Section 8.3.
Specified Non-Recurring Amount. For any period, any amounts
included in Operating Cash Flow or the Cash Flow Excess Amount, as the case
may be, which are attributable to the non-recurring sale of income-
producing assets with net proceeds in excess of $5,000,000.00 in any twelve
month period.
Specified Non-Recurring Cash Flow Excess Amount. As defined
in the Cash Collateral Account Agreement.
Speculative Development. Development of Commercial Land or
Residential Land, if applicable, for office, retail or research/industrial
uses which is less than eighty percent (80%) (sixty percent (60%) for a
supermarket, grocery store, food market or drug store anchored retail
development) leased pursuant to a bona-fide arm's length lease to third
parties that are not an Affiliate of any Borrower, any of the General
Partners, any Guarantor, or any of their Controlled Subsidiaries or Non-
Controlled Subsidiaries at the time construction commences. A lease shall
not be deemed a lease with an Affiliated Person in the event that a
Borrower, any of the General Partners, any Guarantor, or any of their
Controlled Subsidiaries or Non-Controlled Subsidiaries enters into a joint
venture with a third party unaffiliated with any of such Persons which in
turn leases a portion of such property to such unaffiliated Person. In the
event that any of such property is to be leased to an Affiliate of a
Borrower, any of the General Partners, any Guarantor, or any of their
Controlled Subsidiaries or Non-Controlled Subsidiaries, the square footage
subject to such lease shall be deducted from the overall square footage of
the project and excluded in calculating compliance with the foregoing
tests. Once a particular development is leased at or above such level,
such development shall cease to be a Speculative Development.
Subordination, Attornment and Non-Disturbance Agreement. An
agreement among the Agent, a Borrower and a tenant under a Lease pursuant
to which such tenant agrees to subordinate its rights under the Lease to
the lien of the Security Deed and agrees to recognize the Agent or its
successor in interest as landlord under the Lease in the event of a
foreclosure under the Security Deed, such agreement to be in form and
substance satisfactory to the Agent and the Majority Banks.
Survey. That certain draft as-built survey of the
Conference Center delivered to the Agent prior to the date hereof, and a
boundary survey of the Conference Center to be prepared by a registered
land surveyor in form and substance reasonably satisfactory to the Agent.
Surveyor Certification. With respect to the Conference
Center, a certificate executed by the surveyor who prepared the boundary
survey portion of the Survey with respect thereto, dated as of a recent
date and containing such information relating to such parcel as the Agent
may reasonably require, such certificate to be reasonably satisfactory to
the Agent in form and substance.
Syndication Agent. BKB, acting as syndication agent for the
Banks, its successors and assigns.
TCI Easement Agreement. That certain Bulk Billing Agreement
between TCI Woodlands Venture, Inc. ("TCI") and Woodlands pursuant to which
TCI provides cable television service for a five-year period which began on
June 12, 1996.
TCI Easement Fee Value. The present value of projected fee
payments receivable by Commercial Company from the TCI Easement Agreement,
net of any associated expenses, discounted at a rate of 15% per annum.
Such amount shall be determined on the basis of generally accepted
accounting principles consistently applied and consistent with the manner
in which such amounts have previously been calculated and provided to the
Banks.
Test Period. See Section 9.2.
Title Insurance Company. Stewart Title Guaranty Company and
Commonwealth Land Title Company or another title insurance company or
companies approved by the Agent.
Title Policy. With respect to each parcel of Mortgaged
Property, a Texas standard form mortgagee title insurance policy issued by
a Title Insurance Company (with such reinsurance or co-insurance as the
Agent may require, any such reinsurance to be with direct access
endorsements to the extent available under applicable law) in such amount
as the Agent may reasonably require insuring the priority of the Security
Deeds and that Commercial Company holds good and indefeasible fee simple
title to such parcel, subject only to the encumbrances permitted by the
Security Deed and which shall not contain standard exceptions for mechanics
liens, persons in occupancy (other than tenants as tenants only under
Leases) or matters which would be shown by a survey, except as otherwise
approved by the Agent, shall not insure over any matter except to the
extent that any such affirmative insurance is acceptable to the Agent in
its sole discretion, and shall contain (a) a revolving credit endorsement
and (b) such other endorsements and affirmative insurance as the Agent
reasonably may require and is available in the State in which the Mortgaged
Property is located, including but not limited to (i) a comprehensive
endorsement, (ii) a variable rate of interest endorsement, (iii) a usury
endorsement, (iv) a doing business endorsement, (v) an ALTA form 3.1 zoning
endorsement, (vi) an access endorsement.
Total Market Value Capitalization. At any time the sum of
(a) an amount equal to the total value of the Borrowing Base Assets as
determined for the purposes of computing the Borrowing Base at such time
(without reference to any percentage advance rate), plus (b) the historic
cost (including construction in progress and land value) of income
producing properties that are owned by Commercial Company or Land Company
but do not constitute Borrowing Base Assets other than Build-To-Suit
Properties (or in the event that such property is owned by a Controlled
Subsidiary of Commercial Company or Land Company, then a percentage of such
cost equal to the percentage that Commercial Company's or Land Company's
Partial Interest bears to the entire equity interest in such property),
plus (c) the fair market value of Build-To-Suit Properties owned by
Commercial Company or Land Company which do not constitute Borrowing Base
Assets (or in the event that such property is owned by a Controlled
Subsidiary of Commercial Company or Land Company, then a percentage of such
fair market value equal to the percentage that Commercial Company's or Land
Company's Partial Interest bears to the entire equity interest in such
property), plus (d) the product of Net Earnings from Miscellaneous
Operations for the twelve month period then ended multiplied by 5, plus
(e) the TCI Easement Fee Value. Notwithstanding the foregoing, any
Borrowing Base Asset or other property described in clauses (a), (b) and
(c) above (including without limitation, Partial Interests that relate to
Income Properties but excluding any Properties Under Construction that
would otherwise be included in clauses (a), (b) and (c) above) that is
security for any Indebtednesses other than the Obligations in the event
that the Indebtedness secured by such asset exceeds sixty percent (60%) of
the Adjusted Value of such asset, shall be excluded for the purposes of
determining Total Market Value Capitalization.
Type. As to any Revolving Credit Loan, Secured Term Loan or
Second Secured Term Loan, its nature as a Base Rate Loan or a Eurodollar
Rate Loan.
Undeveloped Commercial Land. Land designated for commercial
use under the Master Plan of the Woodlands Project and Wood Trace, but not
Developed Commercial Land.
Undeveloped Residential Land. Land designated for
residential or institutional use, schools, churches, nurseries or day care
centers or designated for gas stations, service stations or similar retail
use or apartment use and other commercial uses designated as part of the
Residential Land under the applicable Master Plan of the Woodlands Project
and Wood Trace, but not Developed Residential Land.
Vertical Commercial Improvements. Improvements to the
Commercial Land or Residential Land, as applicable (which may include
improvements to be used for multifamily housing), which are intended to be
income-producing operating properties upon completion, rising vertically
from such land together with any site work and grading performed on the
Commercial Land or Residential Land, as applicable, in connection
therewith.
Voting Interests. Stock or similar ownership interests of
any class or classes (however designated), the holders of which are at the
time entitled, as such holders, (a) to vote for the election of a majority
of the directors (or persons performing similar functions) of the
corporation, association, partnership, trust or other business entity
involved, or (b) to control, manage, or conduct the business of the
corporation, partnership, association, trust or other business entity
involved.
WECCR. WECCR General Partnership, a Texas general
partnership.
Wood Trace. The approximately 2,850 acres of land in
northwest Houston, Texas known as "Wood Trace", as described in the Master
Plan for Wood Trace.
Woodlands. The Woodlands Corporation.
Woodlands Land. The Woodlands Land Company, Inc., a Texas
corporation.
Woodlands Operating. The Woodlands Operating Company, L.P.
Woodlands Project. The project commonly known as The
Woodlands and described in the Master Plan.
Section 21.2. Rules of Interpretation.
(a) A reference to any document or agreement shall include
such document or agreement as amended, modified or supplemented from time
to time in accordance with its terms and the terms of this Agreement.
(b) The singular includes the plural and the plural
includes the singular.
(c) A reference to any law includes any amendment or
modification to such law.
(d) A reference to any Person includes its permitted
successors and permitted assigns.
(e) Accounting terms not otherwise defined herein have the
meanings assigned to them by generally accepted accounting principles
applied on a consistent basis by the accounting entity to which they refer.
(f) The words "include", "includes" and "including" are not
limiting.
(g) The words "approval" and "approved" as the context so
determines, means an approval in writing given to the party seeking
approval after full and fair disclosure to the party giving approval of all
material facts necessary in order to determine whether approval should be
granted.
(h) All terms not specifically defined herein or by
generally accepted accounting principles, which terms are defined in the
Uniform Commercial Code as in effect in the Commonwealth of Massachusetts,
have the meanings assigned to them therein.
(i) Reference to a particular "Section ", refers to that
section of this Agreement unless otherwise indicated.
(j) The words "herein", "hereof", "hereunder" and words of
like import shall refer to this Agreement as a whole and not to any
particular section or subdivision of this Agreement.
22.THE REVOLVING CREDIT FACILITY
Section 22.1. Commitment to Lend Commercial Company Revolving
Credit Loans Subject to the terms and conditions set forth in this
Agreement, each of the Revolving Credit Banks severally agrees to lend to
Commercial Company, and Commercial Company may borrow (and repay and
reborrow) from time to time between July 31,1997 and the Maturity Date,
upon notice by Commercial Company to the Agent given in accordance with
Section 2.6, such sums as are requested by Commercial Company for the
purposes set forth in Section 7.11 (but subject to the limitations set
forth in Section 7.11) up to the lesser of (a) a maximum aggregate
principal amount outstanding (after giving effect to all amounts requested)
at any one time equal to such Revolving Credit Bank's Commercial Company
Revolving Credit Commitment and (b) such Revolving Credit Bank's Commercial
Company Revolving Credit Commitment Percentage of the sum of (i) the
Borrowing Base minus (ii) the amount of all outstanding or requested Land
Company Revolving Credit Loans, Commercial Company Secured Term Loans and
Land Company Secured Term Loans; provided, that, in all events no Default
or Event of Default shall have occurred and be continuing and the Borrowers
shall be in compliance with all covenants as required pursuant to Section
2.6(ii); and provided, further, that the outstanding principal amount of
the Commercial Company Revolving Credit Loans (after giving effect to all
amounts requested) shall not at any time exceed the total Commercial
Company Revolving Credit Commitment. The Commercial Company Revolving
Credit Loans shall be made pro rata in accordance with each Revolving
Credit Bank's Commercial Company Revolving Credit Commitment Percentage.
Each request for a Commercial Company Revolving Credit Loan hereunder shall
constitute a representation and warranty by Commercial Company that all of
the conditions set forth in Section 10 and Section 11, in the case of the
initial Commercial Company Revolving Credit Loan, and Section 11, in the
case of all other Commercial Company Revolving Credit Loans, have been
satisfied on the date of such request. No Revolving Credit Bank shall have
any obligation to make Commercial Company Revolving Credit Loans to
Commercial Company in the maximum aggregate principal amount outstanding of
more than the principal face amount of its Commercial Company Revolving
Credit Note.
Section 2.1A. Commitment to Lend Land Company Revolving Credit
Loans. Subject to the terms and conditions set forth in this Agreement,
each of the Revolving Credit Banks severally agrees to lend to Land
Company, and Land Company may borrow (and repay and reborrow) from time to
time between July 31,1997 and the Maturity Date, upon notice by Land
Company to the Agent given in accordance with Section 2.6, such sums as are
requested by Land Company for the purposes set forth in Section 7.11 (but
subject to the limitations set forth in Section 7.11) up to the lesser of
(a) a maximum aggregate principal amount outstanding (after giving effect
to all amounts requested) at any one time equal to such Revolving Credit
Bank's Land Company Revolving Credit Commitment and (b) such Revolving
Credit Bank's Land Company Revolving Credit Commitment Percentage of the
sum of (i) the Borrowing Base minus (ii) the amount of all outstanding or
requested Commercial Company Revolving Credit Loans, Commercial Company
Secured Term Loans and Land Company Secured Term Loans; provided, that, in
all events no Default or Event of Default shall have occurred and be
continuing and the Borrowers shall be in compliance with all covenants as
required pursuant to Section 2.6(ii); and provided, further, that the
outstanding principal amount of the Land Company Revolving Credit Loans
(after giving effect to all amounts requested) shall not at any time exceed
the total Land Company Revolving Credit Commitment. The Land Company
Revolving Credit Loans shall be made pro rata in accordance with each
Revolving Credit Bank's Land Company Revolving Credit Commitment
Percentage. Each request for a Land Company Revolving Credit Loan
hereunder shall constitute a representation and warranty by Land Company
that all of the conditions set forth in Section 10 and Section 11, in the
case of the initial Land Company Revolving Credit Loan, and Section 11, in
the case of all other Land Company Revolving Credit Loans, have been
satisfied on the date of such request. No Revolving Credit Bank shall have
any obligation to make Land Company Revolving Credit Loans to Land Company
in the maximum aggregate principal amount outstanding of more than the
principal face amount of its Land Company Revolving Credit Note.
Section 22.2. Facility Fee The Borrowers agree to pay to the
Agent for the accounts of the Revolving Credit Banks in accordance with
their respective Commercial Company Revolving Credit Commitment Percentages
and Land Company Revolving Credit Commitment Percentages a facility fee
calculated at the rate of one-fourth of one percent (1/4%) per annum on the
daily amount by which the aggregate Commercial Company Revolving Credit
Commitment and the Land Company Revolving Credit Commitment from time to
time exceeds the outstanding principal amount of Commercial Company
Revolving Credit Loans and Land Company Revolving Credit Loans during each
calendar quarter or portion thereof commencing on the date hereof and
ending on the Maturity Date. The facility fee shall be payable quarterly
in arrears on the first day of each calendar quarter for the immediately
preceding calendar quarter or portion thereof, or on any earlier date on
which the Commercial Company Revolving Credit Commitment and the Land
Company Revolving Credit Commitments shall terminate as provided in Section
2.3, with a final payment on the Maturity Date. Any payment due under this
Section 2.2 shall be prorated for any partial calendar quarter.
Section 22.3. Optional Reduction of Revolving Credit Commitment
Each Borrower shall have the right at any time and from time to time upon
three Business Days' prior written notice to the Agent to reduce by
$5,000,000.00 or an integral multiple of $500,000.00 in excess thereof
(provided that in no event shall the aggregate Revolving Credit Commitments
be reduced to an amount less than $50,000,000.00) or to terminate entirely
the unborrowed portion of the Commercial Company Revolving Credit
Commitments and the Land Company Revolving Credit Commitments, as
applicable, whereupon the Commercial Company Revolving Credit Commitments
or the Land Company Revolving Credit Commitments, as applicable, of the
Revolving Credit Banks shall be reduced pro rata in accordance with their
respective Commercial Company Revolving Credit Commitment Percentages and
Land Company Revolving Credit Commitment Percentages of the amount
specified in such notice or, as the case may be, terminated, any such
reduction to be without penalty. Promptly after receiving any notice of a
Borrower delivered pursuant to this Section 2.3, the Agent will notify the
Revolving Credit Banks of the substance thereof. Upon the effective date
of any such termination in full, the Borrowers shall pay to the Agent for
the respective accounts of the Revolving Credit Banks the full amount of
any facility fee under Section 2.2 then accrued. No reduction or
termination of the Commercial Company Revolving Credit Commitments or the
Land Company Revolving Credit Commitments, as applicable, may be
reinstated. Any reduction of the Commercial Company Revolving Credit
Commitments or the Land Company Revolving Credit Commitments pursuant to
this Agreement shall be allocated pro rata among the Revolving Credit Banks
in accordance with their Commercial Company Revolving Credit Commitment
Percentages or Land Company Revolving Credit Commitment Percentages, as
applicable.
Section 22.4. Commercial Company Revolving Credit Notes The
Commercial Company Revolving Credit Loans shall be evidenced by separate
promissory notes of the Borrowers in substantially the form of Exhibit A-1
hereto (collectively, the "Commercial Company Revolving Credit Notes"),
dated of even date with this Agreement and completed with appropriate
insertions. One Commercial Company Revolving Credit Note shall be payable
to the order of each Revolving Credit Bank in the principal amount equal to
such Revolving Credit Bank's Commercial Company Revolving Credit Commitment
or, if less, the outstanding amount of all Commercial Company Revolving
Credit Loans made by such Revolving Credit Bank, plus interest accrued
thereon, as set forth below. The Borrowers irrevocably authorize the Agent
to make or cause to be made, at or about the time of the Drawdown Date of
any Commercial Company Revolving Credit Loan or at the time of receipt of
any payment of principal thereof, an appropriate notation on Agent's Record
reflecting the making of such Commercial Company Revolving Credit Loan or
(as the case may be) the receipt of such payment. The outstanding amount
of the Commercial Company Revolving Credit Loans set forth on Agent's
Record shall be prima facie evidence of the principal amount thereof owing
and unpaid to each Revolving Credit Bank, but the failure to record, or any
error in so recording, any such amount on Agent's Record shall not limit or
otherwise affect the obligations of the Borrowers hereunder or under any
Commercial Company Revolving Credit Note to make payments of principal of
or interest on any Commercial Company Revolving Credit Note when due.
Section 2.4A. Land Company Revolving Credit Notes. The Land
Company Revolving Credit Loans shall be evidenced by separate promissory
notes of the Borrowers in substantially the form of Exhibit A-2 hereto
(collectively, the "Land Company Revolving Credit Notes"), dated of even
date with this Agreement and completed with appropriate insertions. One
Land Company Revolving Credit Note shall be payable to the order of each
Revolving Credit Bank in the principal amount equal to such Revolving
Credit Bank's Land Company Revolving Credit Commitment or, if less, the
outstanding amount of all Land Company Revolving Credit Loans made by such
Revolving Credit Bank, plus interest accrued thereon, as set forth below.
The Borrowers irrevocably authorize the Agent to make or cause to be made,
at or about the time of the Drawdown Date of any Land Company Revolving
Credit Loan or at the time of receipt of any payment of principal thereof,
an appropriate notation on Agent's Record reflecting the making of such
Land Company Revolving Credit Loan or (as the case may be) the receipt of
such payment. The outstanding amount of the Land Company Revolving Credit
Loans set forth on Agent's Record shall be prima facie evidence of the
principal amount thereof owing and unpaid to each Revolving Credit Bank,
but the failure to record, or any error in so recording, any such amount on
Agent's Record shall not limit or otherwise affect the obligations of the
Borrowers hereunder or under any Land Company Revolving Credit Note to make
payments of principal of or interest on any Land Company Revolving Credit
Note when due. By delivery of the Commercial Company Revolving Credit
Notes and the Land Company Revolving Credit Notes, there shall not be
deemed to have occurred, and there has not otherwise occurred, any payment,
satisfaction or novation of the Indebtedness evidenced by the "Revolving
Credit Notes" described in the Original Credit Agreement, which
Indebtedness is instead allocated among the Revolving Credit Banks and the
Secured Term Loan Banks as of the date hereof and evidenced by the
Commercial Company Revolving Credit Notes, the Commercial Company Secured
Term Loan Notes, the Land Company Revolving Credit Notes and the Land
Company Secured Term Loan Notes and their respective Commercial Company
Revolving Credit Commitment Percentages, Land Company Revolving Credit
Commitment Percentages, Commercial Company Secured Term Loan Commitment
Percentages and Land Company Secured Term Loan Commitment Percentages, and
the Revolving Credit Banks and the Secured Term Loan Banks shall as of the
date hereof make such adjustments to the outstanding Revolving Credit Loans
and Secured Term Loans of such Revolving Credit Banks and Secured Term Loan
Banks so that such outstanding Revolving Credit Loans and Secured Term
Loans are consistent with their respective Revolving Credit Commitment
Percentages and Secured Term Loan Commitment Percentages.
Section 22.5. Interest on Revolving Credit Loans
(a) Each Revolving Credit Eurodollar Rate Loan shall bear
interest for the period commencing with the Drawdown Date thereof and
ending on the date on which such Revolving Credit Eurodollar Rate Loan is
converted to a Revolving Credit Base Rate Loan from a Revolving Credit
Eurodollar Rate Loan at the rate of two percent (2.0%) per annum above the
Eurodollar Rate.
(b) Each Revolving Credit Base Rate Loan shall bear
interest at the Base Rate for the period commencing with the Drawdown Date
thereof and ending on the date on which such Revolving Credit Base Rate
Loan is converted to a Revolving Credit Eurodollar Rate Loan from a
Revolving Credit Base Rate Loan, provided that a Revolving Credit Loan
shall only bear interest as a Base Rate Loan under the circumstances
described in Section 4.6 and Section 4.7.
(c) The Borrowers promise to pay interest on each Revolving
Credit Loan in arrears on each Interest Payment Date with respect thereto.
Section 22.6. Requests for Revolving Credit Loans The
applicable Borrower (i) shall notify the Agent of a potential request for a
Commercial Company Revolving Credit Loan or a Land Company Revolving Credit
Loan as soon as possible prior to such Borrower's proposed Drawdown Date,
and (ii) shall give to the Agent written notice in the form of Exhibit C-1
or Exhibit C-2 hereto, as applicable (or telephonic notice confirmed in
writing in the form of Exhibit C-1 or Exhibit C-2 hereto, as applicable) of
each Revolving Credit Loan requested hereunder (a "Loan Request") no later
than 10:00 a.m. three (3) Business Days prior to the proposed Drawdown
Date. The Agent shall promptly notify each of the Revolving Credit Banks
following the receipt of a Loan Request, but in any event not less than two
(2) Business Days prior to the proposed Drawdown Date. The Borrowers in
the aggregate shall not make a Loan Request more frequently than five (5)
times each month. Each such notice shall specify with respect to the
requested Revolving Credit Loan the proposed principal amount, Drawdown
Date and Type (if applicable). Each such notice shall also contain (i) a
statement as to the purpose for which such advance shall be used (which
purpose shall be in accordance with the terms of Section 7.11), and (ii) a
certification by the Principal Financial Officer of each Borrower that the
Borrowers are and will be in compliance with all covenants under the Loan
Documents after giving effect to the making of such Revolving Credit Loan.
Promptly upon receipt of any such notice, the Agent shall notify each of
the Revolving Credit Banks thereof. Except as provided in this Section
2.6, each such Loan Request shall be irrevocable and binding on such
Borrower and shall obligate such Borrower to accept the Revolving Credit
Loan requested from the Revolving Credit Banks on the proposed Drawdown
Date, provided that, in addition to such Borrower's other remedies against
any Revolving Credit Bank which fails to advance its proportionate share of
a requested Revolving Credit Loan, such Loan Request may be revoked by such
Borrower by notice received by the Agent no later than the Drawdown Date if
any Revolving Credit Bank fails to advance its proportionate share of the
requested Revolving Credit Loan in accordance with the terms of this
Agreement, provided further that such Borrower shall be liable in
accordance with the terms of this Agreement to any Revolving Credit Bank
which is prepared to advance its proportionate share of the requested
Revolving Credit Loan for any costs, expenses or damages incurred by such
Revolving Credit Bank as a result of such Borrower's election to revoke
such Loan Request. Nothing herein shall prevent such Borrower from seeking
recourse against any Revolving Credit Bank that fails to advance its
proportionate share of a requested Revolving Credit Loan as required by
this Agreement. A Borrower may without cost or penalty revoke a Loan
Request by delivering notice thereof to each of the Revolving Credit Banks
no later than 10:00 a.m. two (2) Business Days prior to the Drawdown Date.
Each Loan Request shall be for a minimum aggregate amount of $1,000,000 or
an integral multiple of $100,000 in excess thereof.
Section 22.7. Funds for Revolving Credit Loans
(a) Not later than 11:00 a.m. (Boston time) on the proposed
Drawdown Date of any Revolving Credit Loans, each of the Revolving Credit
Banks will make available to the Agent, at the Agent's Head Office, in
immediately available funds, the amount of such Revolving Credit Bank's
Commercial Company Revolving Credit Commitment Percentage or Land Company
Revolving Credit Commitment Percentage, as applicable, of the amount of the
requested Revolving Credit Loans which may be disbursed pursuant to Section
2.1. Upon receipt from each Revolving Credit Bank of such amount, and upon
receipt of the documents required by Section 10 and Section 11 and the
satisfaction of the other conditions set forth therein, to the extent
applicable, the Agent will make available to the applicable Borrower the
aggregate amount of such Revolving Credit Loans made available to the Agent
by the Revolving Credit Bank by promptly crediting such amount to the
account of such Borrower maintained at the Agent's Head Office. The
failure or refusal of any Revolving Credit Bank to make available to the
Agent at the aforesaid time and place on any Drawdown Date the amount of
its Commercial Company Revolving Credit Commitment Percentage or Land
Company Revolving Credit Commitment Percentage, as applicable, of the
requested Revolving Credit Loans to the extent it is obligated to fund such
Revolving Credit Loan hereunder shall not relieve any other Revolving
Credit Bank from its several obligation hereunder to make available to the
Agent the amount of such other Revolving Credit Bank's Commercial Company
Revolving Credit Commitment Percentage or Land Company Revolving Credit
Commitment Percentage, as applicable, of any requested Revolving Credit
Loans, including any additional Revolving Credit Loans that may be
requested by the applicable Borrower subject to the terms and conditions
hereof to provide funds to replace those not advanced by the Revolving
Credit Bank so failing or refusing, provided that the applicable Borrower
may by notice received by the Agent no later than the Drawdown Date refuse
to accept any Revolving Credit Loan which is not fully funded in accordance
with such Borrower's Loan Request subject to the terms of Section 2.6;
provided further that no Revolving Credit Bank shall be obligated to
advance any amount in excess of the limits set forth in Section 2.1 or
Section 2.1A, as applicable. In the event of any such failure or refusal,
the Revolving Credit Banks not so failing or refusing shall be entitled to
a priority position as against the Revolving Credit Bank or Revolving
Credit Banks so failing or refusing for such Revolving Credit Loans as
provided in Section 14.5.
(b) Unless Agent shall have been notified by any Revolving
Credit Bank prior to the applicable Drawdown Date that such Revolving
Credit Bank will not make available to Agent such Revolving Credit Bank's
pro rata share of a proposed Revolving Credit Loan, Agent may in its
discretion assume that such Revolving Credit Bank has made such Revolving
Credit Loan available to Agent in accordance with the provisions of this
Agreement and Agent may, if it chooses, in reliance upon such assumption
make such Revolving Credit Loan available to the applicable Borrower, and
such Revolving Credit Bank shall be liable to the Agent for the amount of
such advance.
Section 22.8. Mandatory Reduction of Revolving Credit
Commitments and Secured Term Loan Commitments
(a) The Commercial Company Secured Term Loan Commitments,
the Land Company Secured Term Loan Commitments, the Commercial Company
Revolving Credit Commitments and the Land Company Revolving Credit
Commitments shall be reduced by the amounts described on Schedule 2.8
hereto by the end of each of the amortization periods described therein.
The respective Secured Term Loan Commitments shall be reduced first, and
after the reduction in full of the Secured Term Loan Commitments of the
Borrowers, the amortization shall then be applied to the Revolving Credit
Commitments of such Borrowers. As between the Commercial Company Secured
Term Loan Commitments and the Land Company Secured Term Loan Commitments,
and the Commercial Company Revolving Credit Commitments and the Land
Company Revolving Credit Commitments, respectively, the Borrowers shall be
permitted to allocate such reductions between the respective Secured Term
Loans and the Revolving Credit Loans as specified in a notice to the Agent.
(b) No reduction of the Commercial Company Revolving Credit
Commitments, the Land Company Revolving Credit Commitments, the Commercial
Company Secured Term Loan Commitments and the Land Company Secured Term
Loan Commitments pursuant to this Section 2.8 may be reinstated.
Section 2A. THE SECURED TERM LOAN FACILITY.
Section 2A.1 Commitment to Lend Commercial Company Secured Term
Loan Subject to the terms and conditions set forth in this Agreement, each
of the Secured Term Loan Banks severally agrees to lend to Commercial
Company, such Secured Term Loan Bank's Commercial Company Secured Term Loan
Commitment Percentage of the Commercial Company Secured Term Loan
Commitment.
Section 2A.1A Commitment to Lend Land Company Secured Term
Loan. Subject to the terms and conditions set forth in this Agreement,
each of the Secured Term Loan Banks severally agrees to lend to Land
Company, such Secured Term Loan Bank's Land Company Secured Term Loan
Commitment Percentage of the Land Company Secured Term Loan Commitment.
Section 2A.2 Commercial Company Secured Term Loan Notes The
Commercial Company Secured Term Loan shall be evidenced by separate
promissory notes of the Borrowers in substantially the form of Exhibit B-
1.1 hereto (collectively, the "Commercial Company Secured Term Loan
Notes"), dated of even date with this Agreement and completed with
appropriate insertions. One Commercial Company Secured Term Loan Note
shall be payable to the order of each Secured Term Loan Bank in the
principal amount equal to such Secured Term Loan Bank's Commercial Company
Secured Term Loan Commitment, plus interest accrued thereon, as set forth
below. The Borrowers irrevocably authorize Agent to make or cause to be
made, at or about the time of receipt of any payment of principal thereof,
an appropriate notation on Agent's Record reflecting the receipt of such
payment. The outstanding amount of the Commercial Company Secured Term
Loans set forth on Agent's Record shall be prima facie evidence of the
principal amount thereof owing and unpaid to each Secured Term Loan Bank,
but the failure to record, or any error in so recording, any such amount on
Agent's Record shall not limit or otherwise affect the obligations of the
Borrowers hereunder or under any Commercial Company Secured Term Loan Note
to make payments of principal of or interest on any Commercial Company
Secured Term Loan Note when due.
Section 2A.2A Land Company Secured Term Loan Notes. The Land
Company Secured Term Loan shall be evidenced by separate promissory notes
of the Borrowers in substantially the form of Exhibit B-2.1 hereto
(collectively, the "Land Company Secured Term Loan Notes"), dated of even
date with this Agreement and completed with appropriate insertions. One
Land Company Secured Term Loan Note shall be payable to the order of each
Secured Term Loan Bank in the principal amount equal to such Secured Term
Loan Bank's Land Company Secured Term Loan Commitment, plus interest
accrued thereon, as set forth below. The Borrowers irrevocably authorize
Agent to make or cause to be made, at or about the time of receipt of any
payment of principal thereof, an appropriate notation on Agent's Record
reflecting the receipt of such payment. The outstanding amount of the Land
Company Secured Term Loans set forth on Agent's Record shall be prima facie
evidence of the principal amount thereof owing and unpaid to each Secured
Term Loan Bank, but the failure to record, or any error in so recording,
any such amount on Agent's Record shall not limit or otherwise affect the
obligations of the Borrowers hereunder or under any Land Company Secured
Term Loan Note to make payments of principal of or interest on any Land
Company Secured Term Loan Note when due. By delivery of the Commercial
Company Secured Term Loan Notes and the Land Company Secured Term Loan
Notes, there shall not be deemed to have occurred, and there has not
otherwise occurred, any payment, satisfaction or novation of the
Indebtedness evidenced by the "Revolving Credit Notes" described in the
Original Credit Agreement, which Indebtedness is instead allocated among
the Revolving Credit Banks and the Secured Term Loan Banks as of the date
hereof and evidenced by the Commercial Company Revolving Credit Notes, the
Land Company Revolving Credit Notes, the Commercial Company Secured Term
Loan Notes and the Land Company Secured Term Loan Notes, and their
respective Commercial Company Revolving Credit Commitment Percentages, Land
Company Revolving Credit Commitment Percentages, Commercial Company
Secured Term Loan Commitment Percentages and Land Company Secured Term Loan
Commitment Percentages, and the Revolving Credit Banks and the Secured Term
Loan Banks shall as of the date hereof make such adjustments to the
outstanding Revolving Credit Loans and Secured Term Loans of such Revolving
Credit Banks and Secured Term Loan Banks so that such outstanding Revolving
Credit Loans and Secured Term Loans are consistent with their respective
Revolving Credit Commitment Percentages and Secured Term Loan Commitment
Percentages.
Section 2A.3 Interest on Secured Term Loans
(a) Each Secured Term Eurodollar Rate Loans (whether of
Commercial Company or Land Company) shall bear interest for the period
commencing with the Drawdown Date thereof and ending on the date on which
such Secured Term Eurodollar Rate Loan is converted to a Secured Term Base
Rate Loan at a rate per annum equal to the sum of (i) the Eurodollar Rate
plus (ii) two percent (2%).
(b) Each Secured Term Base Rate Loan shall bear interest at
the Base Rate for the period commencing with the Drawdown Date thereof and
ending on the date on which such Secured Term Base Rate Loan is converted
to a Secured Term Eurodollar Rate Loan, provided that a Secured Term Loan
shall only bear interest as a Base Rate Loan under the circumstances
described in Section 4.6 and Section 4.7.
(c) The Borrowers promise to pay interest on the Secured
Term Loans in arrears on each Interest Payment Date with respect thereto.
Section 2B. THE SECOND SECURED TERM LOAN FACILITY.
Section 2B.1 Commitment to Lend Commercial Company Second
Secured Term Loan. Subject to the terms and conditions set forth in this
Agreement, each of the Second Secured Term Loan Banks severally agrees to
lend to Commercial Company, such Second Secured Term Loan Bank's Commercial
Company Second Secured Term Loan Commitment Percentage of the Commercial
Company Second Secured Term Loan Commitment.
Section 2B.1A Commitment to Lend Land Company Second Secured
Term Loan. Subject to the terms and conditions set forth in this
Agreement, each of the Second Secured Term Loan Banks severally agrees to
lend to Land Company, such Second Secured Term Loan Bank's Land Company
Second Secured Term Loan Commitment Percentage of the Land Company Second
Secured Term Loan Commitment.
Section 2B.2 Commercial Company Second Secured Term Loan Notes.
The Commercial Company Second Secured Term Loan shall be evidenced by
separate promissory notes of the Borrowers in substantially the form of
Exhibit B-1.2 hereto (collectively, the "Commercial Company Second Secured
Term Loan Notes"), dated of even date with this Agreement and completed
with appropriate insertions. One Commercial Company Second Secured Term
Loan Note shall be payable to the order of each Second Secured Term Loan
Bank in the principal amount equal to such Second Secured Term Loan Bank's
Commercial Company Second Secured Term Loan Commitment, plus interest
accrued thereon, as set forth below. The Borrowers irrevocably authorize
Agent to make or cause to be made, at or about the time of receipt of any
payment of principal thereof, an appropriate notation on Agent's Record
reflecting the receipt of such payment. The outstanding amount of the
Commercial Company Second Secured Term Loans set forth on Agent's Record
shall be prima facie evidence of the principal amount thereof owing and
unpaid to each Second Secured Term Loan Bank, but the failure to record, or
any error in so recording, any such amount on Agent's Record shall not
limit or otherwise affect the obligations of the Borrowers hereunder or
under any Commercial Company Second Secured Term Loan Note to make payments
of principal of or interest on any Commercial Company Second Secured Term
Loan Note when due.
Section 2B.2A Land Company Second Secured Term Loan Notes. The
Land Company Second Secured Term Loan shall be evidenced by separate
promissory notes of the Borrowers in substantially the form of Exhibit B-
2.2 hereto (collectively, the "Land Company Second Secured Term Loan
Notes"), dated of even date with this Agreement and completed with
appropriate insertions. One Land Company Second Secured Term Loan Note
shall be payable to the order of each Second Secured Term Loan Bank in the
principal amount equal to such Second Secured Term Loan Bank's Land Company
Second Secured Term Loan Commitment, plus interest accrued thereon, as set
forth below. The Borrowers irrevocably authorize Agent to make or cause to
be made, at or about the time of receipt of any payment of principal
thereof, an appropriate notation on Agent's Record reflecting the receipt
of such payment. The outstanding amount of the Land Company Second Secured
Term Loans set forth on Agent's Record shall be prima facie evidence of the
principal amount thereof owing and unpaid to each Second Secured Term Loan
Bank, but the failure to record, or any error in so recording, any such
amount on Agent's Record shall not limit or otherwise affect the
obligations of the Borrowers hereunder or under any Land Company Second
Secured Term Loan Note to make payments of principal of or interest on any
Land Company Second Secured Term Loan Note when due. By delivery of the
Commercial Company Second Secured Term Loan Notes and the Land Company
Second Secured Term Loan Notes, there shall not be deemed to have occurred,
and there has not otherwise occurred, any payment, satisfaction or novation
of the Indebtedness evidenced by the "Term Loan Notes" described in the
Original Credit Agreement, which Indebtedness is instead allocated among
the Second Secured Term Loan Banks as of the date hereof and evidenced by
the Commercial Company Second Secured Term Loan Notes, the Land Company
Second Secured Term Loan Notes and their respective Commercial Company
Second Secured Term Loan Commitment Percentages and Land Company Second
Secured Term Loan Commitment Percentages, and the Second Secured Term Loan
Banks shall as of the date hereof make such adjustments to the outstanding
Second Secured Term Loans of such Second Secured Term Loan Banks so that
such outstanding Second Secured Term Loans are consistent with their
respective Second Secured Term Loan Commitment Percentages.
Section 2B.3 Interest on Second Secured Term Loans.
(d) The Second Secured Term Eurodollar Rate Loans (whether
of Commercial Company or Land Company) shall bear interest for the period
commencing with the Drawdown Date thereof and ending on the date on which
the Second Secured Term Eurodollar Rate Loans are converted to Second
Secured Term Base Rate Loans at a rate per annum equal to the sum of (i)
the Eurodollar Rate plus (ii) such percentage as would result in the amount
of interest payable on the aggregate Second Secured Term Loans of the
Borrowers, the aggregate Revolving Credit Loans of the Borrowers and the
aggregate Secured Term Loans of the Borrowers (assuming that the aggregate
Revolving Credit Loans and the aggregate Secured Term Loans of the
Borrowers were bearing interest at the Eurodollar Rate applicable to the
Second Secured Term Eurodollar Rate Loans and that the aggregate Second
Secured Term Loans, the aggregate Revolving Credit Loans and the aggregate
Secured Term Loans of the Borrowers are treated as a single loan for the
purposes hereof) to equal the Eurodollar Rate plus two and four-tenths
percent (2.4%).
(e) The Second Secured Term Base Rate Loans shall bear
interest at a rate per annum equal to the sum of the Base Rate plus one-
half percent (0.5%) for the period commencing with the Drawdown Date
thereof and ending on the date on which the Second Secured Term Base Rate
Loans are converted to a Second Secured Term Eurodollar Rate Loans,
provided that the Second Secured Term Loans shall only bear interest as
Base Rate Loans under the circumstances described in Section 4.6 and
Section 4.7.
(f) The Borrowers promise to pay interest on the Second
Secured Term Loans in arrears on each Interest Payment Date with respect
thereto.
Section 3. REPAYMENT OF THE LOANS
Section 3.1. Stated Maturity The Borrowers promise to pay on
the Maturity Date, and there shall become absolutely due and payable on the
Maturity Date, all of the Loans outstanding on such date, together with any
and all accrued and unpaid interest thereon.
Section 3.2. Mandatory Prepayments If at any time the
aggregate outstanding principal amount of the Commercial Company Revolving
Credit Loans or the Land Company Revolving Credit Loans, as applicable,
exceeds the total Commercial Company Revolving Credit Commitment or the
Land Company Revolving Credit Commitment, respectively (as the same may
have been reduced pursuant to Section 2.8), as applicable, or the aggregate
outstanding principal amount of the Revolving Credit Loans and the Secured
Term Loans exceeds the Borrowing Base, then the Borrowers shall immediately
pay the amount of such excess to the Agent for the respective accounts of
the Revolving Credit Banks and the Secured Term Loan Banks for application
to the Revolving Credit Loans and the Secured Term Loans.
Section 3.3. Optional Prepayments The Borrowers shall have the
right, at its election, to prepay the outstanding amount of the applicable
Revolving Credit Loans or Secured Term Loans, as a whole or in part, at any
time without penalty or premium. The applicable Borrower shall give the
Agent, no later than 10:00 a.m., Boston time, at least three Business Days
prior written notice of any prepayment pursuant to this Section 3.3, in
each case specifying the proposed date of payment of applicable Revolving
Credit Loans or Secured Term Loans and the principal amount to be paid.
Neither Borrower may prepay all or any portion of the Second Secured Term
Loans without first obtaining the prior written consent of the holders of
greater than fifty percent (50%) in the aggregate of the Commercial Company
Revolving Credit Commitments, Land Company Revolving Credit Commitments,
Commercial Company Secured Term Loan Commitments and Land Company Secured
Term Loan Commitments.
Section 3.4. Partial Prepayments. Each partial prepayment of
the Loans under Section 3.3 shall be in the minimum amount of $2,000,000.00
or an integral multiple of $250,000.00 in excess thereof (unless the
applicable Loan is being prepaid in full), and each partial prepayment of
the Loans under Section 3.2 and Section 3.3 shall be applied, in the
absence of instruction by the applicable Borrower, first to the principal
of the Secured Term Loans, then to the principal of the Revolving Credit
Loans and then to the principal of the Second Secured Term Loans (to the
extent permitted thereby), and within each category, first to the principal
of Base Rate Loans and then to the principal of Eurodollar Rate Loans.
Notwithstanding anything herein to the contrary, all "Special Amortization
Amounts" (as defined in the Cash Collateral Account Agreement) shall be
applied first to the principal of the Secured Term Loans and then to the
principal of the Revolving Credit Loans, and may be further allocated
between the Commercial Company Secured Term Loans and the Land Company
Secured Term Loans, and the Commercial Company Revolving Credit Loans and
the Land Company Revolving Credit Loans, as applicable, as specified in a
notice to the Agent.
Section 3.5. Effect of Prepayments Except as provided in this
Agreement, amounts of the Revolving Credit Loans prepaid under Section 3.2
and Section 3.3 prior to the Maturity Date may be reborrowed as provided
in Section 2. Notwithstanding the foregoing, amounts of the Revolving
Credit Loans prepaid under Section 3.2 as a result of the operation of
Section 2.8 may not be reborrowed. Any portion of the Secured Term Loan
or Second Secured Term Loan that is prepaid may not be reborrowed. Except
as otherwise expressly provided herein, all payments shall first be applied
to accrued but unpaid interest and then to principal as provided above.
Section 4. CERTAIN GENERAL PROVISIONS
Section 4.1. [Intentionally Omitted].
Section 4.2. Closing Fees. The Borrowers have previously paid
to BKB and MSSF certain fees for services rendered or to be rendered in
connection with the Loan as provided pursuant to an Agreement Regarding
Fees between the Borrower, BKB and MSSF (the "Agreement Regarding Fees").
All such fees shall be solely for the account of BKB and MSSF as provided
in such agreement.
Section 4.3. Agent Fee. The Borrowers shall pay to the Agent,
for the Agent's own account, a non-refundable Agent's fee pursuant to the
Agreement Regarding Fees. The Agent's fee shall be payable quarterly in
arrears on the first day of each calendar quarter for the preceding
calendar quarter or portion thereof. The Agent's fee shall also be paid
upon the Maturity Date or earlier termination of the Commitment. The
Agent's fee for any partial quarter shall be prorated.
Section 4.4. Funds for Payments.
(a) All payments of principal, interest, facility fees,
Agent's fees, closing fees and any other amounts due hereunder or under any
of the other Loan Documents shall be made to the Agent, for the respective
accounts of the Banks and the Agent, as the case may be, at the Agent's
Head Office, no later than 1:00 p.m. (Boston time) on the day when due, in
each case in immediately available funds.
(b) All payments by the Borrowers hereunder and under any
of the other Loan Documents shall be made without set off or counterclaim
and free and clear of and without deduction for any taxes, levies, imposts,
duties, charges, fees, deductions, withholdings, compulsory loans,
restrictions or conditions of any nature now or hereafter imposed or levied
by any jurisdiction or any political subdivision thereof or taxing or other
authority therein unless the Borrowers are compelled by law to make such
deduction or withholding. If any such obligation is imposed upon the
Borrowers with respect to any amount payable by them hereunder or under any
of the other Loan Documents, the Borrowers will pay to the Agent, for the
account of the Banks or (as the case may be) the Agent, on the date on
which such amount is due and payable hereunder or under such other Loan
Document, such additional amount in Dollars as shall be necessary to enable
the Banks or the Agent to receive the same net amount which the Banks or
the Agent would have received on such due date had no such obligation been
imposed upon the Borrowers. The Borrowers will deliver promptly to the
Agent certificates or other valid vouchers for all taxes or other charges
deducted from or paid with respect to payments made by the Borrowers
hereunder or under such other Loan Document.
(c) Each Bank organized under the laws of a jurisdiction
outside the United States, if requested in writing by the Borrowers (but
only so long as such Bank remains lawfully able to do so), shall provide
the Borrowers with such duly executed form(s) or statement(s) which may,
from time to time, be prescribed by law and, which, pursuant to applicable
provisions of (i) an income tax treaty between the United States and the
country of residence of such Bank, (ii) the Code, or (iii) any applicable
rules or regulations in effect under (i) or (ii) above, indicates the
withholding status of such Bank; provided that nothing herein (including
without limitation the failure or inability to provide such form or
statement) shall relieve the Borrowers of their obligations under Section
4.4(b). In the event that the Borrowers shall have delivered the
certificates or vouchers described above for any payments made by the
Borrowers and such Bank receives a refund of any taxes paid by the Borrower
pursuant to Section 4.4(b), such Bank will pay to the Borrowers the amount
of such refund promptly upon receipt thereof; provided that if at any time
thereafter such Bank is required to return such refund, the Borrowers shall
promptly repay to such Bank the amount of such refund. In the event that
any such Bank shall, after it becomes a Bank hereunder, become subject to
withholding as described above (such Bank is hereinafter referred to as a
"Withholding Bank"), then the Withholding Bank shall promptly notify the
Agent and the Borrowers and the Borrowers shall have the one-time right as
to such Withholding Bank, to be exercised by delivery of written notice
delivered to the Agent and the Withholding Bank within thirty (30) days of
receipt of such notice, to elect to cause the Withholding Bank to transfer
its Commitment. The Agent shall promptly notify the remaining Banks that
each of such Banks shall have the right, but not the obligation, to acquire
a portion of the Commitment, pro rata based upon their relevant Commitment
Percentages, of the Commitment of the Withholding Bank (or if any of such
Banks does not elect to purchase its pro rata share, then to such remaining
Banks in such proportion as approved by the Agent). In the event that the
Banks do not elect to acquire all of the Withholding Bank's Commitment,
then the Agent shall endeavor to obtain a new Bank to acquire such
remaining Commitment. Upon any such purchase of the Commitment of the
Withholding Bank, the Withholding Bank's interest in the Obligations and
its rights hereunder and under the Loan Documents shall terminate at the
date of purchase, and the Withholding Bank shall promptly execute all
documents reasonably requested to surrender and transfer such interest.
The purchase price for the Withholding Bank's Commitment shall equal the
principal balance of the Obligations outstanding and owed by Borrowers to
the Withholding Bank, plus any and all accrued and unpaid interest thereon.
Section 4.5. Computations. All computations of interest on the
Loans and of other fees to the extent applicable shall be based on a 360-
day year and paid for the actual number of days elapsed. Whenever a
payment hereunder or under any of the other Loan Documents becomes due on a
day that is not a Business Day, the due date for such payment shall be
extended to the next succeeding Business Day, and interest shall accrue
during such extension. The outstanding amount of the Loans as reflected on
the records of the Agent from time to time shall be considered prima facie
evidence of such amount.
Section 4.6. Inability to Determine Eurodollar Rate. In the
event that at any time the Agent shall determine in the exercise of its
good faith business judgment that adequate and reasonable methods do not
exist for ascertaining the Eurodollar Rate, the Agent shall forthwith give
notice of such determination (which shall be conclusive and binding on the
Borrowers and the Banks) to the Borrowers and the Banks. In such event (a)
any Loan Request with respect to Eurodollar Rate Loans shall be
automatically withdrawn and shall be deemed a request for Base Rate Loans
and (b) each Eurodollar Rate Loan will automatically become a Base Rate
Loan, and the obligations of the Banks to make Eurodollar Rate Loans shall
be suspended until the Agent determines in the exercise of its good faith
business judgment that the circumstances giving rise to such suspension no
longer exist, whereupon the Agent shall so notify the Borrowers and the
Banks.
Section 4.7. Illegality. Notwithstanding any other provisions
herein, if any present or future law, regulation, treaty or directive or
the interpretation or application thereof shall make it unlawful, or any
central bank or other governmental authority having jurisdiction over a
Bank or its Eurodollar Lending Office shall assert that it is unlawful, for
any Bank to make or maintain Eurodollar Rate Loans, such Bank shall
forthwith give notice of such circumstances to the Agent and the Borrowers
and thereupon (a) the commitment of the Banks to make Eurodollar Rate Loans
shall forthwith be suspended and (b) the Eurodollar Rate Loans then
outstanding shall be converted automatically to Base Rate Loans.
Section 4.8. [Intentionally omitted].
Section 4.9. Additional Costs, Etc.. Notwithstanding anything
herein to the contrary, if any present or future applicable law, or any
amendment or modification of present applicable law, which expression, as
used herein, includes statutes, rules and regulations thereunder and
legally binding interpretations thereof by any competent court or by any
governmental or other regulatory body or official with appropriate
jurisdiction charged with the administration or the interpretation thereof
and requests, directives, instructions and notices at any time or from time
to time hereafter made upon or otherwise issued to any Bank or the Agent by
any central bank or other fiscal, monetary or other authority (whether or
not having the force of law), shall:
(a) subject any Bank or the Agent to any tax, levy, impost,
duty, charge, fee, deduction or withholding of any nature with respect to
this Agreement, the other Loan Documents, such Bank's Commitment or the
Loans (other than franchise taxes and taxes based upon or measured by the
income or profits of such Bank or the Agent), or
(b) materially change the basis of taxation (except for
changes in taxes on income or profits) of payments to any Bank of the
principal of or the interest on any Loans or any other amounts payable to
any Bank under this Agreement or the other Loan Documents, or
(c) impose or increase or render applicable any special
deposit, reserve, assessment, liquidity, capital adequacy or other similar
requirements (whether or not having the force of law) against assets held
by, or deposits in or for the account of, or loans by, or commitments of an
office of any Bank, or
(d) impose on any Bank or the Agent any other conditions or
requirements with respect to this Agreement, the other Loan Documents, the
Loans, such Bank's Commitment, or any class of loans or commitments of
which any of the Loans or such Bank's Commitment forms a part; and the
result of any of the foregoing is
(i) to increase the cost to any Bank of making,
funding, issuing, renewing, extending or maintaining any of the
Loans or such Bank's Commitment, or
(ii) to reduce the amount of principal, interest or
other amount payable to such Bank or the Agent hereunder on
account of such Bank's Commitment or any of the Loans, or
(iii) to require such Bank or the Agent to make any
payment or to forego any interest or other sum payable hereunder,
the amount of which payment or foregone interest or other sum is
calculated by reference to the gross amount of any sum receivable
or deemed received by such Bank or the Agent from the Borrowers
hereunder;
then, and in each such case, the Borrowers will, within fifteen (15) days
of demand made by such Bank or (as the case may be) the Agent at any time
and from time to time and as often as the occasion therefor may arise, pay
to such Bank or the Agent such additional amounts as such Bank or the Agent
shall determine in good faith to be sufficient to compensate such Bank or
the Agent for such additional cost, reduction, payment or foregone interest
or other sum. Each Bank and the Agent in determining such amounts may use
any reasonable averaging and attribution methods, generally applied by such
Bank or the Agent. Notwithstanding the foregoing, the Borrowers shall have
the right, in lieu of making the payment referred to in this Section 4.9,
to prepay the Loan of the applicable Bank within fifteen (15) days of such
demand and avoid the payment of the amounts otherwise due under this
Section 4.9, provided, however, that the Borrowers shall be required to
pay together with such prepayment of the Loan all other costs, damages and
expenses otherwise due under this Agreement as a result of such prepayment.
Section 4.10. Capital Adequacy. If after the date hereof any
Bank reasonably determines that (a) the adoption of or change in any law,
rule, regulation or guideline regarding capital requirements for banks or
bank holding companies or any change in the interpretation or application
thereof by any governmental authority charged with the administration
thereof, or (b) compliance by such Bank or its parent bank holding company
with any guideline, request or directive of any such entity regarding
capital adequacy or any amendment or change in interpretation of any
existing guideline, request or directive (whether or not having the force
of law), has the effect of reducing the return on such Bank's or such
holding company's capital as a consequence of such Bank's commitment to
make Loans hereunder to a level below that which such Bank or holding
company could have achieved but for such adoption, change or compliance
(taking into consideration such Bank's or such holding company's then
existing policies with respect to capital adequacy and assuming the full
utilization of such entity's capital) by any amount deemed by such Bank to
be material, then such Bank may notify the Borrowers thereof. The
Borrowers agree to pay to such Bank the amount of such reduction in the
return on capital as and when such reduction is determined, upon
presentation by such Bank of a statement of the amount setting for the
Bank's calculation thereof. In determining such amount, such Bank may use
any reasonable averaging and attribution methods.
Section 4.11. Indemnity of Borrowers. The Borrowers agree to
indemnify each Bank and to hold each Bank harmless from and against any
loss, cost or expense that such Bank may sustain or incur as a consequence
of (a) default by the Borrowers in payment of the principal amount of or
any interest on any Eurodollar Rate Loans as and when due and payable,
including any such loss or expense arising from interest or fees payable by
such Bank to lenders of funds obtained by it in order to maintain its
Eurodollar Rate Loans, or (b) default by a Borrower in making a borrowing
or conversion after such Borrower has given (or is deemed to have given) a
Loan Request, or (c) default by the Borrowers in making the payments or
performing their obligations under Section s 4.9, 4.10 or 4.12.
Section 4.12. Interest on Overdue Amounts; Late Charge.
Overdue principal and (to the extent permitted by applicable law) interest
on the Loans and all other overdue amounts payable hereunder or under any
of the other Loan Documents shall bear interest payable on demand at a rate
per annum equal to two percent (2%) above the interest rate then in effect
for the applicable Loans (which rate of interest shall not in any event be
less than the Base Rate plus one percent (1%)), until such amount shall be
paid in full (after as well as before judgment), or if such rate shall
exceed the maximum rate permitted by law, then at the maximum rate
permitted by law. In addition, the Borrowers shall pay a late charge equal
to three percent (3%) of any amount of interest and/or principal payable on
the Loans or any other amounts payable hereunder or under the Loan
Documents, which is not paid within ten days of the date when due.
Section 4.13. Certificate. A certificate setting forth any
amounts payable pursuant to Section 4.9, Section 4.10, Section 4.11 or
Section 4.12 and a brief explanation of such amounts which are due,
submitted by any Bank or the Agent to the Borrowers, shall be conclusive in
the absence of manifest error.
Section 4.14. Limitation on Interest. Notwithstanding anything
in this Agreement to the contrary, all agreements between the Borrowers and
the Banks and the Agent, whether now existing or hereafter arising and
whether written or oral, are hereby limited so that in no contingency,
whether by reason of acceleration of the maturity of any of the Obligations
or otherwise, shall the interest contracted for, charged or received by the
Banks exceed the maximum amount permissible under applicable law. If, from
any circumstance whatsoever, interest would otherwise be payable to the
Banks in excess of the maximum lawful amount, the interest payable to the
Banks shall be reduced to the maximum amount permitted under applicable
law; and if from any circumstance the Banks shall ever receive anything of
value deemed interest by applicable law in excess of the maximum lawful
amount, an amount equal to any excessive interest shall be applied to the
reduction of the principal balance of the Obligations and to the payment of
interest or, if such excessive interest exceeds the unpaid balance of
principal of the Obligations, such excess shall be refunded to the
Borrowers. All interest paid or agreed to be paid to the Banks shall, to
the extent permitted by applicable law, be amortized, prorated, allocated
and spread throughout the full period until payment in full of the
principal of the Obligations (including the period of any renewal or
extension thereof) so that the interest thereon for such full period shall
not exceed the maximum amount permitted by applicable law. This section
shall control all agreements between the Borrowers and the Banks and the
Agent.
Section 4.15. Extension of Maturity Date.
(a) (i) Provided that no Default or Event of Default shall
have occurred and be continuing, the Borrowers shall have the option, to be
exercised by giving written notice to the Agent in the form of Exhibit D
hereto at least 90 days prior to the initial scheduled Maturity Date of
July 31, 2000, subject to the terms and conditions set forth in this
Agreement, to extend the Maturity Date to July 31, 2001. The request by
the Borrowers for extension of the Maturity Date shall constitute a
representation and warranty by the Borrowers that all of the conditions set
forth in this Section shall have been satisfied on the date of such
request.
(ii) The obligations of the Agent and the Banks to
extend the Maturity Date as provided in Section 4.15(a)(i) shall be
subject to the satisfaction of the following conditions precedent on or
prior to the scheduled Maturity Date of July 31, 2000:
(A) Payment of Extension Fee. The Borrowers
shall pay to the Agent for the pro rata accounts of the Banks in accordance
with their respective Commercial Company Revolving Credit Commitment
Percentages, Land Company Revolving Credit Commitment Percentages,
Commercial Company Secured Term Loan Commitment Percentages, Land Company
Secured Term Loan Commitment Percentages, Commercial Company Second Secured
Term Loan Commitment Percentages and Land Company Second Secured Term Loan
Commitment Percentages, as applicable, an extension fee equal to one-fourth
of one percent (0.25%) of the aggregate principal amount of the Commercial
Company Revolving Credit Loans, Land Company Revolving Credit Loans,
Commercial Company Secured Term Loans, Land Company Secured Term Loans,
Commercial Company Second Secured Term Loans and Land Company Second
Secured Term Loans, respectively (after giving effect to any required
principal reduction) outstanding as of the then scheduled Maturity Date
(without regard to such extension request), which fee shall, when paid, be
fully earned and non-refundable under any circumstances.
(B) Appraisals. There shall have been delivered
to the Agent at the Borrowers' expense updated Appraisals of the Borrowing
Base Assets (other than the Eligible Accounts Receivable) completed no
earlier than three months prior to the then scheduled Maturity Date, and
the Agent shall have determined that the Appraised Value of the Borrowing
Base Assets is such that the Borrowers are not in Default with respect to
any of the covenants in Section 9.
(C) No Default. On the date of the exercise of
such extension option and on the then effective Maturity Date (without
regard to such extension request) there shall exist no Default or Event of
Default.
(D) Representations and Warranties. The
representations and warranties made by the Borrowers or the Guarantors in
the Loan Documents or otherwise made by or on behalf of the Borrowers, any
of the General Partners, the Guarantors or any of their Controlled
Subsidiaries in connection therewith or after the date thereof shall have
been true and correct in all material respects on the then effective
Maturity Date (without regard to such extension request).
(E) Interest Rate Protection. The Borrowers
shall have obtained or extended prior to the then scheduled Maturity Date
(without regard to such extension request) an Interest Cap satisfying the
requirements of this Agreement and shall have provided evidence thereof to
the Agent.
(F) Reduction of Revolving Credit Commitment and
Secured Term Loan Commitment. The aggregate amount of the outstanding
Revolving Credit Loans and the Secured Term Loans shall be reduced (with
the Secured Term Loans being reduced first and then the Revolving Credit
Loans) to an amount such that the aggregate Revolving Credit Commitments
and the Secured Term Loan Commitments (that is, the amount of the
outstanding Revolving Credit Loans and the Secured Term Loans together with
the unfunded Revolving Credit Commitments and the unfunded Secured Term
Loan Commitments) does not exceed the Borrowing Base as most recently
determined under this Agreement based on the Appraisal delivered pursuant
to this Section 4.15(a). Borrowers shall immediately pay the amount of
such excess to the Agent for the respective accounts of the Revolving
Credit Banks and Secured Term Loan Banks for application to the Revolving
Credit Loans and the Secured Term Loans.
(G) Unfunded Revolving Credit Commitment. In the
event that the outstanding amount of the Revolving Credit Loans is less
than the aggregate Revolving Credit Commitments, Borrowers shall have the
option prior to the then scheduled Maturity Date (without regard to such
extension request) (1) to reduce the aggregate Revolving Credit
Commitments to the amount of the Revolving Credit Loans then outstanding
(which reduction may be allocated between the Commercial Company Revolving
Credit Commitment and the Land Company Revolving Credit Commitment as
specified by the Borrowers in a notice to the Agent), or (2) to maintain
all or any portion of such unfunded Revolving Credit Commitments by paying
to Agent for the account of the Revolving Credit Banks in accordance with
their respective Commercial Company Revolving Credit Commitment Percentages
and Land Company Revolving Credit Commitment Percentages an additional
extension fee equal to one-fourth of one percent (0.25%) of the portion of
such unfunded Commercial Company Revolving Credit Loans and Land Company
Revolving Credit Loans that Borrowers elect to remain outstanding, as
Borrowers shall specify to Agent in the extension request.
(b) In the event that the Maturity Date has been extended
as provided in Section 4.15(a), then provided that no Default or Event of
Default shall have occurred and be continuing, the Borrowers shall have the
option to be exercised by giving written notice to the Agent in the form of
Exhibit D hereto at least ninety (90) days prior to the scheduled Maturity
Date of July 31, 2001, subject to the terms and conditions set forth in
this Agreement, to extend the Maturity Date to July 31, 2002. The request
by the Borrowers for extension of the Maturity Date shall constitute a
representation and warranty by the Borrowers that all of the conditions set
forth in this Section shall have been satisfied on the date of such
request. The obligations of the Agent and the Banks to extend the
Maturity Date as provided in this Section 4.15(b) shall be subject to the
satisfaction of each and every condition set forth in Section 4.15(a) on
or prior to the then effective Maturity Date (without regard to such
extension or request), provided that with regard to subparagraph (B), the
Borrowers shall comply with the requirements of Section 5.2(e).
Section 5. COLLATERAL SECURITY AND GUARANTY
Section 5.1. Collateral. The Obligations shall be secured by
(i) a perfected first priority lien or security title and security interest
to be held by the Agent for the benefit of the Banks in the Mortgaged
Property and certain personal property of Commercial Company related to the
Mortgaged Property, pursuant to the terms of the Security Deeds, (ii) a
perfected first priority security interest to be held by the Agent for the
benefit of the Banks in leases, rents and profits pursuant to the
Assignment of Rents and Leases and in the Management Agreements pursuant to
the Assignment of Management Agreements and Subordination, (iii) the
Indemnity Agreement, (iv) a perfected first priority lien to be held by the
Agent for the benefit of the Banks in the interest of the Borrowers in the
Fees and the Accounts Receivable pursuant to the Security Agreements, (v) a
perfected first priority security interest to be held by the Agent for the
benefit of the Banks in the interest of Commercial Company in certain of
the Partnerships pursuant to the Assignment of Interests, (vi) the Cash
Collateral Account Agreement, and (vii) such additional collateral, if any,
as the Agent for the benefit of the Banks from time to time may accept as
security for the Obligations with the consent of the Majority Banks, which
consent may be given or withheld in the sole discretion of the Majority
Banks. The Obligations shall also be guaranteed pursuant to the terms of
the Guaranty.
Section 5.2. Appraisals; Adjusted Value.
(a) The Appraised Value for the Borrowing Base as of July
31,1997 shall be as set forth on Schedule 1.2 hereto. Without limiting any
other provision of this Agreement, the Appraised Value of any Partial
Interest shall take into consideration Commercial Company's interest in the
applicable Partnership. With respect to Land Assets, the Adjusted Value
may be determined as provided herein on a per lot or per acre basis and
then multiplied by the number of lots or acres.
(b) The Borrowers acknowledge that the Borrowers shall make
such quarterly adjustments to the Adjusted Value of the Borrowing Base
Assets and the Borrowing Base as may be required by the Agent in the
exercise of its good faith business judgment to account for the effects of
development costs, sales of land and other assets, new debt, defaults under
Indebtedness, changes in Partial Interests, or other circumstances, as
reflected in the quarterly Compliance Certificate and the attached
Borrowing Base worksheet, a form of which is attached hereto as Exhibit E.
(c) In addition to such quarterly adjustments as may be
necessary, the Borrowers shall prepare and deliver to the Agent on or prior
to December 31, 1998 and December 31, 1999 Borrowers' fair market valuation
of the Borrowing Base Assets (other than the Eligible Accounts Receivable).
Such valuation shall be accompanied by a detailed description of the
methodology and assumptions used by the Borrowers in preparing such
valuation, and such other supporting information as may be reasonably
required by the Agent. In the event that the Agent approves such
valuation, such valuation shall be the Appraised Value for the Borrowing
Base Assets (other than the Eligible Accounts Receivable) for the purposes
of this Agreement until such time as such Appraised Value is required
hereunder to be redetermined. In the event that the Agent reasonably
objects to such valuation after consultation with the Borrowers, the Agent
shall promptly obtain Appraisals or updates revising prior Appraisals,
which Appraisals or updates shall be ordered by the Agent and reviewed and
approved by the appraisal department of the Agent, to determine the
Appraised Value of the Borrowing Base Assets (other than the Eligible
Accounts Receivable), or such portion of the Borrowing Base Assets as was
subject to objection by the Agent. The Borrowers shall pay the Agent
within thirty (30) days of demand from Agent all reasonable costs of such
appraisals. During such valuation process, the prior Appraised Value (as
the same may have been adjusted to reflect changes in the Borrowing Base
Assets) shall continue to be in effect until the new Appraised Value is
determined hereunder.
(d) In the event that Borrowers elect to extend the
Maturity Date as provided in Section 4.15(a), then the Agent may on
behalf of the Banks obtain Appraisals of each of the Borrowing Base Assets
(other than the Eligible Accounts Receivable), which will be ordered by
Agent and reviewed and approved by the appraisal department of the Agent,
in order to determine the current Appraised Value and Borrowing Base, and
the Borrowers shall pay to Agent on demand all reasonable costs of such
Appraisals. If the Agent does not elect to obtain appraisals, the
Appraised Value shall be determined as provided in Section 5.2(c). In
the event that Borrowers exercise their second option to extend the
Maturity Date as provided in Section 4.15(b), the Appraised Value shall
also be determined as provided in Section 5.2(c).
(e) Notwithstanding the provisions of Section 5.2, the
Agent may, for the purpose of determining the current Appraised Value of
the Borrowing Base Assets (other than the Eligible Accounts Receivable) and
Borrowing Base, obtain interim Appraisals updating and revising prior
Appraisals with respect to the Borrowing Base Assets or such portion
thereof as the Agent shall determine (i) at any time that the regulatory
requirements of any Bank generally applicable to real estate loans of the
category made under this Agreement as reasonably interpreted by such Bank
shall require more frequent Appraisals, or (ii) at any time following a
condemnation of more than an immaterial portion of an asset within a
category of Borrowing Base Assets (as determined by the Agent) or any
material adverse change with respect to a Borrowing Base Asset (provided
that such Appraisal shall be limited to the affected Borrowing Base Asset).
The expense of such Appraisals and updates performed pursuant to this
Section 5.2(e) shall be borne by the Borrowers.
(f) In the event that the Agent shall advise the Borrowers,
on the basis of any Appraisal, update or other valuation pursuant to
Section 5.2, that the Borrowing Base is insufficient to comply with the
requirements of Section 9.3, then until the Borrowing Base shall be
restored to compliance with Section 9.3 the Banks shall not be required to
make advances under Section 2.1 or 2.1A.
(g) The Borrowers acknowledge that the Agent may make
changes or adjustments to the value set forth in any Appraisal as may be
required by the appraisal department of the Agent in the exercise of its
good faith business judgment, and that the Agent is not bound by the value
set forth in any Appraisal performed pursuant to this Agreement and does
not make any representations or warranties with respect to any such
Appraisal. The Borrowers further agree that the Banks and Agent shall have
no liability as a result of or in connection with any such Appraisal for
statements contained in such Appraisal, including without limitation, the
accuracy and completeness of information, estimates, conclusions and
opinions contained in such Appraisal, or variance of such Appraisal from
the fair value of such property that is the subject of such Appraisal given
by the local tax assessor's office, or the Borrowers' idea of the value of
such property.
(h) The Borrowers may request that a new Property, Partial
Interest, Income Property, Property Under Construction or other asset which
might qualify as a Borrowing Base Asset acquired or constructed by a
Borrower after July 31,1997 be included in the Borrowing Base. The
admission of such asset into the Borrowing Base and advance percentage for
such asset shall be approved by the Majority Banks in the exercise of their
sole discretion. Notwithstanding anything herein to the contrary, a
Property Under Construction shall not be included within the Borrowing Base
as an Income Property, Partial Interest or otherwise without the approval
of the Majority Banks as provided above.
Section 5.3. Granting of Security.
(a) Upon the occurrence of any Security Event, each of the
Borrowers, their respective Controlled Subsidiaries and Guarantors will
create liens under deeds of trust, assignments, pledges, and security
agreements upon all of its properties and assets, whether now owned or
hereafter acquired, including, without limitation, the Residential Land,
the Commercial Land and any other Real Estate, personal property, accounts,
general intangibles, rights, agreements of sale, the Merger Agreement,
purchase options, stock, limited liability or partnership interests, notes
and other receivables and any collateral for any thereof, which are not
collateral as of such date, and upon the occurrence of a Security Event
described under Section 12.1(a) or (b), shall cause the partners or other
equity holders of the Borrowers to create assignments, pledges and security
agreements upon the partnership interests or other beneficial interest in
such Borrower, in favor of Agent on behalf of Banks, so that obligations of
the Borrowers to the Agent and the Banks under Revolving Credit Loans,
Secured Term Loans and Second Secured Term Loans and otherwise hereunder or
under the other Loan Documents shall be secured equally and ratably by all
of such assets.
(b) All instruments creating or perfecting such deeds of
trust, assignments, pledges and security interests (collectively the "New
Collateral Documents") shall be in form and substance satisfactory to the
Agent (consistent to the extent practicable with the existing Security
Documents), shall be executed and delivered by the applicable Borrower,
their respective Controlled Subsidiaries, the Guarantors or the partners of
the applicable Borrower, as applicable, within ten (10) days of demand by
Agent, and shall be accompanied by such additional documents and agreements
relating thereto, including additional evidence of casualty and liability
insurance, title insurance, surveys, UCC searches, copies of subdivision
plans, and environmental studies, and legal opinions, as Agent may require.
The liens and encumbrances shall be of the highest possible priority
consistent with this Agreement. Borrowers shall pay upon thirty (30) days
of demand from Agent all costs and expenses (including recording fees,
mortgage, documentary stamp or intangibles taxes and reasonable attorneys'
fees) of the Agent and the Banks in preparing and recording the New
Collateral Documents.
(c) Each of the Borrowers, their respective Controlled
Subsidiaries, Guarantors and the partners of Borrowers hereby appoints any
officer or agent of the Agent as its true and lawful attorney, for it and
in its name, place and stead, following an Event of Default by reason of
the breach of Section 5.3, to make, execute, deliver, and cause to be
recorded or filed any or all such deeds of trust, assignments, pledges and
security interests and additional documents and agreements relating
thereto, granting unto said attorney full power to do any and all things it
may consider reasonably necessary or appropriate to be done with respect to
the New Collateral Documents as fully and effectively as such Persons might
or could do, and hereby ratifying and confirming all its said attorney
shall lawfully do or cause to be done by virtue hereof. This power of
attorney is coupled with an interest and shall be irrevocable for the term
of this Agreement and all transactions hereunder.
Section 5.4. Releases of Liens.
The Borrowers shall have the right to obtain the release of
the following items of Collateral from the lien and security interest
created by the Security Documents pursuant to the cash sale of same for
fair market value to third parties unaffiliated with any Borrower and their
respective Controlled Subsidiaries and Non-Controlled Subsidiaries:
(i) the interests described in the Assignment of Interests and the Note
Receivables, (ii) a fifty percent (50%) joint venture interest in the
Conference Center to Exxon Corporation pursuant to that certain Lease
Agreement, dated April 1, 1976, between Grogan's Mill Development
Corporation and Exxon Corporation, as amended by the First Amendment to
Lease Agreement, dated August 14, 1996, and that certain Lease Agreement,
dated September 27, 1978, between Woodlands Commercial Development Company
and Exxon Corporation, as amended by the First Amendment to Lease
Agreement, dated August 14, 1996 (collectively, the "Exxon Leases");
provided, however, that all net proceeds from any such sales shall be
deposited by the Borrowers in such Borrower's "Operating Account," as such
term is defined in the Cash Collateral Account Agreement. Notice of each
such proposed sale together with a request for release by the Agent must be
received by the Agent at least five (5) Business Days prior to the date the
release shall be required by the Borrowers. The Borrowers shall reimburse
the Agent for all costs and expenses incurred in granting such release as
provided in Section 15.
Section 6. REPRESENTATIONS AND WARRANTIES
The Borrowers represent and warrant to the Agent and the Banks as
follows:
Section 6.1. Corporate Authority, Etc.
FOR Organization; Good Standing. Each Borrower is a Texas
limited partnership duly organized and is validly existing and in good
standing under the laws of Texas. CresWood is a limited liability company
duly organized pursuant to its Articles of Organization and filed with the
Secretary of State of Texas and is validly existing and in good standing
under the laws of the State of Texas. MS TWC, Inc. is a corporation duly
organized pursuant to its Certificate of Incorporation filed with the
Secretary of State of Delaware and is validly existing and in good standing
under the laws of the State of Delaware. Woodlands Land is a corporation
duly organized pursuant to its Certificate of Incorporation filed with the
Secretary of State of Texas and is validly existing and in good standing
under the laws of the State of Texas. Each of the Borrowers, the General
Partners and the Guarantors (i) has all requisite power to own its
respective properties and conduct its respective business as now conducted
and as presently contemplated, and (ii) is in good standing as a foreign
entity and is duly authorized to do business in the jurisdictions where the
Borrowing Base Assets are located and, as to each of such Persons, in each
other jurisdiction where a failure to be so qualified in such other
jurisdiction could have a materially adverse effect on the business, assets
or financial condition of such Person.
(b) Subsidiaries. Each of the Controlled Subsidiaries of
the Borrowers (i) is a corporation, limited partnership, limited liability
company or trust duly organized under the laws of its State of organization
and is validly existing and in good standing under the laws thereof, (ii)
has all requisite power to own its property and conduct its business as now
conducted and as presently contemplated and (iii) is in good standing and
is duly authorized to do business in each jurisdiction where Borrowing Base
Assets held by it are located and in each other jurisdiction where a
failure to be so qualified could have a materially adverse effect on the
business, assets or financial condition of such Borrower or such Controlled
Subsidiary.
(c) Authorization. The execution, delivery and performance
of this Agreement and the other Loan Documents to which the Borrowers, the
General Partners or the Guarantors are or are to become a party and the
transactions contemplated hereby and thereby (i) are within the authority
of such Person, (ii) have been duly authorized by all necessary proceedings
on the part of such Person, (iii) do not and will not conflict with or
result in any breach or contravention of any provision of law, statute,
rule or regulation to which such Person is subject or any judgment, order,
writ, injunction, license or permit applicable to such Person, (iv) do not
and will not conflict with or constitute a default (whether with the
passage of time or the giving of notice, or both) under any provision of
the articles of incorporation, partnership agreement, declaration of trust
or other charter documents or bylaws of, or any agreement or other
instrument binding upon, such Person or any of its properties, and (v) do
not and will not result in or require the imposition of any lien or other
encumbrance on any of the properties, assets or rights of such Person.
(d) Enforceability. The execution and delivery of this
Agreement and the other Loan Documents to which the Borrowers, the General
Partners or the Guarantors are or are to become a party are valid and
legally binding obligations of such Person enforceable in accordance with
the respective terms and provisions hereof and thereof, except as
enforceability is limited by bankruptcy, insolvency, reorganization,
moratorium or other laws relating to or affecting generally the enforcement
of creditors' rights and except to the extent that availability of the
remedy of specific performance or injunctive relief is subject to the
discretion of the court before which any proceeding therefor may be
brought.
Section 6.2. Governmental Approvals. The execution, delivery
and performance of this Agreement and the other Loan Documents to which the
Borrowers, the General Partners or the Guarantors are or are to become a
party and the transactions contemplated hereby and thereby do not require
the approval or consent of, or filing with, any governmental agency or
authority other than those already obtained and the filing of the Security
Documents in the appropriate records office with respect thereto.
Section 6.3. Title to Properties; Leases. Except as set forth
on Schedule 6.3 hereto, each Borrower and its Controlled Subsidiaries owns
all of the assets reflected in the consolidated balance sheet of the
applicable Borrower as at the Balance Sheet Date or acquired since that
date (except property and assets sold or otherwise disposed of in the
ordinary course of business since that date), subject to no rights of
others, including any mortgages, leases, conditional sales agreements,
title retention agreements, liens or other encumbrances except Liens
permitted by this Agreement. Without limiting the foregoing, each Borrower
and its Controlled Subsidiaries has good and indefeasible fee simple title
to all real property reasonably necessary for the operation of its
business, free from all liens or encumbrances of any nature whatsoever,
except for Permitted Liens. Commercial Company is the insured under a
marked commitment for owner's title insurance covering the Conference
Center in an amount not less than the fair market value thereof as of July
31,1997.
Section 6.4. Financial Statements. The Borrowers have
furnished or caused to be furnished to each of the Banks: (a) the pro
forma consolidated balance sheet of each Borrower and its subsidiaries as
of the Balance Sheet Date certified by each Borrower's Principal Financial
Officer as fairly presenting the balance sheet of such Persons for such
period, and (b) certain other financial information. Such balance sheet
and statements have been prepared in accordance with generally accepted
accounting principles and fairly present the financial condition of such
Borrower and its subsidiaries as of such dates and the results of the
operations of such Borrower and its subsidiaries for such periods. There
are no liabilities, contingent or otherwise, of any Borrower or any of its
subsidiaries involving material amounts not disclosed in said financial
statements and the related notes thereto.
Section 6.5. No Material Changes. Since the Balance Sheet
Date, there has occurred no materially adverse change in the financial
condition or business of either Borrower, or their respective subsidiaries
taken as a whole as shown on or reflected in the consolidated balance sheet
of such Borrower as of the Balance Sheet Date, or its consolidated
statement of income or cash flows for the fiscal year then ended, other
than changes in the ordinary course of business that have not had any
materially adverse effect either individually or in the aggregate on the
business or financial condition of such Person. Since the date of the
property condition reports delivered to the Agent prior to the date hereof,
there has been no materially adverse change to the physical condition of
any of the Borrowing Base Assets. There has occurred no materially adverse
change in the financial condition or business of any of the Borrowing Base
Assets from the condition shown on the statements delivered to the Banks
pursuant to Section 6.4 other than changes in the ordinary course of
business that have not had any materially adverse effect either
individually or in the aggregate on the business or financial condition of
the Borrowing Base Assets.
Section 6.6. Franchises, Patents, Copyrights, Etc. The
Borrowers and their respective Controlled Subsidiaries and the General
Partners possess all franchises, patents, copyrights, trademarks, trade
names, servicemarks, licenses, liquor licenses and permits, and rights in
respect of the foregoing, adequate for the conduct of their business
substantially as now conducted without known violation of any rights of
others, except where a failure to possess such rights could not have a
materially adverse effect on the business, assets or financial condition of
such Person.
Section 6.7. Litigation. Except as stated on Schedule 6.7
there are no actions, suits, proceedings or investigations of any kind
pending or to the best of the Borrowers' knowledge and belief, threatened
against any Borrower, any General Partner, any Guarantor, any of the
Controlled Subsidiaries of a Borrower or any of the Associations before any
court, tribunal or administrative agency or board that, if adversely
determined, might, either in any case or in the aggregate, materially
adversely affect the properties, assets, financial condition or business of
such Person (in the case of the Associations, which materially adversely
affects a Borrower) or materially impair the right of such Person to carry
on business substantially as now conducted by it, or which question the
validity of this Agreement or any of the other Loan Documents, any action
taken or to be taken pursuant hereto or thereto or any lien or security
interest created or intended to be created pursuant hereto or thereto, or
which will adversely affect the ability of such Person to pay and perform
the Obligations in the manner contemplated by this Agreement and the other
Loan Documents. There are no judgments outstanding against or effecting
any Borrower, any General Partner, any Guarantor, any of the Controlled
Subsidiaries of a Borrower, or any of the Collateral.
Section 6.8. No Materially Adverse Contracts, Etc. None of the
Borrowers, the General Partners, the Guarantors nor any of the Controlled
Subsidiaries of a Borrower is subject to any charter, corporate or other
legal restriction, or any judgment, decree, order, rule or regulation that
has or is expected in the future to have a materially adverse effect on the
business, assets or financial condition of such Person. None of the
Borrowers, the General Partners, the Guarantors nor any of the Controlled
Subsidiaries of a Borrower is a party to any contract or agreement that has
or is expected, in the judgment of the partners or officers of such Person,
to have any materially adverse effect on the business of any of them.
Section 6.9. Compliance with Other Instruments, Laws, Etc.
None of the Borrowers, the General Partners, the Guarantors nor any of the
Controlled Subsidiaries of a Borrower is in violation of any provision of
its partnership agreement, charter or other organizational documents,
bylaws, or any agreement or instrument to which it may be subject or by
which it or any of its properties may be bound or any decree, order,
judgment, statute, license, rule or regulation, in any of the foregoing
cases in a manner that could result in the imposition of substantial
penalties or materially and adversely affect the financial condition,
properties or business of such Person.
Section 6.10. Tax Status. The Borrowers, the General Partners,
the Guarantors and each of the Controlled Subsidiaries of a Borrower (a)
has made or filed all federal and state income and all other tax returns,
reports and declarations required by any jurisdiction to which it is
subject, if applicable or required, except to the extent such Person has
obtained an extension of the deadline to file such return, (b) has paid all
taxes and other private or governmental assessments and charges shown or
determined to be due on such returns, reports and declarations, if
applicable or required, except those being contested in good faith and by
appropriate proceedings or where a failure to so pay could not have a
materially adverse effect on the business, assets or financial condition of
such Person and (c) has set aside on its books provisions reasonably
adequate for the payment of all taxes for periods subsequent to the periods
to which such returns, reports or declarations apply, if applicable or
required. There are no unpaid taxes or assessments in any material amount
claimed to be due by the taxing authority of any jurisdiction or pursuant
to any private agreement except for those that are being contested as
permitted in this Agreement, and the partners or officers of such Person
know of no basis for any such claim.
Section 6.11. No Event of Default. No Default or Event of
Default has occurred and is continuing.
Section 6.12. Holding Company and Investment Company Acts.
None of the Borrowers, the General Partners, the Guarantors nor any of the
Controlled Subsidiaries of a Borrower is a "holding company", or a
"subsidiary company" of a "holding company", or an "affiliate" of a
"holding company", as such terms are defined in the Public Utility Holding
Company Act of 1935; nor is it an "investment company", or an "affiliated
company" or a "principal underwriter" of an "investment company", as such
terms are defined in the Investment Company Act of 1940.
Section 6.13. Absence of UCC Financing Statements, Etc. Except
with respect to Liens permitted by Section 8.2, there is no financing
statement, security agreement, chattel mortgage, real estate mortgage or
other document filed or recorded with any filing records, registry, or
other public office, that purports to cover, affect or give notice of any
present or possible future lien on, or security interest or security title
in, any property of a Borrower or its Controlled Subsidiaries or rights
thereunder.
Section 6.14. Setoff, Etc. The Collateral and the rights of
the Agent and the Banks with respect to the Collateral are not subject to
any setoff, claims, withholdings or other defenses. The Borrowers are the
owner of the Collateral free from any lien, security interest, encumbrance
or other claim or demand, except those encumbrances permitted in the
Security Deeds or permitted by Section 8.2.
Section 6.15. Certain Transactions. Except as set forth in
Schedule 6.15 hereto, none of the partners, officers, trustees, directors,
or employees of the Borrowers, the General Partners, the Guarantors or any
of the Controlled Subsidiaries of a Borrower is a party to any material
transaction with either of the Borrowers or any of their respective
Controlled Subsidiaries (other than employment and severance agreements
relating to services as partners, employees, officers, trustees and
directors), including any contract, agreement or other arrangement
providing for the furnishing of services to or by, providing for rental of
real or personal property to or from, or otherwise requiring payments to or
from any partner, officer, trustee, director or such employee or, to the
knowledge of the Borrowers, any corporation, partnership, trust or other
entity in which any partner, officer, trustee, director, or any such
employee has a substantial interest or is an officer, director, trustee or
partner, unless such contract, agreement or other arrangement is an arm's-
length arrangement with terms comparable to those which would be obtained
from an unaffiliated Person or as otherwise approved by the Agent. For the
purposes of this Section 6.15, a transaction shall be deemed "material"
to the extent such transaction would be required to be disclosed to the
shareholders pursuant to applicable securities laws (including, without
limitation, Item 404 of Regulation SK promulgated by the Securities and
Exchange Commission).
Section 6.16. Employee Benefit Plans. Each Borrower is in
compliance in all material respects with ERISA. There has been no
Reportable Event with respect to any Employee Benefit Plan, Multiemployer
Plan or Guaranteed Pension Plan. There has been no institution of
proceedings or any other action by PBGC, any Borrower or any ERISA
Affiliate to terminate or withdraw or partially withdraw from any such Plan
under any circumstances which could lead to material liabilities to PBGC
or, with respect to a Multiemployer Plan, the "Reorganization" or
"Insolvency" (as each such term is defined in ERISA) of any such Plan. No
"prohibited transaction" (within the meaning of Section 406 of ERISA or
Section 4975 of the Code) has occurred with respect to any such Plan, and
the consummation of the transactions provided for in this Agreement and
compliance by the Borrowers with the provisions hereof and the other Loan
Documents will not involve any prohibited transaction.
Section 6.17. ERISA Taxes. None of the Borrowers or any ERISA
Affiliate thereof is currently and the Borrowers have no reason to believe
that any Borrower or any ERISA Affiliate thereof will become subject to any
liability (other than routine expenses or contributions relating to the
Plans set forth on Schedule 6.17, if timely paid), tax or penalty
whatsoever to any person whomsoever, which liability, tax or penalty is
directly or indirectly related to any Plans set forth on Schedule 6.17
including, but not limited to, any penalty or liability arising under Title
I or Title IV of ERISA, any tax or penalty resulting from a loss of
deduction under Section s 404 and 419 of the Code, or any tax or penalty
under Chapter 43 of the Code, except such liabilities, taxes or penalties
(when taken as a whole) as will not have a material adverse effect on such
Borrowers or upon its financial condition, assets, business, operations,
liabilities or prospects.
Section 6.18. Plan Payments. Each Borrower and each ERISA
Affiliate has made full and timely payment of all amounts (i) required to
be contributed under the terms of each Plan set forth on Schedule 6.17 and
applicable law and (ii) required to be paid as expenses of each Plan set
forth on Schedule 6.17. No Plan set forth on Schedule 6.17 would have an
"amount of unfunded benefit liabilities" (as defined in Section
4001(a)(18) of ERISA) if such Plan were terminated as of the date on which
this representation and warranty is made.
Section 6.19. Regulations U and X. No portion of any Loan is
to be used by any Borrower for the purpose of purchasing or carrying any
"margin security" or "margin stock" as such terms are used in Regulations U
and X of the Board of Governors of the Federal Reserve System, 12 C.F.R.
Parts 221 and 224.
Section 6.20. Environmental Compliance. The Borrowers have
taken all commercially reasonable steps necessary to investigate the past
and present conditions and usage of the Real Estate and the operations
conducted thereon and, based upon such investigation, makes the following
representations and warranties. All of the representations and warranties
in this Section 6.20 shall be deemed to except to the matters specifically
set forth in the written environmental site assessment reports of the
Environmental Engineer provided to the Agent on or before the date hereof.
(a) To the best of the Borrowers' knowledge, none of the
Borrowers, the General Partners, the Guarantors nor the Controlled
Subsidiaries of any Borrower or any operator of the Real Estate, or any
operations thereon is in violation, or alleged violation, of any judgment,
decree, order, law, license, rule or regulation pertaining to environmental
matters, including without limitation, those arising under the Resource
Conservation and Recovery Act ("RCRA"), the Comprehensive Environmental
Response, Compensation and Liability Act of 1980 as amended ("CERCLA"), the
Superfund Amendments and Reauthorization Act of 1986 ("SARA"), the Federal
Clean Water Act, the Federal Clean Air Act, the Toxic Substances Control
Act, or any state or local statute, regulation, ordinance, order or decree
relating to the environment (hereinafter "Environmental Laws"), which
violation involves the Real Estate and would have a material adverse effect
on the environment or the business, assets or financial condition of either
Borrower, any General Partner, any Guarantor or any of a Borrower's
Controlled Subsidiaries.
(b) None of the Borrowers, the General Partners, the
Guarantors nor any of the Controlled Subsidiaries of any Borrower has
received notice from any third party including, without limitation, any
federal, state or local governmental authority, (i) that it has been
identified by the United States Environmental Protection Agency ("EPA") as
a potentially responsible party under CERCLA with respect to a site listed
on the National Priorities List, 40 C.F.R. Part 300 Appendix B (1986); (ii)
that any hazardous waste, as defined by 42 U.S.C. Section 9601(5), any
hazardous substances as defined by 42 U.S.C. Section 9601(14), any
pollutant or contaminant as defined by 42 U.S.C. Section 9601(33) or any
toxic substances, oil or hazardous materials or other chemicals or
substances regulated by any Environmental Laws ("Hazardous Substances")
which it has generated, transported or disposed of have been found at any
site at, on or under the Real Estate for which a federal, state or local
agency or other third party has conducted or has ordered that any of the
Borrowers, any General Partner, any Guarantor or any of the Controlled
Subsidiaries of any Borrower conduct a remedial investigation, removal or
other response action pursuant to any Environmental Law; or (iii) that it
is or shall be a named party to any claim, action, cause of action,
complaint, or legal or administrative proceeding (in each case, contingent
or otherwise) arising out of any third party's incurrence of costs,
expenses, losses or damages of any kind whatsoever in connection with the
release of Hazardous Substances.
(c) To the best of the Borrowers' knowledge: (i) no
portion of the Real Estate has been used as a landfill or for dumping or
for the handling, processing, storage or disposal of Hazardous Substances
except in accordance with applicable Environmental Laws, and no underground
tank or other underground storage receptacle for Hazardous Substances is
located on any portion of the Real Estate that is not in compliance with
applicable Environmental Laws; (ii) in the course of any activities
conducted by the Borrowers, the General Partners, the Guarantors, the
Controlled Subsidiaries of any Borrower or the operators of any of their
properties, no Hazardous Substances have been generated or are being used
on the Real Estate except in the ordinary course of business and in
accordance with applicable Environmental Laws; (iii) there has been no past
or present releasing, spilling, leaking, pumping, pouring, emitting,
emptying, discharging, injecting, escaping, disposing or dumping (a
"Release") or threatened Release of Hazardous Substances on, upon, into or
from the Real Estate, which Release would have a material adverse effect on
the value of any of the Real Estate or adjacent properties or the
environment; (iv) there have been no Releases on, upon, from or into any
real property in the vicinity of any of the Real Estate which, through soil
or groundwater contamination, may have come to be located on, and which
would have a material adverse effect on the value of, the Real Estate; and
(v) any Hazardous Substances that have been generated on any of the Real
Estate have been transported off-site only by carriers having an
identification number issued by the EPA or approved by a state or local
environmental regulatory authority having jurisdiction regarding the
transportation of such substance and treated or disposed of only by
treatment or disposal facilities maintaining valid permits as required
under all applicable Environmental Laws, which transporters and facilities
have been and are, to the best of the Borrowers's knowledge, operating in
compliance with such permits and applicable Environmental Laws.
(d) None of the Borrowers, the General Partners, the
Guarantors, the Controlled Subsidiaries of any Borrower, nor any Real
Estate is subject to any applicable Environmental Law requiring the
performance of Hazardous Substances site assessments, or the removal or
remediation of Hazardous Substances, or the giving of notice to any
governmental agency or the recording or delivery to other Persons of an
environmental disclosure document or statement by virtue of the
transactions set forth herein and contemplated hereby, or as a condition to
the recording of the Security Deed or to the effectiveness of any other
transactions contemplated hereby.
Section 6.21. Subsidiaries. Schedule 6.21 sets forth, as of
the date hereof, all of the Controlled Subsidiaries and Non-Controlled
Subsidiaries of the Borrowers, the form and jurisdiction of organization of
each of such Subsidiaries, and the Borrowers' ownership interest therein.
Section 6.22. Loan Documents. All of the representations and
warranties made by or on behalf of the Borrowers, the General Partners, the
Guarantors and the Controlled Subsidiaries of any Borrower made in this
Agreement and the other Loan Documents or any document or instrument
delivered to the Agent or the Banks pursuant to or in connection with any
of such Loan Documents are true and correct in all material respects, and
neither of the Borrowers nor any Guarantor has failed to disclose such
information as is necessary to make such representations and warranties not
misleading. There is no material fact or circumstance that has not been
disclosed to the Agent and the Banks, and the written information, reports
and other papers and data with respect to the Borrowers and the Property
(other than projections and estimates) furnished to the Agent or the Bank
in connection with this Agreement or the obtaining of the commitments of
the Banks hereunder was, at the time so furnished and when considered as a
whole, complete and correct in all material respects, or has been
subsequently supplemented by other information, reports or other papers or
data, to the extent necessary to give in all material respects a true and
accurate knowledge of the subject matter in all material respects; provided
that such representation shall not apply to (a) the accuracy of any
engineering and environmental reports prepared by third parties or legal
conclusions or analysis provided by the Borrowers' counsel (although
Borrowers have no reason to believe that the Agent and the Banks may not
rely on the accuracy thereof), (b) misstatements or omissions actually
known as such to the loan officer of the Agent or a Bank responsible for
the Loans prior to the execution and delivery of the Loan Documents, or (c)
budgets, projections and other forward-looking speculative information
prepared in good faith by Borrowers (except to the extent the related
assumptions are manifestly unreasonable).
Section 6.23. Property. All of the Borrowers' and their
respective Controlled Subsidiaries' Real Estate are in good condition and
working order subject to ordinary wear and tear, other than with respect to
deferred maintenance existing as of the date of acquisition of such
property which is being corrected or repaired in the ordinary course of
business. Except as disclosed to Agent in writing, there are no unpaid or
outstanding real estate or other taxes or assessments on or against any
property of the Borrowers or any of their respective Controlled
Subsidiaries which are payable by the Borrowers or their respective
Controlled Subsidiaries (except only real estate or other taxes or
assessments, that are not yet due and payable or are being protested as
permitted by this Agreement). Except as disclosed to Agent in writing,
there are no pending eminent domain proceedings against any property of the
Borrowers or their respective Controlled Subsidiaries or any part thereof,
and, to the knowledge of the Borrowers, no such proceedings are presently
threatened or contemplated by any taking authority which in either case may
individually or in the aggregate have any materially adverse effect on the
business or financial condition of either Borrower. None of the property
of Borrowers or their respective Controlled Subsidiaries is now damaged as
a result of any fire, explosion, accident, flood or other casualty in any
manner which individually or in the aggregate would have any materially
adverse effect on the business or financial condition as a whole of either
Borrower.
Section 6.24. Material Agreements.. Borrowers have delivered
or made available to Agent true, correct and complete copies of the
Material Agreements. To the best knowledge of the Borrowers, each of the
Material Agreements is in full force and effect in accordance with their
respective terms, and except as disclosed to the Agent in writing there are
no material claims or any basis for material claims by any party to any
Material Agreement.
Section 6.25. Brokers. None of the Borrowers nor any of their
respective Controlled Subsidiaries has engaged or otherwise dealt with any
broker, finder or similar entity in connection with this Agreement or the
Loans contemplated hereunder.
Section 6.26. General Partners. CresWood and MS TWC, Inc. are
the sole general partners of Commercial Company and own a two percent (2%)
partnership interest in Commercial Company. Woodlands Land and MS TWC,
Inc. are the sole general partners of Land Company and own a forty-three
and one-half percent (43.5%) partnership interest in Land Company.
Section 6.27. Options to Acquire; Restrictions on Development.
None of the Borrowing Base Assets are subject to any right of first
refusal, right of first offer or other options to purchase except as set
forth on Schedule 6.27 hereto. None of the Undeveloped Residential Land or
the Undeveloped Commercial Land is subject to any material agreement
restricting or limiting its development except as set forth on Schedule
6.27.
Section 6.28. Merger Agreement. The Borrowers have delivered
to the Agent a true, correct and complete copy of the Merger Agreement and
any amendments thereto or other agreements relating thereto as of the date
hereof. Commercial Company is not materially in default thereunder and, to
the best of the Borrowers' knowledge, there are no defaults on the part of
the seller thereunder.
Section 6.29. Fair Consideration. The Borrowers, by receiving
the benefits under this Agreement, are receiving "reasonably equivalent
value" within the meaning of Section 548 of the Bankruptcy Code, Title
11, U.S.C.A., in exchange for the delivery of the Security Documents to
Agent. The transaction evidenced by this Agreement and the other Loan
Documents is in the best interests of the Borrowers and the creditors of
the Borrowers.
Section 6.30. Solvency. As of the Closing Date and after
giving affect to the transactions contemplated by this Agreement and the
other Loan Documents, including all of the Loans made or to be made
hereunder, none of the Borrowers nor any of their respective Controlled
Subsidiaries nor any Guarantor is insolvent on a balance sheet basis, the
sum of such Person's assets exceeds the sum of such Person's liabilities,
each of the Borrowers and their respective Controlled Subsidiaries is able
to pay its debts as they become due, and each of the Borrowers and their
respective Controlled Subsidiaries has sufficient capital to carry on its
business. The Borrowers have not entered into the Loan or any Loan
Document with the actual intent to hinder, delay or defraud any creditor.
Section 6.31. No Bankruptcy Filing. None of the Borrowers, the
General Partners, the Guarantors nor any of the Controlled Subsidiaries of
any Borrower is contemplating either the filing of a petition by it under
any state or federal bankruptcy or insolvency laws or the liquidation of
its assets or property, and neither Borrower has any knowledge of any
Person contemplating the filing of any such petition against it or any of
such other Persons.
Section 6.32. Other Debt. None of the Borrowers, the
Guarantors nor any of their respective Controlled Subsidiaries is in
default (after giving effect to applicable grace periods) in the payment of
any Indebtedness or the terms of any agreement, mortgage, deed of trust,
security agreement, financing agreement, indenture or other lease to which
any of them is a party which relates to Indebtedness or other obligations
which individually or in the aggregate exceed $1,000,000.00. None of the
Borrowers, the General Partners, the Guarantors nor the Controlled
Subsidiaries of any Borrower is a party to or bound by any agreement,
instrument or indenture that may require the subordination in right or time
of payment of any of the Obligations to any other indebtedness or
obligation of any Borrower or any Guarantor. The Borrowers have provided
to the Agent copies of or access to all agreements, mortgages, deeds of
trust, financing agreements or other material agreements binding upon
Borrowers, their respective Controlled Subsidiaries, the Guarantors or
their respective properties and entered into by such Person as of the date
of this Agreement with respect to any Indebtedness of such Person.
Section AR AFFIRMATIVE COVENANTS OF THE BORROWERS
The Borrowers covenant and agree that, so long as any Loan or
Note is outstanding or any Bank has any obligation to make any Loans:
Section 7.1. Punctual Payment. The Borrowers will duly and
punctually pay or cause to be paid the principal and interest on the Loans
and all interest and fees provided for in this Agreement, all in accordance
with the terms of this Agreement and the Notes as well as all other sums
owing pursuant to the Loan Documents.
Section 7.2. Maintenance of Office. Each Borrower will
maintain its chief executive office at 777 Main Street, Suite 2100, Tarrant
County, Fort Worth, Texas, or at such other place in the United States of
America as such Borrower shall designate upon prior written notice to the
Agent and the Banks, where notices, presentations and demands to or upon
each Borrower in respect of the Loan Documents may be given or made.
Section 7.3. Records and Accounts. The Borrowers will (a)
keep, and cause each of their respective Controlled Subsidiaries to keep,
true and accurate records and books of account in which full, true and
correct entries will be made in accordance with generally accepted
accounting principles, as revised from time to time, and (b) maintain
reasonably adequate accounts and reserves for all taxes against their
respective Real Estate and depreciation and amortization of its properties
and the properties of their respective Controlled Subsidiaries,
contingencies and other reserves. None of the Borrowers nor any of their
respective Controlled Subsidiaries shall, without the prior written consent
of the Agent, make any material change to the accounting procedures used by
such Person in preparing the financial statements and other information
described in Section 6.4. The Borrowers shall not, without the prior
written consent of the Agent, change their fiscal year.
Section FOR\ Financial Statements, Certificates and
Information. The Borrowers will deliver to the Agent:
(a) as soon as practicable, but in any event not later than
120 days after the end of each fiscal year of each Borrower, the audited
consolidated balance sheet of each Borrower and its subsidiaries and of the
Borrowers collectively and their subsidiaries on a combined basis at the
end of such year, and the related audited consolidated statements of
income, changes in capital and cash flows for such year, each setting forth
in comparative form the figures for the previous fiscal year (as such
comparative information is available on a combined basis for periods prior
to the consummation of the transactions contemplated by the Merger
Agreement) and all such statements to be in reasonable detail, prepared in
accordance with generally accepted accounting principles, and accompanied
by an auditor's report prepared without qualification by a "Big Six"
accounting firm or another accounting firm reasonably acceptable to the
Agent, and any other information the Agent may reasonably require to
complete a financial analysis of the Borrowers, together with a written
statement from such accountants to the effect that they have read a copy of
this Agreement and the Cash Collateral Account Agreement, and that, in
making the examination necessary to said certification, they have obtained
no knowledge of any Default or Event of Default pursuant to Section s 7 and
8 of the Cash Collateral Account Agreement, or, if such accountants shall
have obtained knowledge of any then existing Default or Event of Default
they shall disclose in such statement any such Default or Event of Default;
provided that such accountants shall not be liable to the Agent or the
Banks for failure to obtain knowledge of any Default or Event of Default;
(b) as soon as practicable, but in any event not later than
45 days after the end of each fiscal quarter of the Borrowers (including
the fourth fiscal quarter in each year), copies of the unaudited
consolidated balance sheet of each Borrower and its Controlled Subsidiaries
and of the Borrowers collectively and their Controlled Subsidiaries on a
combined basis as of the end of such quarter, and the related unaudited
consolidated statements of income, changes in capital and cash flows for
the portion of the Borrowers' fiscal year then elapsed, all prepared in
accordance with generally accepted accounting principles and in addition a
calculation of Operating Cash Flow, Adjusted Cash Flow, the Specified Non-
Recurring Amount and any other terms defined in this Agreement or the Cash
Collateral Account Agreement, and showing any variations for such quarter
and the year-to-date of actual operations from the Budget, together with a
certification by the Principal Financial Officer of each Borrower that the
information contained in such financial statements fairly presents the
financial position of the Borrowers and their respective Controlled
Subsidiaries on the date thereof (subject to year-end adjustments);
(c) contemporaneously with the delivery of the financial
statements referred to in clause (a) above, a statement of all contingent
liabilities in excess of $100,000.00 of each Borrower and their respective
Controlled Subsidiaries which are not reflected in such financial
statements or referred to in the notes thereto (including, without
limitation, all guarantees, endorsements and other contingent obligations
in respect of indebtedness of others, and obligations to reimburse the
issuer in respect of any letters of credit);
(d) [Intentionally omitted].
(e) not later than 60 days after the end of the first three
fiscal quarters of the Borrowers and not later than 120 days after the end
of each fiscal year of the Borrowers, a statement (a "Compliance
Certificate") certified by the Principal Financial Officer of each Borrower
in the form of Exhibit E hereto setting forth in reasonable detail
computations evidencing compliance with the covenants contained in Section
9 and the other covenants described therein, and (if applicable)
reconciliations to reflect changes in generally accepted accounting
principles since the Balance Sheet Date;
(f) simultaneously with the delivery of the financial
statements referred to in subsections (a) and (b) above and the Compliance
Certificate referred to in subsection (e) above, a spreadsheet listing each
parcel of Real Estate and its location, whether such Real Estate is owned
by a Borrower or one of their respective Controlled Subsidiaries, its size
(square footage for office and retail assets; number of apartments for
multifamily; number of rooms for hotel/resort assets), occupancy level as
of the quarter most recently ended, current quarter net income and
partnership distributions and such other information as Agent may
reasonably request;
(g) [Intentionally omitted];
(h) if requested by the Agent, copies of all annual federal
income tax returns and amendments thereto of the Borrowers and the General
Partners;
(i) [Intentionally omitted];
(j) not later than 45 days after the end of each fiscal
quarter of the Borrowers (including the fourth fiscal quarter in each
year), a statement, certified as true and correct by the Principal
Financial Officer of each Borrower, of all recourse and non-recourse
Indebtedness of each Borrower and their respective Controlled Subsidiaries
as of the end of such fiscal quarter, including, with respect to each such
Indebtedness, the outstanding principal amount as of the end of such fiscal
quarter, the amount remaining undisbursed, if any, the maturity date and
any extension options, the required monthly payments of principal and
interest, the identity of the lender, the interest rate, the collateral for
such Indebtedness and whether such Indebtedness is recourse or non-
recourse;
(k) not later than 10 days after approval by each
Borrower's executive committee, the Budget for the next calendar year.
Such Budget shall be in form reasonably satisfactory to the Agent and shall
be submitted to the Agent together with a narrative description of the
assumptions upon which the Budget is based and such other information as
the Agent may request; and
(l) from time to time such other financial data and
information in the possession of the Borrowers, their respective Controlled
Subsidiaries or their respective Non-Controlled Subsidiaries (including
without limitation auditors' management letters, market comparable studies,
property inspection and environmental reports and information as to zoning
and other legal and regulatory changes affecting the Borrowers or their
respective Subsidiaries) as the Agent may reasonably request.
Section 7.5. Notices.
(a) Defaults. The Borrowers will promptly notify the Agent
in writing of the occurrence of any Default or Event of Default. If any
Person shall give any notice or take any other action in respect of a
claimed default (whether or not constituting an Event of Default) under
this Agreement or under any note, obligation or other evidence of
indebtedness to which or with respect to which any of the Borrowers, the
General Partners, the Guarantors or any of the Borrowers' Controlled
Subsidiaries or Non-Controlled Subsidiaries is a party or obligor, whether
as principal or surety, and such default would permit the holder of such
note or obligation or other evidence of indebtedness to accelerate the
maturity thereof, which acceleration would have a material adverse effect
on any of such Persons or constitute a Default or Event of Default, the
Borrowers shall forthwith give written notice thereof to the Agent,
describing the notice or action and the nature of the claimed default.
(b) Environmental Events. The Borrowers will promptly give
notice to the Agent (i) upon either of the Borrowers obtaining knowledge of
any potential or known Release, or threat of Release, of any Hazardous
Substances at or from any Real Estate; (ii) of any violation of any
Environmental Law that either of the Borrowers or any of their respective
Controlled Subsidiaries reports in writing or is reportable by such Person
in writing (or for which any written report supplemental to any oral report
is made) to any federal, state or local environmental agency and (iii) upon
becoming aware thereof, of any inquiry, proceeding, investigation, or other
action, including a notice from any agency of potential environmental
liability, of any federal, state or local environmental agency or board,
that in either case involves the Real Estate or has the potential to
materially affect the assets, liabilities, financial conditions or
operations of either of the Borrowers or any Controlled Subsidiary or the
Agent's liens on the Collateral pursuant to the Security Documents.
(c) Notification of Claims Against Collateral. The
Borrowers will, promptly upon becoming aware thereof, notify the Agent in
writing of any material setoff, claims (including, with respect to the Real
Estate, environmental claims), withholdings or other defenses to which any
of the Collateral, or the rights of the Agent or the Banks with respect to
the Collateral, are subject.
(d) Notice of Litigation and Judgments. The Borrowers will
give notice to the Agent in writing within 15 days of becoming aware of any
litigation or proceedings threatened in writing or any pending litigation
and proceedings affecting any of the Borrowers, the General Partners, the
Guarantors or any of the Controlled Subsidiaries of any Borrower or to
which any of such persons is or is to become a party involving an uninsured
claim against any of such Persons that could reasonably be expected to have
a materially adverse effect on such Person and stating the nature and
status of such litigation or proceedings. The Borrowers will give notice
to the Agent, in writing, in form and detail satisfactory to the Agent and
each of the Banks, within ten days of any judgment not covered by
insurance, whether final or otherwise, against any of the Borrowers, the
General Partners, the Guarantors or any of the Controlled Subsidiaries of
any Borrower in an amount in excess of $500,000.00.
(e) [Intentionally omitted].
(f) Notice of Material Adverse Effect. The Borrowers will
give notice to the Agent in writing within 15 days of becoming aware of the
occurrence of any event or circumstance which might have a material adverse
effect on the business, assets or financial condition of either of the
Borrowers or any Guarantor.
(g) Notice of Designation of Controlled Subsidiaries. The
Borrowers will promptly give notice to the Agent of any designation by a
Borrower of Controlled Subsidiaries as provided in the definition of same.
No such designation may be made unless a Borrower has sufficient voting
interests or other rights to veto or block any major actions proposed to be
taken by any other person owning an interest in the subject entity, and
once made, such designation may not be changed.
Section 7.6. Existence; Maintenance of Properties.
(a) The Borrowers will do or cause to be done all things
necessary to preserve and keep in full force and effect their existence as
Texas limited partnerships. Each Borrower will cause each of its
Controlled Subsidiaries to do or cause to be done all things necessary to
preserve and keep in full force and effect its legal existence. The
Borrowers will do or cause to be done all things necessary to preserve and
keep in full force all of their material rights and franchises and those of
their respective Controlled Subsidiaries. The Borrowers will, and will
cause each of their respective Controlled Subsidiaries to, continue to
engage primarily in the businesses now conducted by it and in related
businesses.
(b) Irrespective of whether proceeds of the Loans are
available for such purpose, the Borrowers (i) will cause all of their
respective properties and those of their respective Controlled Subsidiaries
used or useful in the conduct of its business or the business of their
respective Controlled Subsidiaries to be maintained and kept in good
condition, repair and working order (ordinary wear and tear excepted) and
supplied with all necessary equipment, and (ii) will cause to be made all
necessary repairs, renewals, replacements, betterments and improvements
thereof in all cases in which the failure so to do would have a material
adverse effect on the condition of its properties or on the financial
condition, assets or operations of the Borrowers and their respective
Controlled Subsidiaries.
Section 7.7. Insurance. The Borrowers will procure and
maintain or cause to be procured and maintained insurance covering the
Borrowers and the Guarantors and the Controlled Subsidiaries of the
Borrowers and their respective properties (the cost of such insurance to be
borne by the insured thereunder) in such amounts and against such risks and
casualties as are customary for properties of similar character and
location, due regard being given to the type of improvements thereon, their
construction, location, use and occupancy. The terms of this Section 7.7
shall not limit the terms of the Security Deed which may impose insurance
requirements with respect to the Mortgaged Property.
Section 7.8. Taxes. The Borrowers and each Controlled
Subsidiary will duly pay and discharge, or cause to be paid and discharged,
before the same shall become overdue, all taxes, assessments and other
private or governmental charges imposed upon it and upon the Real Estate,
sales and activities, or any part thereof, or upon the income or profits
therefrom, as well as all claims for labor, materials, or supplies that if
unpaid might by law become a lien or charge upon any of its property;
provided that any such tax, assessment, charge, levy or claim need not be
paid if the validity or amount thereof shall currently be contested in good
faith by appropriate proceedings and if a Borrower or such Controlled
Subsidiary shall have set aside on its books reasonably adequate reserves
with respect thereto; and provided, further, that forthwith upon the
commencement of proceedings to foreclose any lien that may have attached as
security therefor, the Borrowers and each Controlled Subsidiary of the
Borrowers either (i) will provide a bond issued by a surety reasonably
acceptable to the Agent and sufficient to stay all such proceedings or (ii)
if no such bond is provided, will pay each such tax, assessment, charge,
levy or claim.
Section 7.9. Inspection of Properties and Books. The Borrowers
shall permit the Banks, through the Agent or any representative designated
by the Agent, at the Borrowers' expense to visit and inspect any of the
properties of the Borrowers or any of their respective Controlled
Subsidiaries, to examine the books of account of the Borrowers and their
respective Controlled Subsidiaries (and to make copies thereof and extracts
therefrom) and to discuss the affairs, finances and accounts of the
Borrowers and their respective Controlled Subsidiaries with, and to be
advised as to the same by, its officers, all at such reasonable times and
intervals as the Agent or any Bank may reasonably request. The Agent shall
use good faith efforts to coordinate such visits and inspections so as to
minimize the interference with and disruption to the Borrowers' normal
business operations and the expense to the Borrowers thereof.
Section 7.10. Compliance with Laws, Contracts, Licenses, and
Permits. The Borrowers will comply with, and will cause each of their
respective Controlled Subsidiaries and each Guarantor to comply in all
respects with (i) all applicable laws and regulations now or hereafter in
effect wherever its business is conducted, including all Environmental
Laws, (ii) the provisions of its corporate charter, partnership agreement
or declaration of trust, as the case may be, and other charter documents
and bylaws, (iii) all agreements and instruments to which it is a party or
by which it or any of its properties may be bound, (iv) all applicable
decrees, orders, and judgments, and (v) all licenses and permits required
by applicable laws and regulations for the conduct of its business or the
ownership, use or operation of its properties, except when a failure to so
comply with the foregoing (i)-(v) would not have a material adverse effect
on the business, assets or financial condition of such Borrower, such
Controlled Subsidiary or such Guarantor (provided, further, that the
foregoing shall not limit any obligation to comply with terms of the Loan
Documents). If at any time while any Loan or Note is outstanding or the
Banks have any obligation to make Loans hereunder, any authorization,
consent, approval, permit or license from any officer, agency or
instrumentality of any government shall become necessary or required in
order that the Borrowers or any Guarantor may fulfill any of their
obligations hereunder, the Borrowers will, and will cause the Guarantors
to, immediately take or cause to be taken all steps necessary to obtain
such authorization, consent, approval, permit or license.
Section 7.11. Use of Proceeds. The Borrowers will use the
proceeds of the Loans solely (a) for the payment of the consideration to
Mitchell Energy & Development Corp. pursuant to the Merger Agreement and
for all due diligence costs, closing costs and other miscellaneous expenses
related thereto, (b) for working capital purposes in the operation and
development of the Real Estate, (c) for such purposes as permitted by the
Cash Collateral Account Agreement, and (d) for such other purposes as the
Majority Banks in their discretion from time to time may agree to in
writing.
Section 7.12. Further Assurances. The Borrowers will cooperate
with, and will cause each of their respective Controlled Subsidiaries to
cooperate with the Agent and the Banks and execute such further instruments
and documents as the Banks or the Agent shall reasonably request to carry
out to their satisfaction the transactions contemplated by this Agreement
and the other Loan Documents.
Section 7.13. Management. The Borrowers shall not, nor shall
the Borrowers permit WECCR or any other Person to, enter into any
Management Agreement relating to all or any portion of the Conference
Center without the prior written consent of the Majority Banks, such
consent not to be unreasonably withheld. Any such consent shall be
conditioned upon the delivery to Agent of an Assignment of Management
Agreement and Subordination. Any management of the Conference Center shall
be by either: (a) Commercial Company or an entity affiliated with
Commercial Company approved by Agent for so long as Commercial Company or
said affiliated entity is managing the Conference Center in a manner
consistent with the operation of a first-class hotel and resort; or (b) a
professional property management company approved by Agent in its sole
discretion, such approval not to be unreasonably withheld. Neither of the
Borrowers shall terminate or replace the management agreement with
Woodlands Operating without the prior consent of the Majority Banks, such
consent not to be unreasonably withheld (provided that if such agreement is
to be replaced by an agreement with an Affiliate of either Borrower, the
Majority Banks may require that any payments to such party be treated as
"Woodlands Operating Payments" under the Cash Collateral Account
Agreement).
Section 7.14. Leases; Development. The Borrowers will take or
cause to be taken all reasonable steps within the power of the Borrowers to
market and lease the saleable and leasable area of the Real Estate in
accordance with sound and customary development, leasing and management
practices for similar properties.
Section 7.15. ERISA Compliance. Neither of the Borrowers will
permit the present value of all employee benefits vested in all Employee
Benefit Plans, Multiemployer Plans and Guaranteed Pension Plans maintained
by such Person and any ERISA Affiliate thereof to exceed the present value
of the assets allocable to such vested benefits by an amount greater than
$500,000.00 in the aggregate. Neither of the Borrowers nor any ERISA
Affiliate thereof will at any time permit any such Plan maintained by it to
engage in any "prohibited transaction" as such term is defined in Section
4975 of the Code or Section 406 of ERISA, incur any "accumulated funding
deficiency" as such term is defined in Section 302 of ERISA, whether or
not waived, or terminate any such Plan in any manner which could result in
the imposition of a lien on the property of such Borrower or any Guarantor
pursuant to Section 4068 of ERISA.
Section 7.16. Interest Cap. From and after July 31,1997, the
Borrowers shall at all times own and maintain in full force and effect the
Interest Cap as required by this Agreement. The Borrowers shall upon the
request of the Agent provide to the Agent evidence that the Interest Cap is
in effect.
Section 7.17. Partnership Pledge. In the event that after July
31,1997 any Controlled Subsidiary of a Borrower acquires Real Estate which
would otherwise qualify as a Borrowing Base Asset and such Borrower desires
for its interest in the same to become a Borrowing Base Asset, then such
property may become a Borrowing Base Asset subject to the terms of Section
5.2 but only in the event that such asset satisfies all of the terms of
this Agreement and such Borrower shall execute and deliver to the Agent on
behalf of the Banks a collateral assignment of all of such Borrower's
right, title and interest in such Controlled Subsidiary, such assignment to
be substantially in the form of the Assignment of Interests, with such
other changes thereto as may be reasonably required by the Agent.
Section 7.18. Business Operations. The Borrowers, the
Guarantors and the Borrowers' Controlled Subsidiaries shall operate their
respective businesses generally in the same manner as Commercial Company's
predecessor and in compliance with the terms and conditions of this
Agreement and the Loan Documents.
Section 7.19. Borrowing Base Assets.
(a) Each of the Borrowing Base Assets shall be owned one
hundred percent (100%) by a Borrower (in fee simple as to Real Estate) and
shall satisfy all of the following conditions:
(i) each of the Borrowing Base Assets shall be free
and clear of all Liens other than the Liens permitted in Section 8.2(i),
(iii), (iv) and (v) or, with respect to the Borrowing Base Assets described
in clauses (f) and (g) of the definition of the term "Borrowing Base",
liens permitted by Section 8.2(vi);
(ii) to the best of the Borrowers' knowledge and
belief, none of the Borrowing Base Assets shall have any material title,
survey, environmental or other defects that would give rise to a materially
adverse effect as to the value, use of or ability to sell or refinance such
property;
(iii) with respect to the Partial Interests, the
Partnership to which the Partial Interest relates shall own the applicable
Real Estate one hundred percent (100%) in fee simple, and such Real Estate
shall otherwise comply with the terms of this Agreement;
(iv) the Borrowing Base Assets (including Properties
Under Construction) which are derived from or are intended to become income
producing operating properties shall be utilized (or with respect to
Properties Under Construction upon completion will be utilized) principally
for office, retail, research/industrial, office/warehouse,
warehouse/distribution or multifamily housing;
(v) the Borrowing Base Assets (other than Properties
Under Construction) which are or derive from income producing operating
properties (A) shall be (1) fully operational; and (2) properties for which
valid certificates of occupancy or the equivalent for all buildings thereon
have been issued and are in full force and effect; and (B) on an aggregate
basis (1) such Borrowing Base Assets (excluding multi-family housing and
the Conference Center) are eighty percent (80%) leased pursuant to bona-
fide arm's length leases to third parties unaffiliated with any Borrower,
any of the General Partners, any Guarantor or any of the Controlled
Subsidiaries of any Borrower; or (2) with respect to multi-family housing
only, such Borrowing Base Assets are eighty-five percent (85%) leased
pursuant to bona-fide arm's length leases; and (C) there is no material
Indebtedness with respect to such Borrowing Base Asset secured thereby
which is subject to acceleration or is accelerated. In the event that any
of such property described in (B)(1) is leased to an Affiliate of a
Borrower, any of the General Partners, any Guarantor or any of the
Controlled Subsidiaries of a Borrower, the square footage subject to such
lease shall be deducted from the overall square footage of the project and
excluded in calculating compliance with the occupancy requirement; and in
determining whether a new Real Estate Asset can be included in the
Borrowing Base only the portfolio leasing test set forth in (B)(1) or
(B)(2) for that property applies; and
(vi) each of such Borrowing Base Assets shall satisfy
each other condition in this Agreement and the other Loan Documents
applicable thereto.
(b) The Borrowers shall provide to the Agent as of July
31,1997 and concurrently with the delivery of the financial statements
described in Section 7.4(a) or 7.4(b) (i) a list of the Borrowing Base
Assets, (ii) the certification of the Principal Financial Officer of each
Borrower of the Adjusted Values and that such properties are in compliance
with this Section 7.19 and Section 9.3, and (iii) that the Borrowing Base
Assets comply with the terms of Section s 6.17 and 6.20. In the event that
all or any material portion of a property within the Borrowing Base Assets
shall be damaged or taken by condemnation, then such property shall no
longer be a part of the Borrowing Base Assets unless and until any damage
to such asset is repaired or restored, such asset becomes fully operational
and the Agent shall receive evidence satisfactory to the Agent of the
Appraised Value of such asset following such repair or restoration.
Section 7.20. Limiting Agreements.
(a) None of the Borrowers, any Guarantor or any of the
Controlled Subsidiaries of either Borrower shall enter into, any agreement,
instrument or transaction which has or may have the effect of prohibiting
or limiting any Borrower's or any Guarantor's ability to pledge to Agent
any assets comprised within the Borrowing Base Assets which are owned by
such Borrower or such Guarantor and which are not otherwise subject to
Liens permitted by Section 8.2(i), (iii) and (v) as security for the
Loans. Borrowers shall take, and shall cause the Guarantors and their
respective Subsidiaries to take, such actions as are necessary to preserve
the right and ability of Borrowers and the Guarantors to pledge such assets
as security for the Loans without any such pledge after the date hereof
causing or permitting the acceleration (after the giving of notice or the
passage of time, or otherwise) of any other Indebtedness of Borrowers, the
Guarantors or any of the Controlled Subsidiaries of either Borrower.
(b) Borrowers shall, upon demand, provide to the Agent such
evidence as the Agent may reasonably require to evidence compliance with
this Section 7.20, which evidence shall include, without limitation,
copies of any agreements or instruments which would in any way restrict or
limit any Borrower's or any Guarantor's ability to pledge assets as
security for Indebtedness, or which provide for the occurrence of a default
(after the giving of notice or the passage of time, or otherwise) if assets
are pledged in the future as security for Indebtedness of a Borrower or a
Guarantor.
Section 7.21. Distribution of Income to the Borrowers. The
Borrowers shall use reasonable and diligent efforts to cause all of their
respective Controlled Subsidiaries to, and shall use reasonable efforts to
cause their respective Non-Controlled Subsidiaries to, promptly distribute
to the Borrowers (but not less frequently than once each fiscal quarter of
the Borrowers), whether in the form of dividends, distributions or
otherwise, all profits, proceeds or other income relating to or arising
from such Person's use, operation, financing, refinancing, sale or other
disposition of their respective assets and properties after (a) the payment
by each Person of its operating expenses and scheduled debt service for
such quarter and (b) the establishment of reasonable reserves for the
payment of operating expenses not paid on at least a quarterly basis and
capital improvements to be made to such Person's assets and properties
approved by such Person in the ordinary course of business consistent with
its past practices.
Section 7.22. More Restrictive Agreements. Without limiting
the terms of Section 8.1, should a Borrower or a Guarantor enter into or
modify any agreements or documents pertaining to any existing or future
Indebtedness or Equity Offering, which agreements or documents include
covenants (whether affirmative or negative) which are individually or in
the aggregate more restrictive against a Borrower, a Guarantor or the
Controlled Subsidiaries of any Borrower than those set forth in Section 9,
the Borrowers shall promptly notify the Agent and, if requested by the
Majority Banks, the Borrowers, the Agent, and the Majority Banks shall (and
if applicable, the Borrowers shall cause the Guarantors to) promptly amend
this Agreement and the other Loan Documents to include some or all of such
more restrictive provisions as determined by the Majority Banks in their
sole discretion; provided that from and after the satisfaction of any such
Indebtedness the agreements for which may have contained a more restrictive
covenant as provided herein, the Agreement shall no longer be modified as a
result of such covenant contained in the agreement relating to such
Indebtedness.
Section 7.23. Associations. The Borrowers will comply in all
respects with the terms of all declarations, agreements and other
instruments with respect to the Associations, the failure to comply with
would have a material adverse effect on either Borrower, and will cause the
Associations to do all things necessary to preserve and keep in full force
their respective rights under such declarations, agreements and
instruments. Either or both of the Borrowers will at all times maintain a
controlling interest in the Associations.
8.CERTAIN NEGATIVE COVENANTS OF THE BORROWERS
The Borrowers covenant and agree that, so long as any Loan or
Note is outstanding or any of the Banks has any obligation to make any
Loans:
Section 8.1. Restrictions on Indebtedness. Subject to the
provisions of Section 9, the Borrowers will not, and will not permit any
of their respective Controlled Subsidiaries to, create, incur, assume,
guarantee or be or remain liable, contingently or otherwise, with respect
to any Indebtedness other than:
(a) Indebtedness to the Banks arising under any of the Loan
Documents;
(b) [Intentionally omitted];
(c) Indebtedness in respect of taxes, assessments,
governmental charges or levies and claims for labor, materials and supplies
to the extent that payment therefor shall not at the time be required to be
made in accordance with the provisions of Section 7.8;
(d) Indebtedness in respect of judgments or awards that
have been in force for less than the applicable period for taking an appeal
so long as execution is not levied thereunder or in respect of which the
applicable Borrower shall at the time in good faith be prosecuting an
appeal or proceedings for review and in respect of which a stay of
execution shall have been obtained pending such appeal or review;
(e) endorsements for collection, deposit or negotiation and
warranties of products or services, in each case incurred in the ordinary
course of business;
(f) Indebtedness in respect of Permitted Financings;
(g) Indebtedness in respect of reverse repurchase
agreements having a term of not more than 180 days with respect to
Investments described in Section 8.3(a), (b) or (e);
(h) Indebtedness existing on the date of this Agreement and
listed and described on Schedule 8.1 hereto and amounts available to be
advanced thereunder not to exceed $4,000,000.00 and any refinancings
thereof;
(i) unsecured Indebtedness of a Borrower to its partners
provided that the terms of such Indebtedness are approved by the Majority
Banks and repayment of such Indebtedness shall be subordinate at all times
to repayment of the Obligations pursuant to a subordination and standstill
agreement in form satisfactory to the Majority Banks;
(j) unsecured Indebtedness between Commercial Company and
Land Company provided that the terms of such Indebtedness are approved by
the Agent and repayment of such Indebtedness shall be subordinate at all
times to repayment of the Obligations pursuant to a subordination and
standstill agreement or other agreement (such as the Funding Agreement
after the approval of such agreement by the Agent) in form satisfactory to
the Majority Banks; and
(k) contingent liability of Commercial Company under a
guaranty with respect to bonds issued for a hotel located in Galveston,
Texas in an amount not to exceed $8,000,000.00, which liability is
supported by a full indemnity from Mitchell Energy & Development Corp.
Section 8.2. Restrictions on Liens, Etc. Each of the Borrowers
will not, and will not permit any of its Controlled Subsidiaries to, (a)
create or incur or suffer to be created or incurred or to exist any lien,
encumbrance, mortgage, pledge, negative pledge, charge, restriction or
other security interest of any kind upon any of its property or assets of
any character whether now owned or hereafter acquired, or upon the income
or profits therefrom; (b) transfer any of its property or assets or the
income or profits therefrom for the purpose of subjecting the same to the
payment of Indebtedness or performance of any other obligation in priority
to payment of its general creditors; (c) acquire, or agree or have an
option to acquire, any property or assets upon conditional sale or other
title retention or purchase money security agreement, device or
arrangement; (d) suffer to exist for a period of more than 60 days after
the same shall have been incurred any Indebtedness or claim or demand
against it that if unpaid might by law or upon bankruptcy or insolvency, or
otherwise, be given any priority whatsoever over its general creditors; (e)
pledge or otherwise encumber any accounts, contract rights, general
intangibles, chattel paper or instruments, with or without recourse; or (f)
incur or maintain any obligation to any holder of Indebtedness of such
Borrowers or such Controlled Subsidiary which prohibits the creation or
maintenance of any lien securing the Obligations (collectively the
"Liens"); provided that a Borrower and any Controlled Subsidiary of a
Borrower may create or incur or suffer to be created or incurred or to
exist:
(i) liens on properties to secure taxes, assessments
and other governmental charges or claims for labor, material or
supplies in respect of obligations not overdue;
(ii) liens on properties other than the Mortgaged
Property or any interest therein (including the rents, issues,
income and profits therefrom) or any other Collateral in respect
of judgments, awards or indebtedness, the Indebtedness with
respect to which is permitted by Section 8.1(d) or Section
8.1(f);
(iii) encumbrances on properties other than the
Mortgaged Property consisting of easements, rights of way, zoning
restrictions, mineral rights reservations, restrictions on the
use of real property, landlord's or lessor's liens under leases
to which a Borrower or a Controlled Subsidiary of a Borrower is a
party, and other minor non-monetary liens or encumbrances none of
which interferes materially with the use, marketability or
development of the property affected in the ordinary conduct of
the business of such Borrower and its Controlled Subsidiaries,
which encumbrances or liens do not individually or in the
aggregate have a materially adverse effect on the business of a
Borrower individually or of such Borrower and its Controlled
Subsidiaries on a consolidated basis;
(iv) liens in favor of the Agent and the Banks under
the Loan Documents;
(v) liens and encumbrances on a Mortgaged Property
expressly permitted under the terms of the Security Deed relating
thereto; and
(vi) other presently outstanding liens on properties
other than the Mortgaged Property listed on Schedule 8.2 hereto
securing Indebtedness described in Section 8.1(h) and liens on
properties to secure Permitted Financings.
Section 8.3. Restrictions on Investments. Each of the
Borrowers will not, and will not permit any of its Controlled Subsidiaries
to, make or permit to exist or to remain outstanding any Investment except
Investments in:
(a) marketable direct or guaranteed obligations of the
United States of America that mature within one (1) year from the date of
purchase by such Borrower or its Controlled Subsidiary;
(b) marketable direct obligations of any of the following:
Federal Home Loan Mortgage Corporation, Student Loan Marketing Association,
Federal Home Loan Banks, Federal National Mortgage Association, Government
National Mortgage Association, Bank for Cooperatives, Federal Intermediate
Credit Banks, Federal Financing Banks, Export-Import Bank of the United
States, Federal Land Banks, or any other agency or instrumentality of the
United States of America;
(c) demand deposits, certificates of deposit, bankers
acceptances and time deposits of United States banks having total assets in
excess of $100,000,000; provided, however, that the aggregate amount at any
time so invested with any single bank having total assets of less than
$1,000,000,000 will not exceed $200,000;
(d) securities commonly known as "commercial paper" issued
by a corporation organized and existing under the laws of the United States
of America or any State which at the time of purchase are rated by Moody's
Investors Service, Inc. or by Standard & Poor's Corporation at not less
than "P 2" if then rated by Moody's Investors Service, Inc., and not less
than "A 2", if then rated by Standard & Poor's Corporation;
(e) mortgage-backed securities guaranteed by the Government
National Mortgage Association, the Federal National Mortgage Association or
the Federal Home Loan Mortgage Corporation and other mortgage-backed bonds
which at the time of purchase are rated by Moody's Investors Service, Inc.
or by Standard & Poor's Corporation at not less than "AA" if then rated by
Moody's Investors Service, Inc. and not less than "AA" if then rated by
Standard & Poor's Corporation;
(f) repurchase agreements having a term not greater than 90
days and fully secured by securities described in the foregoing subsection
(a), (b) or (e) with banks described in the foregoing subsection (c) or
with financial institutions or other corporations having total assets in
excess of $500,000,000;
(g) shares of so-called "money market funds" registered
with the SEC under the Investment Company Act of 1940 which maintain a
level per-share value, invest principally in investments described in the
foregoing subsections (a) through (f) and have total assets in excess of
$50,000,000;
(h) Investments in the Property (excluding Partial
Interests) and subject to Section 8.3(i), Non-Controlled Subsidiaries and
Controlled Subsidiaries of a Borrower existing as of July 31,1997;
(i) Investments in Controlled Subsidiaries and Non-
Controlled Subsidiaries of a Borrower created after July 31,1997, and new
Investments in Controlled Subsidiaries and Non-Controlled Subsidiaries of a
Borrower existing as of July 31,1997, provided the aggregate amount of
investments by Borrowers in such Persons after the date hereof in the form
of the contribution of cash, debt advances or other assets other than
Commercial Land, Residential Land and Income Properties to such Persons (as
opposed to an increase in the value thereof) does not exceed an amount
equal to (A) fifty percent (50%) of the cumulative Cash Flow Excess Amount
(as defined in the Cash Collateral Account Agreement) plus (B) all capital
contributions to the Borrowers over the term of the Loans, as same may be
extended; and
(j) Subject to the terms of this Agreement, Investments in
the construction by Commercial Company of new Income Properties.
Section 8.4. Merger, Consolidation. Each of the Borrowers will
not, and will not permit any of its Controlled Subsidiaries to, become a
party to any merger, consolidation or other business combination except (i)
the merger or consolidation of one or more of the Controlled Subsidiaries
of a Borrower with and into such Borrower and (ii) the merger or
consolidation of two or more Controlled Subsidiaries of a Borrower.
Section 8.5. Sale and Leaseback. Commercial Company will not,
and will not permit any of its Controlled Subsidiaries to, enter into any
arrangement, directly or indirectly, whereby Commercial Company or any
Controlled Subsidiary of Commercial Company shall sell or transfer any Real
Estate owned by it individually or in the aggregate in excess of
$12,500,000.00 in order that then or thereafter Commercial Company or any
Controlled Subsidiary of Commercial Company shall lease back such Real
Estate. Land Company will not, and will not permit any of its Controlled
Subsidiaries to, enter into any arrangement, directly or indirectly,
whereby Land Company or any Controlled Subsidiary of Land Company shall
sell or transfer any Real Estate owned by it in order that then or
thereafter Land Company or any Controlled Subsidiary of Land Company shall
lease back such Real Estate.
Section 8.6. Compliance with Environmental Laws. Each of the
Borrowers will not, and will not permit any of its Controlled Subsidiaries
or any tenants or other occupants of any of the Real Estate, to do any of
the following: (a) use any of the Real Estate or any portion thereof as a
facility for the handling, processing, storage or disposal of Hazardous
Substances, except for small quantities of Hazardous Substances used in the
ordinary course of business and in compliance with all applicable
Environmental Laws, (b) cause or permit to be located on any of the Real
Estate any underground tank or other underground storage receptacle for
Hazardous Substances except in full compliance with Environmental Laws, (c)
generate any Hazardous Substances on any of the Real Estate except in full
compliance with Environmental Laws, (d) conduct any activity at any Real
Estate or use any Real Estate in any manner so as to cause a Release of
Hazardous Substances on, upon or into the Real Estate or any surrounding
properties or any threatened Release of Hazardous Substances which might
give rise to liability under CERCLA or any other Environmental Law, or
(e) directly or indirectly transport or arrange for the transport of any
Hazardous Substances (except in compliance with all Environmental Laws).
The Borrowers shall:
(i) in the event of any change in Environmental Laws
governing the assessment, release or removal of Hazardous
Substances, which change would lead a prudent lender to require
additional testing to avail itself of any statutory insurance or
limited liability, take all action (including, without
limitation, the conducting of engineering tests at the sole
expense of the Borrowers) to confirm that no Hazardous Substances
are or ever were Released or disposed of on the Real Estate; and
(ii) if any Release or disposal of Hazardous Substances
shall occur or shall have occurred on the Real Estate (including
without limitation any such Release or disposal occurring prior
to the acquisition of such Real Estate by a Borrower or its
Controlled Subsidiary), cause the prompt containment and removal
of such Hazardous Substances and remediation of the Real Estate
in full compliance with all applicable laws and regulations and
to the satisfaction of the Majority Banks; provided, that the
Borrowers shall be deemed to be in compliance with Environmental
Laws for the purpose of this clause (ii) so long as it or a
responsible third party with sufficient financial resources is
taking reasonable action to remediate or manage any event of
noncompliance to the satisfaction of the Majority Banks and no
action shall have been commenced by any enforcement agency. The
Majority Banks may engage their own Environmental Engineer to
review the environmental assessments and the Borrowers'
compliance with the covenants contained herein.
At any time after an Event of Default shall have occurred
hereunder, or, whether or not an Event of Default shall have occurred, at
any time that the Agent or the Majority Banks shall have reasonable grounds
to believe that a Release or threatened Release of Hazardous Substances may
have occurred, relating to any Real Estate, or that any of the Real Estate
is not in compliance with the Environmental Laws, the Agent may at its
election (and will at the request of the Majority Banks) obtain such
environmental assessments of such Real Estate prepared by an Environmental
Engineer as may be necessary or advisable for the purpose of evaluating or
confirming (i) whether any Hazardous Substances are present in the soil or
water at or adjacent to such Real Estate and (ii) whether the use and
operation of such Real Estate comply with all Environmental Laws.
Environmental assessments may include detailed visual inspections of such
Real Estate including, without limitation, any and all storage areas,
storage tanks, drains, dry wells and leaching areas, and the taking of soil
samples, as well as such other investigations or analyses as are necessary
or appropriate for a complete determination of the compliance of such Real
Estate and the use and operation thereof with all applicable Environmental
Laws. All such environmental assessments shall be at the sole cost and
expense of the Borrowers.
The Agent may, but shall never be obligated to remove or cause
the removal of any Hazardous Substances from the Real Estate (or if removal
is prohibited by any Environmental Law, take or cause the taking of such
other action as is required by any Environmental Law) if the Borrowers fail
to comply with their obligation hereunder with respect thereto (without
limitation of the Agent's or the Majority Banks rights to declare a default
under any of the Loan Documents and to exercise all rights and remedies
available by reason thereof); and the Agent and its designees are hereby
granted access to the Real Estate at any time or times, upon reasonable
notice, and a license which is coupled with an interest and irrevocable, to
remove or cause such removal or to take or cause the taking of any such
other action. All costs, including, without limitation, the reasonable
costs incurred by the Agent in taking the foregoing action, damages,
liabilities, losses, claims, expenses (including attorneys' fees and
disbursements) which are incurred by the Agent, as the result of the
Borrowers' failure to comply with the provisions of this Section 8.6,
shall be paid by the Borrowers to the Agent upon demand by the Agent and
shall be additional obligations secured by the Security Documents.
Section 8.7. Distributions. Neither of the Borrowers shall pay
any Distributions to the partners or other beneficial owners of such
Borrower prior to July 31, 1998 unless permitted by the Cash Collateral
Account Agreement, and thereafter only as permitted in the Cash Collateral
Account Agreement or the Funding Agreement following approval of such
agreement by Agent.
Section 8.8. Asset Sales. None of the Borrowers or any of the
Controlled Subsidiaries of a Borrower shall sell, transfer or otherwise
dispose of any asset (other than as the result of a condemnation or
casualty, the granting of Permitted Liens or the sale of lots for cash in
the ordinary course of business to parties other than any other Borrower,
the General Partners, a Guarantor, any Controlled Subsidiary of any
Borrower or any Affiliate of any of such Persons) except as follows:
(a) any of such Persons may sell any asset in the ordinary
course of business for all cash and for fair market value;
(b) Commercial Company or Land Company may sell, transfer
or otherwise dispose of Commercial Land or Residential Land to its
Controlled Subsidiaries for the construction of Vertical Commercial
Improvements, provided such sales are (i) for all cash and for fair market
value or (ii) an equivalent equity interest in such Controlled Subsidiary;
and
(c) Commercial Company or Land Company may sell or transfer
Commercial Land or Residential Land to its Non-Controlled Subsidiaries and
Affiliates for the construction of Vertical Commercial Improvements,
provided the aggregate amount of such sales do not exceed $15,000,000.00 in
the aggregate in any fiscal year, such sales are for (i) all cash and for
fair market value or (ii) an equivalent equity interest in such Non-
Controlled Subsidiary (of which amount, the amount which may be transferred
to a Non-Controlled Subsidiary in exchange for an equity interest, shall
not exceed $5,000,000.00 in the aggregate in any fiscal year); and
(d) the Borrowers may sell or transfer Income Producing
Property to their respective Controlled Subsidiaries or Non-Controlled
Subsidiaries, provided that such sales are (i) for all cash and for fair
market value or (ii) subject to Section 8.3(i), an equivalent equity
interest in such Person; and
(e) the Borrowers may sell Property other than Commercial
Land, Residential Land or Income Producing Property to their respective
Controlled Subsidiaries or Non-Controlled Subsidiaries, provided that such
sales are for all cash and for fair market value; and
(f) transfers of assets for all cash and for fair market
value between the Borrowers.
Notwithstanding the foregoing, none of such Persons may sell,
transfer or dispose or permit the sale, transfer or disposition of any
Material Asset or such Person's interest therein without the prior written
consent of the Majority Banks.
Section 8.9. Speculative Development. None of the Borrowers
nor any of their respective Controlled Subsidiaries or Non-Controlled
Subsidiaries shall engage, directly or indirectly, in the development or
construction of real estate other than land development and the
construction by Commercial Company of golf courses and the construction by
Commercial Company and its Controlled Subsidiaries and Non-Controlled
Subsidiaries of Vertical Commercial Improvements; provided, however, that
neither Commercial Company nor any of its Controlled Subsidiaries or Non-
Controlled Subsidiaries shall engage directly or indirectly in any Vertical
Commercial Improvements that would constitute a Speculative Development
which causes at any time (a) the cost of completing such development (on a
fully developed basis including land) of Commercial Company and its
Controlled Subsidiaries and Non-Controlled Subsidiaries (from borrowings
and equity) to exceed $35,000,000.00 in the aggregate at any time, and (b)
the aggregate square footage of all Speculative Development (whether under
construction or complete) to exceed 375,000 square feet (provided that
Commercial Company's percentage ownership interest in its Controlled
Subsidiaries and Non-Controlled Subsidiaries shall not be considered in
testing Commercial Company's compliance with the limitations contained in
this Section 8.9).
Section 8.10. Sources of Capital. The Borrowers shall, at all
times that a Borrower or any of their respective Controlled Subsidiaries is
engaging in any development as provided in Section 8.9 or has entered into
any agreement to provide funds with respect to a development, maintain or
have identified available sources of capital equal to the total cost to
acquire and complete such developments and to satisfy such funding
obligations, which sources of capital shall be acceptable to the Agent in
its reasonable discretion. Amounts available to be disbursed for such
purposes pursuant to this Agreement may be considered as a source of
capital for the purposes of this Section 8.10.
Section 8.11. Restriction on Prepayment of Indebtedness. None
of the Borrowers shall prepay the principal amount, in whole or in part, of
any Indebtedness other than the Obligations after the occurrence of any
Event of Default; provided, however, that this Section 8.11 shall not
prohibit the prepayment of Indebtedness which is financed solely from the
proceeds of a new loan which would otherwise be permitted by the terms of
Section 8.1.
Section 8.12. Restrictions on Amendments; Transfers. None of
the Borrowers shall (a) sell, convey, assign, option, mortgage, pledge,
hypothecate, encumber or dispose of any of the Material Agreements (except
as permitted in Section 5.4) or the Merger Agreement (except for Liens in
favor of the Agent and the Banks to secure the Obligations), or (b) make a
material modification or amendment to or terminate prior to maturity any of
the Material Agreements.
Section 8.13. Transfers. None of the Borrowers shall consent
to or otherwise permit any pledge, mortgage, hypothecation or encumbering
of any direct or indirect interest in such Borrower.
Section 9. FINANCIAL COVENANTS OF THE BORROWERS
The Borrowers covenant and agree that, so long as any Loan or
Note is outstanding or any Bank has any obligation to make any Loans it
will comply with the following:
Section 9.1. Liabilities to Market Value Capitalization Ratio.
The Borrowers will not, as of each Quarterly Measurement Date occurring on
or after December 31, 1997, permit the ratio of the aggregate amount of
Indebtedness of the Borrowers and their Controlled Subsidiaries (limited to
each Borrowers' allocable share thereof) outstanding under notes, bonds,
debentures or similar debt instruments plus all guarantees, endorsements or
similar contingent obligations individually or in the aggregate in excess
of $15,000,000.00 with respect to Indebtedness of other Persons (excluding
obligations under completion guaranties, Indebtedness that is secured by an
Income Property which is owned by a Borrower or with respect to which a
Borrower owns a Partial Interest in the event that the Indebtedness secured
by such Income Property exceeds sixty percent (60%) of the Adjusted Value
thereof and Indebtedness permitted under Section 8.1(i) and Section
8.1(k)) to Total Market Value Capitalization of the Borrowers to exceed the
following percentages:
Year of Loan Percentage
July 31, 1997 through September 30, 1998 70%
October 1, 1998 through September 30, 1999 65%
October 1, 1999 through September 30, 2000 60%
October 1, 2000 through September 30, 2001 55%
October 1, 2001 through July 31, 2002 55%
Section 9.2. Interest Coverage. The Borrowers will not, as of
any Quarterly Measurement Date occurring on or after December 31, 1997,
permit the sum of the Recurring Operating Cash Flow of the Borrowers (such
amount not to include an aggregate amount greater than $7,000,000.00 of
distributions from Controlled Subsidiaries and Non-Controlled Subsidiaries
of the Borrowers which have Indebtedness encumbering the assets of such
Controlled Subsidiaries and Non-Controlled Subsidiaries greater than
twenty-five percent (25%) of the Adjusted Value of such assets if such
assets are included within the Borrowing Base, or if such assets are not
included within the Borrowing Base, such value as reasonably determined by
the Agent) for any period of four consecutive fiscal quarters ending on a
Quarterly Measurement Date (treated as a single accounting period) (the
"Test Period") to be less than 1.5 times the Interest Expense for the Test
Period. In the event that at the end of any Quarterly Measurement Date the
Borrowers and their Controlled Subsidiaries and Non-Controlled Subsidiaries
shall not have any of such components for four fiscal quarters, the actual
amounts shall be annualized in such manner as the Agent may reasonably
determine.
Section 9.3. Borrowing Base. The Borrowers will not at any
time permit the outstanding principal balance of the Revolving Credit Loans
and the Secured Term Loans as of the date of determination to be greater
than the Borrowing Base as determined as of the same date.
Section 9.4. Tangible Net Worth. Borrowers will not, as of
each Quarterly Measurement Date occurring on or after December 31, 1997,
permit their aggregate Consolidated Tangible Net Worth to be less than the
sum of (i) $150,000,000.00, plus (ii) ninety percent (90%) of their
aggregate positive quarterly Net Income from July 31,1997, plus (iii)
ninety percent (90%) of the net proceeds of all Equity Offerings, less (iv)
the amount of Distributions permitted by Section 8.7 above.
Section 9.5. Fixed Charge Coverage Ratio. The Borrowers will
not, as of each Quarterly Measurement Date, permit the sum of the Recurring
Operating Cash Flow of the Borrowers (such amount not to include an
aggregate amount greater than $7,000,000.00 of distributions from
Controlled Subsidiaries and Non-Controlled Subsidiaries of the Borrowers
which have Indebtedness encumbering the assets of such Controlled
Subsidiaries and Non-Controlled Subsidiaries greater than twenty-five
percent (25%) of the Adjusted Value of such asset if such assets are
included within the Borrowing Base, or if such assets are not included
within the Borrowing Base, such value as reasonably determined by the
Agent) for any Test Period to be less than 1.25 times the Debt Service for
such Test Period. In the event that as of any Quarterly Measurement Date
the Borrowers and their Controlled Subsidiaries and Non-Controlled
Subsidiaries shall not have any of such components for four fiscal
quarters, the actual amounts shall be annualized in such manner as the
Agent shall reasonably determine.
Section 10. CLOSING CONDITIONS
The obligations of the Agent and the Banks to make the initial
Loans shall be subject to the satisfaction of the following conditions
precedent on or prior to the Closing Date:
Section 10.1. Loan Documents. Each of the Loan Documents
(including any amendments to agreements securing or relating to the
Original Credit Agreement) shall have been duly executed and delivered by
the respective parties thereto, shall be in full force and effect and shall
be in form and substance satisfactory to the Majority Banks. The Agent
shall have received a fully executed copy of each such document, except
that each Bank shall have received a fully executed counterpart of its Note
or Notes. The Agent is authorized by the Banks to execute on behalf of the
Banks and Agent, as applicable, any amendments to agreements securing or
relating to the Original Credit Agreement as Agent deems appropriate.
Section 10.2. Certified Copies of Organizational Documents.
The Agent shall have received from the Borrowers a copy, certified as of a
recent date by the appropriate officer of each State in which each
Borrower, the General Partners or the Guarantors, as applicable, is
organized or in which the Real Estate is located and a duly authorized
partner or officer of such Borrower, the General Partners and the
Guarantors, as applicable, to be true and complete, of the partnership
agreement or corporate charter of such Borrower, the General Partners and
the Guarantors, as applicable (or a certification satisfactory to the Agent
that there have been no changes to the foregoing from those provided to the
Agent in connection with the execution of the Original Credit Agreement),
or its qualification to do business, as applicable, as in effect on such
date of certification.
Section 10.3. Bylaws; Resolutions. All action on the part of
the Borrowers, the General Partners and the Guarantors necessary for the
valid execution, delivery and performance by the Borrowers, the General
Partners and the Guarantors of this Agreement and the other Loan Documents
to which such Person is or is to become a party shall have been duly and
effectively taken, and evidence thereof satisfactory to the Agent shall
have been provided to the Agent. The Agent shall have received from the
General Partners and the Guarantors true copies of their respective bylaws
(or a certification satisfactory to the Agent that there have been no
changes to the foregoing from those provided to the Agent in connection
with the execution of the Original Credit Agreement) and the resolutions
adopted by their respective board of directors authorizing the transactions
described herein, each certified by its secretary as of a recent date to be
true and complete.
Section 10.4. Incumbency Certificate; Authorized Signers. The
Agent shall have received from the General Partners and the Guarantors an
incumbency certificate, dated as of the Closing Date, signed by a duly
authorized officer of the General Partners and the Guarantors and giving
the name and bearing a specimen signature of each individual who shall be
authorized to sign, in the name and on behalf of the General Partners and
the Guarantors, each of the Loan Documents to which such Person is or is to
become a party. The Agent shall have also received from the Borrowers a
certificate, dated as of the Closing Date, signed by a duly authorized
partner of each Borrower and giving the name and specimen signature of each
individual who shall be authorized to make Loan Requests, and give notices
and to take other action on behalf of such Borrower under the Loan
Documents.
Section 10.5. Opinion of Counsel. The Agent shall have
received a favorable opinion addressed to the Banks and the Agent and dated
as of the Closing Date, in form and substance reasonably satisfactory to
the Agent, from counsel of the Borrowers, the General Partners and the
Guarantors, and counsel in such other states as may be required by the
Agent, as to such matters as the Agent shall reasonably request.
Section 10.6. Payment of Fees. The Borrowers shall have paid
to the Agent the closing fee pursuant to Section 4.2.
Section 10.7. Acquisition of Interest Rate Cap. The Borrowers
shall have acquired an interest rate cap providing to the Borrowers a cap
on the one month Eurodollar Rate on a notional amount equal to fifty
percent (50%) of the Loans outstanding from time to time, of not more than
eight and six-tenths percent (8.6%) per annum (the "Interest Cap"). The
term of the Interest Cap shall not expire before the Maturity Date, as the
same may be extended. The Interest Cap shall be provided by any bank which
is a party to the Credit Agreement or a bank or other financial institution
that has unsecured, uninsured and unguaranteed long-term debt which is
rated at least A-3 by Moody's Investor Service, Inc. or at least A- by
Standard & Poors Corporation.
Section 10.8. Environmental Reports. The Agent shall have
received environmental site assessment reports for the Real Estate prepared
by an Environmental Engineer no more than three months prior to the Closing
Date, which reports are in form and substance satisfactory to the Agent.
Section 10.9. Insurance. The Agent shall have received
certificates evidencing that the Agent and the Banks are named as
additional insured on all policies of insurance as required by this
Agreement or the other Loan Documents.
Section 10.10. Performance; No Default. The Borrowers shall
have performed and complied with all terms and conditions herein required
to be performed or complied with by any of them on or prior to the Closing
Date, and on the Closing Date there shall exist no Default or Event of
Default.
Section 10.11. Representations and Warranties. The
representations and warranties made by the Borrowers, the General Partners
and the Guarantors in the Loan Documents or otherwise made by or on behalf
of the Borrowers, the General Partners, the Guarantors or the Controlled
Subsidiaries of the Borrowers in connection therewith or after the date
thereof shall have been true and correct in all material respects when made
and shall also be true and correct in all material respects on the Closing
Date.
Section 10.12. Proceedings and Documents. All proceedings in
connection with the transactions contemplated by this Agreement and the
other Loan Documents shall be reasonably satisfactory to the Agent and the
Agent's Special Counsel in form and substance, and the Agent shall have
received all information and such counterpart originals or certified copies
of such documents and such other certificates, opinions or documents as the
Agent and the Agent's Special Counsel may reasonably require. No
proceeding challenging or seeking to enjoin any of the transactions
contemplated by the Loan Documents or the Merger Agreement shall be pending
or shall have been threatened.
Section 10.13. Eligible Real Estate Qualification Documents.
The Eligible Real Estate Qualification Documents for each parcel of
Mortgaged Property included in the Collateral as of the Closing Date shall
have been delivered to the Agent at the Borrowers' expense.
Section 10.14. Compliance Certificate. A Compliance
Certificate dated as of the date of the Closing Date demonstrating
compliance with each of the covenants calculated therein.
Section 10.15. Other Transactions. The Agent shall have
received evidence satisfactory to the Agent that all acquisition and
capitalization transactions affecting the Borrowers and the Guarantors
shall have occurred such that the balance sheet of the Borrowers and the
Guarantors shall be in accordance with the pro forma balance sheet
delivered to Agent prior to the Closing Date which evidence shall include,
without limitation:
(a) Evidence that the transactions contemplated by the
Merger Agreement have been consummated; and
(b) Evidence that the Borrowers have contributed not less
than $174,000,000.00 in equity in connection with the consummation of such
transaction.
Section 10.16. Consents. The Agent shall have received
evidence satisfactory to the Agent that all necessary partner consents and
other consents required in connection with the pledge of the Collateral to
the Agent for the benefit of the Banks have been obtained.
Section 10.17. Other Documents. To the extent requested by the
Majority Banks, the Majority Banks shall have received executed copies of
all material agreements of any nature whatsoever to which the Borrowers or
any of their respective Controlled Subsidiaries is a party affecting or
relating to the use, operation, development, construction or management of
the Real Estate.
Section 10.18. No Condemnation/Taking. The Agent shall have
received written confirmation from the Borrowers that no condemnation
proceedings are pending or to the Borrowers' knowledge threatened against
any Real Estate or, if any such proceedings are pending or threatened,
identifying the same and the Real Estate affected thereby and the Agent
shall have determined that none of such proceedings is or will be material
to the Real Estate affected thereby.
Section 10.19. Title Endorsements. The Agent shall have
received endorsements to the Title Policy for the Mortgaged Property as of
the date of this Agreement in form and substance satisfactory to the Agent
reflecting the execution of this Agreement and bringing forward the
effective date of the Title Policy without any additional exceptions except
those which may be approved by the Agent.
Section 10.20. Other. The Agent shall have reviewed such other
documents, instruments, certificates, opinions, assurances, consents and
approvals as the Agent or the Agent's Special Counsel may reasonably have
requested.
Section 11. CONDITIONS TO ALL BORROWINGS
The obligations of the Banks to make any Loan, whether on or
after the Closing Date, shall also be subject to the satisfaction of the
following conditions precedent:
Section 11.1. Prior Conditions Satisfied. All conditions set
forth in Section 10 shall continue to be satisfied as of the date upon
which any Loan is to be made.
Section 11.2. Representations True; No Default. Each of the
representations and warranties made by or on behalf of the Borrowers, the
General Partners, the Guarantors and the Borrowers' Controlled Subsidiaries
contained in this Agreement, the other Loan Documents or in any document or
instrument delivered pursuant to or in connection with this Agreement shall
be true as of the date as of which they were made and shall also be true at
and as of the time of the making of such Loan, with the same effect as if
made at and as of that time (except to the extent of changes resulting from
transactions contemplated or permitted by this Agreement and the other Loan
Documents and changes occurring in the ordinary course of business that
singly or in the aggregate are not materially adverse, and except to the
extent that such representations and warranties relate expressly to an
earlier date) and no Default or Event of Default shall have occurred and be
continuing. The Agent shall have received a certificate of the Borrowers
signed by an authorized officer of each Borrower to such effect.
Section 11.3. No Legal Impediment. No change shall have
occurred in any law or regulations thereunder or interpretations thereof
that in the reasonable opinion of any Bank would make it illegal for such
Bank to make such Loan.
Section 11.4. Governmental Regulation. Each Bank shall have
received such statements in substance and form reasonably satisfactory to
such Bank as such Bank shall require for the purpose of compliance with any
applicable regulations of the Comptroller of the Currency or the Board of
Governors of the Federal Reserve System.
Section 11.5. Proceedings and Documents. All proceedings in
connection with the Loan shall be satisfactory in substance and in form to
the Majority Banks, and the Majority Banks shall have received all
information and such counterpart originals or certified or other copies of
such documents as the Majority Banks may reasonably request.
Section 11.6. Borrowing Documents. In the case of any request
for a Loan, the Agent shall have received a copy of the request for a Loan
required by Section 2.6 in the form of Exhibit C-1 or Exhibit C-2 hereto,
as applicable, fully completed.
Section 11.7. Endorsement to Title Policy. At such times as
Agent shall determine in its discretion, to the extent available under
applicable law, a "date down" endorsement to each Title Policy indicating
no change in the state of title and containing no survey exceptions not
approved by the Agent, which endorsement shall, expressly or by virtue of a
proper "revolving credit" clause or endorsement in the Title Policy,
increase the coverage of the Title Policy to the aggregate amount of all
Loans advanced and outstanding on or before the effective date of such
endorsement, or if such endorsement is not available, such other evidence
and assurances as the Agent may reasonably require (which evidence may
include, without limitation, a "nothing further" letter or statement from
the Borrowers stating that there have been no changes in title from the
date of the last effective date of the Title Policy).
Section 11.8. Future Advances Tax Payment. As a condition
precedent to any Bank's obligations to make any Revolving Credit Loans in
excess of an aggregate amount of $179,000,000 (calculated as the sum of all
Revolving Credit Loans advanced hereunder without deduction for any
repayments of such Revolving Credit Loans and regardless of whether such
Revolving Credit Loans are outstanding at the time of reference hereto),
the Borrowers will pay to the Agent any mortgage, recording, intangible,
documentary stamp or other similar taxes and charges which the Agent
reasonably determines to be payable as a result of such Revolving Credit
Loan to any state or any county or municipality thereof in which the
Mortgaged Property is located and deliver to the Agent such affidavits or
other information which the Agent reasonably determines to be necessary in
connection with the payment of such tax, in order to insure that the
Security Deed secures the Borrowers' obligation with respect to the
Revolving Credit Loans then being requested by a Borrower. The provisions
of this Section 11.8 shall be without limitation of the Borrowers'
obligations under other provisions of the Loan Documents, including without
limitation Section 15 hereof.
Section 12. EVENTS OF DEFAULT; ACCELERATION; ETC.
Section 12.1. Events of Default and Acceleration. If any of
the following events ("Events of Default" or, if the giving of notice or
the lapse of time or both is required, then, prior to such notice or lapse
of time, "Defaults") shall occur:
(a) either of the Borrowers shall fail to pay any principal
of the Loans when the same shall become due and payable, whether at the
stated date of maturity or any accelerated date of maturity or at any other
date fixed for payment;
(b) either of the Borrowers shall fail to pay any interest
on the Loans or any other sums due hereunder or under any of the other Loan
Documents, when the same shall become due and payable, whether at the
stated date of maturity or any accelerated date of maturity or at any other
date fixed for payment;
(c) either of the Borrowers shall fail to comply with any
covenant contained in Section 5.3, Section 7.13, Section 8.1, Section
8.2, Section 8.3 and Section 8.7;
(d) either of the Borrowers shall fail to comply with any
covenant contained in Section 9, and such failure shall continue for 20
days after written notice thereof shall have been given to the Borrowers by
the Agent;
(e) either of the Borrowers or any of their respective
Controlled Subsidiaries or any Guarantor shall fail to perform any other
term, covenant or agreement contained herein or in any of the other Loan
Documents (other than those specified above in this Section 12);
(f) any representation or warranty made by or on behalf of
any Borrower, any of the General Partners, any Guarantor or any of the
Controlled Subsidiaries of a Borrower in this Agreement or any other Loan
Document, or in any report, certificate, financial statement, request for a
Loan, or in any other document or instrument delivered pursuant to or in
connection with this Agreement, any advance of a Loan or any of the other
Loan Documents shall prove to have been false in any material respect upon
the date when made or deemed to have been made or repeated;
(g) any of the Borrowers, any of the General Partners, any
Guarantor or any of the Controlled Subsidiaries of a Borrower shall fail to
pay at maturity, or within any applicable period of grace, any obligation
for borrowed money or credit received or other Indebtedness, or fail to
observe or perform any material term, covenant or agreement contained in
any agreement by which it is bound, evidencing or securing any such
borrowed money or credit received or other Indebtedness for such period of
time as would permit (assuming the giving of appropriate notice if
required) the holder or holders thereof or of any obligations issued
thereunder to accelerate the maturity thereof; provided that the events
described in this Section 12.1(g) shall not constitute an Event of Default
unless such failure to pay or perform, together with other failures to pay
or perform, involve singly or in the aggregate recourse obligations for
borrowed money or credit received or other Indebtedness totaling in excess
of $5,000,000.00 or, with respect to non-recourse obligations for borrowed
money or credit received or other Indebtedness totaling in excess of
$15,000,000.00 (except that with respect to non-recourse Indebtedness of a
Controlled Subsidiary of a Borrower it shall not be an Event of Default
hereunder unless the Borrowers' aggregate equity Investment in all of such
Controlled Subsidiaries exceeds $15,000,000.00);
(h) any of the Borrowers, any of the General Partners, any
Guarantor or any of the Controlled Subsidiaries of a Borrower, (1) shall
make an assignment for the benefit of creditors, or admit in writing its
general inability to pay or generally fail to pay its debts as they mature
or become due, or shall petition or apply for the appointment of a trustee
or other custodian, liquidator or receiver of any of the Borrowers, any of
the General Partners, any Guarantor or any of the Controlled Subsidiaries
of a Borrower or of any substantial part of the assets of any thereof,
(2) shall commence any case or other proceeding relating to any of the
Borrowers, any of the General Partners, any Guarantor or any of the
Controlled Subsidiaries of a Borrower under any bankruptcy, reorganization,
arrangement, insolvency, readjustment of debt, dissolution or liquidation
or similar law of any jurisdiction, now or hereafter in effect, or
(3) shall take any action to authorize or in furtherance of any of the
foregoing;
(i) a petition or application shall be filed for the
appointment of a trustee or other custodian, liquidator or receiver of any
of the Borrowers, any of the General Partners, any Guarantor or any of the
Controlled Subsidiaries of a Borrower or any substantial part of the assets
of any thereof, or a case or other proceeding shall be commenced against
any of the Borrowers, any of the General Partners, any Guarantor or any of
the Controlled Subsidiaries of a Borrower under any bankruptcy,
reorganization, arrangement, insolvency, readjustment of debt, dissolution
or liquidation or similar law of any jurisdiction, now or hereafter in
effect, and any of the Borrowers, any of the General Partners, any
Guarantor or any of the Controlled Subsidiaries of a Borrower shall
indicate its approval thereof, consent thereto or acquiescence therein or
such petition, application, case or proceeding shall not have been
dismissed within 90 days following the filing or commencement thereof;
(j) a decree or order is entered appointing any such
trustee, custodian, liquidator or receiver or adjudicating any of the
Borrowers, any of the General Partners, any Guarantor or any of the
Controlled Subsidiaries of a Borrower bankrupt or insolvent, or approving a
petition in any such case or other proceeding, or a decree or order for
relief is entered in respect of any of the Borrowers, any of the General
Partners, any Guarantor or any of the Controlled Subsidiaries of a
Borrower, in an involuntary case under federal bankruptcy laws as now or
hereafter constituted;
(k) there shall remain in force, undischarged, unsatisfied
and unstayed, for more than 60 days, whether or not consecutive, any
uninsured final judgment against any of the Borrowers, any of the General
Partners, any Guarantor or any of the Controlled Subsidiaries of a Borrower
that, with other outstanding uninsured final judgments, undischarged,
against any of the Borrowers, any of the General Partners, any Guarantor or
any of the Controlled Subsidiaries of a Borrower exceeds in the aggregate
$1,000,000.00;
(l) if any of the Loan Documents shall be canceled,
terminated, revoked or rescinded otherwise than in accordance with the
terms thereof or with the express prior written agreement, consent or
approval of the Banks, or any action at law, suit in equity or other legal
proceeding to cancel, revoke or rescind any of the Loan Documents shall be
commenced by or on behalf of any of the Borrowers, any of the General
Partners, any Guarantor or any of their respective stockholders, partners
or beneficiaries, or any court or any other governmental or regulatory
authority or agency of competent jurisdiction shall make a determination
that, or issue a judgment, order, decree or ruling to the effect that, any
one or more of the Loan Documents is illegal, invalid or unenforceable in
accordance with the terms thereof;
(m) any dissolution, termination, partial or complete
liquidation, merger or consolidation of any of the Borrowers, any of the
General Partners or any Guarantor, or any sale, transfer or other
disposition of the assets of any of the Borrowers, any of the General
Partners or any Guarantor, other than as permitted under the terms of this
Agreement or the other Loan Documents;
(n) any suit or proceeding shall be filed against any of
the Borrowers, any of the General Partners, any Guarantor or any of their
respective assets which in the good faith business judgment of the Majority
Banks after giving consideration to the likelihood of success of such suit
or proceeding and the availability of insurance to cover any judgment with
respect thereto and based on the information available to them, if
adversely determined, would have a materially adverse affect on the ability
of any of the Borrowers or any Guarantor to perform its obligations under
and by virtue of the Loan Documents;
(o) any of the Borrowers, any of the General Partners, any
Guarantor or any of the Controlled Subsidiaries of a Borrower shall be
indicted for a federal crime, a punishment for which could include the
forfeiture of any assets of such Person included in the Collateral or the
Property;
(p) (i) an ERISA Reportable Event shall occur with respect
to, or proceedings shall commence to have a trustee appointed, or a trustee
shall be appointed, to administer or to terminate, any Employee Benefit
Plan, which ERISA Reportable Event or institution of proceedings is, in the
opinion of the Majority Banks, likely to result in the termination of such
Plan for purposes of Title IV of ERISA, and, in the case of an ERISA
Reportable Event, the continuance of such ERISA Reportable Event unremedied
for 30 days after notice of such ERISA Reportable Event pursuant to Section
4043(a), (c) or (d) of ERISA is given or, in the case of institution of
proceedings, the continuance of such proceedings for 30 days after
commencement thereof, (ii) any Employee Benefit Plan shall terminate for
purposes of Title IV of ERISA, or (iii) any other event or condition shall
occur or exist with respect to an Employee Benefit Plan and in each case in
clauses (i) through (iii) above, such event or condition, together with all
other such events or conditions, if any, could subject any of the Borrowers
or any of their respective Controlled Subsidiaries or any Guarantor to any
tax, penalty or other liabilities in the aggregate material in relation to
the business, operations, property or financial or other condition of any
of the Borrowers, any Guarantor or of a Borrower and its Controlled
Subsidiaries taken as a whole;
(q) any Guarantor denies that such Guarantor has any
liability or obligation under the Guaranty, or shall notify the Agent or
any of the Banks of such Guarantor's intention to attempt to cancel or
terminate the Guaranty, or shall fail to observe or comply with any term,
covenant, condition or agreement under the Guaranty;
(r) a Change of Control shall occur; or
(s) any Event of Default, as defined in any of the other
Loan Documents, shall occur;
then, and in any such event, the Agent may, and upon the request of the
Majority Banks shall, by notice in writing to the Borrowers declare all
amounts owing with respect to this Agreement, the Notes and the other Loan
Documents to be, and they shall thereupon forthwith become, immediately due
and payable without presentment, demand, protest or other notice of any
kind, all of which are hereby expressly waived by the Borrowers; provided
that in the event of any Event of Default specified in Section 12.1(h),
Section 12.1(i) or Section 12.1(j), all such amounts shall become
immediately due and payable automatically and without any requirement of
notice from any of the Banks or the Agent.
Notwithstanding the foregoing, it shall not be an Event of
Default upon the occurrence of any of the events described under Section
12.1(f), (h), (i) or (j) with respect to a Controlled Subsidiary or Non-
Controlled Subsidiary unless the Borrowers' aggregate equity Investment in
all of such Controlled Subsidiaries or Non-Controlled Subsidiaries exceeds
$15,000,000.00.
Section 12.lA Limitation of Cure Periods.
(a) Notwithstanding anything contained in Section 12.1 to
the contrary, (i) no Event of Default shall exist hereunder upon the
occurrence of any failure described in Section 12.1(a) or Section 12.1(b)
in the event that the Borrowers cure such Default within five (5) days
following receipt of written notice of such Default, provided, however,
that Borrowers shall not be entitled to receive more than two (2) notices
in the aggregate pursuant to this clause (i) in any period of 365 days
ending on the date of any such occurrence of Default, and provided further
that no such cure period shall apply to any payments due upon the maturity
of the Notes, and (ii) no Event of Default shall exist hereunder upon the
occurrence of any failure described in Section 12.1(e) or Section 12.1(f)
in the event that the Borrowers cure such Default within thirty (30) days
following receipt of written notice of such Default, or if such Default is
of such a nature that it cannot be cured within such thirty (30) day
period, in the event that Borrowers commence such cure within such thirty
(30) day period and thereafter diligently, continuously and in good faith
prosecute such cure to completion, and in any event cure such Default
within ninety (90) days following receipt of such written notice of
Default. The provisions of clause (ii) shall not pertain to Defaults
consisting of a failure to provide insurance as required by Section 7.7,
to any Default consisting of a failure to comply with Section 7.4(e), to
any Default under Section s 7.13, 8.1, 8.2, 8.3 and 8.7, or to any Default
excluded from any provision of cure of Defaults contained in any other of
the Loan Documents.
(b) Notwithstanding anything in this Agreement or any other
Loan Document to the contrary, any reference in this Agreement or any other
Loan Document to "the continuance of a default" or "the continuance of an
Event of Default" or any similar phrase shall not create or be deemed to
create any right on the part of Borrowers or any other party to cure any
default following the expiration of any applicable grace or notice and cure
period.
(c) In the event that a Borrower obtains any knowledge that
any representation or warranty made by or on behalf of the Borrowers, the
Guarantors, the General Partners or any Controlled Subsidiaries of a
Borrower in this Agreement or any of the other Loan Documents to its
knowledge and belief shall be untrue or misleading, the Borrowers shall
promptly notify the Agent in writing of the same and shall, within thirty
(30) days after learning such representation or warranty is untrue or
misleading, take such actions as are required to cause such warranty or
representation to be correct.
Section 12.2. Termination of Commitments. If any one or more
Events of Default specified in Section 12.1(h), Section 12.1(i) or
Section 12.1(j) shall occur, then immediately and without any action on
the part of the Agent or any Bank any unused portion of the credit
hereunder shall terminate and the Banks shall be relieved of all
obligations to make Revolving Credit Loans to the Borrowers. If any other
Event of Default shall have occurred, the Agent, upon the election of the
Majority Banks, may by notice to the Borrowers terminate the obligation to
make Revolving Credit Loans to the Borrowers. No termination under this
Section 12.2 shall relieve the Borrowers of their obligations to the Banks
arising under this Agreement or the other Loan Documents. Nothing in this
Section 12.2 shall limit or impair the terms of this Agreement (including
Section 2.1) which provide that the Banks shall have no obligation to make
Revolving Credit Loans upon the occurrence of a Default or Event of
Default.
Section 12.3. Remedies. In case any one or more of the Events
of Default shall have occurred and be continuing, and whether or not the
Banks shall have accelerated the maturity of the Loans pursuant to Section
12.1, the Agent on behalf of the Banks, may, with the consent of the
Majority Banks but not otherwise, proceed to protect and enforce their
rights and remedies under this Agreement, the Notes or any of the other
Loan Documents by suit in equity, action at law or other appropriate
proceeding, whether for the specific performance of any covenant or
agreement contained in this Agreement and the other Loan Documents or any
instrument pursuant to which the Obligations are evidenced, including to
the full extent permitted by applicable law the obtaining of the ex parte
appointment of a receiver, and, if such amount shall have become due, by
declaration or otherwise, proceed to enforce the payment thereof or any
other legal or equitable right. No remedy herein conferred upon the Agent
or the holder of any Note is intended to be exclusive of any other remedy
and each and every remedy shall be cumulative and shall be in addition to
every other remedy given hereunder or now or hereafter existing at law or
in equity or by statute or any other provision of law. In the event that
all or any portion of the Obligations is collected by or through an
attorney-at-law, the Borrowers shall pay all reasonable costs of collection
including, but not limited to, reasonable attorney's fees. Notwithstanding
the provisions of this Agreement providing that the Loans may be evidenced
by multiple Notes in favor of the Banks, the Banks acknowledge and agree
that only the Agent may exercise any remedies arising by reason of a
Default or Event of Default.
Section 12.4. Distribution of Collateral Proceeds. In the
event that, following the occurrence or during the continuance of any Event
of Default, any monies are received in connection with the enforcement of
any of the Security Documents, or otherwise with respect to the realization
upon any of the Collateral, such monies shall be distributed for
application as follows:
(a) First, to the payment of, or (as the case may be) the
reimbursement of, the Agent for or in respect of all reasonable costs,
expenses, disbursements and losses which shall have been incurred or
sustained by the Agent to protect or preserve the collateral or in
connection with the collection of such monies by the Agent, for the
exercise, protection or enforcement by the Agent of all or any of the
rights, remedies, powers and privileges of the Agent under this Agreement
or any of the other Loan Documents or in respect of the Collateral or in
support of any provision of adequate indemnity to the Agent against any
taxes or liens which by law shall have, or may have, priority over the
rights of the Agent to such monies;
(b) Second, to all other Obligations in such order or
preference as the Agent shall determine; provided, however, that
distributions in respect of such other Obligations shall be made pari passu
among Obligations with respect to the Agent's fee payable pursuant to
Section 4.3 and all other Obligations, and the Agent may in its discretion
make proper allowance to take into account any Obligations not then due and
payable; and
(c) Third, the excess, if any, shall be returned to the
Borrowers or to such other Persons as are entitled thereto.
Section 13. SETOFF
Regardless of the adequacy of any collateral, during the
continuance of any Event of Default, any deposits (general or specific,
time or demand, provisional or final, regardless of currency, maturity, or
the branch of where such deposits are held) or other sums credited by or
due from any of the Banks to any of the Borrowers or any Guarantor and any
securities or other property of any of the Borrowers or any Guarantor in
the possession of such Bank may be applied to or set off against the
payment of Obligations and any and all other liabilities, direct, or
indirect, absolute or contingent, due or to become due, now existing or
hereafter arising, of the Borrowers to such Bank. Each of the Banks agrees
with each other Bank that if such Bank shall receive from any of the
Borrowers or any Guarantor, whether by voluntary payment, exercise of the
right of setoff, or otherwise, and shall retain and apply to the payment of
the Note or Notes held by such Bank any amount in excess of its ratable
portion of the payments received by all of the Banks with respect to the
Notes held by all of the Banks, such Bank will make such disposition and
arrangements with the other Banks with respect to such excess, either by
way of distribution, pro tanto assignment of claims, subrogation or
otherwise as shall result in each Bank receiving in respect of the Notes
held by it its proportionate payment as contemplated by this Agreement;
provided that if all or any part of such excess payment is thereafter
recovered from such Bank, such disposition and arrangements shall be
rescinded and the amount restored to the extent of such recovery, but
without interest.
Section 14. THE AGENT
Section 14.1. Authorization. The Agent is authorized to take
such action on behalf of each of the Banks and to exercise all such powers
as are hereunder and under any of the other Loan Documents and any related
documents delegated to the Agent, together with such powers as are
reasonably incident thereto, provided that no duties or responsibilities
not expressly assumed herein or therein shall be implied to have been
assumed by the Agent. The obligations of Agent hereunder are primarily
administrative in nature, and nothing contained in this Agreement or any of
the other Loan Documents shall be construed to constitute the Agent as a
trustee for any Bank or to create any agency or fiduciary relationship.
The Borrowers and any other Person shall be entitled to conclusively rely
on a statement from the Agent that it has the authority to act for and bind
the Banks pursuant to this Agreement and the other Loan Documents.
Section 14.2. Employees and Agents. The Agent may exercise its
powers and execute its duties by or through employees or agents and shall
be entitled to take, and to rely on, advice of counsel concerning all
matters pertaining to its rights and duties under this Agreement and the
other Loan Documents.
Section 14.3. No Liability. Neither the Agent nor any of its
shareholders, directors, officers or employees nor any other Person
assisting them in their duties nor any agent, or employee thereof, shall be
liable for any waiver, consent or approval given or any action taken, or
omitted to be taken, in good faith by it or them hereunder or under any of
the other Loan Documents, or in connection herewith or therewith, or be
responsible for the consequences of any oversight or error of judgment
whatsoever, except that the Agent or such other Person, as the case may be,
shall be liable for losses due to its willful misconduct or gross
negligence.
Section 14.4. No Representations. The Agent shall not be
responsible for the execution or validity or enforceability of this
Agreement, the Notes, any of the other Loan Documents or any instrument at
any time constituting, or intended to constitute, collateral security for
the Notes, or for the value of any such collateral security or for the
validity, enforceability or collectability of any such amounts owing with
respect to the Notes, or for any recitals or statements, warranties or
representations made herein, or any agreement, instrument or certificate
delivered in connection therewith or in any of the other Loan Documents or
in any certificate or instrument hereafter furnished to it by or on behalf
of any of the Borrowers, any of the General Partners, any of the Controlled
Subsidiaries of a Borrower or any Guarantor, or be bound to ascertain or
inquire as to the performance or observance of any of the terms,
conditions, covenants or agreements herein or in any other of the Loan
Documents. The Agent shall not be bound to ascertain whether any notice,
consent, waiver or request delivered to it by any of the Borrowers or any
Guarantor or any of the Controlled Subsidiaries of a Borrower or any holder
of any of the Notes shall have been duly authorized or is true, accurate
and complete. The Agent has not made nor does it now make any
representations or warranties, express or implied, nor does it assume any
liability to the Banks, with respect to the creditworthiness or financial
condition of any of the Borrowers or any of their respective Controlled
Subsidiaries or Non-Controlled Subsidiaries or any Guarantor. Each Bank
acknowledges that it has, independently and without reliance upon the Agent
or any other Bank, and based upon such information and documents as it has
deemed appropriate, made its own credit analysis and decision to enter into
this Agreement. Each Bank also acknowledges that it will, independently
and without reliance upon the Agent or any other Bank, based upon such
information and documents as it deems appropriate at the time, continue to
make its own credit analysis and decisions in taking or not taking action
under this Agreement and the other Loan Documents.
Section 14.5. Payments.
(a) A payment by the Borrowers or the Guarantors to the
Agent hereunder or under any of the other Loan Documents for the account of
any Bank shall constitute a payment to such Bank. The Agent agrees to
distribute to each Bank not later than one Business Day after the Agent's
receipt of good funds, determined in accordance with the Agent's customary
practices, such Bank's pro rata share of payments received by the Agent for
the account of the Banks except as otherwise expressly provided herein or
in any of the other Loan Documents. In the event that the Agent fails to
distribute such amounts within one Business Day as provided above, the
Agent shall pay interest on such amount at a rate per annum equal to the
Federal Funds Effective Rate from time to time in effect.
(b) If in the opinion of the Agent the distribution of any
amount received by it in such capacity hereunder, under the Notes or under
any of the other Loan Documents might involve it in liability, it may
refrain from making distribution until its right to make distribution shall
have been adjudicated by a court of competent jurisdiction. If a court of
competent jurisdiction shall adjudge that any amount received and
distributed by the Agent is to be repaid, each Person to whom any such
distribution shall have been made shall either repay to the Agent its
proportionate share of the amount so adjudged to be repaid or shall pay
over the same in such manner and to such Persons as shall be determined by
such court.
(c) Notwithstanding anything to the contrary contained in
this Agreement or any of the other Loan Documents, any Bank that fails (i)
to make available to the Agent its pro rata share of any Loan or (ii) to
comply with the provisions of Section 13 with respect to making
dispositions and arrangements with the other Banks, where such Bank's share
of any payment received, whether by setoff or otherwise, is in excess of
its pro rata share of such payments due and payable to all of the Banks, in
each case as, when and to the full extent required by the provisions of
this Agreement, shall be deemed delinquent (a "Delinquent Bank") and shall
be deemed a Delinquent Bank until such time as such delinquency is
satisfied. A Delinquent Bank shall be deemed to have assigned any and all
payments due to it from the Borrowers and the Guarantors, whether on
account of outstanding Loans, interest, fees or otherwise, to the remaining
nondelinquent Banks for application to, and reduction of, their respective
pro rata shares of all outstanding Loans in accordance with the terms of
this Agreement. The Delinquent Bank hereby authorizes the Agent to
distribute such payments to the nondelinquent Banks in proportion to their
respective pro rata shares of all outstanding Loans in accordance with the
terms of this Agreement. A Delinquent Bank shall be deemed to have
satisfied in full a delinquency when and if, as a result of application of
the assigned payments to all outstanding Loans of the nondelinquent Banks
or as a result of other payments by the Delinquent Banks to the
nondelinquent Banks, the Banks' respective pro rata shares of all
outstanding Loans have returned to those in effect immediately prior to
such delinquency and without giving effect to the nonpayment causing such
delinquency.
Section 14.6. Holders of Notes. Subject to the terms of
Article 18, the Agent may deem and treat the payee of any Note as the
absolute owner or purchaser thereof for all purposes hereof until it shall
have been furnished in writing with a different name by such payee or by a
subsequent holder, assignee or transferee.
Section 14.7. Indemnity. The Banks ratably agree hereby to
indemnify and hold harmless the Agent from and against any and all claims,
actions and suits (whether groundless or otherwise), losses, damages,
costs, expenses (including any expenses for which the Agent has not been
reimbursed by the Borrowers as required by Section 15), and liabilities of
every nature and character arising out of or related to this Agreement, the
Notes or any of the other Loan Documents or the transactions contemplated
or evidenced hereby or thereby, or the Agent's actions taken hereunder or
thereunder, except to the extent that any of the same shall be directly
caused by the Agent's willful misconduct or gross negligence.
Section 14.8. Agent as Bank. In its individual capacity, BKB
shall have the same obligations and the same rights, powers and privileges
in respect to its Commitment and the Loans made by it, and as the holder of
any of the Notes as it would have were it not also the Agent.
Section 14.9. Resignation. Subject to the terms of Section
18.1, the Agent may resign at any time by giving 30 calendar days' prior
written notice thereof to the Banks and the Borrowers; provided, however,
that unless a Default or Event of Default shall have occurred and be
continuing, no such resignation shall be permitted without Borrowers'
consent, such consent not to be unreasonably conditioned, withheld or
delayed. Upon any such resignation, the Majority Banks, subject to the
terms of Section 18.1, shall have the right to appoint as a successor
Agent any Bank or any bank whose senior debt obligations are rated not less
than "A" or its equivalent by Moody's Investors Service, Inc. or not less
than "A" or its equivalent by Standard & Poor's corporation and which has a
net worth of not less than $500,000,000. Any such resignation shall be
effective upon appointment and acceptance of a successor agent selected by
the Majority Banks. If no successor Agent shall have been appointed and
shall have accepted such appointment as provided in Section 18.1, then the
retiring Agent may, on behalf of the Banks, appoint a successor Agent,
which shall be a bank whose debt obligations are rated not less than "A" or
its equivalent by Moody's Investors Service, Inc. or not less than "A" or
its equivalent by Standard & Poor's Corporation and which has a net worth
of not less than $500,000,000. Unless a Default or Event of Default shall
have occurred and be continuing, such successor Agent shall be reasonably
acceptable to the Borrowers. Upon the acceptance of any appointment as
Agent hereunder by a successor Agent, such successor Agent shall thereupon
succeed to and become vested with all the rights, powers, privileges and
duties of the retiring or removed Agent, and the retiring Agent shall be
discharged from its duties and obligations hereunder as Agent. After any
retiring Agent's resignation, the provisions of this Agreement and the
other Loan Documents shall continue in effect for its benefit in respect of
any actions taken or omitted to be taken by it while it was acting as
Agent.
Section 14.10. Duties in the Case of Enforcement. In case one
or more Events of Default have occurred and shall be continuing, and
whether or not acceleration of the Obligations shall have occurred, the
Agent shall, if (a) so requested by the Majority Banks and (b) the Banks
have provided to the Agent such additional indemnities and assurances
against expenses and liabilities as the Agent may reasonably request,
proceed to exercise all or any legal and equitable and other rights or
remedies as it may have. The Majority Banks may direct the Agent in
writing as to the method and the extent of any such exercise, the Banks
hereby agreeing to indemnify and hold the Agent harmless from all
liabilities incurred in respect of all actions taken or omitted in
accordance with such directions, provided that the Agent need not comply
with any such direction to the extent that the Agent reasonably believes
the Agent's compliance with such direction to be unlawful or commercially
unreasonable in any applicable jurisdiction.
Section 15. EXPENSES
The Borrowers agree to pay (a) the reasonable costs of producing
and reproducing this Agreement, the other Loan Documents and the other
agreements and instruments mentioned herein, (b) any taxes (including any
interest and penalties in respect thereto) payable by the Agent or any of
the Banks, including any recording, mortgage, documentary or intangibles
taxes in connection with the Security Deeds and other Loan Documents, or
other taxes payable on or with respect to the transactions contemplated by
this Agreement (other than taxes based upon the Agent's or any Bank's gross
or net income, except that the Agent and the Banks shall be entitled to
indemnification for any and all amounts paid by them in respect of taxes
based on income or other taxes assessed by any State in which Mortgaged
Property or other Collateral is located, such indemnification to be limited
to taxes due solely on account of the granting of Collateral under the
Security Documents and to be net of any credit allowed to the indemnified
party from any other State on account of the payment or incurrence of such
tax by such indemnified party), including any such taxes payable by the
Agent or any of the Banks after the Closing Date (the Borrowers hereby
agreeing to indemnify the Agent and each Bank with respect thereto), (c)
all title insurance premiums, appraisal fees, engineer's fees, charges for
commercial finance exams and engineering and environmental reviews
(provided that to the extent permitted under applicable laws and
regulations, the Banks shall rely upon reports of engineering and
environmental consultants previously retained by Borrowers so that
duplication of consultant's expenses is avoided where possible) and the
reasonable fees, expenses and disbursements of the counsel to the Agent,
counsel for BKB and MSSF and any local counsel to the Agent incurred in
connection with the performance of due diligence and the preparation,
negotiation, administration or interpretation of the Loan Documents and
other instruments mentioned herein, each closing hereunder, and amendments,
modifications, approvals, consents or waivers hereto or hereunder, (d) the
reasonable fees, expenses and disbursements of the Agent and the Banks
incurred by the Agent and the Banks in connection with the performance of
due diligence, underwriting analysis, credit reviews and the preparation,
negotiation, administration or interpretation of the Loan Documents and
other instruments mentioned herein, credit and collateral evaluations, and
the making of each advance hereunder, (e) all reasonable out-of-pocket
expenses (including reasonable attorneys' fees and costs, which attorneys
may be employees of any Bank or the Agent and the fees and costs of
appraisers, engineers, investment bankers or other experts retained by any
Bank or the Agent) incurred by any Bank or the Agent in connection with
(i) the enforcement of or preservation of rights under any of the Loan
Documents against any of the Borrowers, any of the General Partners or any
Guarantor or the administration thereof after the occurrence of a Default
or Event of Default, (ii) the sale of, collection from or other realization
upon any of the Collateral, (iii) the failure of any of the Borrowers, any
of the General Partners or any Guarantor to perform or observe any
provision of the Loan Documents, and (iv) any litigation, proceeding or
dispute whether arising hereunder or otherwise, in any way related to the
Agent's or any of the Bank's relationship with any of the Borrowers, any of
the General Partners or any Guarantor, (f) all reasonable fees, expenses
and disbursements of the Agent incurred in connection with UCC searches,
UCC filings, title rundowns, title searches or mortgage recordings, and
(g) all reasonable fees, expenses and disbursements (including reasonable
attorneys' fees and costs) which may be incurred by BKB and MSSF in
connection with each and every assignment of interests in the Loans
pursuant to Section 18.1 or sale of participations pursuant to Section
18.4 occurring within twelve (12) months of the Closing Date. The
covenants of this Section 15 shall survive payment or satisfaction of
payment of amounts owing with respect to the Notes.
Section 16. INDEMNIFICATION
The Borrowers agree to indemnify and hold harmless the Agent and
the Banks and each director, officer, employee, agent and Person who
controls the Agent or any Bank from and against any and all claims, actions
and suits, whether groundless or otherwise, and from and against any and
all liabilities, losses, damages and expenses of every nature and character
arising out of or relating to this Agreement or any of the other Loan
Documents or the transactions contemplated hereby and thereby including,
without limitation, (a) any leasing fees and any brokerage, finders or
similar fees asserted against any Person indemnified under this Section 16
based upon any agreement, arrangement or action made or taken, or alleged
to have been made or taken, by any of the Borrowers, any of the General
Partners, any Guarantor or any of the Controlled Subsidiaries of a
Borrower, (b) any condition, use, operation or occupancy of the Mortgaged
Property or other Collateral first occurring prior to the Agent or the
Banks or their nominee acquiring title to the Mortgaged Property or other
Collateral by the exercise of its foreclosure remedies or by deed in lieu
of foreclosure, (c) any actual or proposed use by a Borrower of the
proceeds of any of the Loans, (d) any actual or alleged infringement of any
patent, copyright, trademark, service mark or similar right of any of the
Borrowers, any of the General Partners, any Guarantor or any of the
Controlled Subsidiaries of a Borrower comprised in the Collateral, (e) the
Borrowers and the Guarantors entering into or performing this Agreement or
any of the other Loan Documents, (f) any actual or alleged violation of any
law, ordinance, code, order, rule, regulation, approval, consent, permit or
license relating to the Mortgaged Property or the other Collateral which
violation first occurred prior to the Agent or the Banks or their nominee
acquiring title to the Mortgaged Property or applicable Collateral by the
exercise of its foreclosure remedies or by deed in lieu of foreclosure, or
(g) with respect to each of the Borrowers, each of the General Partners,
each of the Guarantors and the Controlled Subsidiaries of each Borrower and
their respective properties and assets, the violation of any Environmental
Law, the Release or threatened Release of any Hazardous Substances or any
action, suit, proceeding or investigation brought or threatened with
respect to any Hazardous Substances (including, but not limited to claims
with respect to wrongful death, personal injury or damage to property),
first occurring prior to the Agent or the Banks or their nominee acquiring
title to the Mortgaged Property by the exercise of its foreclosure remedies
or by deed in lieu of foreclosure, in each case including, without
limitation, the reasonable fees and disbursements of counsel and allocated
costs of internal counsel incurred in connection with any such
investigation, litigation or other proceeding; provided, however, that the
Borrowers shall not be obligated under this Section 16 to indemnify any
Person for liabilities arising from such Person's own gross negligence or
willful misconduct. In litigation, or the preparation therefor, the Banks
and the Agent shall be entitled to select a single law firm as their own
counsel and, in addition to the foregoing indemnity, the Borrowers agree to
pay promptly the reasonable fees and expenses of such counsel. If, and to
the extent that the obligations of the Borrowers under this Section 16 are
unenforceable for any reason, the Borrowers hereby agree to make the
maximum contribution to the payment in satisfaction of such obligations
which is permissible under applicable law. The provisions of this Section
16 shall survive the repayment of the Loans and the termination of the
obligations of the Banks hereunder.
Section 17. SURVIVAL OF COVENANTS, ETC
All covenants, agreements, representations and warranties made
herein, in the Notes, in any of the other Loan Documents or in any
documents or other papers delivered by or on behalf of any of the
Borrowers, any of the General Partners, any Guarantor or any of the
Controlled Subsidiaries of a Borrower pursuant hereto or thereto shall be
deemed to have been relied upon by the Banks and the Agent, notwithstanding
any investigation heretofore or hereafter made by any of them, and shall
survive the making by the Banks of any of the Loans, as herein
contemplated, and shall continue in full force and effect so long as any
amount due under this Agreement or the Notes or any of the other Loan
Documents remains outstanding or any Bank has any obligation to make any
Loans. The indemnification obligations of the Borrowers provided herein
and the other Loan Documents shall survive the full repayment of amounts
due and the termination of the obligations of the Banks hereunder and
thereunder to the extent provided herein and therein. All statements
contained in any certificate or other paper delivered to any Bank or the
Agent at any time by or on behalf of any of the Borrowers, any of the
General Partners, any Guarantor or any of the Controlled Subsidiaries of a
Borrower pursuant hereto or in connection with the transactions
contemplated hereby shall constitute representations and warranties by the
Borrowers, the General Partners, the Guarantors or such Controlled
Subsidiary hereunder.
Section 18. ASSIGNMENT AND PARTICIPATION
Section 18.1. Conditions to Assignment by Banks. Except as
provided herein, each Bank may assign to one or more banks or other
entities all or a portion of its interests, rights and obligations under
this Agreement (including all or a portion of its Commitment Percentage and
Commitment and the same portion of the Loans at the time owing to it, and
the Notes held by it); provided that (a) each such assignment shall be of a
constant, and not a varying, percentage of all the assigning Bank's rights
and obligations under this Agreement, (b) the parties to such assignment
shall execute and deliver to the Agent, for recording in the Register (as
hereinafter defined), a notice of such assignment, together with any Notes
subject to such assignment, (c) in no event shall any voting, consent or
approval rights of a Bank be assigned to any Person controlling, controlled
by or under common control with, or which is not otherwise free from
influence or control by, any of the Borrowers, any of the General Partners
or any Guarantor, which rights shall instead be allocated pro rata among
the other remaining Banks, (d) such assignee of a portion of the Revolving
Credit Loans shall have a net worth or unfunded capital commitments as of
the date of such assignment of not less than $200,000,000.00 unless such
requirement is waived in writing by the Borrowers and the Agent, (e) such
assignment is subject to the terms of any intercreditor agreement among the
Banks and the Agent, (f) such assignee shall acquire an interest in the
Revolving Credit Loans of not less than $5,000,000.00 or in the Secured
Term Loans or Second Secured Term Loans of not less than $5,000,000.00, as
applicable, and (g) such assignment shall be of an equal percentage of such
Assignee's Commercial Company Revolving Credit Commitment and Land Company
Revolving Credit Commitment, in the event an interest in the Revolving
Credit Loans is assigned, an equal percentage of such Assignee's Commercial
Company Secured Term Loan Commitment and Land Company Secured Term Loan
Commitment, in the event an interest in the Secured Term Loans is assigned,
and an equal percentage of such Assignee's Commercial Company Second
Secured Term Loan Commitment and Land Company Second Secured Term Loan
Commitment, in the event an interest in the Second Secured Term Loans is
assigned; provided, however, that an assigning Bank shall notify the
Borrowers of the identity of any prospective assignees prior to
consummating such assignment and allow the Borrowers to raise any matters
relating to such prospective assignee prior to consummating such
assignment; provided further that Borrowers' consent shall not be a
condition to such assignment. The Banks shall endeavor to assign
Commitments only to Banks that are not subject to withholding as provided
in Section 4.4(b). Upon such execution, delivery, acceptance and
recording, of such notice of assignment, (i) the assignee thereunder shall
be a party hereto and all other Loan Documents executed by the Banks and,
to the extent provided in such assignment, have the rights and obligations
of a Bank hereunder, (ii) the assigning Bank shall, to the extent provided
in such assignment and upon payment to the Agent of the registration fee
referred to in Section 18.2, be released from its obligations under this
Agreement, and (iii) the Agent may unilaterally amend Schedule 1.1 to
reflect such assignment. In connection with each assignment, the assignee
shall represent and warrant to the Agent, the assignor and each other Bank
as to whether such assignee is controlling, controlled by, under common
control with or is not otherwise free from influence or control by, any of
the Borrowers, the General Partners and the Guarantors. BKB shall retain
an aggregate Commitment (whether of the Revolving Credit Loans, the Secured
Term Loans, the Second Secured Term Loans or any combination thereof) of
not less than $20,000,000.00, provided that such covenant shall be of no
further force or effect in the event that an Event of Default shall have
occurred and be continuing. Notwithstanding anything herein to the
contrary, in the event that BKB shall at any time hold an aggregate
Commitment (whether of the Revolving Credit Loans, the Secured Term Loans,
the Second Secured Term Loans or any combination thereof) of less than
$35,000,000.00, then BKB shall first provide written notice thereof to the
Banks and offer to resign as Agent, which offer must be accepted in writing
by the Majority Banks within fifteen (15) days of delivery of such notice
by BKB (for the purposes of this sentence only BKB shall be deemed to have
accepted its own offer to resign). A failure to accept such offer within
such period shall be deemed a rejection of such offer. In the event that
the Majority Banks have accepted BKB's offer to resign, BKB shall
thereafter resign as Agent as provided in this Agreement in the event that
a successor Agent from among the Banks is selected by the Majority Banks
and approved by the Borrowers to the extent provided in Section 14.9 and
such successor accepts such appointment within fifteen (15) calendar days
following receipt of such notice from BKB. Each Agent, as a condition to
any resignation of its position as Agent, shall be required to provide
written notice thereof to the other Banks and provide the Majority Banks an
opportunity to designate a successor Agent within thirty (30) calendar days
following receipt of such notice in the same manner as provided above.
Upon any change in the Agent under this Agreement, the resigning or removed
Agent shall execute such assignments of and amendments to the Loan
Documents as may be necessary to substitute the successor Agent for the
resigning or removed Agent.
Section 18.2. Register. The Agent shall maintain a copy of
each assignment delivered to it and a register or similar list (the
"Register") for the recordation of the names and addresses of the Banks and
the Commitment Percentages of, and principal amount of the Loans owing to
the Banks from time to time. The entries in the Register shall be
conclusive, in the absence of manifest error, and the Borrowers, the Agent
and the Banks may treat each Person whose name is recorded in the Register
as a Bank hereunder for all purposes of this Agreement. The Register shall
be available for inspection by the Borrowers and the Banks at any
reasonable time and from time to time upon reasonable prior notice. Upon
each such recordation, the assigning Bank agrees to pay to the Agent a
registration fee in the sum of $2,000.
Section 18.3. New Notes. Upon its receipt of an assignment
executed by the parties to such assignment, together with each Note subject
to such assignment, the Agent shall (a) record the information contained
therein in the Register, and (b) give prompt notice thereof to the
Borrowers and the Banks (other than the assigning Bank). Within five
Business Days after receipt of such notice, the Borrowers, at their own
expense, shall execute and deliver to the Agent, in exchange for each
surrendered Note, a new Note to the order of such assignee in an amount
equal to the amount assumed by such assignee pursuant to such assignment
and, if the assigning Bank has retained some portion of its obligations
hereunder, a new Note to the order of the assigning Bank in an amount equal
to the amount retained by it hereunder, and shall cause the Guarantors to
deliver to the Agent an acknowledgment in form and substance satisfactory
to the Agent to the effect that the Guaranty extends to and is applicable
to each new Note. Such new Notes shall provide that they are replacements
for the surrendered Notes, shall be in an aggregate principal amount equal
to the aggregate principal amount of the surrendered Notes, shall be dated
the effective date of such assignment and shall otherwise be in
substantially the form of the assigned Notes. The surrendered Notes shall
be canceled and returned to the Borrowers.
Section 18.4. Participations. Each Bank may sell
participations to one or more banks or other entities in all or a portion
of such Bank's rights and obligations under this Agreement and the other
Loan Documents; provided that (a) any such sale or participation shall not
affect the rights and duties of the selling Bank hereunder to the
Borrowers, (b) such participation shall not entitle such participant to any
rights or privileges under this Agreement or the Loan Documents, including,
without limitation, the right to approve waivers, amendments or
modifications, (c) such participant shall have no direct rights against any
of the Borrowers, any of the General Partners or any Guarantor except the
rights granted to the Banks pursuant to Section 13, (d) such sale is
effected in accordance with all applicable laws, and (e) such participant
shall not be a Person controlling, controlled by or under common control
with, or which is not otherwise free from influence or control by, any of
the Borrowers, any of the General Partners or any Guarantor.
Section 18.5. Pledge by Bank. Any Bank may at any time pledge
all or any portion of its interest and rights under this Agreement
(including all or any portion of its Note) to any of the twelve Federal
Reserve Banks organized under Section 4 of the Federal Reserve Act, 12
U.S.C. Section 341 or to any Federal Home Loan Bank. No such pledge or
the enforcement thereof shall release the pledgor Bank from its obligations
hereunder or under any of the other Loan Documents.
Section 18.6. No Assignment by Borrowers. Neither of the
Borrowers shall assign or transfer any of its rights or obligations under
any of the Loan Documents without the prior written consent of each of the
Banks.
Section 18.7. Cooperation; Disclosure. The Borrowers agree to
promptly cooperate with any Bank in connection with any proposed assignment
or participation of all or any portion of its Commitment. The Borrowers
agree that in addition to disclosures made in accordance with standard
banking practices any Bank may disclose information obtained by such Bank
pursuant to this Agreement to assignees or participants and potential
assignees or participants hereunder, provided that any potential assignee
or participant hereunder shall execute and deliver to Agent and the
Borrowers a confidentiality agreement in substantially the form of Exhibit
G hereto as a condition to the receipt of any financial statements or other
reports delivered by the Borrowers to the Agent hereunder.
Section 19. NOTICES
Each notice, demand, election or request provided for or
permitted to be given pursuant to this Agreement (hereinafter in this
Section 19 referred to as "Notice"), but specifically excluding to the
maximum extent permitted by law any notices of the institution or
commencement of foreclosure proceedings, must be in writing and shall be
deemed to have been properly given or served by personal delivery or by
sending same by overnight courier or by depositing same in the United
States Mail, postpaid and registered or certified, return receipt
requested, or as expressly permitted herein, by telegraph, telecopy,
telefax or telex, and addressed as follows:
If to the Agent or any Bank, at the address set forth on the
signature page for the Agent or such Bank; and
If to the Borrowers:
The Woodlands Commercial Properties Company, L.P.
777 Main Street, Suite 2100
Fort Worth, Texas 76102-5325
Attn: Dallas Lucas
and to: The Woodlands Land Development Company, L.P.
777 Main Street, Suite 2100
Fort Worth, Texas 76102-5325
Attn: Dallas Lucas
with a copy to:
The Woodlands Commercial Properties Company, L.P.
The Woodlands Land Development Company, L.P.
2201 Timberloch Place
The Woodlands, Texas 77380
Attn: Michael Richmond
George Lake
The Morgan Stanley Real Estate
Fund II, L.P.
1585 Broadway
New York, New York 10036
Attn: William Hosler
and to each other Bank which may hereafter become a party to this Agreement
at such address as may be designated by such Bank. Each Notice shall be
effective upon being personally delivered or upon being sent by overnight
courier or upon being deposited in the United States Mail as aforesaid.
The time period in which a response to such Notice must be given or any
action taken with respect thereto (if any), however, shall commence to run
from the date of receipt if personally delivered or sent by overnight
courier, or if so deposited in the United States Mail, the earlier of three
(3) Business Days following such deposit or the date of receipt as
disclosed on the return receipt. Rejection or other refusal to accept or
the inability to deliver because of changed address for which no notice was
given shall be deemed to be receipt of the Notice sent. By giving at least
fifteen (15) days prior Notice thereof, a Borrower, a Bank or Agent shall
have the right from time to time and at any time during the term of this
Agreement to change their respective addresses and each shall have the
right to specify as its address any other address within the United States
of America.
Section 20. RELATIONSHIP
Neither the Agent nor any Bank has any fiduciary relationship
with or fiduciary duty to any of the Borrowers arising out of or in
connection with the Agreement or the other Loan Documents or the
transactions contemplated hereunder and thereunder, and the relationship
between each Bank and each Borrower is solely that of a lender and
borrower, and nothing contained herein or in any of the other Loan
Documents shall in any manner be construed as making the parties hereto
partners, joint venturers or any other relationship other than lender and
borrower.
Section 21. GOVERNING LAW; CONSENT TO JURISDICTION AND SERVICE
THIS AGREEMENT AND EACH OF THE OTHER LOAN DOCUMENTS EXCEPT AS
OTHERWISE SPECIFICALLY PROVIDED THEREIN, ARE CONTRACTS UNDER THE LAWS OF
THE COMMONWEALTH OF MASSACHUSETTS AND SHALL FOR ALL PURPOSES BE CONSTRUED
IN ACCORDANCE WITH AND GOVERNED BY THE LAWS OF SUCH STATE (EXCLUDING THE
LAWS APPLICABLE TO CONFLICTS OR CHOICE OF LAW). THE BORROWERS AGREE THAT
ANY SUIT FOR THE ENFORCEMENT OF THIS AGREEMENT OR ANY OF THE OTHER LOAN
DOCUMENTS MAY BE BROUGHT IN THE COURTS OF THE COMMONWEALTH OF MASSACHUSETTS
OR ANY FEDERAL COURT SITTING THEREIN AND CONSENTS TO THE NONEXCLUSIVE
JURISDICTION OF SUCH COURT AND THE SERVICE OF PROCESS IN ANY SUCH SUIT
BEING MADE UPON THE BORROWERS BY MAIL AT THE ADDRESS SPECIFIED IN Section
19. THE BORROWERS HEREBY WAIVE ANY OBJECTION THAT IT MAY NOW OR HEREAFTER
HAVE TO THE VENUE OF ANY SUCH SUIT OR ANY SUCH COURT OR THAT SUCH SUIT IS
BROUGHT IN AN INCONVENIENT COURT.
Section 22. HEADINGS
The captions in this Agreement are for convenience of reference
only and shall not define or limit the provisions hereof.
Section 23. COUNTERPARTS
This Agreement and any amendment hereof may be executed in
several counterparts and by each party on a separate counterpart, each of
which when so executed and delivered shall be an original, and all of which
together shall constitute one instrument. In proving this Agreement it
shall not be necessary to produce or account for more than one such
counterpart signed by the party against whom enforcement is sought.
Section 24. ENTIRE AGREEMENT, ETC
The Loan Documents and any other documents executed in connection
herewith or therewith express the entire understanding of the parties with
respect to the transactions contemplated hereby. Neither this Agreement
nor any term hereof may be changed, waived, discharged or terminated,
except as provided in Section 27.
Section 25. WAIVER OF JURY TRIAL AND CERTAIN DAMAGE CLAIMS
EACH OF THE BORROWERS, THE AGENT AND THE BANKS HEREBY WAIVES ITS
RIGHT TO A JURY TRIAL WITH RESPECT TO ANY ACTION OR CLAIM ARISING OUT OF
ANY DISPUTE IN CONNECTION WITH THIS AGREEMENT, ANY NOTE OR ANY OF THE OTHER
LOAN DOCUMENTS, ANY RIGHTS OR OBLIGATIONS HEREUNDER OR THEREUNDER OR THE
PERFORMANCE OF SUCH RIGHTS AND OBLIGATIONS. EXCEPT TO THE EXTENT EXPRESSLY
PROHIBITED BY LAW, EACH OF THE BORROWERS HEREBY WAIVES ANY RIGHT IT MAY
HAVE TO CLAIM OR RECOVER IN ANY SUCH LITIGATION ANY SPECIAL, EXEMPLARY,
PUNITIVE OR CONSEQUENTIAL DAMAGES OR ANY DAMAGES OTHER THAN, OR IN ADDITION
TO, ACTUAL DAMAGES. EACH OF THE BORROWERS (A) CERTIFIES THAT NO
REPRESENTATIVE, AGENT OR ATTORNEY OF ANY BANK OR THE AGENT HAS REPRESENTED,
EXPRESSLY OR OTHERWISE, THAT SUCH BANK OR THE AGENT WOULD NOT, IN THE EVENT
OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVERS AND (B) ACKNOWLEDGES
THAT THE AGENT AND THE BANKS HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT
AND THE OTHER LOAN DOCUMENTS TO WHICH THEY ARE PARTIES BY, AMONG OTHER
THINGS, THE WAIVERS AND CERTIFICATIONS CONTAINED IN THIS Section 25.
Section 26. DEALINGS WITH THE BORROWERS
The Banks and their affiliates may accept deposits from, extend
credit to and generally engage in any kind of banking, trust or other
business with the each Borrower, their respective Controlled Subsidiaries
or Non-Controlled Subsidiaries or any of their affiliates regardless of the
capacity of the Bank hereunder.
Section 27. CONSENTS, AMENDMENTS, WAIVERS, ETC
Except as otherwise expressly provided in this Agreement, any
consent or approval required or permitted by this Agreement may be given,
and any term of this Agreement or of any other instrument related hereto or
mentioned herein may be amended, and the performance or observance by the
Borrowers of any terms of this Agreement or such other instrument or the
continuance of any Default or Event of Default may be waived (either
generally or in a particular instance and either retroactively or
prospectively) with, but only with, the written consent of the Agent. The
provisions of Section 14 may not be amended nor any change made in the
amount of any fee payable to the Agent without the written consent of the
Agent. The Borrowers agree to enter into such modifications or amendments
of this Agreement or the other Loan Documents as reasonably may be
requested by BKB or MSSF in connection with the assignment of Commitments
prior to the first anniversary of the Closing Date provided that no such
amendment or modification materially affects or increases any of the
obligations of the Borrowers hereunder. No waiver shall extend to or
affect any obligation not expressly waived or impair any right consequent
thereon. No course of dealing or delay or omission on the part of the
Agent or any Bank in exercising any right shall operate as a waiver thereof
or otherwise be prejudicial thereto. No notice to or demand upon the
Borrowers shall entitle the Borrowers to other or further notice or demand
in similar or other circumstances.
Section 28. SEVERABILITY
The provisions of this Agreement are severable, and if any one
clause or provision hereof shall be held invalid or unenforceable in whole
or in part in any jurisdiction, then such invalidity or unenforceability
shall affect only such clause or provision, or part thereof, in such
jurisdiction, and shall not in any manner affect such clause or provision
in any other jurisdiction, or any other clause or provision of this
Agreement in any jurisdiction.
Section 29. NO UNWRITTEN AGREEMENTS
THE WRITTEN LOAN DOCUMENTS REPRESENT THE FINAL AGREEMENT BETWEEN
THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR,
CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES. THERE ARE NO
UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.
Section 30. REPLACEMENT OF NOTES
Upon receipt of evidence reasonably satisfactory to a Borrower of
the loss, theft, destruction or mutilation of any Note, and in the case of
any such loss, theft or destruction, upon delivery of an indemnity
agreement reasonably satisfactory to such Borrower or, in the case of any
such mutilation, upon surrender and cancellation of the applicable Note,
such Borrower will execute and deliver, in lieu thereof, a replacement
Note, identical in form and substance to the applicable Note and dated as
of the date of the applicable Note and upon such execution and delivery all
references in the Loan Documents to such Note shall be deemed to refer to
such replacement Note.
Section 31. TIME OF THE ESSENCE
Time is of the essence with respect to each and every covenant,
agreement and obligation of the Borrowers under this Agreement and the
other Loan Documents.
Section 32. NONRECOURSE OBLIGATIONS
Anything contained in this Agreement or the other Loan Documents
to the contrary notwithstanding (except as provided below), Agent's and the
Banks' recourse against Borrowers for the payment and performance of all of
the Obligations of Borrowers under this Agreement or the other Loan
Documents shall be limited solely to the interest of Borrowers in the
Collateral and all of the other assets, whether now owned or hereafter
acquired, of any of the Borrowers, and no partner of any of the Borrowers
shall be personally liable for the performance of any of the Obligations;
provided, however, that (a) the foregoing limitation on the personal
liability of the General Partners described above shall not impair the
validity of any lien, pledge, security interest or other encumbrance
created by the Loan Documents, or the right of Agent to foreclose and/or
enforce any of its rights or remedies against a Guarantor in and to the
Collateral or any other assets of any Borrower or a Guarantor upon the
occurrence of an Event of Default as provided in this Agreement or the
other Loan Documents or be deemed to be a release or impairment of the
Obligations, and (b) the foregoing limitation shall not limit Agent's and
Bank's, in the case of actual fraud, misapplication or misappropriation of
insurance proceeds, condemnation proceeds, tenant security deposits, rents,
issues, profits, accounts, revenues, payments and any other funds which are
not applied in accordance with the terms of the Loan Documents, or
intentional misrepresentation committed against, or made to, the Agent or
any Bank by any of the Borrowers, any of their respective Controlled
Subsidiaries, any Guarantor or any of its members, partners, officers,
agents, employees or other person authorized or apparently authorized to
make statements or representations on behalf of such Person, from
instituting any proceeding or making any claim they may otherwise have in
respect thereof. Nothing herein shall be deemed to be a waiver of any
right which Agent may have under Section 506(a), 506(b), 1111(b) or any
other provision of the Bankruptcy Code or any successor thereto or similar
provisions under applicable state law to file a claim for the full amount
of the Obligations or to require that all the Collateral shall continue to
secure all of the Obligations in accordance with this Agreement and the
other Loan Documents. Nothing herein shall relieve, reduce or impair any
obligation of Guarantors under the Guaranty.
Section 33. JOINT AND SEVERAL LIABILITY
Each of the Borrowers covenants and agrees that each and every
covenant and obligation of any Borrower hereunder and under the other Loan
Documents shall be the joint and several obligations of each Borrower.
Section 34. ADDITIONAL AGREEMENTS CONCERNING OBLIGATIONS OF
BORROWERS
Section 34.1. Waiver of Automatic or Supplemental Stay. Each
of the Borrowers represent, warrant and covenant to the Banks and Agent
that in the event of the filing of any voluntary or involuntary petition in
bankruptcy by or against the other of the Borrowers at any time following
the execution and delivery of this Agreement, neither of the Borrowers
shall seek a supplemental stay or any other relief, whether injunctive or
otherwise, pursuant to Section 105 of the Bankruptcy Code or any other
provision of the Bankruptcy Code, to stay, interdict, condition, reduce or
inhibit the ability of the Banks or Agent to enforce any rights it has by
virtue of this Agreement, the Loan Documents, or at law or in equity, or
any other rights the Banks or Agent has, whether now or hereafter acquired,
against the other Borrower or against any property owned by such other
Borrower.
Section 34.2. Consideration. The Borrowers hereby represent
and warrant to the Banks and Agent that each of them has received good and
valuable consideration for the division of the assets described in the
Division Agreement, and the Borrowers hereby acknowledge the adequacy and
sufficiency of such consideration.
Section 34.3. Waiver of Defenses. Each of the Borrowers hereby
waives and agrees not to assert or take advantage of any defense based
upon: (a) any incapacity, lack of authority, death or disability of the
other Borrower or any other Person; (b) any failure of the Banks or Agent
to commence an action against the other Borrower or any other Person or to
file or enforce a claim against the estate (either in administration,
bankruptcy, or any other proceeding) of the other Borrower or any other
Person, whether or not demand is made upon the Banks or Agent to file or
enforce such claim; (c) any failure of the Banks or Agent to give notice of
the existence, creation or incurring of any new or additional indebtedness
or other obligation or of any action or nonaction on the part of any other
Person in connection with the Loan Documents, including the waiver of any
conditions to the making of any advance of proceeds of any Loan; (d) any
failure on the part of the Banks or Agent to ascertain the extent or nature
of the Collateral or any insurance or other rights with respect thereto, or
the liability of any party liable for the Loan Documents or the obligations
evidenced or secured thereby, or any failure on the part of the Banks or
Agent to disclose to the Borrowers any facts any of them may now or
hereafter know regarding the Borrowers, the Collateral, or such other
parties; (e) except as specifically required in the Loan Documents, any
notice of intention to accelerate any of the Obligations or any notice of
acceleration of the Obligations; (f) any lack of acceptance or notice of
acceptance of this Agreement by Banks or Agent; (g) except as specifically
required in the Loan Documents, any lack of presentment, demand, protest,
or notice of demand, protest or nonpayment with respect to any indebtedness
or obligations under any of the Loan Documents; (h) any lack of notice of
disposition or of manner of disposition of any Collateral; (i) except as
specifically required in the Loan Documents, any lack of other notices to
which the Borrowers, or either of them, might otherwise be entitled; (j)
failure to properly record any document or any other lack of due diligence
by the Banks or Agent in creating or perfecting a security interest in or
collection, protection or realization upon any Collateral or in obtaining
reimbursement or performance from any person or entity now or hereafter
liable for the Loan Documents or any obligation secured thereby; (k) any
invalidity or irregularity, in whole or in part, of any one or more of the
Loan Documents; (l) the inaccuracy of any representation or other provision
contained in any Loan Document; (m) any sale or assignment of the Loan
Documents, in whole or in part; (n) any sale or assignment by any of the
Borrowers of the Collateral, or any portion thereof, whether or not
consented to by the Banks or Agent; and (o) any lack of commercial
reasonableness in dealing with any of the Collateral now or hereafter owned
by the other of the Borrowers.
Section 34.4. Waiver. Each of the Borrowers waives, to the
fullest extent that each may lawfully so do, the benefit of all
appraisement, valuation, stay, extension, homestead, exemption and
redemption laws which such Person may claim or seek to take advantage of in
order to prevent or hinder the enforcement of any of the Loan Documents or
the exercise by Banks or Agent of any of their respective remedies under
the Loan Documents and, to the fullest extent that the Borrowers may
lawfully so do, such Person waives any and all right to have the assets
comprised in the security intended to be created by the Security Documents
(including, without limitation, those assets owned by the other of the
Borrowers) marshaled upon any foreclosure of the lien created by such
Security Documents. Each of the Borrowers further agrees that the Banks
and Agent shall be entitled to exercise their respective rights and
remedies under the Loan Documents or at law or in equity in such order as
they may elect. Without limiting the foregoing, each of the Borrowers
further agrees that upon the occurrence of an Event of Default, the Banks
and Agent may exercise any of such rights and remedies without notice to
either of the Borrowers except as required by law or the Loan Documents and
agrees that neither the Banks nor Agent shall be required to proceed
against the other of the Borrowers or any other person or to proceed
against or to exhaust any other security held by the Banks or Agent at any
time or to pursue any other remedy in Bank's or Agent's power or under any
of the Loan Documents before proceeding against a Borrower or its assets
under the Loan Documents.
Section 34.5. Subordination. Each of the Borrowers hereby
expressly waives any right of contribution from or indemnity against the
other, whether at law or in equity, arising from any payments made by such
Person pursuant to the terms of this Agreement or the Loan Documents, and
each of the Borrowers acknowledges that it has no right whatsoever to
proceed against the other for reimbursement of any such payments. In
connection with the foregoing, each of the Borrowers expressly waives any
and all rights of subrogation to the Banks or Agent against the other of
the Borrowers, and each of the Borrowers hereby waives any rights to
enforce any remedy which the Banks or Agent may have against the other of
the Borrowers and any rights to participate in any Collateral or any other
assets of the other Borrower. Notwithstanding the foregoing, the Borrowers
shall be entitled to the rights and benefits set forth in the Contribution
Agreement and the Funding Agreement following the approval of such
agreement by the Agent. In addition to and without in any way limiting the
foregoing, each of the Borrowers hereby subordinates any and all
indebtedness it may now or hereafter owe to such other Borrower to all
indebtedness of the Borrowers to the Banks and Agent, and agrees with the
Banks and Agent that neither of the Borrowers shall claim any offset or
other reduction of such Borrower's obligations hereunder because of any
such indebtedness and shall not take any action to obtain any of the
Collateral or any other assets of the other Borrower.
[Remainder of page intentionally left blank]<PAGE>
IN WITNESS WHEREOF, the undersigned have duly executed this
Agreement as a sealed instrument the date first set forth above.
THE WOODLANDS COMMERCIAL PROPERTIES COMPANY, L.P.,
a Texas limited partnership
By: CresWood Development, L.L.C., a Delaware
limited liability company, its authorized
general partner
By: Crescent Real Estate Equities Limited
Partnership, a Delaware limited
partnership, its sole member
By: Crescent Real Estate Equities, Ltd.,
a Delaware corporation, its general
partner
By:/s/ Jeffrey L. Stevens
---------------------------------------
Name: Jeffrey L. Stevens
Title: President
[CORPORATE SEAL]
THE WOODLANDS LAND DEVELOPMENT COMPANY, L.P., a
Texas limited partnership
By: The Woodlands Land Company, Inc., a Texas
corporation, its authorized general partner
By:/s/Bruce A. Picker
------------------------------------------
Name: Bruce A. Picker
Title: VP and Treasurer
[CORPORATE SEAL]
<PAGE>
BANKBOSTON, N.A., individually and as Agent
By:/s/ Kevin C. Hake
----------------------------------------------
Its:-----------------------------------------
BankBoston, N.A.
115 Perimeter Center Place, N.E.
Suite 500
Atlanta, Georgia 30346
Attn: Kevin C. Hake
Facsimile: (404) 390-8434
and
BankBoston, N.A.
100 Federal Street
Boston, Massachusetts 02110
Attn: Real Estate Division
Facsimile: (617) 434-7108
<PAGE>
MORGAN STANLEY SENIOR FUNDING, INC.,
individually and as Document Agent
By:/s/ Christopher A. Pucill
-----------------------------------------
Its:----------------------------------------
Morgan Stanley Senior Funding, Inc.
1585 Broadway, 10th Floor
New York, New York 10036
Attn: Mr. Jim Morgan
Faxsimile: (212) 761-0592
<PAGE>
BANKTEXAS, N.A.
By:/s/ Robert Weakly
------------------------------------------
Its:-----------------------------------------
BankTEXAS, N.A.
8820 Westheimer
Houston, Texas 77063
Attn: Mr. Robert Weakly
Facsimile:
---------------
<PAGE>
BANK OF SCOTLAND
By:/s/ Annie Chin Tat
------------------------------------------
Its:----------------------------------------
Bank of Scotland
New York Branch
565 Fifth Avenue
New York, New York 10017
Attn: Annie Chin Tat
Facsimile: 212/557-9460
<PAGE>
COMERICA BANK-TEXAS
By:/s/ Michael McAffee
---------------------------------------
Its:--------------------------------------
Comerica Bank-Texas
One Sugar Creek Center Blvd
2nd Floor
Sugarland, Texas 77478
Attn: Michael McAffee
Facsimile:
-----------------
<PAGE>
COMPASS BANK
By:/s/ John Reichenbach
----------------------------------------------
Its:---------------------------------------------
Compass Bank
8080 North Central Expressway, Suite 370
Dallas, Texas 75206
Attn: John Reichenbach
Facsimile: 214/890-8668
<PAGE>
FIRST AMERICAN BANK TEXAS, SSB
By:/s/ James R. Reynolds
----------------------------------------------
Its:---------------------------------------------
First American Bank Texas, SSB
14651 Dallas Parkway
Suite 400
Dallas, Texas 75240
Attn: Jeffrey C. Schultz
Facsimile: 972/419-3308
<PAGE>
KREDIETBANK N.V.
By:/s/ Robert Smauffer
---------------------------------------------
Its:--------------------------------------------
By:/s/ Michael Curran
---------------------------------------------
Its:--------------------------------------------
Kredietbank N.V.
125 West 55th Street
10th Floor
New York, New York 10019
Attn: Frank Bayne
Facsimile: 212/541-0793
<PAGE>
NEW YORK LIFE INSURANCE COMPANY
By:/s/ Patricia Hudson
---------------------------------------------
Its:--------------------------------------------
New York Life Insurance Company
51 Madison Avenue
Room 907
New York, New York 10010
Attn: Kevin Smith
Facsimile: 212/576-7528
<PAGE>
WELLSFORD REAL PROPERTIES, INC.
By:/s/ Edward Lowenthal
-----------------------------------------------
Its: President
Wellsford Real Properties, Inc.
610 Fifth Avenue
7th Floor
New York, New York 10020
Attn: Greg Hughes
Facsimile: 212/333-2323
<PAGE>
KEYPORT LIFE INSURANCE COMPANY
By:/s/ Daniel T.H. Yin
---------------------------------------------
Its:--------------------------------------------
Keyport Life Insurance Company
c/o Chancellor LGT Senior Secured
Management, Inc.
1166 Avenue of the Americas
New York, New York 10036
Attn: Gregory L. Smith
Facsimile: 212/278-9619
<PAGE>
STRATA FUNDING LTD.
By:/s/ Gregory L. Smith
------------------------------------------------
Its:----------------------------------------------
Strata Funding Ltd.
c/o Chancellor LGT Senior Secured
Management, Inc.
1166 Avenue of the Americas
New York, New York 10036
Attn: Gregory L. Smith
Facsimile: 212/278-9619
<PAGE>
EXHIBIT A-1
FORM OF COMMERCIAL COMPANY REVOLVING CREDIT NOTE
$--------------- ---------------, 1997
FOR VALUE RECEIVED, the undersigned THE WOODLANDS COMMERCIAL
PROPERTIES COMPANY. L.P., a Texas limited partnership, and THE WOODLANDS
LAND DEVELOPMENT COMPANY, L.P., a Texas limited partnership, hereby jointly
and severally promise to pay to -------------------------------------------
- -----------------------------------------------------------or order, in
accordance with the terms of that certain First Amended and Restated Master
Credit Agreement dated December ---, 1997, effective as of July 31, 1997
(the "Credit Agreement"), as from time to time in effect, among the
undersigned, BankBoston, N.A., for itself and as Agent, Morgan Stanley
Senior Funding, Inc. and such other Banks as may be from time to time named
therein, to the extent not sooner paid, on or before the Maturity Date, the
principal sum of -------------------------------------------------- DOLLARS
($--------------), or such amount as may be advanced by the payee hereof to
Commercial Company under the Credit Agreement as Commercial Company
Revolving Credit Loans with daily interest from the date hereof, computed
as provided in the Credit Agreement, on the principal amount hereof from
time to time unpaid, at a rate per annum on each portion of the principal
amount which shall at all times be equal to the rate of interest applicable
to such portion in accordance with the Credit Agreement, and with interest
on overdue principal and, to the extent permitted by applicable law, on
overdue installments of interest and late charges at the rates provided in
the Credit Agreement. Interest shall be payable on the dates specified in
the Credit Agreement, except that all accrued interest shall be paid at the
stated or accelerated maturity hereof or upon the prepayment in full
hereof. Capitalized terms used herein and not otherwise defined herein
shall have the meanings set forth in the Credit Agreement.
Payments hereunder shall be made to BankBoston, N.A., as Agent for the
payee hereof, 100 Federal Street, Boston, Massachusetts 02110.
This Note is one of one or more Commercial Company Revolving Credit
Notes evidencing borrowings by Commercial Company under and is entitled to
the benefits and subject to the provisions of the Credit Agreement. The
principal of this Note may be due and payable in whole or in part prior to
the maturity date stated above and is subject to mandatory prepayment in
the amounts and under the circumstances set forth in the Credit Agreement,
and may be prepaid in whole or from time to time in part, all as set forth
in the Credit Agreement.
Notwithstanding anything in this Note to the contrary, all agreements
between the Borrowers and the Banks and the Agent, whether now existing or
hereafter arising and whether written or oral, are hereby limited so that
in no contingency, whether by reason of acceleration of the maturity of any
of the Obligations or otherwise, shall the interest contracted for, charged
or received by the Banks exceed the maximum amount permissible under
applicable law. If, from any circumstance whatsoever, interest would
otherwise be payable to the Banks in excess of the maximum lawful amount,
the interest payable to the Banks shall be reduced to the maximum amount
permitted under applicable law; and if from any circumstance the Banks
shall ever receive anything of value deemed interest by applicable law in
excess of the maximum lawful amount, an amount equal to any excessive
interest shall be applied to the reduction of the principal balance of the
Obligations and to the payment of interest or, if such excessive interest
exceeds the unpaid balance of principal of the Obligations, such excess
shall be refunded to the undersigned Borrower. All interest paid or agreed
to be paid to the Banks shall, to the extent permitted by applicable law,
be amortized, prorated, allocated and spread throughout the full period
until payment in full of the principal of the Obligations (including the
period of any renewal or extension thereof) so that the interest thereon
for such full period shall not exceed the maximum amount permitted by
applicable law. This paragraph shall control all agreements between the
Borrowers and the Banks and the Agent.
In case an Event of Default shall occur, the entire principal amount
of this Note may become or be declared due and payable in the manner and
with the effect provided in said Credit Agreement.
This Note shall be governed by and construed in accordance with the
laws of the Commonwealth of Massachusetts (without giving effect to the
conflict of laws rules of any jurisdiction).
The undersigned maker and all guarantors and endorsers, hereby waive
presentment, demand, notice, protest, notice of intention to accelerate the
indebtedness evidenced hereby, notice of acceleration of the indebtedness
evidenced hereby and all other demands and notices in connection with the
delivery, acceptance, performance and enforcement of this Note, except as
specifically otherwise provided in the Credit Agreement, and assent to
extensions of time of payment or forbearance or other indulgence without
notice.
This Note is a note executed in restatement of that certain Revolving
Credit Note from the undersigned to ----------------------------------,
dated July 31, 1997 in the face principal amount of $---------------------.
[Remainder of page intentionally left blank]<PAGE>
IN WITNESS WHEREOF the undersigned have by their duly authorized
officers, executed this Note under seal as of the day and year first above
written.
THE WOODLANDS COMMERCIAL PROPERTIES COMPANY, L.P.,
a Texas limited partnership
By: CresWood Development, L.L.C., a Delaware
limited liability company, its authorized
general partner
By: Crescent Real Estate Equities Limited
Partnership, a Delaware limited
partnership, its sole member
By: Crescent Real Estate Equities,
Ltd., a Delaware corporation, its
general partner
By:/s/
-------------------------------------
Name:--------------------------------
Title:-----------------------------
[CORPORATE SEAL]
THE WOODLANDS LAND DEVELOPMENT COMPANY, L.P., a
Texas limited partnership
By: The Woodlands Land Company, Inc., a Texas
corporation, its authorized general partner
By:/s/
-----------------------------------------
Name:-----------------------------------
Title:----------------------------------
[CORPORATE SEAL]
<PAGE>
EXHIBIT A-2
FORM OF LAND COMPANY REVOLVING CREDIT NOTE
$-------------- ----------------, 1997
FOR VALUE RECEIVED, the undersigned THE WOODLANDS LAND
DEVELOPMENT COMPANY, L.P., a Texas limited partnership, and THE WOODLANDS
COMMERCIAL PROPERTIES COMPANY, L.P., a Texas limited partnership, hereby
jointly and severally promise to pay to------------------------- or order,
in accordance with the terms of that certain First Amended and Restated
Master Credit Agreement dated December ---, 1997, effective as of July 31,
1997 (the "Credit Agreement"), as from time to time in effect, among the
undersigned, BankBoston, N.A., for itself and as Agent, Morgan Stanley
Senior Funding, Inc. and such other Banks as may be from time to time named
therein, to the extent not sooner paid, on or before the Maturity Date, the
principal sum of ------------------------------- DOLLARS ($--------------),
or such amount as may be advanced by the payee hereof to Land Company under
the Credit Agreement as Land Company Revolving Credit Loans with daily
interest from the date hereof, computed as provided in the Credit
Agreement, on the principal amount hereof from time to time unpaid, at a
rate per annum on each portion of the principal amount which shall at all
times be equal to the rate of interest applicable to such portion in
accordance with the Credit Agreement, and with interest on overdue
principal and, to the extent permitted by applicable law, on overdue
installments of interest and late charges at the rates provided in the
Credit Agreement. Interest shall be payable on the dates specified in the
Credit Agreement, except that all accrued interest shall be paid at the
stated or accelerated maturity hereof or upon the prepayment in full
hereof. Capitalized terms used herein and not otherwise defined herein
shall have the meanings set forth in the Credit Agreement.
Payments hereunder shall be made to BankBoston, N.A., as Agent for the
payee hereof, 100 Federal Street, Boston, Massachusetts 02110.
This Note is one of one or more Land Company Revolving Credit Notes
evidencing borrowings by Land Company under and is entitled to the benefits
and subject to the provisions of the Credit Agreement. The principal of
this Note may be due and payable in whole or in part prior to the maturity
date stated above and is subject to mandatory prepayment in the amounts and
under the circumstances set forth in the Credit Agreement, and may be
prepaid in whole or from time to time in part, all as set forth in the
Credit Agreement.
Notwithstanding anything in this Note to the contrary, all agreements
between the Borrowers and the Banks and the Agent, whether now existing or
hereafter arising and whether written or oral, are hereby limited so that
in no contingency, whether by reason of acceleration of the maturity of any
of the Obligations or otherwise, shall the interest contracted for, charged
or received by the Banks exceed the maximum amount permissible under
applicable law. If, from any circumstance whatsoever, interest would
otherwise be payable to the Banks in excess of the maximum lawful amount,
the interest payable to the Banks shall be reduced to the maximum amount
permitted under applicable law; and if from any circumstance the Banks
shall ever receive anything of value deemed interest by applicable law in
excess of the maximum lawful amount, an amount equal to any excessive
interest shall be applied to the reduction of the principal balance of the
Obligations and to the payment of interest or, if such excessive interest
exceeds the unpaid balance of principal of the Obligations, such excess
shall be refunded to the undersigned Borrower. All interest paid or agreed
to be paid to the Banks shall, to the extent permitted by applicable law,
be amortized, prorated, allocated and spread throughout the full period
until payment in full of the principal of the Obligations (including the
period of any renewal or extension thereof) so that the interest thereon
for such full period shall not exceed the maximum amount permitted by
applicable law. This paragraph shall control all agreements between the
Borrowers and the Banks and the Agent.
In case an Event of Default shall occur, the entire principal amount
of this Note may become or be declared due and payable in the manner and
with the effect provided in said Credit Agreement.
This Note shall be governed by and construed in accordance with the
laws of the Commonwealth of Massachusetts (without giving effect to the
conflict of laws rules of any jurisdiction).
The undersigned maker and all guarantors and endorsers, hereby waive
presentment, demand, notice, protest, notice of intention to accelerate the
indebtedness evidenced hereby, notice of acceleration of the indebtedness
evidenced hereby and all other demands and notices in connection with the
delivery, acceptance, performance and enforcement of this Note, except as
specifically otherwise provided in the Credit Agreement, and assent to
extensions of time of payment or forbearance or other indulgence without
notice.
This Note is a note executed in restatement of that certain Revolving
Credit Note from the undersigned to --------------------------------, dated
July 31, 1997 in the face principal amount of $----------------.
[Remainder of page intentionally left blank]
<PAGE>
IN WITNESS WHEREOF the undersigned have by their duly authorized
officers, executed this Note under seal as of the day and year first above
written.
THE WOODLANDS LAND DEVELOPMENT COMPANY, L.P., a
Texas limited partnership
By: The Woodlands Land Company, Inc., a Texas
corporation, its authorized general partner
By:/s/
------------------------------------
Name:------------------------------
Title:-----------------------------
[CORPORATE SEAL]
THE WOODLANDS COMMERCIAL PROPERTIES COMPANY, L.P.,
a Texas limited partnership
By: CresWood Development, L.L.C., a Delaware
limited liability company, its authorized
general partner
By: Crescent Real Estate Equities Limited
Partnership, a Delaware limited
partnership, its sole member
By: Crescent Real Estate Equities,
Ltd., a Delaware corporation, its
general partner
By:/s/
-------------------------------------
Name:--------------------------------
Title:-----------------------------
[CORPORATE SEAL]
<PAGE>
EXHIBIT B-1.1
FORM OF COMMERCIAL COMPANY SECURED TERM LOAN NOTE
$------------- ---------------, 1997
FOR VALUE RECEIVED, the undersigned THE WOODLANDS COMMERCIAL
PROPERTIES COMPANY, L.P., a Texas limited partnership, and THE WOODLANDS
LAND DEVELOPMENT COMPANY, L.P., a Texas limited partnership, hereby jointly
and severally promise to pay to ---------------------------------------- or
order, in accordance with the terms of that certain First Amended and
Restated Master Credit Agreement dated December ---, 1997, effective as of
July 31, 1997 (the "Credit Agreement"), as from time to time in effect,
among the undersigned, BankBoston, N.A., for itself and as Agent, Morgan
Stanley Senior Funding, Inc. and such other Banks as may be from time to
time named therein, to the extent not sooner paid, on or before the
Maturity Date, the principal sum of ------------------------------------
DOLLARS ($---------------), with daily interest from the date hereof,
computed as provided in the Credit Agreement, on the principal amount
hereof from time to time unpaid, at a rate per annum on each portion of the
principal amount which shall at all times be equal to the rate of interest
applicable to such portion in accordance with the Credit Agreement, and
with interest on overdue principal and, to the extent permitted by
applicable law, on overdue installments of interest and late charges at the
rates provided in the Credit Agreement. Interest shall be payable on the
dates specified in the Credit Agreement, except that all accrued interest
shall be paid at the stated or accelerated maturity hereof or upon the
prepayment in full hereof. Capitalized terms used herein and not otherwise
defined herein shall have the meanings set forth in the Credit Agreement.
Payments hereunder shall be made to BankBoston, N.A., as Agent for the
payee hereof, 100 Federal Street, Boston, Massachusetts 02110.
This Note is one of one or more Commercial Company Secured Term Loan
Notes evidencing borrowings by Commercial Company under and is entitled to
the benefits and subject to the provisions of the Credit Agreement. The
principal of this Note may be due and payable in whole or in part prior to
the maturity date stated above and is subject to mandatory prepayment in
the amounts and under the circumstances set forth in the Credit Agreement,
and may be prepaid in whole or from time to time in part, all as set forth
in the Credit Agreement.
Notwithstanding anything in this Note to the contrary, all agreements
between the Borrowers and the Banks and the Agent, whether now existing or
hereafter arising and whether written or oral, are hereby limited so that
in no contingency, whether by reason of acceleration of the maturity of any
of the Obligations or otherwise, shall the interest contracted for, charged
or received by the Banks exceed the maximum amount permissible under
applicable law. If, from any circumstance whatsoever, interest would
otherwise be payable to the Banks in excess of the maximum lawful amount,
the interest payable to the Banks shall be reduced to the maximum amount
permitted under applicable law; and if from any circumstance the Banks
shall ever receive anything of value deemed interest by applicable law in
excess of the maximum lawful amount, an amount equal to any excessive
interest shall be applied to the reduction of the principal balance of the
Obligations and to the payment of interest or, if such excessive interest
exceeds the unpaid balance of principal of the Obligations, such excess
shall be refunded to the undersigned Borrower. All interest paid or agreed
to be paid to the Banks shall, to the extent permitted by applicable law,
be amortized, prorated, allocated and spread throughout the full period
until payment in full of the principal of the Obligations (including the
period of any renewal or extension thereof) so that the interest thereon
for such full period shall not exceed the maximum amount permitted by
applicable law. This paragraph shall control all agreements between the
Borrowers and the Banks and the Agent.
In case an Event of Default shall occur, the entire principal amount
of this Note may become or be declared due and payable in the manner and
with the effect provided in said Credit Agreement.
This Note shall be governed by and construed in accordance with the
laws of the Commonwealth of Massachusetts (without giving effect to the
conflict of laws rules of any jurisdiction).
The undersigned maker and all guarantors and endorsers, hereby waive
presentment, demand, notice, protest, notice of intention to accelerate the
indebtedness evidenced hereby, notice of acceleration of the indebtedness
evidenced hereby and all other demands and notices in connection with the
delivery, acceptance, performance and enforcement of this Note, except as
specifically otherwise provided in the Credit Agreement, and assent to
extensions of time of payment or forbearance or other indulgence without
notice.
This Note is a note executed in restatement of that certain Revolving
Credit Note from the undersigned to -------------------, dated July 31,
1997 in the face principal amount of $------------------.
[Remainder of page intentionally left blank]
IN WITNESS WHEREOF the undersigned has by its duly authorized
officers, executed this Note under seal as of the day and year first above
written.
THE WOODLANDS COMMERCIAL PROPERTIES COMPANY, L.P.,
a Texas limited partnership
By: CresWood Development, L.L.C., a Delaware
limited liability company, its authorized
general partner
By: Crescent Real Estate Equities Limited
Partnership, a Delaware limited
partnership, its sole member
By: Crescent Real Estate Equities,
Ltd., a Delaware corporation, its
general partner
Name:------------------------------
Title: ----------------------------
[CORPORATE SEAL]
THE WOODLANDS LAND DEVELOPMENT COMPANY, L.P., a
Texas limited partnership
By: The Woodlands Land Company, Inc., a Texas
corporation, its authorized general partner
By:/s/
----------------------------------------
Name:----------------------------------
Title:---------------------------------
[CORPORATE SEAL]
<PAGE>
EXHIBIT B-2.1
FORM OF LAND COMPANY SECURED TERM LOAN NOTE
$------------- --------------, 1997
FOR VALUE RECEIVED, the undersigned THE WOODLANDS LAND DEVELOPMENT
COMPANY, L.P., a Texas limited partnership, and THE WOODLANDS COMMERCIAL
PROPERTIES COMPANY, L.P., a Texas limited partnership, hereby jointly and
severally promise to pay to -------------------------------------- or
order, in accordance with the terms of that certain First Amended and
Restated Master Credit Agreement dated December ---, 1997, effective as of
July 31, 1997 (the "Credit Agreement"), as from time to time in effect,
among the undersigned, BankBoston, N.A., for itself and as Agent, Morgan
Stanley Senior Funding, Inc. and such other Banks as may be from time to
time named therein, to the extent not sooner paid, on or before the
Maturity Date, the principal sum of ---------------------------------------
- ---------------- DOLLARS ($---------------), with daily interest from the
date hereof, computed as provided in the Credit Agreement, on the principal
amount hereof from time to time unpaid, at a rate per annum on each portion
of the principal amount which shall at all times be equal to the rate of
interest applicable to such portion in accordance with the Credit
Agreement, and with interest on overdue principal and, to the extent
permitted by applicable law, on overdue installments of interest and late
charges at the rates provided in the Credit Agreement. Interest shall be
payable on the dates specified in the Credit Agreement, except that all
accrued interest shall be paid at the stated or accelerated maturity hereof
or upon the prepayment in full hereof. Capitalized terms used herein and
not otherwise defined herein shall have the meanings set forth in the
Credit Agreement.
Payments hereunder shall be made to BankBoston, N.A., as Agent for the
payee hereof, 100 Federal Street, Boston, Massachusetts 02110.
This Note is one of one or more Land Company Secured Term Loan Notes
evidencing borrowings by Land Company under and is entitled to the benefits
and subject to the provisions of the Credit Agreement. The principal of
this Note may be due and payable in whole or in part prior to the maturity
date stated above and is subject to mandatory prepayment in the amounts and
under the circumstances set forth in the Credit Agreement, and may be
prepaid in whole or from time to time in part, all as set forth in the
Credit Agreement.
Notwithstanding anything in this Note to the contrary, all agreements
between the Borrowers and the Banks and the Agent, whether now existing or
hereafter arising and whether written or oral, are hereby limited so that
in no contingency, whether by reason of acceleration of the maturity of any
of the Obligations or otherwise, shall the interest contracted for, charged
or received by the Banks exceed the maximum amount permissible under
applicable law. If, from any circumstance whatsoever, interest would
otherwise be payable to the Banks in excess of the maximum lawful amount,
the interest payable to the Banks shall be reduced to the maximum amount
permitted under applicable law; and if from any circumstance the Banks
shall ever receive anything of value deemed interest by applicable law in
excess of the maximum lawful amount, an amount equal to any excessive
interest shall be applied to the reduction of the principal balance of the
Obligations and to the payment of interest or, if such excessive interest
exceeds the unpaid balance of principal of the Obligations, such excess
shall be refunded to the undersigned Borrower. All interest paid or agreed
to be paid to the Banks shall, to the extent permitted by applicable law,
be amortized, prorated, allocated and spread throughout the full period
until payment in full of the principal of the Obligations (including the
period of any renewal or extension thereof) so that the interest thereon
for such full period shall not exceed the maximum amount permitted by
applicable law. This paragraph shall control all agreements between the
Borrowers and the Banks and the Agent.
In case an Event of Default shall occur, the entire principal amount
of this Note may become or be declared due and payable in the manner and
with the effect provided in said Credit Agreement.
This Note shall be governed by and construed in accordance with the
laws of the Commonwealth of Massachusetts (without giving effect to the
conflict of laws rules of any jurisdiction).
The undersigned maker and all guarantors and endorsers, hereby waive
presentment, demand, notice, protest, notice of intention to accelerate the
indebtedness evidenced hereby, notice of acceleration of the indebtedness
evidenced hereby and all other demands and notices in connection with the
delivery, acceptance, performance and enforcement of this Note, except as
specifically otherwise provided in the Credit Agreement, and assent to
extensions of time of payment or forbearance or other indulgence without
notice.
This Note is a note executed in restatement of that certain Revolving
Credit Note from the undersigned to ------------------------, dated July
31, 1997 in the face principal amount of $-------------------.
[Remainder of page intentionally left blank]
IN WITNESS WHEREOF the undersigned has by its duly authorized
officers, executed this Note under seal as of the day and year first above
written.
THE WOODLANDS LAND DEVELOPMENT COMPANY, L.P., a
Texas limited partnership
By: The Woodlands Land Company, Inc., a Texas
corporation, its authorized general partner
By:/s/
-----------------------------------------
Name:-----------------------------------
Title:----------------------------------
[CORPORATE SEAL]
THE WOODLANDS COMMERCIAL PROPERTIES COMPANY, L.P.,
a Texas limited partnership
By: CresWood Development, L.L.C., a Delaware
limited liability company, its authorized
general partner
By: Crescent Real Estate Equities Limited
Partnership, a Delaware limited
partnership, its sole member
By: Crescent Real Estate Equities,
Ltd., a Delaware corporation, its
general partner
Name:------------------------------
Title:-----------------------------
[CORPORATE SEAL]
<PAGE>
EXHIBIT B-1.2
FORM OF COMMERCIAL COMPANY
SECOND SECURED TERM LOAN NOTE
$--------------- ---------------, 1997
FOR VALUE RECEIVED, the undersigned THE WOODLANDS COMMERCIAL
PROPERTIES COMPANY, L.P., a Texas limited partnership, and THE WOODLANDS
LAND DEVELOPMENT COMPANY, L.P., a Texas limited partnership, hereby jointly
and severally promise to pay to ---------------------------------------- or
order, in accordance with the terms of that certain First Amended and
Restated Master Credit Agreement dated December ---, 1997, effective as of
July 31, 1997 (the "Credit Agreement"), as from time to time in effect,
among the undersigned, BankBoston, N.A., for itself and as Agent, Morgan
Stanley Senior Funding, Inc. and such other Banks as may be from time to
time named therein, to the extent not sooner paid, on or before the
Maturity Date, the principal sum of ---------------------------------------
- ----------------------- DOLLARS ($------------), with daily interest from
the date hereof, computed as provided in the Credit Agreement, on the
principal amount hereof from time to time unpaid, at a rate per annum on
each portion of the principal amount which shall at all times be equal to
the rate of interest applicable to such portion in accordance with the
Credit Agreement, and with interest on overdue principal and, to the extent
permitted by applicable law, on overdue installments of interest and late
charges at the rates provided in the Credit Agreement. Interest shall be
payable on the dates specified in the Credit Agreement, except that all
accrued interest shall be paid at the stated or accelerated maturity hereof
or upon the prepayment in full hereof. Capitalized terms used herein and
not otherwise defined herein shall have the meanings set forth in the
Credit Agreement.
Payments hereunder shall be made to BankBoston, N.A., as Agent for the
payee hereof, 100 Federal Street, Boston, Massachusetts 02110.
This Note is one of one or more Commercial Company Second Secured Term
Loan Notes evidencing borrowings by Commercial Company under and is
entitled to the benefits and subject to the provisions of the Credit
Agreement. The principal of this Note may be due and payable in whole or
in part prior to the maturity date stated above and is subject to mandatory
prepayment in the amounts and under the circumstances set forth in the
Credit Agreement, and may be prepaid in whole or from time to time in part,
all as set forth in the Credit Agreement.
Notwithstanding anything in this Note to the contrary, all agreements
between the Borrowers and the Banks and the Agent, whether now existing or
hereafter arising and whether written or oral, are hereby limited so that
in no contingency, whether by reason of acceleration of the maturity of any
of the Obligations or otherwise, shall the interest contracted for, charged
or received by the Banks exceed the maximum amount permissible under
applicable law. If, from any circumstance whatsoever, interest would
otherwise be payable to the Banks in excess of the maximum lawful amount,
the interest payable to the Banks shall be reduced to the maximum amount
permitted under applicable law; and if from any circumstance the Banks
shall ever receive anything of value deemed interest by applicable law in
excess of the maximum lawful amount, an amount equal to any excessive
interest shall be applied to the reduction of the principal balance of the
Obligations and to the payment of interest or, if such excessive interest
exceeds the unpaid balance of principal of the Obligations, such excess
shall be refunded to the undersigned Borrower. All interest paid or agreed
to be paid to the Banks shall, to the extent permitted by applicable law,
be amortized, prorated, allocated and spread throughout the full period
until payment in full of the principal of the Obligations (including the
period of any renewal or extension thereof) so that the interest thereon
for such full period shall not exceed the maximum amount permitted by
applicable law. This paragraph shall control all agreements between the
Borrowers and the Banks and the Agent.
In case an Event of Default shall occur, the entire principal amount
of this Note may become or be declared due and payable in the manner and
with the effect provided in said Credit Agreement.
This Note shall be governed by and construed in accordance with the
laws of the Commonwealth of Massachusetts (without giving effect to the
conflict of laws rules of any jurisdiction).
The undersigned maker and all guarantors and endorsers, hereby waive
presentment, demand, notice, protest, notice of intention to accelerate the
indebtedness evidenced hereby, notice of acceleration of the indebtedness
evidenced hereby and all other demands and notices in connection with the
delivery, acceptance, performance and enforcement of this Note, except as
specifically otherwise provided in the Credit Agreement, and assent to
extensions of time of payment or forbearance or other indulgence without
notice.
This Note is a note executed in restatement of that certain Term Loan
Note from the undersigned to ------------------, dated July 31, 1997 in the
face principal amount of $-------------.
[Remainder of page intentionally left blank]
IN WITNESS WHEREOF the undersigned has by its duly authorized
officers, executed this Note under seal as of the day and year first above
written.
THE WOODLANDS COMMERCIAL PROPERTIES COMPANY, L.P.,
a Texas limited partnership
By: CresWood Development, L.L.C., a Delaware
limited liability company, its authorized
general partner
By: Crescent Real Estate Equities Limited
Partnership, a Delaware limited
partnership, its sole member
By: Crescent Real Estate Equities,
Ltd., a Delaware corporation, its
general partner
Name:------------------------------
Title:-----------------------------
[CORPORATE SEAL]
THE WOODLANDS LAND DEVELOPMENT COMPANY, L.P., a
Texas limited partnership
By: The Woodlands Land Company, Inc., a Texas
corporation, its authorized general partner
By:/s/
--------------------------------------
Name:--------------------------------
Title:-------------------------------
[CORPORATE SEAL]
<PAGE>
EXHIBIT B-2.2
FORM OF LAND COMPANY SECOND SECURED TERM LOAN NOTE
$-------------- --------------, 1997
FOR VALUE RECEIVED, the undersigned THE WOODLANDS LAND DEVELOPMENT
COMPANY, L.P., a Texas limited partnership, and THE WOODLANDS COMMERCIAL
PROPERTIES COMPANY, L.P., a Texas limited partnership, hereby jointly and
severally promise to pay to ------------------------------------------- or
order, in accordance with the terms of that certain First Amended and
Restated Master Credit Agreement dated December ---, 1997, effective as of
July 31, 1997 (the "Credit Agreement"), as from time to time in effect,
among the undersigned, BankBoston, N.A., for itself and as Agent, Morgan
Stanley Senior Funding, Inc. and such other Banks as may be from time to
time named therein, to the extent not sooner paid, on or before the
Maturity Date, the principal sum of------------------------------- DOLLARS
($-------------), with daily interest from the date hereof, computed as
provided in the Credit Agreement, on the principal amount hereof from time
to time unpaid, at a rate per annum on each portion of the principal amount
which shall at all times be equal to the rate of interest applicable to
such portion in accordance with the Credit Agreement, and with interest on
overdue principal and, to the extent permitted by applicable law, on
overdue installments of interest and late charges at the rates provided in
the Credit Agreement. Interest shall be payable on the dates specified in
the Credit Agreement, except that all accrued interest shall be paid at the
stated or accelerated maturity hereof or upon the prepayment in full
hereof. Capitalized terms used herein and not otherwise defined herein
shall have the meanings set forth in the Credit Agreement.
Payments hereunder shall be made to BankBoston, N.A., as Agent for the
payee hereof, 100 Federal Street, Boston, Massachusetts 02110.
This Note is one of one or more Land Company Second Secured Term Loan
Notes evidencing borrowings by Land Company under and is entitled to the
benefits and subject to the provisions of the Credit Agreement. The
principal of this Note may be due and payable in whole or in part prior to
the maturity date stated above and is subject to mandatory prepayment in
the amounts and under the circumstances set forth in the Credit Agreement,
and may be prepaid in whole or from time to time in part, all as set forth
in the Credit Agreement.
Notwithstanding anything in this Note to the contrary, all agreements
between the Borrowers and the Banks and the Agent, whether now existing or
hereafter arising and whether written or oral, are hereby limited so that
in no contingency, whether by reason of acceleration of the maturity of any
of the Obligations or otherwise, shall the interest contracted for, charged
or received by the Banks exceed the maximum amount permissible under
applicable law. If, from any circumstance whatsoever, interest would
otherwise be payable to the Banks in excess of the maximum lawful amount,
the interest payable to the Banks shall be reduced to the maximum amount
permitted under applicable law; and if from any circumstance the Banks
shall ever receive anything of value deemed interest by applicable law in
excess of the maximum lawful amount, an amount equal to any excessive
interest shall be applied to the reduction of the principal balance of the
Obligations and to the payment of interest or, if such excessive interest
exceeds the unpaid balance of principal of the Obligations, such excess
shall be refunded to the undersigned Borrower. All interest paid or agreed
to be paid to the Banks shall, to the extent permitted by applicable law,
be amortized, prorated, allocated and spread throughout the full period
until payment in full of the principal of the Obligations (including the
period of any renewal or extension thereof) so that the interest thereon
for such full period shall not exceed the maximum amount permitted by
applicable law. This paragraph shall control all agreements between the
Borrowers and the Banks and the Agent.
In case an Event of Default shall occur, the entire principal amount
of this Note may become or be declared due and payable in the manner and
with the effect provided in said Credit Agreement.
This Note shall be governed by and construed in accordance with the
laws of the Commonwealth of Massachusetts (without giving effect to the
conflict of laws rules of any jurisdiction).
The undersigned maker and all guarantors and endorsers, hereby waive
presentment, demand, notice, protest, notice of intention to accelerate the
indebtedness evidenced hereby, notice of acceleration of the indebtedness
evidenced hereby and all other demands and notices in connection with the
delivery, acceptance, performance and enforcement of this Note, except as
specifically otherwise provided in the Credit Agreement, and assent to
extensions of time of payment or forbearance or other indulgence without
notice.
This Note is a note executed in restatement of that certain Term Loan
Note from the undersigned to ---------------------------, dated July 31,
1997 in the face principal amount of $--------------------.
[Remainder of page intentionally left blank]
IN WITNESS WHEREOF the undersigned has by its duly authorized
officers, executed this Note under seal as of the day and year first above
written.
THE WOODLANDS LAND DEVELOPMENT COMPANY, L.P., a
Texas limited partnership
By: The Woodlands Land Company, Inc., a Texas
corporation, its authorized general partner
By:/s/
---------------------------------------
Name:---------------------------------
Title:--------------------------------_
[CORPORATE SEAL]
THE WOODLANDS COMMERCIAL PROPERTIES COMPANY, L.P.,
a Texas limited partnership
By: CresWood Development, L.L.C., a Delaware
limited liability company, its authorized
general partner
By: Crescent Real Estate Equities Limited
Partnership, a Delaware limited
partnership, its sole member
By: Crescent Real Estate Equities,
Ltd., a Delaware corporation, its
general partner
Name:------------------------------
Title:-----------------------------
[CORPORATE SEAL]
<PAGE>
EXHIBIT C-1
FORM OF REQUEST FOR LOAN
(COMMERCIAL COMPANY)
BankBoston, N.A.,
for itself and as Agent
115 Perimeter Center Place, N.E.
Suite 500
Atlanta, Georgia 30346
Attn: Dan Silbert
Ladies and Gentlemen:
Pursuant to the provisions of Section 2.6 of the First Amended and
Restated Master Credit Agreement dated December ---, 1997, effective as of
July 31, 1997, as from time to time in effect (the "Credit Agreement"),
among The Woodlands Commercial Properties Company, L.P. and The Woodlands
Land Development Company, L.P. (individually a "Borrower" and collectively
the "Borrowers"), BankBoston, N.A., for itself and as Agent, Morgan Stanley
Senior Funding, Inc. and the other Banks from time to time party thereto,
the undersigned Borrower hereby requests and certifies as follows:
1. Revolving Credit Loan. The undersigned Borrower hereby requests
a Commercial Company Revolving Credit Loan under Section 2.1 of the Credit
Agreement:
Principal Amount: $
Type (Eurodollar Rate, Base Rate):
Drawdown Date: , 19
by credit to the general account of the undersigned Borrower with the Agent
at the Agent's Head Office.
2. Use of Proceeds. Such Revolving Credit Loan shall be used for
the following purposes permitted by Section 7.11 of the Credit Agreement:
[Describe]
3. No Default. The undersigned Principal Financial Officer of the
Borrower certifies that the Borrower is and will be in compliance with all
covenants under the Loan Documents after giving effect to the making of the
Revolving Credit Loan requested hereby. No condemnation proceedings are
pending or to the Borrower's knowledge threatened against any Mortgaged
Property, and there have been no changes in title as reflected in the Title
Policy since the date of the Title Policy.
4. Representations True. Each of the representations and warranties
made by or on behalf of any of the Borrowers, the General Partners, the
Guarantors and the Controlled Subsidiaries of a Borrower contained in the
Credit Agreement, in the other Loan Documents or in any document or
instrument delivered pursuant to or in connection with the Credit Agreement
was true as of the date as of which it was made and shall also be true at
and as of the Drawdown Date for the Revolving Credit Loan requested hereby,
with the same effect as if made at and as of such Drawdown Date (except to
the extent of changes resulting from transactions contemplated or permitted
by the Credit Agreement and the other Loan Documents and changes occurring
in the ordinary course of business that singly or in the aggregate are not
materially adverse, and except to the extent that such representations and
warranties relate expressly to an earlier date) and no Default or Event of
Default has occurred and is continuing.
5. Other Conditions. All other conditions to the making of the
Revolving Credit Loan requested hereby set forth in Section 11 of the
Credit Agreement have been satisfied. (Reference title insurance "date
down", if applicable.)
6. Drawdown Date. Except to the extent, if any, specified by notice
actually received by the Agent prior to the Drawdown Date specified above,
the foregoing representations and warranties shall be deemed to have been
made by the Borrowers on and as of such Drawdown Date.
7. Definitions. Terms defined in the Credit Agreement are used
herein with the meanings so defined.
THE WOODLANDS COMMERCIAL PROPERTIES COMPANY, L.P.,
a Texas limited partnership
By: CresWood Development, L.L.C., a Delaware
limited liability company, its authorized
general partner
By: Crescent Real Estate Equities Limited
Partnership, a Delaware limited
partnership, its sole member
By: Crescent Real Estate Equities, Ltd.,
a Delaware corporation, its general
partner
By:/s/
---------------------------------------
Name:---------------------------------
Title:--------------------------------
[CORPORATE SEAL]<PAGE>
EXHIBIT C-2
FORM OF REQUEST FOR LOAN
(LAND COMPANY)
BankBoston, N.A.,
for itself and as Agent
115 Perimeter Center Place, N.E.
Suite 500
Atlanta, Georgia 30346
Attn: Dan Silbert
Ladies and Gentlemen:
Pursuant to the provisions of Section 2.6 of the First Amended and
Restated Master Credit Agreement dated December ---, 1997, effective as of
July 31, 1997, as from time to time in effect (the "Credit Agreement"),
among The Woodlands Commercial Properties Company, L.P. and The Woodlands
Land Development Company, L.P. (individually a "Borrower" and collectively
the "Borrowers"), BankBoston, N.A., for itself and as Agent, Morgan Stanley
Senior Funding, Inc. and the other Banks from time to time party thereto,
the undersigned Borrower hereby requests and certifies as follows:
1. Revolving Credit Loan. The undersigned Borrower hereby requests
a Land Company Revolving Credit Loan under Section 2.1 of the Credit
Agreement:
Principal Amount: $
Type (Eurodollar Rate, Base Rate):
Drawdown Date: , 19
by credit to the general account of the undersigned Borrower with the Agent
at the Agent's Head Office.
2. Use of Proceeds. Such Revolving Credit Loan shall be used for
the following purposes permitted by Section 7.11 of the Credit Agreement:
[Describe]
3. No Default. The undersigned Principal Financial Officer of the
Borrower certifies that the Borrower is and will be in compliance with all
covenants under the Loan Documents after giving effect to the making of the
Revolving Credit Loan requested hereby. No condemnation proceedings are
pending or to the Borrower's knowledge threatened against any Mortgaged
Property, and there have been no changes in title as reflected in the Title
Policy since the date of the Title Policy.
4. Representations True. Each of the representations and warranties
made by or on behalf of any of the Borrowers, the General Partners, the
Guarantors and the Controlled Subsidiaries of a Borrower contained in the
Credit Agreement, in the other Loan Documents or in any document or
instrument delivered pursuant to or in connection with the Credit Agreement
was true as of the date as of which it was made and shall also be true at
and as of the Drawdown Date for the Revolving Credit Loan requested hereby,
with the same effect as if made at and as of such Drawdown Date (except to
the extent of changes resulting from transactions contemplated or permitted
by the Credit Agreement and the other Loan Documents and changes occurring
in the ordinary course of business that singly or in the aggregate are not
materially adverse, and except to the extent that such representations and
warranties relate expressly to an earlier date) and no Default or Event of
Default has occurred and is continuing.
5. Other Conditions. All other conditions to the making of the
Revolving Credit Loan requested hereby set forth in Section 11 of the
Credit Agreement have been satisfied. (Reference title insurance "date
down", if applicable.)
6. Drawdown Date. Except to the extent, if any, specified by notice
actually received by the Agent prior to the Drawdown Date specified above,
the foregoing representations and warranties shall be deemed to have been
made by the Borrowers on and as of such Drawdown Date.
7. Definitions. Terms defined in the Credit Agreement are used
herein with the meanings so defined.
[Remainder of page intentionally left blank]
<PAGE>
IN WITNESS WHEREOF, I have hereunto set my hand this ----- day of ----
- ---------, 199--.
THE WOODLANDS LAND DEVELOPMENT COMPANY, L.P., a
Texas limited partnership
By: The Woodlands Land Company, Inc., a Texas
corporation, its authorized general partner
By:/s/
------------------------------------------
Name:-----------------------------------
Title:----------------------------------
[CORPORATE SEAL]
<PAGE>
EXHIBIT D
FORM OF REQUEST FOR EXTENSION OF LOAN
BankBoston, N.A.
for itself and as Agent
115 Perimeter Center Place, N.E.
Suite 500
Atlanta, Georgia 30346
Attn: Dan Silbert
Ladies and Gentlemen:
Pursuant to the provisions of Section 4.15 of the First Amended and
Restated Master Credit Agreement dated December ---, 1997, effective as of
July 31, 1997 as from time to time in effect (the "Credit Agreement"),
among The Woodlands Commercial Properties Company, L.P. and The Woodlands
Land Development Company, L.P. (collectively the "Borrowers"), BankBoston,
N.A., for itself and as Agent, Morgan Stanley Senior Funding, Inc. and the
other Banks from time to time party thereto, the Borrowers hereby request
and certify as follows:
1. Extension Request. The Borrowers hereby irrevocably request that
the Maturity Date be extended to [insert date as permitted by Section
4.15], The aggregate principal amount of Loans which will be outstanding
as of the Maturity Date is $------------.
2. Unfunded Revolving Credit Commitment. The amount of the unfunded
Commercial Company Revolving Credit Commitment and Land Company Revolving
Credit Commitment to remain in effect following the extension requested
hereby is $-----------.
3. Extension Fee. The Borrowers undertake to pay the extension fee
required by Section 4.15 of the Credit Agreement in the amount of $-------
.
4. No Default. The undersigned Principal Financial Officers of the
Borrowers certify that the Borrowers are and will be in compliance with all
covenants under the Loan Documents after giving effect to the extension
requested hereby. Attached to this Request for Extension of Loan is a
Compliance Certificate prepared using the financial statements of the
Borrowers most recently provided or required to be provided under Section
6.4 or Section 7.4 of the Credit Agreement adjusted in the best good-faith
estimate of the Borrowers to give effect to the extension of the Loan
requested hereby.
5. Representations True. Each of the representations and warranties
made by or on behalf of any of the Borrowers, the General Partners, the
Guarantors and the Controlled Subsidiaries of the Borrowers contained in
the Credit Agreement, in the other Loan Documents or in any document or
instrument delivered pursuant to or in connection with the Credit Agreement
was true as of the date as of which it was made and shall also be true at
and as of the Maturity Date with the same effect as if made at and as of
the Maturity Date (except to the extent of changes resulting from
transactions contemplated or permitted by the Credit Agreement and the
other Loan Documents and changes occurring in the ordinary course of
business that singly or in the aggregate are not materially adverse, and
except to the extent that such representations and warranties relate
expressly to an earlier date) and no Default or Event of Default has
occurred and is continuing.
6. Other Conditions. All other conditions to the extension to the
Maturity Date requested hereby set forth in Section 4.15 of the Credit
Agreement have been satisfied.
7. Date. Except to the extent, if any, specified by notice actually
received by the Agent prior to the Maturity Date specified above, the
foregoing representations and warranties shall be deemed to have been made
by the Borrowers on and as of the Maturity Date.
8. Definitions. Terms defined in the Credit Agreement are used
herein with the meanings so defined.
IN WITNESS WHEREOF, I have hereunto set my hand this ----- day of ----
- ---------, 199--.
THE WOODLANDS COMMERCIAL PROPERTIES COMPANY, L.P.,
a Texas limited partnership
By: CresWood Development, L.L.C., a Delaware
limited liability company, its authorized
general partner
By: Crescent Real Estate Equities Limited
Partnership, a Delaware limited
partnership, its sole member
By: Crescent Real Estate Equities, Ltd.,
a Delaware corporation, its general
partner
By:/s/
---------------------------------------
Name:---------------------------------
Title:--------------------------------
[CORPORATE SEAL]
THE WOODLANDS LAND DEVELOPMENT COMPANY, L.P., a
Texas limited partnership
By: The Woodlands Land Company, Inc., a Texas
corporation, its authorized general partner
By:/s/
------------------------------------------
Name:-----------------------------------
Title:----------------------------------
[CORPORATE SEAL]
<PAGE>
EXHIBIT E
FORM OF
COMPLIANCE CERTIFICATE
BankBoston, N.A., for itself and as Agent
115 Perimeter Center Place, N.E.
Suite 500
Atlanta, Georgia 30346
Attn: Dan Silbert
Ladies and Gentlemen:
Reference is made to the First Amended and Restated Master Credit
Agreement dated December ---, 1997, effective as of July 31, 1997 (the
"Credit Agreement") by and among The Woodlands Commercial Properties
Company, L.P. and The Woodlands Land Development Company, L.P.
(collectively the "Borrowers"), BankBoston, N.A., for itself and as Agent,
Morgan Stanley Senior Funding, Inc. and the other Banks from time to time
party thereto. Terms defined in the Credit Agreement and not otherwise
defined herein are used herein as defined in the Credit Agreement.
Pursuant to the Credit Agreement, the Borrowers are furnishing to you
herewith (or have most recently furnished to you) the financial statements
of the Borrowers and their respective subsidiaries for the fiscal period
ended --------------- (the "Balance Sheet Date"). Such financial
statements have been prepared in accordance with generally accepted
accounting principles and present fairly the financial position of the
Borrowers and the subsidiaries covered thereby at the date thereof and the
results of their operations for the periods covered thereby, subject in the
case of interim statements only to normal year-end audit adjustments.
This certificate is submitted in compliance with requirements of
Section 4.15(a), Section 7.4(e) or Section 10.14 of the Credit
Agreement. If this certificate is provided under a provision other than
Section 7.4(e), the calculations provided below are made using the
financial statements of the Borrowers and their respective Controlled
Subsidiaries as of the Balance Sheet Date adjusted in the best good-faith
estimate of the Borrowers to give effect to the making of a Revolving
Credit Loan, extension of the Maturity Date, acquisition or disposition of
property or other event that occasions the preparation of this certificate;
and the nature of such event and the Borrowers' estimate of its effects are
set forth in reasonable detail in an attachment hereto. The undersigned
officers of the Borrowers are its Principal Financial Officers.
The undersigned officers have caused the provisions of the Credit
Agreement to be reviewed and have no knowledge of any Default or Event of
Default. (Note: If the signer does have knowledge of any Default or Event
of Default, the form of certificate should be revised to specify the
Default or Event of Default, the nature thereof, the actions taken, being
taken or proposed to be taken by the Borrowers with respect thereto in
order to cure such Default or Event of Default and the time period required
to cure such Default or Event of Default.]
The Borrowers are providing the following information to demonstrate
compliance as of the date hereof with the following covenants:
[SEE ATTACHED EXHIBIT 1]
[Remainder of page intentionally left blank]<PAGE>
IN WITNESS WHEREOF, I have hereunto set my hand this ----- day of ----
- -----------, 199--.
THE WOODLANDS COMMERCIAL PROPERTIES COMPANY, L.P.,
a Texas limited partnership
By: CresWood Development, L.L.C., a Delaware
limited liability company, its authorized
general partner
By: Crescent Real Estate Equities Limited
Partnership, a Delaware limited
partnership, its sole member
By: Crescent Real Estate Equities, Ltd.,
a Delaware corporation, its general
partner
By:/s/
---------------------------------------
Name:---------------------------------
Title:--------------------------------
[CORPORATE SEAL]
THE WOODLANDS LAND DEVELOPMENT COMPANY, L.P., a
Texas limited partnership
By: The Woodlands Land Company, Inc., a Texas
corporation, its authorized general partner
By:/s/
------------------------------------------
Name:-----------------------------------
Title:----------------------------------
[CORPORATE SEAL]
<PAGE>
EXHIBIT G
FORM OF CONFIDENTIALITY AGREEMENT<PAGE>
SCHEDULE 1.1
BANKS AND COMMITMENTS
REVOLVING CREDIT LOAN
Commercial Company Commercial Company
Revolving Credit Revolving Credit
Name and Address Commitment Commitment Percentage
---------------- ------------------- ---------------------
BankBoston, N.A. $13,677,506.78 27.374302%
100 Federal Street
Boston, Massachusetts 02110
Attn: Real Estate Division
Eurodollar Lending Office
Same as above
Morgan Stanley Senio $ 5,582,655.83 11.17384%
Funding, Inc.
1585 Broadway, 10th Floor
New York, New York 10036
Attn: Mr. Jim Morgan
Eurodollar Lending Office
Same as above
Bank of Scotland $ 6,978,319.78 13.966480%
New York Branch
565 Fifth Avenue
New York, New York 10017
Attn: Annie Chin Tat
Eurodollar Lending Office
Same as above
BankTEXAS N.A. $ 5,582,655.83 11.173184%
8820 Westheimer
Houston, Texas 77063
Attn: Mr. Robert Weekly
Eurodollar Lending Office
Same as above
Comerica Bank-Texas $ 5,582,655.83 11.173184%
One Sugar Creek Center Blvd
2nd Floor
Sugarland, Texas 77478
Attn: Michael McAfee
Eurodollar Lending Office
Same as above
Compass Bank $ 5,582,655.83 11.173184%
8080 North Central Expressway
Suite 370
Dallas, Texas 75206
Attn: John Reichenbach
Eurodollar Lending Office
Same as above
First American Bank $ 4,186,991.87 8.379888%
Texas, SSB
14651 Dallas Parkway
Suite 400
Dallas, Texas 75240
Attn: Jeffrey L. Schultz
Eurodollar Lending Office
Same as above
Kredietbank N.V. $ 2,791,327.91 5.586592%
125 West 55th Street
10th Floor
New York, New York 10019
Attn: Frank Bayne
Eurodollar Lending Office
Same as above
Total $49,964,769.65 100%
Land Company Land Company
Revolving Credit Revolving Credit
Name and Address Commitment Commitment Percentage
---------------- ---------------- ---------------------
BankBoston, N.A. $35,322,493.22 27.374302%
100 Federal Street
Boston, Massachusetts 02110
Attn: Real Estate Division
Eurodollar Lending Office
Same as above
Morgan Stanley Senior $14,417,344.17 11.173184%
Funding, Inc.
1585 Broadway, 10th Floor
New York, New York 10036
Attn: Mr. Jim Morgan
Eurodollar Lending Office
Same as above
Bank of Scotland $18,021,680.22 13.966480%
New York Branch
565 Fifth Avenue
New York, New York 10017
Attn: Annie Chin Tat
Eurodollar Lending Office
Same as above
BankTEXAS N.A. $14,417,344.17 11.173184%
8820 Westheimer
Houston, Texas 77063
Attn: Mr. Robert Weekly
Eurodollar Lending Office
Same as above
Comerica Bank-Texas $14,417,344.17 11.173184%
One Sugar Creek Center Blvd
2nd Floor
Sugarland, Texas 77478
Attn: Michael McAfee
Eurodollar Lending Office
Same as above
Compass Bank $14,417,344.17 11.173184%
8080 North Central Expressway
Suite 370
Dallas, Texas 75206
Attn: John Reichenbach
Eurodollar Lending Office
Same as above
First American Bank $10,813,008.13 8.379888%
Texas, SSB
14651 Dallas Parkway
Suite 400
Dallas, Texas 75240
Attn: Jeffrey C. Schultz
Eurodollar Lending Office
Same as above
Kredietbank N.V. $ 7,208,672.09 5.586592%
125 West 55th Street
10th Floor
New York, New York 10019
Attn: Frank Bayne
Eurodollar Lending Office
Same as above
Total $129,035,230.35 100%
Revolving Credit Revolving Credit
Commitments Commitment Percentages
---------------- ----------------------
Bank Boston, N.A. $ 49,000,000.00 27.374302%
Morgan Stanley Senior $ 20,000,000.00 11.173184%
Funding, Inc.
Bank of Scotland $ 25,000,000.00 13.966480%
BankTEXAS N.A. $ 20,000,000.00 11.173184%
Comerica Bank-Texas $ 20,000,000.00 11.173184%
Compass Bank $ 20,000,000.00 11.173184%
First American Bank $ 15,000,000.00 8.379888%
Texas, SSB
Kredietbank N.V. $ 10,000,000.00 5.586592%
Total: $179,000,000.00 100%
<PAGE>
SECURED TERM LOAN
Commercial Company Commercial Company
Secured Term Secured Term Loan
Name and Address Loan Commitment Commitment Percentage
---------------- ------------------- ---------------------
BankBoston, N.A. $ 2,791,327.91 7.692308%
100 Federal Street
Boston, Massachusetts 02110
Attn: Real Estate Division
Eurodollar Lending Office
Same as above
Morgan Stanley Senior $22,974,775.90 63.313609%
Funding, Inc.
1585 Broadway, 10th Floor
New York, New York 10036
Attn: Mr. Jim Morgan
Eurodollar Lending Office
Same as above
Keyport Life Insurance $ 2,147,175.32 5.917160%
Company
c/o State Street Bank &
Trust Company
Attn: Paul Thomson
Two International Place
Boston, Massachusetts 02171
Eurodollar Lending Office
Same as Above
New York Life Insurance $ 8,373,983.74 23.076923%
Company
51 Madison Avenue
Room 907
New York, New York 10010
Attn: Kevin Smith
Eurodollar Lending Office
Same as above
Total $36,287,262.87 100%
Land Company Land Company
Secured Term Secured Term Loan
Name and Address Loan Commitment Commitment Percentage
---------------- --------------- ---------------------
BankBoston, N.A. $ 7,208,672.09 7.692308%
100 Federal Street
Boston, Massachusetts 02110
Attn: Real Estate Division
Eurodollar Lending Office
Same as above
Morgan Stanley Senior $59,332,916.41 63.313609%
Funding, Inc.
1585 Broadway, 10th Floor
New York, New York 10036
Attn: Mr. Jim Morgan
Eurodollar Lending Office
Same as above
Keyport Life Insurance $ 5,545,132.37 5.917160%
Company
c/o State Street Bank &
Trust Company
Attn: Paul Thomson
Two International Place
Boston, Massachusetts 02171
Eurodollar Lending Office
Same as above
New York Life Insurance $21,626,016.26 23.076923%
Company
51 Madison Avenue
Room 907
New York, New York 10010
Attn: Kevin Smith
Eurodollar Lending office
Same as above
Total $93,712,737.13 100%
<PAGE>
Secured Term Loan Secured Term Loan
Commitments Commitment Percentages
------------------ ----------------------
Bank Boston, N.A. $10,000,000.00 7.692308%
Morgan Stanley Senior $82,307,692.31 63.313609%
Funding, Inc.
Keyport Life Insurance $ 7,692,307.69 5.917160%
Company
New York Life Insurance $30,000,000.00 23.076923%
Company
Total: $130,000,000.00 100%
<PAGE>
SECOND SECURED TERM LOAN
Commercial Company Commercial Company
Second Secured Term Second Secured Term Loan
Name and Address Loan Commitment Commitment Percentage
---------------- ------------------- ------------------------
BankBoston, N.A. $ 5,582,655.83 33.333333%
100 Federal Street
Boston, Massachusetts 02110
Attn: Real Estate Division
Eurodollar Lending Office
Same as above
Morgan Stanley Senior $ 6,334,167.19 37.820513%
Funding, Inc.
1585 Broadway, 10th Floor
New York, New York 10036
Attn: Mr. Jim Morgan
Eurodollar Lending Office
Same as above
Keyport Life Insurance $ 644,152.60 3.846154%
Company
c/o State Street Bank
& Trust Company
Attn: Paul Thomson
Two International Place
Boston, Massachusetts 02171
Eurodollar Lending office
Same as above
Wellsford Real Properties, $ 4,186,991.87 25.0%
Inc.
610 Fifth Avenue
7th Floor
New York, New York 10020
Attn: Greg Hughes
Eurodollar Lending office
Same as above
Total $16,747,967.48 100%
<PAGE>
Commercial Company Commercial Company
Second Secured Term Second Secured Term Loan
Name and Address Loan Commitment Commitment Percentage
---------------- ------------------- ------------------------
BankBoston, N.A. $14,417,344.17 33.333333%
100 Federal Street
Boston, Massachusetts 02110
Attn: Real Estate Division
Eurodollar Lending Office
Same as above
Morgan Stanley Senior $16,358,140.50 37.820513%
Funding, Inc.
1585 Broadway, 10th Floor
New York, New York 10036
Attn: Mr. Jim Morgan
Eurodollar Lending Office
Same as above
Keyport Life Insurance $ 1,663,539.71 3.846154%
c/o State Street Bank
& Trust Company
Attn: Paul Thomson
Two International Place
Boston, Massachusetts 02171
Eurodollar Lending Office
Same as above
Wellsford Real Properties, $10,813,008.13 25.0%
Inc.
610 Fifth Avenue
7th Floor
New York, New York 10020
Attn: Greg Hughes
Eurodollar Lending office
Same as above
Total $43,252,032.52 100%
<PAGE>
Second Second
Secured Term Loan Secured Term Loan
Commitment Percentage Commitment Percentage
--------------------- ---------------------
BankBoston, N.A. $20,000,000.00 33.333333%
Morgan Stanley Senior
Funding, Inc. $22,692,307.69 37.820513%
Keyport Life Insurance
Company $ 2,307,692.31 3.846154%
Wellsford Real Properties,
Inc. $15,000,000.00 25.0%
Total: $60,000,000.00 100%
<PAGE>
TOTAL COMMITMENTS
Commitment
Commitments Percentages
----------- -----------
Bank Boston, N.A. $59,000,000.00 15.989160%
Morgan Stanley Senior
Funding, Inc. $105,000,000.00 28.455285%
Keyport Life Insurance
Company $10,000,000.00 2.710027%
Bank United $40,000,000.00 10.840108%
Bank of Scotland $25,000,000.00 6.775068%
New York Life Insurance
Company $30,000,000.00 8.130081%
BankTEXAS N.A. $20,000,000.00 5.420054%
Comerica Bank- Texas $20,000,000.00 5.420054%
Compass Bank $20,000,000.00 5.420054%
First American Bank
Texas, SSB $15,000,000.00 4.065041%
Wellsford Real Properties,
Inc. $15,000,000.00 4.065041%
Kredietbank N.V. $10,000,000.00 2.710027%
Total: $369,000,000.00 100%
Percentages may not equal 100% due to rounding.<PAGE>
SCHEDULE 1.2
BORROWING BASE
<PAGE>
SCHEDULE 1.3
INCOME PROPERTIES
<PAGE>
SCHEDULE 1.4
PARTIAL INTERESTS
<PAGE>
SCHEDULE 1.5
PARTNERSHIPS
<PAGE>
SCHEDULE 2.8
REQUIRED AMORTIZATION AMOUNTS
Amortization Period Required Amortization Amount
July 31, 1997 through June 30, 1998 $ 8,125,000.00
July 1, 1998 through June 30, 1999 $11,250,000.00
July 1, 1999 through June 30, 2000 $12,500,000.00
July 1, 2000 through June 30, 2001 $12,500,000.00
(if Maturity Date extended)
July 1, 2001 through June 30, 2002 $12,500,000.00
(if Maturity Date extended)
<PAGE>
SCHEDULE 6.3
TITLE TO PROPERTIES; LEASES
<PAGE>
SCHEDULE 6.7
LITIGATION<PAGE>
SCHEDULE 6.15
TRANSACTIONS OF AFFILIATES
<PAGE>
SCHEDULE 6.17
ERISA MATTERS
<PAGE>
SCHEDULE 6.21
SUBSIDIARIES
<PAGE>
SCHEDULE 6.27
RIGHT OF FIRST REFUSALS, PURCHASE OPTIONS, ETC.
<PAGE>
SCHEDULE 8.1
EXISTING INDEBTEDNESS
<PAGE>
SCHEDULE 8.2
EXISTING LIENS
<PAGE>
TABLE OF CONTENTS
Section 1. DEFINITIONS AND RULES OF INTERPRETATION. . . . . . . . . -2-
Section 1.1. Definitions . . . . . . . . . . . . . . . . . . . . -2-
Section 1.2. Rules of Interpretation . . . . . . . . . . . . . .-31-
Section 2. THE REVOLVING CREDIT FACILITY. . . . . . . . . . . . . .-32-
Section 2.1. Commitment to Lend Commercial Company Revolving
Credit Loans . . . . . . . . . . . . . . . . . . . .-32-
Section 2.1A. Commitment to Lend Land Company Revolving
Credit Loans. . . . . . . . . . . . . . . . . . . .-32-
Section 2.2. Facility Fee. . . . . . . . . . . . . . . . . . . .-33-
Section 2.3. Optional Reduction of Revolving Credit
Commitment . . . . . . . . . . . . . . . . . . . . .-33-
Section 2.4. Commercial Company Revolving Credit Notes . . . . .-34-
Section 2.4A. Land Company Revolving Credit Notes. . . . . . .-34-
Section 2.5. Interest on Revolving Credit Loans. . . . . . . . .-35-
Section 2.6. Requests for Revolving Credit Loans . . . . . . . .-35-
Section 2.7. Funds for Revolving Credit Loans. . . . . . . . . .-36-
Section 2.8. Mandatory Reduction of Revolving Credit
Commitments and Secured Term Loan Commitments. . . .-37-
Section 2A. THE SECURED TERM LOAN FACILITY.. . . . . . . . . . . . .-38-
Section 2A.1 Commitment to Lend Commercial Company
Secured Term Loan. . . . . . . . . . . . . . . . . .-38-
Section 2A.1A Commitment to Lend Land Company Secured
Term Loan. . . . . . . . . . . . . . . . . . . . .-38-
Section 2A.2 Commercial Company Secured Term Loan Notes. . . . .-38-
Section 2A.2A Land Company Secured Term Loan Notes. . . . . . .-38-
Section 2A.3 Interest on Secured Term Loans. . . . . . . . . . .-39-
Section 2B. THE SECOND SECURED TERM LOAN FACILITY. . . . . . . . . .-39-
Section 2B.1 Commitment to Lend Commercial Company
Second Secured Term Loan. . . . . . . . . . . . . .-39-
Section 2B.1A Commitment to Lend Land Company Second
Secured Term Loan. . . . . . . . . . . . . . . . .-39-
Section 2B.2 Commercial Company Second Secured Term
Loan Notes. . . . . . . . . . . . . . . . . . . . .-40-
Section 2B.2A Land Company Second Secured Term Loan Notes. . .-40-
Section 2B.3 Interest on Second Secured Term Loans. . . . . . .-41-
Section 3. REPAYMENT OF THE LOANS . . . . . . . . . . . . . . . . .-41-
Section 3.1. Stated Maturity . . . . . . . . . . . . . . . . . .-41-
Section 3.2. Mandatory Prepayments . . . . . . . . . . . . . . .-41-
Section 3.3. Optional Prepayments. . . . . . . . . . . . . . . .-42-
Section 3.4. Partial Prepayments . . . . . . . . . . . . . . . .-42-
Section 3.5. Effect of Prepayments . . . . . . . . . . . . . . .-42-
Section 4. CERTAIN GENERAL PROVISIONS . . . . . . . . . . . . . . .-42-
Section 4.1. [Intentionally Omitted] . . . . . . . . . . . . . .-42-
Section 4.2. Closing Fees. . . . . . . . . . . . . . . . . . . .-42-
Section 4.3. Agent Fee . . . . . . . . . . . . . . . . . . . . .-43-
Section 4.4. Funds for Payments. . . . . . . . . . . . . . . . .-43-
Section 4.5. Computations. . . . . . . . . . . . . . . . . . . .-44-
Section 4.6. Inability to Determine Eurodollar Rate. . . . . . .-44-
Section 4.7. Illegality. . . . . . . . . . . . . . . . . . . . .-44-
Section 4.8. [Intentionally omitted]. . . . . . . . . . . . . . .-45-
Section 4.9. Additional Costs, Etc.. . . . . . . . . . . . . . .-45-
Section 4.10. Capital Adequacy . . . . . . . . . . . . . . . . .-46-
Section 4.11. Indemnity of Borrowers . . . . . . . . . . . . . .-46-
Section 4.12. Interest on Overdue Amounts; Late Charge . . . . .-46-
Section 4.13. Certificate. . . . . . . . . . . . . . . . . . . .-47-
Section 4.14. Limitation on Interest . . . . . . . . . . . . . .-47-
Section 4.15. Extension of Maturity Date . . . . . . . . . . . .-47-
Section 5. COLLATERAL SECURITY AND GUARANTY . . . . . . . . . . . .-49-
Section 5.1. Collateral. . . . . . . . . . . . . . . . . . . . .-49-
Section 5.2. Appraisals; Adjusted Value. . . . . . . . . . . . .-50-
Section 5.3. Granting of Security. . . . . . . . . . . . . . . .-51-
Section 5.4. Releases of Liens . . . . . . . . . . . . . . . . .-52-
Section 6. REPRESENTATIONS AND WARRANTIES . . . . . . . . . . . . .-53-
Section 6.1. Corporate Authority, Etc. . . . . . . . . . . . . .-53-
Section 6.2. Governmental Approvals. . . . . . . . . . . . . . .-54-
Section 6.3. Title to Properties; Leases . . . . . . . . . . . .-54-
Section 6.4. Financial Statements. . . . . . . . . . . . . . . .-54-
Section 6.5. No Material Changes . . . . . . . . . . . . . . . .-55-
Section 6.6. Franchises, Patents, Copyrights, Etc. . . . . . . .-55-
Section 6.7. Litigation. . . . . . . . . . . . . . . . . . . . .-55-
Section 6.8. No Materially Adverse Contracts, Etc. . . . . . . .-55-
Section 6.9. Compliance with Other Instruments, Laws, Etc. . . .-56-
Section 6.10. Tax Status . . . . . . . . . . . . . . . . . . . .-56-
Section 6.11. No Event of Default. . . . . . . . . . . . . . . .-56-
Section 6.12. Holding Company and Investment Company Acts. . . .-56-
Section 6.13. Absence of UCC Financing Statements, Etc . . . . .-56-
Section 6.14. Setoff, Etc. . . . . . . . . . . . . . . . . . . .-57-
Section 6.15. Certain Transactions . . . . . . . . . . . . . . .-57-
Section 6.16. Employee Benefit Plans . . . . . . . . . . . . . .-57-
Section 6.17. ERISA Taxes. . . . . . . . . . . . . . . . . . . .-57-
Section 6.18. Plan Payments. . . . . . . . . . . . . . . . . . .-58-
Section 6.19. Regulations U and X. . . . . . . . . . . . . . . .-58-
Section 6.20. Environmental Compliance . . . . . . . . . . . . .-58-
Section 6.21. Subsidiaries . . . . . . . . . . . . . . . . . . .-59-
Section 6.22. Loan Documents . . . . . . . . . . . . . . . . . .-60-
Section 6.23. Property . . . . . . . . . . . . . . . . . . . . .-60-
Section 6.24. Material Agreements. . . . . . . . . . . . . . . .-60-
Section 6.25. Brokers. . . . . . . . . . . . . . . . . . . . . .-61-
Section 6.26. General Partners . . . . . . . . . . . . . . . . .-61-
Section 6.27. Options to Acquire; Restrictions on Development. .-61-
Section 6.28. Merger Agreement . . . . . . . . . . . . . . . . .-61-
Section 6.29. Fair Consideration . . . . . . . . . . . . . . . .-61-
Section 6.30. Solvency . . . . . . . . . . . . . . . . . . . . .-61-
Section 6.31. No Bankruptcy Filing . . . . . . . . . . . . . . .-61-
Section 6.32. Other Debt . . . . . . . . . . . . . . . . . . . .-62-
Section 7. AFFIRMATIVE COVENANTS OF THE BORROWERS . . . . . . . . .-62-
Section 7.1. Punctual Payment. . . . . . . . . . . . . . . . . .-62-
Section 7.2. Maintenance of Office . . . . . . . . . . . . . . .-62-
Section 7.3. Records and Accounts. . . . . . . . . . . . . . . .-62-
Section 7.4. Financial Statements, Certificates and
Information. . . . . . . . . . . . . . . . . . . . .-63-
Section 7.5. Notices . . . . . . . . . . . . . . . . . . . . . .-65-
Section 7.6. Existence; Maintenance of Properties. . . . . . . .-66-
Section 7.7. Insurance . . . . . . . . . . . . . . . . . . . . .-66-
Section 7.8. Taxes . . . . . . . . . . . . . . . . . . . . . . .-67-
Section 7.9. Inspection of Properties and Books. . . . . . . . .-67-
Section 7.10. Compliance with Laws, Contracts, Licenses,
and Permits. . . . . . . . . . . . . . . . . . . . .-67-
Section 7.11. Use of Proceeds. . . . . . . . . . . . . . . . . .-68-
Section 7.12. Further Assurances . . . . . . . . . . . . . . . .-68-
Section 7.13. Management . . . . . . . . . . . . . . . . . . . .-68-
Section 7.14. Leases; Development. . . . . . . . . . . . . . . .-68-
Section 7.15. ERISA Compliance . . . . . . . . . . . . . . . . .-68-
Section 7.16. Interest Cap. . . . . . . . . . . . . . . . . . . .-69-
Section 7.17. Partnership Pledge . . . . . . . . . . . . . . . .-69-
Section 7.18. Business Operations. . . . . . . . . . . . . . . .-69-
Section 7.19. Borrowing Base Assets. . . . . . . . . . . . . . .-69-
Section 7.20. Limiting Agreements. . . . . . . . . . . . . . . .-70-
Section 7.21. Distribution of Income to the Borrowers. . . . . .-71-
Section 7.22. More Restrictive Agreements. . . . . . . . . . . .-71-
Section 7.23. Associations . . . . . . . . . . . . . . . . . . .-71-
Section 8. CERTAIN NEGATIVE COVENANTS OF THE BORROWERS. . . . . . .-72-
Section 8.1. Restrictions on Indebtedness. . . . . . . . . . . .-72-
Section 8.2. Restrictions on Liens, Etc. . . . . . . . . . . . .-73-
Section 8.3. Restrictions on Investments . . . . . . . . . . . .-74-
Section 8.4. Merger, Consolidation . . . . . . . . . . . . . . .-75-
Section 8.5. Sale and Leaseback. . . . . . . . . . . . . . . . .-75-
Section 8.6. Compliance with Environmental Laws. . . . . . . . .-76-
Section 8.7. Distributions . . . . . . . . . . . . . . . . . . .-77-
Section 8.8. Asset Sales . . . . . . . . . . . . . . . . . . . .-77-
Section 8.9. Speculative Development . . . . . . . . . . . . . .-78-
Section 8.10. Sources of Capital . . . . . . . . . . . . . . . .-78-
Section 8.11. Restriction on Prepayment of Indebtedness. . . . .-79-
Section 8.12. Restrictions on Amendments; Transfers. . . . . . .-79-
Section 8.13. Transfers. . . . . . . . . . . . . . . . . . . . .-79-
Section 9. FINANCIAL COVENANTS OF THE BORROWERS . . . . . . . . . .-79-
Section 9.1. Liabilities to Market Value Capitalization Ratio. .-79-
Section 9.2. Interest Coverage . . . . . . . . . . . . . . . . .-80-
Section 9.3. Borrowing Base. . . . . . . . . . . . . . . . . . .-80-
Section 9.4. Tangible Net Worth. . . . . . . . . . . . . . . . .-80-
Section 9.5. Fixed Charge Coverage Ratio . . . . . . . . . . . .-80-
Section 10. CLOSING CONDITIONS . . . . . . . . . . . . . . . . . . .-81-
Section 10.1. Loan Documents . . . . . . . . . . . . . . . . . .-81-
Section 10.2. Certified Copies of Organizational Documents . . .-81-
Section 10.3. Bylaws; Resolutions. . . . . . . . . . . . . . . .-81-
Section 10.4. Incumbency Certificate; Authorized Signers . . . .-82-
Section 10.5. Opinion of Counsel . . . . . . . . . . . . . . . .-82-
Section 10.6. Payment of Fees. . . . . . . . . . . . . . . . . .-82-
Section 10.7. Acquisition of Interest Rate Cap. . . . . . . . .-82-
Section 10.8. Environmental Reports. . . . . . . . . . . . . . .-82-
Section 10.9. Insurance. . . . . . . . . . . . . . . . . . . . .-82-
Section 10.10. Performance; No Default . . . . . . . . . . . . .-82-
Section 10.11. Representations and Warranties. . . . . . . . . .-82-
Section 10.12. Proceedings and Documents . . . . . . . . . . . .-83-
Section 10.13. Eligible Real Estate Qualification Documents. . .-83-
Section 10.14. Compliance Certificate. . . . . . . . . . . . . .-83-
Section 10.15. Other Transactions. . . . . . . . . . . . . . . .-83-
Section 10.16. Consents. . . . . . . . . . . . . . . . . . . . .-83-
Section 10.17. Other Documents . . . . . . . . . . . . . . . . .-83-
Section 10.18. No Condemnation/Taking. . . . . . . . . . . . . .-83-
Section 10.19. Title Endorsements. . . . . . . . . . . . . . . .-84-
Section 10.20. Other . . . . . . . . . . . . . . . . . . . . . .-84-
Section 11. CONDITIONS TO ALL BORROWINGS . . . . . . . . . . . . . .-84-
Section 11.1. Prior Conditions Satisfied . . . . . . . . . . . .-84-
Section 11.2. Representations True; No Default . . . . . . . . .-84-
Section 11.3. No Legal Impediment. . . . . . . . . . . . . . . .-84-
Section 11.4. Governmental Regulation. . . . . . . . . . . . . .-84-
Section 11.5. Proceedings and Documents. . . . . . . . . . . . .-84-
Section 11.6. Borrowing Documents. . . . . . . . . . . . . . . .-85-
Section 11.7. Endorsement to Title Policy. . . . . . . . . . . .-85-
Section 11.8. Future Advances Tax Payment. . . . . . . . . . . .-85-
Section 12. EVENTS OF DEFAULT; ACCELERATION; ETC.. . . . . . . . . .-85-
Section 12.1. Events of Default and Acceleration . . . . . . . .-85-
Section 12.2. Termination of Commitments . . . . . . . . . . . .-90-
Section 12.3. Remedies . . . . . . . . . . . . . . . . . . . . .-90-
Section 12.4. Distribution of Collateral Proceeds. . . . . . . .-90-
Section 13. SETOFF . . . . . . . . . . . . . . . . . . . . . . . . .-91-
Section 14. THE AGENT. . . . . . . . . . . . . . . . . . . . . . . .-91-
Section 14.1. Authorization. . . . . . . . . . . . . . . . . . .-91-
Section 14.2. Employees and Agents . . . . . . . . . . . . . . .-92-
Section 14.3. No Liability . . . . . . . . . . . . . . . . . . .-92-
Section 14.4. No Representations . . . . . . . . . . . . . . . .-92-
Section 14.5. Payments . . . . . . . . . . . . . . . . . . . . .-92-
Section 14.6. Holders of Notes . . . . . . . . . . . . . . . . .-93-
Section 14.7. Indemnity. . . . . . . . . . . . . . . . . . . . .-93-
Section 14.8. Agent as Bank. . . . . . . . . . . . . . . . . . .-94-
Section 14.9. Resignation. . . . . . . . . . . . . . . . . . . .-94-
Section 14.10. Duties in the Case of Enforcement . . . . . . . .-94-
Section 15. EXPENSES . . . . . . . . . . . . . . . . . . . . . . . .-95-
Section 16. INDEMNIFICATION. . . . . . . . . . . . . . . . . . . . .-96-
Section 17. SURVIVAL OF COVENANTS, ETC . . . . . . . . . . . . . . .-97-
Section 18. ASSIGNMENT AND PARTICIPATION . . . . . . . . . . . . . .-97-
Section 18.1. Conditions to Assignment by Banks. . . . . . . . .-97-
Section 18.2. Register . . . . . . . . . . . . . . . . . . . . .-98-
Section 18.3. New Notes. . . . . . . . . . . . . . . . . . . . .-99-
Section 18.4. Participations . . . . . . . . . . . . . . . . . .-99-
Section 18.5. Pledge by Bank . . . . . . . . . . . . . . . . . .-99-
Section 18.6. No Assignment by Borrowers . . . . . . . . . . . .-99-
Section 18.7. Cooperation; Disclosure. . . . . . . . . . . . . -100-
Section 19. NOTICES. . . . . . . . . . . . . . . . . . . . . . . . -100-
Section 20. RELATIONSHIP . . . . . . . . . . . . . . . . . . . . . -101-
Section 21. GOVERNING LAW; CONSENT TO JURISDICTION AND SERVICE . . -101-
Section 22. HEADINGS . . . . . . . . . . . . . . . . . . . . . . . -102-
Section 23. COUNTERPARTS . . . . . . . . . . . . . . . . . . . . . -102-
Section 24. ENTIRE AGREEMENT, ETC. . . . . . . . . . . . . . . . . -102-
Section 25. WAIVER OF JURY TRIAL AND CERTAIN DAMAGE CLAIMS . . . . -102-
Section 26. DEALINGS WITH THE BORROWERS. . . . . . . . . . . . . . -103-
Section 27. CONSENTS, AMENDMENTS, WAIVERS, ETC . . . . . . . . . . -103-
Section 28. SEVERABILITY . . . . . . . . . . . . . . . . . . . . . -103-
Section 29. NO UNWRITTEN AGREEMENTS. . . . . . . . . . . . . . . . -103-
Section 30. REPLACEMENT OF NOTES . . . . . . . . . . . . . . . . . -104-
Section 31. TIME OF THE ESSENCE. . . . . . . . . . . . . . . . . . -104-
Section 32. NONRECOURSE OBLIGATIONS. . . . . . . . . . . . . . . . -104-
Section 33. JOINT AND SEVERAL LIABILITY. . . . . . . . . . . . . . -105-
Section 34. ADDITIONAL AGREEMENTS CONCERNING OBLIGATIONS
OF BORROWERS. . . . . . . . . . . . . . . . . . . . . -105-
Section 34.1. Waiver of Automatic or Supplemental Stay . . . . -105-
Section 34.2. Consideration. . . . . . . . . . . . . . . . . . -105-
Section 34.3. Waiver of Defenses . . . . . . . . . . . . . . . -105-
Section 34.4. Waiver . . . . . . . . . . . . . . . . . . . . . -106-
Section 34.5. Subordination. . . . . . . . . . . . . . . . . . -106-
EXHIBITS
EXHIBIT A-1 FORM OF COMMERCIAL COMPANY REVOLVING CREDIT
NOTE
EXHIBIT A-2 FORM OF LAND COMPANY REVOLVING CREDIT NOTE
EXHIBIT B-1.1 FORM OF COMMERCIAL COMPANY SECURED TERM LOAN NOTE
EXHIBIT B-2.1 FORM OF LAND COMPANY SECURED TERM LOAN NOTE
EXHIBIT B-1.2 FORM OF COMMERCIAL COMPANY SECOND SECURED TERM LOAN NOTE
EXHIBIT B-2.2 FORM OF LAND COMPANY SECOND SECURED TERM LOAN NOTE
EXHIBIT C-1 FORM OF REQUEST FOR LOAN (COMMERCIAL COMPANY)
EXHIBIT C-2 FORM OF REQUEST FOR LOAN (LAND COMPANY)
EXHIBIT D FORM OF REQUEST FOR EXTENSION OF LOAN
EXHIBIT E FORM OF COMPLIANCE CERTIFICATE WITH BORROWING BASE
WORKSHEET
EXHIBIT F [INTENTIONALLY OMITTED]
EXHIBIT G FORM OF CONFIDENTIALITY AGREEMENT
SCHEDULES
SCHEDULE 1.1 BANKS AND COMMITMENTS
SCHEDULE 1.2 BORROWING BASE
SCHEDULE 1.3 INCOME PROPERTIES
SCHEDULE 1.4 PARTIAL INTERESTS
SCHEDULE 1.5 PARTNERSHIPS
SCHEDULE 2.8 REQUIRED AMORTIZATION AMOUNTS
SCHEDULE 6.3 TITLE TO PROPERTIES; LEASES
SCHEDULE 6.7 LITIGATION
SCHEDULE 6.15 TRANSACTIONS OF AFFILIATES
SCHEDULE 6.17 ERISA MATTERS
SCHEDULE 6.21 SUBSIDIARIES
SCHEDULE 6.27 RIGHT OF FIRST REFUSALS, PURCHASE OPTIONS, ETC.
SCHEDULE 8.1 EXISTING INDEBTEDNESS
SCHEDULE 8.2 EXISTING LIENS
INTERCREDITOR AGREEMENT
THIS INTERCREDITOR AGREEMENT (the "Agreement") is dated this 30th day
of December, 1997, effective as of the 31st day of July, 1997, by and
between BANKBOSTON, N.A., a national bank organized under the laws of the
United States of America, its successors and assigns, for itself
("BankBoston") and as agent for certain other lenders ("Agent"), MORGAN
STANLEY SENIOR FUNDING, INC. ("MSSF"), and the other lenders a party
hereto. Collectively, BankBoston (except when acting as Agent), MSSF and
each other lending institution which may now or hereafter become a party to
the Credit Agreement shall be referred to collectively as the "Banks" and
individually as a "Bank".
RECITALS
A. Pursuant to the First Amended and Restated Master Credit
Agreement, dated of even date herewith (such agreement, as amended,
modified, extended, split, revised or supplemented in accordance with its
terms, is hereinafter referred to as the "Credit Agreement"), among The
Woodlands Commercial Properties Company, L.P., a Texas limited partnership
("Commercial Company"), The Woodlands Land Development Company, L.P., a
Texas limited partnership ("Land Company"; Commercial Company and Land
Company are hereinafter referred to collectively as the "Borrowers"), the
Agent, BankBoston, MSSF and the Banks, the Banks have agreed to make
available to the Borrowers loans in the aggregate principal amount of
$369,000,000.00 upon the terms set forth in the Credit Agreement
(collectively, the "Loans");
B. The Loans consist of a Revolving Credit Loan in the principal
amount of up to $179,000,000.00 (the "Revolving Loan"), a Secured Term Loan
in the principal amount of $130,000,000.00 (the "Secured Term Loan"; the
Revolving Credit Loan and the Secured Term Loan are hereinafter referred to
collectively as the "Senior Loan"), and a Second Secured Term Loan in the
principal amount of $60,000,000.00 (the "Second Secured Term Loan");
C. The Agent and the Banks desire to supplement the provisions of
the Credit Agreement relating to the relationship of the Banks with respect
to one another and the Agent;
NOW, THEREFORE, in consideration of the mutual covenants contained
herein, the Banks and the Agent agree as follows:
1. Definitions.
(a) For the purposes of this Agreement,
(i) "Majority Banks" shall mean any Bank or Banks
whose aggregate Commitment Percentage equals or exceeds sixty-six and
2/3 percent (66.67%);
(ii) "Senior Banks" shall mean the holders from
time to time of the Revolving Credit Notes and the Secured Term Loan
Notes;
(iii) "Second Secured Term Loan Banks" shall mean
the holders from time to time of the Second Secured Term Loan Notes;
(iv) "Enforcement Action" shall mean the
commencement of any litigation or proceeding, the commencement of any
foreclosure proceeding, the exercise of any statutory power of sale,
the taking of a deed or assignment in lieu of foreclosure, the
obtaining of a receiver or the taking of any other enforcement action
against, or the taking of possession or control of, or the exercise of
any remedies with respect to, a Borrower or any Collateral or any
portion thereof; and
(v) Any capitalized terms not otherwise defined
herein have the meanings ascribed to them in the Credit Agreement.
(b) For the purposes of the Credit Agreement, the
"Majority Banks" as defined in the Credit Agreement shall mean the
"Majority Banks" as such term is defined herein, except to the extent that
the approval of all of the Banks is specifically required for such action
or approval (in which case the "Majority Banks" as used in the Credit
Agreement shall mean all of the Banks).
2. Relationship with Credit Agreement. The parties hereto
acknowledge and ratify the Credit Agreement and acknowledge that this
Agreement is meant to supplement, and not to abrogate, the terms of the
Credit Agreement. All provisions of this Agreement shall be read so as to
be compatible with the provisions of the Credit Agreement. In the event of
any conflict between this Agreement and the Credit Agreement, this
Agreement shall control among the Agent and the Banks.
3. Interests in the Loan. The Banks hereby acknowledge and
agree that each Bank holds an undivided interest in the Loan and the Loan
Documents equal to its Commitment Percentage as in effect from time to
time. The Agent shall hold the Security Documents for the benefit of the
Banks as provided in this Agreement and the Loan Documents. The Commitment
and Commitment Percentage of each Bank under the Credit Agreement as of the
date hereof shall be as set forth in the Credit Agreement.
4. Representations of the Banks. Each Bank represents to and
agrees with each other Bank and Agent that (a) in the event that such Bank
now or hereafter has other loans, commitments, letters of credit or other
financial accommodations or arrangements outstanding to any Borrower,
Guarantor or an affiliate thereof, such Bank shall deal with the Loans and
Loan Documents as if it were the only loan in such Bank's portfolio to such
Borrower, Guarantor or such affiliate thereof; (b) such Bank's execution
and delivery of this Agreement has been duly authorized and it has full
power and authority to execute this Agreement; (c) such Bank's decision to
enter into this Agreement was based solely upon its own independent
evaluation of the Loans and the Loan Documents and the creditworthiness of
Borrowers and the value of the Collateral and without reliance upon any
warranties or representations of Agent or any other Bank or any of their
respective officers, directors, employees, agents or attorneys; (d) such
Bank acknowledges receipt of copies of all of the Loan Documents; (e) as of
the date hereof, except for MSSF, such Bank does not control, is not
controlled by, is not under common control with and is otherwise free from
influence or control by, Borrowers, their respective General Partners and
Guarantor; and (f) as of the date hereof, except for MSSF, [Chancellor LGT
Asset Management] and Wellsford Real Properties, Inc., such Bank is subject
to control, regulation or examination by a state or federal regulatory
agency. Except as set forth above or as otherwise provided herein or in
the Loan Documents, no Bank or Agent makes any further representations or
warranties, express or implied, including, without limitation, any
representation or warranty as to the collectability of the Loans,
enforceability of the Loan Documents, continued solvency of Borrowers or
any other Person or the continued existence, sufficiency or value of any
assets of Borrowers or any other Person which may be realized upon for the
repayment of the Loans. Neither Agent nor any Bank shall be responsible in
any manner to any other Bank for the observation of or compliance with any
of the terms, covenants or conditions of the Loan Documents on the part of
Borrowers.
5. Allocation of Fees.
(a) By execution hereof, each Bank acknowledges that it
has received its full share of the closing fee payable with respect to such
Bank's Commitment.
(b) Each Bank shall be entitled to its proportionate
share based on its respective Commitment Percentages of the facility fee
paid pursuant to Section 2.2 of the Credit Agreement. In the event that a
Bank shall not have owned its Commitment for the full quarter to which such
fee relates, such Bank's share thereof shall be prorated as of the day
immediately preceding the day on which the assignment to such Bank is
recorded by Agent on the Register.
(c) All of the Agent's fee described in Section 4.3 of
the Credit Agreement shall belong to the Agent and none of the Banks shall
be entitled to any portion thereof.
(d) Each Bank shall be entitled to its proportionate
share based on its Revolving Credit Commitment Percentage, Secured Term
Loan Commitment Percentage and Second Secured Term Loan Commitment
Percentage, as applicable, of any fee paid by Borrowers pursuant to Section
4.15 of the Credit Agreement.
6. Set-Off Against Other Indebtedness. Notwithstanding the
provisions of Section 4(a), above, each Bank agrees that any deposits of
money or property or other indebtedness held or owing by such Bank to or
for the credit or the account of any Borrower or Guarantor which may now or
hereafter be specifically pledged as collateral under the Credit Agreement
or other Loan Documents shall not be set-off against indebtedness other
than the Obligations; provided, however, that the foregoing restriction
shall not limit any Bank's right of set-off against any Indebtedness other
than the Obligations with respect to any such deposit of money, property or
other indebtedness which has not been specifically pledged as collateral
notwithstanding any general description of secured obligations contained in
any security agreement or other instrument held by such Bank; provided
further, however, that no Bank shall be permitted to exercise any right of
set-off against any Borrower, any partner thereof or any Guarantor in
respect of the Obligation if such exercise would jeopardize the Agent's
ability to realize upon the Collateral pursuant to the Security Documents
in any jurisdiction which has a so-called "single action rule."
7. Intentionally omitted.
8. Payments, Distributions.
(a) (i) All payments and proceeds received by Agent
(including any (A) payments made by Borrowers in connection with the
release of any portion of the Mortgaged Property or other Collateral from
the liens and security interests granted pursuant to the Loan Documents,
(B) insurance and condemnation proceeds and (C) amounts received in
connection with the liquidation or other realization by Agent upon any
portion of the Collateral) shall be applied, prior to the occurrence of an
Event of Default, first, to reimburse the Agent for any unpaid costs and
expenses incurred by the Agent, second, to accrued and unpaid interest on
the Senior Loan, third, to accrued and unpaid interest on the Second
Secured Term Loan, fourth, to Agent and Banks pro rata in respect of any
unpaid Agent's fee, late charges, default rate interest and other sums
payable under the Credit Agreement and the other Loan Documents, fifth, to
the principal amount of the Senior Loan as provided in the Credit Agreement
until such principal amount of the Senior Loan has been repaid in full, and
sixth, to the extent permitted by the Credit Agreement, to the principal
balance of the Second Secured Term Loan until such principal balance of the
Second Secured Term Loan has been repaid in full.
(ii) From and after the occurrence of an Event of
Default and during the continuance thereof, all payments and proceeds
received by Agent shall be applied, first, as provided in Section 12.4(a)
of the Credit Agreement, whether or not such payments constitute
administrative expenses under Section 503(b) of the Bankruptcy Code,
second, to the Senior Loan (pro rata based on the respective Revolving
Credit Commitments and the Secured Term Loan Commitments) until all amounts
due and payable in connection with the Senior Loan (including protective or
curative advances and expenses funded only by the Senior Banks) have been
repaid in full in cash or cash equivalents, third, the balance, if any, to
the Second Secured Term Loan until all amounts due and payable in
connection with the Second Secured Term Loan (including principal and
scheduled interest, default interest, late charges, protective or curative
advances and expenses funded only by the Second Secured Term Loan Banks)
have been repaid in full, fourth, to the Agent for the payment of the
Agent's fee payable pursuant to Section 4.3 of the Credit Agreement and
fifth, the balance, if any, shall be returned to the Borrowers or to such
other Persons as are entitled thereto. For the purposes of Section
12.4(b) of the Credit Agreement, Agent shall be deemed to have determined
to apply such payments and proceeds as provided in this Section 8(a).
(b) If at any time collections by Agent are sufficient
to fund only a partial principal, interest or fee payment under the Senior
Loan or Second Secured Term Loan (and after giving effect to the
distribution priorities established in Section 8 hereof), each Senior Bank
or Second Secured Term Loan Bank, as the case may be, shall be entitled to
receive an amount equal to the product of (i) the amount such Bank would
have been entitled to receive if Borrowers had made a full principal,
interest or fee payment under the Credit Agreement, multiplied by (ii) a
fraction (A) the numerator of which is the amount of the partial principal,
interest or fee payment collected by Agent under the Loan Documents, and
(B) the denominator of which is the amount of the full principal, interest
or fee payment that Borrowers were obligated to pay with respect to the
Revolving Credit Loan and the Secured Term Loan comprising the Senior Loan
(pro rata among the Revolving Credit Banks and the Secured Term Loan Banks
in accordance with the ratio that such Bank's Revolving Credit Commitment
or Secured Term Loan Commitment bears to the total of all Revolving Credit
Commitments and Secured Term Loan Commitments), or the Second Secured Term
Loan, as the case may be.
(c) In the event (i) the Senior Loan becomes or is
declared due and payable prior to its stated maturity, or (ii) of any
distribution, division or application, partial or complete, voluntary or
involuntary, by operation of law or otherwise, of all or any part of the
property, assets or business of any Borrower or any other Person liable
with respect to the Loans or the proceeds thereof, in whatever form, to any
creditor or creditors of such Persons or to any holder of indebtedness of
such Persons by reason of any liquidation, dissolution or other winding up
of any of such Persons or its business, or of any receivership or
custodianship for such Persons of all or substantially all of its property,
or of any assignment for the benefit of creditors of any proceeding by or
against such Persons for relief under the United States Bankruptcy Code
(the "Bankruptcy Code") or any other bankruptcy, reorganization or
insolvency laws, federal or state, or any law, federal or state, relating
to the relief of debtors, readjustment of indebtedness, reorganization,
composition or extension (a "Bankruptcy Proceeding"), then any payment or
distribution of any kind or character, whether in cash, property or
securities which shall be payable or deliverable with respect to any or all
of the Second Secured Term Loan or which shall be received by the Second
Secured Term Loan Banks shall be held in trust by the Second Secured Term
Loan Banks and shall forthwith be paid or delivered directly to Agent for
application to the payment of the Senior Loan to the extent necessary to
make payment in full in cash or cash equivalents of all sums due under the
Senior Loan remaining unpaid after giving effect to any concurrent payment
or distribution to Agent or Senior Banks as required by this Agreement. In
any such event, Agent may, but shall not be obligated to, demand, claim and
collect any such payment or distribution that would, but for the provisions
of this Agreement, be payable or deliverable with respect to the Second
Secured Term Loan.
(d) To the extent any transfer, payment or distribution
of assets with respect to the Senior Loan (whether in cash, property or
securities and whether by or on behalf of a Borrower, as proceeds of
security or enforcement of any right of setoff or otherwise) is declared to
be fraudulent or preferential, set aside or required to be paid to a
Borrower or a Guarantor, the estate in bankruptcy thereof, any third party,
or a trustee, receiver or other similar party under any bankruptcy,
insolvency, receivership or similar law, then if such payment is recovered
by, or paid over to, a Borrower or a Guarantor, the estate in bankruptcy
thereof, any third party, or such trustee, receiver or other similar party,
the Senior Loan or part thereof originally intended to be satisfied shall
be deemed to be reinstated and outstanding as if such payment or
distribution had not occurred, and this Agreement and the agreements and
payment priorities contained herein shall be reinstated with respect to any
such transfer, payment or distribution. Neither the Agent nor the Senior
Banks shall be required to contest any such declaration or obligation to
return such payment or distribution.
(e) If any Bank shall acquire by indemnification,
subrogation or otherwise, any lien, estate, right or other interest in the
Collateral or any portion thereof in connection with the Senior Loan or the
Second Secured Term Loan, that lien, estate, right, or other interest shall
be held in trust for the benefit of, and assigned to Agent for the benefit
of the Banks in accordance with the terms of this Agreement. Any such
lien, estate, right or other interest shall be subordinate to the lien and
security interests of the Security Documents and the other Loan Documents
as provided herein.
(f) Without limiting the terms of Section 9(d) below,
so long as any amounts remain outstanding under the Senior Loan, the Second
Secured Term Loan Banks shall not seek the appointment of a receiver with
respect to any portion of the Collateral without the prior written consent
of Agent, which consent may be granted or withheld by Agent at the
direction of the Majority Banks in their sole discretion.
(g) Notwithstanding anything herein to the contrary, in
the event that (i) an Event of Default shall occur and be continuing, (ii)
the effect of the operation of Section 8(a)(ii) is that the Senior Banks
shall be applying amounts received by the Agent to Obligations to the
Senior Banks, which amounts, but for the application of Section 8(a)(ii),
would have been received by the Second Secured Term Loan Banks pursuant to
Section 8(a)(i), (iii) the Majority Banks shall not have authorized the
Agent to commence or institute any Enforcement Action, and (iv) such
circumstances shall have existed for a period of 120 consecutive days, then
within sixty (60) days of the expiration of such 120-day period, the Bank
or Banks whose aggregate Second Secured Term Loan Commitment Percentage
exceeds fifty percent (50%) shall have the right to direct that the Agent
commence an Enforcement Action, which direction shall have the same force
and effect as if such direction was provided by the Majority Banks.
Notwithstanding the foregoing, such rights of the Second Secured Term Loan
Banks shall not be in effect more than once during any period of 360
consecutive days, and such rights shall not be in effect on more than three
occasions.
(h) The provisions of this Agreement concerning the
order of payments between the Second Secured Term Loan and the Senior Loan
shall apply to the Senior Loan as the same shall be amended, modified,
restated or renewed from time to time as permitted herein, and regardless
of the value of any Collateral or any other assets of the Borrowers or any
Guarantor, any failure to realize thereon, or any other action or failure
to act with respect to any thereof.
(i) For the purposes of this Agreement, the "Senior
Loan" shall include the payment of the outstanding principal, interest
(including contract interest, default interest, late charges and any of the
foregoing accruing subsequent to the filing of any bankruptcy petition by
or against either Borrower under the Bankruptcy Code) (and regardless of
the value of the Collateral and the security interest of Agent therein at
the time of such accrual), prepayment fees, breakage costs and other fees
and expenses payable in connection with the Senior Loan.
(j) Each Bank agrees that it shall not take any action
or in any way contest (i) the validity or enforceability of this Agreement,
(ii) the validity of the payment priority established by Section 8, or
(iii) the relative rights and duties of the parties hereto.
9. Notice of Event of Default, Exercise of Remedies, Approvals,
etc.
(a) In the event that Agent or any Bank acquires Actual
Knowledge (as herein defined) of the occurrence of a Default or an Event of
Default, Agent or the Bank acquiring such knowledge will notify the other
Banks and the Agent thereof as soon as is reasonably practical.
Thereafter, the Agent shall provide the Banks with prior written notice of
any actions proposed or recommended to be taken by Agent with respect
thereto unless the giving of such notice is impractical for reasons of
safety or preservation of Collateral, in which event Agent shall promptly
notify the Banks of such action. For purposes of this Agreement, "Actual
Knowledge" shall mean actual knowledge of any officer of Agent or any Bank
having primary, day-to-day responsibility for administration of the Loan.
WEL (i) Agent shall not take any action hereunder or
under the Loan Documents following a Default or Event of Default, except as
specifically authorized herein to the contrary, unless such action is
approved by the Majority Banks (except as provided in Section 8(g) hereof)
and, subject to the terms of this Agreement and the other Loan Documents,
the Agent shall take such actions as are directed by the Majority Banks
following a Default or Event of Default. Following such approval, the
Agent shall, subject to the terms of this Section 9(b), take such action
or actions, assert such rights, exercise such remedies and/or waive such
Default or Event of Default or refrain from taking such actions with
respect thereto as, but only as, agreed to in writing by the Majority
Banks. Notwithstanding anything herein or in the Credit Agreement to the
contrary, the Agent shall not be liable in connection with the making of
any advance to the Borrowers at any time at which there shall exist a
Default or Event of Default other than an uncured monetary or other
"material" (as defined herein) Default or Event of Default. For the
purposes of this Agreement, the term "material" Default or Event of Default
shall mean any monetary default, or any other default, the occurrence of
which could have a material adverse effect on repayment of the Loans or the
financial condition of the Borrowers. The Agent shall, if so requested by
the Majority Banks and the Banks have provided to the Agent such additional
indemnities and assurances in accordance with their respective Commitment
Percentages against expenses and liabilities as the Agent may reasonably
request, proceed to enforce the provisions of the Security Documents
authorizing the sale or other disposition of all or any part of the
Collateral and exercise all or any legal and equitable and other rights or
remedies as it may have in respect of such Collateral or against Borrowers
or any other Person (which actions shall include any notices to Borrowers
as counsel to Agent may recommend be provided pursuant to M.G.L. Chapter
244, Section 17B). Subject to the terms hereof, the Majority Banks may
direct the Agent in writing as to the method and the extent of any such
action, sale or disposition, the Banks hereby agreeing to indemnify and
hold the Agent harmless in accordance with their respective Commitment
Percentages from all liabilities incurred in respect of all actions taken
or omitted in accordance with such directions, provided that the Agent need
not comply with any such direction to the extent that the Agent reasonably
believes the Agent's compliance with such direction to be unlawful or
commercially unreasonable in any applicable jurisdiction.
(ii) Agent shall not be required to obtain the
consent of the Majority Banks to its taking any action with respect to the
Loans if immediate action is required to be taken in the best interest of
the Banks to preserve or protect the continued enforceability of the Loan
Documents. Agent shall promptly verbally notify the Banks if Agent takes
such immediate action, which notice shall be promptly confirmed in writing.
Without limiting the generality of the foregoing, if the Agent reasonably
determines payment is in the best interest of all the Banks and immediate
action is required to protect or preserve the interests of the Banks, Agent
may without the approval of the Banks (A) pay taxes and insurance premiums
and (B) spend money for maintenance, repairs or other expenses which may be
necessary to be incurred; provided that the amount that may be spent
annually by the Agent pursuant to clause (B) shall not exceed $1,000,000.00
without obtaining the consent of the Majority Banks. Each Bank shall,
within thirty (30) days of request therefor, pay to the Agent in the manner
set forth in Section 14 below, its Commitment Percentage of the costs
incurred by the Agent in taking any such actions hereunder to the extent
that such costs shall not be promptly reimbursed to the Agent by Borrowers
or a Guarantor or out of the Collateral within such period and such costs
shall be deemed an "Expense" as defined in Section 14 of this Agreement.
(c) If consent is required for some action under this
Agreement, or except as otherwise provided herein an approval of the
Majority Banks (as such term is used in the Credit Agreement) is required
or permitted under the Credit Agreement, each Bank agrees to give the Agent
and the other Banks, within ten (10) Business Days of receipt of the
request for action together with all reasonably requested information
related thereto (or such lesser period of time required by the terms of the
Loan Documents), notice in writing of approval or disapproval
(collectively "Directions") in respect of any action requested or proposed
in writing pursuant to the terms hereof. To the extent that any Bank does
not approve any recommendation of Agent, such Bank shall in such notice to
Agent describe the actions that would be acceptable to such Bank (to the
extent the organizational agreements of such Bank permit such Bank to
describe such actions). If consent is required for the requested action,
any Bank's failure to respond to a request for Directions within the
required time period shall be deemed to constitute a Direction to take such
requested action. In the event that any recommendation is not approved by
the requisite number of Banks and a subsequent approval on the same subject
matter is requested by Agent, then for the purposes of this paragraph each
Bank shall be required to respond to a request for Directions within five
(5) Business Days of receipt of such request. Agent and each Bank shall be
entitled to assume that any officer of the other Banks delivering any
notice, consent, certificate or other writing is authorized to give such
notice, consent, certificate or other writing unless Agent and such other
Banks have otherwise been notified in writing. Notwithstanding anything
herein to the contrary, the Agent may with the approval of the Majority
Banks temporarily waive compliance by Borrowers with any condition,
obligation or covenant contained in the Credit Agreement or the Loan
Documents (other than a failure to make a payment of any principal,
interest or fee when due) for a period not to exceed ninety (90) days, and
in obtaining such approval, Agent shall be authorized to waive such
compliance upon the verbal approval of the Majority Banks without
compliance with the provisions of this Paragraph 9(c).
(d) For the purposes of carrying out the provisions and
exercising the rights, remedies, powers and privileges granted by or
referred to in this Agreement and the Loan Documents, each of the Banks,
subject to the other terms of this Agreement and the Loan Documents, hereby
irrevocably and exclusively constitutes and appoints the Agent to hold the
Collateral and enforce the Loan Documents on behalf of the Banks and to
exercise such powers, rights and remedies under this Agreement and the Loan
Documents as are delegated to Agent by the terms hereof or thereof,
together with all such powers, rights and remedies as are reasonably
incidental thereto.
10. Required Bank Consents. Notwithstanding anything in this
Agreement or the Loan Documents to the contrary, none of the following may
occur without the written consent of each Bank: a change in the rate of
interest on and the term of the Notes; a change in the amount of the
Commitments of the Banks; a reduction or waiver of the principal of any
unpaid Senior Loan, Second Secured Term Loan, or any interest thereon or
any fee payable pursuant to the Credit Agreement; an extension of the
Maturity Date (except as permitted in the Credit Agreement); the release of
any Borrower or Guarantor which has executed any of the Loan Documents or
any Collateral except as permitted in the Loan Documents; any modification
to require a Bank to fund a pro rata share of a request for an advance of
the Revolving Credit Loans made by a Borrower other than based on its
Revolving Credit Commitment Percentage; a change to this Section 10; any
change of any date fixed for any payment of principal of or interest on the
Loan; or any change in the manner of distribution of any payments to the
Banks or Agent.
11. Bankruptcy.
(a) In the event of a Bankruptcy Proceeding affecting
any Borrower, the Senior Banks and the Second Secured Term Loan Banks agree
that, to the maximum extent permitted under the Bankruptcy Code, the Senior
Loan (including the Notes evidencing the Senior Loan) and the Second
Secured Term Loan shall constitute a single claim in such Bankruptcy
Proceeding. Whether or not the Senior Loan and the Second Secured Term
Loan are in fact filed as a single claim in such Bankruptcy Proceeding or
as multiple separate claims, all elections, consents and voting rights
afforded to the Senior Banks and Second Secured Term Loan Banks in such
Bankruptcy Proceeding shall be exercised collectively by Agent upon the
direction of the Majority Banks.
(b) This Agreement shall be applicable both before and
after the commencement, whether voluntary or involuntary, of any Bankruptcy
Proceeding by or against either Borrower or any Guarantor, and all
references herein to the Borrowers and Guarantor shall be deemed to apply
to either Borrower or any Guarantor as a debtor-in-possession and to any
trustee in bankruptcy for the estate of either Borrower or any Guarantor.
The provisions of this Agreement shall apply notwithstanding the fact that
the Senior Loan or any claim for or under the Senior Loan is subordinated,
avoided or disallowed, in whole or in part, under the Bankruptcy Code or
other applicable federal or state law. In the event of a Bankruptcy
Proceeding, the amounts due under the Senior Loan shall include all
interest, breakage costs and fees accrued on the Senior Loan, in accordance
with and at the rates specified in the Credit Agreement and the other Loan
Documents, both for periods before and for periods after the commencement
of any Bankruptcy Proceeding, even if the claim for such interest is
disallowed pursuant to applicable law.
12. Foreclosure; Possession of Collateral.
(a) If the Agent shall take possession of any of the
Collateral after the occurrence of any Event of Default (upon institution
of foreclosure proceedings or otherwise) as and to the extent provided by
the Loan Documents, the Agent shall collect all sales proceeds,
distributions, dividends, rents or other revenues from the Collateral and
pay all expenses incurred by it in connection with the operation and
management of the Collateral in question and such expenses shall be deemed
Expenses as defined in Section 14 below. With the consent of the Majority
Banks, the Agent may employ an independent third party management firm
whose fees shall be negotiated on an arm's length basis; provided, however,
notwithstanding the foregoing, if the Majority Banks cannot agree as to the
employment of a management firm within ten (10) Business Days of request
therefor by Agent, Agent shall be entitled to employ such independent third
party management firm as Agent deems necessary to protect and enforce the
interests and rights of all the Banks and to pay such management fees and
expenses to such firm as Agent in its good faith business judgment deems
appropriate under the circumstances. All management fees paid to an
independent third party and all other reasonable fees and expenses paid by
the Agent in accordance with the terms of this Agreement shall be deducted
from the distributions, dividends, revenues, rents and/or sales proceeds
collected, or if such rents and sales proceeds are insufficient, such fees
and expenses shall be paid by the Banks, with each Bank paying such Bank's
Commitment Percentage thereof within ten (10) days of request therefor.
(b) If there shall be a foreclosure sale of all or a
portion of the Collateral, the Agent shall bid at the foreclosure sale on
behalf of the Banks to raise any bid made by others at said sale, up to the
highest price agreed upon by the Majority Banks (not to exceed the
indebtedness outstanding under the Loan Documents), or if the Majority
Banks are unable to agree, then an amount determined by Agent in the
exercise of its good faith business judgment (but in no event in an amount
in excess of the indebtedness outstanding under the Loan Documents). Upon
completion of a foreclosure sale and the conveyance of said Collateral to
the highest bidder, the Agent shall render an accounting for monies
received and monies expended between the date of taking possession of such
Collateral and the date of conveyance to the highest bidder, including,
without limitation, expenses of foreclosure. If the highest bidder shall
be someone other than the Agent, then, upon receipt from the highest bidder
of the amount of the bid, the Agent will remit to the Banks, in accordance
with the provisions of Section 8, above, the net amount received from the
foreclosure sale, after deducting all reasonable Expenses incurred by Agent
in accordance with the terms of this Agreement.
(c) Any decision to sell any of the Collateral acquired
by the Agent, the Banks or their nominees must be approved by the Majority
Banks; provided, however, that the consent of all of the Banks shall be
required if the sale is other than for all cash. If all of the Banks agree
to take a purchase money obligation and mortgage instrument or security
interest in part payment for the sale of any of the Collateral acquired by
the Agent, the Banks or their nominees, as the case may be, then the Agent,
the Banks and their nominees, as applicable, agree to enter into an
agreement with respect to that obligation and mortgage instrument or
security interest, defining the Banks' or their nominees' rights in the
same in accordance with the Banks' or their nominees' Commitment
Percentage, which agreement shall be in all material respects similar to
this Agreement, to the extent this Agreement is appropriate or applicable.
In the absence of such an agreement, the obligation and mortgage instrument
or security interest shall be held by the mortgagee or security interest
holder for the ratable benefit of the Banks and their nominees in
accordance with their respective Commitment Percentages and shall be
subject to the terms of this Agreement to the extent applicable.
(d) If any of the Agent, the Banks or any nominee of
any of them acquires the Collateral either by foreclosure or deed in lieu
of foreclosure, then the Collateral shall be held for the pro rata benefit
of the Banks by a corporation or other entity approved by the Majority
Banks, the interests in which shall be owned by the Banks or their nominees
based upon their respective Commitment Percentages. This Agreement shall
continue in full force and effect during such ownership of the Collateral
and this Agreement shall govern the rights and obligations of the parties
in connection with such ownership, until such time as the written agreement
described below in this Subsection 12(d) below is executed. In the event
such acquisition shall occur, the Agent and the Banks agree to negotiate in
good faith to reach agreement relating to the ownership, operation,
maintenance, management, leasing and marketing of the Collateral, which
agreement shall be consistent with the following: (i) except as otherwise
provided in this subparagraph, decisions regarding the administration and
disposition of the Collateral and all other decisions with respect to the
Collateral shall require the consent of the Majority Banks; (ii) the
Collateral will not be held as a long-term investment and will be marketed
to sell such Collateral in a time period consistent with the regulations
applicable to national banks, foreign banks or life insurance companies for
owning real estate, whichever is shorter; (iii) certain decision making
with respect to the day-to-day operations of the Collateral may be
delegated to management and leasing agents, provided that, subject to the
terms of Paragraph 12(a) above, all agreements with such management and
leasing agents will be subject to the approval of the Majority Banks; (iv)
all decisions reserved to the owner in such agreements will be subject to
the approval of the Majority Banks; (v) all expenses incurred by the Agent
and the Banks in connection with the Collateral shall be allocated among
the Banks pro rata in accordance with their respective Commitment
Percentages; and (vi) each Bank shall waive its right to partition the
Collateral. The documents shall provide for customary remedies in the
event any Bank does not pay its pro rata share of such expenses. All
proceeds received from the operation, sale or other disposition of the
Collateral (net of expenses incurred in connection therewith) shall be paid
to the Banks in accordance with each Bank's Commitment Percentage, and
shall be paid in the same priority as set forth in Section 8(a)(ii),
above.
13. Transfers. Each Bank may sell, assign, pledge or enter into
participations for all or any part of their respective interests in the
Loan and Loan Documents in compliance with the terms of the Credit
Agreement, but not otherwise. Notwithstanding anything herein, in the
Credit Agreement or elsewhere to the contrary, any assignment, or sale of a
participation in, any interest in or part of the Loan or the Loan Documents
shall be subject to the terms of this Agreement and the Credit Agreement,
and as a condition to any such assignment, the assignee shall acknowledge
that it is subject to the terms of this Agreement and the Credit Agreement,
and assume the obligations of a Bank hereunder and thereunder, such
agreement to be in form and substance satisfactory to Agent.
14. Cost and Expense Sharing. Within thirty (30) days of
request therefor from Agent (to the extent that the same have not been paid
by Borrowers or Guarantor after demand for payment of the same), each Bank
will pay its pro rata share or otherwise make arrangements satisfactory to
Agent for the payment thereof (based on its Commitment Percentage) of all
reasonable out-of-pocket costs and expenses (including, without limitation,
reasonable attorneys' fees, appraisers' fees and consultants' fees) which
are incurred by the Agent (a) in connection with the administration of the
Loan and the Loan Documents or enforcement of the obligations of Borrowers
and the other parties thereto under the Loan and the Loan Documents, (b) in
connection with the foreclosure of the Loan Documents, or (c) which, by the
terms of this Agreement, are deemed to be expenses (hereinafter
collectively referred to as the "Expenses"). The Banks shall pay their
Commitment Percentage of Expenses for attorneys, appraisers and consultants
retained by Agent. In the event Agent later receives reimbursement from
Borrowers or Guarantor or another source for such costs, expenses or other
Expenses, Agent shall promptly refund to each Bank its ratable share of
such reimbursement.
15. Payments.
(a) Except as expressly provided herein to the
contrary, nothing herein shall be deemed (i) to give any Bank any advantage
over the others with respect to reimbursement for, or other payment on
account of, any of Borrowers', Guarantor's or other Person's obligations
under the Loan Documents or any attorneys' fees or expenses incurred by
Agent in connection with enforcement of the obligations of such Persons
under any of the Loan Documents, or (ii) to relieve any Bank from absorbing
its respective pro rata part of any losses sustained with respect to the
amount of such Person's obligations under any of the Loan Documents.
(b) If any Bank is entitled to and decides to require a
payment of any amounts described in Article 4 of the Credit Agreement, such
Bank shall (i) give written notice thereof to the Agent and the Borrowers,
and (ii) deliver to Agent such other information, certifications and
documentation as is required to be furnished to the Borrowers under the
terms of Section 4.13 of the Credit Agreement, and such amount shall be
payable to such Bank in accordance with the terms of the Credit Agreement.
16. Standard of Care. Agent shall service the Loan in
accordance with its customary practices in servicing loans entered into
solely for its own account, and as provided in this Agreement. Nothing
contained in this Agreement or the other Loan Documents is intended to
create an agency or fiduciary relationship, it being acknowledged that
Agent's obligations are primarily administrative in nature. Agent shall
not be required to take or omit to take any action which violates the terms
of this Agreement or any of the Loan Documents or violates any laws, rules,
court orders and decisions, ordinances, regulations, statutes,
requirements, codes and executive orders, now existing or hereafter
created.
17. Defaults by Bank.
(a) If for any reason any Bank (a "Defaulting Bank")
shall fail to abide by its obligations under this Agreement or under any
Loan Document and such failure shall continue for ten (10) Business Days
after notice with respect to monetary obligations hereunder or under any
Loan Document or thirty (30) days after notice with respect to non-monetary
obligations hereunder or under any Loan Document (provided, however, that
if such non-monetary default is of a nature that the same cannot be
reasonably cured within thirty (30) days and such Bank shall have commenced
to cure such non-monetary default within such period and shall thereafter
proceed with reasonable diligence and good faith to cure such non-monetary
default, such period shall be extended for such longer period as shall be
necessary for such Bank to cure such default with all reasonable diligence,
but in no event beyond that date which is one hundred twenty (120) days
after such Bank received notice of such default), then, in addition to the
rights and remedies that may be available to the Agent at law and in
equity, such Defaulting Bank's right to participate in the administration
of the Loan Documents, including, without limitation, any rights to consent
to or direct any action or inaction of the Agent pursuant to Section s 9 or
10 above or otherwise, or to be taken into account in the calculation of
Majority Banks, shall be suspended during the pendency of such failure. If
for any reason a Bank fails to make timely payment to the Agent of any
amount required to be paid to it hereunder (without giving effect to any
notice or cure periods), in addition to the other rights and remedies which
the Agent may have under this Section 17 or otherwise, the Agent shall be
entitled (i) to collect interest from such Bank for the period from the
date on which the payment was due at the Federal Funds Effective Rate, for
each day during such period, (ii) to withhold or setoff, and to apply to
the payment of the defaulted amount and any related interest, any amounts
to be paid to such Bank under this Agreement or the Loan Documents, and
(iii) to bring an action or suit against such Bank in a court of competent
jurisdiction to recover the defaulted amount and any related interest.
(b) In the event a Bank becomes a Defaulting Bank,
other Banks who are not Defaulting Banks (the "Current Banks") shall have
the right, but not the obligation, in their sole discretion, to acquire
(or, if more than one Bank exercises such right, each such Bank shall have
the right to acquire, pro rata based on their relative Commitment
Percentages, or such proportion as they may mutually agree) the Commitment
of the Defaulting Bank. Upon any such purchase of the Commitment of the
Defaulting Bank, the Defaulting Bank's interest in the Obligations and its
rights hereunder and under the Loan Documents (but not its liability with
respect thereto or under the Loan Documents or this Agreement to the extent
that the same relate to the period prior to the effective date of the
purchase) shall terminate at the date of purchase, and the Defaulting Bank
shall promptly execute all documents reasonably requested to surrender and
transfer such interest. The purchase price for the Defaulting Bank's
Commitment shall equal the principal balance of the Obligations outstanding
and owed by Borrowers to the Defaulting Bank, plus any and all accrued and
unpaid interest thereon and fees in connection therewith. On or before the
date of such purchase, the Defaulting Bank shall pay to the Agent a
processing fee of Two Thousand Dollars ($2,000.00).
18. Amendments. This Agreement may not be amended, modified or
terminated except by an agreement in writing signed by each Bank and Agent.
19. NOT A LOAN; NO DUTY TO PURCHASE. THIS AGREEMENT SHALL IN NO
WAY BE CONSTRUED AS PROVIDING AN EXTENSION OF CREDIT BY ANY BANK TO ANY
OTHER OF THE BANKS. NO BANK SHALL HAVE THE OBLIGATION TO PURCHASE THE
PERCENTAGE INTEREST OF ANY OTHER PARTY HERETO UPON ANY DEFAULT BY BORROWERS
OR ANY OTHER PERSON UNDER ANY OF THE LOAN DOCUMENTS OR IN ANY OTHER EVENT
WHATSOEVER.
20. Withholding Taxes. If Agent shall be required by law to
deduct and withhold taxes or other charges imposed by any jurisdiction
("Taxes") from any amounts payable to a Bank with respect to the Loan
because such Bank is a Non-Exempt Person (as hereinafter defined), Agent
shall be entitled to do so with respect to such Bank's interest in such
payment (all withheld amounts being deemed paid to such Bank). "Non-Exempt
Person" is any person other than a person who is either (i) a United States
person, or (ii) has on file with Agent for the year involved such duly
executed forms or statements which may, from time to time, be prescribed by
law and which, pursuant to applicable provisions of (a) an income tax
treaty between the United States and the country of residence of such
person, (b) the United States Internal Revenue Code of 1986, as amended and
as such may hereafter be amended, or (c) any applicable rules or
regulations in effect under (i) or (ii) above, and which permit Agent to
make such payments free of any obligation or liability for withholding.
Each Bank agrees to indemnify Agent against and to hold Agent harmless from
any Taxes, interest, penalties and attorneys' fees arising from any failure
of Agent to withhold Taxes from payments made to such Bank in reliance upon
any representation or document made or provided by such Bank to Agent, it
being agreed that (x) Agent shall be absolutely and unconditionally
entitled to accept any such representation or document as being true and
correct in all respects and to fully rely thereon without any obligation or
responsibility to investigate the same, and (y) such Bank shall, upon
request of Agent and at the Bank's sole cost and expense, defend any claim
relating to the indemnification by counsel selected by such Bank reasonably
satisfactory to Agent. Each Bank represents to Agent that such Bank is not
a Non-Exempt Person and that Agent is not obligated under applicable law to
withhold Taxes on any sum paid to such Bank pursuant to this Agreement. If
requested by Agent, contemporaneously with the execution of this Agreement,
and, if requested by Agent from time to time as necessary during the term
of this Agreement, each Bank shall deliver to Agent evidence reasonably
satisfactory to Agent substantiating that such Bank is not a Non-Exempt
Person and that Agent is not obligated under applicable law to withhold
Taxes on sums paid to it with respect to the Loan or otherwise. As used
herein, the term "Person" means any individual, firm, corporation,
association, partnership, joint venture, trust, other entity or tribunal,
and the term "Tribunal" means any state, federal, foreign or other court or
governmental department, commission, board, bureau, agency or
instrumentality.
21. No Reliance By Others. None of the provisions of this
Agreement shall inure to the benefit of Borrowers, Guarantor or any Person
other than the Banks and Agent; consequently, neither any Borrower nor
Guarantor shall be, and no Person other than the Banks and Agent shall be,
entitled to rely upon or raise as a defense, in any manner whatsoever, the
failure of any Bank or Agent to comply with the provisions of this
Agreement. Neither the Banks nor the Agent shall incur any liability to
Borrowers, Guarantor or any other Person for any act or omission of the
Banks or Agent.
22. Legal Fees. If any legal or equitable action or proceeding
is brought by Agent or a Bank to enforce or construe a provision of this
Agreement, the unsuccessful party in such action or proceeding, whether
such action or proceeding is settled or prosecuted to final judgment, shall
pay all of the reasonable attorneys' fees and costs incurred by the
prevailing party.
23. Notices. All notices and other communications hereunder
shall be in writing (unless verbal communications are expressly permitted
hereunder) and shall be personally delivered or delivered by commercial
courier service or deposited in the United States Mail (certified, return
receipt requested and postage prepaid), or transmitted by facsimile, in
each case addressed to the party to whom notice is being given at its
address set forth below its signature hereto or at such other address as
may hereafter be designated in writing by a party hereto to the Agent and
the other Banks. All such notices or communications shall be deemed given
on (i) the date received if delivered personally or when delivered by
commercial courier service, (ii) the date of receipt or refusal to accept
receipt thereof if sent by certified mail, or (iii) the first Business Day
following the Business Day of transmission by facsimile. Any verbal
communications permitted hereunder shall be promptly confirmed in writing.
24. Construction. All headings appearing in this Agreement are
for convenience only and shall be disregarded in construing this Agreement.
No waiver of any breach of the terms of this Agreement shall be implied
from any failure to take, or delay in taking, action with respect to such
breach or any previous waiver of any similar or unrelated breach. A waiver
of any term of this Agreement must be made in writing and shall be limited
to the express terms of such writing. The parties hereto intend that this
Agreement be afforded the protections of Section 510(a) of the Bankruptcy
Code.
25. Law. This Agreement shall be governed by, and construed in
accordance with, the laws of the Commonwealth of Massachusetts.
26. Severability. The invalidity, illegality or
unenforceability of any provision of this Agreement, pursuant to judicial
decree, shall not affect the validity or enforceability of any other
provision hereof, all of which shall remain in full force and effect.
27. Successors and Assigns. Except as otherwise provided
herein, the terms and provisions of this Agreement shall inure to the
benefit of and be binding upon and enforceable by the respective successors
and assigns of the parties hereto.
28. Counterparts. This Agreement may be executed in any number
of counterparts, all of which taken together shall constitute one and the
same instrument, and any of the parties hereto may execute this Agreement
by signing any such counterpart.
29. Termination. Unless otherwise agreed to by the parties,
this Agreement shall terminate when the Obligations have been paid and
finally discharged in full and the obligations of the Banks to advance
funds to Borrowers under the Credit Agreement are terminated and no portion
of the Obligations has been reinstated or is required to be repaid by the
Banks or Agent to Borrowers or, if the Agent, Banks or the Banks' nominees
take title to the Collateral by foreclosure or conveyance in lieu of
foreclosure, when the Collateral is thereafter sold to a third party
purchaser and all purchase money financing, if any, is paid in full. The
provisions of Section 14 of this Agreement and all provisions requiring
the Banks to indemnify the Agent shall survive repayment of the Loan and
termination of this Agreement.
30. Judicial Interpretation. In the event the provisions of
this Agreement require judicial or other interpretation, it is agreed that
the court interpreting or construing same shall not apply a presumption
that the terms hereof shall be more strictly construed against one party by
reason of the rule of construction that a document is to be more strictly
construed against a party who by itself or through its agents prepared the
same, it being agreed that all parties to this Agreement participated in
the preparation of this Agreement.
31. No Joint Venture. This Agreement shall not be construed to
create a partnership or joint venture between the parties hereto nor shall
Agent have any fiduciary obligations to any of the Banks.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed by their respective duly authorized officers as of the date
first above written.
BANKBOSTON, N.A. (as both Bank and Agent)
By: /s/ Kevin C. Hake
_____________________________________
Its: __________________________________
BankBoston, N.A.
115 Perimeter Center Place, N.E.
Suite 500
Atlanta, Georgia 30346
Attn: Kevin C. Hake
Facsimile: 770/390-8434
and
BankBoston, N.A.
100 Federal Street
Boston, Massachusetts 02110
Attn: Real Estate Division
Facsimile: 617/434-7108
<PAGE>
MORGAN STANLEY SENIOR FUNDING, INC.
By: /s/ Christopher A. Pucill
________________________________
Its: ______________________________
Morgan Stanley Senior Funding, Inc.
1585 Broadway, 2nd Floor
New York, New York 10036
Attn: Michael T. McLaughlin
Fax: 212/761-0587
<PAGE>
BANKTEXAS, N.A.
By: /s/ Robert Weakly
____________________________________
Its: ____________________________________
BankTEXAS, N.A.
8820 Westheimer
Houston, Texas 77063
Attn: Mr. Robert Weakly
Facsimile: ___________________
<PAGE>
BANK OF SCOTLAND
By: /s/ Annie Chin Tat
___________________________________
Its: ___________________________________
Bank of Scotland
New York Branch
565 Fifth Avenue
New York, New York 10017
Attn: Annie Chin Tat
Facsimile: 212/557-9460
<PAGE>
COMERICA BANK-TEXAS
By: /s/ Michael McAffee
___________________________________
Its: ___________________________________
Comerica Bank-Texas
One Sugar Creek Center Blvd
2nd Floor
Sugarland, Texas 77478
Attn: Michael McAffee
Facsimile: ___________________
<PAGE>
COMPASS BANK
By: /s/ John Reichenbach
_____________________________________
Its: ____________________________________
Compass Bank
8080 North Central Expressway, Suite 370
Dallas, Texas 75206
Attn: John Reichenbach
Facsimile: 214/890-8668
<PAGE>
FIRST AMERICAN BANK TEXAS, SSB
By: /s/ James R. Reynolds
___________________________________
Its: ___________________________________
First American Bank Texas, SSB
14651 Dallas Parkway
Suite 400
Dallas, Texas 75240
Attn: Jeffrey C. Schultz
Facsimile: 972/419-3308
<PAGE>
KREDIETBANK N.V.
By: /s/ Robert Smauffer
___________________________________
Its: ___________________________________
By: /s/ Michael Curran
___________________________________
Its: ___________________________________
Kredietbank N.V.
125 West 55th Street
10th Floor
New York, New York 10019
Attn: Frank Bayne
Facsimile: 212/541-0793
<PAGE>
NEW YORK LIFE INSURANCE COMPANY
By: /s/ Patricia Hudson
___________________________________
Its: ___________________________________
New York Life Insurance Company
51 Madison Avenue
Room 907
New York, New York 10010
Attn: Kevin Smith
Facsimile: 212/576-7528
<PAGE>
WELLSFORD REAL PROPERTIES, INC.
By: /s/ Edward Lowenthal
___________________________________
Its: President
Wellsford Real Properties, Inc.
610 Fifth Avenue
7th Floor
New York, New York 10020
Attn: Greg Hughes
Facsimile: 212/333-2323
<PAGE>
KEYPORT LIFE INSURANCE COMPANY
By: /s/ Daniel T.H. Yin
___________________________________
Its: ___________________________________
Keyport Life Insurance Company
c/o Chancellor LGT Senior Secured
Management, Inc.
1166 Avenue of the Americas
New York, New York 10036
Attn: Gregory L. Smith
Facsimile: 212/278-9619
<PAGE>
STRATA FUNDING LTD.
By: /s/ Gregory L. Smith
___________________________________
Its: ___________________________________
Strata Funding Ltd.
c/o Chancellor LGT Senior Secured
Management, Inc.
1166 Avenue of the Americas
New York, New York 10036
Attn: Gregory L. Smith
Facsimile: 212/278-9619
COMMERCIAL COMPANY SECOND SECURED TERM LOAN NOTE
$4,186,991.87 December 30, 1997
FOR VALUE RECEIVED, the undersigned THE WOODLANDS COMMERCIAL
PROPERTIES COMPANY, L.P., a Texas limited partnership, and THE WOODLANDS
LAND DEVELOPMENT COMPANY, L.P., a Texas limited partnership, hereby jointly
and severally promise to pay to WELLSFORD REAL PROPERTIES, INC. or order,
in accordance with the terms of that certain First Amended and Restated
Master Credit Agreement dated December 30, 1997, effective as of July 31,
1997 (the "Credit Agreement"), as from time to time in effect, among the
undersigned, BankBoston, N.A., for itself and as Agent, Morgan Stanley
Senior Funding, Inc. and such other Banks as may be from time to time named
therein, to the extent not sooner paid, on or before the Maturity Date, the
principal sum of FOUR MILLION ONE HUNDRED EIGHTY-SIX THOUSAND NINE HUNDRED
NINETY-ONE AND 87/100 DOLLARS ($4,186,991.87), with daily interest from
the date hereof, computed as provided in the Credit Agreement, on the
principal amount hereof from time to time unpaid, at a rate per annum on
each portion of the principal amount which shall at all times be equal to
the rate of interest applicable to such portion in accordance with the
Credit Agreement, and with interest on overdue principal and, to the extent
permitted by applicable law, on overdue installments of interest and late
charges at the rates provided in the Credit Agreement. Interest shall be
payable on the dates specified in the Credit Agreement, except that all
accrued interest shall be paid at the stated or accelerated maturity hereof
or upon the prepayment in full hereof. Capitalized terms used herein and
not otherwise defined herein shall have the meanings set forth in the
Credit Agreement.
Payments hereunder shall be made to BankBoston, N.A., as Agent for the
payee hereof, 100 Federal Street, Boston, Massachusetts 02110.
This Note is one of one or more Commercial Company Second Secured Term
Loan Notes evidencing borrowings by Commercial Company under and is
entitled to the benefits and subject to the provisions of the Credit
Agreement. The principal of this Note may be due and payable in whole or
in part prior to the maturity date stated above and is subject to mandatory
prepayment in the amounts and under the circumstances set forth in the
Credit Agreement, and may be prepaid in whole or from time to time in part,
all as set forth in the Credit Agreement.
Notwithstanding anything in this Note to the contrary, all agreements
between the Borrowers and the Banks and the Agent, whether now existing or
hereafter arising and whether written or oral, are hereby limited so that
in no contingency, whether by reason of acceleration of the maturity of any
of the Obligations or otherwise, shall the interest contracted for, charged
or received by the Banks exceed the maximum amount permissible under
applicable law. If, from any circumstance whatsoever, interest would
otherwise be payable to the Banks in excess of the maximum lawful amount,
the interest payable to the Banks shall be reduced to the maximum amount
permitted under applicable law; and if from any circumstance the Banks
shall ever receive anything of value deemed interest by applicable law in
excess of the maximum lawful amount, an amount equal to any excessive
interest shall be applied to the reduction of the principal balance of the
Obligations and to the payment of interest or, if such excessive interest
exceeds the unpaid balance of principal of the Obligations, such excess
shall be refunded to the undersigned Borrower. All interest paid or agreed
to be paid to the Banks shall, to the extent permitted by applicable law,
be amortized, prorated, allocated and spread throughout the full period
until payment in full of the principal of the Obligations (including the
period of any renewal or extension thereof) so that the interest thereon
for such full period shall not exceed the maximum amount permitted by
applicable law. This paragraph shall control all agreements between the
Borrowers and the Banks and the Agent.
In case an Event of Default shall occur, the entire principal amount
of this Note may become or be declared due and payable in the manner and
with the effect provided in said Credit Agreement.
This Note shall be governed by and construed in accordance with the
laws of the Commonwealth of Massachusetts (without giving effect to the
conflict of laws rules of any jurisdiction).
The undersigned maker and all guarantors and endorsers, hereby waive
presentment, demand, notice, protest, notice of intention to accelerate the
indebtedness evidenced hereby, notice of acceleration of the indebtedness
evidenced hereby and all other demands and notices in connection with the
delivery, acceptance, performance and enforcement of this Note, except as
specifically otherwise provided in the Credit Agreement, and assent to
extensions of time of payment or forbearance or other indulgence without
notice.
This Note, together with other Second Secured Term Loan Notes dated of
even date herewith, is a note executed in restatement of those certain Term
Loan Notes from the undersigned to BankBoston, N.A. and Morgan Stanley
Senior Funding, Inc., both dated July 31, 1997 and each in the face
principal amount of $30,000,000.00.
IN WITNESS WHEREOF the undersigned has by its duly authorized
officers, executed this Note under seal as of the day and year first above
written.
THE WOODLANDS COMMERCIAL PROPERTIES COMPANY, L.P.,
a Texas limited partnership
By: CresWood Development, L.L.C., a Delaware
limited liability company, its authorized
general partner
By: Crescent Real Estate Equities Limited
Partnership, a Delaware limited
partnership, its sole member
By: Crescent Real Estate Equities, Ltd.,
a Delaware corporation, its general
partner
Name:/s/ Bruce A. Picker
------------------------
Title: VP and Treasurer
[CORPORATE SEAL]
THE WOODLANDS LAND DEVELOPMENT COMPANY, L.P., a
Texas limited partnership
By: The Woodlands Land Company, Inc., a Texas
corporation, its authorized general partner
By: /s/ Jeffrey L. Stevens
-----------------------------------
Name: Jeffrey L. Stevens
Title: President
[CORPORATE SEAL]
LAND COMPANY SECOND SECURED TERM LOAN NOTE
$10,813,008.13 December 30, 1997
FOR VALUE RECEIVED, the undersigned THE WOODLANDS LAND DEVELOPMENT
COMPANY, L.P., a Texas limited partnership, and THE WOODLANDS COMMERCIAL
PROPERTIES COMPANY, L.P., a Texas limited partnership, hereby jointly and
severally promise to pay to WELLSFORD REAL PROPERTIES, INC. or order, in
accordance with the terms of that certain First Amended and Restated Master
Credit Agreement dated December 30, 1997, effective as of July 31, 1997
(the "Credit Agreement"), as from time to time in effect, among the
undersigned, BankBoston, N.A., for itself and as Agent, Morgan Stanley
Senior Funding, Inc. and such other Banks as may be from time to time named
therein, to the extent not sooner paid, on or before the Maturity Date, the
principal sum of TEN MILLION EIGHT HUNDRED THIRTEEN THOUSAND EIGHT AND
13/100 DOLLARS ($10,813,008.13), with daily interest from the date hereof,
computed as provided in the Credit Agreement, on the principal amount
hereof from time to time unpaid, at a rate per annum on each portion of the
principal amount which shall at all times be equal to the rate of interest
applicable to such portion in accordance with the Credit Agreement, and
with interest on overdue principal and, to the extent permitted by
applicable law, on overdue installments of interest and late charges at the
rates provided in the Credit Agreement. Interest shall be payable on the
dates specified in the Credit Agreement, except that all accrued interest
shall be paid at the stated or accelerated maturity hereof or upon the
prepayment in full hereof. Capitalized terms used herein and not otherwise
defined herein shall have the meanings set forth in the Credit Agreement.
Payments hereunder shall be made to BankBoston, N.A., as Agent for the
payee hereof, 100 Federal Street, Boston, Massachusetts 02110.
This Note is one of one or more Land Company Second Secured Term Loan
Notes evidencing borrowings by Land Company under and is entitled to the
benefits and subject to the provisions of the Credit Agreement. The
principal of this Note may be due and payable in whole or in part prior to
the maturity date stated above and is subject to mandatory prepayment in
the amounts and under the circumstances set forth in the Credit Agreement,
and may be prepaid in whole or from time to time in part, all as set forth
in the Credit Agreement.
Notwithstanding anything in this Note to the contrary, all agreements
between the Borrowers and the Banks and the Agent, whether now existing or
hereafter arising and whether written or oral, are hereby limited so that
in no contingency, whether by reason of acceleration of the maturity of any
of the Obligations or otherwise, shall the interest contracted for, charged
or received by the Banks exceed the maximum amount permissible under
applicable law. If, from any circumstance whatsoever, interest would
otherwise be payable to the Banks in excess of the maximum lawful amount,
the interest payable to the Banks shall be reduced to the maximum amount
permitted under applicable law; and if from any circumstance the Banks
shall ever receive anything of value deemed interest by applicable law in
excess of the maximum lawful amount, an amount equal to any excessive
interest shall be applied to the reduction of the principal balance of the
Obligations and to the payment of interest or, if such excessive interest
exceeds the unpaid balance of principal of the Obligations, such excess
shall be refunded to the undersigned Borrower. All interest paid or agreed
to be paid to the Banks shall, to the extent permitted by applicable law,
be amortized, prorated, allocated and spread throughout the full period
until payment in full of the principal of the Obligations (including the
period of any renewal or extension thereof) so that the interest thereon
for such full period shall not exceed the maximum amount permitted by
applicable law. This paragraph shall control all agreements between the
Borrowers and the Banks and the Agent.
In case an Event of Default shall occur, the entire principal amount
of this Note may become or be declared due and payable in the manner and
with the effect provided in said Credit Agreement.
This Note shall be governed by and construed in accordance with the
laws of the Commonwealth of Massachusetts (without giving effect to the
conflict of laws rules of any jurisdiction).
The undersigned maker and all guarantors and endorsers, hereby waive
presentment, demand, notice, protest, notice of intention to accelerate the
indebtedness evidenced hereby, notice of acceleration of the indebtedness
evidenced hereby and all other demands and notices in connection with the
delivery, acceptance, performance and enforcement of this Note, except as
specifically otherwise provided in the Credit Agreement, and assent to
extensions of time of payment or forbearance or other indulgence without
notice.
This Note, together with other Second Secured Term Loan Notes dated of
even date herewith, is a note executed in restatement of those certain Term
Loan Notes from the undersigned to BankBoston, N.A. and Morgan Stanley
Senior Funding, Inc., both dated July 31, 1997 and each in the face
principal amount of $30,000,000.00.
[Remainder of page intentionally left blank]
IN WITNESS WHEREOF the undersigned has by its duly authorized
officers, executed this Note under seal as of the day and year first above
written.
THE WOODLANDS LAND DEVELOPMENT COMPANY, L.P., a
Texas limited partnership
By: The Woodlands Land Company, Inc., a Texas
corporation, its authorized general partner
By: /s/ Jeffrey L. Stevens
----------------------------------
Name: Jeffrey L. Stevens
Title: President
[CORPORATE SEAL]
THE WOODLANDS COMMERCIAL PROPERTIES COMPANY, L.P.,
a Texas limited partnership
By: CresWood Development, L.L.C., a Delaware
limited liability company, its authorized
general partner
By: Crescent Real Estate Equities Limited
Partnership, a Delaware limited
partnership, its sole member
By: Crescent Real Estate Equities, Ltd.,
a Delaware corporation, its general
partner
Name: /s/ Bruce A. Picker
Title: Vice President and Treasurer
[CORPORATE SEAL]
[EXECUTION COPY]
PROGRAM AGREEMENT
FOR
CLAIRBORNE INVESTORS
MORTGAGE INVESTMENT PROGRAM
BETWEEN
CREAMER REALTY CONSULTANTS
AND
THE PRUDENTIAL INVESTMENT CORPORATION
DATED AS OF DECEMBER 10, 1997
<PAGE>
TABLE OF CONTENTS
Section Page
ARTICLE I
DEFINITIONS AND INTERPRETATION
1.1 Definitions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.2 Interpretation . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
ARTICLE II
FORMATION OF VENTURES
2.1 Formation of the Ventures. . . . . . . . . . . . . . . . . . . . . . 5
2.2 Aggregate Commitment of Creamer and PREI Investors . . . . . . . . . 7
2.3 Communication. . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
2.4 Proposal of an Eligible Investment . . . . . . . . . . . . . . . . . 7
2.5 Response to Proposal of an Eligible Investment . . . . . . . . . . . 8
2.6 Follow-on Investments. . . . . . . . . . . . . . . . . . . . . . . . 9
2.7 Proposal for Sale or Disposition of Owned Investment . . . . . . . . 9
2.8 PREI Response to Sale or Disposition Proposal. . . . . . . . . . . .10
2.9 Right to Compel Sale or Disposition. . . . . . . . . . . . . . . . .10
2.10 ERISA Restrictions . . . . . . . . . . . . . . . . . . . . . . . . .10
2.11 Venture Entity . . . . . . . . . . . . . . . . . . . . . . . . . . .11
ARTICLE III
COVENANTS OF THE PARTIES
3.1 Limitations on the General Partner . . . . . . . . . . . . . . . . .11
3.2 Other Funds and Investments. . . . . . . . . . . . . . . . . . . . .12
3.3 Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .13
3.4 Implementing Agreement . . . . . . . . . . . . . . . . . . . . . . .13
3.5 Access to Information and Employees. . . . . . . . . . . . . . . . .13
3.6 Confidentiality. . . . . . . . . . . . . . . . . . . . . . . . . . .13
3.7 Public Announcements . . . . . . . . . . . . . . . . . . . . . . . .14
3.8 Role of PREI . . . . . . . . . . . . . . . . . . . . . . . . . . . .14
3.9 Informational Meetings . . . . . . . . . . . . . . . . . . . . . . .14
3.10 Commitment of Principals . . . . . . . . . . . . . . . . . . . . . .14
3.11 Compliance with Applicable Law . . . . . . . . . . . . . . . . . . .14
ARTICLE IV
BUY/SELL ARRANGEMENT
4.1 Buy/Sell in Certain Circumstances. . . . . . . . . . . . . . . . . .15
ARTICLE V
CONDITIONS PRECEDENT
5.1 Conditions Precedent of PREI . . . . . . . . . . . . . . . . . . . .17
5.2 Conditions Precedent of Creamer. . . . . . . . . . . . . . . . . . .18
ARTICLE VI
CLOSING
6.1 Closing. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .19
6.2 Deliveries by Creamer. . . . . . . . . . . . . . . . . . . . . . . .19
6.3 Deliveries by PREI . . . . . . . . . . . . . . . . . . . . . . . . .21
6.4 Initial Capital Contributions. . . . . . . . . . . . . . . . . . . .21
ARTICLE VII
REPRESENTATIONS AND WARRANTIES
7.1 Representations and Warranties of Creamer. . . . . . . . . . . . . .21
7.2 Representations and Warranties of PIC. . . . . . . . . . . . . . . .22
ARTICLE VIII
TERMINATION
ARTICLE IX
INDEMNIFICATION
9.1 Indemnification by Creamer . . . . . . . . . . . . . . . . . . . . .24
9.2 Indemnification by PIC . . . . . . . . . . . . . . . . . . . . . . .24
9.3 Indemnification by each Venture. . . . . . . . . . . . . . . . . . .24
9.4 Claims . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .25
9.5 Insurance or Third-Party Indemnification . . . . . . . . . . . . . .25
ARTICLE X
REPORTS
10.1 Independent Auditors . . . . . . . . . . . . . . . . . . . . . . . .25
10.2 Reports to PREI. . . . . . . . . . . . . . . . . . . . . . . . . . .26
10.3 Reports to Current and Former Partners . . . . . . . . . . . . . . .26
10.4 Additional Information . . . . . . . . . . . . . . . . . . . . . . .26
ARTICLE XI
MISCELLANEOUS
11.1 Notices. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .26
11.2 No Third-Party Beneficiaries . . . . . . . . . . . . . . . . . . . .28
11.3 No Assignment. . . . . . . . . . . . . . . . . . . . . . . . . . . .28
11.4 Execution in Counterparts. . . . . . . . . . . . . . . . . . . . . .28
11.5 Amendments . . . . . . . . . . . . . . . . . . . . . . . . . . . . .28
11.6 Validity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .28
11.7 Governing Law. . . . . . . . . . . . . . . . . . . . . . . . . . . .28
11.8 Jurisdiction . . . . . . . . . . . . . . . . . . . . . . . . . . . .28
11.9 Arbitration. . . . . . . . . . . . . . . . . . . . . . . . . . . . .28
11.10 Waiver of Jury Trial. . . . . . . . . . . . . . . . . . . . . .29
11.11 Waiver. . . . . . . . . . . . . . . . . . . . . . . . . . . . .29
11.12 Binding Effect. . . . . . . . . . . . . . . . . . . . . . . . .29
11.13 Entire Agreement. . . . . . . . . . . . . . . . . . . . . . . .29
11.14 Remedies Not Exclusive. . . . . . . . . . . . . . . . . . . . .30
EXHIBITS AND SCHEDULES
Exhibit A Investment Guidelines
Exhibit B Sample IRR Calculation
Exhibit C Form of Limited Liability Company Agreement
Exhibit D Capital Commitments
Schedule 3.2(a) Certain Advisory or Consulting Relationships
Schedule 7.1(a) Controlled or Controlling Entities
<PAGE>
PROGRAM AGREEMENT
THIS PROGRAM AGREEMENT FOR CLAIRBORNE INVESTORS MORTGAGE INVESTMENT
PROGRAM is made and entered into as of December 10, 1997, by and between
The Prudential Investment Corporation, a New Jersey corporation ("PIC"),
through one of its divisions, Prudential Real Estate Investors ("PREI"),
and Creamer Realty Consultants, a New York partnership ("Creamer").
W I T N E S S E T H :
WHEREAS, PREI and Creamer intend to identify distressed, discount or
other secured mortgage debt through Creamer's efforts that satisfy the
objectives and criteria ("Investment Guidelines") set forth in Exhibit A
hereto (each an "Eligible Investment"), and if any such Eligible Investment
is approved by PREI, in its sole and absolute discretion, to establish a
Venture to acquire such Eligible Investment;
WHEREAS, each Venture shall acquire such Eligible Investment with
funds contributed by Creamer and/or a Financing Source (as defined herein)
and funds contributed by a particular account managed or advised by PREI;
and
WHEREAS, the Venture Agreement for each Venture shall provide for the
management and monitoring of such Eligible Investment by Creamer.
NOW, THEREFORE, in consideration of the premises and the mutual
covenants of the parties hereto, and for other good and valuable
consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto hereby agree as follows:
ARTICLE I
DEFINITIONS AND INTERPRETATION
1.1 Definitions. Whenever used in this Agreement, including the
Recitals, the following terms have the meanings assigned below:
"Affiliate" means, when used with reference to a specified
Person, (i) any Person that directly or indirectly through one or more
intermediaries controls or is controlled by or is under common control with
the specified Person or (ii) any Person that is an officer, general partner
or trustee of, or serves in a similar capacity with respect to the
specified Person or of which the specified Person is an officer, general
partner or trustee, or with respect to which the specified Person serves in
a similar capacity. For the purpose of this definition, "controls," "is
controlled by" and "under common control with" mean the possession of the
power to direct or cause the direction of the management and policies of a
Person, whether through ownership of voting securities, by employment, by
contract or otherwise, which shall conclusively be deemed to exist where
one Person directly or indirectly is the beneficial owner of 10% or more of
any class of voting equity securities or other voting ownership interests
of another Person. No Venture shall be deemed to be an Affiliate of either
Creamer or PREI for the purposes of this Agreement. Neither Wellsford Real
Properties, Inc., a Maryland corporation, nor its Affiliates (excluding
Creamer and the Principals), shall be deemed to be an Affiliate of Creamer
for the purposes of Sections 3.2 or 3.7 or Section 15.9 of the Venture
Agreement.
"Agreement" means this Agreement, as amended, modified,
supplemented or restated from time to time.
"Approved Investment" means an Eligible Investment proposed by
Creamer which is approved, in its sole discretion, by PREI for acquisition
and investment by a Venture in accordance with this Agreement.
"Buy/Sell Date" is defined in Section 4.1.
"Carry" is defined in Section 2.1(b).
"Capital Commitments" means the capital commitment and obligation
of each PREI Investor and Creamer to contribute capital and invest in
Ventures in accordance with this Agreement as set forth in Exhibit D
hereto, subject to Section 2.2.
"Closing" means, with respect to a particular Venture, the
consummation of the formation of such Venture in accordance with this
Agreement
"Closing Date" is defined in Section 6.1.
"Commitment Period" means the period from and after the date
hereof through the earlier of (i) December 10, 1999, subject to Section
2.2, (ii) the date on which all Capital Commitments have been funded,
subject to Section 2.2, or (iii) an Early Termination Date.
"Creamer" is defined in the preamble and includes any controlled
Affiliate of Creamer. For the purpose of this definition "controlled"
shall mean a Person's beneficial ownership of more than 50% of all classes
of voting equity securities or other voting ownership interests of another
Person.
"Creamer Response Notice" is defined in Section 2.2.
"Defaulting Purchaser" is defined in Section 4.1.
"Disabling Conduct" means conduct that constitutes fraud, willful
misfeasance, bad faith, gross negligence, breach of fiduciary duty or
reckless disregard of duty in connection with the Program or any Venture,
or such Person has pleaded nolo contendere to, or been convicted of a
felony or of violating federal or state securities laws.
"Early Termination Date" means the earlier to occur of (a) the
breach in any material respect by Creamer or any Principal of this
Agreement or any Venture Agreement related to a Venture and the failure of
such breach to be cured in full within 10 days after notice thereof from
PREI or any PREI Investor, (b) the bankruptcy or insolvency of Creamer or
any Principal, (c) the failure of Creamer to submit at least $50 million of
Eligible Investments during any consecutive six months during the
Commitment Period as determined by PREI in its sole and absolute
discretion, provided, that, should Creamer submit in excess of $50 million
of Eligible Investments during any such six month period, up to $25 million
of such excess may be credited to the next six month period for purposes of
determining whether or not an Early Termination Date has occurred, (d)
either of the Principals ceasing to be a full-time director and officer of
Creamer, whether due to death, disability, termination or any other reason
or circumstance, or (e) any of Creamer or the Principals engaging in
Disabling Conduct.
"Eligible Investment" is defined in the Recital.
"ERISA" means the Employee Retirement Income Security Act of
1974, as amended.
"Financing Source" means (i) Wellsford Real Properties, Inc., a
Maryland corporation, and (ii) any controlled Affiliate thereof. For the
purpose of this definition "controlled" shall mean a Person's beneficial
ownership of more than 50% of all classes of voting equity securities or
other voting ownership interests of another Person.
"Fixed Reimbursement Amount" is defined in Section 2.1(d).
"Increase Notice" is defined in Section 2.2.
"Investment Documentation" is defined in Section 2.5.
"Investment Guidelines" means the guidelines and criteria for
Eligible Investments set forth in Exhibit A.
"Investment Proposal" is defined in Section 2.4(a).
"Limited Liability Company Agreement" means, with respect to a
particular Venture in connection with an Approved Investment which Creamer
and PREI have agreed to form as a limited liability company, an agreement
of limited liability company between Creamer, a Financing Source and the
participating PREI Investor in substantially the form of Exhibit C
implementing the terms of a particular Venture, together with such
amendments thereto as may be necessary to reflect any additional terms of a
particular Venture to which Creamer and PREI have agreed.
"Limited Partnership Agreement" means, with respect to a
particular Venture in connection with an Approved Investment which Creamer
and PREI have agreed to form as a limited partnership, a limited
partnership agreement between Creamer, a Financing Source and the
participating PREI Investor containing the substantive provisions contained
in the form of Limited Liability Company Agreement attached hereto as
Exhibit C, together with such amendments thereto as may be necessary to
reflect (i) any additional terms of a particular Venture to which Creamer
and PREI have mutually agreed and (ii) the status of the Venture as a
limited partnership rather than a limited liability company.
"Loan Documents" means all loan and financing agreements and
instruments relating to an Eligible Investment, including all notes,
mortgages, assignments and other collateral or security agreements,
instruments and documents, and all exhibits and schedules thereto, each as
amended, supplemented or modified.
"Loss" or "Losses" means all liabilities, losses, costs, damages
(including punitive, consequential and treble damages), penalties or
expenses (including, without limitation, reasonable attorneys' fees and
expenses and costs of investigation and litigation), and also including any
expenditures or expenses incurred to cover, remedy or rectify any such
Losses.
"Offeree" is defined in Section 4.1.
"Offering Notice" is defined in Section 4.1.
"Offeror" is defined in Section 4.1.
"Option Period" is defined in Section 4.1.
"Other Assets" is defined in Section 4.1.
"Owned Investment" means an Approved Investment that has been
acquired by a Venture and is owned by the Venture at the time in question.
"Person" means an individual, partnership, corporation (including
a business trust), limited liability company, joint stock company, trust,
unincorporated association, joint venture, governmental authority or other
entity.
"Principal" means Frank G. Creamer, Jr. and Michael J. Vitale.
"PREI Investor" means any account managed or advised by PREI,
without being limited to those that previously invested in any particular
Venture.
"Program" is defined in Section 2.1.
"Purchaser" is defined in Section 4.1.
"Restricted Party" is defined in Section 2.10.
"Sale Documentation" is defined in Section 2.8.
"Sale Notice" is defined in Section 2.9.
"Substituted Purchaser" is defined in Section 4.1.
"Transaction Documents" means with respect to a particular
Venture this Agreement and the Venture Agreement for such Venture and such
other agreements between the Venture and Creamer or its Affiliates and any
Financing Source as shall be identified in the opinion given with respect
to such Venture by counsel to Creamer at the Closing for such Venture.
"Venture" means a limited liability company or limited
partnership, as the case may be, formed by Creamer, the participating PREI
Investor and any Financing Source pursuant to this Agreement for the
purpose of acquiring Approved Investments, which limited liability company
or limited partnership shall be governed by a Venture Agreement.
"Venture Agreement" means, in the case of a Venture which is
formed as a limited partnership, a Limited Partnership Agreement or, in the
case of a Venture which is formed as a limited liability company, a Limited
Liability Company Agreement.
1.2 Interpretation. The headings preceding the text of Articles and
Sections included in this Agreement and the headings to the Schedules
attached to this Agreement are for convenience of reference only and shall
not be deemed a part of this Agreement or be given any effect in
interpreting this Agreement. The use of the masculine, feminine or neuter
gender or the singular or plural form of words herein shall not limit the
applicability of any provision of this Agreement to such gender or form.
The use of the term "including" or "include" shall in all cases herein mean
"including, without limitation," or "include, without limitation,"
respectively. Underscored references to Articles, Sections, clauses,
Exhibits or Schedules shall refer to those portions of this Agreement, and
any underscored reference to a clause shall, unless otherwise identified,
refer to the appropriate clause within the same Section in which such
reference occurs. The use of the terms "hereunder," "hereof," "hereto" and
words of similar import shall refer to this Agreement as a whole and not to
any particular Article, Section or clause of, or Exhibit or Schedule to,
this Agreement.
ARTICLE II
FORMATION OF VENTURES
2.1 Formation of the Ventures.
(a) Creamer and PREI may from time to time form Ventures for the
purposes of acquiring, owning, managing, selling and disposing of
Approved Investments that are consistent with the Investment
Guidelines and the provisions of this Agreement (unless otherwise
agreed in a writing signed by Creamer and PREI) and with the goal of
providing unleveraged internal rates of return of 16-26% to the PREI
Investors. This Agreement and its exhibits and the transactions
contemplated hereby and thereby are referred to as the "Program".
(b) Each Venture which Creamer and PREI agree to form will be
implemented by the execution by Creamer, a Financing Source (if any)
and the PREI Investor participating in such Venture of a Venture
Agreement pursuant to which (i) Creamer and a Financing Source (if
any) will agree to contribute 10% and the PREI Investor participating
in such Venture will agree to contribute 90% of the capital necessary
for such Venture to acquire the Approved Investment, subject to
Section 2.2; (ii) distributions and profit and loss allocations in
respect of such Venture will be distributed (A) first, to such
participating PREI Investor, a 10% quarterly compounded return in
respect of capital invested by such participating PREI Investor in
such Venture will be paid or allocated to such participating PREI
Investor, (B) second, to Creamer and a Financing Source (if any), a
10% quarterly compounded return in respect of capital invested by
Creamer and a Financing Source (if any) in such Venture will be paid
or allocated to Creamer and a Financing Source (if any), (C) third, to
such participating PREI Investor and Creamer and a Financing Source
(if any), the return and repayment of their capital invested in the
Venture, (D) fourth, to such participating PREI Investor and Creamer
and a Financing Source (if any), allocated 80% to such participating
PREI Investor and 20% to Creamer and a Financing Source (if any) until
such participating PREI Investor has received a 16% quarterly
compounded return in respect of the capital invested by such
participating PREI Investor in the Venture, determined by PREI on a
quarterly compounded basis and in accordance with the sample set forth
on Exhibit B attached hereto, and (E) fifth, 70% to such participating
PREI Investor and 30% to Creamer and a Financing Source (if any) (the
Creamer and any Financing Source participations described in clauses
(D) and (E) are referred to as the "Carry", and are subject to
adjustment as described in Section 2.2); and (iii) the other terms of
such Venture shall be substantially similar to those set forth in the
form of Limited Liability Company Agreement attached hereto as
Exhibit C. Except as otherwise permitted by the applicable Venture
Agreement, Creamer, a Financing Source (if any) and the PREI Investor
shall be the only partners of each Venture, if a partnership, or its
only members, if a limited liability company.
:\E Unless otherwise agreed, (i) Creamer shall be the general
partner of each Venture, if a limited partnership, or its managing
member, if a limited liability company and (ii) a single PREI Investor
and a Financing Source (if any) shall be the sole limited partners of
each Venture, if a limited partnership, or its members, if a limited
liability company.
(d) Each Venture, in consideration of Creamer's management
duties under the applicable Venture Agreement, will pay to Creamer (i)
a contribution fee equal to 50 basis points (or one-half of 1%) of the
capital contributed by the PREI Investors participating in such
Venture to such Venture payable upon funding of such Venture, and (ii)
an annual fixed amount (the "Fixed Reimbursement Amount") as
reimbursement for the expenses of Creamer in managing such Venture
equal to 25 basis points (or one-quarter of 1%) of the gross
acquisition cost of the Approved Investment acquired by such Venture,
payable quarterly in arrears at the end of each fiscal quarter.
2.2 Aggregate Commitment of Creamer and PREI Investors. Except as
otherwise agreed by Creamer and PREI, the aggregate Capital Commitment of
Creamer and any Financing Sources to all Ventures shall not exceed
$15,000,000, and the aggregate Capital Commitment of the PREI Investors to
all Ventures shall not exceed $135,000,000 and the individual Capital
Commitment of any one PREI Investor shall not exceed the amount set forth
opposite such PREI Investor's name on Exhibit D; provided, that, at any
time and from time to time during the Commitment Period, PREI may, in its
sole and absolute discretion and on behalf of the PREI Investors, increase
their aggregate Capital Commitments by an amount up to an additional
$75,000,000, for aggregate PREI Investor Capital Commitments of
$210,000,000, by notifying ("Increase Notice") Creamer thereof in which
case, (a) the Commitment Period will be extended from and after December
10, 1999 to a date which reflects the same number of elapsed days as from
the date hereof to the date of the Increase Notice, (b) Creamer may, in its
sole and absolute discretion and at any time within 30 days following such
Increase Notice, increase the Creamer Capital Commitment by an amount up to
the percentage increase in PREI Investor Capital Commitments reflected in
the Increase Notice by notifying ("Creamer Response Notice") PREI of its
determination thereof, and (c) the Carry allocable to Creamer and any
Financing Source with respect to all Ventures funded from and after the
30th day following the date of the Increase Notice will be proportionately
reduced by a percentage which equals the percentage decline, if any, in the
ratio of the aggregate Creamer and any Financing Source Capital Commitment
to total Capital Commitments of all parties prior to the Increase Notice as
compared to the ratio of the aggregate Creamer and any Financing Source
Capital Commitment to total Capital Commitments of all parties after the
Increase Notice and Creamer Response Notice, if any, and such reduction in
the Carry will be reallocated to the PREI Investors participating in such
Ventures. No PREI Investor shall be liable for the Capital Commitments of
any other PREI Investor, and PREI will not be obligated or liable for the
Capital Commitments of any of them. Subject to the terms and conditions of
this Agreement, each of Creamer, any Financing Source and the PREI
Investors shall fund their Capital Commitment with respect to each Venture
in such amounts and at such times as shall be specified in the Venture
Agreement applicable to such Venture.
2.3 Communication. Creamer and PREI shall orally communicate as to
potential Investment Proposals, the Ventures, and Owned Investments on a
reasonably frequent basis. Creamer shall inform PREI of any significant
activity in respect of any Venture or Owned Investment. Creamer shall
afford PREI the opportunity to visit the collateral underlying a Proposed
Investment whenever possible. PREI shall name a single contact person for
purposes of this Section.
2.4 Proposal of an Eligible Investment. In furtherance of this
Agreement, Creamer, if it desires PREI to consider an Eligible Investment
for a Venture, shall submit to PREI a copy of each of the following
documents:
(a) an investment proposal describing the Eligible Investment
and its eligibility under the Investment Guidelines, summarizing the
investment opportunity and expected returns, describing the underlying
property, a market summary, a borrower summary and financial
information, loan summary, disposition strategy, pro forma and
sensitivity analyses, and such other information, and in such manner
of presentation, as PREI shall, from time to time, request
("Investment Proposal");
(b) all available Loan Documents, including collateral and
security documents, relating to the Eligible Investment;
(c) the most recently available appraisal or valuation of the
underlying property;
(d) the most recently available environmental, structural and
other reports relating to the underlying property;
(e) other documentation prepared or obtained by Creamer relating
to the Eligible Investment which Creamer reasonably believes is
material to an investment decision with respect to such Eligible
Investment; and
(f) such other information and documentation reasonably
available to Creamer as PREI shall reasonably request.
2.5 Response to Proposal of an Eligible Investment.
(a) PREI shall promptly review the documents referred to in
Section 2.4 with respect to an Eligible Investment (collectively, the
"Investment Documentation"). After review of such Investment
Documentation, but in no event later than 10 business days after
receipt thereof, PREI shall notify Creamer in writing that (i) it has
elected to proceed with Creamer to form a Venture with respect to such
Eligible Investment based on the facts, circumstances, terms and
conditions set forth in the Investment Documentation and the form of
Venture Agreement attached hereto, (ii) it has amendments or
objections to the Investment Documentation, and will negotiate with
Creamer to implement such amendments and/or resolve such objections
and form a Venture with respect to such Eligible Investment based on
the facts, circumstances, terms and conditions set forth in the
amended Investment Documentation, or (iii) it does not wish to form a
Venture with respect to the Eligible Investment. PREI may determine,
in its sole and absolute discretion, for any reason or no reason at
all, to pursue any of the alternatives set forth above.
(b) If PREI has notified Creamer that it has amendments to the
Investment Documentation or Venture Documents, objections to the
Investment Documentation or Venture Documents and/or desires to form a
Venture with respect to such Eligible Investment, then PREI and
Creamer shall proceed to negotiate to implement such amendments and/or
resolve such objections within thirty days of such notification from
PREI, and if they are able to accomplish the foregoing within such
thirty days, they shall negotiate to promptly form such Venture.
Notwithstanding any other provision of this Agreement, neither PREI
nor Creamer shall have any obligation to form a Venture unless and
until definitive documentation, including a Venture Agreement, setting
forth their complete and final understanding with respect to the
formation of the Venture, and the acquisition of the Eligible
Investment by the Venture, shall have been executed and delivered by
the PREI Investor and Creamer.
(c) Under no circumstances shall Creamer, PIC, PREI or any PREI
Investors be required to pursue the formation of Ventures which
individually or in the aggregate require Capital Commitments greater
than those set forth in Section 2.2.
2.6 Follow-on Investments. In furtherance of this Agreement,
Creamer, if it desires PREI to consider an Eligible Investment that
increases the amount of or is substantially related to an Owned Investment
(a "Follow-on Investment"), then Creamer shall submit to PREI the
Investment Documentation described in Section 2.4 as to such Follow-on
Investment. After review of such Investment Documentation, but in no event
later than 10 business days after receipt thereof, PREI shall notify
Creamer in writing that (i) it has elected to proceed with Creamer with
respect to such Follow-on Investment based on the facts, circumstances,
terms and conditions set forth in the Investment Documentation, (ii) it has
amendments or objections to the Investment Documentation, and will
negotiate with Creamer to implement such amendments and/or resolve such
objections and proceed with such Follow-on Investment based on the facts,
circumstances, terms and conditions set forth in the amended Investment
Documentation, or (iii) it does not wish to proceed with the Follow-on
Investment. PREI may determine, in its sole and absolute discretion, for
any reason or no reason at all, to pursue any of the alternatives set forth
above. If PREI elects the alternative described in clause (i) above, then
PREI and Creamer shall amend the Venture Agreement with respect to the
Owned Investment related to such Follow-on Investment to allow for such
Follow-on Investment. If PREI elects the alternative described in clause
(ii) above, then PREI shall proceed to negotiate to implement such
amendments and/or resolve such objections within thirty days of
notification from PREI, and if they are able to accomplish the foregoing
within such thirty days, they shall negotiate to promptly amend the Venture
Agreement with respect to the Owned Investment related to such Follow-on
Investment to allow for such Follow-on Investment. If PREI elects the
alternative described in clause (iii) above, then Creamer may exercise its
rights pursuant to Section 4.1 as to the particular Venture that owns the
Owned Investment related to the Follow-on Investment.
2.7 Proposal for Sale or Disposition of Owned Investment. In
furtherance of this Agreement, Creamer, if it desires PREI to consider the
sale or other disposition of an Owned Investment or an interest therein by
the Venture owning such Owned Investment or any or all of the interests in
such Venture that are held by Creamer and the PREI Investor participating
in such Venture, shall submit to PREI one copy of the following:
(a) an updated rent roll and other information relating to the
property or loans underlying such Venture and arising since the
delivery of the Investment Documentation relating thereto;
(b) a sale and disposition proposal summarizing the sale or
disposition opportunity, strategy and limitation, and expected
unleveraged internal rate of return for the PREI Investor
participating in such Venture;
(c) such other documentation prepared or obtained by Creamer
relating to the Owned Investment which Creamer reasonably believes is
material to a sale or disposition decision with respect to such Owned
Investment; and
(d) such other information and documentation reasonably
available to Creamer as may be reasonably requested by PREI.
2.8 PREI Response to Sale or Disposition Proposal. PREI shall review
the documents referred to in Section 2.7 with respect to an Owned
Investment (collectively, the "Sale Documentation"). After review of all
of the Sale Documentation, but in no event later than ten business days
after receipt of the Sale Documentation, PREI shall notify Creamer in
writing that (i) it has elected to proceed with the sale or disposition of
the Owned Investment based on the facts, circumstances, terms and
conditions set forth in the Sale Documentation, or (ii) it does not wish to
proceed with the sale or disposition of the Approved Investment. PREI may
determine, in its sole and absolute discretion, for any reason or no reason
at all, to pursue any of the alternatives set forth above. If PREI
notifies Creamer that it does not wish to proceed with the sale or
disposition of the Owned Investment, Creamer may, within forty-five days of
such notification, initiate an Offering Notice pursuant to Section 4.1.
2.9 Right to Compel Sale or Disposition. PREI may, at any time after
the first anniversary of organizing and funding any Venture, direct Creamer
and such Venture to sell or dispose of the Owned Investment owned by such
Venture or all of the interests in such Venture that are held by Creamer
and the PREI Investors participating in such Venture, by notifying ("Sale
Notice") Creamer thereof, in which case, Creamer will use it best efforts
to realize the highest available cash purchase price therefor in accordance
with and within the time period set forth in the Sale Notice, subject to
Section 3.1. After the delivery of a Sale Notice, Creamer may, within 10
business days of such notification, initiate an Offering Notice pursuant to
Section 4.1.
2.10 ERISA Restrictions. Without limiting Creamer's fiduciary
obligations under ERISA, in no event shall any Venture enter into any
transaction with or acquire or hold any security in or obligation of a
Restricted Party unless, prior thereto, PREI has advised Creamer in writing
that such transaction, acquisition or holding does not constitute a
prohibited transaction within the meaning of Section 406 of ERISA. For
purposes of this Section, no such writing shall be required in respect of
the fees payable to the managing member or general partner, as the case may
be, pursuant to a Venture Agreement. The term "Restricted Party" includes
PREI and its Affiliates, Creamer and its Affiliates and such other persons
as PREI shall advise Creamer in writing are Restricted Parties, including
persons with respect to whom PREI determines that a transaction may
constitute a prohibited transaction under ERISA for which the prohibited
transaction exemptions referred to in Section 7.2(e) would not be
applicable.
2.11 Venture Entity. In organizing any Venture, the parties thereto
may elect for such Venture to take the legal form of a Delaware limited
liability company or a Delaware limited partnership. Such election shall,
if applicable, be made on the basis of which legal entity is anticipated to
result in the lowest aggregate state and local tax burden to such Venture
and its owners.
ARTICLE III
COVENANTS OF THE PARTIES
3.1 Limitations on the General Partner. Creamer, as general partner
or managing member of any Venture, shall not, without the prior approval of
PREI:
(a) act in contravention of any applicable law or regulation, or
provision of this Agreement (including the Investment Guidelines);
(b) intentionally act in a manner which would make it impossible
to carry out the purposes of any Venture;
(c) confess a judgment against any Venture;
(d) possess any Venture property or assign its rights in any
specific Venture property for other than a Venture purpose;
(e) admit any Person in addition to the PREI Investor
participating in a Venture as a partner or member of such Venture,
except for the successors and assignees of such PREI Investor;
(f) incur indebtedness (including guarantees of indebtedness) of
or on behalf of any Venture;
(g) call or require any capital contributions to any Venture;
(h) commence litigation or other proceedings by, on behalf of or
in respect of any Venture or Approved Investment, including
foreclosure or bankruptcy proceedings, or other similar judicial
enforcement of rights or remedies;
(i) release, waive or substitute any collateral, security or
other credit support in respect of any Venture or Approved Investment;
(j) engage in any or enter into any agreements or commitments
relating to any restructuring, rescheduling or other "work-out" in
respect of any Approved Investment in a Venture, including receipt of
any additional notes, securities or rights in connection therewith;
(k) engage in any or enter into any agreements or commitments
relating to any amendments, supplements, waivers or other
modifications in respect of any Loan Documents;
(l) engage in any or enter into any agreements or commitments
relating to any sale, transfer or disposition of any Approved
Investment or Venture or any interest therein; and
(m) make additional equity or debt investments in or on behalf
of any Venture.
3.2 Other Funds and Investments.
(a) Until such time as the Commitment Period expires, neither
Creamer nor the Principals, nor any of their respective Affiliates,
shall act as general partner, managing member, executive, manager,
advisor or consultant, nor otherwise sponsor or participate, directly
or indirectly, in any program, investment fund or investment venture
with a primary investment objective, strategy or focus of or on
purchasing distressed, discount or other secured mortgage debt that
satisfies the Investment Guidelines, other than advisory or consulting
relationships (but not any program or investment fund) which may exist
from time to time between Creamer and the entities listed on Schedule
3.2(a).
(b) If, at any time within two years after the Commitment Period
expires, any of Creamer or the Principals or their respective
Affiliates becomes a general partner, managing member, executive,
manager, or advisor as to any program, investment fund or venture
described in clause (a) that is controlled by Creamer or the
Principals or their respective Affiliates, they will promptly notify
PREI, and PREI and any PREI Investors will be provided with a right of
first refusal or priority participation therein on the same terms
offered to other third-party participants in such program, investment
fund or venture.
(c) Until 100% of the Capital Commitments have been committed,
neither Creamer nor the Principals, nor any of their respective
Affiliates, shall as principal purchase or acquire, directly or
indirectly, any interest in any Eligible Investment, whether or not it
becomes an Approved Investment.
(d) Any agreement or transaction of any kind whatsoever
between Creamer and any Person listed or to be listed on Schedule
7.1(b) that is directly or indirectly at the expense of a Venture or
directly or indirectly on behalf of a Venture shall be subject to the
prior written approval of PREI, and at PREI's sole discretion approval
may be withheld.
3.3 Expenses.
(a) Each party hereto shall bear its own expenses with respect
to this Agreement and the Program; provided, that, each Venture will
bear all fees and expenses related to its organization and closing and
the closing of any Owned Investment. Notwithstanding the foregoing,
Creamer shall bear any commission, finder's fee, or similar amount
payable to any broker, finder, agent or other intermediary as the
result of any engagement of such party by Creamer.
(b) No Venture will have any overhead or employees. Creamer
will bear all expenses of its personnel, office, overhead and out-of-
pocket expenses incurred in connection with the Program and each
Venture, including the cost of complying with the reporting
requirements contained herein or in any Venture Document, provided
that, pursuant to each Venture Agreement, each Venture will bear the
reasonable and documented costs of any third party consultants,
advisors, accountants and attorneys engaged by such Venture that have
been approved by PREI. Unless so approved by PREI, payment of the
Fixed Reimbursement Amount shall be in lieu of any other reimbursement
to Creamer for costs and expenses incurred in operating any Venture.
WEL Implementing Agreement. Each of Creamer and PREI shall take all
reasonable actions required to fulfill their respective obligations to one
another hereunder and shall otherwise use their respective reasonable
efforts to facilitate the consummation of the transactions contemplated
hereby. Each of Creamer and PREI agrees that it will not take any action
that would have the effect of preventing or impairing its ability to
perform its obligations hereunder. Notwithstanding the foregoing or any
other provision of this Agreement, neither PREI nor Creamer shall have any
obligation to form a Venture unless and until definitive documentation,
including a Venture Agreement, setting forth their complete and final
understanding with respect to the formation of the Venture and the
acquisition of the Approved Investment have been executed and delivered by
PREI and Creamer.
3.5 Access to Information and Employees. Creamer shall give PREI and
its representatives access to any and all information in its possession
relating to each of the Eligible Investments or Ventures that are the
subject matter of this Agreement and shall, in furtherance thereof, make
available to PREI and its representatives those of its officers, employees
and representatives as PREI and its representatives shall reasonably
request.
3.6 Confidentiality. Except as otherwise provided below, each party
hereto shall, and shall use its reasonable best efforts to cause its
Affiliates, employees and, with respect to PREI, the PREI Investors, to
maintain all information furnished to it by its counterparty hereto with
respect to the subject matter of this Agreement in strict confidence in
accordance with the procedures it uses to protect its own information of a
similar nature, provided that PREI may disclose such information to the
PREI Investors and each party and such PREI Investors may disclose such
information to its officers, directors, employees, accountants, financial
advisors, attorneys and appraisers. Notwithstanding the foregoing, no
party shall be required to maintain in confidence information which (i)
such party is compelled to disclose by judicial or administrative
requirements of law, provided that if permitted by law, such party shall
promptly inform its counterparty hereto of the request to disclose, and as
such counterparty may reasonably request, such party shall assist such
counterparty, at the expense of such counterparty, in any effort by such
counterparty to obtain a protective order with respect to such information,
(ii) becomes generally available to the public other than through a
disclosure by such party, (iii) is lawfully known to such party prior to
its disclosure by such counterparty to such party or (iv) becomes available
to such party on a non-confidential basis from a source which was not known
by such party to be bound by any legal or contractual obligation of
confidentiality with respect to such information.
3.7 Public Announcements. No party hereto (or any of its Affiliates)
shall make any public statement, including, without limitation, any press
release, with respect to this Agreement and the transactions contemplated
hereby, without the prior written consent of PREI and Creamer (which
consent may not be unreasonably withheld), except as may be required by
law. If a disclosure is required by law, the disclosing party shall make
reasonable efforts to afford PREI and Creamer an opportunity to review and
comment on the proposed disclosure prior to the making of such disclosure.
3.8 Role of PREI. PREI's obligation and role will be to review
Investment Proposals and Sale Proposals, but in no event will PREI be
obligated with regard to the Capital Commitments of each of the PREI
Investors.
EDG Informational Meetings. Creamer agrees to hold meetings with
PREI at reasonable times and upon reasonable notice to review and discuss
the status of Eligible Investments. Such meetings shall be held at the
corporate headquarters of PREI unless the PREI otherwise agrees. PREI may
designate any one or more representatives to attend such meetings.
3.10 Commitment of Principals. During the Commitment Period, each of
Creamer and the Principals shall devote sufficient business time and
activity to the activities of the Program.
3.11 Compliance with Applicable Law. Each of Creamer and the
Principals agrees, and agrees to cause their respective Affiliates,
shareholders, controlling persons, officers, directors, partners, members,
employees, representatives or agents, to comply in all material respects
with all applicable laws, rules and regulations in connection with any and
all matters relating to the Program or the performance of their obligations
hereunder.
ARTICLE IV
BUY/SELL ARRANGEMENT
4.1 Buy/Sell in Certain Circumstances.
(a) At any time after the occurrence of (i) the first
anniversary of the organization and funding of any Venture, (ii) any
other party being in default of any material obligation under this
Agreement or the Program, (iii) an Early Termination Date, (iv) the
events described in Sections 2.6, 2.8(ii) or 2.9, or (v) the events
described in Sections 3.1(a) or (c) of the Venture Agreement for any
Venture, then either PREI or Creamer (but, in the case of Creamer,
only under the circumstances referenced in clauses (i), (ii), (iv) or
(v)) shall be entitled to initiate the buy/sell rights set forth in
this Section 4.1 as to (x) in the case of clauses (i), (iv) or (v),
the particular Venture(s) relevant to such clause or (y) in the case
of clauses (ii) or (iii), any particular Venture(s) or all of the
Ventures.
(b) Either PREI or Creamer (an "Offeror") may serve upon the
other (an "Offeree") a notice (an "Offering Notice") which shall
contain the following terms:
(i) a statement of intent to rely on this Section 4.1 and
the particular clause in Section 4.1(a) relied on; and
(ii) a valuation stating the aggregate dollar amount (the
"Specified Valuation Amount") which the Offeror as a third party
would be willing to pay in cash for all of the ownership of the
Venture(s), exclusive of all prepaid expenses, notes and accounts
receivable (net of reserves and adjustments), marketable
securities, cash and cash equivalents (the "Other Assets").
(c) Within 15 business days after receipt of the Offering Notice
by the Offeree (the "Option Period"), the Offeree shall notify the
Offeror whether the Offeree elects:
(i) to sell its interest in the Venture(s) to the Offeror
for an amount equal to (A) the amount the Offeree would have been
entitled to receive if the Venture(s) had been sold on the
Buy/Sell Closing Date (as hereinafter defined) for a purchase
price equal to the Specified Valuation Amount and (B) the book
value of the Other Assets adjusted to the Buy/Sell Closing Date
(determined in accordance with GAAP), and the Venture had been
wound up and terminated in accordance with its Venture Agreement;
or
(ii) to purchase the Offeror's interest in the Venture(s)
for an amount equal to the amount the Offeror would have been
entitled to receive if the Venture(s) had been sold on the
Buy/Sell Closing Date for a purchase price equal to the sum of
(A) the Specified Valuation Amount and (B) the book value of the
Other Assets adjusted to the Buy/Sell Closing Date (determined in
accordance with GAAP), and the Partnership had been wound up and
terminated in accordance with its Venture Agreement.
(d) If the Offeree does not notify the Offeror of its election
prior to expiration of the Option Period, the Offeree shall for all
purposes be conclusively deemed to have elected to sell its interest
in the Venture(s) to the Offeror.
(e) Within five business days after the date of the exercise of
the election by the Offeree or five business days after the expiration
of the Option Period, whichever is earlier, the party obligated to
purchase under this Section 4.1 (the "Purchaser") shall deposit in
cash an amount equal to 10% of the Specified Valuation Amount (the
"earnest money") with an independent and neutral party reasonably
satisfactory to the party obligated to sell under this Section 4.1
(the "Seller"). The earnest money shall be applied against the
purchase price at the closing referenced below, or shall be paid to
the Seller as liquidated damages in the event of default by the
Purchaser. In the event Purchaser fails to deposit timely such
earnest money as provided above (such Purchaser being then referred to
as a "Defaulting Purchaser"), Seller shall have the option (i) within
fifteen days thereafter, unless the Defaulting Purchaser has earlier
cured such default by depositing the required earnest money as
provided above, of substituting itself as Purchaser under this Section
4.1 to purchase the Defaulting Purchaser's interest in the Venture(s)
at a 10% discount from the Specified Valuation Amount (such Seller
being then referred to as a "Substituted Purchaser") by giving notice
to the Defaulting Purchaser of its intention to do so and by
depositing, within five days after such notice, earnest money equal to
10% of the Specified Valuation Amount (after giving effect to such 10%
discount) with an independent and neutral party reasonably selected by
the Substituted Purchaser, whereupon, for purposes of Section 4.1(f)
and (g), the Substituted Purchaser shall become the Purchaser and the
Defaulting Purchaser shall become the Seller; or (ii) at any time
after default by the Defaulting Purchaser in depositing the earnest
money, of seeking from the Defaulting Purchaser by judicial
proceedings or as otherwise permitted by law, as liquidated damages
for its default in its obligations under this Section 4.1, an amount
of money equal to the amount of earnest money the Defaulting Purchaser
was required to deposit pursuant to this Section 4.1.
(f) On or before the date on which the Purchaser is required to
make the earnest money deposit referenced in Section 4.1(e) (or, with
respect to a Substituted Purchaser, within five business days after
making such earnest money deposit), the Purchaser shall fix a closing
date (the "Buy/Sell Closing Date") not later than 30 days following
(i) the date of the election by the Offeree, or (ii) if no election
was made, the date of the expiration of the Option Period. The
closing shall take place on the Buy/Sell Closing Date at a location
reasonably designated by the Purchaser.
(g) At the closing on the Buy/Sell Closing Date, the Purchaser
shall pay Seller, in cash, the amount determined in Section 4.1(c)
(any earnest money actually deposited being credited against such
amount) and the Seller shall execute and deliver to the Purchaser or
its designee assignments of interest, bills of sale, instruments of
conveyance, and other instruments as the Purchaser may reasonably
require, to give it or its designee good and indefeasible title to all
of the Seller's right, title and interest in and to its interest in
and to the Venture(s). Purchaser shall pay all closing costs,
including without limitation, escrow costs and transfer taxes;
provided, however, that the Purchaser and the Seller shall pay their
own respective legal costs and expenses in connection with the
preparation of the closing documentation.
(h) The sale of an interest in any Venture pursuant to this
Section 4.1 shall be deemed to be a sale of the assets of such Venture
by such Venture for the Specified Valuation Amount plus the book value
of the Other Assets and shall be accounted for in each party's capital
account under the applicable Venture Agreement in the same manner as
such sale would be accounted.
(i) The Purchaser (or Substituted Purchaser), if PREI, shall,
upon deposit of 250% of the earnest money required by this Section
4.1, and upon written notice thereof to the other Partner, have the
option to immediately become the general partner or managing member of
the Venture(s) and irrevocably remain so unless the Purchaser (or
Substituted Purchaser) shall default in its obligations under this
Section 4.1.
ARTICLE V
CONDITIONS PRECEDENT
5.1 Conditions Precedent of PREI. Without limiting the scope of all
conditions to be satisfied prior to PREI agreeing to cause a PREI Investor
to enter into a particular Venture Agreement and to make the initial
capital contribution contemplated thereby, it is contemplated that the
following matters shall have been completed to the satisfaction of or
waived by PREI prior thereto:
(a) Fulfillment of Obligations. Creamer shall have complied in
all material respects with all of its obligations and covenants under
this Agreement with respect to the Venture required to be performed by
it on or before the applicable Closing Date, including funding its
Capital Commitment;
(b) Representations and Warranties. All of the representations
and warranties of Creamer hereunder shall be true, correct and
complete in all material respects on and as of the applicable Closing
Date as if made on the applicable Closing Date;
(c) Delivery of Documents. Creamer shall have delivered all of
the documents contemplated to be delivered by it pursuant to this
Agreement, all in form and substance reasonably satisfactory to PREI;
(d) Legal Proceedings. No order of any court or administrative
agency shall be in effect that restrains or prohibits any of the
transactions contemplated by the applicable Venture Agreement, and no
suit, action, inquiry, investigation or proceeding in which it will
be, or it is sought to restrain, prohibit or change the terms of or
obtain damages or other relief in connection with the applicable
Venture Agreement, which in the judgment of PREI makes it inadvisable
to proceed with the consummation of such transactions, shall have been
instituted by any Person; and
(e) ERISA. PREI shall have satisfied itself that the
transactions contemplated to be taken on the applicable Closing Date
will not result in a prohibited transaction under ERISA.
5.2 Conditions Precedent of Creamer. Without limiting the scope of
all conditions to be satisfied prior to Creamer agreeing to enter into a
particular Venture Agreement and to make the initial capital contribution
contemplated thereby, it is contemplated that the following matters shall
have been completed to the satisfaction of or waived by Creamer prior
thereto:
(a) Fulfillment of Obligations. PREI shall have complied in all
material respects with all of its obligations and covenants under this
Agreement with respect to the Venture required to be performed by it
on or before the applicable Closing Date, including the PREI Investors
funding their applicable Capital Commitments;
(b) Representations and Warranties. All of the representations
and warranties of PREI and the applicable PREI Investor hereunder
shall be true, correct and complete in all material respects on and as
of the applicable Closing Date as if made on the applicable Closing
Date;
(c) Delivery of Documents. PREI shall have delivered all of the
documents contemplated to be delivered by it pursuant to this
Agreement all in form and substance reasonably satisfactory to
Creamer; and
(d) Legal Proceedings. No order of any court or administrative
agency shall be in effect that restrains or prohibits any of the
transactions contemplated by the applicable Venture Agreement, and no
suit, action, inquiry, investigation or proceeding in which it will
be, or it is sought to restrain, prohibit or change the terms of or
obtain damages or other relief in connection with the applicable
Venture Agreement, which in the judgment of Creamer makes it
inadvisable to proceed with the consummation of such transactions,
shall have been instituted by any Person.
ARTICLE VI
CLOSING
6.1 Closing. Each Closing shall take place at the offices of PREI,
at 10:00 a.m. on the fifth business day after the satisfaction or waiver of
each of the conditions precedent with respect to such Venture (which shall
include without limitation all of the conditions precedent set forth in
Sections 6.1 and 6.2 hereof) or on such other day as Creamer and PREI shall
agree or at such other place as Creamer and PREI shall agree (each such
date being hereinafter referred to as a "Closing Date").
6.2 Deliveries by Creamer. Without limiting the scope of the
documents and agreements to be delivered by Creamer at each Closing, it is
anticipated that Creamer will deliver such of the following as PREI shall
deem necessary for the Closing:
1. All Loan Documents relating to the Eligible Investment.
2. Any updates, supplements or modifications of the Investment
Documentation, including any such modifications that are
necessary to correct any materially misleading statements or
material omissions in respect of the Investment
Documentation.
3. Opinion(s) of counsel of Creamer, subject to such
assumptions, exceptions and matters as are customarily
contained in similar opinions and are in form and substance
satisfactory to PREI, including, without limitation,
opinion(s) addressing the following matters:
(a) The Venture (i) is a limited partnership or limited
liability company, as applicable, duly formed, validly
existing and in good standing under the laws of the
State of Delaware and has qualified to do business in,
and is in good standing under the laws of each
jurisdiction in which the nature of the business
conducted or proposed to be conducted requires such
qualification (except where the failure to do so would
not have a material adverse effect thereon), (ii) has
all requisite power and authority to carry on its
business as now being conducted and (iii) has all
requisite power to execute, deliver and perform the
Transaction Documents to which it is a party;
(b) Creamer (i) is a partnership or limited liability
company, as applicable, duly formed, validly existing
and in good standing under the laws of the jurisdiction
of its formation and has qualified to do business in,
and is in good standing under the laws of each
jurisdiction in which the nature of the business
conducted or proposed to be conducted requires such
qualification (except where the failure to do so would
not have a material adverse effect thereon), (ii) has
all requisite power and authority to own, lease and
operate its properties and to carry on its business as
now being conducted and (iii) has all requisite power
to execute, deliver and perform the Transaction
Documents to which it is a party;
(c) The execution, delivery and performance of the
Transaction Documents to which each of the Venture,
Creamer and any Affiliates is a party have been duly
authorized by all necessary action;
(d) Each of the Transaction Documents to which the Venture,
Creamer and any Affiliate is a party has been (i) duly
executed and delivered by the Venture, Creamer or such
Affiliate, as applicable, and (ii) constitutes the
legal, valid and binding obligation of the Venture,
Creamer or such Affiliate, as applicable, and is
enforceable against such party in accordance with its
terms, subject, in each case, to (x) the effect of any
applicable bankruptcy, insolvency, reorganization,
moratorium or similar law affecting creditors' rights
generally and (y) the effect of general principles of
equity (regardless of whether considered in a
proceeding in equity or at law);
(e) The execution, delivery and performance of each
Transaction Document to which the Venture, Creamer or
any Affiliates is a party does not (i) to such
counsel's knowledge, violate any decree, order, rule or
judgment of any court or governmental authority which
may be applicable to the Venture, Creamer or such
Affiliate, as applicable, or their respective
properties; (ii) violate any law (or regulation
promulgated under any law) applicable to the Venture,
Creamer or such Affiliate, as applicable, or their
respective properties; (iii) to such counsel's
knowledge, violate or conflict with, or result in a
breach of, or constitute a default under (or an event
with or without notice or lapse of time or both would
constitute a default) any material contract or
agreement to which the Venture, Creamer or such
Affiliate is a party or is bound or by which any of
their respective properties is bound; or (iv) violate
or conflict with any provision of the organizational
documents of the Venture, Creamer or such Affiliate;
(f) No consent of, notice to, approval of, or authorization
of, or declaration or filing with, any governmental
authority, is required in connection with each of the
Venture's, Creamer's and the Affiliates' execution and
delivery of each of the Transaction Documents to which
it is a party;
(g) To such counsel's knowledge there is no pending action,
suit, proceeding, or counterclaim by any Person, or
investigation by any governmental authority or any
basis for any of the foregoing, (a) with respect to any
Transaction Document, or (b) which, if adversely
determined, is reasonably likely to have a material
adverse effect on the Venture or the Program; and
(h) That the Venture will be classified as a partnership
for United States federal income tax purposes and not
as an association taxable as a corporation.
4. A counterpart of the Venture Agreement duly executed by or
on behalf of Creamer.
6.3 Deliveries by PREI. Without limiting the scope of the documents
and agreements to be delivered by PREI at each Closing, it is anticipated
that the participating PREI Investor will deliver to Creamer the following:
1. A counterpart of the Venture Agreement duly executed by or
on behalf of the participating PREI Investor.
6.4 Initial Capital Contributions. At each Closing, each of Creamer
and the applicable PREI Investor shall make their respective initial
capital contributions to the Venture as provided in the applicable Venture
Agreement. Except as otherwise agreed by PREI, the amount of such initial
capital contribution shall be agreed by Creamer and PREI at least 10
business days prior to the applicable Closing Date and, to the extent such
initial capital contribution constitutes cash, shall be wire transferred to
the account of the applicable Venture, the details of which shall be
notified to PREI by Creamer at least 5 business days prior to the
applicable Closing Date.
ARTICLE VII
REPRESENTATIONS AND WARRANTIES
7.1 Representations and Warranties of Creamer. Creamer hereby
represents and warrants to PREI as follows:
(a) Creamer is a general partnership duly formed and validly
existing under the laws of the State of New York, with all requisite
partnership power and authority to own, lease and operate its
properties and to carry on its business as now being conducted.
Creamer has all requisite power and authority to enter into this
Agreement and the other agreements contemplated to be entered into by
it in connection herewith and to carry out the transactions
contemplated hereby and thereby.
(b) On Schedule 7.1(b) Creamer has set forth all of its
subsidiaries, if any, and all persons, corporations or other entities,
if any, owning or controlling Creamer and all persons, corporations or
other entities, if any, owned or controlled by such persons,
corporations or other persons, if any, which control Creamer. During
the continuance of this Agreement, Creamer shall promptly notify PREI
of any changes or additions to the information required to be set
forth on Schedule 7.1(b).
(c) The execution and delivery of this Agreement and the other
agreements to be entered into by it in connection herewith and the
consummation of the transactions contemplated hereby and thereby have
been duly authorized by all necessary action on the part of Creamer.
This Agreement and such other agreements have been executed and
delivered by a duly authorized officer of the general partner of
Creamer and constitute the valid and binding obligations of Creamer,
enforceable against Creamer in accordance with the terms hereof and
thereof, subject as to enforcement to bankruptcy, insolvency,
reorganization and other laws of general applicability relating to or
affecting creditors' rights and to general principles of equity.
(d) The execution, delivery and performance of this Agreement
and all other agreements contemplated hereby by Creamer do not: (i)
violate any decree or judgment of any court or governmental authority
that may be applicable to Creamer; (ii) violate any law (or regulation
promulgated under any law); (iii) violate or conflict with, or result
in a breach of, or constitute a default under (or an event with or
without notice or lapse of time or both would constitute a default)
under, any contract or agreement to which Creamer is a party; or (iv)
violate or conflict with any provision of the organizational documents
of Creamer.
(e) No broker, finder, agent or other intermediary has been
employed by or on behalf of Creamer in connection with the negotiation
or consummation of this Agreement, and no such party has any claim for
any commission, finder's fee or similar amount payable as a result of
any engagement of such party by Creamer.
(f) None of Creamer nor any officer, director, employee or agent
of Creamer exercising any authority or conduct with respect to this
Agreement or any Venture or the assets thereof, have prior to the date
hereof or the term of this Agreement or of any Venture, been convicted
of a crime described in Section 411 of ERISA.
7.2 Representations and Warranties of PIC. PIC hereby represents and
warrants to Creamer as follows:
(a) PIC is a corporation duly formed and validly existing under
the laws of the State of New Jersey, with all requisite power and
authority to carry on its business as now being conducted. PIC has
all requisite power and authority to enter into this Agreement, and to
carry out the transactions contemplated hereby, and, subject to and in
accordance with the terms and limitations set forth in this Agreement,
to bind and commit the PREI Investors (other than Strategic
Performance Fund - II, Inc.) as set forth herein.
(b) The execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby have been duly
authorized by all necessary action on the part of PIC. This Agreement
has been executed and delivered by a duly authorized representative of
PIC and constitutes the valid and binding obligation of PIC,
enforceable against PIC in accordance with the terms hereof, subject
as to enforcement to bankruptcy, insolvency, reorganization and other
laws of general applicability relating to or affecting creditors'
rights and to general principles of equity.
(c) The execution, delivery and performance of this Agreement by
PIC do not: (i) violate any decree or judgment of any court or
governmental authority that may be applicable to PIC; (ii) violate any
law (or regulation promulgated under any law); (iii) violate or
conflict with, or result in a breach of, or constitute a default under
(or an event with or without notice or lapse of time or both would
constitute a default) under, any contract or agreement to which PIC is
a party; or (iv) violate or conflict with any provision of the
organizational documents of PIC.
(d) No broker, finder, agent or other intermediary has been
employed by or on behalf of PIC in connection with the negotiation or
consummation of this Agreement, and no such party has any claim for
any commission, finder's fee or similar amount payable as a result of
any engagement of such party by PIC.
(e) Each PREI Investor which is deemed to hold ERISA plan assets
within the meaning of 29 CFR Section 2510.101-3 shall either (i) be
an insurance company pooled separate account within the meaning of
Prohibited Transaction Exemption 90-1, 55 Fed. Reg. 2891 (Jan. 29,
1990) or (ii) be an investment fund with respect to which PREI serves
as a qualified professional asset manager as defined in Prohibited
Transaction Exemption 84-14, 49 Fed. Reg. 9494 (Mar. 13, 1984) and 50
Fed. Reg. 41430 (Oct. 10, 1985).
ARTICLE VIII
TERMINATION
Except for the provisions of Sections 3.3, 3.6 and 3.7 as well as
Articles VIII, IX and XI, this Agreement will terminate on the earlier of
December 31, 2002 or the fifth anniversary of the formation and funding of
the initial Venture under this Agreement, provided, that such termination
will not terminate or otherwise effect any Ventures, which will terminate
in accordance with their governing Venture Agreement.
ARTICLE IX
INDEMNIFICATION
9.1 Indemnification by Creamer. Creamer agrees to indemnify each of
PIC, PREI and the PREI Investors against, and agrees to hold harmless each
of PIC, PREI and the PREI Investors from, any and all Losses incurred or
suffered by any of PIC, PREI or any PREI Investor relating to or arising
out of or in connection with any of the following:
(a) any breach of or any inaccuracy in any representation or
warranty made by Creamer in this Agreement; provided that a notice of
their claim shall have been given to Creamer not later than the close
of business on the third anniversary of the last Closing Date to occur
pursuant to this Agreement; and
(b) any breach of or failure by Creamer to perform any covenant
or obligation of Creamer set out or contemplated in this Agreement;
provided that a notice of their claim shall have been given to Creamer
prior to the expiration of the statute of limitations with respect to
claims of the nature of the claim being asserted by any of PIC, PREI
or any PREI Investor.
9.2 Indemnification by PIC. PIC agrees to indemnify Creamer against,
and agrees to hold Creamer harmless from, any and all Losses incurred or
suffered by Creamer relating to or arising out of or in connection with any
of the following:
(a) any breach of or any inaccuracy in any representation or
warranty made by PREI in this Agreement; provided that a notice of
Creamer's claim shall have been given to PREI not later than the close
of business on the third anniversary of the last Closing Date to occur
pursuant to this Agreement; or
(b) any breach of or failure by PREI to perform any covenant or
obligation of PREI set out or contemplated in this Agreement; provided
that a notice of Creamer's claim shall have been given to PREI prior
to the expiration of the statute of limitations with respect to claims
of the nature of the claim being asserted by Creamer.
9.3 Indemnification by each Venture. Creamer, its Principals, PREI,
PIC, their respective employees, officers, directors, agents, stockholders,
members, partners and other Affiliates (including any Financing Source),
and any other person who serves at the request of Creamer or PREI on behalf
of a Venture as an officer, director, partner, member, employee or agent of
any other entity (in each case, an "Indemnitee") will not be liable to a
Venture or any member or partner of such Venture for any act performed or
omission made by it in the absence of its own conduct that constitutes a
breach of fiduciary duty under ERISA, fraud, willful misfeasance, bad
faith, gross negligence, negligence in the handling of funds, or reckless
disregard of duty in connection with the Program or any Venture, or such
Person has pleaded nolo contendere to, or been convicted of a felony or of
violating federal or state securities laws (collectively, "Improper
Conduct"). Subject to Section 3.3(b) and the provisions of ERISA and other
applicable law, each Venture will indemnify each Indemnitee for any loss or
damage incurred by such Indemnitee arising out of or in connection with the
Venture, except for any loss or damage arising from such Indemnitee's own
Improper Conduct or the Improper Conduct of any of its Affiliates,
employees, officers, directors, agents, stockholders or members. No partner
or member of a Venture will be individually obligated with respect to such
indemnification beyond the capital such partner or member has contributed
to such Venture.
9.4 Claims. As soon as is reasonably practicable after becoming
aware of a claim for indemnification under this Agreement, the party
seeking indemnification hereunder (the "Indemnified Person") shall promptly
give notice to the person from whom indemnification is sought (the
"Indemnifying Person") of such claim and the amount the Indemnified Person
will be entitled to receive hereunder from the Indemnifying Person;
provided that the failure of the Indemnified Person to give notice shall
not relieve the Indemnifying Person of its obligations under this Article
IX, except to the extent (if any) that the Indemnifying Person shall have
been prejudiced thereby. If the Indemnifying Person does not object in
writing to such indemnification claim within 30 days of receiving notice
thereof, the Indemnified Person shall be entitled to recover promptly from
the Indemnifying Person the amount of such claim, and no later objection by
the Indemnifying Person shall be permitted. If the Indemnifying Person
agrees that it has an indemnification obligation but objects that it is
obligated to pay only a lesser amount, the Indemnified Person shall
nevertheless be entitled to recover promptly from the Indemnifying Person
the lesser amount, without prejudice to the Indemnified Person's claim for
the difference.
9.5 Insurance or Third-Party Indemnification. Notwithstanding
anything to the contrary herein, an Indemnifying Person shall not be liable
for a Loss arising out of or in connection with any matter described in
this Article IX if and to the extent such Loss is covered by a policy of
insurance or benefits from a right to indemnification from a Person not
party to this Agreement and payment is made under such policy to the
Indemnified Person by the insurer or under such right to indemnification by
such Person, as applicable. Notwithstanding anything to the contrary
herein, PREI and Creamer may acquire insurance against Losses arising in
connection with this Agreement.
ARTICLE X
REPORTS
10.1 Independent Auditors. The books of account and records of each
Venture shall be subject to a general accounting as of the end of each
fiscal year by Creamer, or, at the election and expense of the PREI
Investor participating in such Venture, a general accounting and audit by
Price Waterhouse LLP or such other nationally recognized accounting firm
with experience in similar investment partnerships as shall be selected by
such PREI Investor.
10.2 Reports to PREI. As to any Venture and within 60 days after the
end of each fiscal year of such Venture and 20 days after the end of each
quarter other than the last quarter thereof, Creamer shall prepare and mail
to PREI a financial report (and, if requested by the PREI Investor
participating in such Venture, audited in the case of a report sent at the
end of a fiscal year), which shall be prepared in accordance with generally
accepted accounting principles, consistently applied, setting forth or
containing as of the end of such fiscal year or quarter:
(a) a balance sheet of the Venture;
(b) a statement of income or loss and a statement of cash flows
of the Venture;
(c) a statement of changes in Investors' capital accounts of the
Venture;
(d) a summary of the investments made by such Venture; and
\ED an unaudited report of Creamer setting forth the cost and
good faith estimate of the value as of the end of such fiscal year of
the Venture and its Approved Investment and a good faith estimate of
the value of each Investor's capital account, together with reasonable
explanation or support therefor.
10.3 Reports to Current and Former Partners. As to any Venture and
within 60 days after the end of each fiscal year of such Venture, Creamer
shall use its best efforts to prepare and mail to PREI, to the extent
reasonably necessary, a financial report (which shall include, at a
minimum, a Form K-1 for each PREI Investor and former PREI Investor setting
forth in sufficient detail such transactions effected by the applicable
Venture during such fiscal year as shall enable such PREI Investor or
former PREI Investor (or its legal representatives) to prepare their
respective income tax returns in accordance with the laws, rules and
regulations then prevailing.
10.4 Additional Information. Upon the request of any PREI Investor
participating in any Venture, Creamer shall furnish such additional
information about such Venture, distributions from such Venture as may be
reasonably related to such PREI Investor's interest in such Venture.
ARTICLE XI
MISCELLANEOUS
11.1 Notices. All notices and demands under this Agreement shall be
in writing and may be either delivered personally (which shall include
deliveries by courier), by telefax or other wire transmission (with request
for assurance of receipt in a manner appropriate with respect to
communications of that type, provided that a confirmation copy is
concurrently sent by a nationally recognized express courier for overnight
delivery) or mailed, postage prepaid, by certified or registered mail,
return receipt requested:
If to PREI, addressed as follows:
Prudential Real Estate Investors
8 Campus Drive
Parsippany, NJ 07054
Attention: Joseph D. Margolis
Fax: 973-683-1752
with a copy to:
Mayer, Brown & Platt
1675 Broadway
New York, New York 10019
Attention: James B. Carlson
Fax: 212-262-1910
If to Creamer, addressed as follows:
Creamer Realty Consultants
40 West 57th Street, Suite 1515
New York, New York 10019
Attention: Michael J. Vitale
Fax: 212-399-6150
with a copy to:
Battle Fowler LLP
75 East 55th Street
New York, NY 10022
Attention: David M. Warburg
Fax: 212-339-9150
and a copy to any Financing Source subsequently identified by reason of
being a party to a Venture Agreement.
Unless delivered personally or by telefax or other wire transmission as
above (which shall be deemed delivered on the next business day following
the date of such personal delivery or transmission), any notice shall be
deemed to have been made three (3) days following the date so mailed. Any
party hereto may designate a different address to which notices and demands
shall thereafter be directed by written notice given in the same manner and
directed to the Partnership at its office hereinabove set forth.
11.2 No Third-Party Beneficiaries. The parties do not intend to
confer any benefit hereunder on any Person other than the parties hereto
and any Ventures that are formed as a result of the terms hereof.
11.3 No Assignment. No party hereto shall have the right to assign
any right or obligation under this Agreement to any other Person, except
that each of Creamer and PREI shall be entitled to assign all or any
portion of its interest in any Venture to the extent permitted by the
applicable Venture Agreement and Creamer shall be entitled to assign all of
its rights and obligations hereunder to a limited partnership or limited
liability company that is a controlled Affiliate of the Principals. For
the purpose of this definition "controlled" shall mean a Person's
beneficial ownership of more than 50% of all classes of voting equity
securities or other voting ownership interests of another Person.
11.4 Execution in Counterparts. This Agreement may be executed in
several counterparts, each of which shall be deemed an original but all of
which shall constitute one and the same instrument.
11.5 Amendments. This Agreement may be amended, modified or
supplemented but only in a writing signed by all of the parties.
11.6 Validity. If any provision of this Agreement or the application
of such provision to any Person or circumstance shall be held invalid, the
remainder of this Agreement or the application of such provision to Persons
or circumstances other than those with respect to which it is held invalid
shall not be affected thereby and shall continue to be binding and in
force.
11.7 Governing Law. This Agreement and the rights of the parties
hereunder shall be governed by and interpreted in accordance with the
internal laws of the State of New York, without giving effect to the
principles of conflicts of law thereof.
11.8 Jurisdiction. Except as provided by Section 11.9, the parties
hereto consent to personal jurisdiction in the State of New York and agree
that the exclusive venue and place of trial for their solution of any
disputes arising in connection with the interpretation or enforcement of
this Agreement shall be the Federal District Court in the Southern District
of New York.
11.9 Arbitration. The parties hereby agree to submit all
controversies, claims and matters in dispute in respect of this Agreement
to arbitration in New York, New York according to the commercial
arbitration rules of the American Arbitration Association from time to time
in force. This submission and agreement to arbitrate shall be specifically
enforceable. The parties may agree on a retired judge as sole arbitrator.
In the absence of such agreement, there shall be three (3) arbitrators,
selected in accordance with the commercial arbitration rules of the
American Arbitration Association: one (1) attorney and/or retired judge,
one (1) expert in real estate investment; and one (1) certified public
accountant. A decision agreed on by two (2) of the arbitrators shall be
the decision of the arbitration panel; provided, however, that in the case
of monetary damages, if there is no agreement of two arbitrators as to the
amount of the award, then the average of the two amounts that are closest
to each other shall be the final award of the arbitration panel for the
purpose of this Agreement. The arbitration panel may elect to specifically
enforce this Agreement. The parties agree to abide by all awards rendered
in such proceedings. Any award shall include costs and reasonable
attorneys' fees to the successful party. Such awards shall be final and
binding on all parties. There shall be no appeal therefrom other than for
fraud or willful misconduct. All awards may be filed with the clerk of one
or more courts, State or Federal, having jurisdiction over the party
against whom such an award is rendered or its property as a basis of
judgment and of the issuance of execution for its collection. Nothing in
this Agreement and/or the exhibits hereto shall be deemed to prevent the
arbitration panel from exercising authority to permit the exercise by a
party of its legal and/or equitable remedies including right of offset and
specific performance. The parties agree that this Section shall be valid,
binding and enforceable and shall survive the termination of this
Agreement.
11.10 Waiver of Jury Trial. THE PARTIES HERETO HEREBY KNOWINGLY,
VOLUNTARILY AND INTENTIONALLY WAIVE ANY RIGHTS THEY MAY HAVE TO A TRIAL BY
JURY IN RESPECT OF ANY LITIGATION BASED HEREON, OR ARISING OUT OF, UNDER,
OR IN CONNECTION WITH, THIS AGREEMENT OR ANY RELATED DOCUMENT, OR ANY
COURSE OF CONDUCT, COURSE OF DEALING, STATEMENTS (WHETHER VERBAL OR
WRITTEN) OR ACTIONS OF THE PARTIES HERETO. EACH PARTY HERETO ACKNOWLEDGES
AND AGREES THAT IT HAS RECEIVED FULL AND SUFFICIENT CONSIDERATION FOR THIS
PROVISION (AND EACH OTHER PROVISION OF EACH RELATED DOCUMENT TO WHICH IT IS
A PARTY) AND THAT THIS PROVISION IS A MATERIAL INDUCEMENT FOR EACH OF THE
PARTIES ENTERING INTO THIS AGREEMENT AND EACH SUCH OTHER RELATED DOCUMENT.
11.11 Waiver. The waiver by any party hereto of the breach of any
term, covenant, agreement or condition herein contained shall not be deemed
a waiver of any subsequent breach of the same or any other term, covenant,
agreement or condition herein, nor shall any custom, practice or course of
dealings arising among the parties hereto in the administration hereof be
construed as a waiver or diminution of the right of any party hereto to
insist upon the strict performance by any other party hereto of the terms,
covenants, agreements and conditions herein contained.
11.12 Binding Effect. Except as herein otherwise provided, this
Agreement shall be binding upon and inure to the benefit of the parties,
their legal representatives, heirs, administrators, executors, successors
and permitted assigns.
11.13 Entire Agreement. This Agreement, including the Schedules
and Exhibits hereto, constitutes the entire understanding and agreement of
the parties hereto with respect to the subject matter hereof and supersedes
all other prior agreements and understandings, written or oral, between the
parties with respect to the subject matter hereof. In the event of any
conflict between this Agreement and a Venture Agreement, the Venture
Agreement shall control.
11.14 Remedies Not Exclusive. Any remedies herein contained for
breaches of obligations hereunder shall not be deemed to be exclusive and
shall not impair the right of any party to exercise any other right or
remedy, whether for damages, injunction or otherwise.
<PAGE>
IN WITNESS WHEREOF, this Agreement has been executed by each of the
parties hereto as of the date of this Agreement set forth above.
THE PRUDENTIAL INVESTMENT CORPORATION
By:/s/ Joseph D. Margolis
---------------------------------
Name: Joseph D. Margolis
Title: Vice President
CREAMER REALTY CONSULTANTS
By:/s/ Frank G. Creamer, Jr.
---------------------------------
Name: Frank G. Creamer, Jr.
Title: President, FGC Realty Consultant, Inc.
Managing Partner
For purposes of Sections 3.2, 3.10 and 3.11 only:
/s/ Frank G. Creamer, Jr.
__________________________________________
Frank G. Creamer, Jr.
For purposes of Sections 3.2, 3.10 and 3.11 only:
/s/ Michael J. Vitale
__________________________________________
Michael J. Vitale
[Draft of 1/20/98]
AMENDED AND RESTATED
GENERAL PARTNERSHIP AGREEMENT
OF
CREAMER REALTY CONSULTANTS
THIS AMENDED AND RESTATED GENERAL PARTNERSHIP AGREEMENT of CREAMER
REALTY CONSULTANTS, a general partnership formed pursuant to the laws of
the State of New York (the "Partnership") dated as of the 1st day of
January, 1998 (the "Agreement") by and between WELLSFORD CRC HOLDING CORP.
("Wellsford"), a Maryland corporation which is a wholly-owned subsidiary of
Wellsford Real Properties, Inc., ("WRP"), and FGC REALTY CONSULTANTS, INC.,
a New York corporation ("FGC"; FGC together with Wellsford being
collectively referred to hereinafter as the "Partners" and individually as
a "Partner").
W I T N E S S E T H:
WHEREAS, the Partnership was originally formed pursuant to a
Partnership Agreement dated as of December 21, 1990 (the "Original
Agreement") between FGC and Leo Taurus & Company, Inc., a Delaware
corporation ("Leo Taurus"; Leo Taurus and FGC, collectively referred to
hereinafter as the "Original Partners");
WHEREAS, in connection with the sale by Leo Taurus and the purchase by
Wellsford of all of the partnership interest of Leo Taurus in the
Partnership pursuant to an Asset Purchase Agreement dated as of the date
hereof, among Duterra Corp., a Delaware corporation ("Duterra"), John
Rapuano ("Rapuano"), Leo Taurus and Wellsford (the "Asset Purchase
Agreement"), the parties hereto desire to enter into this Agreement to
amend, modify and restate the Original Agreement in its entirety as
provided below.
NOW, THEREFORE, in consideration of the foregoing, and of the mutual
promises herein contained, the Partners, intending to be legally bound,
agree as follows:
ARTICLE XII
ORGANIZATION, NAME, PURPOSES AND TERM
1.12.1 Organization, Name and Office.
1. The Partners shall promptly file any and all
documentation as shall be necessary under the laws of the State of New York
to give effect to the provisions of this Agreement and to constitute the
Partners as partners of the Partnership and the Partnership as a general
partnership, and to maintain the qualification of the Partnership as a
general partnership in any state or other jurisdiction in which such
qualification is required by law.
2. The name of the Partnership shall remain Creamer Realty
Consultants, and the principal office of the Partnership shall be located
at 40 West 57th Street, New York, New York 10019, or at such other place as
the Partners may agree upon from time to time.
3. All property owned by the Partnership shall be deemed
owned by the Partnership as an entity, and no Partner, individually, shall
have any ownership of such property.
1.12.2 Purposes. The purpose of the Partnership is to (a)
provide consulting services to the real estate industry with respect to the
operation, management, finance and refinance, marketing and rehabilitation
of real estate and interests in real estate, and, acting singly or together
with others, directly or indirectly, as principal, partner, shareholder or
otherwise, to purchase, own, invest in, develop, operate, manage, lease,
exchange, mortgage or otherwise generally deal in and with real estate,
real property and interests therein, either improved or unimproved, in
accordance with all applicable laws and (b) engage in any lawful activity
related or incidental to one or more of the foregoing activities.
1.12.3 Term. The term of the Partnership shall commence on
the date hereof and shall continue until December 31, 2007, unless sooner
dissolved or terminated as hereinafter provided.
ARTICLE XIII
CAPITAL CONTRIBUTIONS
2.13.1 Capital Contributions. Leo Taurus and FGC, as Original
Partners, upon formation of the Partnership pursuant to the Original
Agreement, contributed, in cash, capital to the Partnership in amounts
equal to $500,000 and $100, respectively.
2.13.2 Additional Capital Contributions. No Partner shall be
required to contribute additional capital to the Partnership unless all
Partners agree.
2.13.3 Capital Account.
1. A capital account shall be maintained for each Partner.
The capital account of each Partner as of the date hereof (hereinafter
sometimes referred to as such Partner's "Initial Capital Account Balance")
appears on Schedule A attached hereto (which, if such amounts cannot be
determined at execution of this Agreement, such amounts shall be determined
after such execution by the Partnership's accountants, and the amounts so
determined shall be entered onto Schedule A). Each Partner's capital
account shall after the date hereof be increased by the cash or net agreed
value of each capital contribution made by or on behalf of such Partner
after the date hereof and allocations to such Partner after the date hereof
of Net Profit (as hereinafter defined). Each Partner's capital account
shall be decreased by the value of each distribution made to such Partner
by the Partnership after the date hereof and allocations to such Partner
after the date hereof of Net Loss (as hereinafter defined). The capital
accounts shall be further maintained and adjusted in accordance with the
Treasury Regulations promulgated pursuant to Section 704 of the Internal
Revenue Code of 1986, as amended (the "Code").
2. No interest shall be paid on the Partners' capital
accounts and no Partner shall withdraw any part of such Partner's capital
account or shall be entitled to receive any distribution from this
Partnership except as may be specifically provided in this Agreement. No
Partner with a negative balance in its capital account shall have any
obligation to the Partnership or the other Partner to restore said negative
balance to zero.
2.13.4 Interests. The "Interest" of a Partner in the
Partnership shall mean the rights or interest of such Partner in the
Partnership. The "Percentage Interest" of a Partner shall mean the
percentage set forth opposite such Partner's name on Schedule B attached
hereto.
ARTICLE XIV
DISTRIBUTIONS AND ALLOCATIONS
3.14.1 Distribution of Cash Flow. (1) The following terms
shall have the following meanings when used herein:
"Adjusted Wellsford Base Amount" means, for each Distribution
Period, an amount equal to the Wellsford Base Amount reduced by the sum of
all Old Wellsford Share and all New Wellsford Share distributed to
Wellsford for all prior Distribution Periods.
"Clairborne Program" means the Clairborne Investors Mortgage
Investment Program, as established by the Program Agreement.
"Distribution Period" means each fiscal year, or such other time
period as the Managing Partner may determine in accordance with Section
3.1(c) hereof.
"FGC Share" means, for each Distribution Period, an amount equal
to 51% of any excess of the Net Cash Flow for such Distribution Period over
the Wellsford Priority Return for such Distribution Period.
"Net Cash Flow" means, for each Distribution Period, (A) the sum
of (i) all cash funds received by the Partnership (other than capital
contributions or loans by the Partners) and (ii) any amounts released from
Partnership reserves, less (B) the sum of amounts paid or funded during
such Distribution Period with respect to the following items: (i) current
charges and expenses (including operating expenses and payroll), (ii) debt
service, interest and other payments with respect to any loan or obligation
extended to the Partnership, (iii) expenditures for acquisition of property
and for capital improvements or replacements not financed through capital
contributions, borrowings, or reserves previously set aside by the
Partnership for such purposes and (iv) amounts contributed to reasonable
reserves for working capital, contingencies, capital improvements and
replacements.
"New Creamer" means Creamer Vitale Wellsford, L.L.C.
"New Creamer Cash Receipts" means all cash funds received by New
Creamer (other than (i) capital contributions, (ii) loans by members of New
Creamer and (iii) Post-Buy/Sell Net Cash Flow (as defined in the Operating
Agreement of New Creamer).
"New Creamer Net Cash Flow" means, for each Distribution Period,
(A) the sum of (i) New Creamer Cash Receipts and (ii) any amounts released
from its reserves, less (B) the sum of amounts paid or funded during such
Distribution Period with respect to the following items: (i) current
charges and expenses (including operating expenses and payroll), (ii) debt
service, interest and other payments with respect to any loan or obligation
extended to New Creamer, (iii) expenditures for acquisition of property and
for capital improvements or replacements not financed through capital
contributions, borrowings, or reserves previously set aside by the New
Creamer for such purposes, (iv) Wellsford First Level Preferred Return, (v)
Wellsford First Level Carry, (vi) Wellsford Second Level Carry, (vii)
Wellsford Unreturned Capital Contributions and (viii) amounts contributed
to reasonable reserves for working capital, contingencies, capital
improvements and replacements.
"New Wellsford Share" means for each Distribution Period, an
amount equal to 49% of any excess the New Creamer Net Cash Flow over
distributions made by New Creamer with respect to the Wellsford Priority
Return during such Distribution Period.
"Old Wellsford Share" means, for each Distribution Period, an
amount equal to 49% of any excess of the Net Cash Flow for such
Distribution Period over distributions made by the Partnership with respect
to the Wellsford Priority Return for such Distribution Period.
"Post-Buy/Sell Net Cash Flow" means, as to any Venture, for each
Distribution Period after New Creamer has purchased the interest of the
Prudential Investor in such Venture, all cash funds received by New Creamer
from such Venture.
"Program Agreement" means the Program Agreement for the
Clairborne Program, dated as of December 10, 1997, between the Partnership
and PIC (as hereinafter defined).
"Prudential Investor" means any account managed or advised by
Prudential Real Estate Investors ("PREI"), a division of The Prudential
Investment Corporation, a New Jersey Corporation ("PIC"), or any of their
respective successors and assigns.
"Venture" means each limited liability company or limited
partnership, as the case may be, formed by New Creamer or a subsidiary
thereof and a Prudential Investor to acquire distressed, discount or other
secured mortgage debt under the Clairborne Program.
"Venture Agreement" means form of limited liability company
agreement attached as Exhibit C to the Program Agreement and which provides
the model for the operating agreement of each Venture between a Prudential
Investor and New Creamer or a subsidiary of New Creamer.
"Wellsford Base Amount" means an amount equal to $2 million.
"Wellsford First Level Carry" means an amount equal to one-half
of the amount received by New Creamer or any of its subsidiaries as a
distribution of the First Level Carried Percentage (as defined in the
Venture Agreement) from each Venture during each Distribution Period.
"Wellsford First Level Preferred Return" means an amount equal to
the First Level Preferred Return (as defined in the Venture Agreement),
received by New Creamer or any of its subsidiaries from each Venture during
each Distribution Period.
"Wellsford Priority Return" means, for each Distribution Period,
an amount equal to 15% per annum times the outstanding balance of the
Adjusted Wellsford Base Amount on the first day of such Distribution
Period.
"Wellsford Second Level Carry" means an amount equal to one-third
of the amount received by New Creamer or any of its subsidiaries as a
distribution of the Second Level Carried Percentage (as defined in the
Venture Agreement) from each Venture during each Distribution Period.
"Wellsford Unreturned Capital Contributions" means the Unreturned
Capital Contributions (as defined in the Venture Agreement) contributed
indirectly to each Venture by Wellsford or an affiliate of Wellsford
through New Creamer.
(2) Distributions. Net Cash Flow shall be distributed
annually, within 45 days after the close of each fiscal year as follows:
(i) Until Wellsford shall have received by virtue of
the receipt by it of distributions of the Old Wellsford Share and the New
Wellsford Share an aggregate amount equal to the Wellsford Base Amount, Net
Cash Flow shall be distributed as follows:
(A) First, to Wellsford, an amount which when added to
distributions of New Creamer Net Cash Flow received by Wellsford
from New Creamer during such period equals the Wellsford Priority
Return payable to Wellsford for the current Distribution Period,
plus any accrued and unpaid Wellsford Priority Return; and
(B) Second, to each of Wellsford and FGC, the Old Wellsford
Share and the FGC Share, respectively.
(ii) Thereafter, Net Cash Flow shall be distributed to
each of Wellsford and FGC in accordance with their respective Percentage
Interests in the Partnership.
(iii) Upon termination and dissolution of the
Partnership, the assets of the Partnership shall be used, applied and
distributed as provided in Section 5.4 of this Agreement.
(3) Interim Distributions. In addition to the annual
distributions of Net Cash Flow made under Section 3.1(b) hereof, the
Managing Partner (as hereinafter defined) may make interim distributions of
Net Cash Flow during the fiscal year to the extent the Partnership has
available cash, provided, however, that all such interim distributions of
Net Cash Flow shall be made in the order of priority provided in Section
3.1(b) hereof and that the Managing Partner shall act prudently with
respect to its decisions as to the amount and frequency of such
distributions. The Partners agree that it shall be deemed prudent to
distribute, on a quarterly basis, amounts sufficient to pay the anticipated
tax obligations of the Partners attributable to their Interests.
3.14.2 Allocations of Net Profits and Net Losses. [OPEN]
1. ((0).1 "Net Profit" means, for each fiscal year, the
excess, if any, of the Partnership's items of income and gain over the
Partnership's items of loss and deduction for such fiscal year, determined
in accordance with Federal income tax principles, taking account, however,
of the difference, if any, between the book value and the tax basis of the
assets of the Partnership in accordance with the principles of Section s
1.704-1(b)(2)(iv)(f) and (g) of the Treasury Regulations.
((0).2 "Net Loss" means, for each fiscal year, the
excess, if any, of the Partnership's items of loss and deduction over the
Partnership's items of income and gain for such fiscal year, determined in
accordance with Federal income tax principles, taking account, however, of
the difference, if any, between the book value and the tax basis of the
assets of the Partnership in accordance with the principles of Section s
1.704-1(b)(2)(iv)(f) and (g) of the Treasury Regulations.
2. Net Profit and Net Loss shall be allocated between the
Partners with respect to each fiscal year for purposes of maintaining the
capital accounts of the Partnership as follows:
((0).1 Subject to Section 3.2(b)(ii) below, Net Profit
and Net Loss shall be allocated between the Partners
so as to bring the differences (positive or negative) between the Partners'
respective Capital Account Balances and the Partners' respective Initial
Capital Account Balances into the ratio of the Partners' respective
Percentage Interests, and then in the ratio of the Partners' respective
Percentage Interests, provided that such allocations shall be adjusted to
the extent necessary to prevent one Partner's capital account from being
negative while the other Partner's capital account is positive.
((0).2 Net Profit and Net Loss upon liquidation (which
for this purpose shall mean the year or years during which the Partnership
sells or is in the process of selling all or substantially all of its
assets) shall be allocated between the Partners so as to bring the
Partners' respective capital account balances into the ratio of the
Partners' respective Percentage Interests, and then in the ratio of the
Partners' respective Percentage Interests.
3. Notwithstanding Section 3.2(b) hereof, appropriate
adjustments shall be made, if required, to the allocations to the extent
required to comply with the "qualified income offset," "minimum gain
chargeback" and "chargeback for nonrecourse debt for which a partner bears
a risk of loss" rules of the Treasury Regulations promulgated pursuant to
Section 704(b) of the Code. To the extent permitted by such Treasury
Regulations, the allocations in such year and subsequent years shall be
further adjusted so that the cumulative effect of all the allocations shall
be the same as if all such allocations were made pursuant to Section s
3.2(b) hereof without regard to this Section 3.2(c).
4. Allocations pursuant to this Section 3.2 shall be made
after taking account of all distributions with respect to the period for
which the allocations are being made.
5. Notwithstanding the foregoing, allocations for income
tax purposes shall be made in the same manner as allocations for purposes
of maintaining the capital accounts of the Partnership, except that
appropriate adjustments shall be made to such allocations (i) to take
account of the effect of the Section 754 election of the Partnership and
(ii) if applicable, in accordance with the principles of Section 704(c) of
the Code and the Treasury Regulations thereunder and Section s 1.704-
1(b)(2)(iv)(d), (e), (f) and (g) of the Treasury Regulations.
6. Upon the transfer of an Interest in the Partnership,
the allocations between transferor and transferee shall be apportioned by
an interim closing of the books of the Partnership.
3.14.3 No Salaries; Reimbursement. (1) No salary or other
compensation shall be paid to any Partner by the Partnership, but the
Partnership shall reimburse each Partner for actual expenses incurred by
such Partner, in connection with the business of, and in fulfilling its
duties or rendering services to and on behalf of, the Partnership so long
as such expenses are provided for in the Budget and that they do not exceed
the amounts provided therefor in the Budget by 10% or more.
(2) Notwithstanding the foregoing and subject to the
provisions in the immediately following sentence, the Partners acknowledge
that the Partnership shall continue to employ and shall pay to each of
Frank G. Creamer, Jr. ("Creamer") and Michael J. Vitale ("Vitale") for each
fiscal year his respective base compensation in an amount which, when added
to his respective base compensation received from New Creamer, equals
$300,648.66 and $294,528.78, respectively. However, it is further
understood and agreed that, commencing with calendar year 1999, in the
event there shall be any accrued and unpaid Wellsford Priority Return
outstanding as of the end of the preceding fiscal year, an amount equal to
the sum of all accrued and unpaid Wellsford Priority Return outstanding as
of the end of such fiscal year, but in any event not to exceed $100,000 per
annum, shall be withheld by the Partnership (taking into account any amount
which may be withheld by New Creamer pursuant to the applicable provision
of the Limited Liability Company Agreement of New Creamer, dated as of the
date hereof, between Wellsford and SX Advisors, LLC (the "New Creamer
Operating Agreement")) from each of Creamer's and Vitale's base
compensation, such amount to be deducted pro rata from each of their
respective base compensation on each payroll period during such fiscal
year, and such withheld amounts shall be applied to the payment of any
accrued and unpaid Wellsford Priority Return. The amount so withheld shall
accrue interest at the rate of fifteen percent (15%) per annum, and be
payable to each of Creamer and Vitale, respectively, to the extent the
Partnership has available cash remaining therefor, at any time after the
distribution to Wellsford of any and all accrued and unpaid Wellsford
Priority Return for all previous Distribution Periods.
3.14.4 Periodic Financial Statements, Status Reports and Tax
Returns. (1) Within 70 days after the end of each fiscal year and 25 days
after the end of each quarter, FGC and the FGC Designees (as hereinafter
defined) shall prepare, maintain and mail (or cause to be prepared,
maintained and mailed) to each Partner a financial report (audited in the
case of a report sent at the end of the fiscal year and unaudited in the
case of a report sent at the end of a quarter), which shall be prepared in
accordance with generally accepted accounting principles, consistently
applied, setting forth or containing as of the end of such fiscal year or
quarter: (i) a consolidated balance sheet of the Partnership and its
subsidiaries or affiliated entities; (ii) a consolidated statement of
income or loss and a consolidated statement of cash flows of the
Partnership and its subsidiaries or affiliated entities; (iii) a
consolidated statement of changes in capital accounts of the Partnership
and its subsidiaries or affiliated entities; and (iv) a consolidated
statement of the investments made by the Partnership and its subsidiaries
or affiliated entities.
(2) Within 70 days after the end of each fiscal year, FGC
and the FGC Designees (as hereinafter defined) shall prepare and mail (or
cause to be prepared and mailed) to each Partner, a financial report (which
shall include, without limitation, a Form K-1 for each Partner or former
Partner) setting forth in sufficient detail such business and transactions
of the Partnership during such fiscal year as shall enable each Partner (or
their respective legal representatives or accountants) to prepare their
respective income tax returns in accordance with the laws, rules and
regulations then prevailing.
ARTICLE XV
OPERATION AND MANAGEMENT
4.15.1 Management. 1. Subject to the provisions set forth in
Section 4.1(d) hereof, FGC shall act as the managing partner of the
Partnership (the "Managing Partner") and through its designees (the "FGC
Designees"), shall have complete power and authority to do all things it
deems necessary or desirable to conduct the day-to-day operations and
business activities of the Partnership, including, without limitation, the
making of any payment set forth in the Budget (as hereinafter defined),
provided, however, that (i) the FGC Designees shall prepare, maintain and
provide (or cause to be prepared, maintained and provided) to Wellsford
periodic reports as set forth in Section 3.4 hereof and (ii) there shall
be regular Partners' meetings on a monthly basis, or such other interval as
the Partners shall determine, in which the FGC Designees shall discuss and
consult with the Wellsford Designees regarding the operations and other
business affairs of the Partnership and shall obtain any consent which may
be required for any impending activity of the Partnership.
2. No later than sixty days prior to the end of each fiscal
year, FGC shall prepare and provide (or cause to be prepared and provided)
to Wellsford a plan of operations for the business of the Partnership for
such calendar year and an operating and capital budget for the Partnership,
setting forth the estimated receipts and expenditures (capital and
operating) of the business for the following fiscal year (the "Budget") to
be considered for approval by Wellsford. In the event the Partners do not
reach a mutual agreement with respect to the Budget within five (5) days
prior to the beginning of the year for which the Budget applies, then the
Budget for such year shall be the same as the Budget for the preceding
year, provided that each line item (other than base compensation payable to
Creamer and Vitale, as to which there shall be no increase) shall be
increased by 10% of the amount reflected in the preceding year's Budget.
3. Notwithstanding Section 4.1(b) hereof, the Budget for
the fiscal year beginning January 1, 1998 in the form attached hereto as
Schedule C is hereby approved and adopted by the Partners.
4. The following activities and decisions shall require the
unanimous consent of all of the Partners:
(i) the admission of any additional partners;
(ii) the assignment, transfer, sale, lease or otherwise
disposition of all or substantially all of the Partnerships' property or
assets, or any material change in the nature of its business, or any
decision to wind up, liquidate or dissolve the Partnership, or any
agreement to do any of the foregoing;
(iii) increasing the compensation payable by the
Partnership to any officer, director, employee or agent of the Partnership
or any of the Partners' designees having an annual base compensation in
excess of $125,000, except as otherwise provided in an approved budget;
(iv) making any payments or loans directly or indirectly
to or for the benefit of any Partner, except as expressly permitted by this
Agreement;
(v) with respect to an expenditure provided for in the
Budget, paying or committing to pay any amount which exceeds the budgeted
amount for such expenditure by 10%;
(vi) acquiring, by purchase, lease or otherwise, or
disposing of or abandoning any real property or any interest therein;
(vii) making any tax elections in connection with the
Partnership;
(viii) making any decision with respect to setting up new
subsidiaries or affiliated entities; and
(ix) doing any other act which would materially alter or
materially adversely affect the Partnership's business.
5. The Partners may appoint, employ or otherwise contract
with other persons for the transaction of the business of the Partnership
or the performance of services for or on their behalf or for or on behalf
of the Partnership. Each Partner shall designate up to two designees who
shall act on its behalf in managing the affairs or transacting the business
of the Partnership. The initial FGC Designees and the designees of
Wellsford (the "Wellsford Designees") are set forth on Schedule D attached
hereto. Each designee shall continue to act on behalf of its designating
Partner until his respective resignation or removal by the designating
Partner. A Partner may not remove or replace a designee not designated by
it. In the event that either Creamer or Vitale (or both) elects
voluntarily to terminate his (or their) employment with the Partnership or
New Creamer, as the case may be, prior to the later of (i) the Adjusted
Wellsford Base Amount being reduced to zero and (ii) the expiration of the
Commitment Period under the Program Agreement (the "Employment Period"),
Wellsford shall have the right to initiate (or direct FGC to initiate, in
which case FGC shall be obligated to initiate) the Buy/Sell (as hereinafter
defined).
ARTICLE XVI
TERMINATION; TRANSFERS OF INTERESTS; BUY/SELL
5.16.1 Events of Termination. The Partnership shall be
dissolved and its affairs wound up upon the first to occur of the
following:
1. the sale or other disposition of all or substantially
all of the assets of the Partnership;
2. a determination of all of the Partners to dissolve and
liquidate the Partnership (except that upon the death or disability of
either Creamer or Vitale, such determination may be made by Wellsford and,
if applicable, the survivor of Creamer and Vitale as set forth in Section
9.2 hereof);
3. the withdrawal, dissolution or bankruptcy of any
Partner; or
4. the expiration of the term of the Partnership.
For purposes of this Agreement, a bankruptcy of a Partner
shall be deemed to occur when such Partner files a petition in bankruptcy,
or voluntarily takes advantage of any bankruptcy or insolvency law, or is
adjudicated to be bankrupt, or if a petition or answer is filed proposing
the adjudication of such Partner as bankrupt and such Partner either
consents to the filing thereof or such petition or an answer is not
discharged or denied prior to the expiration of sixty (60) days from the
date of such filing.
5.16.2 Withdrawal of a Partner. Except as set forth in
Section 4.1(e) hereof or except as set forth in the last sentence of this
Section 5.2, no Partner shall have the right voluntarily to withdraw from
the Partnership without the written consent of the other Partner. Upon
withdrawal by a Partner, as aforesaid, such Partner shall cease to be a
Partner and shall not retain its interest in the Net Profits, Net Losses
and distributions of the Partnership. Following the death, resignation or
permanent disability of either Creamer or Vitale, the voluntary resignation
of the survivor of them shall be deemed a withdrawal by FGC.
5.16.3 Winding Up. Upon a dissolution of the Partnership
requiring the winding up of its affairs, the Partners or a designated
person or persons shall with reasonable promptness wind up the
Partnership's affairs. The assets of the Partnership shall be sold within
a reasonable period of time, to the extent necessary to pay or provide for
the debts and liabilities of the Partnership, and may be sold to the extent
deemed commercially feasible by the person or persons winding up the
affairs of the Partnership, and all assets of the Partnership shall be
distributed as provided in Section 5.4.
5.16.4 Distributions upon Winding Up. The proceeds of any
winding up shall be applied and distributed in the following order of
priority (to the extent that such order of priority is consistent with the
laws of the State of New York):
1. to the payment of the debts and liabilities of the
Partnership and the expenses of dissolution and liquidation;
2. to the setting up of any reserves which the person or
persons winding up the affairs of the Partnership may deem reasonably
necessary for any contingent or unforeseen liabilities or obligations of
the Partnership, and, at the expiration of such period as the aforesaid
person or persons may deem advisable, for distribution in the manner
hereinafter provided;
3. to the payment of any accrued and unpaid Wellsford
Priority Return;
4. pro rata to the repayment of any advances or loans,
with interest accrued thereon, that may have been made by any of the
Partners to the Partnership; and
5. pro rata to the Partners in proportion to their
respective positive Capital Account Balances, until such capital account
balances have been reduced to zero; and
(f) pro rata to the Partners in accordance with their
respective Percentage Interests.
5.16.5 Statements on Winding Up. Upon termination of the
Partnership, a statement shall be prepared by the Partnership's
accountants, which shall set forth the assets and liabilities of the
Partnership as of the date of termination.
5.16.6 Restrictions on Transfers of Interests.
(1) Neither Wellsford nor FGC shall, or shall have the
right to, sell, assign, transfer or dispose of (whether by gift or
otherwise), mortgage, pledge, hypothecate, create a lien on or security
interest in, or otherwise encumber, whether voluntarily, involuntarily, by
operation of law or otherwise (a "Disposition") all or any part of their
respective Interests, except as permitted by, and only upon compliance with
the terms of this Agreement. Any purported or attempted Disposition of an
Interest in violation of this subclause (a) shall be null, void and of no
effect.
(2) Notwithstanding the provisions of subclause (a)
immediately above,
(i) Subject to the terms of this Agreement, Wellsford
shall have the right, without requiring the consent of FGC (but upon prior
notice to FGC and the Partnership), to assign or transfer all or any
portion of its Interests to a wholly-owned subsidiary or other Wellsford
Related Entity (as hereinafter defined), provided that such subsidiary or
Wellsford Related Entity expressly assumes in writing all of Wellsford's
obligations under this Agreement and otherwise agrees to be bound by the
provisions of this Agreement as if an original signatory hereof. For the
purposes of this Agreement, the term "Wellsford Related Entity" shall mean
any person, partnership, corporation or other entity in which Wellsford or
WRP, directly or indirectly, owns a majority of the voting interests; and
(ii) Subject to the terms of this Agreement, FGC shall
have the right (upon prior notice to Wellsford and the Partnership) to
assign or transfer all or a portion of its Interests to Creamer, Vitale,
members of Creamer's or Vitale's immediate family or to a trust or trusts
established for the benefit of the members of the respective immediate
family of Creamer or Vitale, or to a wholly-owned subsidiary of FGC or an
entity wholly-owned by either Creamer or Vitale or other FGC Related Entity
(as hereinafter defined) provided that in connection with any such
transfer, FGC retains, by a written voting trust or other instrument in
form and substance satisfactory to the Partners and the Partnership, all
voting and management rights with respect to the transferred Interests and
provided that any such subsidiary or FGC's Related Entity expressly assumes
in writing all of FGC's obligations under this Agreement and otherwise
agrees to be bound by the provisions of this Agreement as if an original
signatory hereof. For the purposes of this Agreement, the term "FGC
Related Entity" shall mean any person, partnership, corporation or other
entity in which either FGC owns or Creamer or Vitale owns a majority of the
voting interests, and the term "immediate family" shall mean the respective
spouse, parents and issue of Creamer or Vitale, as the case may be. If FGC
shall transfer any portion of its Interest to Creamer or Vitale, or members
of Creamer's or Vitale's immediate family, or to a trust or trusts
established for the benefit of the members of the respective immediately
family of Creamer or Vitale, or other FGC Related Entity, all references in
this Agreement to "FGC" shall apply to FGC, Creamer or Vitale, the legal
representative of Creamer's or Vitale's estate, Creamer's or Vitale's
heirs, the members of Creamer's or Vitale's immediate family, trusts
established for the benefit of the members of the respective immediately
family of Creamer or Vitale, or other FGC Related Entity to which such
Interests were transferred and, simultaneously with the transfer, the
transferees shall execute and deliver to Wellsford and the Partnership an
agreement, in form and substance satisfactory to Wellsford and the
Partnership, pursuant to which such transferees agree to be bound by all of
the provisions of this Agreement.
(iii) Notwithstanding the foregoing, until the later
of (A) the Adjusted Wellsford Base Amount being reduced to zero and (B) the
expiration of the Employment Period, Creamer and Vitale shall remain the
designees of FGC and shall agree to be employed by the Partnership as set
forth in Section 3.3 hereof, subject to the provisions set forth in
Section 4.1(e) hereof.
5.16.7 Buy/Sell Option. 1. Either Partner may elect to
initiate a buy/sell procedure (the "Buy/Sell") with respect to its Interest
if:
((0).1 the Partners do not reach a mutual agreement
with respect to the Budget for two (2) consecutive years; or
(ii) the Partners (or the Members of New Creamer) are
not able to reach agreement as to any material matter such that the
Partnership or New Creamer, as the case may be, is unable to carry out
its respective business, including, without limitation, satisfying its
respective obligations under the Partnership Commitments (as
hereinafter defined) or the Clairborne Program, as the case may be.
2. In the event (i) either Creamer or Vitale (or both)
elects voluntarily to terminate his (or their) employment with the
Partnership or with New Creamer, as the case may be, during the Employment
Period, or (ii) PIC gives notice of its intention to exercise its rights
under Section 4.1 of the Program Agreement, Wellsford shall have the right
to initiate (or direct FGC to initiate, in which case FGC shall be
obligated to initiate) the Buy/Sell;
3. In the event (i) Jeffrey H. Lynford or Edward Lowenthal
ceases to act as the Chairman and the President, respectively, of WRP, or
(ii) a merger or consolidation of WRP with a third party, or a sale of the
majority of the stock or substantially all of the assets of WRP to a third
party (each, a "WRP Change of Control"), or (iii) Wellsford refuses to
approve a total of five (5) investment opportunities, each of which
satisfies the objectives and criteria set forth in Exhibit A to the Program
Agreement, during the term of the Commitment Period (as defined in the
Program Agreement), FGC shall have the right to initiate (or direct
Wellsford to initiate, in which case Wellsford shall be obligated to
initiate) the Buy/Sell.
4. In the event of the occurrence of any of the conditions
set forth in Section 5.7(a), (b) or (c) above, such Partner as may be
applicable (the "Initiating Partner") may initiate the Buy/Sell by giving a
written notice of its intention to initiate the Buy/Sell (a "Buy/Sell
Notice") to the other Partner (the "Offeree Partner") which sets forth an
amount equal to the Initiating Partner's valuation of the entire
Partnership (the "Sale Price") and such other terms of the sale as the
Initiating Partner may determine. The Offeree Partner shall have the
option to (x) buy the Initiating Partner's Interest at an amount equal to
the amount which the Initiating Partner would be entitled to receive if the
Partnership were sold for the Sale Price and the proceeds distributed
pursuant to Section 5.4 hereof, and on the other terms and conditions set
forth in the Buy/Sell Notice, or (y) sell its Interest to the Initiating
Partner for an amount equal to the amount which the Offeree Partner would
be entitled to receive if the Partnership were sold for the Sale Price and
the proceeds distributed pursuant to Section 5.4 hereof, and on the other
terms and conditions set forth in the Buy/Sell Notice.
5. Within forty-five (45) days following the giving of the
Buy/Sell Notice (the "Buy/Sell Election Period"), the Offeree Partner shall
deliver a written notice to the Initiating Partner of its decision to buy
or sell. Failure to deliver such notice shall be deemed a decision to
sell.
6. The purchase or sale of an Interest pursuant to the
Buy/Sell shall be consummated upon the transfer of the Interest (the
"Subject Interest") by the selling Partner or its designee (the "Selling
Partner"), and shall occur no later than fifteen (15) days following the
expiration of the Buy/Sell Election Period.
7. If the Partner or its designee purchasing the Subject
Interest pursuant to the Buy/Sell (the "Purchasing Partner") is ready,
willing and able to perform its obligations at the closing, and the Selling
Partner defaults in performing its obligations at the closing, the sale of
the Subject Interest shall be deemed to have occurred at the closing, the
Partnership shall record the transfer of the Subject Interest in its books
and records, the Partnership shall treat the Purchasing Partner as the
legal and beneficial owner of the Subject Interest sold by the Selling
Partner, the Selling Partner shall cease to have any rights as a Partner of
the Partnership with respect to the Subject Interest, and the Selling
Partner's sole remedy against the Purchasing Partner shall be to be paid
the amount due it in connection with the sale of the Subject Interest
(without interest) upon reasonable written notice to the Purchasing Partner
and upon tender to the Purchasing Partner of the assignment of the Subject
Interest and other documents which should have been delivered at the
closing.
8. If the Selling Partner is ready, willing and able
to perform its obligations at the closing, and the Purchasing Partner
defaults in performing its obligations at the closing, the Selling Partner
shall have the right (but not the obligation) to acquire the Interest of
the Purchasing Partner at a price equal to 75% (seventy-five percent) of
the amount that would otherwise have been payable to the Purchasing Partner
had the Purchasing Partner elected to be the seller, as determined in
accordance with clause (d) above, or to sell the Subject Interest to a non-
affiliated third party free of the restrictions set forth in Section 5.6
hereof.
9. At the closing, the Selling Partner shall deliver
to the Purchasing Partner a duly executed assignment of Subject Interest
and such other documents reasonably requested by the Purchasing Partner
which are necessary to evidence or complete the transfer of such Subject
Interest, and the Purchasing Partner shall deliver to the Selling Partner
(i) cash payable by wire transfer of immediately available funds to an
account or accounts of the Selling Partner at the bank specified by the
Selling Partner in writing at least two business days prior to the closing,
or (ii) a certified or bank check payable to the Selling Partner in an
amount equal to the purchase price of the Subject Interest.
10. Any decision by a Partner to initiate the Buy/Sell
and/or any response by a Partner to a Buy/Sell Notice shall be made
simultaneously and consistently with respect to the applicable buy/sell
provisions of interests in New Creamer as set forth in the New Creamer
Operating Agreement.
ARTICLE XVII
BOOKS AND RECORDS; ACCOUNTING; TAX MATTERS
6.17.1 Books and Records. FGC, as Managing Partner, shall
prepare and maintain (or cause to be prepared and maintained) for the
Partnership true and correct books and records which shall be prepared in
accordance with generally accepted accounting principles, consistently
applied, showing all costs, expenditures, sales, receipts, assets and
liabilities, Net Profits and Net Losses (as determined under Section 3.1
hereof) and all other records necessary, convenient or incidental to
recording the Partnership's business and affairs and sufficient to record
the allocation of Net Profits, Net Losses and distributions as provided for
herein.
6.17.2 Fiscal Year. The fiscal year of the Partnership shall
be the calendar year.
6.17.3 Bank Accounts. All receipts, funds and income of the
Partnership shall be deposited in the name of the Partnership in such banks
as are determined by the Partners. Withdrawals from said banks shall be
made on signatures of Creamer or Vitale, or such person or persons as shall
be authorized by the Partners, and there shall be no commingling of the
monies and funds of the Partnership with monies and funds of any other
entity.
6.17.4 Accounting Decisions. All decisions as to accounting
principles and tax elections shall be made by the Partners. The
Partnership shall make any election permitted under Section 754 of the
Code, unless otherwise agreed to by the Partners.
6.17.5 Tax Returns. Federal, state and local income tax
returns of the Partnership shall be prepared by such accounting firm as may
be selected by the Managing Partner, subject to the approval of Wellsford.
FGC shall file (or cause to be filed) all federal, state and local tax
returns required of the Partnership.
6.17.6 Tax Matters Partner. FGC shall be the "tax matters
partner" of the Partnership within the meaning of Section 6231(a)(7) of
the Code. The tax matters partner shall not be liable for its conduct
under this Section 6.6 to any Partner if it shall have acted in good faith
and in reliance upon the advice of legal counsel and/or Diamante, Katz &
Kahn or such other tax accountants reasonably acceptable to the other
Partner. The Partnership shall bear the expense of any tax audit or
proceeding conducted at the Partnership level, but the cost of any
adjustment to any Partner's tax liability shall be borne by that Partner.
FGC shall take all actions necessary for Wellsford to be a "notice partner"
within the meaning of Section 6231(a)(8) of the Code.
6.17.7 Inspection. Each Partner or its authorized
representative may examine any of the books or records of the Partnership
at reasonable times and upon reasonable notice provided such examination
shall not interfere with the business of the Partnership.
ARTICLE XVIII
REPRESENTATIONS AND WARRANTIES
FGC, in order to induce Wellsford to enter into this Agreement,
hereby represents and warrants to Wellsford the following with respect to
the Partnership:
7.18.1 Organization; Etc. The Partnership has all requisite
power and authority to carry on its business as it is now being conducted
and presently proposed to be conducted and to own or lease and to operate
its properties and assets. The Partnership is duly qualified or licensed
to do business and is in good standing in every jurisdiction in which the
failure to be so qualified or licensed or in good standing could have a
material adverse effect on its respective business, properties, assets,
financial condition, results of operations (a "Material Adverse Effect").
The Partnership is a partnership for federal income tax purposes, and has
never been known by any other name.
7.18.2 Financial Statements; Undisclosed Liabilities.
(1) Certain Definitions. The following terms shall have
the following meanings when used herein:
"Partnership's 1996 Financial Statements" means the
Partnership's Financial Statements as of and for the year ended December
31, 1996.
"Partnership's 1997 Financial Statements" means the
unaudited balance sheets of the Partnership as of December 31, 1997, and
the related statements of income and expense, retained earnings and cash
flows for the periods then ended, and the notes thereto.
"Partnership's Audited Financial Statements" means the
audited balance sheets of the Partnership as of December 31 in each of the
years 1995 through 1996, and the related statements of income and expense,
retained earnings and cash flows for the years then ended, and the notes
thereto.
"Partnership's Financial Statements" means the Partnership's
Audited Financial Statements, the Partnership's Unaudited Financial
Statements and the Partnership's 1997 Financial Statements.
"Partnership's Unaudited Financial Statements" means the
unaudited balance sheets of the Partnership as of December 31 in each of
the years 1991 through 1994, and the related statements of income and
expense, retained earnings and cash flows for the years then ended, and the
notes thereto.
(2) The Partnership's Financial Statements, have been
prepared in accordance with generally accepted accounting principles
consistently applied throughout the periods indicated. The Partnership's
Financial Statements, are correct, true and complete in all material
respects and fairly present the financial position and the results of
operations of the Partnership as of the respective dates thereof and for
the respective periods indicated. Except as disclosed, reflected or
reserved against in the Partnership's 1996 Financial Statements and the
Partnership's 1997 Financial Statements, the Partnership does not have any
material liabilities, commitments or obligations (secured or unsecured and
whether accrued, absolute, contingent or otherwise and whether due or to
become due), other than any liabilities, commitments or obligations
incurred after the respective dates thereof in the ordinary course of
business. The assets and properties of the Partnership are fairly valued
in the Partnership's Financial Statements.
7.18.3 Title to Assets. 1. The Partnership has good and
valid (and, in the case of real property, marketable) title to all of the
assets and properties which it purports to own (including those reflected
in the Partnership's 1996 Financial Statements and the Partnership's 1997
Financial Statements, except for assets and properties sold, consumed or
otherwise disposed of in the ordinary course of business since the date of
the Partnership's 1996 Financial Statements and the Partnership's 1997
Financial Statements), free and clear of all liens, security interests,
pledges, mortgages, rights of first refusal, options, proxies, voting
trusts or other encumbrances ("Encumbrances") and except for liens for
taxes not yet due and payable or due but not delinquent or being contested
in good faith by appropriate proceedings and for which adequate reserves
have been provided in the Partnership's 1996 Financial Statements and the
Partnership's 1997 Financial Statements.
2. All property and assets owned or utilized by the
Partnership (i) are in good operating condition and repair (except for
ordinary wear and tear), free from any defects (except such minor defects
as do not interfere with the use thereof in the conduct of the normal
operations), (ii) have been maintained consistent with the standards
generally followed in the industry and (iii) are sufficient to carry on the
business of the Partnership as presently conducted.
7.18.4 Commitments. 1. Schedule 7.4 attached hereto sets
forth, as of the date hereof, a list of each of contracts or agreements,
whether written or oral (including any and all amendments thereto), to
which the Partnership is a party or by which the Partnership is bound
(collectively, the "Partnership Commitments")
2. No Commitment violates any law or any order of any
court or administrative or governmental entity which violation would have a
material adverse effect on the Partnership. The Partnership is not in
breach of or default under any of the Commitments whereby the breach
thereof or default thereunder would have a material adverse effect on the
Partnership, and no event or omission has occurred on the part of the
Partnership which through the passage of time or the giving of notice, or
both, would constitute a breach of or default thereunder or cause the
acceleration of or give rise to the right to accelerate the Partnership's
obligations thereunder or result in the creation of any Encumbrance on any
of the assets owned, used or occupied by the Partnership thereunder. To
the best of FGC's knowledge, no third party is in breach of or default
under any Commitment, nor has any event or omission occurred which, through
the passage of time or the giving of notice, or both, would constitute a
breach of or default thereunder or give rise to an automatic termination,
or the right of discretionary termination, thereof. Each Commitment is
(assuming due power and authority of, and due execution and delivery by,
the other party or parties thereto) valid and binding upon each party
thereto and is in full force and effect.
7.18.5 Insurance. Schedule 7.5 attached hereto sets forth a
complete and accurate list of all policies of fire, liability, workers'
compensation, health and other forms of insurance currently in effect with
respect to the business and properties of the Partnership. All such
insurance is in full force and effect, and no notice of cancellation or
termination, or reduction of coverage or intention to cancel, terminate or
reduce coverage, has been received with respect to any policy for such
insurance. The insurance coverage provided by such policies or insurance
will not terminate or lapse by reason of the transactions contemplated by
this Agreement and, on and after the date hereof, the Partnership will
continue to be covered under such policies for events occurring prior to
the date hereof.
No such policy provides for or is subject to any currently enforceable
retroactive rate or premium adjustment, loss sharing arrangement or other
actual or contingent liability arising wholly or partially out of events
arising prior to the date hereof.
7.18.6 Litigation. Schedule 7.6 attached hereto sets forth a
list of all lawsuits, legal, administrative, arbitration or other
proceeding or action or investigation ("Litigation") pending or threatened
against or involving the Partnership. Except as set forth in Schedule 7.6,
the Partnership is not subject to and has not received written notice of
any outstanding orders, rulings, judgments or decrees of any court,
arbitration or administrative or governmental entity. Notwithstanding the
foregoing, there is no Litigation, pending, or to the best of FGC's
knowledge, threatened against or involving the Partnership or any of its
properties, assets or rights which could reasonably be expected to have a
Material Adverse Effect.
7.18.7 Compliance with Law; Licenses, Permits. The
Partnership is in compliance with all applicable laws, rules, regulations
and orders currently in effect the non-compliance with which would have a
material adverse effect on the Partnership. The Partnership has all third
party consents and authorizations and governmental permits, licenses and
authorizations necessary for the conduct of its business as presently
conducted or proposed to be conducted.
7.18.8 Employee Benefit Plans. Except as set forth on
Schedule 7.8, neither the Partnership nor any of its respective ERISA
Affiliates established, adopted, maintained, sponsored or contributed to
any employee benefit plans within the meaning of Section 3(3) of the
Employee Retirement Income Security Act of 1974, as amended ("ERISA"), and
none of such entities has any obligation to contribute to any such employee
benefit plan. For purposes of this Agreement, the term "ERISA Affiliate"
means any corporation or person which is a member of any group of
organizations described in Section 414(b), (c), (m) or (o) of the Internal
Revenue Code of 1986, as amended, or Section 4001(a)(14)] of ERISA of
which the Partnership is a member.
7.18.9 Tax Returns; Taxes. (i) All federal, state, local and
foreign income and other tax returns required to be filed by the
Partnership have been filed in a timely manner (taking into account all
extensions of due dates) and all taxes and other charges shown as due
thereon have been paid. (ii) There are no Encumbrances for unpaid taxes
(other than taxes not yet due and payable) upon any of the assets of the
Partnership. (iii) No claims or deficiencies in writing for any taxes with
respect to the Partnership have been asserted or assessed in writing which
remain unpaid. (iv) There are no waivers of statutes of limitations in
effect in respect of any tax liability of the Partnership. (v) To FGC's
knowledge, the Partnership has withheld and paid all taxes required to have
been withheld and paid by it in connection with income, payments or
distributions to its partners, employees or other recipients. (vi) The
Partnership has made no election to be taxable as a corporation or any
other election not reflected on the Partnership returns. (vii) Neither FGC
nor the Partnership have received any notice by any tax authority that such
authority intends to audit the Partnership.
7.18.10 Environmental Matters. The Partnership does not have any
knowledge of, and has not received any claims or notices (whether oral or
written) from any person or governmental or administrative entity, that
there are lawsuits, orders, consent decrees, administrative enforcement
actions, environmental cleanup proceedings or notices of violation pending
or threatened, with respect to compliance or in connection with all
applicable laws, foreign and domestic statutes, ordinances, rules,
regulations, common law, orders, decrees and other binding legal
requirements pertaining to health, protection of the environment,
pollution, natural resources, waste management and other matters relating
to the environment affecting the Partnership.
7.18.11 Labor Matters. 1. The Partnership has been for the last
five years and is in compliance in all material respects with all
applicable laws respecting employment and employment practices, terms and
conditions of employment, wages, hours of work and occupational safety and
health, and is not and has not been engaged in any unfair labor practices
as defined in the National Labor Regulations Act or other applicable law,
ordinance or regulation.
(b) The Partnership does not have any employees, except for
those sets forth in Schedule 7.11 attached hereto. There are no
administrative charges or court complaints against the Partnership
concerning alleged employment discrimination or other employment related
matters pending or threatened before the U.S. Equal Employment Opportunity
Commission or any administrative or governmental entity. There is not
pending as of the date hereof any complaint against the Partnership issued
by or pending before the National Labor Relations Board.
7.18.12 Affiliates' Relationships. Except as set forth in the
Partnership's 1996 Financial Statements and the Partnership's 1997
Financial Statements, the Partnership does not have any outstanding
contract, agreement or other arrangement with either Duterra, Rapuano, Leo
Taurus or any of their respective affiliates, which will continue after the
Closing (as defined in the Asset Purchase Agreement).
7.18.13 Patents and Trademarks. The Partnership has valid, legal
rights to use, all patents, patent applications, trademarks, trademark
applications, service marks, trade names, copyrights, licenses and rights
(collectively, the "Intellectual Property Rights") which are necessary to,
or used in, its business, which Intellectual Property Rights are set forth
on Schedule 7.13 attached hereto. Schedule 7.13 sets forth a list of all
trade and service marks which have been registered or for which an
application for registration is pending, in each case which are owned and
used or held for use exclusively by the Partnership (the "Patent Rights").
Except as set forth on Schedule 7.13 attached hereto, the Partnership (i)
is not a defendant in any claim, suit, action or proceeding relating to its
business which involves a claim of infringement of any patents, trademarks
or service marks, (ii) does not have any knowledge of any existing
infringement by another person of any of the Patent Rights belonging to it,
(iii) has not granted any licenses or other rights, and has no obligations
to grant licenses or other rights, to any of its Intellectual Property
Rights, or (iv) has not received notice of its infringement of the patent,
trademark, copyright or other intellectual property rights of a third
party.
7.18.14 Directors, Officers and Employees; Conflicts of Interest.
No director, officer or employee of the Partnership has or claims to have
(i) any interest in the property, real or personal, tangible or intangible,
including, without limitation, intangibles, licenses, inventions,
technology, processes, designs, computer programs, know-how and formulae
used in the business of the Partnership, or (ii) any contract, commitment,
arrangement or understanding with the Partnership.
7.18.15 Accounts Receivable. All accounts receivable of the
Partnership are bona fide accounts receivable. There has not been any
material adverse change in the collectability of accounts receivable of the
Partnership since the date of the Partnership's 1996 Financial Statements.
7.18.16 Investments. (1) Schedule 7.16 attached hereto sets
forth a list of all securities, membership or partnership interests,
mortgages, investments in real estate, real property and interests therein,
or other investments (collectively, the "Investments") owned by the
Partnership as of December 31, 1997, and a list of all transactions in
Investments by the Partnership as of December 31, 1997, together with the
cost basis book or amortized value, as the case may be, as of December 31,
1997, as well as such other information with respect to transactions in
Investments by the Partnership as of December 31, 1997, of such
Investments.
(2) The Partnership has good and marketable title to the
Investments listed on Schedule 7.16 or acquired in the ordinary course of
business since December 31, 1997 other than with respect to those
Investments which have been disposed of in the ordinary course of business
or redeemed in accordance with their terms since such date.
(3) The Partnership has not committed any act or omitted to
take any act which would make any of the Investments not enforceable
against the issuer thereof or the parties thereto in accordance with their
terms.
7.18.17 Activities of the Partnership. The Partnership does not
engage and has not engaged in any business or activity of any nature other
than such activities as set forth in its partnership agreements,
certificates of partnership or other organizational documents, or in
connection with the transactions reflected in the Commitments.
7.18.18 Disclosure; Guarantee. No representation or warranty by
FGC contained in this Agreement and no information contained in any
Schedule or Exhibit hereto contains or will contain any untrue statement of
a material fact or omits or will omit to state a material fact necessary in
order to make the statements contained herein or therein not misleading.
7.18.19 No Outstanding Loans; Cancellations or Waivers. The
Partnership has not cancelled any debts payable to it or waived in writing
any claims or any rights or any statute of limitation operating to its
benefit.
7.18.20 No Distributions. Except as set forth on Schedule 7.20
attached hereto, no distributions (whether in the form of cash or property)
have been made by the Partnership to Leo Taurus or FGC since December 31,
1996. Except as set forth on Schedule 7.20, the Partnership has not
declared or set aside for payment any distribution since December 31, 1996.
7.18.21 Bank Accounts. Schedule 7.21 attached hereto sets forth
the names and locations of all banks, trust companies, savings and loan
associations and other financial institutions at which the Partnership
maintains accounts of any nature and the names of all persons authorized to
draw thereon or make withdrawals therefrom.
7.18.22 Consents. No consent, approval or authorization of, or
exemption by, or filing with, any governmental or administrative entity or
any third party is required to be obtained or made by the Partnership in
connection with the execution, delivery and performance by FGC of this
Agreement or the taking by FGC or the Partnership of any other action
contemplated hereby.
7.18.23 Representations by Creamer and Vitale. Each of Creamer
and Vitale by their execution of this Agreement, certifies, to the best of
their respective knowledge after due inquiry and investigation with respect
to any and all matters of, and relating to, the Partnership, that the
representations and warranties set forth in the this Article VII are true,
correct and complete, and each of Creamer and Vitale shall agree to
indemnify Wellsford with respect thereto. Notwithstanding the foregoing,
the liability of each of Creamer and Vitale with respect to such
representations and warranties shall be limited to $375,000. Each of
Creamer and Vitale may satisfy any such liability by (a) tendering cash in
the amount of such liability, or, (b) surrendering certain of the warrants
issued to each of Creamer and Vitale on January 16, 1998 to purchase up to
74,000 shares of common stock of WRP (the "Shares") which warrants have not
been exercised, such warrants to be valued for the specific purpose set
forth in this Section 7.23, at an amount equal to the difference between
the exercise price of such warrants and the fair market price of the Shares
underlying such warrants as of the date of the exercise thereof, provided
that in no event shall such value be less than $5 with respect to the
Warrant for each Share.
ARTICLE XIX
LIABILITIES AND INDEMNIFICATION
8.19.1 Liability and Indemnification of the Partnership and
the Partners. (1) To the fullest extent permitted by applicable law, an
Indemnified Person (as hereinafter defined) shall be entitled to
indemnification from the Partnership for any loss, damage or claim incurred
by such Indemnified Person by reason of any act or omission performed or
omitted by such Indemnified Person, if such Indemnified Person acted in
good faith and in a manner reasonably believed by such Indemnified Person
to be in or not opposed to the best interests of the Partnership; provided
that the Indemnified Person's conduct shall not have constituted fraud,
gross negligence or willful or wanton misconduct. For purposes of this
Agreement, an Indemnified Person means (i) each Partner and its directors,
officers, shareholders, members, partners, affiliates, trustees, employees
and agents, and (ii) any person who is or was serving at the request of the
Partnership or any Partner, as a director, officer, shareholder, member,
partner, trustee, employee or agent of the Partnership or another
corporation, limited liability company, partnership, joint venture, trust
or other enterprise in connection with the business or investments of the
Partnership.
(2) To the fullest extent permitted by applicable law,
expenses (including attorneys' fees and expenses) incurred in defending any
action, suit or proceeding subject to Section 8.1(a) shall be paid by the
Partnership in advance of the final disposition of such proceeding, subject
to repayment, if it shall conclusively be determined, by a court of
competent and final jurisdiction, that the Indemnified Person is not
entitled to be indemnified by the Partnership as authorized hereunder.
(3) The indemnification provided by this Section 8.1 shall
be in addition to any other rights to which an Indemnified Person may be
entitled under any agreement of the Partners, as a matter of law or
otherwise, both as to action in the Indemnified Person's capacity as the
Partner, a director, officer, employee or agent of a Partner or a person
serving at the request of the Partnership and to any action in another
capacity. Such indemnification shall continue as to an Indemnified Person
who has ceased to serve in such capacity and shall inure to the benefit of
the heirs, successors, assigns, administrators and personal representatives
of such Indemnified Person.
(4) The Partnership may purchase and maintain insurance on
behalf of any one or more Indemnified Persons and other persons as the
Partners shall determine against any liability that may be asserted against
or expense that may be incurred by such person in connection with the
activities of the Partnership, whether or not the Partnership would have
the power to indemnify such person against such liability hereunder.
(5) In no event may an Indemnified Person subject the
Partners to personal liability by reason of this Section 8.1 except
specifically provided for in this Agreement.
(6) An Indemnified Person shall not be denied
indemnification in whole or in part under this Section 8.1 because the
Indemnified Person had an interest in the transaction with respect to which
indemnification applies if the transaction was otherwise permitted by the
terms hereof.
(7) The provisions of this Section 8.1 are for the benefit
of the Indemnified Persons and their heirs, successors, assigns,
administrators and personal representatives and shall not be deemed to
create any rights for the benefit of any other persons. Without limitation
of any provision of this Section 8.1, this Section 8.1 shall be construed
to indemnify all persons exculpated pursuant to Section 8.2 to the fullest
extent of any such exculpation.
8.19.2 Liability of the Managing Partner. The Managing
Partner shall be liable to the Partnership and the other Partner for fraud,
gross negligence or willful or wanton misconduct in any of its actions or
omissions, but shall not be liable to the Partnership, the other Partner or
any other persons who have acquired interests in any Interest, whether as
partners, assignees or otherwise, for errors in judgment or for any acts or
omissions, made, taken or omitted in good faith and that FGC, as the
Managing Partner (or, if applicable, any of its designees, directors,
officers, employees or agents acting on its behalf) reasonably believes is
in or not opposed to the best interests of the Partnership, unless such
errors in judgment, acts or omissions constitute fraud, gross negligence or
willful or wanton misconduct.
FGC shall indemnify Wellsford and its affiliates for any
loss, damage or claim incurred or suffered by Wellsford and/or its
affiliates, but only if such loss, damage or claim is incurred or suffered
as a result of any breach of FGC's representations and warranties herein,
or by reason of any act or omission on or prior to the date hereof by FGC,
any FGC Designee or the Partnership and their respective directors,
officers, employees or agents acting on their respective behalves, which
act or omission constitutes fraud, gross negligence or willful or wanton
misconduct.
ARTICLE XX
KEY-MAN LIFE INSURANCE; DEATH OF PRINCIPALS
9.20.1 Key-Man Life Insurance. The Partnership, at its sole
cost and expense (which expense shall be set forth in the Budget), shall
purchase and maintain one-year renewable term key-man life insurance ("Key-
Man Insurance") on the life of each of Creamer and Vitale in an amount with
respect to each of them which, when added to the amount of the one-year
key-man life insurance purchased and maintained by New Creamer, shall equal
the lesser of two million dollars ($2,000,000) or an amount equal to the
Adjusted Wellsford Base Amount, or such lesser amount as is determined by
Wellsford at its sole discretion. Creamer and Vitale each shall cooperate
with respect to purchasing and maintaining the Key-Man Insurance,
including, without limitation, the taking of physical examinations and the
completion and execution of appropriate insurance forms and applications.
Upon the death of either Creamer or Vitale, any payment from the Key-Man
Insurance shall be remitted to the Partnership.
9.20.2 Death of Principals. Upon the death or permanent
disability of either Creamer or Vitale, the Partnership shall be continued
unless both Wellsford and the survivor of either Creamer or Vitale mutually
consent to dissolve and liquidate the Partnership.
ARTICLE XXI
GENERAL PROVISIONS
10.21.1 Right of First Refusal/Other Business Activities.
Wellsford may engage in all business activities (including those similar to
the activities of the Partnership or the entities involved in the
Clairborne Program), provided, however, that so long as the Clairborne
Program is in effect, Wellsford will, to the extent possible, present any
investment opportunities which are substantially similar to those of the
Clairborne Program to New Creamer. FGC, the FGC Designees or any
affiliates in which either FGC or the FGC Designees or Creamer or Vitale
owns or shall own a majority of the voting interests or over which FGC or
the FGC Designees or Creamer or Vitale has or shall have voting control,
may participate, directly or indirectly in any business activity or
venture, provided, however, that (a) such participation will not interfere
with either of the FGC Designees' performance of his duties hereunder or
with respect to New Creamer or the Clairborne Program, and (b) in the event
FGC, any FGC Designee or any of their respective affiliates desire to
participate or sponsor (i) any program, investment fund or investment
venture with an investment objective, strategy or focus substantially
similar to the Clairborne Program, or (ii) other business activity or
business venture competitive to or substantially similar to the activities
or ventures of the Partnership or New Creamer at any time during the term
of this Partnership, FGC, the respective FGC Designee or the respective
affiliates, whichever may be applicable, shall first provide either
Wellsford, the Partnership or New Creamer with a right of first refusal or
priority participation therein on terms no less favorable to those being
offered to other third-party participants in such program, investment fund
or venture or business activity or venture. No Partner shall be required
to devote any particular amount of time to the business of the Partnership,
except that FGC shall cause Creamer and Vitale to devote such time,
energies and attention as are necessary to the fulfillment of their
responsibilities and duties to the Partnership and New Creamer, including,
without limitation, all activities required of the Partnership and/or New
Creamer pursuant to the Partnership Commitments and the Clairborne Program.
10.21.2 Representations and Warranties of Wellsford. Wellsford
represents and warrants that (a) it has all requisite capacity, power and
authority to execute, deliver and perform this Agreement and the New
Creamer Operating Agreement, and to consummate the transactions
contemplated hereby and thereby, (b) the execution, delivery and
performance by Wellsford of this Agreement and the New Creamer Operating
Agreement, and the consummation by Wellsford of the transactions
contemplated hereby and thereby, have been duly authorized by all necessary
corporate action on its part, (c) this Agreement and the New Creamer
Operating Agreement have been duly and validly executed and delivered by
Wellsford, and each constitutes the valid and binding obligation of
Wellsford, enforceable against Wellsford in accordance with its terms, and
(d) it has adequate financial resources to satisfy its funding obligations
hereunder and under the New Creamer Operating Agreement.
10.21.3 Representations and Warranties of FGC. FGC represents
and warrants that (a) it has all requisite capacity, power and authority to
execute, deliver and perform this Agreement and to consummate the
transactions contemplated hereby, (b) the execution, delivery and
performance by FGC of this Agreement, and the consummation by FGC of the
transactions contemplated hereby, have been duly authorized by all
necessary corporate action on its part, and (c) this Agreement has been
duly and validly executed and delivered by FGC and constitutes the valid
and binding obligation of FGC, enforceable against FGC in accordance with
its terms.
10.21.4 Survival. The representations, warranties and covenants
made in this Agreement or other document executed at or prior to the date
hereof in connection herewith shall survive for one (1) year after the date
hereof, except for representations, warranties and covenants regarding tax-
related matters set forth in Section 7.9 hereof, which representations and
warranties shall survive until the expiration of the relevant statute of
limitations, including any extensions thereof, and which covenants shall
survive for the duration of their term. No investigation by Wellsford or
on Wellsford's behalf heretofore or hereafter conducted shall affect the
representations, warranties and covenants of FGC (and its designees) set
forth in this Agreement.
10.21.5 Sophisticated Investor. Wellsford is a sophisticated
investor with significant business experience and knowledge, and it has
consulted with all legal, accounting and other professionals which it deems
necessary to evaluate and understand the merits of, and to make informed
decisions with respect to, the transaction contemplated hereby. Wellsford
has had the opportunity to review all information regarding the
Partnership, which access and review does not in any way limit the
representation and warranties of any of FGC, Creamer or Vitale set forth in
this Agreement.
10.21.6 Integration. This Agreement constitutes the entire
agreement among the parties hereto with respect to the subject matter
hereof. This Agreement supersedes any prior agreement or understanding
among the parties hereto, including, without limitation, the Original
Agreement, and may not be modified or amended in any manner unless in
writing and signed by all the parties hereto.
10.21.7 Notices. All notices, demands, offers or other
communications required or permitted by this Agreement shall be in writing
and shall be sent by prepaid registered or certified mail, return receipt
requested, or by hand delivery, and addressed to the Partnership at its
address set forth herein, and to the Partners at their respective addresses
set forth on Schedule B hereto or to such other address as shall, from time
to time, be supplied by any party to the other by like notice, and shall be
deemed given upon the date the return receipt is signed on behalf of the
receiving party or, if hand delivered, upon delivery.
10.21.8 Benefits and Obligations. The covenants and agreements
herein contained shall be binding upon and inure to the benefit of the
legal representatives, heirs, executors, administrators, successors and
assigns of the respective parties hereto.
10.21.9 Severability. If any provision of this Agreement or the
application thereof to any part or circumstances shall be determined by any
court of competent jurisdiction to be invalid and unenforceable in any
respect and to any extent, the remainder of this Agreement or the
application of such provision to such person or circumstance, other than
that as to which it so determined invalid or unenforceable, shall not be
affected thereby and shall be valid and enforceable to the fullest extent
permitted by law.
10.21.10 Waivers. No waiver of any breach of any term hereof
shall be effective unless made in writing signed by the party against whom
enforcement of the waiver is sought, and no such waiver of any subsequent
breach of that term or any other term of the same or different nature shall
be construed as a waiver of any subsequent breach of that term of the same
or different nature.
10.21.11 Applicable Law. This Agreement shall be construed and
enforced in accordance with the laws of the State of New York.
10.21.12 No Partition. The Partners hereby waive any right of
partition they may have with respect to any assets of the Partnership, now
existing or hereafter acquired.
10.21.13 Confidentiality. Except if and to the extent required
by law, or as the parties hereto may from time to time agree in writing,
the parties hereto shall not, and shall cause their respective employees,
officers, directors, partners, shareholders, affiliates or agents not to,
divulge, disclose or communicate, whether orally or in writing, the
provisions or subject matter of this Agreement, any confidential non-public
information regarding business, affairs and operations of the Partnership,
the transactions contemplated hereby or the identity of the parties hereto,
other than to the parties' or the Partnership's respective legal counsel,
accountants and financial advisors.
10.21.14 Counterparts. This Agreement may be executed in one or
more counterparts, each of which shall for all purposes be deemed to be an
original and all of which shall constitute the same instrument.
10.21.15 Headings. The headings in this Agreement are solely
for convenience of reference and shall not affect its interpretation.
10.21.16 Exhibits and Schedules. The Schedules and Exhibits
attached hereto are hereby incorporated herein and made a part hereof.
<PAGE>
IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed as of the day and year first above written.
WELLSFORD CRC HOLDING CORP.
By:/s/ William H. Darrow
--------------------------------
Name: William H. Darrow
Title: Vice President
FGC REALTY CONSULTANTS, INC.
By:/s/ Frank G. Creamer, Jr.
--------------------------------
Name: Frank G. Ceamer, Jr.
Title: President
The undersigned have executed this Agreement as of the day and
year first above written to reflect their agreement to Sections 5.6(b)(iii)
and 7.23 of this Agreement.
/s/ Frank G. Creamer, Jr.
-------------------------------------
Frank G. Creamer, Jr.
/s/ Michael J. Vitale
-------------------------------------
Michael J. Vitale
<PAGE>
SCHEDULE A
CAPITAL ACCOUNT (AS OF JANUARY 1, 1998)
Wellsford CRC Holding Corp. [ ]
FGC Realty Consultants, Inc. [ ]
<PAGE>
SCHEDULE B
Name and Percentage
Address Interest
Wellsford CRC Holding Corp. 49%
610 Fifth Avenue
New York, New York 10020
FGC Realty Consultants, Inc. 51%
c/o Creamer Realty Consultants
40 West 57th Street
New York, New York 10019
<PAGE>
SCHEDULE C
1998 BUDGET
See attached<PAGE>
SCHEDULE D
Partner Designees
Wellsford CRC Holding Corp. William H. Darrow II
Jeffrey H. Lynford
FGC Realty Consultants, Inc. Frank G. Creamer, Jr.
Michael J. Vitale
<PAGE>
SCHEDULE 7.4
PARTNERSHIP COMMITMENTS
See attached<PAGE>
SCHEDULE 7.5
INSURANCE
See attached<PAGE>
SCHEDULE 7.6
LITIGATION
None<PAGE>
SCHEDULE 7.8
EMPLOYEE BENEFIT PLANS
See attached<PAGE>
SCHEDULE 7.11
PARTNERSHIP EMPLOYEES
See attached<PAGE>
SCHEDULE 7.13
PATENTS AND TRADEMARKS
None<PAGE>
SCHEDULE 7.16
INVESTMENTS
None
<PAGE>
SCHEDULE 7.20
DISTRIBUTIONS
See attached<PAGE>
SCHEDULE 7.21
BANK ACCOUNTS
See attached
[Draft of 1/20/98]
LIMITED LIABILITY COMPANY AGREEMENT
OF
CREAMER VITALE WELLSFORD, L.L.C.
THIS LIMITED LIABILITY COMPANY AGREEMENT of
CREAMER VITALE WELLSFORD, L.L.C. (the "Company"), dated as of the 20th day
of January, 1998 (the "Agreement") is entered into by and between WELLSFORD
CRC HOLDING CORP. ("Wellsford"), a Maryland corporation which is a wholly-
owned subsidiary of Wellsford Real Properties, Inc. ("WRP"), and SX
Advisors, LLC, a Delaware limited liability company ("Creamer"; Creamer
together with Wellsford being collectively referred to hereinafter as the
"Members" and individually as a "Member").
W I T N E S S E T H:
WHEREAS, the Members have formed a limited
liability company pursuant to the Delaware Limited Liability Company Law,
as amended from time to time (the "Delaware Act"), by filing on the date
hereof the Certificate of Formation of the Company with the office of the
Secretary of State of the State of Delaware; and
WHEREAS, the undersigned desire to provide for the
regulation and establishment of the affairs of the Company, the conduct of
its business and the relations among them as Members of the Company.
NOW, THEREFORE, in consideration of the foregoing,
and of the mutual promises herein contained, the parties hereto, intending
to be legally bound, agree as follows:
ARTICLE XXII
ORGANIZATION, NAME, PURPOSES, POWERS AND TERM
1.22.1 Organization, Name and Office.
1. The Company shall maintain, preserve, and keep in full
force and effect its limited liability company existence and all rights,
franchises, licenses and permits necessary to the proper conduct of its
business, and the ownership, lease, or operation of its properties which,
if not so maintained, could reasonably be expected to have a material
adverse effect on the Company, and to take all action which may be
reasonably required to obtain, preserve, renew and extend all material
licenses, permits, authorizations, trade names, trademarks, service names,
service marks, copyrights and patents which are necessary for the
continuance of the operation of any such property by the Company.
2. The Managing Member (as hereinafter defined) shall cause
the Company to be qualified, formed or registered under assumed or
fictitious name statutes or similar laws in any jurisdiction in which the
Company transacts business in which such qualification, formation or
registration is required or desirable. The Managing Member, acting as an
authorized person within the meaning of the Delaware Act, shall execute,
deliver and file any certificates (and any amendments and/or restatements
thereof) necessary for the Company to qualify to do business in a
jurisdiction in which the Company may wish to conduct business.
3. The name of the Company shall be Creamer Vitale
Wellsford, L.L.C., and the principal office of the Company shall be
located at 40 West 57th Street, New York, New York 10019, or at such other
place as the Members may agree upon from time to time.
1.22.2 Purposes. The purpose of the Company is to (a) provide
consulting services to the real estate industry with respect to the
operation, management, finance and refinance, marketing and rehabilitation
of real estate and interests in real estate, and, acting singly or
together with others, directly or indirectly, as principal, partner,
shareholder or otherwise, to purchase, own, invest in, develop, operate,
manage, lease, exchange, mortgage or otherwise generally deal in and with
real estate, real property and interests therein, either improved or
unimproved, in accordance with all applicable laws, (b) invest in,
participate, directly or indirectly, as a general partner or managing
member in, and manage directly, or through its subsidiaries or affiliates,
entities formed for the purpose of acquiring distressed, discount or other
secured mortgage debt, including without limitation, entities formed
pursuant to the Clairborne Investors Mortgage Investment Program (the
"Clairborne Program") and (c) engage in any lawful activity related or
incidental to one or more of the foregoing activities.
1.22.3 Powers of the Company. 1. The Company shall possess
and may exercise all powers and privileges authorized to be exercised by a
limited liability company, including all those necessary or convenient to
the conduct, promotion or attainment of its business, purposes or
activities, to the fullest extent provided in the Delaware Act. Subject
to Section 4.1(d) hereof, the Managing Member may, or may authorize any
person, to enter into and perform any document on behalf of the Company.
2. Notwithstanding the foregoing, the Company shall not do
business in any jurisdiction that would jeopardize the limitation on
liability afforded to the Members or agents of the Company under the
Delaware Act or this Agreement.
1.22.4 Term. The term of the Company shall commence on the
date hereof and shall continue until December 31, 2007, unless sooner
dissolved or terminated as hereinafter provided.
ARTICLE XXIII
CAPITAL CONTRIBUTIONS
2.23.1 Capital Contributions. Wellsford and Creamer have
contributed capital to the Company in cash amounts of $490 and $510,
respectively. In addition, Wellsford has committed to contribute to the
Company from time to time amounts up to an aggregate of $15,000,000 in
cash for investment in connection with the Clairborne Program, any such
contributions to be made in accordance with provisions of Article II of
the Program Agreement for the Clairborne Program, dated as of December 10,
1997 (the "Program Agreement"), between The Prudential Investment
Corporation, a New Jersey Corporation ("PIC") and Old Creamer (as
hereinafter defined). Wellsford may, in its sole discretion, elect to
contribute additional capital to the Company in connection with the
Company's investments in the Ventures (as hereinafter defined) under
Clairborne Program. Each such capital contributions by Wellsford and
Creamer shall hereinafter be referred to as "Capital Contributions".
2.23.2 Additional Capital Contributions. Subject to Section
2.1 hereof and to the extent required by Section 4.1(e) hereof, no Member
shall be required to contribute additional capital to the Company unless
with the consent of all Members.
2.23.3 Capital Account.
1. A capital account shall be maintained for each Member.
The initial capital account of each Member shall be equal to the initial
Capital Contribution of such Member. Each Member's capital account shall
be increased by the cash or net agreed value of each subsequent Capital
Contribution made by or on behalf of such Member and allocations to such
Member of Net Profit (as hereinafter defined). Each Member's capital
account shall be decreased by the cash or net value of each distribution
made to the Member by the Company and allocations to such Member of Net
Loss (as hereinafter defined). The capital accounts shall be further
maintained and adjusted in accordance with the Treasury Regulations
promulgated pursuant to Section 704 of the Internal Revenue Code of 1986,
as amended (the "Code").
2. No interest shall be paid on the Members' capital
accounts and no Member shall withdraw any part of such Member's capital
account or shall be entitled to receive any distribution from this Company
except as may be specifically provided in this Agreement. No Member with
a negative balance in its capital account shall have any obligation to the
Company or the other Member to restore said negative balance to zero.
2.23.4 Interests. The "Interest" of a Member in the Company
shall mean the rights or interest of such Member in the Company. The
"Member Interest" of a Member shall mean the percentage set forth opposite
such Member's name on Schedule A attached hereto.
ARTICLE XXIV
DISTRIBUTIONS AND ALLOCATIONS
3.24.1 Capital Return and Distribution of Cash Flow. (1) The
following terms shall have the following meanings when used herein:
"Adjusted Wellsford Base Amount" means, for each Distribution
Period, an amount equal to the Wellsford Base Amount reduced by the sum of
all Old Wellsford Share and all New Wellsford Share distributed to
Wellsford for all prior Distribution Periods.
"Aggregate Capital Contribution" means an amount equal to the sum
of the Wellsford Unreturned Capital Contributions and the amount
contributed by Wellsford to the Company to purchase any interests in the
Venture(s) under the Clairborne Program in connection with a buy/sell
thereunder.
"Cash Receipts" means all cash funds received by the Company other
than (i) Capital Contributions, (ii) loans by Members, and (iii) Post-
Buy/Sell Net Cash Flow.
"Distribution Period" means each fiscal year, or such other time
period as the Managing Member may determine in accordance with Section
3.1(d) hereof.
"Creamer Share" means, for each Distribution Period, an amount
equal to 51% of any excess of the Net Cash Flow for such Distribution
Period over distributions made by the Company with respect to the
Wellsford Priority Return for such Distribution Period.
"Net Cash Flow" means, for each Distribution Period, (A) the sum
of (i) Cash Receipts and (ii) any amount released from its reserves, less
(B) the sum of amounts paid or funded during such Distribution Period with
respect to the following items: (i) current charges and expenses
(including operating expenses and payroll), (ii) debt service, interest
and other payments with respect to any loan or obligation extended to the
Company, (iii) expenditures for acquisition of property and for capital
improvements or replacements not financed through Capital Contributions,
borrowings, or reserves previously set aside by the Company for such
purposes, (iv) Wellsford First Level Preferred Return, (v) Wellsford First
Level Carry, (vi) Wellsford Second Level Carry, (vii) Wellsford Unreturned
Capital Contributions and (viii) amounts contributed to reasonable
reserves for working capital, contingencies, capital improvements and
replacements.
"New Wellsford Share" means, for each Distribution Period, an
amount equal to 49% of any excess of the Net Cash Flow for such
Distribution Period over distributions made by the Company with respect to
the Wellsford Priority Return for such Distribution Period.
"Old Creamer" means Creamer Realty Consultants.
"Old Creamer Net Cash Flow" means, for each Distribution Period,
(A) the sum of (i) all cash funds received by Old Creamer (other than
capital contributions and loans by partners of Old Creamer) and (ii) any
amounts released from its reserves, less (B) the sum of amounts paid or
funded during such Distribution Period with respect to the following
items: (i) current charges and expenses (including operating expenses and
payroll), (ii) debt service, interest and other payments with respect to
any loan or obligation extended to Old Creamer, (iii) expenditures for
acquisition of property and for capital improvements or replacements not
financed through capital contributions, borrowings, or reserves previously
set aside by Old Creamer for such purposes and (iv) amounts contributed to
reasonable reserves for working capital, contingencies, capital
improvements and replacements.
"Old Wellsford Share" means for each Distribution Period, an
amount equal to 49% of any excess of the Old Creamer Net Cash Flow over
distributions made by Old Creamer with respect to the Wellsford Priority
Return during such Distribution Period.
"Post-Buy/Sell Net Cash Flow" means, as to any Venture, for each
Distribution Period after the Company has purchased the interest of the
Prudential Investor in such Venture, all cash funds received by the
Company from such Venture.
"Prudential Investor" means any account managed or advised by
Prudential Real Estate Investors ("PREI"), a division of PIC, or any of
their respective successors and assigns.
"Venture" means each limited liability company or limited
partnership, as the case may be, formed by the Company or a subsidiary
thereof and a Prudential Investor to acquire distressed, discount or other
secured mortgage debt under the Clairborne Program.
"Venture Agreement" means the form of limited liability company
agreement attached as Exhibit C to the Program Agreement and which
provides the model for the operating agreement of each Venture between a
Prudential Investor and the Company or a subsidiary thereof.
"Wellsford Base Amount" means an amount equal to $2 million.
"Wellsford First Level Carry" means an amount equal to one-half of
the amount received by the Company or any of its subsidiaries as a
distribution of the First Level Carried Percentage (as defined in the
Venture Agreement) from each Venture during each Distribution Period.
"Wellsford First Level Preferred Return" means an amount equal to
the First Level Preferred Return (as defined in the Venture Agreement),
received by the Company or any of its subsidiaries from each Venture
during each Distribution Period.
"Wellsford Post Buy/Sell Share" means the distribution of 90% of
the Post Buy/Sell Net Cash Flow from a Venture distributable to Wellsford
pursuant to Section 3.1(e)(iv) below.
"Wellsford Priority Return" means, for each Distribution Period,
an amount equal to 15% per annum times the outstanding balance of the
Adjusted Wellsford Base Amount on the first day of such Distribution
Period.
"Wellsford Second Level Carry" means an amount equal to one-third
of the amount received by the Company or any of its subsidiaries as a
distribution of the Second Level Carried Percentage (as defined in the
Venture Agreement) from each Venture during each Distribution Period.
"Wellsford Unreturned Capital Contributions" means the Unreturned
Capital Contributions (as defined in the Venture Agreement) contributed
indirectly to each Venture by Wellsford through the Company.
(2) Capital Return and Wellsford Distributions. The
Wellsford First Level Preferred Return, the Wellsford Unreturned Capital
Contributions, the Wellsford First Level Carry and the Wellsford Second
Level Carry shall be distributed by the Company to Wellsford not later
than three (3) business days after receipt of such distributions by the
Company.
(3) Distributions. Net Cash Flow shall be distributed
annually, not later than 45 days after the end of each fiscal year as
follows:
(i) Until Wellsford shall have received by virtue of the
receipt by it of distributions of the New Wellsford Share and the Old
Wellsford Share an aggregate amount equal to the Wellsford Base Amount,
Net Cash Flow shall be distributed as follows:
(A) First, to Wellsford, an amount which when added to
distributions of Old Creamer Net Cash Flow received by Wellsford
from Old Creamer during such period equals the Wellsford Priority
Return payable to Wellsford for the current Distribution Period,
plus any accrued and unpaid Wellsford Priority Return; and
(B) Second, to each of Wellsford and Creamer, the New
Wellsford Share and the Creamer Share, respectively.
(ii) Thereafter, Net Cash Flow shall be distributed to
each of Wellsford and Creamer in accordance with their respective Member
Interests in the Company.
(iii) Upon termination and dissolution of the Company,
the assets of the Company shall be used, applied and distributed as
provided in Section 5.4 of this Agreement.
(4) Interim Distributions. In addition to the annual
distributions of Net Cash Flow made under 3.1(c) hereof, the Managing
Member (as hereinafter defined) may make interim distributions of Net Cash
Flow during the fiscal year, to the extent the Company has available cash,
provided, however, that all such interim distributions of Net Cash Flow
shall be made in the order of priority as provided in Section 3.1(c)
hereof and the Managing Member shall act prudently with respect to its
decisions as to the amount and frequency of such distributions. The
Members agree that it shall be deemed prudent to distribute, on a
quarterly basis, amounts sufficient to pay the anticipated tax obligations
of the Members attributable to their Interests.
(5) Special Provisions Regarding Distributions after a
Buy/Sell under the Clairborne Program. Notwithstanding the foregoing, in
the event the Company (under the direction of Wellsford) purchases the
interests of the Investor (as defined in the Venture Agreement) in any
Venture under the Clairborne Program as set forth in Section 4.1(e)
hereof, from and after the date of such purchase, the Post-Buy/Sell Net
Cash Flow from any such Venture shall be distributed not later than twenty
(20) days after the end of each fiscal quarter as follows:
((5).1 First, to Wellsford, an amount equal to the First
Level Preferred Return (as defined in the Venture Agreement) distributed
by each such applicable Venture to the Company.
(ii) Second, to Wellsford, an amount equal to the
Aggregate Capital Contribution with respect to such Venture.
(iii) Third, to Wellsford, an amount which, when added
to the sum of the amounts distributed under clauses (i) and (ii)
immediately above, would result in Wellsford receiving a sixteen percent
(16%) internal rate of return in respect of the Aggregate Capital
Contribution of the Company in such Venture.
(iv) After such time as Wellsford shall have received
out of distributions made by the applicable Venture an amount equal to the
sum of the amounts set forth in clauses (i), (ii) and (iii) immediately
above, the Post-Buy/Sell Net Cash Flow from such Venture shall be
distributed 90% to Wellsford (such 90% interest to be referred to herein
as the "Wellsford Post Buy/Sell Share") and the remaining 10% shall be
deemed Cash Receipts, and distributed in accordance with the priorities
set forth in Section 3.1(c) of this Agreement.
(f) In the event of a buy/sell of the interests of the
Prudential Investor in any Venture , the Members agree to take all action
necessary to increase the Fixed Expense Reimbursement (as defined in the
Venture Agreement) to be received by the Company or the respective
subsidiary which shall act as the managing member or partner for each such
Venture, to one-half of one percent (1/2%) from one-quarter of one percent
(1/4%) of the Aggregate Capital Contribution.
(g) In the event the Company (at the direction of Wellsford)
elects to purchase the interest of a Prudential Investor in a Venture,
Wellsford or such other entity as may be purchasing such interest shall
pay or cause to be paid to the Company, in addition to the amounts
required to purchase the interest of the Prudential Investor, an amount
equal to the sum of one-half (1/2) of the First Level Carried Interest (as
defined in the Venture Agreement) and two-thirds (2/3) of the Second Level
Carried Interest (as defined in the Venture Agreement) that would have
been received by the Company had the property owned by such Venture been
sold for the Special Valuation Amount (as defined in the Program
Agreement). Such amount shall be treated by the Company as Cash Receipts.
3.24.2 Allocations of Net Profits and Net Losses.
1. ((0).1 "Net Profit" means, for each fiscal year, the
excess, if any, of the Company's items of income and gain over the
Company's items of loss and deduction for such fiscal year, determined in
accordance with Federal income tax principles, taking account, however, of
the difference, if any, between the book value and the tax basis of the
assets of the Company in accordance with the principles of Sections 1.704-
1(b)(2)(iv)(f) and (g) of the Treasury Regulations.
((0).2 "Net Loss" means, for each fiscal year, the
excess, if any, of the Company's items of loss and deduction over the
Company's items of income and gain for such fiscal year, determined in
accordance with Federal income tax principles, taking account, however, of
the difference, if any, between the book value and the tax basis of the
assets of the Company in accordance with the principles of Sections 1.704-
1(b)(2)(iv)(f) and (g) of the Treasury Regulations.
2. Net Profit and Net Loss shall be allocated between the
Members with respect to each fiscal year for purposes of maintaining the
capital accounts of the Company so as to bring the Members' respective
capital account balances into the ratio of the Members' respective Member
Interests, and then in the ratio of the Members' respective Member
Interests.
3. Notwithstanding Section 3.2(b) hereof, appropriate
adjustments shall be made, if required, to the allocations to the extent
required to comply with the "qualified income offset," "minimum gain
chargeback" and "chargeback for nonrecourse debt for which a member bears
a risk of loss" rules of the Treasury Regulations promulgated pursuant to
Section 704(b) of the Code. To the extent permitted by such Treasury
Regulations, the allocations in such year and subsequent years shall be
further adjusted so that the cumulative effect of all the allocations
shall be the same as if all such allocations were made pursuant to
Sections 3.2(b) hereof without regard to this Section 3.2(c).
4. Allocations pursuant to this Section 3.2 shall be made
after taking account of all distributions with respect to the period for
which the allocations are being made.
5. Notwithstanding the foregoing, allocations for income
tax purposes shall be made in the same manner as allocations for purposes
of maintaining the capital accounts of the Company, except that
appropriate adjustments shall be made to such allocations (i) to take
account of the effect of any Section 754 election of the Company and (ii)
if applicable, in accordance with the principles of Section 704(c) of the
Code and the Treasury Regulations thereunder and Sections 1.704-
1(b)(2)(iv)(d), (e), (f) and (g) of the Treasury Regulations.
6. Upon the transfer of an Interest in the Company, the
allocations between transferor and transferee shall be apportioned by an
interim closing of the books of the Company.
3.24.3 No Salaries; Reimbursement. (1) No salary or other
compensation shall be paid to any Member by the Company, but the Company
shall reimburse each Member for actual expenses incurred by such Member,
in connection with the business of, and in fulfilling its duties or
rendering services to and on behalf of, the Company so long as such
expenses are provided for in the Budget and that they do not exceed the
amounts provided therefor in the Budget by 10% or more.
(2) Notwithstanding the foregoing and subject to the
provisions in the immediately following sentence, the Members acknowledge
that the Company shall continue to employ and shall pay to each of Frank
G. Creamer, Jr. ("Frank Creamer") and Michael J. Vitale ("Vitale") for
each fiscal year his respective base compensation in an amount which, when
added to his respective base compensation received from Old Creamer,
equals $300,648.66 and $294,528.78, respectively. However, it is further
understood and agreed that, commencing with calendar year 1999, in the
event there shall be any accrued and unpaid Wellsford Priority Return
outstanding as of the end of the preceding fiscal year, an amount equal to
the sum of all accrued and unpaid Wellsford Priority Return outstanding as
of the end of such fiscal year, but in any event not to exceed $100,000
per annum, shall be withheld by the Company (taking into account any
amount which may be withheld by Old Creamer pursuant to the applicable
provision of the Amended and Restated General Partnership Agreement of Old
Creamer, dated as of the date hereof, between Wellsford and FGC Realty
Consultants, Inc. (the "Old Creamer Partnership Agreement")) from each of
Frank Creamer's and Vitale's base compensation, such amount to be deducted
pro rata from each of their respective compensation on each payroll period
during such fiscal year, and such withheld amounts shall be applied to the
payment of any accrued and unpaid Wellsford Priority Return. The amount
so withheld shall accrue interest at the rate of fifteen percent (15%) per
annum, and be payable to each of Frank Creamer and Vitale, respectively,
to the extent the Company has available cash remaining therefor, at any
time after the distribution to Wellsford of any and all accrued and unpaid
Wellsford Priority Return for all previous Distribution Periods.
3.24.4 Periodic Financial Statements, Status Reports and Tax
Returns. (1) Within 70 days after the end of each fiscal year and 25
days after the end of each quarter, Creamer and the Creamer Designees (as
hereinafter defined) shall prepare, maintain and mail (or cause to be
prepared, maintained and mailed) to each Member a financial report
(audited in the case of a report sent at the end of the fiscal year and
unaudited in the case of a report sent at the end of a quarter), which
shall be prepared in accordance with generally accepted accounting
principles, consistently applied, setting forth or containing as of the
end of such fiscal year or quarter: (i) a consolidated balance sheet of
the Company and its subsidiaries or affiliated entities; (ii) a
consolidated statement of income or loss and a consolidated statement of
cash flows of the Company and its subsidiaries or affiliated entities;
(iii) a consolidated statement of changes in capital accounts of the
Company and its subsidiaries or affiliated entities; and (iv) a
consolidated statement of the investments made by the Company and its
subsidiaries or affiliated entities.
(2) Within 70 days after the end of each fiscal year,
Creamer and the Creamer Designees (as hereinafter defined) shall prepare
and mail (or cause to be prepared and mailed) to each Member, a financial
report (which shall include, without limitation, a Form K-1 for each
Member or former Member) setting forth in sufficient detail such business
and transactions of the Company during such fiscal year as shall enable
each Member (or their respective legal representatives or accountants) to
prepare their respective income tax returns in accordance with the laws,
rules and regulations then prevailing.
ARTICLE XXV
OPERATION AND MANAGEMENT
4.25.1 Management. 1. Subject to the provisions set forth in
Sections 4.1(d) and 4.1(e) hereof, Creamer shall act as the managing
member of the Company (the "Managing Member") and through its designees
(the "Creamer Designees"), shall have complete power and authority to do
all things it deems necessary or desirable to conduct the day-to-day
operations and business activities of the Company, including, without
limitation, the making of any payment set forth in the Budget (as
hereinafter defined), provided, however, that (i) the Creamer Designees
shall prepare, maintain and provide (or cause to be prepared, maintained
and provided) to Wellsford periodic reports as set forth in Section 3.4
hereof and (ii) there shall be regular Members' meetings on a monthly
basis, or such other interval as the Members shall determine, in which the
Creamer Designees shall discuss and consult with the Wellsford Designees
regarding the operations and other business affairs of the Company and
shall obtain any consent which may be required for any impending activity
of the Company.
2. No later than sixty days prior to the end of each fiscal
year, Creamer shall prepare and provide (or cause to be prepared and
provided) to Wellsford a plan of operations for the business of the
Company for such calendar year and an operating and capital budget for the
Company, setting forth the estimated receipts and expenditures (capital
and operating) of the business for the following fiscal year (the
"Budget") to be considered for approval by Wellsford. In the event the
Members do not reach a mutual agreement with respect to the Budget within
five (5) days prior to the beginning of the year for which the Budget
applies, then the Budget for such year shall be the same as the Budget for
the preceding year, provided that each line item (other than base
compensation payable to Frank Creamer or Vitale, as to which there shall
be no increase) shall be increased by 10% of the amount reflected in the
preceding year's Budget.
3. Notwithstanding Section 4.1(b) hereof, the Budget for the
fiscal year beginning January 1, 1998 in the form attached hereto as
Schedule B is hereby approved and adopted by the Members.
4. The following activities and decisions shall require the
unanimous consent of all of the Members:
(i) making any investment decisions with respect to the
Clairborne Program;
(ii) the admission of any additional members;
(iii) the assignment, transfer, sale, lease or otherwise
disposition of all or substantially all of the Company's property or
assets, or any material change in the nature of its business, or any
decision to wind up, liquidate or dissolve the Company, or any agreement
to do any of the foregoing;
(iv) increasing the compensation payable by the Company to
any officer, director, employee or agent of the Company or any of the
Members' designees having an annual base compensation in excess of
$125,000, except as otherwise provided in an approved budget;
(v) making any payments or loans directly or indirectly to
or for the benefit of any Member, except as expressly permitted by this
Agreement;
(vi) with respect to an expenditure provided for in the
Budget, paying or committing to pay any amount which exceeds the budgeted
amount for such expenditure by 10%;
(vii) acquiring, by purchase, lease or otherwise, or disposing
of or abandoning any real property or any interest therein;
(viii) making any investments in connection with the
acquisition of distressed, discount or other secured mortgage debt under
the Clairborne Program;
(ix) making any tax elections in connection with the Company;
(x) making any decision with respect to setting up new
subsidiaries or affiliated entities; and
(xi) doing any other act which would materially alter or
materially adversely affect the Company's business.
With respect to the activities set forth in subclauses (i) and
(viii) above, the Managing Member shall provide Wellsford with all
available information and documentation necessary for Wellsford to
evaluate any such investment proposal or opportunity in order for
Wellsford to be able to make any decision with respect thereto.
5. (i) Notwithstanding anything to the contrary herein, with
respect to the buy/sell of interests in each Venture under the Clairborne
Program, any and all rights of the Company and each subsidiary thereof
with respect to such buy/sell and any decision relating thereto shall vest
in Wellsford, so that Wellsford shall make any and all decisions with
respect to the buy/sell of interests in the Venture(s) for and on behalf
of the Company or the respective subsidiary, including, without
limitation, the initiation of a buy/sell, the decision to purchase or sell
the interests in the Venture(s) in response to a buy/sell initiated by the
relevant Prudential Investor or, if applicable, the determination of the
Special Valuation Amount (as defined in the Program Agreement), provided,
however, that (A) if Creamer disagrees with Wellsford's decision to
initiate a buy/sell of interests in any Venture(s), or (B) in the event
Wellsford elects to sell the interests of the Company or any subsidiary
thereof in any Venture(s) in response to a buy/sell initiated by the
Prudential Investor(s), Creamer shall have the right to elect to purchase
Wellsford's interests in such Venture(s) by paying to Wellsford an amount
(the "Purchase Price") calculated as follows. In the event of a purchase
pursuant to clause (A) of the immediately preceding sentence, the Purchase
Price shall be calculated based on such Special Valuation Amount as
Wellsford proposed to include in the Initiating Notice it proposed to send
to the Prudential Investor. In the event of a purchase pursuant to clause
(B) of the next preceding sentence, the Purchase Price shall be calculated
based on the Special Valuation Amount included in the Initiating Notice
received by the Company from the Prudential Investor. In either case, the
Purchase Price shall be equal to the amount Wellsford would have received
as a distribution under Sections 3.1(b) and (c)(ii) of this Agreement
assuming the Company had sold its interest in such Venture(s)based on the
an assumed sale by the Venture at the applicable Special Valuation Amount.
Upon compliance with the provisions of the next sentence, Creamer shall
have the right to make any and all decisions relating to the buy/sell of
interests in such Venture(s). In order to exercise its right to purchase
Wellsford's interests in such Venture(s), (i) a written notice of such
intent shall be delivered promptly by Creamer to Wellsford (but in any
case no later than the earlier of (x) five (5) days prior to the
expiration of the Option Period (as defined and set forth in the Program
Agreement) and (y) two (2) business days after notification by Wellsford,
through the Company or the relevant subsidiary thereof, of its or their
election with respect to the Offering Notice (as defined in the Program
Agreement) delivered by the relevant Prudential Investor(s)); (ii) cash in
an amount equal to 10% of the Special Valuation Amount shall be deposited
by Creamer into an account specified by Wellsford simultaneously with the
delivery of such written notice and (iii) Creamer shall provide evidence,
reasonably satisfactory to Wellsford, of the availability of funds
sufficient to pay the balance of such Purchase Price as provided in the
Program Agreement.
(ii) In the event the Company sells to the respective
Prudential Investor(s) the interests of the Company or any subsidiary
thereof in any Venture(s) in accordance with Section 4.1(e)(i) hereof and
Section 4.1 of the Program Agreement, any proceeds received by the Company
as a result of such sale shall be distributed as follows: first to
Wellsford, an amount which would have been distributable to Wellsford
under Section 3.1(b) hereof had the property owned by the Venture been
sold for the Special Valuation Amount and the proceeds distributed by the
Venture to the Company; and second, the balance shall be treated as Cash
Receipts.
6. The Members may appoint, employ or otherwise contract
with such other persons for the transaction of the business of the Company
or the performance of services for or on their behalf or for or on behalf
of the Company. Each Member shall designate up to two designees who shall
act on its behalf in managing the affairs or transacting the business of
the Company. The initial Creamer Designees and the designees of Wellsford
(the "Wellsford Designees") are set forth on Schedule C attached hereto.
Each designee shall continue to act on behalf of its designating Member
until his respective resignation or removal by the designating Member. A
Member may not remove or replace a designee not designated by it. In the
event that either Frank Creamer or Vitale (or both) elects voluntarily to
terminate his (or their) employment with the Company or Old Creamer, as
the case may be, prior to the later of (i) the Adjusted Wellsford Base
Amount being reduced to zero and (ii) the expiration of the Commitment
Period under the Program Agreement (the "Employment Period"), Wellsford
shall have the right to initiate (or direct Creamer to initiate, in which
case Creamer shall be obligated to initiate) the Interest Buy/Sell (as
hereinafter defined).
ARTICLE XXVI
TERMINATION; TRANSFERS OF INTERESTS; BUY/SELL OF INTEREST
5.26.1 Events of Termination. The Company shall be dissolved
and its affairs wound up upon the first to occur of the following:
1. the sale or other disposition of all or substantially
all of the assets of the Company;
2. a determination of all of the Members to dissolve and
liquidate the Company (except that upon the death or disability of either
Frank Creamer or Vitale, such determination may be made by Wellsford and,
if applicable, the survivor of Frank Creamer and Vitale as set forth in
Section 9.2 hereof);
3. the withdrawal, dissolution or bankruptcy of any Member;
or
4. the expiration of the term of the Company.
For purposes of this Agreement, a bankruptcy of a Member
shall be deemed to occur when such Member files a petition in bankruptcy,
or voluntarily takes advantage of any bankruptcy or insolvency law, or is
adjudicated to be bankrupt, or if a petition or answer is filed proposing
the adjudication of such Member as bankrupt and such Member either
consents to the filing thereof or such petition or an answer is not
discharged or denied prior to the expiration of sixty (60) days from the
date of such filing.
5.26.2 Withdrawal of a Member. Except as set forth in Section
4.1(f) hereof or except as set forth in the last sentence of this Section
5.2, no Member shall have the right voluntarily to withdraw from the
Company without the written consent of the other Member. Upon withdrawal
by a Member, as aforesaid, such Member shall cease to be a Member and
shall not retain its interest in the Net Profits, Net Losses and
distributions of the Company. Following the death, resignation or
permanent disability of either Frank Creamer or Vitale, the voluntary
resignation of the survivor of either of them shall be deemed a withdrawal
by Creamer.
5.26.3 Winding Up. Upon a dissolution of the Company requiring
the winding up of its affairs, the Members or a designated person or
persons shall with reasonable promptness wind up the Company's affairs.
The assets of the Company shall be sold within a reasonable period of
time, to the extent necessary to pay or provide for the debts and
liabilities of the Company, and may be sold to the extent deemed
commercially feasible by the person or persons winding up the affairs of
the Company, and all assets of the Company shall be distributed as
provided in Section 5.4.
5.26.4 Distributions upon Winding Up. The proceeds of any
winding up shall be applied and distributed in the following order of
priority (to the extent that such order of priority is consistent with the
laws of the State of Delaware):
1. to the payment of the debts and liabilities of the
Company and the expenses of dissolution and liquidation;
2. to the setting up of any reserves which the person or
persons winding up the affairs of the Company may deem reasonably
necessary for any contingent or unforeseen liabilities or obligations of
the Company, and, at the expiration of such period as the aforesaid person
or persons may deem advisable, for distribution in the manner hereinafter
provided;
3. to the payment of any Wellsford First Level Preferred
Return, any Wellsford Unreturned Capital Contributions, any Wellsford
First Level Carry, any Wellsford Second Level Carry, and any Wellsford
Post Buy/Sell Share to the extent the proceeds of any winding up represent
any such amounts;
4. to the payment of any accrued and unpaid Wellsford
Priority Return;
5. pro rata to the repayment of any advances or loans, with
interest accrued thereon, that may have been made by any of the Members to
the Company;
6. pro rata to the Members in proportion to their
respective positive capital account balances until such balances have been
reduced to zero; and
(g) pro rata to the Members in accordance with their
respective Member Interests.
5.26.5 Statements on Winding Up. Upon termination of the
Company, a statement shall be prepared by the Company's accountants, which
shall set forth the assets and liabilities of the Company as of the date
of termination.
5.26.6 Restrictions on Transfers of Interests.
(1) Neither Wellsford nor Creamer shall, or shall have the
right to, sell, assign, transfer or dispose of (whether by gift or
otherwise), mortgage, pledge, hypothecate, create a lien on or security
interest in, or otherwise encumber, whether voluntarily, involuntarily, by
operation of law or otherwise (a "Disposition") all or any part of their
respective Interests, except as permitted by, and only upon compliance
with, the terms of this Agreement. Any purported or attempted Disposition
of an Interest in violation of this subclause (a) shall be null, void and
of no effect.
(2) Notwithstanding the provisions of subclause (a)
immediately above,
(i) Subject to the terms of this Agreement, Wellsford
shall have the right, without requiring the consent of Creamer (but upon
prior notice to Creamer and the Company), to assign or transfer all or any
portion of its Interests to a wholly-owned subsidiary or other Wellsford
Related Entity (as hereinafter defined), provided that such subsidiary or
Wellsford Related Entity expressly assumes in writing all of Wellsford's
obligations under this Agreement and otherwise agrees to be bound by the
provisions of this Agreement as if an original signatory hereof. For the
purposes of this Agreement, the term "Wellsford Related Entity" shall mean
any person, partnership, corporation or other entity in which Wellsford or
WRP, directly or indirectly, owns a majority of the voting interests; and
(ii) Subject to the terms of this Agreement, Creamer
shall have the right (upon prior notice to Wellsford and the Company) to
assign or transfer all or a portion of its Interests to Frank Creamer,
Vitale, members of Frank Creamer's or Vitale's immediate family or to a
trust or trusts established for the benefit of the members of the
respective immediately family of Frank Creamer or Vitale, or to a wholly-
owned subsidiary of Creamer or an entity wholly-owned by either Frank
Creamer or Vitale or other Creamer Related Entity (as hereinafter defined)
provided that in connection with any such transfer, Creamer retains, by a
written voting trust or other instrument in form and substance
satisfactory to the Members and the Company, all voting and management
rights with respect to the transferred Interests and provided that any
such subsidiary or Creamer's Related Entity expressly assumes in writing
all of Creamer's obligations under this Agreement and otherwise agrees to
be bound by the provisions of this Agreement as if an original signatory
hereof. For the purposes of this Agreement, the term "Creamer Related
Entity" shall mean any person, partnership, corporation or other entity in
which either Creamer owns or Frank Creamer or Vitale owns a majority of
the voting interests, and the term "immediate family" shall mean the
respective spouse, parents and issue of Frank Creamer or Vitale, as the
case may be. If Creamer shall transfer any portion of its Interest to
Frank Creamer or Vitale, or members of Frank Creamer's or Vitale's
immediate family, or to a trust or trusts established for the benefit of
the members of the respective immediately family of Frank Creamer or
Vitale, or other Creamer Related Entity, all references in this Agreement
to "Creamer" shall apply to Creamer, Frank Creamer or Vitale, the legal
representative of Frank Creamer's or Vitale's estate, Frank Creamer's or
Vitale's heirs, the members of Frank Creamer's or Vitale's immediate
family, trusts established for the benefit of the members of the
respective immediately family of Frank Creamer or Vitale, or other Creamer
Related Entity to which such Interests were transferred and,
simultaneously with the transfer, the transferees shall execute and
deliver to Wellsford and the Company an agreement, in form and substance
satisfactory to Wellsford and the Company, pursuant to which such
transferees agree to be bound by all of the provisions of this Agreement.
(iii) Notwithstanding the foregoing, until the later of
(A) the Adjusted Wellsford Base Amount being reduced to zero and (B) the
expiration of the Employment Period, Frank Creamer and Vitale shall remain
the designees of Creamer and shall agree to be employed by the Company as
set forth in Section 3.3 hereof, subject to the provisions set forth in
Section 4.1(f) hereof.
5.26.7 Interest Buy/Sell Option. 1. Either Member may elect
to initiate a buy/sell procedure with respect to its Interest (the
"Interest Buy/Sell") if:
((0).1 the Members do not reach a mutual agreement with
respect to the Budget for two (2) consecutive years; or
((0).2 the Members (or the Partners of Old Creamer) are
not able to reach agreement as to any material matter such that the
Company or Old Creamer, as the case may be, is unable to carry out its
respective business, including, without limitation, satisfying its
respective obligations under the Clairborne Program or any of the
contracts or agreements, whether written or oral, to which Old Creamer
is bound (collectively, the "Old Creamer Commitments"), as the case
may be.
2. In the event (i) either Frank Creamer or Vitale (or
both) elects voluntarily to terminate his (or their) employment with the
Company or with Old Creamer, as the case may be, during the Employment
Period, or (ii) PIC gives notice of its intention to exercise its rights
under Section 4.1 of the Program Agreement, Wellsford shall have the right
to initiate (or direct Creamer to initiate, in which case Creamer shall be
obligated to initiate) the Interest Buy/Sell;
3. In the event (i) Jeffrey H. Lynford or Edward Lowenthal
ceases to act as the Chairman and the President, respectively, of WRP, or
(ii) of a merger or consolidation of WRP with a third party, or a sale of
the majority of the stock or substantially all of the assets of WRP to a
third party (each, a "WRP Change of Control"), or (iii) Wellsford refuses
to approve a total of five (5) investment opportunities, each of which
satisfies the objectives and criteria set forth in Exhibit A to the
Program Agreement during the term of the Commitment Period (as defined in
the Program Agreement), Creamer shall have the right to initiate (or
direct Wellsford to initiate, in which case Wellsford shall be obligated
to initiate) the Interest Buy/Sell.
4. In the event of the occurrence of any of the conditions
set forth in Section 5.7(a), (b) or (c) above, such Member as may be
applicable (the "Initiating Member") may initiate the Interest Buy/Sell by
giving a written notice of its intention to initiate the Interest Buy/Sell
(an "Interest Buy/Sell Notice") to the other Member (the "Offeree Member")
which sets forth an amount equal to the Initiating Member's valuation of
the entire Company (the "Sale Price") and such other terms of the sale as
the Initiating Member may determine. The Offeree Member shall then have
the option to (x) buy the Initiating Member's Interest at an amount equal
to the amount which the Initiating Member would be entitled to receive if
the Company were sold for the Sale Price and the proceeds distributed
pursuant to Section 5.4 hereof, and on the other terms and conditions set
forth in the Interest Buy/Sell Notice, or (y) sell its Interest to the
Initiating Member for an amount equal to the amount which the Offeree
Member would be entitled to receive if the Company were sold for the Sale
Price and the proceeds distributed pursuant to Section 5.4 hereof, and on
the other terms and conditions set forth in the Interest Buy/Sell Notice.
5. Within forty-five (45) days following the giving of
the Interest Buy/Sell Notice (the "Interest Buy/Sell Election Period"),
the Offeree Member shall deliver a written notice to the Initiating Member
of its decision to buy or sell. Failure to deliver such notice shall be
deemed a decision to sell.
6. The purchase or sale of an Interest pursuant to the
Interest Buy/Sell shall be consummated upon the transfer of the Interest
(the "Subject Interest") by the selling Member or its designee (the
"Selling Member"), and shall occur no later than fifteen (15) days
following the expiration of the Interest Buy/Sell Election Period.
7. If the Member or its designee purchasing the Subject
Interest pursuant to the Interest Buy/Sell (the "Purchasing Member") is
ready, willing and able to perform its obligations at the closing, and the
Selling Member defaults in performing its obligations at the closing, the
sale of the Subject Interest shall be deemed to have occurred at the
closing, the Company shall record the transfer of the Subject Interest in
its books and records, the Company shall treat the Purchasing Member as
the legal and beneficial owner of the Subject Interest sold by the Selling
Member, the Selling Member shall cease to have any rights as a Member of
the Company with respect to the Subject Interest, and the Selling Member's
sole remedy against the Purchasing Member shall be to be paid the amount
due it in connection with the sale of the Subject Interest (without
interest) upon reasonable written notice to the Purchasing Member and upon
tender to the Purchasing Member of the assignment of the Subject Interest
and other documents which should have been delivered at the closing.
8. If the Selling Member is ready, willing and able to
perform its obligations at the closing, and the Purchasing Member defaults
in performing its obligations at the closing, the Selling Member shall
have the right (but not the obligation) to acquire the Interest of the
Purchasing Member at a price equal to 75% (seventy-five percent) of the
amount which would otherwise have been payable to the Purchasing Partner
had the Purchasing Partner elected to be the seller, as determined in
accordance with clause (d) above, or to sell the Subject Interest to a
non-affiliated third party free of the restrictions set forth in Section
5.6 hereof.
9. At the closing, the Selling Member shall deliver to
the Purchasing Member a duly executed assignment of Subject Interest and
such other documents reasonably requested by the Purchasing Member which
are necessary to evidence or complete the transfer of such Subject
Interest, and the Purchasing Member shall deliver to the Selling Member
(i) cash payable by wire transfer of immediately available funds to an
account or accounts of the Selling Member at the bank specified by the
Selling Member in writing at least two business days prior to the closing,
or (ii) a certified or bank check payable to the Selling Member in an
amount equal to the Sale Price of the Subject Interest.
10. Any decision by a Member to initiate the Interest
Buy/Sell and/or any response by a Member to an Interest Buy/Sell Notice
shall be made simultaneously and consistently with respect to the
applicable buy/sell provisions of interests in Old Creamer as set forth in
the Old Creamer Partnership Agreement.
ARTICLE XXVII
BOOKS AND RECORDS; ACCOUNTING; TAX MATTERS
6.27.1 Books and Records. Creamer, as Managing Member, shall
prepare and maintain (or cause to be prepared and maintained) for the
Company true and correct books and records which shall be prepared in
accordance with generally accepted accounting principles, consistently
applied, showing all costs, expenditures, sales, receipts, assets and
liabilities, Net Profits and Net Losses (as determined under Section 3.1
hereof) and all other records necessary, convenient or incidental to
recording the Company's business and affairs and sufficient to record the
allocation of Net Profits, Net Losses and distributions as provided for
herein.
6.27.2 Fiscal Year. The fiscal year of the Company shall be
the calendar year.
6.27.3 Bank Accounts. All receipts, funds and income of the
Company shall be deposited in the name of the Company in such banks as are
determined by the Members. Withdrawals from said banks shall be made on
signatures of Frank Creamer or Vitale, or such person or persons as shall
be authorized by the Members, and there shall be no commingling of the
monies and funds of the Company with monies and funds of any other entity.
6.27.4 Accounting Decisions. All decisions as to accounting
principles and tax elections shall be made by the Members. The Company
shall make any election permitted under Section 754 of the Code, unless
otherwise agreed to by the Members.
6.27.5 Tax Returns. Federal, state and local income tax
returns of the Company shall be prepared by such accounting firm as may be
selected by the Managing Member, subject to the approval of Wellsford.
Creamer shall file (or cause to be filed) all federal, state and local tax
returns required of the Company.
6.27.6 Tax Matters Partner. Creamer shall be the "tax matters
partner" of the Company within the meaning of Section 6231(a)(7) of the
Code. The tax matters partner shall not be liable for its conduct under
this Section 6.6 to any Member if it shall have acted in good faith and in
reliance upon the advice of legal counsel and/or Diamante, Katz & Kahn or
such other tax accountants reasonably acceptable to the other Member. The
Company shall bear the expense of any tax audit or proceeding conducted at
the Company level, but the cost of any adjustment to any Member's tax
liability shall be borne by that Member. Creamer shall take all action
necessary for Wellsford to be a "notice partner" within the meaning of
Section 6231(a)(8) of the Code.
6.27.7 Inspection. Each Member or its authorized
representative may examine any of the books or records of the Company at
reasonable times and upon reasonable notice provided such examination
shall not interfere with the business of the Company.
ARTICLE XXVIII
LIABILITIES AND INDEMNIFICATION
7.28.1 Liability and Indemnification of the Company and the
Members. (1) To the fullest extent permitted by applicable law, an
Indemnified Person (as hereinafter defined) shall be entitled to
indemnification from the Company for any loss, damage or claim incurred by
such Indemnified Person by reason of any act or omission performed or
omitted by such Indemnified Person, if such Indemnified Person acted in
good faith and in a manner reasonably believed by such Indemnified Person
to be in or not opposed to the best interests of the Company; provided
that the Indemnified Person's conduct shall not have constituted fraud,
gross negligence or willful or wanton misconduct. For purposes of this
Agreement, an Indemnified Person means (i) each Member and its directors,
officers, shareholders, members, partners, affiliates, trustees, employees
and agents, and (ii) any person who is or was serving at the request of
the Company or any Member, as a director, officer, shareholder, member,
partner, trustee, employee or agent of the Company or another corporation,
limited liability company, partnership, joint venture, trust or other
enterprise in connection with the business or investments of the Company.
(2) To the fullest extent permitted by applicable law,
expenses (including attorneys' fees and expenses) incurred in defending
any action, suit or proceeding subject to Section 7.1(a) shall be paid by
the Company in advance of the final disposition of such proceeding,
subject to repayment, if it shall conclusively be determined, by a court
of competent and final jurisdiction, that the Indemnified Person is not
entitled to be indemnified by the Company as authorized hereunder.
(3) The indemnification provided by this Section 7.1 shall
be in addition to any other rights to which an Indemnified Person may be
entitled under any agreement of the Members, as a matter of law or
otherwise, both as to action in the Indemnified Person's capacity as the
Member, a director, officer, employee or agent of a Member or a person
serving at the request of the Company and to any action in another
capacity. Such indemnification shall continue as to an Indemnified Person
who has ceased to serve in such capacity and shall inure to the benefit of
the heirs, successors, assigns, administrators and personal
representatives of such Indemnified Person.
(4) The Company may purchase and maintain insurance on
behalf of any one or more Indemnified Persons and other persons as the
Members shall determine against any liability that may be asserted against
or expense that may be incurred by such person in connection with the
activities of the Company, whether or not the Company would have the power
to indemnify such person against such liability hereunder.
(5) In no event may an Indemnified Person subject the
Members to personal liability by reason of this Section 7.1. except
specifically provided for in this Agreement.
(6) An Indemnified Person shall not be denied
indemnification in whole or in part under this Section 7.1 because the
Indemnified Person had an interest in the transaction with respect to
which indemnification applies if the transaction was otherwise permitted
by the terms hereof.
(7) The provisions of this Section 7.1 are for the benefit
of the Indemnified Persons and their heirs, successors, assigns,
administrators and personal representatives and shall not be deemed to
create any rights for the benefit of any other persons. Without
limitation of any provision of this Section 7.1, this Section 7.1 shall be
construed to indemnify all persons exculpated pursuant to Section 7.2 to
the fullest extent of any such exculpation.
7.28.2 Liability of the Managing Member. The Managing Member
shall be liable to the Company and the other Member for fraud, gross
negligence or willful or wanton misconduct in any of its actions or
omissions, but shall not be liable to the Company, the other Member or any
other persons who have acquired interests in any Interest, whether as
members, assignees or otherwise, for errors in judgment or for any acts or
omissions, made, taken or omitted in good faith and that Creamer, as the
Managing Member (or, if applicable, any of its designees, directors,
officers, employees or agents acting on its behalf) reasonably believes is
in or not opposed to the best interests of the Company, unless such errors
in judgment, acts or omissions constitute fraud, gross negligence or
willful or wanton misconduct.
ARTICLE XXIX
KEY-MAN LIFE INSURANCE; DEATH OF PRINCIPALS
8.29.1 Key-Man Life Insurance. The Company, at its sole cost and
expense (which expense shall be set forth in the Budget), shall purchase
and maintain one-year renewable term key-man life insurance ("Key-Man
Insurance") on the life of each of Frank Creamer and Vitale in an amount
with respect to each of them which, when added to the amount of the one-
year key-man life insurance purchased and maintained by Old Creamer, shall
equal the lesser of two million dollars ($2,000,000) or the amount of the
Adjusted Wellsford Base Amount, or such lesser amount as is determined by
Wellsford at its sole discretion. Frank Creamer and Vitale each shall
cooperate with respect to purchasing and maintaining the Key-Man
Insurance, including, without limitation, the taking of physical
examinations and the completion and execution of appropriate insurance
forms and applications. Upon the death of either Frank Creamer or Vitale,
any payment from the Key-Man Insurance shall be remitted to the Company.
8.29.2 Death of Principals. Upon the death or permanent
disability of either Frank Creamer or Vitale, the Company shall be
continued unless both Wellsford and the survivor of either Frank Creamer
or Vitale mutually consent to dissolve and liquidate the Company.
ARTICLE XXX
GENERAL PROVISIONS
9.30.1 Right of First Refusal/Other Business Activities.
(1) Wellsford may engage in all business activities
(including those similar to the activities of the Company or the entities
involved in the Clairborne Program), provided, however, that so long as
the Clairborne Program is in effect, Wellsford will, to the extent
possible, present any investment opportunities which are substantially
similar to those of the Clairborne Program to the Company. Creamer, the
Creamer Designees or any affiliates in which either Creamer or the Creamer
Designees or Frank Creamer or Vitale owns or shall own a majority of the
voting interests or over which Creamer or the Creamer Designees or Frank
Creamer or Vitale has or shall have voting control, may participate,
directly or indirectly, in any business activity or venture, provided,
however, that (a) such participation will not interfere with either of the
Creamer Designees' performance of his duties with respect to the
Clairborne Program, the Company or Old Creamer, and (b) in the event
Creamer, any Creamer Designee or any of their respective affiliates desire
to participate or sponsor (i) any program, investment fund or investment
venture with an investment objective, strategy or focus substantially
similar to those of the Clairborne Program, or (ii) other business
activity or business venture competitive to or substantially similar to
the activities or ventures of Old Creamer or the Company at any time
during the term of the Company, Creamer, the respective Creamer Designee
or the respective affiliates, whichever may be applicable, shall first
provide either Wellsford, the Company or Old Creamer with a right of first
refusal or priority participation therein on terms no less favorable to
those being offered to other third-party participants in such program,
investment fund or venture or business activity or venture.
No Member shall be required to devote any particular
amount of time to the business of the Company, except that Creamer shall
cause Frank Creamer and Vitale to devote such time, energies and attention
as are necessary to the fulfillment of their responsibilities and duties
to the Company and Old Creamer, including, without limitation, all
activities required of the Company and/or Old Creamer pursuant to the
Clairborne Program and the Old Creamer Commitments.
(2) In conjunction with the making of any investment
decisions as set forth in clauses (i) and (viii) of Section 4.1(d) hereof,
prior to the making of an investment proposal under the Clairborne
Program, Creamer or the Company shall present any such investment proposal
or opportunity to Wellsford (together with all information and
documentation with respect thereto to enable Wellsford to adequately
evaluate such proposal), and only upon Wellsford's approval of the
investment proposal shall any such investment proposal be presented to
PREI for consideration under the Clairborne Program, provided, however,
that nothing herein shall prevent Creamer or the Company from discussing
with PREI potential investment opportunities, which discussions shall not,
under any circumstances, bind the Company and/or Wellsford in
participating in such investment opportunities or obligate Wellsford to
fund its proportionate share of the required capital thereof. The
approval by Wellsford of any investment proposal for consideration by the
relevant PREI, shall constitute the agreement by Wellsford to fund its
proportionate share of the required capital for investment by the Company
in the Clairborne Program for interest in the applicable Venture. Nothing
herein shall be deemed to obligate Wellsford to contribute amounts in
excess of the Capital Contributions set forth in Section 2.1 hereof.
9.30.2 Representations and Warranties of Wellsford. Wellsford
represents and warrants that (a) it has all requisite capacity, power and
authority to execute, deliver and perform this Agreement and the Old
Creamer Partnership Agreement, and to consummate the transactions
contemplated hereby and thereby, (b) the execution, delivery and
performance by Wellsford of this Agreement and the Old Creamer Partnership
Agreement, and the consummation by Wellsford of the transactions
contemplated hereby and thereby, have been duly authorized by all
necessary corporate action on its part, (c) this Agreement and the Old
Creamer Partnership Agreement have been duly and validly executed and
delivered by Wellsford, and each constitutes the valid and binding
obligation of Wellsford, enforceable against Wellsford in accordance with
its terms, and (d) it has adequate financial resources to satisfy its
funding obligations hereunder and under the Old Creamer Partnership
Agreement.
9.30.3 Representations and Warranties of Creamer. Creamer
represents and warrants that (a) it has all requisite capacity, power and
authority to execute, deliver and perform this Agreement and to consummate
the transactions contemplated hereby, (b) the execution, delivery and
performance by Creamer of this Agreement, and the consummation by Creamer
of the transactions contemplated hereby, have been duly authorized by all
necessary corporate action on its part, and (c) this Agreement has been
duly and validly executed and delivered by Creamer and constitutes the
valid and binding obligation of Creamer, enforceable against Creamer in
accordance with its terms.
9.30.4 Survival. The representations, warranties and covenants
made in this Agreement or other document executed at or prior to the date
hereof in connection herewith shall survive for one (1) year after the
date hereof. No investigation by Wellsford or on Wellsford's behalf
heretofore or hereafter conducted shall affect the representations,
warranties and covenants of Creamer (and its designees) set forth in this
Agreement.
9.30.5 Integration. This Agreement constitutes the entire
agreement among the parties hereto with respect to the subject matter
hereof. This Agreement supersedes any prior agreement or understanding
among the parties hereto, and may not be modified or amended in any manner
unless in writing and signed by all the parties hereto.
9.30.6 Notices. All notices, demands, offers or other
communications required or permitted by this Agreement shall be in writing
and shall be sent by prepaid registered or certified mail, return receipt
requested, or by hand delivery, and addressed to the Company at its
address set forth herein, and to the Members at their respective addresses
set forth on Schedule A hereto or to such other address as shall, from
time to time, be supplied by any party to the other by like notice, and
shall be deemed given upon the date the return receipt is signed on behalf
of the receiving party or, if hand delivered, upon delivery.
9.30.7 Benefits and Obligations. The covenants and agreements
herein contained shall be binding upon and inure to the benefit of the
legal representatives, heirs, executors, administrators, successors and
assigns of the respective parties hereto.
9.30.8 Severability. If any provision of this Agreement or the
application thereof to any part or circumstances shall be determined by
any court of competent jurisdiction to be invalid and unenforceable in any
respect and to any extent, the remainder of this Agreement or the
application of such provision to such person or circumstance, other than
that as to which it so determined invalid or unenforceable, shall not be
affected thereby and shall be valid and enforceable to the fullest extent
permitted by law.
9.30.9 Waivers. No waiver of any breach of any term hereof shall
be effective unless made in writing signed by the party against whom
enforcement of the waiver is sought, and no such waiver of any subsequent
breach of that term or any other term of the same or different nature
shall be construed as a waiver of any subsequent breach of that term of
the same or different nature.
9.30.10 Applicable Law. This Agreement shall be construed and
enforced in accordance with the laws of the State of Delaware.
9.30.11 No Partition. The Members hereby waive any right of
partition they may have with respect to any assets of the Company, now
existing or hereafter acquired.
9.30.12 Confidentiality. Except if and to the extent required by
law, or as the parties hereto may from time to time agree in writing, the
parties hereto shall not, and shall cause their respective employees,
officers, directors, partners, shareholders, affiliates or agents not to,
divulge, disclose or communicate, whether orally or in writing, the
provisions or subject matter of this Agreement, any confidential non-
public information regarding the business, affairs and operations of the
Company, the transactions contemplated hereby or the identity of the
parties hereto, other than to the parties' or the Company's respective
legal counsel, accountants and financial advisors.
9.30.13 Counterparts. This Agreement may be executed in one or
more counterparts, each of which shall for all purposes be deemed to be an
original and all of which shall constitute the same instrument.
9.30.14 Headings. The headings in this Agreement are solely for
convenience of reference and shall not affect its interpretation.
9.30.15 Exhibits and Schedules. The Schedules and Exhibits
attached hereto are hereby incorporated herein and made a part hereof.
<PAGE>
IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed as of the day and year first above written.
WELLSFORD CRC HOLDING CORP.
By:/s/ William H. Darrow
-----------------------------
Name: William H. Darrow
Title: Vice President
SX ADVISORS, LLC
By:/s/ Frank G. Creamer, Jr.
------------------------------
Name: Frank G. Creamer, Jr.
Title: Member
<PAGE>
The undersigned have executed this Agreement as of the day
and year first above written to reflect their agreement to Section
5.6(b)(iii) of this Agreement
/s/ Frank G. Creamer, Jr.
-----------------------------------
Frank G. Creamer, Jr.
/s/ Michael J. Vitale
-----------------------------------
Michael J. Vitale
<PAGE>
SCHEDULE A
Name and Member
Address Interest
Wellsford CRC Holding Corp. 49%
610 Fifth Avenue
New York, New York 10020
SX Advisors, LLC 51%
[Provide Address]
<PAGE>
SCHEDULE B
1998 BUDGET
<PAGE>
SCHEDULE C
Member Designees
Wellsford CRC Holding Corp. William H. Darrow II
Jeffrey H. Lynford
SX Advisors, LLC Frank G. Creamer, Jr.
Michael J. Vitale
Loan No.: 50750
Servicing No.: 880802067
===========================================================================
NATIONSBANK, N.A.,
------------------
LOAN AGREEMENT
dated as of February 27, 1998
WELLSFORD SONTERRA LLC,
as Borrower
===========================================================================
<PAGE>
TABLE OF CONTENTS
Page
ARTICLE I DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . 1
Section 1.1 Definitions . . . . . . . . . . . . . . . . . 1
Section 1.2 Other Definitional Provisions . . . . . . . . 13
Section 1.3 Incorporation by Reference of Commitment. . . 13
ARTICLE II THE LOAN . . . . . . . . . . . . . . . . . . . . . 13
Section 2.1 Loan Terms. . . . . . . . . . . . . . . . . . 14
Section 2.2 Interest. . . . . . . . . . . . . . . . . . . 14
Section 2.3 Term. . . . . . . . . . . . . . . . . . . . . 14
Section 2.4 Payments. . . . . . . . . . . . . . . . . . . 14
ARTICLE III CONDITIONS PRECEDENT TO LOAN . . . . . . . . . . . 14
Section 3.1 Loan Documents. . . . . . . . . . . . . . . . 14
Section 3.2 Brokerage Commissions . . . . . . . . . . . . 14
Section 3.3 Title Evidence. . . . . . . . . . . . . . . . 14
Section 3.4 Survey. . . . . . . . . . . . . . . . . . . . 15
Section 3.5 Insurance . . . . . . . . . . . . . . . . . . 15
Section 3.6 Authority Documents . . . . . . . . . . . . . 15
Section 3.7 Financial Statements and
Operating Statements. . . . . . . . . . . . . 15
Section 3.8 Opinion . . . . . . . . . . . . . . . . . . . 15
Section 3.9 Compliance with Laws. . . . . . . . . . . . . 15
Section 3.10 Agreements. . . . . . . . . . . . . . . . . . 16
Section 3.11 Taxes . . . . . . . . . . . . . . . . . . . . 16
Section 3.12 Utilities . . . . . . . . . . . . . . . . . . 16
Section 3.13 Reserve Accounts. . . . . . . . . . . . . . . 16
Section 3.14 Engineering Report. . . . . . . . . . . . . . 16
Section 3.15 Certificate of Occupancy and Other Permits. . 16
Section 3.16 Environmental Assessment and O&M Program. . . 16
Section 3.17 Appraisal . . . . . . . . . . . . . . . . . . 16
Section 3.18 Equity. . . . . . . . . . . . . . . . . . . . 16
Section 3.19 Management Agreement. . . . . . . . . . . . . 16
Section 3.20 Special Purpose Entity. . . . . . . . . . . . 17
Section 3.21 Miscellaneous . . . . . . . . . . . . . . . . 17
ARTICLE IV REPRESENTATIONS AND WARRANTIES. . . . . . . . . . . . 17
Section 4.1 Existence; Compliance with Laws . . . . . . . 17
Section 4.2 Equity Interests. . . . . . . . . . . . . . . 17
Section 4.3 Power; Authorization;
Enforceable Obligations . . . . . . . . . . . 17
Section 4.4 No Legal Bar. . . . . . . . . . . . . . . . . 18
Section 4.5 No Litigation . . . . . . . . . . . . . . . . 18
Section 4.6 No Default. . . . . . . . . . . . . . . . . . 18
Section 4.7 Solvency; Fraudulent Conveyance . . . . . . . 18
Section 4.8 Special Purpose Entity. . . . . . . . . . . . 19
Section 4.9 Taxes . . . . . . . . . . . . . . . . . . . . 19
Section 4.10 No Burdensome Restrictions. . . . . . . . . . 19
Section 4.11 Investment Company Act; Other Regulations . . 19
Section 4.12 Subsidiaries. . . . . . . . . . . . . . . . . 19
Section 4.13 Title to Premises . . . . . . . . . . . . . . 19
Section 4.14 Ownership of Personalty . . . . . . . . . . . 20
Section 4.15 Financial Statements. . . . . . . . . . . . . 20
Section 4.16 No Changes. . . . . . . . . . . . . . . . . . 20
Section 4.17 Accuracy of Information . . . . . . . . . . . 20
Section 4.18 Principal Place of Business . . . . . . . . . 21
Section 4.19 Taxpayer Identification Number. . . . . . . . 21
Section 4.20 Insurance . . . . . . . . . . . . . . . . . . 21
Section 4.21 Mechanic's Liens, etc . . . . . . . . . . . . 21
Section 4.22 No Violation. . . . . . . . . . . . . . . . . 21
Section 4.23 ERISA . . . . . . . . . . . . . . . . . . . . 21
Section 4.24 O&M Program . . . . . . . . . . . . . . . . . 22
ARTICLE V COVENANTS AND AGREEMENTS . . . . . . . . . . . . . . . 22
Section 5.1 Affirmative Covenants of the Borrower . . . . 22
Section 5.2 Negative Covenants of the Borrower. . . . . . 28
Section 5.3 Environmental Covenants . . . . . . . . . . . 30
Section 5.4 Recourse Covenants. . . . . . . . . . . . . . 32
Section 5.5 Insurance . . . . . . . . . . . . . . . . . . 32
ARTICLE VI RESERVE ACCOUNTS. . . . . . . . . . . . . . . . . . . 34
Section 6.1 Establishment of Reserve Accounts . . . . . . 34
Section 6.2 Initial Reserve Deposits. . . . . . . . . . . 34
Section 6.3 Monthly Reserve Deposits. . . . . . . . . . . 34
Section 6.4 Adjustments to Monthly Reserve Deposit to
the Replacement Reserve Account . . . . . . 35
Section 6.5 Permitted Investments, Earnings, Charges
and Annual Accounting . . . . . . . . . . . 35
Section 6.6 Assignment to the Lender of Reserve
Accounts and Rights and Claims. . . . . . . 36
Section 6.7 Application of Reserve Accounts Upon an
Event of Default. . . . . . . . . . . . . . 36
Section 6.8 Disbursements from Tax and Insurance
Reserve Account . . . . . . . . . . . . . . 37
Section 6.9 Disbursements from Repair Escrow Account
and Replacement Reserve Account . . . . . . 37
Section 6.10 Indemnification . . . . . . . . . . . . . . . 37
ARTICLE VII EVENTS OF DEFAULT; REMEDIES. . . . . . . . . . . . . 38
Section 7.1 Events of Default . . . . . . . . . . . . . . 38
Section 7.2 Remedies. . . . . . . . . . . . . . . . . . . 39
ARTICLE VIII CASUALTY LOSSES; EMINENT DOMAIN . . . . . . . . . . 40
Section 8.1 Repairs and Casualty Losses . . . . . . . . . 40
Section 8.2 Eminent Domain. . . . . . . . . . . . . . . . 40
Section 8.3 Application of Insurance Proceeds and
Condemnation Awards . . . . . . . . . . . . 41
ARTICLE IX GENERAL PROVISIONS . . . . . . . . . . . . . . . . . . 42
Section 9.1 Remedies Cumulative; Waivers. . . . . . . . . 42
Section 9.2 Benefit . . . . . . . . . . . . . . . . . . . 43
Section 9.3 Assignment and Assumption . . . . . . . . . . 43
Section 9.4 Information . . . . . . . . . . . . . . . . . 44
Section 9.5 Nonrecourse Loan; Exceptions. . . . . . . . . 45
Section 9.6 Amendments. . . . . . . . . . . . . . . . . . 45
Section 9.7 Governing Law and Jurisdictions . . . . . . . 45
Section 9.8 Savings Clause. . . . . . . . . . . . . . . . 45
Section 9.9 Execution in Counterparts . . . . . . . . . . 45
Section 9.10 Notices . . . . . . . . . . . . . . . . . . . 45
Section 9.11 Right of Set-Off. . . . . . . . . . . . . . . 46
Section 9.12 Written Agreement . . . . . . . . . . . . . . 46
Section 9.13 Waiver of Jury Trials . . . . . . . . . . . . 46
EXHIBITS
EXHIBIT A Equity Interests
EXHIBIT B Immediate Repairs, Replacements and Reserve Amounts
EXHIBIT C Addresses for Notice
EXHIBIT D Program Rider
<PAGE>
LOAN AGREEMENT
LOAN AGREEMENT, dated as of February 27, 1998 (together with all
exhibits, schedules, riders and addenda hereto, which are hereby
incorporated herein, the "Loan Agreement" or "Agreement"), by and between
WELLSFORD SONTERRA LLC, an Arizona limited liability company (the
"Borrower"), with its principal place of business at 1623 Blake Street,
Suite 270, Denver, Colorado 80202; and NATIONSBANK, N.A., a national
banking association, with its principal offices in Charlotte, North
Carolina (together with its successors and assigns, the "Lender").
RECITALS:
The Borrower has applied to the Lender for a loan in the original
principal amount of $16,400,000.00 (the "Loan") to be made by the Lender
pursuant to the terms hereof.
The Loan will be secured by, among other things, a first priority lien
on the Land, Improvements, Personalty and Rents and Profits.
The Lender is willing to make the Loan based on the terms and
conditions set forth in this Loan Agreement and subject to the execution
and delivery of each of the Loan Documents.
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the Borrower and the Lender
hereby agree as follows:
ARTICLE I
DEFINITIONS
Section 1.1 Definitions.
As used in this Agreement, the other Loan Documents, or any
certificate or other document made or delivered pursuant hereto, the
capitalized terms used herein shall, unless otherwise defined herein or
therein, have the following meanings:
Additional Repair(s) or Replacement(s). Any repairs, replacements or
improvements (other than Immediate Repairs or Replacements) (i) which are
advisable to keep the Premises in good order and repair and in good
marketable condition, or to prevent deterioration of the Premises, or (ii)
for an Immediate Repair or Replacement to the extent such Immediate Repair
or Replacement exceeds 125% of the estimated cost of such Immediate Repair
or Replacement as set forth in Exhibit B hereto.
Affiliate(s). As to any specified Person, any other Person
controlling or controlled by or under common control with such specified
Person. For the purposes of this definition, "control" when used with
respect to any specified Person means the power to direct the management
and policies of such Person, directly or indirectly, whether through the
ownership of voting securities, by contract or otherwise; and the terms
"controlling" or "controlled" have meanings correlative to the foregoing.
Appraisal. An appraisal of the Premises prepared at the Borrower's
expense by a qualified appraiser designated by and satisfactory to the
Lender, in accordance with written instructions from the Lender, dated as
of a date acceptable to the Lender and otherwise satisfactory in form and
substance to the Lender.
Approved Insurer. An insurer previously approved by the Lender with
an A.M. Best Company, Inc. rating of A- or better, and which is authorized
to issue insurance in the State.
Assignment of Management Agreement. The Assignment and Subordination
of Management Agreement, dated as of even date herewith, executed by the
Borrower, the Lender and the property manager for the Premises.
Bankruptcy Event. As to any Person, the occurrence of any of the
following with respect to such Person: (i) a court or governmental agency
having jurisdiction over the Premises shall enter a decree or order for
relief in respect of such Person in an involuntary case under any
applicable bankruptcy, insolvency, reorganization, moratorium,
sequestration, liquidation, consolidation or other similar law now or
hereafter in effect, or appoint a receiver, liquidator, assignee,
custodian, conservator, trustee, sequestrator (or similar official) of such
Person or for any substantial part of its property or order the winding up
or liquidation of its affairs; (ii) an involuntary case under any
applicable bankruptcy, insolvency or other similar law now or hereafter in
effect is commenced against a Person and such petition remains unstayed and
in effect for a period of sixty (60) consecutive days; (iii) such Person
shall commence a voluntary case under any applicable bankruptcy, insolvency
or similar law or make any general assignment for the benefit of creditors;
(iv) such Person shall admit in writing its inability to pay its debts
generally as they become due (otherwise than on a purely temporary basis),
or (v) such Person shall take any action in furtherance of any of the
aforesaid purposes.
Business Day. Any day other than a Saturday, a Sunday, a legal
holiday in Charlotte, North Carolina, or a day on which banking
institutions located in Charlotte, North Carolina are authorized by law or
other governmental action to close.
Certification. As to any specified report, Financial Statement,
Operating Statement, Rent Roll or other document, a written certification
by a Responsible Officer of the Person providing such report, Financial
Statement, Operating Statement, Rent Roll or other document that such
report, Financial Statement, Operating Statement, Rent Roll or other
document, as at the date thereof, (i) contains all of the information and
statements required to be set forth therein, (ii) that such information and
statements are true and correct in all material respects, (iii) that there
is no untrue statement of a material fact required to be stated therein,
(iv) that there is no failure to state therein any information or fact that
is necessary to make the information or statements contained therein, in
light of the circumstances under which they are made, not misleading, and
(v) that there is no fact known to such Responsible Officer that materially
adversely affects any of the information or statements set forth therein.
Closing Date. The date set forth in the first paragraph of this Loan
Agreement.
Commitment. The Lender's commitment letter with respect to the Loan
as accepted by the Borrower in accordance with the terms thereof.
Default Condition. The occurrence or existence of an event or
condition which, upon the giving of notice or the passage of time, or both,
would constitute an Event of Default.
Eligible Account. An account that is either (i) maintained with a
depository institution whose commercial or finance paper or other similar
obligations are rated A-1 or better by Standard & Poor's or P-1 or better
by Moody's, (ii) an account or accounts maintained with a depository
institution with a minimum long-term unsecured debt rating of BBB- or
better by Standard & Poor's or Baa3 or better by Moody's, provided that the
deposits in such account or accounts are fully insured by the Federal
Deposit Insurance Corporation, (iii) a segregated trust account maintained
with the corporate trust department of an institution with capital and
surplus of not less than $50,000,000 and with a minimum long-term unsecured
debt rating of BBB- or better by Standard & Poor's or Baa3 or better by
Moody's, or (iv) an account otherwise acceptable to the Lender.
Engineering Report. An engineering report of the Premises from an
engineer approved by the Lender and dated as of a date acceptable to the
Lender, which report shall, among other things, (a) conform to all
requirements of the Lender and (b) certify that the Premises is in
compliance with all applicable requirements of the Americans with
Disabilities Act of 1990.
Environmental Assessment. A report (including all drafts thereof) of
an environmental assessment of the Premises of such scope (including but
not limited to the taking of soil borings and air and groundwater samples
and other above and below ground testing) as the Lender may request, by a
consulting firm acceptable to the Lender, which shall, among other things,
be dated as of a date acceptable to the Lender and conform to (i) the
current minimum standards for the American Society of Testing and
Materials, and (ii) the Lender's then current requirements.
Environmental Covenant(s). Each of the covenants, agreements and/or
indemnities set forth in Section 5.3 of this Loan Agreement.
Equity Interests. Any and all shares, interests, participations and
other equivalents (however designated) of capital stock of a corporation,
any and all equivalent ownership interests in a Person not a corporation
(including, without limitation, general and limited partnership interests
in a limited partnership), and any and all warrants and options to purchase
any of the foregoing.
ERISA. The Employee Retirement Income Security Act of 1974.
Event of Default. The occurrence of any event or condition specified
in Section 7.1 of this Loan Agreement.
Financial Statement. As to any indicated Person, for any specified
period, financial statements of such Person, including, at a minimum, a
current balance sheet, a current income and expense statement, a statement
showing contingent liabilities and any other supporting schedules or
documentation that the Lender may from time to time require, and, in the
case of the Borrower, a detailed cash flow statement for each property
and/or entity in which the Borrower has an interest, prepared in accordance
with Required Accounting Standards. The cash flow statements provided
shall include, as applicable, the property and entity name, location, size
(including the number of rooms with respect to hotels and the number of
licensed beds with respect to healthcare facilities), and the percentage of
ownership therein, its leasing and occupancy status, its Operating Income
(including the sources of Operating Income), its Operating Expenses, its
Net Operating Income, any loan balance currently outstanding, the amount
and beneficiary of any cash distributions, the amount invested in and/or
received from such property or entity; and detailed cash flow projections
for the next twelve (12) month period therefor. Each Financial Statement
shall include a Certification thereto.
Financing Statements. The UCC financing statements filed in order to
perfect the Lender's lien on certain personal property and fixtures as more
particularly described therein. The Financing Statements shall be on forms
approved for filing in the State and local filing offices of the State in
which any filings are necessary or, in the Lender's opinion desirable, to
be made to perfect the interests of the Lender granted under the Loan
Documents, together with the search results for such filing offices,
including copies of all reported financing statements.
GAAP. Generally accepted accounting principles, as from time-to-time
in effect in the United States of America, consistently applied.
Governmental Action. The issuance or threatened issuance of any
claim, citation, notice of any pending or threatened suit, proceeding,
order or governmental inquiry or opinion involving the Premises that
alleges the violation of any Requirement of Law or Hazardous Materials Law.
Governmental Authorities. Any governmental (including health and
environmental) agency, office, officer or official whose consent or
approval is required as a prerequisite to the commencement of the
construction, renovation or expansion of the Improvements or to the
operation and occupancy of the Improvements or the Premises or to the
performance of any act or obligation or the observance of any agreement,
provision or condition of whatsoever nature herein contained.
Ground Lease. Each ground lease, if any, pursuant to which the
Borrower acquires an interest as ground lessee of any portion of the
Premises.
Hazardous Materials. Includes petroleum and petroleum products,
flammable explosives, radioactive materials (excluding radioactive
materials in smoke detectors), polychlorinated biphenyls, lead, asbestos or
asbestos containing materials in any form that is or could become friable,
hazardous waste, toxic or hazardous substances or other related materials
whether in the form of a chemical, element, compound, solution, mixture or
otherwise including, but not limited to, those materials defined as
"hazardous substances," "extremely hazardous substances," "hazardous
chemicals," "hazardous materials," "toxic substances," "solid waste,"
"toxic chemicals," "air pollutants," "toxic pollutants," "hazardous
wastes," "extremely hazardous waste," or "restricted hazardous waste" by
Hazardous Materials Law or regulated by Hazardous Materials Law in any
manner whatsoever, and all other "Hazardous Materials", if any, identified
in the Program Rider.
Hazardous Materials Law. All federal, state, and local laws,
ordinances and regulations and standards, rules, policies and other
governmental requirements and any court judgments applicable to the
Borrower or to the Premises relating to industrial hygiene or to
environmental or unsafe conditions or to human health including, but not
limited to, those relating to the generation, manufacture, storage,
handling, transportation, disposal, release, emission or discharge of
Hazardous Materials, those in connection with the construction, fuel
supply, power generation and transmission, waste disposal or any other
operations or processes relating to the Premises, and those relating to the
atmosphere, soil, surface and ground water, wetlands, stream sediments and
vegetation on, under, in or about the Premises. "Hazardous Materials Law"
also shall include, but not be limited to, the following laws, as amended
as set forth herein and as subsequently amended: (1) the Comprehensive
Environmental Response, Compensation, and Liability Act of 1980, as amended
by the Superfund Amendments and Reauthorization Act of 1986, 42 USCA 9601
et seq.; (2) the Solid Waste Disposal Act, as amended by the Resource
Conservation and Recovery Act of 1976, as amended by the Hazardous and
Solid Waste Amendments of 1984, 42 USCA 6901 et seq.; (3) the Federal Water
Pollution Control Act, as amended by the Clean Water Act of 1977, 33 USCA
1251 et seq.; (4) the Toxic Substances Control Act, 15 USCA 2601 et seq.;
(5) the Emergency Planning and Community Right-to-Know Act of 1986, 42 USCA
11001 et seq.; (6) the Clean Air Act, as amended by the Clean Air Act
Amendments, 42 USCA 7401 et seq.; (7) the National Environmental Policy Act
of 1969, 42 USCA 4321 et seq.; (8) the River and Harbor Act of 1899, 33
USCA 401 et seq.; (9) the Endangered Species Act of 1973, 16 USCA 1531 et
seq.; (10) the Occupational Safety and Health Act of 1970, 29 USCA 651 et
seq.; (11) the Safe Drinking Water Act, 42 USCA 300(f) et seq.; and (12)
the Hazardous Materials Transportation Act, 49 USCA 1801 et seq., and all
regulations from time to time adopted in respect to the foregoing laws.
Immediate Repair(s). Those repairs, replacements and improvements
listed as "Immediate Repairs" on Exhibit B hereto.
Improvements. As defined in the Security Instrument.
Initial Reserve Deposit(s). Any amount required to be deposited into
any Reserve Account on or before the Closing Date in accordance with the
terms of this Loan Agreement, including without limitation, any initial
deposit to any Reserve Account identified on Exhibit B hereto or in the
Program Rider.
Insurance. All of the following insurance coverages:
(i) Property Insurance. Insurance with respect to the
Improvements against any peril included within the classification "All
Risks of Physical Loss" with extended coverage in amounts at all times
sufficient to prevent it from becoming a co-insurer within the terms
of the applicable policies, but in any event such insurance shall be
maintained in an amount equal to the full insurable value of the
Premises and with deductibles acceptable to the Lender. The term
"full insurable value" as used herein shall mean the actual
replacement cost of the Premises (without taking into account any
depreciation, and exclusive of excavations, footings and foundations,
landscaping and paving). The policy must include an agreed value
clause, which must be updated annually.
(ii) Liability Insurance. Comprehensive general liability
insurance, including bodily injury, death and property damage
liability, dram shop coverage and umbrella liability insurance against
any and all claims, including all legal liability to the extent
insurable imposed upon the Lender and all court costs and attorneys'
fees and expenses, arising out of or connected with the possession,
use, leasing, operation, maintenance or condition of the Premises in
such amounts as the Lender may require but in no event for a combined
single limit of less than a $1,000,000.00 minimum (or a $3,000,000.00
minimum if the Premises contains one or more elevators) with a
$2,000,000.00 minimum (or a $6,000,000.00 minimum if the Premises
contains one or more elevators) general aggregate limit. In the event
that any payment of proceeds is made under any umbrella liability
insurance policy, the Borrower shall immediately purchase additional
liability insurance coverage so that at all times there shall be no
less than a $1,000,000.00 minimum (or a $3,000,000.00 minimum if the
Premises contains one or more elevators) of liability insurance
coverage per occurrence with a $2,000,000.00 minimum (or a
$6,000,000.00 minimum if the Premises contains one or more elevators)
general aggregate limit.
(iii) Workers' Compensation Insurance. Statutory workers'
compensation insurance (to the extent the risks to be covered thereby
are not already covered by other policies of insurance maintained by
it), with respect to any work on, about or regarding the Premises.
(iv) Business Interruption. Business interruption insurance
and/or insurance for loss of rental value (as determined by the
Lender) in an amount sufficient to avoid any co-insurance penalty and
to provide proceeds which will cover a period acceptable to the Lender
in its reasonable discretion.
(v) Boiler and Machinery Insurance. Broad form boiler and
machinery insurance covering all boilers and other pressure vessels,
machinery and equipment located in, on or about the Premises and
insurance against loss of occupancy or use arising from any such
breakdown in an amount equal to 100% of the actual replacement cost of
such machinery (without taking into account any depreciation) and
containing such deductibles as are acceptable to the Lender.
(vi) Flood Insurance. If all or any portion of the Premises is
located within a federally designated flood hazard zone, flood
insurance as is generally available and in such amounts and with such
deductibles as the Lender may reasonably require.
(vii) Other Insurance. Such other insurance (including, without
limitation, earthquake insurance, sinkhole insurance, law and
ordinance insurance, environmental insurance and malpractice
insurance) with respect to the Premises against loss or damage of the
kinds from time to time reasonably required by the Lender in
connection with loans secured by properties comparable to the
Premises.
Intangible Personalty. As defined in the Security Instrument.
Land. As defined in the Security Instrument.
Lien. Any mortgage, pledge, hypothecation, assignment, deposit
arrangement, encumbrance, lien (statutory or other), charge or other
security interest or any preference, priority or other security agreement
or preferential arrangement of any kind or nature whatsoever (including,
without limitation, any conditional sale or other title retention agreement
and any financing lease having substantially the same economic effect as
any of the foregoing).
Loan Amount. The original principal amount of the Note.
Loan Document(s). This Loan Agreement, the Commitment, the Note, the
Security Instrument, the Financing Statements, the Assignment of Management
Agreement, and all other documents evidencing, securing or relating to the
Loan.
Local Tenant Lease(s). Any non-residential lease representing the
lesser of (i) an interest in 20% or less of the aggregate net rental square
footage of the Premises or (ii) any lease representing 5,000 sq. ft. or
less; provided however, as to one or more tenants that are Affiliates, all
leases of such affiliated tenant(s) shall be aggregated and treated as one
lease for purposes of determining whether such leases are individually
Local Tenant Leases, and if such leases, as aggregated, exceed either
limitation set forth above, then each such lease shall be deemed not to be
a Local Tenant Lease.
Management Agreement. The written management agreement for the
Premises, in form and substance satisfactory to the Lender, by and between
the Borrower, as owner, and a management company acceptable to the Lender,
as manager.
Monthly Reserve Deposits. Any other monthly payment or deposit
required in connection with any Reserve Account, including without
limitation, any monthly payments or deposits to any Reserve Account
identified in Exhibit B hereto or in the Program Rider.
Net Cash Flow. Net Operating Income, minus (A) fees, costs and
expenses related to tenant improvements required to be paid or reimbursed
under any lease or other agreement and (B) replacement reserves, each as
calculated for such period.
Net Operating Income. With respect to any specified period, (i)
Operating Income, minus (ii) Operating Expenses, each as calculated for
such period.
Note. The promissory note or notes of the Borrower in connection with
the Loan in favor of the Lender, together with all prior notes amended,
modified, renewed, extended, restated, supplemented, replaced or
substituted thereby.
Note Payment Amount. For any Payment Date, the total amount due and
owing under the Note on such Payment Date.
O&M Program. An operations and maintenance program (in form and
substance satisfactory to the Lender) relating to the use, handling and/or
abatement of one or more Hazardous Materials and which is accepted in
writing by the Borrower.
Obligations. As to any stated Person, the unpaid principal of and
interest on any promissory note or other indebtedness of such Person
(including, without limitation, interest accruing after the maturity of any
such promissory note or indebtedness and interest accruing thereon after
the filing of any petition in bankruptcy, or the commencement of any
insolvency, reorganization or like proceeding, relating to such Person,
whether or not a claim for post-filing or post-petition interest is allowed
in such proceeding) and all other obligations and liabilities of such
Person, whether direct or indirect, absolute or contingent, due or to
become due, now existing or hereafter incurred, whether on account of
principal, interest, reimbursement obligations, fees, indemnities, costs,
expenses (including, without limitation, all fees and disbursements of
counsel) or otherwise.
Operating Expenses. Any expense paid or to be paid by the Borrower
(or any of its agents or by the Lender on account or on behalf of the
Borrower) at any time in connection with the operation of the Premises,
determined on an accrual basis, in accordance with GAAP, including, without
limitation, (i) all payments required to be made pursuant to any
management, franchise or other agreement, (ii) undistributed expenses,
including without limitation, general and administrative, marketing,
utilities, operations and maintenance and other expenses, as appropriate,
(iii) legal, accounting, appraisal and other professional fees, costs and
disbursements, including annual fees and other amounts (including indemnity
payments) payable annually or otherwise, (iv) taxes, insurance premiums and
impositions of any type, (v) any amount paid in connection with any
interest rate contract or similar hedge, cap, collar, floor or currency
swap, (vi) all items, if any, defined as an Operating Expense in the
Program Rider, and (vii) the cost of goods sold. Notwithstanding the
foregoing, Operating Expenses will not include (A) depreciation or
amortization, (B) any expenses that in accordance with GAAP should be
capitalized (other than current charges for any such expenses included in
the preceding sentence), (C) the principal of and interest on the Note and
(D) any item of expense that would otherwise be considered within Operating
Expenses pursuant to the provisions above but which is required to be paid
directly by any tenant or other Person under such tenant's or Person's
lease and/or other agreement.
Operating Income. All rents (net of concessions), charges, fees,
expense recovery, revenues and other income (including interest income)
paid or to be paid (other than security deposits from tenants or other
Persons under valid leases or other agreements and insurance, eminent
domain or similar proceeds and rewards paid directly to the Lender pursuant
to the provisions of the Loan Agreement) at any time to the Borrower (or to
any of its agents for the account of the Borrower) by any Person in
connection with the operation of the Premises, determined on a cash basis,
and all items, if any, defined as Operating Income in the Program Rider.
Operating Statement. As to the Premises, for any period indicated, a
statement of the Borrower, as reflecting, truly and accurately, the items
set forth therein as at the date thereof, showing the Operating Income and
Operating Expenses for the indicated period and including a statement as to
the amounts and sources of rent or other income collected and any other
information reasonably required by the Lender. Each Operating Statement
shall include a Certification.
Payment Date. Each date any payment of principal or interest on the
Note is due and payable thereunder.
Permitted Encumbrances. As defined in the Security Instrument,
together with any Liens which have been bonded over (i) within thirty (30)
days after the date of filing thereof, (ii) with a bonding company
satisfactory to the Lender, (iii) in an amount satisfactory to the Lender,
and (iv) otherwise in form and substance satisfactory to the Lender, in
each case, in the Lender's reasonable discretion.
Permitted Investments. Any (i) direct obligations of, or obligations
the principal of and interest on which are unconditionally guaranteed by,
the full faith and credit of the United States of America (including
obligations issued or held in book-entry form on the books of the
Department of the Treasury of the United States of America); (ii)
commercial or finance paper or other similar obligations rated at the time
of purchase A-1 or better by Standard & Poor's or P-1 or better by Moody's;
(iii) interest-bearing demand or time deposits (including certificates of
deposit) in any issuing bank or trust company secured at all times, in the
manner and to the extent provided by law, by collateral security (described
in clause (i) of this definition) of a market value (valued at least
quarterly) of no less than the amount of money so invested; (iv) negotiable
or non-negotiable certificates of deposit, time deposits or other similar
banking arrangements issued by any bank or trust company with combined
equity and surplus of no less than $100,000,000, having a rating in either
of the two highest rating categories by either Moody's or Standard & Poor's
or fully insured by the Federal Deposit Insurance Corporation; (v) Eligible
Account; and (vi) account or fund that is invested only in any of the
above; provided that such Permitted Investments shall be redeemable on any
Business Day, including the Business Day after the date of acquisition.
Person. An individual, a general or limited partnership, a limited
liability company, a limited liability partnership, a corporation, a
business trust, a joint stock company, a trust, an unincorporated
association, a joint venture, a Governmental Authority or other entity of
whatever nature.
Personalty. The Tangible Personalty and the Intangible Personalty.
Premises. The collective reference to the Land, the Improvements and
the Tangible Personalty.
Program Rider. The Program Rider attached as Exhibit D to this Loan
Agreement.
Prohibited Activities or Conditions. Causing or permitting, whether
directly or indirectly, (i) the presence, use, generation, manufacture,
production, processing, installation, release, discharge, storage
(including storage in above ground and underground storage tanks for
petroleum or petroleum products), treatment, handling, or disposal of any
Hazardous Materials (excluding the safe and lawful use and storage of
quantities of Hazardous Materials or petroleum products, customarily used
in the ordinary operations of the Borrower or customarily used in the
ordinary operations of any tenant previously approved by the Lender) on or
under the Premises, or in any way affecting the Premises or its value or
which may form the basis for any present or future claim, demand or action
seeking cleanup of the Premises, (ii) the transportation of any Hazardous
Materials to or from the Premises (excluding the safe and lawful use and
storage of quantities of Hazardous Materials or petroleum products,
customarily used in the ordinary operations of the Borrower or customarily
used in the ordinary operations of any tenant previously approved by the
Lender), or (iii) any occurrence or condition on the Premises (or
exacerbation of the same) that is or may be in violation of Hazardous
Materials Law.
Recourse Covenant(s). Each of those covenants and/or agreements set
forth in Section 5.4 of this Loan Agreement.
Rent Roll. As to the Premises, a rent schedule in a form acceptable
to the Lender, including a Certification thereof, showing the legal and
trade name of each tenant, and for each tenant, the net rentable square
feet occupied, the lease expiration date, the rent payable (both base rent
and additional rent), right of first refusal, options, rights to move
tenants, security deposits and any other information requested by the
Lender and, as to any annual Rent Roll, copies of paid tax receipts for the
related fiscal year.
Rents and Profits. As defined in the Security Instrument.
Repair Escrow Account. Not Applicable.
Replacement Reserve Account. Not Applicable.
Replacements. Those repairs, replacements or improvements listed as
"Replacements" on Exhibit B hereto.
Required Accounting Standards. GAAP or such alternative accounting
standard as may be acceptable to the Lender, consistently applied.
Requirement(s) of Law. As to any Person, the organizational or
governing documents of such Person, and any statute, law, treaty, rule or
regulation or determination of an arbitrator or a court or other
Governmental Authority (including, without limitation, all requirements
relating to zoning, parking, ingress and egress, building setbacks, or use
of the Premises, all Hazardous Materials Laws, the Architectural Barriers
Act of 1968, the Rehabilitation Act of 1973, the Americans with
Disabilities Act of 1990, erosion control ordinances, storm drainage
control laws and doing business and/or licensing laws), in each case
applicable to or binding upon such Person or any of its property or to
which such Person or any of its property is subject.
Reserve Account(s). The Repair Escrow Account, the Tax and Insurance
Reserve Account, the Replacement Reserve Account, and all other reserve
and/or escrow accounts established or required pursuant to the provisions
of the Loan Documents, including, without limitation, pursuant to the
Program Rider.
Responsible Officer. As to any Person, the general partner (if the
general partner is not an individual, then the chief executive officer, the
chief financial officer or the president or similar individual of the
general partner), the chief executive officer, the chief financial officer
or the president or similar individual of such Person.
Security Instrument. The deed of trust, mortgage, deed to secure debt
or other instrument, dated as of even date herewith, executed by the
Borrower granting to the Lender a first priority lien or title priority on
the Premises, the Intangible Personalty and the Rents and Profits to secure
the obligations of the Borrower under the Loan Documents, together with all
prior instruments amended, modified, renewed, extended, restated,
supplemented, replaced or substituted thereby.
Special Purpose Entity. An entity whose structure and organizational
and governing documents are in form and substance acceptable to the Lender
and which satisfies all of the following requirements:
(i) it conducts its business solely in its own name through
its duly authorized officers or agents so as not to mislead others as
to the identity of the entity with which those others are concerned,
and particularly uses its best efforts to avoid the appearance of
conducting business on behalf of any Affiliate or that its assets are
available to pay the creditors of any Affiliate. Without limiting the
generality of the foregoing, all oral and written communications,
including, without limitation, letters, invoices, purchase orders,
contracts, statements and loan applications, are made solely in its
name;
(ii) it maintains its records and books of account separate
from those of its Affiliates;
(iii) it obtains proper authorization required by any
Requirement of Law of all action requiring such authorization;
(iv) it obtains proper authorization from its shareholders,
partners or members, as the case may be, of all action requiring such
approval;
(v) it pays its Operating Expenses and liabilities from its
own funds;
(vi) its Financial Statements disclose the effects of its
transactions in accordance with Required Accounting Standards, and
disclose that its assets are not available to pay creditors of any
Affiliate;
(vii) its resolutions, agreements and other instruments
authorizing and underlying the transactions described in this
Agreement and in the other Loan Documents are maintained by it as its
official records, separately identified and held apart from the
records of any Affiliate;
(viii) it maintains an arm's-length relationship with its
Affiliates and does not hold itself out as being liable for the debts
of any Affiliate;
(ix) it keeps its assets and its liabilities wholly separate
from those of all other entities, including, but not limited to its
Affiliates except, in each case, as contemplated by the Loan
Documents; and
(x) its sole assets are the Premises, the Intangible
Personalty and the Rents and Profits.
State. The state in which the Premises is located.
Subordination Agreement. A subordination, non-disturbance and
attornment agreement in form and substance acceptable to the Lender.
Survey. A survey of the Land and Improvements (as-built) made by a
civil engineer or surveyor, duly licensed or registered in the State, dated
as of a date acceptable to the Lender, containing a surveyor's
certification acceptable to the Lender for the benefit of the Borrower and
the Lender (which certification shall, among other things, indicate whether
or not any of the Land or Improvements are located within an area
identified as having "special flood hazards" as such term is used in the
Flood Disaster Protection Act of 1973), together with its successors and
assigns, as their interests may appear, and otherwise in form and substance
acceptable to the Lender.
Tangible Personalty. As defined in the Security Instrument.
Tax and Insurance Reserve Account. An Eligible Account established
and maintained pursuant to the terms of this Loan Agreement.
Tenant Estoppel Certificate. A tenant estoppel certificate in form
and substance acceptable to the Lender.
Section 1.2 Other Definitional Provisions.
(a) The words "hereof," "herein" and "hereunder" and words of
similar import when used in this Agreement shall refer to this
Agreement as a whole and not to any particular provision of this
Agreement. The word "including" when used in this Agreement is
intended to be illustrative and not exclusive. Section, subsection,
paragraph, clause, exhibit, schedule, addendum and rider references
contained in this Agreement are references to sections, subsections,
paragraphs, clauses, exhibits, schedules, addenda and riders in or to
this Agreement unless otherwise specified. The captions herein are
inserted only as a matter of convenience and for reference and in no
way define, limit or describe the scope of this Loan Agreement nor the
intent of any provision hereof. The terms set forth herein are
applicable to the singular as well as the plural forms of such terms
and to the masculine as well as the feminine and neuter genders of
such terms.
(b) All references in this Loan Agreement or any other Loan
Document to any Loan Document, agreement, contract, license, document
or instrument shall mean such Loan Document, agreement, contract,
license, document or instrument as amended, modified, renewed,
extended, restated, supplemented, reissued, and/or substituted from
time to time.
(c) All references or citations in this Loan Agreement or any
other Loan Document to any statute, law, treaty, rule, regulation or
other Requirement of Law shall mean such statute, law, treaty, rule,
regulation or other Requirement of Law as amended, modified,
supplemented, replaced or substituted from time to time.
Section 1.3 Incorporation by Reference of Commitment.
All of the terms and conditions of the Commitment are hereby
incorporated herein by reference, as if such terms and conditions were set
forth herein in their entirety, but in the event of any conflict or
discrepancy between the terms and/or conditions of this Loan Agreement and
those of the Commitment, the terms and conditions of this Loan Agreement
shall control.
ARTICLE II
THE LOAN
Section 2.1 Loan Terms.
Subject to the terms and conditions of this Loan Agreement and the
other Loan Documents, the Lender agrees to make the Loan to the Borrower in
the principal sum of the Loan Amount, such borrowing to be evidenced by the
Note and the other Loan Documents.
Section 2.2 Interest.
The outstanding principal balance of the Loan shall bear interest, and
principal and interest shall be repayable, in accordance with the terms of
the Note.
Section 2.3 Term.
The Loan shall be due and payable in full, unless accelerated sooner
pursuant to the terms of this Loan Agreement, on the maturity date set
forth in the Note.
Section 2.4 Payments.
All payments by the Borrower under the Loan shall be made in
accordance with the terms of the Note.
ARTICLE III
CONDITIONS PRECEDENT TO LOAN
The obligation of the Lender to make the Loan is subject to the
Lender's satisfaction, by proper evidence, execution and/or delivery to the
Lender of each of the following items, each in form and substance
satisfactory to the Lender and the Lender's counsel:
Section 3.1 Loan Documents.
Each of the Loan Documents.
Section 3.2 Brokerage Commissions.
All brokerage commissions, finder's fees or similar compensation in
connection with the purchase of the Premises (if all or any portion of the
Premises is being purchased with Loan proceeds), the making of the Loan, or
the transactions contemplated by the Loan Documents have been paid in full.
Section 3.3 Title Evidence.
An original signed title commitment in form and substance satisfactory
to the Lender, for a standard ALTA mortgagee policy as to the Premises from
a company or from companies approved by the Lender (including any
reinsurance agreements and endorsements required by the Lender), providing
coverage for the full principal amount of the Loan, containing such
coverages and endorsements as may be required by the Lender, together with
copies of all recorded documents creating exceptions to such policy.
Section 3.4 Survey.
Two (2) originals of the Survey.
Section 3.5 Insurance.
Each policy of insurance required by this Loan Agreement is in full
force and effect on the Closing Date.
Section 3.6 Authority Documents.
(a) Organizational Documents. As applicable, a certified copy
of each limited partnership agreement, limited partnership
certificate, partnership agreement, articles of incorporation, bylaws,
shareholder agreements, articles of organization and operating
agreement of the Borrower and each general partner, member or
shareholder of the Borrower, with all amendments, modifications,
supplements and restatements thereto.
(b) Assumed Name Certificate. A certified copy of each assumed
name certificate, if any, of the Borrower.
(c) Good Standing Certificates. Good standing certificates, or
their equivalent, issued by the Secretary of State and all other
appropriate offices of the state organization of the Borrower and
evidence satisfactory to the Lender of the Borrower's authorization to
do business in the State if the state of the Borrower's organization
is other than the State.
(d) Resolutions and Consents. Certified resolutions and/or
consents authorizing the Borrower to enter into the Loan Documents.
Section 3.7 Financial Statements and Operating Statements.
Financial Statements of the Borrower as of the end of the most recent
fiscal year, together with Operating Statements for the period from the
beginning of the current fiscal year and ending on a date not more than
forty-five (45) days prior to the Closing Date.
Section 3.8 Opinion.
An opinion of independent counsel to the Borrower in form and
substance acceptable to the Lender, dated as of the Closing Date.
Section 3.9 Compliance with Laws.
The Premises and the Intangible Personalty, and the intended uses
thereof, are in compliance with all Requirements of Law.
Section 3.10 Agreements.
Copies of all operating agreements, service contracts, labor
contracts, license agreements and equipment leases, if any, relating to the
Borrower's ownership and operation of the Premises. Copies, including a
Certification thereof, of all franchise agreements and purchase contracts,
if any, relating to the Premises.
Section 3.11 Taxes.
The Land and the Improvements are separately assessed for tax
purposes, together with tax parcel identification numbers, tax rates,
estimated tax values and the identities of the taxing authorities.
Section 3.12 Utilities.
The availability and suitability of the water, storm water, electric,
oil, natural gas, sewer and telephone utilities needed to properly service
the Premises in its intended use.
Section 3.13 Reserve Accounts.
The establishment of each Reserve Account with balances equal to any
Initial Reserve Deposit thereto required by this Loan Agreement (including
the Program Rider) or any of the other Loan Documents.
Section 3.14 Engineering Report.
An Engineering Report.
Section 3.15 Certificate of Occupancy and Other Permits.
Such certificates of occupancy, permits and licenses as the Lender may
require to evidence that the Premises is suitable for occupancy and use.
Section 3.16 Environmental Assessment and O&M Program.
An Environmental Assessment of the Premises. The Borrower shall
furnish and adopt an O&M Program with respect to all Hazardous Materials,
if any, identified in such Environmental Assessment or as otherwise
required by the Lender.
Section 3.17 Appraisal.
An Appraisal.
Section 3.18 Equity.
The Borrower's equity as of the Closing Date is acceptable to the
Lender.
Section 3.19 Management Agreement.
A copy of the Management Agreement for the Premises in form and
substance satisfactory to the Lender, including a Certification thereof.
The Management Agreement and all management fees thereunder shall be
subordinate to the Loan.
Section 3.20 Special Purpose Entity.
The Borrower is a Special Purpose Entity.
Section 3.21 Miscellaneous.
All other documents or items set forth in the Commitment (including
all supplemental and special conditions included in the Commitment) or
otherwise required by the Lender.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
To induce the Lender to enter into this Agreement and to make the
Loan, the Borrower hereby represents and warrants to the Lender (for
itself, but not otherwise) on the Closing Date as follows:
Section 4.1 Existence; Compliance with Law.
The Borrower and each Borrower Principal (when not an individual) (a)
is duly organized, validly existing and in good standing under the laws of
the jurisdiction of its organization, (b) has the power and authority, and
the legal right, to own and operate its property, to lease the property it
operates as lessor and to conduct the business in which it is currently
engaged, (c) is duly qualified to do business in and is in good standing
under the laws of each jurisdiction where its ownership, lease or operation
of property or the conduct of its business requires such qualification and
(d) is in compliance with all Requirements of Law.
Section 4.2 Equity Interests.
The owners (beneficial and otherwise) of all of the Equity Interests
in the Borrower are as set forth in Exhibit A and have been duly
authorized, are validly issued and outstanding, fully paid and non-
assessable. There are no outstanding options or other rights pertaining to
the Equity Interests in the Borrower, and no voting trust or similar
agreement affecting either ownership of or the right to vote such Equity
Interests (except for those items detailed in the Borrower's partnership or
operating agreement or certificate of incorporation).
Section 4.3 Power; Authorization; Enforceable Obligations.
The Borrower has all requisite legal power and authority, and the
legal right, to make, deliver and perform each Loan Document to which it
is, or is to be, a party and to borrow hereunder, and has taken all
necessary corporate, partnership or company action (as the case may be) to
authorize the execution, delivery and performance of each Loan Document to
which it is, or is to be, a party and to authorize the borrowings on the
terms and conditions of this Agreement and the Note. No consent or
authorization of, filing with, notice to or other act by or in respect of,
any Governmental Authority or any other Person is required in connection
with the borrowings hereunder or with the execution, delivery, performance,
validity or enforceability of any Loan Document, except to the extent
specified in any such Loan Document. Each Loan Document has been (or will
be) duly executed by, and delivered on behalf of the Borrower. Each Loan
Document constitutes (or when executed and delivered will constitute) the
legal, valid and binding obligation, enforceable against the Borrower, in
accordance with its terms, except as enforceability may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium,
sequestration, liquidation, consolidation or similar laws affecting the
enforcement of creditors' rights generally and by general equitable
principles (whether enforcement is sought by proceedings in equity or at
law).
Section 4.4 No Legal Bar.
The execution, delivery and performance of the Loan Documents will not
violate any Requirement of Law applicable to the Borrower or any
contractual obligation, security, agreement, instrument, license or other
undertaking by which the Borrower is bound and will not result in, or
require, the creation or imposition of any Lien on any of their properties
or revenues pursuant to any such Requirement of Law or contractual
obligation, security, agreement, instrument, license or other undertaking.
Section 4.5 No Litigation.
No litigation, investigation or proceeding of or before any arbitrator
or Governmental Authority is pending or, to the knowledge of the Borrower,
threatened against any of them or any of their properties or revenues, or
with respect to any Loan Document or any of the transactions contemplated
thereby, and the Borrower is not a surety on any bond through which a Lien
might be created superior to the Security Instrument.
Section 4.6 No Default.
The Borrower is not in default, under or with respect to any
contractual obligation, security, agreement, instrument, license or other
undertaking by which the Borrower is bound which is in excess of $10,000.
No Default Condition or Event of Default has occurred and is continuing.
Section 4.7 Solvency; Fraudulent Conveyance.
The Borrower is solvent and will not be rendered insolvent by the
transactions contemplated hereby and, after giving effect to such
transactions, will not be left with an unreasonably small amount of capital
with which to engage in its business. The Borrower does not intend to
incur, and does not believe that it has incurred, debts beyond its ability
to pay such debts as they mature. The Borrower has not commenced or filed
nor contemplates the commencement or filing of any bankruptcy, insolvency,
reorganization, moratorium, sequestration, liquidation, consolidation or
similar proceedings or the appointment of a receiver, liquidator, assignee,
conservator, trustee, sequestrator or similar official in respect of it or
any of its assets. The amount of the Loan constitutes reasonably
equivalent value and fair consideration for the transfer to the Lender of
the interest in the Premises represented by the Security Instrument. The
Borrower is not transferring any interest in the Premises with any intent
to hinder, delay or defraud any of its creditors.
Section 4.8 Special Purpose Entity.
The Borrower is a Special Purpose Entity.
Section 4.9 Taxes.
The Borrower has filed or caused to be filed all tax returns which are
required to be filed and has paid all taxes shown to be due and payable on
said returns and on any assessments made against it and any of its property
and, to its knowledge, all other taxes, fees and other charges imposed on
it and any of its property by any Governmental Authority (other than any
the amount or validity of which are currently being contested in good faith
by appropriate proceedings and with respect to which reserves in conformity
with the Required Accounting Standards have been provided on its books).
No tax Lien has been filed with respect to any such tax, fee or other
charge. To its knowledge, no claim is being asserted with respect to any
such tax, fee or other charge which, in either case, could reasonably be
expected to have a material adverse change with respect to the Borrower or
the Premises.
Section 4.10 No Burdensome Restrictions.
The Borrower is not a party to or subject to any contractual
obligation, security, agreement, instrument, license or other undertaking
by which the Borrower is bound (other than the Loan Documents) which could
have a material adverse change on the business, properties, assets,
operations or condition, financial or otherwise, of it, or on the ability
of it to carry out its obligations hereunder or under the other Loan
Documents.
Section 4.11 Investment Company Act; Other Regulations.
The 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. The Borrower is not subject to regulation under
any Requirement of Law which limits its ability to incur Obligations, other
than as set forth herein or in the other Loan Documents.
Section 4.12 Subsidiaries.
The Borrower has no Subsidiaries.
Section 4.13 Title to Premises.
The Borrower is seized of the Land and Improvements (and any fixtures)
in fee, or is the owner of a leasehold interest in the Land and
Improvements (and any fixtures) pursuant to a Ground Lease, and has
marketable title to any appurtenant easements and has the right to convey
the same, that title to such property is free and clear of all encumbrances
except for the Permitted Encumbrances, and that it will warrant and defend
the title to such property (except for the Permitted Encumbrances) against
the claims of all Persons. As to the balance of the Premises, the Rents
and Profits and the Intangible Personalty, the Borrower represents and
warrants that it has marketable title to such property, that it has the
right to convey such property and that it will warrant and defend such
property against the claims of all persons or parties.
Section 4.14 Ownership of Personalty.
The Borrower owns, subject to no Lien other than the Lien of the
Security Instrument and the other Loan Documents, as appropriate, all of
the Personalty.
Section 4.15 Financial Statements.
As of the date of the most recent Financial Statement furnished to the
Lender, the Borrower had no material (a) indebtedness for borrowed money or
for the deferred purchase price of property or services, as evidenced by
bonds, notes or other similar instruments or agreements, (b) obligations as
a lessee under leases which shall have been or should be, in accordance
with the Required Accounting Standards, recorded as capital leases, (c)
obligations under direct or indirect guaranties in respect of, or any
obligations (contingent or otherwise) to purchase or otherwise acquire, or
otherwise to assure a creditor against loss in respect of, indebtedness or
any obligations of another of the kind referred to in clause (a) or (b)
above, (d) contingent liability or liability for taxes, or (e) long-term
lease or unusual forward or long-term commitment, including, without
limitation, any interest rate or foreign currency swap or exchange
transaction, which is not, to the extent required by the Required
Accounting Standards, reflected in the foregoing statements or in the notes
thereto. No sale, transfer or other disposition by the Borrower of any
material part of its business or property has occurred since the date of
such party's most recent Financial Statement furnished to the Lender.
Section 4.16 No Change.
There has been no development or event which has had or could
reasonably be expected to have a material adverse change (a) with respect
to the Borrower since the date of such party's most recent Financial
Statement furnished to the Lender, or (b) with respect to the Premises or
any portion of the Intangible Personalty since the date of the most recent
Operating Statements furnished to the Lender.
Section 4.17 Accuracy of Information.
(a) Each exhibit, Financial Statement, Operating Statement, Rent Roll,
document, book, record, report and other item of written information
furnished by the Borrower to the Lender in connection with the Loan
Documents is accurate as of its date and as of the date so furnished and
(b) all financial projections contained therein are based on reasonable and
stated assumptions, and no such document contains any material misstatement
of fact or omits to state a material fact.
Section 4.18 Principal Place of Business.
The Borrower's principal place of business and chief executive office
is at the location set forth in the first paragraph of this Loan Agreement
and it has not operated under any name other than its own name at any time
from the date of its formation.
Section 4.19 Taxpayer Identification Number.
The Borrower's taxpayer identification number is as set forth in the
Note.
Section 4.20 Insurance.
The Borrower does not know of and has not received any written notice
of any violation of any insurance policy term that remains uncured and, to
its best knowledge, it and the Premises and the use thereof materially
comply with all insurance policy terms.
Section 4.21 Mechanic's Liens, etc.
Except as have been paid for in full by the Borrower on or before the
Closing Date or as shall be paid prior to delinquency in the ordinary
course of the Borrower's business, no improvements or repairs have been
made to the Premises during the one hundred twenty (120) days preceding the
date hereof; there are no contracts not fully performed, and no outstanding
bills incurred, for labor or materials used in making improvements or
repairs on the Premises, or for services of architects, surveyors or
engineers incurred in connection therewith. The Borrower has made no
contract or arrangement of any kind whatsoever, the performance of which by
the other party thereto could give rise to a Lien on the Premises superior
to that of the Security Instrument.
Section 4.22 No Violation.
The Borrower has not received any notice of, and, to the best of its
knowledge is not in violation of any Requirement of Law, any Hazardous
Materials Law or any Governmental Action.
Section 4.23 ERISA.
(a) The Borrower is not an "employee benefit plan" as defined in
Section 3(3) of ERISA, which is subject to Title I of ERISA, (b) the assets
of the Borrower do not constitute "plan assets" of one or more such plans
within the meaning of 29 C.F.R. Section2510.3-101, (c) neither the Borrower
nor any of its general partners, members or shareholders, as the case may
be, have any trust or custodial relationship with the Lender or any
affiliate of the Lender with respect to any ERISA plan, and (d) neither the
Borrower nor any general partner, member or shareholder of the Borrower is
a participant in any governmental plan that has a trust or custodial
relationship with the Lender or any affiliate of the Lender. The Borrower
(i) is not a "governmental plan" within the meaning of Section 3(32) of
ERISA and (ii) transactions by or with the Borrower are not subject to
Requirements of Law regulating investments of and fiduciary obligations
with respect to government plans.
Section 4.24 O&M Program.
Not Applicable.
ARTICLE V
COVENANTS AND AGREEMENTS
Section 5.1 Affirmative Covenants of the Borrower.
During any period in which the Loan is outstanding, the Borrower
agrees that it will:
(a) Use of Loan Funds. Cause all Loan proceeds to be used for
the purposes set forth in a loan closing statement approved by the
Lender and use all excess Loan proceeds disbursed to the Borrower only
for lawful business purposes permitted under the Borrower's
organizational documents. No part of the proceeds of the Loan will be
used for "purchasing" or "carrying" any "margin stock" within the
respective meanings of each of the quoted terms under Regulation U of
the Board of Governors of the Federal Reserve System as now and from
time to time hereafter in effect or for any purpose which violates the
provisions of the Regulations of such Board of Governors. If
requested by the Lender, the Borrower will furnish to the Lender a
statement to the foregoing effect in conformity with the requirements
of FR Form U-1 referred to in said Regulation U. No part of the
proceeds of the Loan has been used in any manner that could result in
a violation of Regulations G, T, V or X of the Board of Governors of
the Federal Reserve System.
(b) Payment. Pay when due all sums owing to the Lender and
others in accordance with the terms of the Loan Documents.
(c) Fees, Costs and Expenses. Pay when due all fees, costs and
expenses required to be paid by the Borrower pursuant to the terms of
the Commitment or any of the other Loan Documents, including without
limitation, reasonable attorneys fees and other fees, costs and
expenses of the Lender in connection with the enforcement of the
Lender's rights under the Loan Documents. Any such amounts paid by
the Lender shall be due and payable upon demand.
(d) Condition of Premises. Keep and maintain the Premises in
good order, condition and repair and shall make, as and when the same
shall become necessary, all repairs and maintenance necessary or
appropriate in order to keep the Premises from deteriorating.
(e) Compliance. Comply with all (i) building, zoning, fire,
health, environmental, disability and use laws (including, but not
limited, to all state and local handicapped access laws, the
Architectural Barriers Act of 1968, the Fair Housing Amendments Act of
1988, the Rehabilitation Act of 1973, the Americans with Disabilities
Act of 1990 and similar laws and ordinances), codes, ordinances, rules
and regulations, to the extent required by applicable Governmental
Authorities, (ii) covenants and restrictions of record and (iii)
easements which are in any way applicable to the Premises or any part
thereof and the use or enjoyment thereof.
(f) Inspection. Subject to the rights of any tenants of the
Premises under their leases, permit the Lender and/or its authorized
agents to enter upon the Premises during normal working hours and as
often as the Lender desires, for the purpose of inspecting the
Improvements specifically and the condition and operation of the
Premises generally. In connection therewith, the Borrower shall
permit the Lender and the Lender's representatives (including an
independent Person such as an engineer, architect, or inspector) or
third parties making Immediate Repairs, Replacements or Additional
Repairs or Replacements to enter onto the Premises during normal
business hours (subject to the rights of any tenants of the Premises
under their leases) to inspect the progress of any Immediate Repairs,
Replacements or Additional Repairs or Replacements and all materials
being used in connection therewith, to examine all plans,
specifications and shop drawings relating to such Immediate Repairs,
Replacements or Additional Repairs or Replacements which are or may be
kept at the Premises, and to complete any Immediate Repairs,
Replacements or Additional Repairs or Replacements. The Borrower
agrees to use its best efforts to cause all contractors,
subcontractors, agents, architects and inspectors reasonably to
cooperate with the Lender and the Lender's representatives or such
other Persons described above in connection with inspections or the
completion of Immediate Repairs, Replacements or Additional Repairs or
Replacements.
(g) Reimbursement. The Borrower agrees that if it shall fail to
pay prior to delinquency any tax, assessment or charge levied or
assessed against the Premises (other than the amount or validity of
which are currently being contested in good faith by appropriate
proceedings and with respect to which reserves in conformity with the
Required Accounting Standards have been provided on its books) or any
utility charge, whether public or private, or any insurance premium or
if it shall fail to procure the Insurance required hereunder and cause
the delivery of the insurance certificates as required herein, or if
it shall fail to pay any other charge or fee described herein, then
the Lender, at its option, may pay, procure or cause the delivery of
the same. The Borrower will reimburse the Lender upon demand for any
sums of money paid by the Lender pursuant to this Section, together
with interest on each such payment at the default rate set forth in
the Note and all such sums and interest thereon shall be secured
hereby.
(h) Environmental Assessment. Provide to the Lender from time-
to-time, at the Borrower's sole fee, cost and expense, if the Lender
shall ever have reason to believe that any Hazardous Material affects
the Premises, or if any Governmental Action is made or threatened, or
if an Event of Default shall have occurred, an Environmental
Assessment, which Environmental Assessment shall have been ordered by
the Borrower within ten (10) days after the Lender's request and which
shall be delivered to the Lender promptly after the date of the
Lender's request. At all other times, the Lender may request an
Environmental Assessment to be provided by the Borrower at the
Lender's expense. The Borrower will cooperate with each consulting
firm making any Environmental Assessment and will promptly supply to
the consulting firm, from time to time upon request, all information
available to the Borrower to facilitate the completion of the
Environmental Assessment. If the Borrower fails to furnish the Lender
within ten (10) days after the Lender's request with a copy of an
agreement with an acceptable environmental consulting firm to provide
such Environmental Assessment, or if the Borrower fails to order such
Environmental Assessment within ten (10) days after the Lender's
request, the Lender may cause any such Environmental Assessment to be
made at the Borrower's fee, cost, expense and risk. The Lender may
disclose to interested parties any information the Lender ever has
about the environmental condition or compliance of the Premises, but
shall be under no duty to disclose any such information except as may
be required by law. The Lender shall be under no duty to make any
Environmental Assessment of the Premises, and in no event shall any
such Environmental Assessment by the Lender be or give rise to a
representation that any Hazardous Material is or is not present on the
Premises, or that there has been or shall be compliance with any
Hazardous Materials Law, nor shall the Borrower or any other Person be
entitled to rely on any Environmental Assessment made by the Lender or
at the Lender's request. The Lender owes no duty of care to protect
the Borrower or any other Person against, or to inform them of, any
Hazardous Material or other adverse condition affecting the Premises.
(i) Appraisal. At all times during the term of the Loan,
cooperate with the Lender and use its best efforts to assist the
Lender in obtaining an Appraisal of the Premises, and will promptly
supply to the Lender, from time to time upon request, all information
available to the Borrower to facilitate the completion of the
Appraisal. If any Event of Default occurs, or if a casualty loss or
governmental taking occurs and results in insurance or eminent domain
proceeds in excess of $50,000.00, the Lender may, in its reasonable
discretion, choose the appraiser, but the Borrower shall be
responsible for any fees payable to said appraiser in connection with
an Appraisal of the Premises. Under all other circumstances, the
appraiser performing any such Appraisal shall be engaged by the
Lender, and the Lender shall be responsible for any fees payable to
said appraiser in connection with an Appraisal of the Premises.
(j) Surveys. Following any change in the exterior configuration
of the Improvements or any rezoning affecting the Premises, provide
the Lender with such additional Surveys as requested by the Lender.
(k) Other Tests. Promptly submit to the Lender copies of
reports of all physical tests at any time made on the Land, the
Improvements or the materials to be incorporated into the Improvements
and shall, at the Borrower's expense, cause to be made such additional
tests from time to time as the Lender may reasonably require after any
change in the Premises or receipt by the Lender of any such report.
(l) Taxes and Fees. Except as otherwise provided herein, pay
prior to delinquency all taxes, general and special assessments (other
than the amount or validity of which are currently being contested in
good faith by appropriate proceedings and with respect to which
reserves in conformity with the Required Accounting Standards have
been provided on its books), permit fees, inspection fees, license
fees, water and sewer charges, franchise fees and equipment rents
against it or the Premises, and the Borrower, upon request of the
Lender, will submit to the Lender receipts evidencing said payments.
(m) Financial Statements and Operating Statements. Furnish, or
cause to be furnished to the Lender, annual Financial Statements for
itself. Monthly Operating Statements shall be submitted to the Lender
when requested by the Lender and for any period during which any Event
of Default is continuing. Operating Statements shall be delivered to
the Lender within forty-five (45) days of the end of each of the
Borrower's fiscal quarters, and an annual Financial Statements shall
be submitted to the Lender within ninety (90) days (or one
hundred twenty (120) days if such annual Financial Statements are
audited) of the Borrower's fiscal year end in lieu of an Operating
Statement for the Borrower's fourth fiscal quarter. Without limiting
any other rights available to the Lender under this Loan Agreement or
any of the other Loan Documents, in the event the Borrower shall fail
to timely furnish the Lender any Financial Statement in accordance
with this subsection, the Borrower shall promptly pay to the Lender a
penalty in the amount of $1,000.00 for each such failure.
(n) Books and Records. Keep and maintain at all times at the
Premises, at the Borrower's address set forth herein, at the property
manager's address, or at such other place as the Lender may approve in
writing, complete and accurate books of accounts and records adequate
to reflect correctly the results of the operation of the Premises and
copies of all written contracts, leases and other instruments which
affect the Premises (including, but not limited to, all bills,
invoices and contracts for utilities, waste management service,
telephone service and management services, rent registrations and all
materials filed with any Governmental Authority where applicable).
Such books, records, contracts, leases and other instruments shall be
subject to examination and inspection at any time by the Lender upon
reasonable prior notice.
(o) Further Assurances. The Borrower shall furnish or cause to
be furnished such further documentation or information (including
without limitation, amendments, replacements, corrections, deletions
or additions to the Loan Documents or any other materials furnished to
the Lender in connection with the Loan) which is (i) reasonably
required to enable the Lender to sell the Loan, or (ii) deemed
necessary or appropriate by the Lender in the exercise of its rights
under any of the Loan Documents or to perfect, protect, maintain,
preserve, continue and/or extend any Lien granted to the Lender under
the Security Instrument or any other Loan Document, provided, however,
that the Borrower shall not be required to do anything that (A) has
the effect of (I) changing the essential economic terms of the Loan
set forth in the Loan Documents or (II) imposing greater liability
under the Loan Documents, or (B) results in any substantial fee, cost
or expense to the Borrower. In addition, the Borrower shall furnish
or cause to be furnished such further documentation and information
(including without limitation, amendments, replacements, corrections,
deletions and additions to the Loan Documents and other materials
furnished to the Lender in connection with the Loan) deemed necessary
or appropriate by the Lender to correct patent mistakes in the Loan
Documents, materials relating to title insurance policies and other
insurance required hereunder, and the funding of the Loan, provided
that any such further documentation or information shall be at the
sole fee, cost and expense of the Lender.
(p) Payment of Operating Expenses. Pay all Operating Expenses,
except to the extent that the Lender is obligated to pay any Operating
Expense on behalf of the Borrower from the Tax and Insurance Reserve
Account.
(q) Payment of Recurring Capital Expenditures. Pay all
expenditures with respect to the Premises related to capital repairs,
replacements and improvements (other than Replacements) performed from
time to time.
(r) ERISA. Deliver to the Lender such certifications or other
evidence from time to time throughout the term of the Loan, as
requested by the Lender in its reasonable discretion, that (i) the
Borrower is not an "employee benefit plan," a "governmental plan"
and/or subject to state statutes regulating investments and fiduciary
obligations with respect to governmental plans; and (ii) one or more
of the following circumstances is true:
(A) Less than twenty-five percent (25%) of all Equity
Interests in the Borrower are held by "benefit plan investors"
within the meaning of 29 C.F.R. Section 2510.3-101(f)(2); and/or
(B) The Borrower qualifies as an "operating company"
or a "real estate operating company" within the meaning of 29
C.F.R. Section 2510.3-101(c) or (e).
(s) Actions and Proceedings. Promptly notify the Lender in
writing of any action or proceeding relating to any condemnation or
other taking, whether direct or indirect, of the Premises or any
portion thereof, or purporting to affect the Premises, any Loan
Document or any right of the Lender hereunder or thereunder. In each
such action or proceeding, the Borrower shall, unless otherwise
directed by the Lender in writing, appear in and prosecute or defend
any such action or proceeding. The Borrower hereby further authorizes
the Lender to participate and appear in (at the Borrower's expense,
including without limitation, the Lender's reasonable attorney's fees)
any action or proceeding relating to any condemnation or other taking
of the Premises, whether direct or indirect, and, following an Event
of Default, to settle or compromise any claim in connection with such
condemnation or other taking.
(t) Completion of Immediate Repairs, Replacements and Additional
Repairs or Replacements.
(i) The Borrower shall commence the Immediate Repairs
immediately following the execution of this Agreement (or as soon
thereafter as weather reasonably shall permit) and shall at all times
thereafter diligently pursue the completion of all Immediate Repairs.
The Borrower shall complete all Immediate Repairs no later than twelve
(12) months after the date of this Agreement. The Borrower covenants
and agrees that each of the Immediate Repairs, Replacements and
Additional Repairs or Replacements and all materials, equipment,
fixtures, and any other item comprising a part of any Immediate
Repair, Replacement or Additional Repair or Replacement shall be
constructed, installed or completed, as applicable, free and clear of
all mechanic's, materialman's or other liens (except for those liens
existing on the date of this Agreement which have been approved in
writing by the Lender).
(ii) If the Lender determines, in its reasonable discretion,
that Additional Repairs or Replacements are advisable in order to keep
the Premises in good order and repair, the Lender may send the
Borrower written notice of the need for making such Additional Repairs
or Replacements. The Borrower shall promptly commence making such
Additional Repairs or Replacements. If the Borrower fails to commence
such Additional Repairs or Replacements within thirty (30) days after
such notice and diligently pursue completion of such Additional
Repairs or Replacements, such failure shall be an Event of Default
under this Loan Agreement, and, in addition to all other rights the
Lender may have under the Loan Documents upon an Event of Default, the
Lender may contract with third parties to make such Additional Repairs
or Replacements and may in its sole discretion demand payment for such
Additional Repairs or Replacements from the Borrower.
(iii) In the event the Lender determines in its reasonable
discretion that any Immediate Repair, Replacement or Additional Repair
or Replacement has not been completed in a workmanlike and timely
manner, the Lender shall have the option to proceed under existing
contracts or to contract with third parties to complete such Immediate
Repair, Replacement or Additional Repair or Replacement and to demand
payment for such Immediate Repair, Replacement or Additional Repair or
Replacement from the Borrower.
(iv) In order to facilitate the Lender's completion or making
of the Immediate Repairs, Replacements or Additional Repairs or
Replacements, the Lender is granted the irrevocable right to enter
onto the Premises and perform any and all work and labor necessary to
complete or make the Immediate Repairs, Replacements or Additional
Repairs or Replacements and employ watchmen to protect the Premises
from damage, loss and/or theft. All sums so expended by the Lender
shall be deemed to have been advanced to the Borrower and secured by
the Security Instrument and the other Loan Documents.
(v) All Immediate Repairs, Replacements and Additional Repairs
or Replacements shall comply with all Requirements of Law and
applicable insurance requirements including, without limitation,
applicable building codes, special use permits, environmental
regulations, and requirements of insurance underwriters.
(u) Program Rider. Comply with all covenants and agreements set
forth in the Program Rider.
Section 5.2 Negative Covenants of the Borrower.
During any period in which the Loan is outstanding, the Borrower
agrees that it will not:
(a) Sale or Encumbrance of Personalty. Sell, encumber or
otherwise dispose of any of the Personalty except (i) to incorporate
Tangible Personalty into the Improvements or replace Tangible
Personalty with goods of quality and value at least equal to that
replaced, or (ii) for the sale, disposal or use of inventory, if any,
in the ordinary course of the Borrower's business at the Premises;
provided, however, in the event the Borrower sells or otherwise
disposes of any of the Personalty, the Lender's security interest in
the proceeds of the Personalty shall continue pursuant to the Security
Instrument and the other Loan Documents, as appropriate.
(b) Construction. Construct or permit the construction of any
improvements on the Premises other than Immediate Repairs or
Replacements or as otherwise required hereunder or previously
consented to in writing by the Lender, which consent shall not be
unreasonably withheld, conditioned or delayed.
(c) Change in Ownership; Identity of the Borrower. Permit any
sale, transfer, assignment or other disposition of, or grant or create
any Lien on, any of the following interests in the Borrower, except by
inheritance, devise, bequest or by operation of law upon the death of
a natural person:
(i) General Partnerships and Joint Ventures. If the Borrower
is a general partnership or a joint venture, (A) any partnership
interest in the Borrower, or (B) any interest of a joint venturer in
the Borrower;
(ii) Limited Partnerships. If the Borrower is a limited
partnership, (A) any limited partnership interest in the Borrower
which, together with all other limited partnership interests in the
Borrower sold, assigned, transferred, pledged, encumbered or otherwise
disposed of since the Closing Date exceeds 49% of all of the limited
partnership interests in the Borrower, or (B) any general partnership
interest in the Borrower;
(iii) Limited Liability Companies and Limited Liability
Partnerships. If the Borrower is a limited liability company or
limited liability partnership, (A) any membership interest which,
together with all other membership interests in the Borrower sold,
assigned, transferred, pledged, encumbered or otherwise disposed of
since the Closing Date exceeds 49% of all of the membership interests
in the Borrower, or (B) any managing membership interest in the
Borrower;
(iv) Corporations. If the Borrower is a corporation, any
voting stock in the Borrower which, together with all other voting
stock of the Borrower sold, assigned, transferred, pledged, encumbered
or otherwise disposed of since the Closing Date exceeds 49% of all of
the voting stock of the Borrower; and/or
(v) Trusts. If the Borrower is a trust, any beneficial
interest in such trust which, together with all other beneficial
interests in the trust sold, assigned, transferred, pledged,
encumbered or otherwise disposed of since the Closing Date exceeds 49%
of all of the beneficial interests in the trust.
The Borrower hereby acknowledges to the Lender that (i) the identity
of the Borrower and the expertise available to the Borrower were and
continue to be material circumstances upon which the Lender has relied
in connection with, and which constitute valuable consideration to the
Lender for, the extending to the Borrower of the indebtedness
evidenced by the Note and (ii) any change in such identity or
expertise could materially impair or jeopardize the security for the
payment of the Note granted to the Lender by the Security Instrument
and the other Loan Documents, as appropriate.
(d) Prepayment of Rent. Accept any prepayment of rent or
installments of rent for more than two (2) months in advance without
the prior written consent of the Lender.
(e) No Other Name. Change its name or operate under any name
other than its name as set forth herein.
(f) No Restricted Payments. Make any payment or take any other
action constituting (i) any direct or indirect purchase or other
acquisition by the Borrower of Equity Interests of any other Person,
or any direct or indirect loan, advance (other than advances to
employees for moving and travel expenses, drawing accounts and
expenditures in the ordinary course of business) or capital
contribution by the Borrower to any other Person, including all debt
and any Obligation of any sort, and/or (ii) a payment or prepayment on
account of, or the setting apart of assets for a sinking or other
analogous fund for, the purchase, redemption, defeasance, retirement
or other acquisition of subordinated debt, either directly or
indirectly, whether in cash or in property or in obligations of any
Person.
(g) No Waste or Abandonment. Suffer, permit or commit waste,
permit impairment or deterioration of, or abandon, the Premises or any
portion thereof. The Borrower will not itself, or permit any tenant
or other Person to, remove, demolish or alter any improvement now
existing or hereafter erected on the Premises or any fixture,
equipment or machinery in or on the Premises except in connection with
any Repair or Replacement.
(h) Use of Premises. Except as required by applicable law, or
as otherwise permitted in writing by the Lender, allow any change in
the business use of all or any portion of Premises from the use
thereof as of the Closing Date.
Section 5.3 Environmental Covenants.
During any period in which the Loan is outstanding, the Borrower
agrees that it will:
(a) Not cause, permit or exacerbate any Prohibited Activities or
Conditions. The Borrower represents and warrants that it has not at
any time caused or permitted any Prohibited Activities or Conditions
except as set forth in the Environmental Assessment and that no
Prohibited Activities or Conditions exist or have existed on or under
the Premises. The Borrower shall take all appropriate steps to
prevent its employees, agents, and contractors, and any tenants from
causing, permitting, or exacerbating any Prohibited Activities or
Conditions. The Borrower shall not lease or allow the sublease or use
of all or any portion of the Premises to any tenant, subtenant or user
that, in the ordinary course of its business, would cause, permit, or
exacerbate any Prohibited Activities or Conditions, and all leases,
subleases and use agreements relating to the Premises shall contain
provisions sufficient to ensure that tenants, subtenants and users
shall not cause, permit or exacerbate any Prohibited Activities or
Conditions.
(b) Comply in a timely manner with, and cause all employees,
agents, and contractors of the Borrower and any other persons present
on the Premises to so comply with, (i) any O&M Program now or
hereafter in effect during the term of the Loan, and (ii) Hazardous
Materials Law, so as to minimize any economic loss to the Premises and
the Loan. The Borrower shall adopt an O&M Program with respect to any
Hazardous Materials identified in any Environmental Assessment or any
Governmental Action relating to the Premises, or as otherwise required
by the Lender with respect to the Premises. Any O&M Program shall be
performed by qualified contractors under the supervision of a
consulting engineer hired by the Borrower with the prior written
approval of the Lender which approval shall not be unreasonably
withheld, conditioned or delayed. All costs and expenses of any O&M
Program shall be paid by the Borrower, including without limitation
the charges of such contractors and consulting engineer and the
Lender's fees, costs and expenses incurred in connection with the
monitoring and review of the O&M Program and the Borrower's
performance thereunder.
(c) Promptly notify the Lender in writing of: (i) any
Governmental Action it becomes aware of (ii) any claim made or
threatened by any third party against the Borrower, the Lender, or the
Premises relating to loss or injury resulting from any occurrence or
condition on the Premises or any other real property that could
require the removal from the Premises of any Hazardous Materials or
cause any restrictions on the ownership, occupancy, transferability or
use of the Premises under Hazardous Materials Law or (iii) the
occurrence of any Prohibited Activities or Conditions. The Borrower
shall cooperate with any governmental inquiry, and shall comply with
any governmental or judicial order, request or directive which arises
from any alleged Prohibited Activities or Conditions; provided that
with respect to governmental requests or directives only, the Borrower
may contest or object to a good faith dispute regarding said request
or directive if the Borrower notifies the Lender in advance of said
contest or objection and as long as said contest or objection does not
result in a violation of law or fines assessed against the Premises.
(d) Pay promptly all costs and expenses incurred by the Lender
in connection with any Governmental Action, including but not limited
to costs of any environmental audits, studies, investigations or
remedial activities including but not limited to the removal of any
Hazardous Materials from the Premises. The Borrower also shall pay
promptly the costs of any environmental audits, studies,
investigations or the removal of any Hazardous Materials from the
Premises required by the Lender as a condition of its consent to any
sale or transfer of all or any part of the Premises or any interest
therein or required by the Lender following a reasonable determination
by the Lender that there may be Prohibited Activities or Conditions on
or under the Premises. Any such costs or expenses incurred by the
Lender (including but not limited to reasonable fees and expenses of
attorneys and consultants, whether incurred in connection with any
judicial or administrative process or otherwise) which the Borrower
fails to pay promptly shall become additional indebtedness secured by
the Security Instrument.
(e) HOLD HARMLESS, DEFEND AND INDEMNIFY THE LENDER AND ITS
OFFICERS, DIRECTORS, TRUSTEES, EMPLOYEES, AGENTS, AFFILIATES
(INCLUDING ANY PARENT CORPORATION), SUCCESSORS AND ASSIGNS, FROM AND
AGAINST ALL PROCEEDINGS, CLAIMS, DAMAGES, PENALTIES, FEES, COSTS AND
EXPENSES (INCLUDING WITHOUT LIMITATION REASONABLE FEES AND EXPENSES OF
ATTORNEYS AND EXPERT WITNESSES, INVESTIGATORY FEES, AND CLEANUP AND
REMEDIATION EXPENSES, WHETHER INCURRED IN CONNECTION WITH ANY JUDICIAL
OR ADMINISTRATIVE PROCESS OR OTHERWISE), ARISING DIRECTLY OR
INDIRECTLY FROM (i) ANY BREACH OF ANY REPRESENTATION, WARRANTY, OR
OBLIGATION OF THE BORROWER CONTAINED IN THIS SECTION 5.3 OR (ii) THE
PRESENCE OF HAZARDOUS MATERIALS ON OR UNDER THE PREMISES OR ANY
PROPERTY PROXIMATE TO THE PREMISES OR ANY GOVERNMENTAL ACTION ALLEGING
ANY SUCH PRESENCE, EXCEPT TO THE EXTENT THAT THE BORROWER CAN
CONCLUSIVELY PROVE BOTH THAT SUCH PRESENCE OR GOVERNMENTAL ACTION
ALLEGING SUCH PRESENCE WAS CAUSED SOLELY BY ACTIONS, CONDITIONS, OR
EVENTS THAT OCCURRED AFTER THE DATE THAT THE LENDER (OR ANY PURCHASER
AT A FORECLOSURE SALE) ACTUALLY ACQUIRED TITLE TO THE PREMISES AND
THAT SUCH PRESENCE OR GOVERNMENTAL ACTION ALLEGING SUCH PRESENCE WAS
NOT CAUSED BY THE DIRECT OR INDIRECT ACTIONS OF THE BORROWER OR ANY
PARTNER, MEMBER, PRINCIPAL, OFFICER, DIRECTOR, TRUSTEE OR MANAGER OF
THE BORROWER OR ANY EMPLOYEE, AGENT, CONTRACTOR OR AFFILIATE OF THE
BORROWER. THE OBLIGATIONS AND LIABILITIES OF THE BORROWER UNDER THIS
SECTION 5.3(e) SHALL SURVIVE ANY TERMINATION, SATISFACTION,
ASSIGNMENT, ENTRY OF A JUDGMENT OF FORECLOSURE OR DELIVERY OF A DEED
IN LIEU OF FORECLOSURE OF THE SECURITY INSTRUMENT.
Section 5.4 Recourse Covenants.
Except as otherwise expressly permitted by the Loan Documents, during
any period in which the Loan is outstanding, the Borrower agrees that it
will not, without the prior written consent of the Lender:
(a) Sale, Transfer, Conveyance or Disposal. Permit any sale,
transfer, conveyance or other disposal of the Premises, the Rents and
Profits or the Intangible Personalty.
(b) Other Financing and Liens. Engage in any other financing
with respect to the Borrower (except payables incurred in the ordinary
course of business and paid prior to delinquency), the Premises, the
Rents and Profits or the Intangible Personalty or grant any consensual
Liens against the Premises, the Rents and Profits or the Intangible
Personalty.
(c) Special Purpose Entity. Fail to be a Special Purpose
Entity.
Section 5.5 Insurance.
(a) Maintenance of Insurance. The Borrower shall, at its sole
cost and expense, keep in full force and effect all Insurance. The
Borrower shall furnish the Lender evidence acceptable to the Lender of
payment of all Insurance premiums at least thirty (30) days prior to
the due date thereof. If the Borrower fails to maintain any Insurance
required by this Agreement, the Lender may, at its option, procure
such Insurance, and the Borrower shall reimburse the Lender for the
amount of all premiums paid by the Lender thereon promptly upon demand
by the Lender, with interest thereon at the rate then provided by the
Note from the date paid by the Lender to the date of repayment, and
such sum shall be a part of the indebtedness secured by the Security
Instrument. The Lender shall not by the fact of approving, disap-
proving, accepting, preventing, obtaining or failing to obtain any
Insurance, incur any liability for or with respect to the amount of
Insurance carried, the form or legal sufficiency of insurance
contracts, solvency of insurance companies, or payment or defense of
lawsuits, and the Borrower, for itself, hereby expressly assumes full
responsibility therefor and all liability, if any, with respect
thereto.
(b) Insurance with Respect to Immediate Repairs, Replacements
and Additional Repairs or Replacements. In addition to and to the
extent not covered by any Insurance required under the Loan Documents,
the Borrower shall provide or cause to be provided worker's
compensation insurance, builder's risk, and public liability insurance
and other insurance to the extent required under applicable law in
connection with a particular Immediate Repair, Replacement or
Additional Repair or Replacement reasonably required by the Lender.
(c) Approved Insurers. Each of the Borrower's insurers shall be
an Approved Insurer. If any of the Borrower's insurers shall at any
time cease to be an Approved Insurer, then within thirty (30) days
after notice from the Lender to the Borrower, the Borrower will obtain
replacement Insurance or additional Insurance issued by one or more
other Approved Insurers.
(d) Form of Insurance Policies; Endorsements. All policies for
Insurance shall be in such form and with such endorsements as are
comparable to the forms of and endorsements to the Borrower's
insurance policies in effect on the date hereof or otherwise in
accordance with commercially reasonable standards applied by prudent
owners of similar businesses in the general vicinity of the Premises
and generally acceptable to institutional lenders for comparable
properties and risks. All such policies shall name the Lender, and
its successors and assigns, as additional insureds, mortgagees and/or
loss payees, as deemed appropriate by the Lender, and shall provide
that all proceeds are payable to the Lender and shall contain: (i) a
standard "non-contributory mortgagee" endorsement or its equivalent
relating, inter alia, to recovery by the Lender notwithstanding the
negligent or willful acts or omissions of the named Borrower; (ii) to
the extent available at commercially reasonable rates, a waiver of
subrogation endorsement as to the Lender; (iii) an endorsement
providing that no policy shall be impaired or invalidated by virtue of
any act, failure to act, negligence of, or violation of declarations,
warranties or conditions contained in such policy by the Borrower, the
Lender or any other named insured, additional insured, mortgagee or
loss payee, except for the willful misconduct of the Lender knowingly
in violation of the conditions of such policy; (iv) an endorsement
providing for a deductible per loss of an amount not more than that
which is customarily maintained by prudent owners of similar
businesses in the general vicinity of the Premises; (v) a provision
that such policies shall not be canceled or amended, including,
without limitation, any amendment reducing the scope or limits of
coverage, without at least thirty (30) days prior written notice to
the Lender in each instance, and (vi) effective waivers by the insurer
of all claims for insurance premiums against any loss payees,
additional insureds, mortgagees and named insureds (other than the
Borrower). Any insurance coverage relating to the Premises that is
carried by the Borrower in excess of the Insurance required hereunder
shall name the Lender, and its successors and assigns, as additional
insureds, mortgagees and/or loss payees, as appropriate, as provided
herein. A certificate executed by the Borrower's insurance consultant
and other evidence of Insurance required by the Lender shall be
delivered to the Lender not less than ten (10) days prior to the
expiration date of any of the policies for Insurance required to be
maintained hereunder which certificate and other evidence shall
certify payment of applicable premiums for renewal and replacement
policies. The Borrower may effect any Insurance required hereunder
through blanket insurance policies. The Borrower shall deliver to the
Lender certified copies of all policies for Insurance which shall be
taken out upon the Premises while any part of the Loan shall remain
unpaid.
(e) Compliance with Insurance Policy Terms. The Borrower shall
comply with all terms of policies for Insurance and shall not bring or
keep or permit to be brought or kept any article upon the Premises or
cause or permit any condition to exist thereon which would be
prohibited by or could invalidate any Insurance required hereunder.
ARTICLE VI
RESERVE ACCOUNTS
Section 6.1 Establishment of Reserve Accounts.
On or before the Closing Date, the Lender shall establish each Reserve
Account. Each Reserve Account shall be under the sole dominion and control
of the Lender.
Section 6.2 Initial Reserve Deposits.
On the Closing Date, the Borrower shall pay to the Lender for deposit
into each Reserve Account any Initial Reserve Deposit applicable to such
Reserve Account.
Section 6.3 Monthly Reserve Deposits.
On each Payment Date, the Borrower shall pay to the Lender for deposit
into each Reserve Account any Monthly Reserve Deposit applicable to such
Reserve Account. The Lender may, upon written request from the Borrower,
waive any requirement for the payment of a Monthly Reserve Deposit,
provided however, that any such waiver by the Lender of a requirement that
the Borrower pay such Monthly Reserve Deposit may be revoked by the Lender,
in the Lender's sole discretion, at any time upon notice in writing to the
Borrower.
Section 6.4 Adjustments to Monthly Reserve Deposit to the Replacement
Reserve Account.
Not Applicable.
Section 6.5 Permitted Investments, Earnings, Charges and Annual
Accounting.
(a) Permitted Investments. The Lender may invest and reinvest,
or cause to be invested or reinvested, all or any portion of any funds
on deposit in any Reserve Account in Permitted Investments. The
maturities of the Permitted Investments on deposit in any Reserve
Account shall be selected and coordinated to become due not later than
the day before any disbursements from any Reserve Account must be
made. All such Permitted Investments shall be held in the name and be
under the sole dominion and control of the Lender, to the extent
permitted by applicable laws, and no Permitted Investment shall be
made unless the Lender shall perfect its first priority Lien in such
Permitted Investment and, to the extent permitted by applicable laws,
the Lender shall have sole possession and control over each such
Permitted Investment and the income thereon, and any certificate or
other instrument or document evidencing any such investment shall be
delivered directly to the Lender, together with any document of
transfer necessary to transfer title to such investment to the Lender.
The Lender shall not have any liability (other than for the Lender's
gross negligence or willful misconduct) for any loss in investments of
funds in any Reserve Account that are invested in Permitted
Investments and no such loss shall affect the Borrower's obligation to
(i) make any payment hereunder, under the Security Instrument, the
Note or any other Loan Document, or (ii) fund, or have liability for
funding, any Reserve Account. The Borrower agrees that it shall
include all interest, earnings or profits on Permitted Investments of
funds on deposit in any Reserve Account as its income (and, if the
Borrower is a partnership or other pass-through entity, the partners,
members or beneficiaries of the Borrower, as the case may be), and
shall be the owner of such accounts for federal and applicable state
and local tax purposes, except to the extent the Lender retains such
interest, earnings or profits for its own account in accordance with
the provisions of Section 6.5(b) of this Loan Agreement. The Borrower
shall have no right whatsoever to direct the investment of the pro-
ceeds in any Reserve Account.
(b) Earnings. All interest, earnings or profits on the
Permitted Investments of funds in any of the Reserve Accounts shall be
deposited into the applicable Reserve Account, provided that the
Lender may, at its election, retain for its own account any such
interest, earnings or profits (i) on the Tax and Insurance Reserve
Account, and (ii) on any or all of the Reserve Accounts during the
occurrence and continuance of an Event of Default.
(c) Charges. Except as prohibited by applicable laws, the
Lender may charge the Borrower for holding, maintaining and applying
funds in any of the Reserve Accounts to the extent funds on deposit in
such Reserve Account are invested or reinvested in Permitted
Investments and the Lender does not retain for its own account any
interest, earnings or profits on such Reserve Account in accordance
with the provisions of Section 6.5(b) of this Loan Agreement.
(d) Annual Accounting. The Lender shall furnish or cause to be
furnished to the Borrower, without charge, an annual accounting of
each Reserve Account in the normal format of the Lender or its agent,
showing credits and debits to such Reserve Account and the purpose for
which each debit to such Reserve Account was made.
Section 6.6 Assignment to the Lender of Reserve Accounts and Rights
and Claims.
(a) The Borrower hereby assigns to the Lender the Reserve
Accounts as additional security for all of the Borrower's Obligations
to the Lender, under the Note and under the other Loan Documents;
provided, however, the Lender shall make disbursements from the
Reserve Accounts in accordance with the terms of this Agreement,
including without limitation, the Program Rider.
(b) The Borrower assigns to the Lender all rights and claims the
Borrower may have against (i) all persons or entities claiming amounts
due for taxes, utilities, rent or insurance, or (ii) all persons or
entities supplying labor or materials in connection with the Immediate
Repairs, Replacements or Additional Repairs or Replacements; provided,
however, that the Lender may not pursue any such right or claim unless
an Event of Default exists under this Agreement or the Loan Documents.
Section 6.7 Application of Reserve Accounts Upon an Event of Default.
If any Event of Default occurs, then the Borrower shall
immediately lose all of its rights to receive disbursements from the
Reserve Accounts unless and until the earlier to occur of or
concurrently with (a) the date on which such Event of Default is fully
cured, and (b) the date on which all amounts secured by the Security
Instrument and the other Loan Documents have been paid in full and the
lien of the Security Instrument and the other Loan Documents, as
appropriate, have been released by the Lender. Upon any Event of
Default, the Lender may in its sole discretion, use the Reserve
Accounts (or any portion thereof) for any purpose, including but not
limited to (i) repayment of any indebtedness secured by the Security
Instrument and the other Loan Documents, including but not limited to
principal prepayments and the prepayment premium applicable to such
full or partial prepayment (as applicable); provided, however, that
such application of funds shall not cure or be deemed to cure any
Event of Default, (ii) reimbursement of the Lender for all losses,
fees, costs and expenses (including, without limitation, reasonable
legal fees) suffered or incurred by the Lender as a result of such
Event of Default, (iii) payment of any amount expended in exercising
all rights and remedies available to the Lender at law or in equity or
under this Agreement or under any of the other Loan Documents, or (iv)
to the payment of any item for which payment is required or permitted
from any of the Reserve Accounts pursuant to the terms of this Loan
Agreement. Nothing in this Loan Agreement shall obligate the Lender
to apply all or any portion of the Reserve Accounts on account of any
Event of Default by the Borrower or to pay the indebtedness secured by
the Security Instrument or any of the other Loan Documents or in any
specific order of priority.
Section 6.8 Disbursements from Tax and Insurance Reserve Account.
(a) The Lender shall disburse, to the extent of amounts on
deposit in the Tax and Insurance Reserve Account, directly to each
Person owed any portion of the water and sewer assessments and
frontage charges, taxes, assessments and insurance premiums, the total
sum owed to such Person. Such disbursements shall be made by the
Lender (i) so as to coincide in frequency with the regular billing
cycle of such Person, and (ii) on or before the date that each such
payment is due.
(b) The Lender may require the Borrower to pay to the Lender in
advance, additional amounts for taxes, charges, premiums, assessments,
and impositions in connection with the Borrower or the Premises which
the Lender shall reasonably deem necessary. Unless otherwise provided
by applicable law, the Lender may require payments for such other
amounts to be paid by the Borrower in a lump sum or periodic
installments, at the Lender's option.
(c) If the amount held in the Tax and Insurance Reserve Account
at the time of the annual accounting thereof shall exceed the amount
deemed necessary by the Lender to provide for the payment of water and
sewer assessments and frontage charges, taxes, assessments,
impositions and insurance premiums, as they fall due, such excess
shall be credited against future Monthly Reserve Deposits to the Tax
and Insurance Reserve Account. If at any time the amount held in the
Tax and Insurance Reserve Account shall be less than the amount deemed
necessary by the Lender to pay water and sewer assessments and
frontage charges, taxes, assessments, impositions and insurance
premiums, the Borrower shall pay to the Lender any amount necessary to
make up the deficiency within thirty (30) days after notice from the
Lender to the Borrower requesting payment thereof.
(d) Upon payment in full of all amounts owed by the Borrower
under or otherwise secured by any of the Loan Documents, all remaining
amounts on deposit, if any, in the Tax and Insurance Reserve Account
shall be distributed to the Borrower.
Section 6.9 Disbursements from Repair Escrow Account and Replacement
Reserve Account.
Not Applicable.
Section 6.10 Indemnification.
The Borrower agrees to indemnify the Lender and to hold the Lender
harmless from and against any and all actions, suits, claims, demands,
counterclaims, cross-claims, liabilities, losses, damages, obligations,
fees and costs and expenses (including litigation costs, reasonable
attorneys' fees and expenses) arising from or in any way connected with (a)
the performance of the Immediate Repairs, Replacements or Additional
Repairs or Replacements, (b) unpaid taxes, utility bills, rent or insurance
premiums owed by the Borrower, and/or (c) the holding or investment of the
Reserve Accounts, except to the extent any of the foregoing is the direct
result of the gross negligence or willful misconduct of the Lender.
ARTICLE VII
EVENTS OF DEFAULT; REMEDIES
Section 7.1 Events of Default.
An Event of Default shall occur if any of the following has occurred
and is continuing:
(a) Payments. The Borrower fails to make any payment hereunder,
under the Note or under any other Loan Document, when due and payable,
and such payment is not received prior to the 10th day after the same
is due (or such greater period, if any, required by applicable law).
(b) Bankruptcy, etc. The occurrence of any Bankruptcy Event
with respect to the Borrower or any general partner or member thereof.
(c) Judgments. One or more judgments or decrees shall be
entered against the Borrower (not paid or fully covered by insurance
provided by a carrier who has acknowledged coverage), and any such
judgments or decrees shall not have been vacated, discharged, stayed
or bonded (through appeal or otherwise) within thirty (30) calendar
days from the entry thereof.
(d) Recourse Covenants. The Borrower violates any of the
Recourse Covenants.
(e) Compliance with Sections 5.1(o) and (p). The Borrower fails
to comply with any or all of the provisions of either Section 5.1(o)
or 5.1(p) and such failure continues for a period of thirty (30)
calendar days following (i) in the case of Section 5.1(o), the date of
written demand by the Lender is made upon the Borrower for the
execution of any agreement or document in accordance with the
provisions of Section 5.1(o) or (ii) in the case of Section 5.1(p),
the date on which any Operating Expense becomes due and payable in
accordance with the terms thereof, without regard to any extension,
modification or waiver relating thereto; provided that if any
Operating Expense is the subject of a bona fide dispute and is less
than 1% of the outstanding balance of the Loan as of the date on which
the particular Operating Expense in dispute became due and payable,
then the Borrower shall have ninety (90) days from the date the same
becomes due and payable to pay such Operating Expense or to furnish
the Lender a bond or other collateral acceptable to the Lender in the
Lender's reasonable discretion.
(f) Representations and Warranties. Any representation,
warranty, acknowledgment or statement made by the Borrower herein, in
any other Loan Document or in any written statement or certificate
delivered or required to be delivered pursuant hereto shall prove
untrue in any material respect on the date as of which it was deemed
to have been made or any representation, warranty acknowledgment or
statement submitted to the Lender concerning the financial condition
or credit standing of the Borrower, any general partner or member
thereof proves to be false or misleading.
(g) Compliance with Covenants and Agreements. The Borrower
shall fail to comply with, observe or perform any covenant or
agreement made by it herein or in any other Loan Document, which
failure continues for thirty (30) days following written notice
thereof to the Borrower; provided that if such failure is of a type
which can not feasibly be cured within such thirty (30) day period and
the Borrower is diligently and in good faith pursuing such cure, then
the Borrower shall have a reasonable period of time (but in no event
more than ninety (90) days following such written notice) to cure such
failure without the same becoming an Event of Default hereunder.
Nothing in this Section 7.1(g) shall be deemed or construed to entitle
the Borrower to any notice and opportunity to cure with respect to any
failure to comply with, observe or perform any covenant or agreement
which constitutes an Event of Default under any other subsection of
this Section 7.1 or to extend any notice and/or opportunity to cure
otherwise provided for in any other subsection of this Section 7.1.
(h) Events of Default under the Program Rider or other Loan
Documents. The occurrence of any Event of Default or similar event
under any of the Program Rider or the other Loan Documents, after
giving effect to any period of time provided for the cure of any such
event or occurrence in the Program Rider or any such Loan Document.
Section 7.2 Remedies.
Upon the occurrence of an Event of Default, the Lender may, at its
option:
(a) Acceleration. Accelerate the entire unpaid principal
balance of the Loan and all accrued interest thereon without advance
notice to the Borrower, the same becoming immediately due and payable.
In addition, upon acceleration, any and all other Obligations of the
Borrower to the Lender shall be immediately due and payable.
(b) Replacement of Property Manager. Upon written notice to the
Borrower, require the replacement of any property manager or managing
agent for the Premises with a property manager or managing agent
acceptable to the Lender.
(c) Other Remedies. Invoke any other remedies set forth herein
or in any of the other Loan Documents, including without limitation,
foreclosure of the Lien granted in the Security Instrument and
enforcement of the assignment to the Lender of the Rents and Profits
in accordance with the terms of the Security Instrument.
ARTICLE VIII
CASUALTY LOSSES; EMINENT DOMAIN
Section 8.1 Repairs and Casualty Losses.
(a) Restoration of Premises. Except as otherwise provided in
this Section 8.1, the Borrower shall, at its expense, promptly repair,
restore, replace or rebuild any part of the Premises which is damaged
or destroyed by any casualty or as the result of any taking under the
power of eminent domain, provided the Lender has made available
insurance proceeds or eminent domain proceeds or awards available to
the Borrower for such repair, restoration, replacement or rebuilding.
The Borrower shall cause all repairs, rebuilding, replacements or
restorations to be (in the reasonable opinion of the Lender) of
substantially equivalent quality to the Premises as of the date
hereof, ordinary wear and tear excepted.
(b) Proof of Loss; Claims Settlement. In the event of loss, the
Borrower shall give prompt written notice thereof to the insurance
carrier and the Lender, and the Lender may make proof of loss if not
made promptly by the Borrower. During the existence of any Event of
Default, the Lender is hereby authorized, in its reasonable
discretion, to adjust, compromise and collect the proceeds of any
insurance claims.
(c) Application of Insurance Proceeds. The Borrower hereby
assigns the proceeds of any such insurance policies to the Lender and
hereby directs and authorizes each insurance company to make payment
for such loss directly to the Lender. The proceeds of any insurance
or any part thereof shall be applied by the Lender in accordance with
the provisions of Section 8.3 of this Loan Agreement.
Section 8.2 Eminent Domain.
(a) Participation in Proceedings. The Borrower shall promptly
notify the Lender of any actual or threatened initiation of any
eminent domain proceeding or other taking for public use as to the
whole or any part of the Premises and/or any rights incident or
appurtenant thereto and shall deliver to the Lender copies of any and
all papers served or received in connection with such proceedings, and
the Lender shall have the right, at its option, to participate in such
proceedings at the expense of the Borrower (including, without
limitation, the Lender's reasonable attorneys' fees) and the Borrower
will execute such documents and take such other steps as required to
permit such participation.
(b) Right to Settle Claims. During the existence of any Event
of Default, the Lender is hereby authorized to adjust, compromise and
collect the proceeds of any eminent domain or similar award or settle
a claim for damages and to apply the same (or any part thereof) to the
then outstanding balance of the Loan.
(c) Use of Proceeds. The Borrower assigns to the Lender any
proceeds or awards which may become due by reason of any condemnation
or other taking for public use of the whole or any part of the
Premises and any rights incident or appurtenant thereto. The proceeds
of any such condemnation award or proceeds of any part thereof shall
be applied by the Lender in accordance with the provisions of Section
8.3 of this Loan Agreement.
(d) Further Assignments; Acceleration. The Borrower agrees to
execute such further assignments and agreements as may be reasonably
required by the Lender to assure the effectiveness of this Section
8.2. In the event any governmental agency or authority shall require
or commence any proceedings for the seizing or demolishing of any part
of the Premises, or shall commence any proceedings to condemn or
otherwise take pursuant to the power of eminent domain (or other
power) a material portion of the Premises, the Lender may, at its
option, declare the Loan to be immediately due and payable in full and
apply all or any portion of the eminent domain (or similar) awards or
proceeds to the then outstanding balance of the Loan.
Section 8.3 Application of Insurance Proceeds and Condemnation Awards.
(a) All proceeds of insurance assigned to the Lender pursuant to
Section 8.1 of this Loan Agreement, and all proceeds or awards which
may become due by reason of any condemnation or other taking for
public use of the whole or any part of the Premises or any rights
incident or appurtenant thereto and that have been assigned to the
Lender pursuant to Section 8.2 of this Loan Agreement shall be
eligible to be applied by the Lender in its sole discretion to the
repayment of the Loan; provided, however, that subject to the
provisions of this Section 8.3, such proceeds shall be held in an
Eligible Account and applied to the repair or restoration of the
Premises if all of the following conditions are met:
(i) there exists no Default Condition or Event of Default;
(ii) the Borrower presents sufficient evidence to the Lender
that (A) with respect to any casualty loss, there are sufficient funds
from the insurance proceeds and from equity funds, if needed, to
completely restore or repair the damaged Premises, (B) with respect to
any condemnation award, there are sufficient funds from the
condemnation award or proceeds and from equity funds, if needed, to
completely restore the Premises to an architectural whole and to pay
Operating Expenses, and (C) the insurance proceeds or condemnation
award is less than 20% of the original Loan Amount;
(iii) as applicable, all affected non-Local Tenants and 75% of
all affected Local Tenants (as determined by square footage) agree in
a manner reasonably satisfactory to the Lender that they will continue
or extend their interests and arrangements for the contract terms then
in effect following the repair, restoration, replacement or
rebuilding;
(iv) all parties having material operating, management and/or
franchise interests in, and arrangements concerning, the Premises
agree that they will continue their interests and arrangements for the
contract terms then in effect following the repair, restoration,
replacement or rebuilding;
(v) the Borrower presents sufficient evidence to the Lender
that the Premises will be repaired or restored to an architectural
whole two (2) years prior to the maturity date of the Loan;
(vi) the Lender will not incur any liability to any other
Person as a result of such use or release of proceeds; and
(vii) (A) as to any casualty loss, the insurance proceeds shall
be held by the Lender and disbursed as repair, restoration,
replacement or rebuilding progresses substantially in accordance with
the procedures set forth in this Loan Agreement for disbursement from
the Replacement Reserve Account; provided, however that insurance
proceeds of $50,000.00 or less will be disbursed directly to the
Borrower for repair, restoration, replacement or rebuilding and (B) as
to any condemnation award, the condemnation award or proceeds shall be
held by the Lender and disbursed as repair, restoration, replacement
or rebuilding progresses substantially in accordance with the
procedures set forth in this Loan Agreement for disbursement from the
Replacement Reserve Account.
(b) If the above-stated conditions are not satisfied within
ninety (90) days of loss, then the Lender may, at its option, apply
any proceeds in repayment of the amount then outstanding under the
Note.
(c) Upon the completion of any repair, restoration, replacement
or rebuilding any remaining proceeds shall be paid to the Lender in
repayment of the amount then outstanding under the Note in accordance
with the provisions of the Note.
ARTICLE IX
GENERAL PROVISIONS
Section 9.1 Remedies Cumulative; Waivers.
All remedies of the Lender provided for herein and/or in the other
Loan Documents are cumulative and shall be in addition to any and all other
rights and remedies provided for or available under the other Loan
Documents, at law and/or in equity. The exercise of any right or remedy by
the Lender hereunder shall not in any way constitute a cure or waiver of
any Default Condition or Event of Default hereunder or under any other Loan
Document, or invalidate any act done pursuant to any notice of the
occurrence of any Default Condition or Event of Default, or prejudice the
Lender in the exercise of any of its rights hereunder or under or any other
Loan Document, unless, in the exercise of said rights, the Lender realizes
all amounts owed to it under the Loan Documents. No waiver of any Default
Condition or Event of Default hereunder shall be implied from any delay or
omission by the Lender to take action on account of such Default Condition
or Event of Default, and no express waiver shall affect any Default
Condition or Event of Default other than the Default Condition or Event of
Default specified in the waiver and it shall be operative only for the time
and to the extent therein stated. Waivers of any covenants, terms or
conditions contained herein must be in writing and shall not be construed
as a waiver of any subsequent failure to observe or comply with the same
covenant, term or condition. The consent or approval by the Lender to or
of any act by the Borrower requiring further consent or approval shall not
be deemed to waive or render unnecessary the consent or approval to or of
any subsequent or similar act.
Section 9.2 Benefit.
This Loan Agreement is made and entered into for the sole protection
and benefit of the Lender and the Borrower, their successors and permitted
assigns, and no other Person or Persons shall have any right to action
hereon or rights to the Loan proceeds at any time, nor shall the Lender owe
any duty whatsoever to any claimant for labor performed or material
furnished in connection with the construction of the Improvements, or to
apply any undisbursed portion of the Loan to the payment of any such claim,
or to exercise any right or power of the Lender hereunder or arising from
any Default Condition or Event of Default by the Borrower.
Section 9.3 Assignment and Assumption.
(a) The terms hereof shall be binding upon and inure to the
benefit of the heirs, successors, assigns, and personal
representatives of the parties hereto.
(b) The Borrower shall not assign or permit any assumption of
this Loan Agreement, any of the other Loan Documents or any of its
rights, interests, duties or obligations hereunder or thereunder or
any Loan proceeds or other sums to be advanced hereunder in whole or
in part without the prior written consent of the Lender (which consent
shall not be unreasonably withheld or delayed) and the payment to the
Lender of all reasonable and customary expenses incurred by the Lender
in connection with any such assignment and/or assumption and of a
processing fee (i) with respect to any assignment and/or assumption
requested or occurring during the first twelve (12) months of the term
of the Loan, in an amount equal to $25,000.00, provided, however, that
in the event the assignee or purchaser of the Premises is Equity
Residential Properties Trust or an affiliate thereof, the processing
fee shall be in an amount equal to $10,000.00, and (ii) with respect
to any such assignment and/or assumption thereafter, in an amount
equal to $10,000.00; any assignment or assumption (whether voluntary
or by operation of law) without said consent shall be void. Without
in any way limiting the foregoing, in no event shall the Lender
consent to any assignment or assumption requested or occurring during
the first twelve (12) months of the term of the Loan, if the
consideration paid or to be paid by the assignee or purchaser of the
Premises in connection therewith, as determined by the Lender in its
reasonable judgment, is less than the appraised value of the Premises
used by the Lender in underwriting the Loan. The Borrower shall
furnish the Lender at the Borrower's sole cost and expense such
information as the Lender shall request in connection with any
assignment or assumption, including without limitation, an Appraisal
or other evidence satisfactory to the Lender in its reasonable
discretion of the value of the Premises as of the date of the
assignment and/or assumption. In addition, the assignee or purchaser
of the Premises shall be required to assume the Borrower's duties and
obligations under this Loan Agreement and shall be required to execute
and deliver to the Lender such documents, opinions, certificates and
information as the Lender reasonably requires to effectuate such
assumption of duties and obligations. No sale, assignment or
assumption shall relieve the Borrower of its Obligations under this
Loan Agreement or any of the other Loan Documents, unless the Borrower
has obtained the prior written consent of the Lender, which consent
shall not be unreasonably withheld or delayed.
(c) It is expressly recognized and agreed that the Lender may,
in its sole discretion, sell, assign, transfer, participate or
otherwise convey this Loan Agreement, the Note, the Security
Instrument and any other Loan Documents, in whole or in part, to any
other Person provided that all of the provisions hereof shall continue
in full force and effect and, in the event of such assignment, the
Lender shall thereafter be relieved of all liability hereunder and any
Loan disbursements made by any assignee shall be deemed made in
pursuance and not in modification hereof and shall be evidenced by the
Note and secured by the Security Instrument and any other Loan
Documents. It is further expressly recognized that the Lender intends
to sell, transfer, deliver and assign the Loan in the secondary
mortgage market. By its execution of this Loan Agreement and the
other Loan Documents, the Borrower understands and agrees that any
Financial Statement, Operating Statement, Rent Roll and other
information delivered to the Lender may be delivered to any secondary
mortgage market participant in connection with the sale or assignment
of the Loan or any security backed by the Loan. In the event of such
assignment, the Lender shall thereafter be relieved of all liability
hereunder and any Loan disbursements made by any assignee shall be
deemed made in pursuance and not in modification hereof and shall be
evidenced by the Note and secured by the Security Instrument and the
other Loan Documents.
Section 9.4 Information.
The Borrower hereby gives permission to the Lender to release
publicity articles concerning the existence, structure and the terms of the
Loan and the Borrower and principals involved in the financing of the
Premises. It is also expressly recognized and agreed that the Lender may
share any information pertaining to the Loan Documents, the transactions
contemplated thereby and the records maintained by the Lender in connection
therewith with NationsBank Corporation, including its bank subsidiaries and
NationsBanc Montgomery Securities LLC and any of the other Affiliates of
the foregoing and any other Persons which require such information in
connection with the sale of the Loan in the secondary mortgage market.
Section 9.5 Nonrecourse Loan; Exceptions.
The liability of the Borrower hereunder shall be limited to the same
extent set forth in the Note.
Section 9.6 Amendments.
This Loan Agreement shall not be amended except by a written
instrument signed by all parties hereto.
Section 9.7 Governing Law and Jurisdiction.
This Loan Agreement and the other Loan Documents and all matters
relating thereto shall be governed by and construed and interpreted in
accordance with the laws of the State. The Borrower and all of its general
partners/members hereby submit to the jurisdiction of the state and federal
courts located in the State and agree that the Lender may, at its option,
enforce its rights under the Loan Documents in such courts.
Section 9.8 Savings Clause.
Invalidation of any one or more of the provisions of this Loan
Agreement shall in no way affect any of the other provisions hereof, which
shall remain in full force and effect.
Section 9.9 Execution in Counterparts.
This Loan Agreement may be executed in two (2) or more counterparts,
each of which shall be deemed to be an original, but all of which shall
constitute one and the same instrument, and in making proof of this Loan
Agreement, it shall not be necessary to produce or account for more than
one such counterpart.
Section 9.10 Notices.
All notices and other communications shall have been duly given and
shall be effective (a) when delivered, (b) when transmitted via telecopy
(or other facsimile device) to the number set forth in Exhibit C hereto,
(c) the day following the day on which the same has been delivered prepaid
to a reputable national overnight air courier service, or (d) the third
Business Day following the day on which the same is sent by certified or
registered mail, postage prepaid, in each case to the respective party at
the address set forth in Exhibit C hereto, or at such other address as such
party may specify by written notice to the other party hereto. No notice
of change of address shall be effective except upon actual receipt. This
Section 9.10 shall not be construed in any way to affect or impair any
waiver of notice or demand provided in any Loan Document or to require
giving of notice or demand to or upon any Person in any situation or for
any reason. In addition to the foregoing, the Lender may, from time to
time, specify to the Borrower additional notice parties by providing to the
Borrower written notice of the name, address, telephone number and telecopy
number of any such additional notice party. Each such additional notice
party shall be entitled to receive and/or give any notice required or
permitted to be given under this Loan Agreement or any other Loan Document.
Section 9.11 Right of Set-Off.
In addition to any rights now or hereafter granted under applicable
law or otherwise, and not by way of limitation of any such rights, upon the
occurrence of any Event of Default, the Lender is authorized at any time
and from time to time, without presentment, demand, protest or other notice
of any kind (all of which rights being hereby expressly waived), to set-off
and to appropriate and apply any and all deposits (general or special) and
any other indebtedness at any time held by or owing to the Lender
(including, without limitation branches, agencies or Affiliates of the
Lender wherever located) to or for the credit or the account of the
Borrower against the obligations and liabilities of the Borrower to the
Lender hereunder, under the Note or otherwise, irrespective of whether the
Lender shall have made any demand hereunder and although such obligations,
liabilities or claims, or any of them, may be contingent or unmatured, and
any such set-off shall be deemed to have been made immediately upon the
occurrence of an Event of Default even though such charge is made or
entered on the books of the Lender subsequent thereto. The Lender agrees
to notify the Borrower subsequent to any such set-off or application.
Section 9.12 Written Agreement.
(a) THE RIGHTS AND OBLIGATIONS OF THE BORROWER AND THE LENDER,
AS APPROPRIATE, SHALL BE DETERMINED SOLELY FROM THIS WRITTEN LOAN
AGREEMENT AND THE OTHER LOAN DOCUMENTS, AND ANY PRIOR OR
CONTEMPORANEOUS ORAL OR WRITTEN AGREEMENTS BETWEEN THE LENDER AND THE
BORROWER CONCERNING THE SUBJECT MATTER HEREOF AND OF THE OTHER LOAN
DOCUMENTS ARE SUPERSEDED BY AND MERGED INTO THIS LOAN AGREEMENT AND
THE OTHER LOAN DOCUMENTS.
(b) THIS LOAN AGREEMENT AND THE OTHER LOAN DOCUMENTS MAY NOT BE
VARIED BY ANY ORAL AGREEMENTS OR DISCUSSIONS THAT OCCUR BEFORE,
CONTEMPORANEOUSLY WITH, OR SUBSEQUENT TO THE EXECUTION OF THIS LOAN
AGREEMENT OR THE OTHER LOAN DOCUMENTS.
(c) THIS WRITTEN LOAN AGREEMENT AND THE OTHER LOAN DOCUMENTS
REPRESENT THE FINAL AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE
CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL
AGREEMENTS OF THE PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS
BETWEEN THE PARTIES.
Section 9.13 Waiver of Jury Trial.
THE LENDER AND THE BORROWER HEREBY WAIVE, TO THE FULLEST EXTENT
PERMITTED BY APPLICABLE LAW, THE RIGHT TO A TRIAL BY JURY IN ANY ACTION OR
PROCEEDING BASED UPON, OR RELATED TO, THE SUBJECT MATTER OF THIS LOAN
AGREEMENT. THIS WAIVER IS KNOWINGLY, INTENTIONALLY, AND VOLUNTARILY MADE
BY THE LENDER AND THE BORROWER, AND THE LENDER AND THE BORROWER ACKNOWLEDGE
THAT NO PERSON ACTING ON BEHALF OF ANOTHER PARTY TO THIS LOAN AGREEMENT HAS
MADE ANY REPRESENTATIONS OF FACT TO INDUCE THIS WAIVER OF TRIAL BY JURY OR
IN ANY WAY TO MODIFY OR NULLIFY ITS EFFECT. THE LENDER AND THE BORROWER
FURTHER ACKNOWLEDGE THAT THEY HAVE BEEN REPRESENTED (OR HAVE HAD THE
OPPORTUNITY TO BE REPRESENTED) IN THE SIGNING OF THIS LOAN AGREEMENT AND IN
THE MAKING OF THIS WAIVER BY INDEPENDENT LEGAL COUNSEL, SELECTED OF THEIR
OWN FREE WILL, AND THAT THEY HAVE HAD THE OPPORTUNITY TO DISCUSS THIS
WAIVER WITH COUNSEL.
IN WITNESS WHEREOF, the Borrower and the Lender have executed this
Loan Agreement as of the above-written date.
BORROWER:
WELLSFORD SONTERRA LLC, an
Arizona limited liability company
By: Wellsford/Sonterra Manager,
LLC,
an Arizona limited liability
company, its sole Manager
By: Wellsford Real Properties,
Inc., a Maryland corporation,
its sole Member
By:/s/ David M. Strong
--------------------------------
Name: David M. Strong
Title: Vice President
LENDER:
NATIONSBANK, N.A., a national
banking association
By:/s/ Rhonda David
-------------------------------
Name: Rhonda David
Title: Vice President
<PAGE>
EXHIBIT A
EQUITY INTERESTS
Borrower:
Wellsford Real Properties, Inc. 100%
<PAGE>
EXHIBIT B
IMMEDIATE REPAIRS, REPLACEMENTS, INITIAL RESERVE DEPOSITS
AND MONTHLY RESERVE DEPOSITS
Immediate Repairs Estimated Cost
None
Replacements Estimated Cost
Not Applicable
Initial Reserve Deposits
Initial Reserve Deposit to the Tax and Insurance Reserve Account:
$104,628.00
Monthly Reserve Deposits
Monthly Reserve Deposits to the Tax and Insurance Reserve Account
shall be in an amount equal to (a) the sum of (i) following the
occurrence of any Event of Default or failure of the Borrower to
furnish the Lender evidence of payment of Insurance premiums at least
thirty (30) days prior to the due date thereof in accordance with
Section 5.5(a) hereof, the aggregate anticipated annual premiums for
all insurance policies required to be maintained pursuant to this Loan
Agreement due in the coming year, (ii) the sum of the anticipated
annual real property taxes, personal property taxes, intangibles taxes
and assessment for the Premises due in the coming year, (iii) the sum
of anticipated annual water and sewer assessments and frontage charges
for the Premises due in the coming year, and (iv) the sum of all other
anticipated assessments and charges against the Premises due in the
coming year, divided by (b) twelve (12).
<PAGE>
EXHIBIT C
ADDRESSES FOR NOTICE
if to the Borrower: Wellsford Sonterra LLC
c/o Wellsford Real Properties, Inc.
1623 Blake Street, Suite 270
Denver, Colorado 80202
Attn: David M. Strong
Telephone: (303) 534-4396
Telecopy: (303) 534-4398
if to the Lender: NationsBank, N.A.
c/o Midland Loan Services, L.P.
210 W. 10th Street, 6th Floor
Kansas City, Missouri 64105
Attn: Servicing Manager
Telephone: (800) 894-9205
Telecopy: (816) 843-5522
with copies to: Moore & Van Allen, PLLC (EKO)
NationsBank Corporate Center
100 North Tryon Street, Floor 47
Charlotte, North Carolina 28202-4003
Telephone: (704) 331-1000
Telecopy: (704) 331-1159
<PAGE>
EXHIBIT D
PROGRAM RIDER
(Multifamily)
1. Conditions Precedent. The obligation of the Lender to make the
Loan provided for in this Loan Agreement is subject to the satisfaction, by
proper evidence, execution and/or delivery to the Lender of each of the
following items, each in form and substance satisfactory to the Lender and
the Lender's counsel:
(a) Rent Roll. A Rent Roll dated as of a date not more than
forty-five (45) days prior to the Closing Date.
(b) Standard Lease Form. The standard form of lease currently
in use and to be used in future leasing with respect to the Premises.
All leases, assignments of lease, subleases and lease amendments and
other agreements with respect to the Premises (hereinafter "leases")
shall be subordinate to the Security Instrument.
(c) Tenant Estoppel Certificates. Current Tenant Estoppel
Certificates from all commercial tenants and other users (hereinafter
"tenants") of any non-residential portion of the Premises.
(d) Subordination Agreements. Subordination Agreements with all
commercial tenants of any portion of the Premises designated by the
Lender.
(e) Licenses. Copies (including a Certification) of all
licenses, permits, certificates and/or privileges necessary or
desirable for the ownership or operation of the Premises as currently
constructed and operated.
2. Representations and Warranties of the Borrower. To induce the
Lender to enter into this Loan Agreement and to make the Loan, the Borrower
hereby represents and warrants to the Lender on the Closing Date as
follows:
(a) Rent Roll. The Rent Roll provided to the Lender pursuant to
Section 1 of this Program Rider is complete and correct as at the date
thereof.
(b) Leases. All residential leases with respect to the Premises
are for terms of one (1) year or less. Not more than 20% of the net
rentable space at the Premises is being used for non-residential
purposes. Neither the Borrower, nor any general partner or member of
the Borrower, nor any individual having a 10% or greater interest in
the Borrower is an affiliate or otherwise related to the tenant under
any leases for laundry equipment, telecommunications, television or
similar systems at the Premises.
(c) Tenant Estoppel Certificates and Subordination Agreements.
The Borrower has delivered to the Lender an original executed Tenant
Estoppel Certificate for each commercial tenant of any portion of the
Premises and a Subordination Agreement for each commercial tenant of
any portion of the Premises designated by the Lender.
(d) Licenses. The Borrower has all licenses, permits,
certificates and/or privileges necessary or desirable for the
ownership or operation of the Premises as currently constructed and
operated.
3. Affirmative Covenants of the Borrower. During any period in
which the Loan is outstanding, the Borrower agrees that it will:
(a) Lessee Information. Submit to the Lender when requested by
the Lender, all information on all tenant leases otherwise required to
be included in a Rent Roll, which information shall include a
Certification thereof.
(b) Appraisal. In addition to the items required to be
furnished by the Borrower pursuant to Section 5.1(i) of the Loan
Agreement, provide to the Lender or the Lender's appraiser a current
Rent Roll, in form and substance satisfactory to the Lender, in
connection with an Appraisal.
(c) Rent Rolls. Furnish, or cause to be furnished, Rent Rolls
to the Lender within forty-five (45) days of the end of each of the
Borrower's fiscal quarters.
(d) Licenses. Maintain in full force and effect all licenses,
permits, certificates and/or privileges necessary or desirable for the
ownership or operation of the Premises as currently or hereafter
constructed and operated.
4. Negative Covenants of the Borrower. During any period in which
the Loan is outstanding, the Borrower agrees that it will not:
(a) Other Agreements, Licenses and Permits. Allow any default
under or a breach, withdrawal, cancellation, revocation, rescission,
termination, alteration, amendment, extension or modification of the
standard form of lease, or any sales contract, management contract,
construction contract, technical service agreement or other contract
or agreement, or any license, permit, certificate or privilege
affecting the ownership or operation of the Premises.
(b) Management Fees. Pay or allow to be paid incentive
management fees more frequently than annually.
(c) Leases. The Borrower shall not enter into, default under,
breach, withdraw, cancel, rescind, terminate, alter or modify any non-
residential lease of, or other agreement regarding, any portion of the
Premises without the Lender's prior written approval, unless such
lease or other agreement (i) is on a form previously approved by the
Lender, (ii) provides for terms in conformity with local conditions,
(iii) conforms with applicable laws and all recorded restrictive
covenants affecting the Premises, if any, and with the covenants and
agreements set forth in the Loan Documents, including but not limited
to those relating to Hazardous Materials and specifically references
such covenants relating to Hazardous Materials, and (iv) does not
provide for any purchase option, right of first offer or refusal or
similar right relating to all or any portion of the Premises.
5. Hazardous Materials. In addition to all Hazardous Materials
described in the definitions to this Loan Agreement, the term "Hazardous
Materials" shall also include radon and lead based paint.
6. No Low Income Housing Tax Credit. The Borrower has not claimed,
nor does the Borrower intend to claim a low income housing tax credit for
the Premises under Section 42 of the Internal Revenue Code of 1986, or any
successor Section thereto. Should the Borrower later decide to pursue
claiming such a tax credit, the Borrower will not proceed without obtaining
the Lender's prior written consent.
LOAN TERMS TABLE
Note Date: February 27, 1998
Borrower: Wellsford Sonterra LLC
Original Principal Amount: $16,400,000.00 Loan No.: 50750
Note Rate: 6.870% Servicing No.: 880802067
Monthly Payment Amount: $107,681.54 Borrower's TIN: 86-
0902924
Amortization Commencement Date: April 1, 1998 Maturity Date: March 1,
2008
Lockout Period: Beginning on the date of this Note and ending on February
28, 2002
Yield Maintenance Period: The period from March 1, 2002 to August 31, 2007
Specified U.S. Treasury Security: 6.125% U.S. Treasury Security due
August, 2007)
PROMISSORY NOTE
FOR VALUE RECEIVED, the borrower described in the Loan Terms Table set
forth above (the "Borrower") promises to pay to the order of NATIONSBANK,
N.A., a national banking association, its successors and assigns (the
"Lender"), the Original Principal Amount (as outstanding from time to time,
the "Principal Amount") under the terms and conditions of this promissory
note (the "Note") and in accordance with the loan agreement of even date
herewith by and between the Borrower and the Lender (the "Loan Agreement").
This Note is secured by a deed of trust, mortgage or deed to secure debt of
even date on certain property of the Borrower (the "Security Instrument")
and other agreements by and between the Borrower and the Lender. The Loan
Terms Table is a part of this Note and all terms used in this Note which
are defined in the Loan Terms Table shall have the meaning set forth
therein. Except as expressly provided otherwise in this Note, the defined
terms in the Loan Documents (as defined in the Loan Agreement) are used
herein with the same meaning. All of the terms, definitions, conditions
and covenants of the Loan Documents are expressly made a part of this Note
by reference in the same manner and with the same effect as if set forth
herein at length. Any holder of this Note is entitled to the benefits of
and remedies provided in the Loan Documents. Any Event of Default under
any of the Loan Documents is an Event of Default under the terms of this
Note.
1. Interest. The outstanding Principal Amount of the loan evidenced
by this Note (the "Loan") shall bear interest at a fixed rate per annum
equal to the Note Rate. Interest shall be computed based on the daily rate
produced assuming a 360 day year, multiplied by the actual number of days
elapsed. Except as otherwise set forth in this Note, interest shall be
paid in arrears.
2. Principal and Interest Payments. The Principal Amount and
interest thereon shall be payable at the Lender's offices in Charlotte,
North Carolina, or at such other place as the Lender may designate in
writing. An initial payment is due on the date hereof for prepaid interest
through and including the last day of the month in which this Note is
executed. Thereafter, except as may be adjusted in accordance with the
immediately following sentence, payment shall be made in consecutive
monthly installments of principal and interest in an amount equal to the
Monthly Payment Amount on the first day of each month beginning on the
Amortization Commencement Date (each a "Scheduled Payment Date"), until the
entire indebtedness evidenced hereby is fully paid, except that any
remaining indebtedness, if not sooner paid, shall be due and payable on the
Maturity Date. Following any partial prepayment occurring solely as a
result of the application of insurance proceeds or condemnation awards
pursuant to the terms of the Loan Agreement, the Lender may, in its sole
discretion, adjust the Monthly Payment Amount to give effect to any such
partial prepayment, provided, however, that in no event will any such
adjustment result in any such installment becoming due and payable on any
date after the Maturity Date.
3. Late Charges. In the event any payment of interest or principal
is not received prior to the 10th day after the same is due (or such
greater period, if any, required by applicable law), the Borrower will pay
to the Lender a late charge of four percent (4%) of the amount of the
overdue payment. This provision for late charges shall not be deemed to
extend the time for payment or be a "grace period" or "cure period" that
gives the Borrower a right to cure a Default Condition. Imposition of late
charges is not contingent upon the giving of any notice or lapse of any
cure period provided for in the Loan Documents.
4. Prepayment. Except as otherwise expressly permitted by this
Section 4, no voluntary prepayments, whether in whole or in part, of the
outstanding Principal Amount or any other amount at any time due and owing
under this Note can be made by the Borrower or any other Person.
(a) Lockout Period. The Borrower has no right to make any
voluntary prepayment, whether in whole or in part, of the outstanding
Principal Amount or any other amount under this Note at any time
during the Lockout Period. Notwithstanding the foregoing, if either
(i) the Lender, in its sole discretion, accepts a full or partial
voluntary prepayment during the Lockout Period or (ii) there is an
involuntary prepayment during the Lockout Period, then, in either
case, the Borrower shall, in addition to any portion of the
outstanding Principal Amount prepaid (together with all interest
accrued and unpaid thereon), pay to the Lender a prepayment premium in
an amount calculated in accordance with Section 4(b) hereof.
(b) During the Yield Maintenance Period. During the Yield
Maintenance Period and upon giving the Lender at least 60 days (but
not more than 90 days) prior written notice, the Borrower may
voluntarily prepay this Note in whole (but not in part) on a Scheduled
Payment Date. Any such voluntary prepayment shall be made by paying
to the Lender the sum of (i) the entire outstanding Principal Amount,
(ii) all accrued interest and any other sums due the Lender at the
time of such prepayment and (iii) a prepayment premium in an amount
equal to the greater of:
(A) 1% of the Principal Amount being prepaid, or
(B) the product obtained by multiplying:
(1) the Principal Amount being prepaid, times
(2) the difference obtained by subtracting (I) the
Yield Rate from (II) the Note Rate, times
(3) the present value factor calculated using the
following formula:
1-(1+r)-n
r
r = Yield Rate
n = the number of years and any fraction thereof,
remaining between the date the prepayment is
made and the Maturity Date of this Note
As used herein, "Yield Rate" means the yield rate for the
Specified U.S. Treasury Security, as reported in The Wall Street
Journal on the fifth Business Day preceding the Prepayment Calculation
Date. If the Yield Rate is not published for the Specified U.S.
Treasury Security, then the "Yield Rate" shall mean the yield rate for
the nearest equivalent U.S. Treasury Security (as selected at the
Lender's sole discretion) as reported in The Wall Street Journal on
the fifth Business Day preceding the Prepayment Calculation Date. If
the publication of such Yield Rate in The Wall Street Journal is
discontinued, the Lender shall determine such Yield Rate from another
source selected by the Lender in the Lender's sole discretion. The
"Prepayment Calculation Date" shall mean, as applicable, the date on
which (i) notice of prepayment is given to the Lender, in the case of
a voluntary prepayment of the entire outstanding Principal Amount of
this Note, (ii) the Lender applies any partial prepayment to the
reduction of the outstanding Principal Amount hereof, in the case of a
voluntary partial prepayment which is accepted by the Lender, (iii)
the Lender accelerates the Loan, in the case of a prepayment resulting
from acceleration, or (iv) the Lender applies funds held under any
Reserve Account, in the case of a prepayment resulting from such an
application (other than in connection with acceleration of the Loan).
(c) After the Yield Maintenance Period. After the expiration of
the Yield Maintenance Period and upon giving the Lender at least 60
days (but not more than 90 days) prior written notice, the Borrower
may voluntarily prepay (without penalty) the Note in whole (but not in
part) on a Scheduled Payment Date.
(d) Limitation on Partial Prepayments. In no event shall the
Lender have any obligation to accept a partial prepayment.
(e) Prepayment Premium Due Whether Voluntary or Involuntary
Prepayment. The Borrower shall pay the applicable prepayment premium
due under this Section 4 regardless of whether the prepayment is
voluntary or involuntary (in connection with the Lender's acceleration
of the outstanding Principal Amount of this Note or otherwise) or
whether the Security Instrument is satisfied or released by
foreclosure (whether by power of sale or judicial proceeding), deed in
lieu of foreclosure or by any other means.
(f) Insurance and Condemnation Proceeds; Excess Interest.
Notwithstanding any other provision herein to the contrary, the
Borrower shall not be required to pay any prepayment premium in
connection with any prepayment occurring solely as a result of (i) the
application of insurance proceeds or condemnation awards pursuant to
the terms of the Loan Documents, or (ii) the application of any
interest in excess of the maximum rate permitted by applicable law to
the reduction of the Principal Amount in accordance with Section 13 of
this Note.
(g) Defeasance
(i) Notwithstanding any provisions of this Section 4 to the
contrary, at any time after the date which (I) is two (2) years
after the "startup day," within the meaning of Section 860G(a)(9)
of the Internal Revenue Code of 1986, as amended from time to
time or any successor statute (the "Code"), of a "real estate
mortgage investment conduit," within the meaning of Section 860D
of the Code, that holds this Note or (II) three (3) years after
the date of final disbursement of Loan proceeds, whichever shall
first occur, and provided no Event of Default has occurred
hereunder or under any of the Loan Documents which is not cured
within any applicable grace period or cure period, the Borrower
may cause the release of the Premises from the lien of the
Security Instrument and the other Loan Documents upon the
satisfaction of the following conditions:
(A) not less than 60 (but not more than 90) days prior
written notice shall be given to the Lender specifying a
date on which the Defeasance Collateral (as hereinafter
defined) is to be delivered (the "Release Date"), such date
being on a Scheduled Payment Date;
(B) all accrued and unpaid interest and all other sums
due under this Note and under the other Loan Documents up to
the Release Date, including, without limitation, all fees,
costs and expenses incurred by the Lender and its agents in
connection with such release (including, without limitation,
the review of the materials described in subsection
4(g)(i)(C) below and any related documentation), shall be
paid in full on or prior to the Release Date; and
(C) the Borrower shall deliver to the Lender on or
prior to the Release Date:
(1) a pledge and security agreement, in form and
substance satisfactory to the Lender in its sole
discretion, creating a first priority security interest
in favor of the Lender in the Defeasance Collateral, as
defined herein (the "Defeasance Security Agreement"),
which shall provide, among other things, that any
excess amounts received by the Lender from the
Defeasance Collateral over the amounts payable by the
Borrower hereunder shall be refunded to the Borrower
promptly after each Scheduled Payment Date;
(2) direct, non-callable obligations of the
United States of America that provide for payments
prior and as close as possible to (but in no event
later than) all successive Scheduled Payment Dates
occurring after the Release Date, with each such
payment being equal to or greater than the amount of
the corresponding Monthly Payment Amount required to be
paid under this Note (including all amounts due on the
Maturity Date) for the balance of the term hereof (the
"Defeasance Collateral"), each of which shall be duly
endorsed by the holder thereof as directed by the
Lender or accompanied by a written instrument of
transfer in form and substance wholly satisfactory to
the Lender in its sole discretion (including, without
limitation, such certificates, documents and
instruments as may be required by the depository
institution holding such securities or the issuer
thereof, as the case may be, to effectuate book-entry
transfers and pledges through the book-entry facilities
of such institution) in order to perfect upon the
delivery of the Defeasance Security Agreement the first
priority security interest therein in favor of the
Lender in conformity with all applicable state and
federal laws governing granting of such security
interests;
(3) a certificate of the Borrower certifying that
all of the requirements set forth in this subsection
4(g)(i) have been satisfied;
(4) one or more opinions of counsel for the
Borrower in form and substance and delivered by counsel
satisfactory to the Lender in its sole discretion
stating, among other things, that (i) the Lender has a
perfected first priority security interest in the
Defeasance Collateral and that the Defeasance Security
Agreement is enforceable against the Borrower in
accordance with its terms, (ii) in the event of a
bankruptcy proceeding or similar occurrence with
respect to the Borrower, none of the Defeasance
Collateral nor any proceeds thereof will be property of
the Borrower's estate under Section 341 of the U.S.
Bankruptcy Code or any similar statute, and (iii) the
release of the lien of the Security Instrument and the
pledge of Defeasance Collateral will not have an
adverse effect upon any real estate mortgage investment
conduit that then holds this Note; and
(5) such other certificates, documents and
instruments as the Lender may in its sole discretion
require.
(ii) Upon compliance with the requirements of subsection
4(g)(i), the Premises shall be released from the lien of the
Security Instrument and the other Loan Documents, and the
Defeasance Collateral shall constitute collateral which shall
secure this Note and all other obligations under the Loan
Documents. The Lender will, at the Borrower's expense, execute
and deliver any agreements reasonably requested by the Borrower
to release the lien of the Security Instrument and the other Loan
Documents from the Premises.
(iii) Upon the release of the Premises in accordance
with this Section 4(g), the Borrower shall (at the Lender's sole
discretion) assign all its obligations and rights under this
Note, together with the pledged Defeasance Collateral, to a
successor entity designated by the Borrower and approved by the
Lender in its sole discretion. Such successor entity shall
execute an assignment and assumption agreement in form and
substance satisfactory to the Lender in its sole discretion
pursuant to which such successor entity shall assume the
Borrower's obligations under this Note and the Defeasance
Security Agreement. As conditions to such assignment and
assumption, the Borrower shall (A) deliver to the Lender one or
more opinions of counsel in form and substance and delivered by
counsel satisfactory to the Lender in its sole discretion
stating, among other things, that such assignment and assumption
agreement is enforceable against the Borrower and such successor
entity in accordance with its terms and that this Note, the
Defeasance Security Agreement and the other Loan Documents, as so
assigned and assumed, are enforceable against such successor
entity in accordance with their respective terms, and (B) pay all
fees, costs and expenses incurred by the Lender or its agents in
connection with such assignment and assumption (including,
without limitation, the review of the proposed transferee and the
preparation of the assignment and assumption agreement and
related certificates, documents and instruments). Upon such
assignment and assumption, the Borrower shall be relieved of its
obligations hereunder, under the other Loan Documents and under
the Defeasance Security Agreement.
5. Certain Provisions Regarding Payments, Prepayments and
Remittances.
(a) Payments. Except to the extent that specific provisions are
set forth in this Note or any other Loan Document with respect to
application of payments, all payments received by the holder hereof
shall be applied, to the extent thereof, to the indebtedness secured
by the Security Instrument in such manner and order as the Lender may
elect in its sole discretion, any instructions from the Borrower or
anyone else to the contrary notwithstanding. All payments made as
scheduled on this Note shall be applied, to the extent thereof, to
accrued but unpaid interest, late charges, accrued fees, the unpaid
Principal Amount, and any other sums due and unpaid to the Lender in
connection with the Loan, in such manner and order as the Lender may
elect in its sole discretion.
(b) Prepayments. All involuntary prepayments on this Note shall
be applied, to the extent thereof, to accrued but unpaid interest on
the amount prepaid, to the remaining Principal Amount, and any other
sums due and unpaid to the Lender in connection with the Loan, in such
manner and order as the Lender may elect in its sole discretion,
including but not limited to application to principal installments in
inverse order of maturity.
(c) Remittances. Remittances in payment of any part of the
indebtedness other than in the required amount in immediately
available U.S. funds shall not, regardless of any receipt or credit
issued therefor, constitute payment until the required amount is
actually received by the holder hereof in immediately available U.S.
funds and shall be made and accepted subject to the condition that any
check or draft may be handled for collection in accordance with the
practices of the collecting bank or banks.
6. Acceleration. If the full outstanding Principal Amount of this
Note, together with all interest due thereon and any other amounts due in
respect of this Note are not paid on or before the Maturity Date or are
accelerated under the terms of this Note or the other Loan Documents, the
then outstanding Principal Amount, all accrued but unpaid interest thereon
and any other amounts due in respect of this Note shall bear interest at
the Note Rate plus four percent (4%) per annum until such Principal Amount
and interest have been paid in full. Further, in the event of such
acceleration, the Loan, and all other indebtedness of the Borrower to the
Lender arising out of or in connection with the Loan shall become
immediately due and payable, without presentment, demand, protest, dishonor
or notice of any kind, all of which are hereby waived by the Borrower.
7. Non-Recourse Loan.
(a) Subject to the provisions of Section 8 and notwithstanding
any other provision in this Note or the other Loan Documents, the
personal liability of the Borrower to pay the Principal Amount and
interest thereon and any other sums under this Note or the other Loan
Documents shall be limited to (i) the Premises, (ii) the Intangible
Personalty, (iii) all Rents and Profits distributed (except to the
extent that the Borrower did not have the legal right, because of a
bankruptcy, receivership or similar judicial proceeding, to direct the
disbursement of such sums), and not applied, first, to the payment of
reasonable Operating Expenses as such Operating Expenses become due
and payable, and then, to the payment of the Principal Amount and
interest then due and payable under this Note and any other sums due
under the other Loan Documents (including but not limited to deposits,
escrows and/or reserves); provided, however, that there shall be no
personal liability incurred for Rents and Profits distributed in any
particular fiscal year to the extent that all Operating Expenses and
principal and interest due under this Note and other sums due under
the other Loan Documents (including but not limited to deposits,
escrows and/or reserves) are paid in full in that fiscal year, and
(iv) all other collateral or security for the Loan.
(b) Except as provided above and in Section 8, the Lender shall
not seek (i) any judgment for a deficiency against the Borrower or any
of the Borrower's heirs, legal representatives, successors or assigns,
in any action to enforce any right or remedy under the Security
Instrument, or (ii) any judgment on this Note except as may be
necessary in any action brought under the Security Instrument to
enforce the lien against the Premises, the Intangible Personalty, the
Rents and Profits or any other collateral or security for the Loan, or
to exercise any remedies under any of the other Loan Documents.
8. Exceptions to Non-Recourse Liability.
(a) If, without obtaining the Lender's prior written consent,
there shall occur any violation of any of the Recourse Covenants (as
defined in the Loan Agreement), and if such violation shall continue
for thirty (30) days after written notice thereof from the Lender to
the Borrower, then Section 7 hereof shall not apply from and after the
date which is thirty (30) days after such written notice and the
Borrower shall be personally liable on a joint and several basis for
full recourse liability under this Note and the other Loan Documents.
(b) Notwithstanding Section 7 hereof, the Borrower shall be
personally liable in the amount of any loss, damage or cost (including
but not limited to reasonable attorney's fees) resulting from (i)
fraud or intentional misrepresentation by the Borrower or any agent,
contractor or employee of the Borrower, in connection with obtaining
the Loan, or in complying with any of the Borrower's obligations under
the Loan Documents, (ii) sale proceeds, insurance proceeds,
condemnation awards, security deposits from tenants or other sums or
payments received by or on behalf of the Borrower in its capacity as
owner of the Premises and not applied in accordance with the
provisions of the Loan Documents, (iii) all Rents and Profits
distributed and not applied, first, to the payment of reasonable
Operating Expenses as such Operating Expenses become due and payable,
and then, to the payment of the Principal Amount and interest then due
and payable under this Note and any other sums due under the other
Loan Documents (including but not limited to deposits, escrows and/or
reserves); provided, however, that there shall be no personal
liability incurred for Rents and Profits distributed in any particular
fiscal year to the extent that all Operating Expenses and principal
and interest due under this Note and other sums due under the other
Loan Documents (including but not limited to deposits, escrows and/or
reserves) are paid in full in that fiscal year, (iv) the Borrower's
failure following any Event of Default to deliver to the Lender on
demand all Rents and Profits, security deposits, books and records
relating to the Premises, (v) any damage to the Premises caused by the
willful, wanton or tortious act or omission of the Borrower, (vi) the
Borrower's failure to procure and maintain the insurance policies
required by the Loan Agreement, (vii) the Lender's incurrence and
obligation to pay attorney's fees, costs, and expenses in any
bankruptcy, receivership or similar case filed by or against the
Borrower, (viii) any transfer tax, recordation tax or other similar
tax or assessment, if any, in connection with the transactions
contemplated by the Loan Documents, or (ix) any violation of or
failure to comply with the Environmental Covenants (as defined in the
Loan Agreement), including without limitation, the indemnification
obligations set forth therein, except to the extent any such violation
or failure to comply is recovered or recoverable under any
environmental insurance policy furnished by the Borrower to the Lender
in connection with the Loan. Notwithstanding the foregoing, the
Borrower shall not be personally liable under clauses (ii), (iii) or
(iv) of this subsection 8(b) to the extent that the Borrower did not
have the legal right, because of a bankruptcy, receivership or similar
judicial proceeding, to direct the disbursement of the sums described
in such clauses.
9. No Waiver or Impairment. No provision of Section 7 or Section 8
shall (a) affect any guaranty or similar agreement executed in connection
with the debt evidenced by this Note, (b) release or reduce the debt
evidenced by this Note, (c) impair the right of the Lender to enforce the
Environmental Covenants pursuant to the provisions of the Loan Agreement,
(d) impair the lien of the Security Instrument, or (e) constitute a waiver,
forfeiture, abrogation or limitation of or on any right accorded by any law
establishing a debtor-in-relief proceeding (including, but not limited to,
Title 11, U.S. Code) which right provides for the assertion in such debtor-
in-relief proceeding of a deficiency arising by reason of the insufficiency
of collateral notwithstanding an agreement of the holder thereof not to
assert such a deficiency.
10. Expenses. In the event this Note is not paid when due at any
stated or accelerated maturity, the Borrower will pay, in addition to the
Principal Amount and interest hereunder, all costs of collection, including
reasonable attorney's fees.
11. Taxpayer Identification Number. This Note provides for the
Borrower's federal taxpayer identification number to be inserted on the
first page of this Note. If such number is not available at the time of
execution of this Note or is not inserted by the Borrower, the Borrower
hereby authorizes and directs the Lender to fill in such number on the
first page of this Note when the Borrower provides to Lender, advises the
Lender of, or the Lender otherwise obtains, such number.
12. Notice. Any notice to the Lender provided for in this Note shall
be given in the manner provided in the Loan Agreement.
13. Governing Law and Jurisdiction. This Note and the other Loan
Documents and all matters relating thereto shall be governed by and
construed and interpreted in accordance with the laws of the State where
the Premises is located. The Borrower hereby submits to the jurisdiction
of the state and federal courts located in the State where the Premises is
located and agree that the Lender may, at its sole discretion, enforce its
rights under the Loan Documents in such courts.
14. Maximum Rate of Interest. This Note is subject to the express
condition that at no time shall the Borrower be obligated or required to
pay interest on the Principal Amount at a rate which could subject the
Lender to either civil or criminal liability as a result of being in excess
of the maximum interest rate which the Borrower is permitted by applicable
law to contract or agree to pay. If by the terms of this Note, the
Borrower is at any time required or obligated to pay interest on the
Principal Amount at a rate in excess of such maximum rate, the rate of
interest under this Note shall be deemed to be immediately reduced to such
maximum rate and all previous payments in excess of the maximum rate shall
be deemed to have been payments in reduction of the Principal Amount and
not on account of the interest due hereunder.
15. No Third Party Beneficiary. The Borrower acknowledges and agrees
that (i) any arrangement for interim advancement of funds that originally
is made by the Lender named in this Note to any investor in the secondary
mortgage market is made pursuant to a contractual obligation of such Lender
to that investor that is independent of, and separate and distinct from,
the obligation of the Borrower for the full and prompt payment of the
indebtedness evidenced by this Note, (ii) the Borrower shall not be deemed
to be a third party beneficiary of such arrangement for interim advancement
of funds, and (iii) no such interim advancement arrangement shall
constitute any person or entity making such payment as a guarantor or
surety of the Borrower's obligations, notwithstanding the fact that the
obligations under any such interim advancement arrangement may be
calculated with reference to amounts payable under this Note or the other
Loan Documents.
16. Assignment. The holder of this Note may, from time to time,
sell, assign or participate or offer to sell, assign or participate the
Loan, or interests therein, to one or more Persons (including, without
limitation, assignees or participants) and is hereby authorized to
disseminate any information it has pertaining to the Loan, including,
without limitation, any security for this Note and credit information on
the Borrower and any of its principals, to any such Person, and to the
extent, if any, specified in any such sale, assignment or participation,
such Person shall have the rights and benefits with respect to this Note
and the other Loan Documents as such Person would have if such Person were
the Lender hereunder.
17. General Provisions. A determination that any provision of this
Note is unenforceable or invalid shall not affect the enforceability or
validity of any other provision and the determination that the application
of any provision of this Note to any Person or circumstance is illegal or
unenforceable shall not affect the enforceability or validity of such
provision as it may apply to other Persons or circumstances. The Borrower
warrants and represents to the Lender and all other holders of this Note
that the Loan is and will be for business or commercial purposes and not
primarily for personal, family, or household use. The terms, provisions,
covenants and conditions hereof shall be binding upon the Borrower and the
heirs, devisees, representatives, successors and assigns of the Borrower.
Captions and headings in this Note are for convenience only and shall be
disregarded in construing it.
18. WRITTEN AGREEMENT.
(a) THE RIGHTS AND OBLIGATIONS OF THE BORROWER AND THE LENDER
SHALL BE DETERMINED SOLELY FROM THIS WRITTEN NOTE AND THE OTHER LOAN
DOCUMENTS, AND ANY PRIOR ORAL OR WRITTEN AGREEMENTS BETWEEN THE LENDER
AND THE BORROWER CONCERNING THE SUBJECT MATTER HEREOF AND OF THE OTHER
LOAN DOCUMENTS ARE SUPERSEDED BY AND MERGED INTO THIS NOTE AND THE
OTHER LOAN DOCUMENTS.
(b) THIS NOTE AND THE OTHER LOAN DOCUMENTS MAY NOT BE VARIED BY
ANY ORAL AGREEMENTS OR DISCUSSIONS THAT OCCUR BEFORE,
CONTEMPORANEOUSLY WITH, OR SUBSEQUENT TO THE EXECUTION OF THIS NOTE OR
THE LOAN DOCUMENTS.
(c) THIS WRITTEN NOTE AND THE OTHER LOAN DOCUMENTS REPRESENT THE
FINAL AGREEMENTS BETWEEN THE PARTIES AND MAY NOT BE CONTRADICTED BY
EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS OF
THE PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE
PARTIES.
19. WAIVER OF JURY TRIAL. THE LENDER AND THE BORROWER HEREBY WAIVE,
TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, THE RIGHT TO A TRIAL BY
JURY IN ANY ACTION OR PROCEEDING BASED UPON, OR RELATED TO, THE SUBJECT
MATTER OF THIS NOTE. THIS WAIVER IS KNOWINGLY, INTENTIONALLY, AND
VOLUNTARILY MADE BY THE LENDER AND THE BORROWER, AND THE LENDER AND THE
BORROWER ACKNOWLEDGE THAT NO PERSON ACTING ON BEHALF OF ANOTHER PARTY TO
THIS NOTE HAS MADE ANY REPRESENTATIONS OF FACT TO INDUCE THIS WAIVER OF
TRIAL BY JURY OR IN ANY WAY TO MODIFY OR NULLIFY ITS EFFECT. THE LENDER
AND THE BORROWER FURTHER ACKNOWLEDGE THAT THEY HAVE BEEN REPRESENTED (OR
HAVE HAD THE OPPORTUNITY TO BE REPRESENTED) IN THE SIGNING OF THIS NOTE AND
IN THE MAKING OF THIS WAIVER BY INDEPENDENT LEGAL COUNSEL, SELECTED OF
THEIR OWN FREE WILL, AND THAT THEY HAVE HAD THE OPPORTUNITY TO DISCUSS THIS
WAIVER WITH COUNSEL.
IN WITNESS WHEREOF, the Borrower has caused this Note to be duly
executed under seal as of the day and year first above written.
BORROWER:
WELLSFORD SONTERRA LLC, an Arizona
limited liability company
By: Wellsford/Sonterra Manager, LLC, an
Arizona limited liability company, its
sole Manager
By: Wellsford Real Properties, Inc., a
Maryland corporation,
its sole Member
By:/s/ David M. Strong
--------------------------------
- -
Name: David M. Strong
Title: Vice President
Drawn By and Return To: Loan No.: 50750
Moore & Van Allen, PLLC (EKO) Servicing No.: 880802067
NationsBank Corporate Center
100 North Tryon Street, Floor 47
Charlotte, North Carolina 28202-4003
STATE OF ARIZONA DEED OF TRUST,
ASSIGNMENT OF LEASES AND RENTS,
COUNTY OF PIMA SECURITY AGREEMENT AND
FIXTURE FILING
COLLATERAL IS OR INCLUDES FIXTURES
THIS DEED OF TRUST, ASSIGNMENT OF LEASES AND RENTS AND SECURITY
AGREEMENT (the "Security Instrument") is made and entered into as of the
27th day of February, 1998, by WELLSFORD SONTERRA LLC, an Arizona limited
liability company, whose mailing address is c/o Wellsford Real Properties,
Inc., 1623 Blake Street, Suite 270, Denver, Colorado 80202 (the
"Borrower"), in favor of NATIONSBANK, N.A., a national banking association,
whose mailing address is c/o Midland Loan Services, L.P., 210 W. 10th
Street, 6th Floor, Kansas City, Missouri 64105 (the "Trustee"), and
NATIONSBANK, N.A., a national banking association, whose mailing address is
c/o Midland Loan Services, L.P., 210 W. 10th Street, 6th Floor, Kansas
City, Missouri 64105, together with its successors and assigns (the
"Lender").
This Security Instrument secures (i) the obligations of the Borrower
under the promissory note, executed by the Borrower, of even date herewith
payable to the order of the Lender in the original principal amount of
$16,400,000.00 (such promissory note and all amendments, renewals,
replacements, extensions or other modifications being hereinafter referred
to as the "Note"); (ii) the performance by the Borrower of its obligations
under the Loan Agreement of even date herewith, between the Borrower and
the Lender (as amended, modified or restated, the "Loan Agreement") and
under all other Loan Documents (as defined in the Loan Agreement) executed
by the Borrower in connection with the loan evidenced by the Note (the
"Loan"); and (iii) the payment by the Borrower of all other sums, with
interest thereon, advanced in accordance with the Note, the Loan Agreement
or any other Loan Document to protect the security of this Security
Instrument.
Capitalized terms used, but not defined, herein shall have the
meanings given to such terms in the Loan Agreement. All of the terms,
definitions, conditions and covenants of the Loan Agreement are expressly
made a part of this Security Instrument by reference in the same manner and
with the same effect as if set forth herein at length and any beneficiary
of this Security Instrument is entitled to the benefits of and remedies
provided in the Loan Agreement, the Note and other Loan Documents by and
between the Borrower and the Lender.<PAGE>
W I T N E S S E T H:
The Borrower, in consideration of the indebtedness herein recited,
irrevocably grants, conveys and assigns to the Trustee and the Trustee's
successors and assigns, in trust, with power of sale, all of the following
described land, real property interests, buildings, improvements, fixtures,
furniture and appliances and other personal property:
(a) All that tract or parcel of land and other real property
interests in Pima County, Arizona more particularly described in Exhibit A
attached hereto and made a part hereof (the "Land"), subject to the
permitted encumbrances described in Exhibit B attached hereto and made a
part hereof; and
(b) All buildings, improvements and tenements of every kind and
description now or hereafter erected or placed on the Land (the
"Improvements") and all materials intended for construction,
reconstruction, alteration and repair of such Improvements now or hereafter
erected or placed thereon, all of which materials shall be deemed to be
included within the premises hereby conveyed immediately upon the delivery
thereof to the Land, and all Tangible Personalty (as defined in the
Personalty Rider attached hereto and made a part hereof for all purposes).
TO HAVE AND HOLD the same, together with all privileges,
hereditaments, easements and appurtenances thereunto belonging, to the
Trustee and the Trustee's successors and assigns to secure the indebtedness
herein recited and upon this special trust: that should the indebtedness
secured hereby be paid according to the tenor and effect thereof when the
same shall be due and payable and should the Borrower timely and fully
discharge its obligations hereunder and under the other Loan Documents,
then the Land, Improvements and Tangible Personalty (hereinafter
collectively referred to as the "Premises") shall be reconveyed to the
Borrower or the title thereto shall be revested according to the provisions
of applicable law.
As additional collateral and further security for the indebtedness
secured hereby, to the fullest extent permitted by applicable law, the
Borrower does hereby assign to the Lender and grants to the Lender a
security interest in all of the right, title and interest of the Borrower
in and to any and all Intangible Personalty (as defined in the Personalty
Rider attached hereto), and the Borrower agrees to execute and deliver to
the Lender such additional instruments, in form and substance satisfactory
to the Lender, as may hereafter be requested by the Lender to evidence and
confirm said assignment; provided, however, that acceptance of any such
assignment shall not be construed as a consent by the Lender to any of the
foregoing or to impose upon the Lender any obligation with respect thereto.
As part of the consideration for the indebtedness secured hereby, the
Borrower hereby absolutely and unconditionally assigns and transfers to the
Lender and grants to the Lender a security interest in any and all leases
and other occupancy or use agreements (whether oral or written) now
existing or hereafter made and affecting the Premises as such leases and
other agreements may have been, or may from time to time be hereafter,
modified, extended and renewed, with all the security deposits, rents
(including, without limitation, room rents and room revenues, if any),
issues, profits, revenues and other income of the Premises from time to
time accruing therefrom (the "Rents and Profits"), and the acceptance of
this assignment and the collection of the Rents and Profits shall not
constitute a waiver of any rights of the Lender under the terms of the Loan
Documents. So long as there shall exist no Event of Default (as defined in
the Loan Agreement), the Borrower shall have the right under a license
granted hereby (but limited as provided elsewhere in this Security
Instrument and in the Loan Agreement) to collect upon, but not more than
two months prior to accrual, all of said Rents and Profits arising from or
out of such leases and other agreements or any modifications, renewals or
extensions thereof, or from or out of the Premises or any part thereof, and
the Borrower shall receive such Rents and Profits, as a trust fund to be
applied, and the Borrower hereby covenants to so apply same, to the payment
of taxes and assessments upon the Premises before penalty or interest are
due thereon, to the cost of such insurance and of such maintenance and
repairs as is required by the terms of the Security Instrument and Loan
Agreement, to the payment of Operating Expenses (as defined in the Loan
Agreement), and to the payment of interest and principal and other amounts
becoming due on the Loan or under the Loan Documents, before using any part
of the same for any other purposes.
All the Tangible Personalty which comprises a part of the Premises
shall, as far as permitted by applicable law, be deemed to be affixed to
the Land and conveyed therewith. As to the balance of the Tangible
Personalty and the Intangible Personalty, this Security Instrument shall be
considered to be a security agreement which creates a security interest in
such items for the benefit of the Lender. In that regard, the Borrower
grants to the Lender all of the rights and remedies of a secured party
under the laws of the state in which the Premises is located.
The Borrower covenants, warrants, represents and agrees as follows:
1. Amount Secured. This Security Instrument secures all present and
future loan disbursements made by the Lender under the Note, and all other
sums from time to time owing to the Lender by the Borrower under the other
Loan Documents, including, without limitation, sums advanced in accordance
herewith to protect the security of this Security Instrument. The
principal amount secured hereby is $16,400,000.00.
2. Acceleration; Foreclosure. Upon the occurrence of an Event of
Default, the Lender, at the Lender's option, may declare the entire balance
of the Loan, including all accrued interest, to be immediately due and
payable without further demand and may foreclose the lien of this Security
Instrument by judicial proceeding or pursuant to the power of sale hereby
granted, and may pursue any other remedies permitted by applicable law or
provided herein or in any of the other Loan Documents. The Lender shall be
entitled to collect all fees, costs and expenses incurred in pursuing such
remedies, including, but not limited to, reasonable attorney's fees, costs
of documentary evidence, abstracts and title reports.
3. Rights Upon Event of Default. Upon the occurrence of any Event of
Default, the Lender, immediately and without additional notice and without
liability therefor to the Borrower, except for gross negligence or willful
misconduct, may, in accordance with, and subject to, the terms and
conditions of the Loan Agreement, do or cause to be done any or all of the
following: (a) take physical possession of the Premises; (b) exercise its
right to collect the Rents and Profits; (c) enter into contracts for the
repair and maintenance of the Improvements thereon; (d) expend Loan funds
and any Rents and Profits for payment of any taxes, insurance premiums,
assessments and charges for repair and maintenance of the Improvements,
preservation of the lien of this Security Instrument and satisfaction and
fulfillment of any liabilities or obligations of the Borrower arising out
of or in any way connected with the use, repair or maintenance of
Improvements on the Premises whether or not such liabilities and
obligations in any way affect, or may affect, the lien of this Security
Instrument; (e) enter into leases demising the Premises or any part
thereof; (f) take such steps to protect and enforce the specific
performance of any covenant, condition or agreement in the Note, this
Security Instrument, the Loan Agreement, or the other Loan Documents, or to
aid in the execution of any power herein granted; (g) take such steps to
protect and enforce the specific performance of any covenant, condition or
agreement as to the Intangible Personalty; and (h) generally, supervise,
manage, and contract with reference to the Premises as if the Lender were
an equitable owner of the Premises. Notwithstanding the occurrence of an
Event of Default or acceleration of the Loan, the Lender shall continue to
have the right to pay money, whether or not Loan funds, for the purposes
described in the Loan Agreement, and all such sums and interest thereon
shall be secured hereby. The Borrower also agrees that any of the
foregoing rights and remedies of the Lender may be exercised at any time
independently of the exercise of any other such rights and remedies, and
the Lender may continue to exercise any or all such rights and remedies
until the Event of Default is cured or until foreclosure and the conveyance
of the Premises to the high bidder or until the Loan is otherwise satisfied
or paid in full.
4. Rents and Profits.
(a) Collection. The Borrower hereby authorizes the Lender, by its
employees or agents, at its option, after the occurrence of an Event of
Default, to terminate the aforesaid license granted to the Borrower to
collect said Rents and Profits, and to enter upon the Premises, and to
collect, in accordance with the Loan Agreement and in the name of the
Borrower or in its own name, as assignee, the Rents and Profits accrued but
unpaid and in arrears at the date of said Event of Default as well as the
Rents and Profits thereafter accruing and becoming payable during the
period of the continuance of such Event of Default or any other Event of
Default; and to this end, the Borrower further agrees that it will
facilitate in all reasonable ways the Lender's collection of said Rents and
Profits, and will, upon request by the Lender, execute a written notice to
each tenant directing the tenant to pay rent to the Lender. Upon such
entry, the Lender shall be authorized, but not obligated, to take over and
assume the control, care, management, operation, repair and maintenance of
the Premises and to perform such other acts as the Lender in its sole
discretion may deem proper, and to expend such sums out of the income of
the Premises as may be needful in connection therewith (including the right
to effect new leases, to cancel or surrender existing leases, to evict
tenants, to bring or defend any suits in connection with the possession of
any portion of the Premises in its own name or the Borrower's name, to
alter or to amend the terms of existing leases, to renew existing leases,
and to make concessions to the tenants). The Borrower hereby releases all
claims against the Lender arising out of such management, operation, repair
and maintenance, excepting the liability of the Lender to account as
hereinafter set forth, and except claims arising from the gross negligence
or willful misconduct of the Lender.
(b) Indemnity. Unless and until the license granted to the Borrower
in this Security Instrument to collect the Rents and Profits is terminated
and the Lender enters the Premises as described herein, the Lender shall
not be obligated to perform or discharge any obligation or duty to be
performed or discharged by the Borrower under any of said leases, and the
Borrower hereby agrees to indemnify the Lender for, and to save it harmless
from, any and all liability arising from any of said leases or from this
assignment, and this assignment shall not place responsibility for the
conduct, care, management, or repair of the Premises upon the Lender, or
make the Lender responsible or liable for any negligence in the management,
operation, upkeep, repair or control of said Premises resulting in loss or
injury to, or death of any invitee, tenant, licensee, employee or stranger
and/or damage to, or destruction of the Premises.
5. Appointment of Receiver. Upon the occurrence of an Event of Default,
the Lender shall be entitled, without additional notice and without regard
to the adequacy of any security for the Loan or the solvency of any party
bound for its payment, to seek the appointment of a receiver to take
possession of and to operate the Premises, and to collect the Rents and
Profits, all expenses of which shall be added to the Loan and secured
hereby.
6. Waivers. No waiver of any Default Condition or Event of Default shall
at any time thereafter be held to be a waiver of any rights of the Lender
stated anywhere in the Note, this Security Instrument, the Loan Agreement
or any of the other Loan Documents, nor shall any waiver of any prior
Default Condition or Event of Default operate to waive any subsequent
Default Condition and/or Event of Default. All remedies provided in this
Security Instrument, in the Note, in the Loan Agreement and in the other
Loan Documents are cumulative and may, at the election of the Lender, be
exercised alternatively, successively, or in any manner and are in addition
to any other rights provided by applicable law.
7. Substitution of Trustee. If, for any reason, the Lender shall elect
to substitute for the Trustee herein named (or for any successor to said
Trustee), the Lender shall have the right to appoint successor Trustee(s)
by duly acknowledged written instruments, and each such successor Trustee
immediately upon recordation of an instrument so appointing said successor
Trustee shall become successor in title to the Premises for the uses and
purposes of this Security Instrument, with all the powers, duties and
obligations conferred on the Trustee in the same manner and to the same
effect as though said successor Trustee were named herein as the Trustee.
If more than one Trustee has been appointed, each of such Trustees and each
successor thereto shall be and hereby is empowered to act independently.
8. Terms. The singular used herein shall be deemed to include the
plural; the masculine deemed to include the feminine and neuter; and the
named parties deemed to include their heirs, successors and assigns. The
term "Lender" shall include any payee of the indebtedness hereby secured or
any transferee thereof whether by operation of law or otherwise.
9. Notices. All notices and other communications shall have been duly
given and shall be effective (i) when delivered, (ii) when transmitted via
telecopy (or other facsimile device) to the number set forth below, (iii)
on the day following the day on which the same has been delivered prepaid
to a reputable national overnight air courier service, or (iv) on the third
Business Day following the day on which the same is sent by certified or
registered mail, postage prepaid, in each case to the respective parties at
the address set forth below, or at such other address as such party may
specify by written notice to the other party hereto. No notice of change
of address shall be effective except upon actual receipt. This Section
shall not be construed in any way to affect or impair any waiver of notice
or demand provided in any other Loan Document or to require giving of
notice or demand to or upon any Person in any situation or for any reason.
if to Borrower: Wellsford Sonterra LLC
c/o Wellsford Real Properties, Inc.
1623 Blake Street, Suite 270
Denver, Colorado 80202
Attn: David M. Strong
Telephone: (303) 534-4396
Telecopy: (303) 534-4398
to the Trustee: NationsBank, N.A.
c/o Midland Loan Services, L.P.
210 W. 10th Street, 6th Floor
Kansas City, Missouri 64105
Attn: Servicing Manager
Telephone: (800) 894-9205
Telecopy: (816) 843-5522
to the Lender: NationsBank, N.A.
c/o Midland Loan Services, L.P.
210 W. 10th Street, 6th Floor
Kansas City, Missouri 64105
Attn: Servicing Manager
Telephone: (800) 894-9205
Telecopy: (816) 843-5522
with a copy to: Moore & Van Allen, PLLC (EKO)
NationsBank Corporate Center
100 North Tryon Street, Floor 47
Charlotte, North Carolina 28202-4003
Telephone: (704) 331-1000
Telecopy: (704) 331-1159
The parties hereto agree that any notice sent to the Borrower at its
address set forth herein (or designated in accordance with this Section)
shall be deemed notice to all general partners or members of the Borrower,
if any. Personal delivery to a party or to any officer, partner, member,
agent or employee of such party at its address herein shall constitute
receipt. Rejection or other refusal to accept or inability to deliver
because of changed address of which no notice has been received shall also
constitute receipt.
10. Greater Estate. In the event that the Borrower is the owner of a
leasehold estate with respect to any portion of the Premises and, prior to
the satisfaction of the indebtedness secured hereby and the cancellation of
this Security Instrument of record, Borrower obtains a fee estate in such
portion of the Premises, then, such fee estate shall automatically, and
without further action of any kind on the part of Borrower, be and become
subject to the security lien of this Security Instrument.
11. Imposition of Tax. In the event of the passage of any state, federal,
municipal or other governmental law, order, rule or regulation, in any
manner changing or modifying the laws now in force governing the taxation
of debts secured by deeds of trust or the manner of collecting taxes so as
to affect adversely the Lender, the Borrower will promptly pay any such tax
on or before the due date thereof; and if the Borrower fails to make such
prompt payment or if any such state, federal, municipal or other
governmental law, order, rule or regulation prohibits the Borrower from
making such payment or would penalize the Lender if the Borrower makes such
payment, then the entire balance of the Loan shall become due and payable
upon demand at the sole option of the Lender.
12. Headings. The captions and headings herein are inserted only as a
matter of convenience and for reference and in no way define, limit, or
describe the scope of this Security Instrument nor the intent of any
provision hereof.
13. General Provisions. A determination that any provision of this
Security Instrument is unenforceable or invalid shall not affect the
enforceability or validity of any other provision and the determination
that the application of any provision of this Security Instrument to any
Person or circumstance is illegal or unenforceable shall not affect the
enforceability or validity of such provision as it may apply to other
Persons or circumstances. This Security Instrument may not be amended
except in a writing specifically intended for such purpose and executed by
the party against whom enforcement of the amendment is sought. The holder
of this Security Instrument may, from time to time, sell or offer to sell
the Loan, or any interests therein, to one or more transferees, assignees
or participants and is hereby authorized to disseminate any information it
has pertaining to the Loan, including, without limitation, any security for
this Security Instrument and credit information on the Borrower and any of
its principals to any such transferee, assignee or participant or
prospective transferee, assignee or participant, and to the extent, if any,
specified in any such transfer instrument, assignment or participation, and
such transferee, assignee or participant shall have the rights and benefits
with respect to this Security Instrument and the other Loan Documents as
such Person would have if such Person were the Lender hereunder. The
Borrower warrants and represents to the Lender and all other holders of
this Security Instrument that the Loan is and will be for business or
commercial purposes only and not primarily for personal, family, or
household use. The terms, provisions, covenants and conditions hereof
shall be binding upon the Borrower and the heirs, devisees,
representatives, successors and assigns of the Borrower.
14. WRITTEN AGREEMENT.
(a) THE RIGHTS AND OBLIGATIONS OF THE BORROWER AND THE LENDER SHALL
BE DETERMINED SOLELY FROM THIS WRITTEN SECURITY INSTRUMENT AND THE OTHER
LOAN DOCUMENTS, AND ANY PRIOR ORAL OR WRITTEN AGREEMENTS BETWEEN THE LENDER
AND THE BORROWER CONCERNING THE SUBJECT MATTER HEREOF AND OF THE OTHER LOAN
DOCUMENTS ARE SUPERSEDED BY AND MERGED INTO THIS SECURITY INSTRUMENT AND
THE OTHER LOAN DOCUMENTS.
(b) THIS SECURITY INSTRUMENT AND THE OTHER LOAN DOCUMENTS MAY NOT BE
VARIED BY ANY ORAL AGREEMENTS OR DISCUSSIONS THAT OCCUR BEFORE,
CONTEMPORANEOUSLY WITH, OR SUBSEQUENT TO THE EXECUTION OF THIS SECURITY
INSTRUMENT OR THE LOAN DOCUMENTS.
(c) THIS WRITTEN SECURITY INSTRUMENT AND THE OTHER LOAN DOCUMENTS
REPRESENT THE FINAL AGREEMENTS BETWEEN THE PARTIES AND MAY NOT BE
CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL
AGREEMENTS OF THE PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN
THE PARTIES.
15. WAIVER OF JURY TRIAL. THE LENDER, THE TRUSTEE AND THE BORROWER HEREBY
WAIVE, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, THE RIGHT TO A
TRIAL BY JURY IN ANY ACTION OR PROCEEDING BASED UPON, OR RELATED TO, THE
SUBJECT MATTER OF THIS SECURITY INSTRUMENT. THIS WAIVER IS KNOWINGLY,
INTENTIONALLY, AND VOLUNTARILY MADE BY THE LENDER, THE TRUSTEE AND THE
BORROWER, AND THE LENDER, THE TRUSTEE AND THE BORROWER ACKNOWLEDGE THAT NO
PERSON ACTING ON BEHALF OF ANOTHER PARTY TO THIS AGREEMENT HAS MADE ANY
REPRESENTATIONS OF FACT TO INDUCE THIS WAIVER OF TRIAL BY JURY OR IN ANY
WAY TO MODIFY OR NULLIFY ITS EFFECT. THE LENDER, THE TRUSTEE AND THE
BORROWER FURTHER ACKNOWLEDGE THAT THEY HAVE BEEN REPRESENTED (OR HAVE HAD
THE OPPORTUNITY TO BE REPRESENTED) IN THE SIGNING OF THIS SECURITY
INSTRUMENT AND IN THE MAKING OF THIS WAIVER BY INDEPENDENT LEGAL COUNSEL,
SELECTED OF THEIR OWN FREE WILL, AND THAT THEY HAVE HAD THE OPPORTUNITY TO
DISCUSS THIS WAIVER WITH COUNSEL.
16. Non-Recourse. The Borrower's liability hereunder shall be limited to
the same extent provided in the Note.
IN WITNESS WHEREOF, the Borrower has executed this Security Instrument
under seal as of the above written date.
BORROWER:
WELLSFORD SONTERRA LLC,
an Arizona limited liability company
By: Wellsford/Sonterra Manager, LLC, an
Arizona limited liability company, its
sole Manager
By: Wellsford Real Properties, Inc., a
Maryland corporation,
its sole Member
By:/s/ David M. Strong
-------------------------------
Name: David M. Strong
Title: Vice President
STATE OF ___________
COUNTY OF __________
The foregoing instrument was acknowledged before me this ____ day of
February, 1998, by _______________, _________________ of Wellsford Real
Properties, Inc., a Maryland corporation, the sole Member of
Wellsford/Sonterra Manager, LLC, an Arizona limited liability company, the
sole Manager of Wellsford Sonterra LLC, an Arizona limited liability
company.
_____________________________________
Notary Public
My Commission Expires:_______________
(Notarial Seal)
<PAGE>
PERSONALTY RIDER
(Retail/Industrial/Office/Multifamily)
The term "Intangible Personalty" as used herein shall mean any and all
present and future accounts, general intangibles, instruments, documents
and chattel paper now or hereafter affecting or relating to the Premises or
any part thereof, and all proceeds or products thereof, including without
limitation, (i) all leases (including equipment leases), rental agreements,
sales contracts, management contracts, franchise and related agreements,
construction contracts, architects' contracts, technical services
agreements, licenses and permits, (ii) all receivables, customer
obligations, installment payment obligations and other obligations now
existing or hereafter arising or created out of the sale or lease of
property or rendering of services by the Borrower in its business of
ownership and operation of the Premises or acquired from others including,
without limiting the generality of the foregoing, from rental of rooms,
halls, stores, offices, exhibit or sales space of every kind, license,
lease and concession fees and rentals, health club membership fees, food
and beverage, whole and retail sales of merchandise, service charges, and
proceeds, if any, from business interruption or other loss of income
insurance, (iii) all of the Borrower's right, title and interest in all
royalties, license fees and other income or proceeds derived from
trademarks, trademark applications, the registration therefor, the good
will of the business symbolized by the same, now or hereafter filed, owned
or acquired.
The term "Tangible Personalty" as used herein shall mean any and all
fixtures, equipment, furnishings and other articles of personal property
now or hereafter owned by the Borrower and attached to or contained in and
used in connection with the Land and Improvements including, but not
limited to, all furniture, furnishings, apparatus, machinery, equipment,
motors, boilers, buildings, materials, appliances, fire prevention and
extinguishing apparatus, security and access control apparatus, trash
receptacles, bath tubs, water heaters, water closets, sinks, dishwashers,
disposals, washers, dryers, elevators, fittings, radiators, ranges,
refrigerators, awnings, storm windows, storm doors, shades, screens,
blinds, curtains and curtain rods, mirrors, cabinets, panelling, rugs,
pictures, antennas, trees, plants, carpeting, office equipment and other
furnishings and all plumbing, heating, lighting, cooking, laundry,
ventilating, refrigerating, incinerating, trash compacting, air-
conditioning and sprinkler equipment, telephone systems, televisions and
television systems, computer systems and fixtures and appurtenances thereto
and all renewals or replacements thereof or articles in substitution
thereof, whether or not the same are or shall be attached to the Land and
Improvements in any manner, and all proceeds and products of any of the
foregoing.
<PAGE>
EXHIBIT A
Legal Description
Blocks 19, 21, 22, 23 of the Resubdivision of Williams Centre, Pima County,
Arizona, according to the plat of record in the office of the Pima County
Recorder in Book 39 of Maps at Page 28.
<PAGE>
EXHIBIT B
Permitted Encumbrances
1. Taxes for the year 1998, not due or payable.
2. Reservations and exceptions in the Patent from the United States of
America, recorded in Book 52 of Deeds at Page 236, reading as follows:
Subject to any vested and accrued water rights for mining,
agricultural, manufacturing, or other purposes, and rights to ditches
and reservoirs used in connection with such water rights as may be
recognized and acknowledged by the local customs, laws, and decisions
of courts; and also subject to the right of the proprietor of a vein
or lode to extract and remove his ore therefrom, should the same be
found to penetrate or intersect the premises hereby granted, as
provided by law; and there is reserved from the lands hereby granted,
a right of way thereon for ditches or canals constructed by the
authority of the United States of America.
3. Easements and rights incident thereto as shown on the recorded plat of
said subdivision, as recorded in Book 39 of Maps at page 28, and as
modified by instrument recorded in Docket 9902 at page 1924.
4. Easement for the purpose stated herein, and rights incident thereto;
In favor of: Mountain States Telephone and Telegraph Company
Purpose: Communication and other facilities
Recorded in: Docket 4966 at Page 654
Affects: That portion shown on the sketch attached thereto
5. Covenants, conditions and restrictions,
Recorded in: Docket 7335 at Page 842; Assignment and Assumption of
Declarant's
Rights recorded in Docket 9882 at page 1580
6. Easement for the purpose stated herein, and rights incident thereto;
In favor of: Tucson Electric Power Company
Purpose: Electric Transmission or Distribution Line or System
Recorded in: Docket 10043 at Page 719
Affects: That portion shown on the sketch attached thereto
7. Agreement upon the terms and conditions contained therein;
For: Cable Television Service and Telephone License
Recorded in: Docket 10106 at Page 1003 and in Docket 10106 at Page
1013
8. Agreement upon the terms and conditions contained therein;
For: License and Easement
Recorded in: Docket 10106 at Page 1010
9. Easement for the purpose stated herein, and rights incident thereto;
In favor of: Tucson Electric Power Company
Purpose: Water Lines
Recorded in: Docket 10110 at Page 1202
Affects: That portion as described therein
10. Rights of tenants, as tenants only, under unrecorded leases or on
month to month tenancies.
11. Unrecorded Lease for a term 10 years, disclosed by instrument;
Entitled:
Lessor: Specified Properties VIII, L.P.
Lessee: Web Service Company Inc.
Dated: July 5, 1995
Recorded: September 25, 1995 in Docket 10135 at Page 580
Said lease is subordinate to the Deed of Trust
FHLMC Loan No. 679503102
MULTIFAMILY NOTE
(MULTISTATE)
(Blue Ridge at Palomino Park)
US $34,500,000.00 as of December 24, 1997
FOR VALUE RECEIVED, the undersigned ("Borrower") jointly and
severally (if more than one) promises to pay to the order of GMAC
COMMERCIAL MORTGAGE CORPORATION, a California corporation the principal sum
of THIRTY-FOUR MILLION FIVE HUNDRED THOUSAND and 00/100 Dollars (US
$34,500,000.00) with interest on the unpaid principal balance at the annual
rate of six and 92/100 percent (6.92%).
1. Defined Terms. As used in this Note, (i) the term "Lender"
means the holder of this Note, and (ii) the term "Indebtedness" means the
principal of, interest on, or any other amounts due at any time under, this
Note, the Security Instrument or any other Loan Document, including
prepayment premiums, late charges, default interest, and advances to
protect the security of the Security Instrument under Section 12 of the
Security Instrument. "Event of Default" and other capitalized terms used
but not defined in this Note shall have the meanings given to such terms in
the Security Instrument.
2. Address for Payment. All payments due under this Note shall
be payable at 650 Dresher Road, Horsham, Pennsylvania 19044, or such other
place as may be designated by written notice to Borrower from or on behalf
of Lender.
3. Payment of Principal and Interest. Principal and interest
shall be paid as follows:
(1) Unless disbursement of principal is made by Lender to
Borrower on the first day of the month, interest for the period beginning
on the date of disbursement and ending on and including the last day of the
month in which such disbursement is made shall be payable simultaneously
with the execution of this Note. Interest under this Note shall be
computed on the basis of a 360-day year consisting of twelve 30-day months.
(2) Consecutive monthly installments of principal and interest,
each in the amount of TWO HUNDRED TWENTY-SEVEN THOUSAND SIX HUNDRED
SEVENTY-EIGHT and 76/100 Dollars (US $227,678.76), shall be payable on the
first day of each month beginning on February 1, 1998 until the entire
unpaid principal balance evidenced by this Note is fully paid. Any accrued
interest remaining past due for 30 days or more shall be added to and
become part of the unpaid principal balance and shall bear interest at the
rate or rates specified in this Note, and any reference below to "accrued
interest" shall refer to accrued interest which has not become part of the
unpaid principal balance. Any remaining principal and interest shall be
due and payable on January 1, 2008 or on any earlier date on which the
unpaid principal balance of this Note becomes due and payable, by
acceleration or otherwise (the "Maturity Date"). The unpaid principal
balance shall continue to bear interest after the Maturity Date at the
Default Rate set forth in this Note until and including the date on which
it is paid in full.
(3) Any regularly scheduled monthly installment of principal and
interest that is received by Lender before the date it is due shall be
deemed to have been received on the due date solely for the purpose of
calculating interest due.
4. Application of Payments. If at any time Lender receives,
from Borrower or otherwise, any amount applicable to the Indebtedness which
is less than all amounts due and payable at such time, Lender may apply
that payment to amounts then due and payable in any manner and in any order
determined by Lender, in Lender's discretion. Borrower agrees that neither
Lender's acceptance of a payment from Borrower in an amount that is less
than all amounts then due and payable nor Lender's application of such
payment shall constitute or be deemed to constitute either a waiver of the
unpaid amounts or an accord and satisfaction.
5. Security. The Indebtedness is secured, among other things,
by a multifamily mortgage, deed to secure debt or deed of trust dated as of
the date of this Note (the "Security Instrument"), and reference is made to
the Security Instrument for other rights of Lender as to collateral for the
Indebtedness.
6. Acceleration. If an Event of Default has occurred and is
continuing, the entire unpaid principal balance, any accrued interest, the
prepayment premium payable under Paragraph 10, if any, and all other
amounts payable under this Note and any other Loan Document shall at once
become due and payable, at the option of Lender, without any prior notice
to Borrower. Lender may exercise this option to accelerate regardless of
any prior forbearance.
7. Late Charge. If any monthly amount payable under this Note
or under the Security Instrument or any other Loan Document is not received
by Lender within ten (10) days after the amount is due, Borrower shall pay
to Lender, immediately and without demand by Lender, a late charge equal to
five (5%) percent of such amount. Borrower acknowledges that its failure
to make timely payments will cause Lender to incur additional expenses in
servicing and processing the loan evidenced by this Note (the "Loan"), and
that it is extremely difficult and impractical to determine those
additional expenses. Borrower agrees that the late charge payable pursuant
to this Paragraph represents a fair and reasonable estimate, taking into
account all circumstances existing on the date of this Note, of the
additional expenses Lender will incur by reason of such late payment. The
late charge is payable in addition to, and not in lieu of, any interest
payable at the Default Rate pursuant to Paragraph 8.
8. Default Rate. So long as (a) any monthly installment under
this Note remains past due for 30 days or more, or (b) any other Event of
Default has occurred and is continuing, interest under this Note shall
accrue on the unpaid principal balance from the earlier of the due date of
the first unpaid monthly installment or the occurrence of such other Event
of Default, as applicable, at a rate (the "Default Rate") equal to the
lesser of 4 percentage points above the rate stated in the first paragraph
of this Note or the maximum interest rate which may be collected from
Borrower under applicable law. If the unpaid principal balance and all
accrued interest are not paid in full on the Maturity Date, the unpaid
principal balance and all accrued interest shall bear interest from the
Maturity Date at the Default Rate. Borrower also acknowledges that its
failure to make timely payments will cause Lender to incur additional
expenses in servicing and processing the Loan, that, during the time that
any monthly installment under this Note is delinquent for more than 30
days, Lender will incur additional costs and expenses arising from its loss
of the use of the money due and from the adverse impact on Lender's ability
to meet its other obligations and to take advantage of other investment
opportunities, and that it is extremely difficult and impractical to
determine those additional costs and expenses. Borrower also acknowledges
that, during the time that any monthly installment under this Note is
delinquent for more than 30 days or any other Event of Default has occurred
and is continuing, Lender's risk of nonpayment of this Note will be
materially increased and Lender is entitled to be compensated for such
increased risk. Borrower agrees that the increase in the rate of interest
payable under this Note to the Default Rate represents a fair and
reasonable estimate, taking into account all circumstances existing on the
date of this Note, of the additional costs and expenses Lender will incur
by reason of the Borrower's delinquent payment and the additional
compensation Lender is entitled to receive for the increased risks of
nonpayment associated with a delinquent loan.
9. Limits on Personal Liability.
(1) Except as otherwise provided in this Paragraph 9, Borrower
shall have no personal liability under this Note, the Security Instrument
or any other Loan Document for the repayment of the Indebtedness or for
the performance of any other obligations of Borrower under the Loan
Documents, and Lender's only recourse for the satisfaction of the
Indebtedness and the performance of such obligations shall be Lender's
exercise of its rights and remedies with respect to the Mortgaged Property
and any other collateral held by Lender as security for the Indebtedness.
This limitation on Borrower's liability shall not limit or impair Lender's
enforcement of its rights against any guarantor of the Indebtedness or any
guarantor of any obligations of Borrower.
(2) Borrower shall be personally liable to Lender for the
repayment of a portion of the Indebtedness equal to zero percent (0%)
of the original principal balance of this Note, plus any other amounts for
which Borrower has personal liability under this Paragraph 9.
(3) In addition to Borrower's personal liability under Paragraph
9(b), Borrower shall be personally liable to Lender for the repayment of a
further portion of the Indebtedness equal to any loss or damage suffered by
Lender as a result of (1) failure of Borrower to pay to Lender upon demand
after an Event of Default all Rents to which Lender is entitled under
Section 3 (a) of the Security Instrument and the amount of all security
deposits collected by Borrower from tenants then in residence; (2) failure
of Borrower to apply all insurance proceeds and condemnation proceeds as
required by the Security Instrument; or (3) failure of Borrower to comply
with Section 14(d) or (e) of the Security Instrument relating to the
delivery of books and records, statements, schedules and reports.
(4) For purposes of determining Borrower's personal liability
under Paragraph 9(b) and Paragraph 9(c), all payments made by Borrower or
any guarantor of this Note with respect to the Indebtedness and all amounts
received by Lender from the enforcement of its rights under the Security
Instrument shall be applied first to the portion of the Indebtedness for
which Borrower has no personal liability.
(5) Borrower shall become personally liable to Lender for the
repayment of all of the Indebtedness upon the occurrence of any of the
following Events of Default: (1) Borrower's acquisition of any property or
operation of any business not permitted by Section 33 of the Security
Instrument; (2) a Transfer (including, but not limited to, a lien or
encumbrance) that is an Event of Default under Section 21 of the Security
Instrument, other than a Transfer consisting solely of the involuntary
removal or involuntary withdrawal of a general partner in a limited
partnership or a manager in a limited liability company; or (3) fraud or
written material misrepresentation by Borrower or any officer, director,
partner, member or employee of Borrower in connection with the application
for or creation of the Indebtedness or any request for any action or
consent by Lender.
(6) In addition to any personal liability for the Indebtedness,
Borrower shall be personally liable to Lender for (1) the performance of
all of Borrower's obligations under Section 18 of the Security Instrument
(relating to environmental matters); (2) the costs of any audit under
Section 14(d) of the Security Instrument; and (3) any costs and expenses
incurred by Lender in connection with the collection of any amount for
which Borrower is personally liable under this Paragraph 9, including fees
and out of pocket expenses of attorneys and expert witnesses and the costs
of conducting any independent audit of Borrower's books and records to
determine the amount for which Borrower has personal liability.
(7) To the extent that Borrower has personal liability under
this Paragraph 9, Lender may exercise its rights against Borrower
personally without regard to whether Lender has exercised any rights
against the Mortgaged Property or any other security, or pursued any rights
against any guarantor, or pursued any other rights available to Lender
under this Note, the Security Instrument, any other Loan Document or
applicable law. For purposes of this Paragraph 9, the term "Mortgaged
Property" shall not include any funds that (1) have been applied by
Borrower as required or permitted by the Security Instrument prior to the
occurrence of an Event of Default or (2) Borrower was unable to apply as
required or permitted by the Security Instrument because of a bankruptcy,
receivership, or similar judicial proceeding.
10. Voluntary and Involuntary Prepayments.
(1) A prepayment premium shall be payable in connection with any
prepayment made under this Note as provided below:
(1) Borrower may voluntarily prepay all of the unpaid
principal balance of this Note on the last Business Day of a calendar month
if Borrower has given Lender at least 30 days prior notice of its intention
to make such prepayment. Such prepayment shall be made by paying (A) the
amount of principal being prepaid, (B) all accrued interest, (C) all other
sums due Lender at the time of such prepayment, and (D) the prepayment
premium calculated pursuant to Schedule A. For all purposes including the
accrual of interest, any prepayment received by Lender on any day other
than the last calendar day of the month shall be deemed to have been
received on the last calendar day of such month. For purposes of this
Note, a "Business Day" means any day other than a Saturday, Sunday or any
other day on which Lender is not open for business. Borrower shall not
have the option to voluntarily prepay less than all of the unpaid principal
balance.
(2) Upon Lender's exercise of any right of acceleration
under this Note, Borrower shall pay to Lender, in addition to the entire
unpaid principal balance of this Note outstanding at the time of the
acceleration, (A) all accrued interest and all other sums due Lender, and
(B) the prepayment premium calculated pursuant to Schedule A.
(3) Any application by Lender of any collateral or other
security to the repayment of any portion of the unpaid principal balance of
this Note prior to the Maturity Date and in the absence of acceleration
shall be deemed to be a partial prepayment by Borrower, requiring the
payment to Lender by Borrower of a prepayment premium. The amount of any
such partial prepayment shall be computed so as to provide to Lender a
prepayment premium computed pursuant to Schedule A without Borrower having
to pay out-of-pocket any additional amounts.
(2) Notwithstanding the provisions of Paragraph 10(a), no
prepayment premium shall be payable with respect to (A) any prepayment made
no more than 180 days before the Maturity Date, or (B) any prepayment
occurring as a result of the application of any insurance proceeds or
condemnation award under the Security Instrument.
(3) Schedule A is hereby incorporated by reference into this
Note.
(4) Any permitted or required prepayment of less than the unpaid
principal balance of this Note shall not extend or postpone the due date of
any subsequent monthly installments or change the amount of such
installments, unless Lender agrees otherwise in writing.
(5) Borrower recognizes that any prepayment of the unpaid
principal balance of this Note, whether voluntary or involuntary or
resulting from a default by Borrower, will result in Lender's incurring
loss, including reinvestment loss, additional expense and frustration or
impairment of Lender's ability to meet its commitments to third parties.
Borrower agrees to pay to Lender upon demand damages for the detriment
caused by any prepayment, and agrees that it is extremely difficult and
impractical to ascertain the extent of such damages. Borrower therefore
acknowledges and agrees that the formula for calculating prepayment
premiums set forth on Schedule A represents a reasonable estimate of the
damages Lender will incur because of a prepayment.
(6) Borrower further acknowledges that the prepayment premium
provisions of this Note are a material part of the consideration for the
Loan, and acknowledges that the terms of this Note are in other respects
more favorable to Borrower as a result of the Borrower's voluntary
agreement to the prepayment premium provisions.
11. Costs and Expenses. Borrower shall pay all expenses and
costs, including fees and out-of-pocket expenses of attorneys and expert
witnesses and costs of investigation, incurred by Lender as a result of any
default under this Note or in connection with efforts to collect any amount
due under this Note, or to enforce the provisions of any of the other Loan
Documents, including those incurred in post-judgment collection efforts and
in any bankruptcy proceeding (including any action for relief from the
automatic stay of any bankruptcy proceeding) or judicial or non-judicial
foreclosure proceeding.
12. Forbearance. Any forbearance by Lender in exercising any
right or remedy under this Note, the Security Instrument, or any other Loan
Document or otherwise afforded by applicable law, shall not be a waiver of
or preclude the exercise of that or any other right or remedy. The
acceptance by Lender of any payment after the due date of such payment, or
in an amount which is less than the required payment, shall not be a waiver
of Lender's right to require prompt payment when due of all other payments
or to exercise any right or remedy with respect to any failure to make
prompt payment. Enforcement by Lender of any security for Borrower's
obligations under this Note shall not constitute an election by Lender of
remedies so as to preclude the exercise of any other right or remedy
available to Lender.
13. Waivers. Presentment, demand, notice of dishonor, protest,
notice of acceleration, notice of intent to demand or accelerate payment or
maturity, presentment for payment, notice of nonpayment, grace, and
diligence in collecting the Indebtedness are waived by Borrower and all
endorsers and guarantors of this Note and all other third party obligors.
14. Loan Charges. If any applicable law limiting the amount of
interest or other charges permitted to be collected from Borrower in
connection with the Loan is interpreted so that any interest or other
charge provided for in any Loan Document, whether considered separately or
together with other charges provided for in any other Loan Document,
violates that law, and Borrower is entitled to the benefit of that law,
that interest or charge is hereby reduced to the extent necessary to
eliminate that violation. The amounts, if any, previously paid to Lender
in excess of the permitted amounts shall be applied by Lender to reduce the
unpaid principal balance of this Note. For the purpose of determining
whether any applicable law limiting the amount of interest or other charges
permitted to be collected from Borrower has been violated, all Indebtedness
that constitutes interest, as well as all other charges made in connection
with the Indebtedness that constitute interest, shall be deemed to be
allocated and spread ratably over the stated term of the Note. Unless
otherwise required by applicable law, such allocation and spreading shall
be effected in such a manner that the rate of interest so computed is
uniform throughout the stated term of the Note.
15. Commercial Purpose. Borrower represents that the
Indebtedness is being incurred by Borrower solely for the purpose of
carrying on a business or commercial enterprise, and not for personal,
family or household purposes.
16. Counting of Days. Except where otherwise specifically
provided, any reference in this Note to a period of "days" means calendar
days, not Business Days.
17. Governing Law. This Note shall be governed by the law of the
jurisdiction in which the Land is located.
18. Captions. The captions of the paragraphs of this Note are
for convenience only and shall be disregarded in construing this Note.
19. Notices. All notices, demands and other communications
required or permitted to be given by Lender to Borrower pursuant to this
Note shall be given in accordance with Section 31 of the Security
Instrument.
20. Consent to Jurisdiction and Venue. Borrower agrees that any
controversy arising under or in relation to this Note shall be litigated
exclusively in the jurisdiction in which the Land is located (the "Property
Jurisdiction"). The state and federal courts and authorities with
jurisdiction in the Property Jurisdiction shall have exclusive jurisdiction
over all controversies which shall arise under or in relation to this Note.
Borrower irrevocably consents to service, jurisdiction, and venue of such
courts for any such litigation and waives any other venue to which it might
be entitled by virtue of domicile, habitual residence or otherwise.
21. WAIVER OF TRIAL BY JURY. BORROWER AND LENDER EACH (A)
AGREES NOT TO ELECT A TRIAL BY JURY WITH RESPECT TO ANY ISSUE ARISING OUT
OF THIS NOTE OR THE RELATIONSHIP BETWEEN THE PARTIES AS LENDER AND BORROWER
THAT IS TRIABLE OF RIGHT BY A JURY AND (B) WAIVES ANY RIGHT TO TRIAL BY
JURY WITH RESPECT TO SUCH ISSUE TO THE EXTENT THAT ANY SUCH RIGHT EXISTS
NOW OR IN THE FUTURE. THIS WAIVER OF RIGHT TO TRIAL BY JURY IS SEPARATELY
GIVEN BY EACH PARTY, KNOWINGLY AND VOLUNTARILY WITH THE BENEFIT OF
COMPETENT LEGAL COUNSEL.
ATTACHED SCHEDULES. The following Schedules are attached to this Note:
|X| Schedule A Prepayment Premium (required)
| | Schedule B Modifications to Multifamily Note
IN WITNESS WHEREOF, Borrower has signed and delivered this Note or has
caused this Note to be signed and delivered by its duly authorized
representative.
PARK AT HIGHLANDS LLC, a Colorado limited liability
company
By:/s/ Al Feld
________________________________(SEAL)
Al Feld
Managing Member
84-1305862
Borrower's Social Security/Employer ID Number
PAY TO THE ORDER OF FEDERAL
HOME LOAN MORTGAGE
CORPORATION WITHOUT RECOURSE
AS OF THE 24TH DAY OF DECEMBER, 1997.
GMAC COMMERCIAL MORTGAGE
CORPORATION
By:/s/ J. Kevin McCormack
_______________________________
J. Kevin McCormack
Vice President
<PAGE>
SCHEDULE A
PREPAYMENT PREMIUM
Any prepayment premium payable under Paragraph 10 of this Note shall be
computed as follows:
(a) If the prepayment is made between the date of this Note and the
date that is 114 months after the first day of the first calendar month
following the date of this Note (the "Yield Maintenance Period"), the
prepayment premium shall be the greater of
(i) 1.0% of the unpaid principal balance of this Note; or
(ii) the product obtained by multiplying:
(A) the amount of principal being prepaid,
by
(B) the excess (if any) of the Monthly Note Rate over the
Assumed Reinvestment Rate,
by
(C) the Present Value Factor.
For purposes of subparagraph (ii), the following definitions
shall apply:
Monthly Note Rate: one-twelfth (1/12) of the annual interest
rate of the Note, expressed as a decimal calculated to five
digits.
Prepayment Date: in the case of a voluntary prepayment, the
date on which the prepayment is made; in any other case, the
date on which Lender accelerates the unpaid principal
balance of the Note.
Assumed Reinvestment Rate: one-twelfth (1/12) of the yield
rate as of the date 5 Business Days before the Prepayment
Date, on the 6.125% U.S. Treasury Security due 8/1/2007, as
reported in The Wall Street Journal, expressed as a decimal
calculated to five digits. In the event that no yield is
published on the applicable date for the Treasury Security
used to determine the Assumed Reinvestment Rate, Lender, in
its discretion, shall select the non-callable Treasury
Security maturing in the same year as the Treasury Security
specified above with the lowest yield published in The Wall
Street Journal as of the applicable date. If the
publication of such yield rates in The Wall Street Journal
is discontinued for any reason, Lender shall select a
security with a comparable rate and term to the Treasury
Security used to determine the Assumed Reinvestment Rate.
The selection of an alternate security pursuant to this
Paragraph shall be made in Lender's discretion.
Present Value Factor: the factor that discounts to present
value the costs resulting to Lender from the difference in
interest rates during the months remaining in the Yield
Maintenance Period, using the Assumed Reinvestment Rate as
the discount rate, with monthly compounding, expressed
numerically as follows:
n = number of months remaining in Yield Maintenance Period
ARR = Assumed Reinvestment Rate
(b) If the prepayment is made after the expiration of the Yield
Maintenance Period but more than one hundred eighty (180) days before the
Maturity Date, the prepayment premium shall be 1.0% of the unpaid principal
balance of this Note.
<PAGE>
SCHEDULE B
MODIFICATIONS TO MULTIFAMILY NOTE
Prepared by, and after recording FHLMC Loan No.
679503102
return to:
Gary S. Smuckler, Esq.
Pepper, Hamilton & Scheetz
1300 Nineteenth Street, N.W.
Washington, D.C. 20036
MULTIFAMILY DEED OF TRUST,
ASSIGNMENT OF RENTS
AND SECURITY AGREEMENT
(COLORADO)
(Blue Ridge at Palomino Park)
<PAGE>
MULTIFAMILY DEED OF TRUST,
ASSIGNMENT OF RENTS AND
SECURITY AGREEMENT
THIS MULTIFAMILY DEED OF TRUST, ASSIGNMENT OF RENTS AND SECURITY
AGREEMENT (the "Instrument") is made as of the 24th day of December, 1997,
by PARK AT HIGHLANDS LLC, a limited liability company organized and
existing under the laws of Colorado, whose address is 1623 Blake Street,
Suite 270, Denver, Colorado 80202, as trustor ("Borrower"), to the Public
Trustee of Douglas County, Colorado as trustee ("Trustee"), for the benefit
of GMAC COMMERCIAL MORTGAGE CORPORATION, a corporation organized and
existing under the laws of California, whose address is 650 Dresher Road,
Horsham, Pennsylvania 19044, as beneficiary ("Lender").
Borrower, in consideration of the Indebtedness and the trust created
by this Instrument, irrevocably grants, conveys and assigns to Trustee, in
trust, with power of sale, the Mortgaged Property, including the Land
located in Douglas County, State of Colorado and described in Exhibit A
attached to this Instrument.
TO SECURE TO LENDER the repayment of the Indebtedness evidenced by
Borrower's Multifamily Note payable to Lender, dated as of the date of this
Instrument, and maturing on January 1, 2008 in the principal amount of
$34,500,000.00, and all renewals, extensions and modifications of the
Indebtedness, and the performance of the covenants and agreements of
Borrower contained in the Loan Documents.
Borrower represents and warrants that Borrower is lawfully seized of
the Mortgaged Property and has the right, power and authority to grant,
convey and assign the Mortgaged Property, and that the Mortgaged Property
is unencumbered. Borrower covenants that Borrower will warrant and defend
generally the title to the Mortgaged Property against all claims and
demands, subject to any easements and restrictions listed in a schedule of
exceptions to coverage in any title insurance policy issued to Lender
contemporaneously with the execution and recordation of this Instrument and
insuring Lender's interest in the Mortgaged Property.
Covenants. Borrower and Lender covenant and agree as follows:
1. DEFINITIONS. The following terms, when used in this Instrument
(including when used in the above recitals), shall have the following
meanings:
(a) "Borrower" means all persons or entities identified as "Borrower"
in the first paragraph of this Instrument, together with their successors
and assigns.
(b) "Collateral Agreement" means any separate agreement between
Borrower and Lender for the purpose of establishing replacement reserves
for the Mortgaged Property, establishing a fund to assure the completion of
repairs or improvements specified in that agreement, or assuring reduction
of the outstanding principal balance of the Indebtedness if the occupancy
of or income from the Mortgaged Property does not increase to a level
specified in that agreement, or any other agreement or agreements between
Borrower and Lender which provide for the establishment of any other fund,
reserve or account.
(c) "Controlling Entity" means an entity which owns, directly or
indirectly through one or more intermediaries, (A) a general partnership
interest or more than 50% of the limited partnership interests in Borrower
(if Borrower is a partnership or joint venture), (B) a manager's interest
in Borrower or more than 50% of the ownership or membership interests in
Borrower (if Borrower is a limited liability company), or (C) more than 50%
of any class of voting stock of Borrower (if Borrower is a corporation).
(d) "Environmental Permit" means any permit, license, or other
authorization issued under any Hazardous Materials Law with respect to any
activities or businesses conducted on or in relation to the Mortgaged
Property.
(e) "Event of Default" means the occurrence of any event listed in
Section 22.
(f) "Fixtures" means all property which is so attached to the Land or
the Improvements as to constitute a fixture under applicable law,
including: machinery, equipment, engines, boilers, incinerators, installed
building materials; systems and equipment for the purpose of supplying or
distributing heating, cooling, electricity, gas, water, air, or light;
antennas, cable, wiring and conduits used in connection with radio,
television, security, fire prevention, or fire detection or otherwise used
to carry electronic signals; telephone systems and equipment; elevators and
related machinery and equipment; fire detection, prevention and
extinguishing systems and apparatus; security and access control systems
and apparatus; plumbing systems; water heaters, ranges, stoves, microwave
ovens, refrigerators, dishwashers, garbage disposers, washers, dryers and
other appliances; light fixtures, awnings, storm windows and storm doors;
pictures, screens, blinds, shades, curtains and curtain rods; mirrors;
cabinets, paneling, rugs and floor and wall coverings; fences, trees and
plants; swimming pools; and exercise equipment.
(g) "Governmental Authority" means any board, commission, department
or body of any municipal, county, state or federal governmental unit, or
any subdivision of any of them, that has or acquires jurisdiction over the
Mortgaged Property or the use, operation or improvement of the Mortgaged
Property.
(h) "Hazardous Materials" means petroleum and petroleum products and
compounds containing them, including gasoline, diesel fuel and oil;
explosives; flammable materials; radioactive materials; polychlorinated
biphenyls ("PCBs") and compounds containing them; lead and lead-based
paint; asbestos or asbestos-containing materials in any form that is or
could become friable; underground or above-ground storage tanks, whether
empty or containing any substance; any substance the presence of which on
the Mortgaged Property is prohibited by any federal, state or local
authority; any substance that requires special handling; and any other
material or substance now or in the future defined as a "hazardous
substance," "hazardous material," "hazardous waste," "toxic substance,"
"toxic pollutant," "contaminant," or "pollutant" within the meaning of any
Hazardous Materials Law.
(i) "Hazardous Materials Laws" means all federal, state, and local
laws, ordinances and regulations and standards, rules, policies and other
governmental requirements, administrative rulings and court judgments and
decrees in effect now or in the future and including all amendments, that
relate to Hazardous Materials and apply to Borrower or to the Mortgaged
Property. Hazardous Materials Laws include, but are not limited to, the
Comprehensive Environmental Response, Compensation and Liability Act, 42
U.S.C. Section 9601, et seq., the Resource Conservation and Recovery Act,
42 U.S.C. Section 6901, et seq., the Toxic Substance Control Act, 15 U.S.C.
Section 2601, et seq., the Clean Water Act, 33 U.S.C. Section 1251, et
seq., and the Hazardous Materials Transportation Act, 49 U.S.C.
Section 5101, and their state analogs.
(j) "Impositions" and "Imposition Deposits" are defined in
Section 7(a).
(k) "Improvements" means the buildings, structures, improvements, and
alterations now constructed or at any time in the future constructed or
placed upon the Land, including any future replacements and additions.
(l) "Indebtedness" means the principal of, interest on, and all other
amounts due at any time under, the Note, this Instrument or any other Loan
Document, including prepayment premiums, late charges, default interest,
and advances as provided in Section 12 to protect the security of this
Instrument.
(m) "Initial Owners" means, with respect to Borrower or any other
entity, the persons or entities who on the date of the Note own in the
aggregate 100% of the ownership interests in Borrower or that entity.
(n) "Land" means the land described in Exhibit A.
(o) "Leases" means all present and future leases, subleases,
licenses, concessions or grants or other possessory interests now or
hereafter in force, whether oral or written, covering or affecting the
Mortgaged Property, or any portion of the Mortgaged Property (including
proprietary leases or occupancy agreements if Borrower is a cooperative
housing corporation), and all modifications, extensions or renewals.
(p) "Lender" means the entity identified as "Lender" in the first
paragraph of this Instrument, or any subsequent holder of the Note.
(q) "Loan Documents" means the Note, this Instrument, all guaranties,
all indemnity agreements, all Collateral Agreements, O&M Programs, and any
other documents now or in the future executed by Borrower, any guarantor or
any other person in connection with the loan evidenced by the Note, as such
documents may be amended from time to time.
(r) "Loan Servicer" means the entity that from time to time is
designated by Lender to collect payments and deposits and receive notices
under the Note, this Instrument and any other Loan Document, and otherwise
to service the loan evidenced by the Note for the benefit of Lender.
Unless Borrower receives notice to the contrary, the Loan Servicer is the
entity identified as "Lender" in the first paragraph of this Instrument.
(s) "Mortgaged Property" means all of Borrower's present and future
right, title and interest in and to all of the following:
(1) the Land;
(2) the Improvements;
(3) the Fixtures;
(4) the Personalty;
(5) all current and future rights, including air rights,
development rights, zoning rights and other similar rights
or interests, easements, tenements, rights-of-way, strips
and gores of land, streets, alleys, roads, sewer rights,
waters, watercourses, and appurtenances related to or
benefitting the Land or the Improvements, or both, and all
rights-of-way, streets, alleys and roads which may have been
or may in the future be vacated;
(6) all proceeds paid or to be paid by any insurer of the Land,
the Improvements, the Fixtures, the Personalty or any other
part of the Mortgaged Property, whether or not Borrower
obtained the insurance pursuant to Lender's requirement;
(7) all awards, payments and other compensation made or to be
made by any municipal, state or federal authority with
respect to the Land, the Improvements, the Fixtures, the
Personalty or any other part of the Mortgaged Property,
including any awards or settlements resulting from
condemnation proceedings or the total or partial taking of
the Land, the Improvements, the Fixtures, the Personalty or
any other part of the Mortgaged Property under the power of
eminent domain or otherwise and including any conveyance in
lieu thereof;
(8) all contracts, options and other agreements for the sale of
the Land, the Improvements, the Fixtures, the Personalty or
any other part of the Mortgaged Property entered into by
Borrower now or in the future, including cash or securities
deposited to secure performance by parties of their
obligations;
(9) all proceeds from the conversion, voluntary or involuntary,
of any of the above into cash or liquidated claims, and the
right to collect such proceeds;
(10) all Rents and Leases;
(11) all earnings, royalties, accounts receivable, issues and
profits from the Land, the Improvements or any other part of
the Mortgaged Property, and all undisbursed proceeds of the
loan secured by this Instrument and, if Borrower is a
cooperative housing corporation, maintenance charges or
assessments payable by shareholders or residents;
(12) all Imposition Deposits;
(13) all refunds or rebates of Impositions by any municipal,
state or federal authority or insurance company (other than
refunds applicable to periods before the real property tax
year in which this Instrument is dated);
(14) all tenant security deposits which have not been forfeited
by any tenant under any Lease; and
(15) all names under or by which any of the above Mortgaged
Property may be operated or known, and all trademarks, trade
names, and goodwill relating to any of the Mortgaged
Property.
(t) "Note" means the Multifamily Note described on page 1 of this
Instrument, including all schedules, riders, allonges and addenda, as such
Multifamily Note may be amended from time to time.
(u) "O&M Program" is defined in Section 18(a).
(v) "Personalty" means all furniture, furnishings, equipment,
machinery, building materials, appliances, goods, supplies, tools, books,
records (whether in written or electronic form), computer equipment
(hardware and software) and other tangible personal property (other than
Fixtures) which are used now or in the future in connection with the
ownership, management or operation of the Land or the Improvements or are
located on the Land or in the Improvements, and any operating agreements
relating to the Land or the Improvements, and any surveys, plans and
specifications and contracts for architectural, engineering and
construction services relating to the Land or the Improvements and all
other intangible property and rights relating to the operation of, or used
in connection with, the Land or the Improvements, including all
governmental permits relating to any activities on the Land.
(w) "Property Jurisdiction" is defined in Section 30(a).
(x) "Rents" means all rents (whether from residential or non-
residential space), revenues and other income of the Land or the
Improvements, including parking fees, laundry and vending machine income
and fees and charges for food, health care and other services provided at
the Mortgaged Property, whether now due, past due, or to become due, and
deposits forfeited by tenants.
(y) "Taxes" means all taxes, assessments, vault rentals and other
charges, if any, general, special or otherwise, including all assessments
for schools, public betterments and general or local improvements, which
are levied, assessed or imposed by any public authority or quasi-public
authority, and which, if not paid, will become a lien, on the Land or the
Improvements.
(z) "Transfer" means (A) a sale, assignment, transfer or other
disposition (whether voluntary, involuntary or by operation of law); (B)
the granting, creating or attachment of a lien, encumbrance or security
interest (whether voluntary, involuntary or by operation of law); (C) the
issuance or other creation of an ownership interest in a legal entity,
including a partnership interest, interest in a limited liability company
or corporate stock; (D) the withdrawal, retirement, removal or involuntary
resignation of a partner in a partnership or a member or manager in a
limited liability company; or (E) the merger, dissolution, liquidation, or
consolidation of a legal entity or the reconstitution of one type of legal
entity into another type of legal entity. "Transfer" does not include (i)
a conveyance of the Mortgaged Property at a judicial or non-judicial
foreclosure sale under this Instrument or (ii) the Mortgaged Property
becoming part of a bankruptcy estate by operation of law under the United
States Bankruptcy Code. For purposes of defining the term "Transfer," the
term "partnership" shall mean a general partnership, a limited partnership,
a joint venture and a limited liability partnership, and the term "partner"
shall mean a general partner, a limited partner and a joint venturer.
2. UNIFORM COMMERCIAL CODE SECURITY AGREEMENT. This Instrument is also a
security agreement under the Uniform Commercial Code for any of the
Mortgaged Property which, under applicable law, may be subject to a
security interest under the Uniform Commercial Code, whether acquired now
or in the future, and all products and cash and non-cash proceeds thereof
(collectively, "UCC Collateral"), and Borrower hereby grants to Lender a
security interest in the UCC Collateral. Borrower shall execute and
deliver to Lender, upon Lender's request, financing statements,
continuation statements and amendments, in such form as Lender may require
to perfect or continue the perfection of this security interest. Borrower
shall pay all filing costs and all costs and expenses of any record
searches for financing statements that Lender may require. Without the
prior written consent of Lender, Borrower shall not create or permit to
exist any other lien or security interest in any of the UCC Collateral. If
an Event of Default has occurred and is continuing, Lender shall have the
remedies of a secured party under the Uniform Commercial Code, in addition
to all remedies provided by this Instrument or existing under applicable
law. In exercising any remedies, Lender may exercise its remedies against
the UCC Collateral separately or together, and in any order, without in any
way affecting the availability of Lender's other remedies. This Instrument
constitutes a financing statement with respect to any part of the Mortgaged
Property which is or may become a Fixture.
3. ASSIGNMENT OF RENTS; APPOINTMENT OF RECEIVER; LENDER IN POSSESSION.
(a) As part of the consideration for the Indebtedness, Borrower
absolutely and unconditionally assigns and transfers to Lender all Rents.
It is the intention of Borrower to establish a present, absolute and
irrevocable transfer and assignment to Lender of all Rents and to authorize
and empower Lender to collect and receive all Rents without the necessity
of further action on the part of Borrower. Promptly upon request by
Lender, Borrower agrees to execute and deliver such further assignments as
Lender may from time to time require. Borrower and Lender intend this
assignment of Rents to be immediately effective and to constitute an
absolute present assignment and not an assignment for additional security
only. For purposes of giving effect to this absolute assignment of Rents,
and for no other purpose, Rents shall not be deemed to be a part of the
"Mortgaged Property" as that term is defined in Section 1(s). However, if
this present, absolute and unconditional assignment of Rents is not
enforceable by its terms under the laws of the Property Jurisdiction, then
the Rents shall be included as a part of the Mortgaged Property and it is
the intention of the Borrower that in this circumstance this Instrument
create and perfect a lien on Rents in favor of Lender, which lien shall be
effective as of the date of this Instrument.
(b) After the occurrence of an Event of Default, Borrower authorizes
Lender to collect, sue for and compromise Rents and directs each tenant of
the Mortgaged Property to pay all Rents to, or as directed by, Lender.
However, until the occurrence of an Event of Default, Lender hereby grants
to Borrower a revocable license to collect and receive all Rents, to hold
all Rents in trust for the benefit of Lender and to apply all Rents to pay
the installments of interest and principal then due and payable under the
Note and the other amounts then due and payable under the other Loan
Documents, including Imposition Deposits, and to pay the current costs and
expenses of managing, operating and maintaining the Mortgaged Property,
including utilities, Taxes and insurance premiums (to the extent not
included in Imposition Deposits), tenant improvements and other capital
expenditures. So long as no Event of Default has occurred and is
continuing, the Rents remaining after application pursuant to the preceding
sentence may be retained by Borrower free and clear of, and released from,
Lender's rights with respect to Rents under this Instrument. From and after
the occurrence of an Event of Default, and without the necessity of Lender
entering upon and taking and maintaining control of the Mortgaged Property
directly, or by a receiver, Borrower's license to collect Rents shall
automatically terminate and Lender shall without notice be entitled to all
Rents as they become due and payable, including Rents then due and unpaid.
Borrower shall pay to Lender upon demand all Rents to which Lender is
entitled. At any time on or after the date of Lender's demand for Rents,
Lender may give, and Borrower hereby irrevocably authorizes Lender to give,
notice to all tenants of the Mortgaged Property instructing them to pay all
Rents to Lender, no tenant shall be obligated to inquire further as to the
occurrence or continuance of an Event of Default, and no tenant shall be
obligated to pay to Borrower any amounts which are actually paid to Lender
in response to such a notice. Any such notice by Lender shall be delivered
to each tenant personally, by mail or by delivering such demand to each
rental unit. Borrower shall not interfere with and shall cooperate with
Lender's collection of such Rents.
(c) Borrower represents and warrants to Lender that Borrower has not
executed any prior assignment of Rents (other than an assignment of Rents
securing indebtedness that will be paid off and discharged with the
proceeds of the loan evidenced by the Note), that Borrower has not
performed, and Borrower covenants and agrees that it will not perform, any
acts and has not executed, and shall not execute, any instrument which
would prevent Lender from exercising its rights under this Section 3, and
that at the time of execution of this Instrument there has been no
anticipation or prepayment of any Rents for more than two months prior to
the due dates of such Rents. Borrower shall not collect or accept payment
of any Rents more than two months prior to the due dates of such Rents.
(d) If an Event of Default has occurred and is continuing, Lender
may, regardless of the adequacy of Lender's security or the solvency of
Borrower and even in the absence of waste, enter upon and take and maintain
full control of the Mortgaged Property in order to perform all acts that
Lender in its discretion determines to be necessary or desirable for the
operation and maintenance of the Mortgaged Property, including the
execution, cancellation or modification of Leases, the collection of all
Rents, the making of repairs to the Mortgaged Property and the execution or
termination of contracts providing for the management, operation or
maintenance of the Mortgaged Property, for the purposes of enforcing the
assignment of Rents pursuant to Section 3(a), protecting the Mortgaged
Property or the security of this Instrument, or for such other purposes as
Lender in its discretion may deem necessary or desirable. Alternatively,
if an Event of Default has occurred and is continuing, regardless of the
adequacy of Lender's security, without regard to Borrower's solvency and
without the necessity of giving prior notice (oral or written) to Borrower,
Lender may apply to any court having jurisdiction for the appointment of a
receiver for the Mortgaged Property to take any or all of the actions set
forth in the preceding sentence. If Lender elects to seek the appointment
of a receiver for the Mortgaged Property at any time after an Event of
Default has occurred and is continuing, Borrower, by its execution of this
Instrument, expressly consents to the appointment of such receiver,
including the appointment of a receiver ex parte if permitted by applicable
law. Lender or the receiver, as the case may be, shall be entitled to
receive a reasonable fee for managing the Mortgaged Property. Immediately
upon appointment of a receiver or immediately upon the Lender's entering
upon and taking possession and control of the Mortgaged Property, Borrower
shall surrender possession of the Mortgaged Property to Lender or the
receiver, as the case may be, and shall deliver to Lender or the receiver,
as the case may be, all documents, records (including records on electronic
or magnetic media), accounts, surveys, plans, and specifications relating
to the Mortgaged Property and all security deposits and prepaid Rents. In
the event Lender takes possession and control of the Mortgaged Property,
Lender may exclude Borrower and its representatives from the Mortgaged
Property. Borrower acknowledges and agrees that the exercise by Lender of
any of the rights conferred under this Section 3 shall not be construed to
make Lender a mortgagee-in-possession of the Mortgaged Property so long as
Lender has not itself entered into actual possession of the Land and
Improvements.
(e) If Lender enters the Mortgaged Property, Lender shall be liable
to account only to Borrower and only for those Rents actually received.
Lender shall not be liable to Borrower, anyone claiming under or through
Borrower or anyone having an interest in the Mortgaged Property, by reason
of any act or omission of Lender under this Section 3, and Borrower hereby
releases and discharges Lender from any such liability to the fullest
extent permitted by law.
(f) If the Rents are not sufficient to meet the costs of taking
control of and managing the Mortgaged Property and collecting the Rents,
any funds expended by Lender for such purposes shall become an additional
part of the Indebtedness as provided in Section 12.
(g) Any entering upon and taking of control of the Mortgaged Property
by Lender or the receiver, as the case may be, and any application of Rents
as provided in this Instrument shall not cure or waive any Event of Default
or invalidate any other right or remedy of Lender under applicable law or
provided for in this Instrument.
4. ASSIGNMENT OF LEASES; LEASES AFFECTING THE MORTGAGED PROPERTY.
(a) As part of the consideration for the Indebtedness, Borrower
absolutely and unconditionally assigns and transfers to Lender all of
Borrower's right, title and interest in, to and under the Leases, including
Borrower's right, power and authority to modify the terms of any such
Lease, or extend or terminate any such Lease. It is the intention of
Borrower to establish a present, absolute and irrevocable transfer and
assignment to Lender of all of Borrower's right, title and interest in, to
and under the Leases. Borrower and Lender intend this assignment of the
Leases to be immediately effective and to constitute an absolute present
assignment and not an assignment for additional security only. For
purposes of giving effect to this absolute assignment of the Leases, and
for no other purpose, the Leases shall not be deemed to be a part of the
"Mortgaged Property" as that term is defined in Section 1(s). However, if
this present, absolute and unconditional assignment of the Leases is not
enforceable by its terms under the laws of the Property Jurisdiction, then
the Leases shall be included as a part of the Mortgaged Property and it is
the intention of the Borrower that in this circumstance this Instrument
create and perfect a lien on the Leases in favor of Lender, which lien
shall be effective as of the date of this Instrument.
(b) Until Lender gives notice to Borrower of Lender's exercise of its
rights under this Section 4, Borrower shall have all rights, power and
authority granted to Borrower under any Lease (except as otherwise limited
by this Section or any other provision of this Instrument), including the
right, power and authority to modify the terms of any Lease or extend or
terminate any Lease. Upon the occurrence of an Event of Default, the
permission given to Borrower pursuant to the preceding sentence to exercise
all rights, power and authority under Leases shall automatically terminate.
Borrower shall comply with and observe Borrower's obligations under all
Leases, including Borrower's obligations pertaining to the maintenance and
disposition of tenant security deposits.
(c) Borrower acknowledges and agrees that the exercise by Lender,
either directly or by a receiver, of any of the rights conferred under this
Section 4 shall not be construed to make Lender a mortgagee-in-possession
of the Mortgaged Property so long as Lender has not itself entered into
actual possession of the Land and the Improvements. The acceptance by
Lender of the assignment of the Leases pursuant to Section 4(a) shall not
at any time or in any event obligate Lender to take any action under this
Instrument or to expend any money or to incur any expenses. Lender shall
not be liable in any way for any injury or damage to person or property
sustained by any person or persons, firm or corporation in or about the
Mortgaged Property. Prior to Lender's actual entry into and taking
possession of the Mortgaged Property, Lender shall not (i) be obligated to
perform any of the terms, covenants and conditions contained in any Lease
(or otherwise have any obligation with respect to any Lease); (ii) be
obligated to appear in or defend any action or proceeding relating to the
Lease or the Mortgaged Property; or (iii) be responsible for the operation,
control, care, management or repair of the Mortgaged Property or any
portion of the Mortgaged Property. The execution of this Instrument by
Borrower shall constitute conclusive evidence that all responsibility for
the operation, control, care, management and repair of the Mortgaged
Property is and shall be that of Borrower, prior to such actual entry and
taking of possession.
(d) Upon delivery of notice by Lender to Borrower of Lender's
exercise of Lender's rights under this Section 4 at any time after the
occurrence of an Event of Default, and without the necessity of Lender
entering upon and taking and maintaining control of the Mortgaged Property
directly, by a receiver, or by any other manner or proceeding permitted by
the laws of the Property Jurisdiction, Lender immediately shall have all
rights, powers and authority granted to Borrower under any Lease, including
the right, power and authority to modify the terms of any such Lease, or
extend or terminate any such Lease.
(e) Borrower shall, promptly upon Lender's request, deliver to Lender
an executed copy of each residential Lease then in effect. All Leases for
residential dwelling units shall be on forms approved by Lender, shall be
for initial terms of at least six months and not more than two years, and
shall not include options to purchase.
(f) Borrower shall not lease any portion of the Mortgaged Property
for non-residential use except with the prior written consent of Lender and
Lender's prior written approval of the Lease agreement. Borrower shall not
modify the terms of, or extend or terminate, any Lease for non-residential
use (including any Lease in existence on the date of this Instrument)
without the prior written consent of Lender. Borrower shall, without
request by Lender, deliver an executed copy of each non-residential Lease
to Lender promptly after such Lease is signed. All non-residential
Leases, including renewals or extensions of existing Leases, shall
specifically provide that (1) such Leases are subordinate to the lien of
this Instrument; (2) the tenant shall attorn to Lender and any purchaser at
a foreclosure sale, such attornment to be self-executing and effective upon
acquisition of title to the Mortgaged Property by any purchaser at a
foreclosure sale or by Lender in any manner; (3) the tenant agrees to
execute such further evidences of attornment as Lender or any purchaser at
a foreclosure sale may from time to time request; (4) the Lease shall not
be terminated by foreclosure or any other transfer of the Mortgaged
Property; (5) after a foreclosure sale of the Mortgaged Property, Lender or
any other purchaser at such foreclosure sale may, at Lender's or such
purchaser's option, accept or terminate such Lease; and (6) the tenant
shall, upon receipt after the occurrence of an Event of Default of a
written request from Lender, pay all Rents payable under the Lease to
Lender.
(g) Borrower shall not receive or accept Rent under any Lease
(whether residential or non-residential) for more than two months in
advance.
5. PAYMENT OF INDEBTEDNESS; PERFORMANCE UNDER LOAN DOCUMENTS; PREPAYMENT
PREMIUM. Borrower shall pay the Indebtedness when due in accordance with
the terms of the Note and the other Loan Documents and shall perform,
observe and comply with all other provisions of the Note and the other Loan
Documents. Borrower shall pay a prepayment premium in connection with
certain prepayments of the Indebtedness, including a payment made after
Lender's exercise of any right of acceleration of the Indebtedness, as
provided in the Note.
6. EXCULPATION. Borrower's personal liability for payment of the
Indebtedness and for performance of the other obligations to be performed
by it under this Instrument is limited in the manner, and to the extent,
provided in the Note.
7. DEPOSITS FOR TAXES, INSURANCE AND OTHER CHARGES.
(a) Borrower shall deposit with Lender on the day monthly
installments of principal or interest, or both, are due under the Note (or
on another day designated in writing by Lender), until the Indebtedness is
paid in full, an additional amount sufficient to accumulate with Lender the
entire sum required to pay, when due (1) any water and sewer charges which,
if not paid, may result in a lien on all or any part of the Mortgaged
Property, (2) the premiums for fire and other hazard insurance, rent loss
insurance and such other insurance as Lender may require under Section 19,
(3) Taxes, and (4) amounts for other charges and expenses which Lender at
any time reasonably deems necessary to protect the Mortgaged Property, to
prevent the imposition of liens on the Mortgaged Property, or otherwise to
protect Lender's interests, all as reasonably estimated from time to time
by Lender, plus one-sixth of such estimate. The amounts deposited under
the preceding sentence are collectively referred to in this Instrument as
the "Imposition Deposits". The obligations of Borrower for which the
Imposition Deposits are required are collectively referred to in this
Instrument as "Impositions". The amount of the Imposition Deposits shall
be sufficient to enable Lender to pay each Imposition before the last date
upon which such payment may be made without any penalty or interest charge
being added. Lender shall maintain records indicating how much of the
monthly Imposition Deposits and how much of the aggregate Imposition
Deposits held by Lender are held for the purpose of paying Taxes, insurance
premiums and each other obligation of Borrower for which Imposition
Deposits are required. Any waiver by Lender of the requirement that
Borrower remit Imposition Deposits to Lender may be revoked by Lender, in
Lender's discretion, at any time upon notice to Borrower.
(b) Imposition Deposits shall be held in an institution (which may be
Lender, if Lender is such an institution) whose deposits or accounts are
insured or guaranteed by a federal agency. Lender shall not be obligated
to open additional accounts or deposit Imposition Deposits in additional
institutions when the amount of the Imposition Deposits exceeds the maximum
amount of the federal deposit insurance or guaranty. Lender shall apply
the Imposition Deposits to pay Impositions so long as no Event of Default
has occurred and is continuing. Unless applicable law requires, Lender
shall not be required to pay Borrower any interest, earnings or profits on
the Imposition Deposits. Borrower hereby pledges and grants to Lender a
security interest in the Imposition Deposits as additional security for all
of Borrower's obligations under this Instrument and the other Loan
Documents. Any amounts deposited with Lender under this Section 7 shall
not be trust funds, nor shall they operate to reduce the Indebtedness,
unless applied by Lender for that purpose under Section 7(e).
(c) If Lender receives a bill or invoice for an Imposition, Lender
shall pay the Imposition from the Imposition Deposits held by Lender.
Lender shall have no obligation to pay any Imposition to the extent it
exceeds Imposition Deposits then held by Lender. Lender may pay an
Imposition according to any bill, statement or estimate from the
appropriate public office or insurance company without inquiring into the
accuracy of the bill, statement or estimate or into the validity of the
Imposition.
(d) If at any time the amount of the Imposition Deposits held by
Lender for payment of a specific Imposition exceeds the amount reasonably
deemed necessary by Lender plus one-sixth of such estimate, the excess
shall be credited against future installments of Imposition Deposits. If
at any time the amount of the Imposition Deposits held by Lender for
payment of a specific Imposition is less than the amount reasonably
estimated by Lender to be necessary plus one-sixth of such estimate,
Borrower shall pay to Lender the amount of the deficiency within 15 days
after notice from Lender.
(e) If an Event of Default has occurred and is continuing, Lender may
apply any Imposition Deposits, in any amounts and in any order as Lender
determines, in Lender's discretion, to pay any Impositions or as a credit
against the Indebtedness. Upon payment in full of the Indebtedness, Lender
shall refund to Borrower any Imposition Deposits held by Lender.
8. COLLATERAL AGREEMENTS. Borrower shall deposit with Lender such
amounts as may be required by any Collateral Agreement and shall perform
all other obligations of Borrower under each Collateral Agreement.
9. APPLICATION OF PAYMENTS. If at any time Lender receives, from
Borrower or otherwise, any amount applicable to the Indebtedness which is
less than all amounts due and payable at such time, then Lender may apply
that payment to amounts then due and payable in any manner and in any order
determined by Lender, in Lender's discretion. Neither Lender's acceptance
of an amount which is less than all amounts then due and payable nor
Lender's application of such payment in the manner authorized shall
constitute or be deemed to constitute either a waiver of the unpaid amounts
or an accord and satisfaction. Notwithstanding the application of any such
amount to the Indebtedness, Borrower's obligations under this Instrument
and the Note shall remain unchanged.
10. COMPLIANCE WITH LAWS. Borrower shall comply with all laws,
ordinances, regulations and requirements of any Governmental Authority and
all recorded lawful covenants and agreements relating to or affecting the
Mortgaged Property, including all laws, ordinances, regulations,
requirements and covenants pertaining to health and safety, construction of
improvements on the Mortgaged Property, fair housing, zoning and land use,
and Leases. Borrower also shall comply with all applicable laws that
pertain to the maintenance and disposition of tenant security deposits.
Borrower shall at all times maintain records sufficient to demonstrate
compliance with the provisions of this Section 10. Borrower shall take
appropriate measures to prevent, and shall not engage in or knowingly
permit, any illegal activities at the Mortgaged Property that could
endanger tenants or visitors, result in damage to the Mortgaged Property,
result in forfeiture of the Mortgaged Property, or otherwise materially
impair the lien created by this Instrument or Lender's interest in the
Mortgaged Property. Borrower represents and warrants to Lender that no
portion of the Mortgaged Property has been or will be purchased with the
proceeds of any illegal activity.
11. USE OF PROPERTY. Unless required by applicable law, Borrower shall
not (a) except for any change in use approved by Lender, allow changes in
the use for which all or any part of the Mortgaged Property is being used
at the time this Instrument was executed, (b) convert any individual
dwelling units or common areas to commercial use, (c) initiate or acquiesce
in a change in the zoning classification of the Mortgaged Property, or (d)
establish any condominium or cooperative regime with respect to the
Mortgaged Property.
12. PROTECTION OF LENDER'S SECURITY.
(a) If Borrower fails to perform any of its obligations under this
Instrument or any other Loan Document, or if any action or proceeding is
commenced which purports to affect the Mortgaged Property, Lender's
security or Lender's rights under this Instrument, including eminent
domain, insolvency, code enforcement, civil or criminal forfeiture,
enforcement of Hazardous Materials Laws, fraudulent conveyance or
reorganizations or proceedings involving a bankrupt or decedent, then
Lender at Lender's option may make such appearances, disburse such sums and
take such actions as Lender reasonably deems necessary to perform such
obligations of Borrower and to protect Lender's interest, including (1)
payment of fees and out of pocket expenses of attorneys, accountants,
inspectors and consultants, (2) entry upon the Mortgaged Property to make
repairs or secure the Mortgaged Property, (3) procurement of the insurance
required by Section 19, and (4) payment of amounts which Borrower has
failed to pay under Sections 15 and 17.
(b) Any amounts disbursed by Lender under this Section 12, or under
any other provision of this Instrument that treats such disbursement as
being made under this Section 12, shall be added to, and become part of,
the principal component of the Indebtedness, shall be immediately due and
payable and shall bear interest from the date of disbursement until paid at
the "Default Rate", as defined in the Note.
(c) Nothing in this Section 12 shall require Lender to incur any
expense or take any action.
13. INSPECTION. Lender, its agents, representatives, and designees may
make or cause to be made entries upon and inspections of the Mortgaged
Property (including environmental inspections and tests) during normal
business hours, or at any other reasonable time.
14. BOOKS AND RECORDS; FINANCIAL REPORTING.
(a) Borrower shall keep and maintain at all times at the Mortgaged
Property or the management agent's offices, and upon Lender's request shall
make available at the Mortgaged Property, complete and accurate books of
account and records (including copies of supporting bills and invoices)
adequate to reflect correctly the operation of the Mortgaged Property, and
copies of all written contracts, Leases, and other instruments which affect
the Mortgaged Property. The books, records, contracts, Leases and other
instruments shall be subject to examination and inspection at any
reasonable time by Lender.
(b) Borrower shall furnish to Lender all of the following:
(1) within 120 days after the end of each fiscal year of
Borrower, a statement of income and expenses for Borrower's
operation of the Mortgaged Property for that fiscal year, a
statement of changes in financial position of Borrower
relating to the Mortgaged Property for that fiscal year and,
when requested by Lender, a balance sheet showing all assets
and liabilities of Borrower relating to the Mortgaged
Property as of the end of that fiscal year;
(2) within 120 days after the end of each fiscal year of
Borrower, and at any other time upon Lender's request, a
rent schedule for the Mortgaged Property showing the name of
each tenant, and for each tenant, the space occupied, the
lease expiration date, the rent payable for the current
month, the date through which rent has been paid, and any
related information requested by Lender;
(3) within 120 days after the end of each fiscal year of
Borrower, and at any other time upon Lender's request, an
accounting of all security deposits held pursuant to all
Leases, including the name of the institution (if any) and
the names and identification numbers of the accounts (if
any) in which such security deposits are held and the name
of the person to contact at such financial institution,
along with any authority or release necessary for Lender to
access information regarding such accounts;
(4) within 120 days after the end of each fiscal year of
Borrower, and at any other time upon Lender's request, a
statement that identifies all owners of any interest in
Borrower and any Controlling Entity and the interest held by
each, if Borrower or a Controlling Entity is a corporation,
all officers and directors of Borrower and the Controlling
Entity, and if Borrower or a Controlling Entity is a limited
liability company, all managers who are not members;
(5) upon Lender's request, quarterly income and expense
statements for the Mortgaged Property;
(6) upon Lender's request at any time when an Event of Default
has occurred and is continuing, monthly income and expense
statements for the Mortgaged Property;
(7) upon Lender's request, a monthly property management report
for the Mortgaged Property, showing the number of inquiries
made and rental applications received from tenants or
prospective tenants and deposits received from tenants and
any other information requested by Lender; and
(8) upon Lender's request, a balance sheet, a statement of
income and expenses for Borrower and a statement of changes
in financial position of Borrower for Borrower's most recent
fiscal year.
(c) Each of the statements, schedules and reports required by
Section 14(b) shall be certified to be complete and accurate by an
individual having authority to bind Borrower, and shall be in such form and
contain such detail as Lender may reasonably require. Lender also may
require that any statements, schedules or reports be audited at Borrower's
expense by independent certified public accountants acceptable to Lender.
(d) If Borrower fails to provide in a timely manner the statements,
schedules and reports required by Section 14(b), Lender shall have the
right to have Borrower's books and records audited, at Borrower's expense,
by independent certified public accountants selected by Lender in order to
obtain such statements, schedules and reports, and all related costs and
expenses of Lender shall become immediately due and payable and shall
become an additional part of the Indebtedness as provided in Section 12.
(e) If an Event of Default has occurred and is continuing, Borrower
shall deliver to Lender upon written demand all books and records relating
to the Mortgaged Property or its operation.
(f) Borrower authorizes Lender to obtain a credit report on Borrower
at any time.
15. TAXES; OPERATING EXPENSES.
(a) Subject to the provisions of Section 15(c) and Section 15(d),
Borrower shall pay, or cause to be paid, all Taxes when due and before the
addition of any interest, fine, penalty or cost for nonpayment.
(b) Subject to the provisions of Section 15(c), Borrower shall pay
the expenses of operating, managing, maintaining and repairing the
Mortgaged Property (including insurance premiums, utilities, repairs and
replacements) before the last date upon which each such payment may be made
without any penalty or interest charge being added.
(c) As long as no Event of Default exists and Borrower has timely
delivered to Lender any bills or premium notices that it has received,
Borrower shall not be obligated to pay Taxes, insurance premiums or any
other individual Imposition to the extent that sufficient Imposition
Deposits are held by Lender for the purpose of paying that specific
Imposition. If an Event of Default exists, Lender may exercise any rights
Lender may have with respect to Imposition Deposits without regard to
whether Impositions are then due and payable. Lender shall have no
liability to Borrower for failing to pay any Impositions to the extent that
any Event of Default has occurred and is continuing, insufficient
Imposition Deposits are held by Lender at the time an Imposition becomes
due and payable or Borrower has failed to provide Lender with bills and
premium notices as provided above.
(d) Borrower, at its own expense, may contest by appropriate legal
proceedings, conducted diligently and in good faith, the amount or validity
of any Imposition other than insurance premiums, if (1) Borrower notifies
Lender of the commencement or expected commencement of such proceedings,
(2) the Mortgaged Property is not in danger of being sold or forfeited, (3)
Borrower deposits with Lender reserves sufficient to pay the contested
Imposition, if requested by Lender, and (4) Borrower furnishes whatever
additional security is required in the proceedings or is reasonably
requested by Lender, which may include the delivery to Lender of the
reserves established by Borrower to pay the contested Imposition.
(e) Borrower shall promptly deliver to Lender a copy of all notices
of, and invoices for, Impositions, and if Borrower pays any Imposition
directly, Borrower shall promptly furnish to Lender receipts evidencing
such payments.
16. LIENS; ENCUMBRANCES. Borrower acknowledges that, to the extent
provided in Section 21, the grant, creation or existence of any mortgage,
deed of trust, deed to secure debt, security interest or other lien or
encumbrance (a "Lien") on the Mortgaged Property (other than the lien of
this Instrument) or on certain ownership interests in Borrower, whether
voluntary, involuntary or by operation of law, and whether or not such Lien
has priority over the lien of this Instrument, is a "Transfer" which
constitutes an Event of Default and subjects Borrower to personal liability
under the Note.
17. PRESERVATION, MANAGEMENT AND MAINTENANCE OF MORTGAGED PROPERTY.
Borrower (a) shall not commit waste or permit impairment or deterioration
of the Mortgaged Property, (b) shall not abandon the Mortgaged Property,
(c) shall restore or repair promptly, in a good and workmanlike manner, any
damaged part of the Mortgaged Property to the equivalent of its original
condition, or such other condition as Lender may approve in writing,
whether or not insurance proceeds or condemnation awards are available to
cover any costs of such restoration or repair, (d) shall keep the Mortgaged
Property in good repair, including the replacement of Personalty and
Fixtures with items of equal or better function and quality, (e) shall
provide for professional management of the Mortgaged Property by a
residential rental property manager satisfactory to Lender under a contract
approved by Lender in writing, and (f) shall give notice to Lender of and,
unless otherwise directed in writing by Lender, shall appear in and defend
any action or proceeding purporting to affect the Mortgaged Property,
Lender's security or Lender's rights under this Instrument. Borrower shall
not (and shall not permit any tenant or other person to) remove, demolish
or alter the Mortgaged Property or any part of the Mortgaged Property
except in connection with the replacement of tangible Personalty.
18. ENVIRONMENTAL HAZARDS.
(a) Except for matters covered by a written program of operations and
maintenance approved in writing by Lender (an "O&M Program") or matters
described in Section 18(b), Borrower shall not cause or permit any of the
following:
(1) the presence, use, generation, release, treatment,
processing, storage (including storage in above ground and
underground storage tanks), handling, or disposal of any
Hazardous Materials on or under the Mortgaged Property or
any other property of Borrower that is adjacent to the
Mortgaged Property;
(2) the transportation of any Hazardous Materials to, from, or
across the Mortgaged Property;
(3) any occurrence or condition on the Mortgaged Property or any
other property of Borrower that is adjacent to the Mortgaged
Property, which occurrence or condition is or may be in
violation of Hazardous Materials Laws; or
(4) any violation of or noncompliance with the terms of any
Environmental Permit with respect to the Mortgaged Property
or any property of Borrower that is adjacent to the
Mortgaged Property.
The matters described in clauses (1) through (4) above are referred to
collectively in this Section 18 as "Prohibited Activities or Conditions".
(b) Prohibited Activities and Conditions shall not include the safe
and lawful use and storage of quantities of (1) pre-packaged supplies,
cleaning materials and petroleum products customarily used in the operation
and maintenance of comparable multifamily properties, (2) cleaning
materials, personal grooming items and other items sold in pre-packaged
containers for consumer use and used by tenants and occupants of
residential dwelling units in the Mortgaged Property; and (3) petroleum
products used in the operation and maintenance of motor vehicles from time
to time located on the Mortgaged Property's parking areas, so long as all
of the foregoing are used, stored, handled, transported and disposed of in
compliance with Hazardous Materials Laws.
(c) Borrower shall take all commercially reasonable actions
(including the inclusion of appropriate provisions in any Leases executed
after the date of this Instrument) to prevent its employees, agents, and
contractors, and all tenants and other occupants from causing or permitting
any Prohibited Activities or Conditions. Borrower shall not lease or allow
the sublease or use of all or any portion of the Mortgaged Property to any
tenant or subtenant for nonresidential use by any user that, in the
ordinary course of its business, would cause or permit any Prohibited
Activity or Condition.
(d) If an O&M Program has been established with respect to Hazardous
Materials, Borrower shall comply in a timely manner with, and cause all
employees, agents, and contractors of Borrower and any other persons
present on the Mortgaged Property to comply with the O&M Program. All
costs of performance of Borrower's obligations under any O&M Program shall
be paid by Borrower, and Lender's out-of-pocket costs incurred in
connection with the monitoring and review of the O&M Program and Borrower's
performance shall be paid by Borrower upon demand by Lender. Any such out-
of-pocket costs of Lender which Borrower fails to pay promptly shall become
an additional part of the Indebtedness as provided in Section 12.
(e) Borrower represents and warrants to Lender that, except as
previously disclosed by Borrower to Lender in writing:
(1) Borrower has not at any time engaged in, caused or permitted
any Prohibited Activities or Conditions;
(2) to the best of Borrower's knowledge after reasonable and
diligent inquiry, no Prohibited Activities or Conditions
exist or have existed;
(3) except to the extent previously disclosed by Borrower to
Lender in writing, the Mortgaged Property does not now
contain any underground storage tanks, and, to the best of
Borrower's knowledge after reasonable and diligent inquiry,
the Mortgaged Property has not contained any underground
storage tanks in the past. If there is an underground
storage tank located on the Property which has been
previously disclosed by Borrower to Lender in writing, that
tank complies with all requirements of Hazardous Materials
Laws;
(4) Borrower has complied with all Hazardous Materials Laws,
including all requirements for notification regarding
releases of Hazardous Materials. Without limiting the
generality of the foregoing, Borrower has obtained all
Environmental Permits required for the operation of the
Mortgaged Property in accordance with Hazardous Materials
Laws now in effect and all such Environmental Permits are in
full force and effect;
(5) no event has occurred with respect to the Mortgaged Property
that constitutes, or with the passing of time or the giving
of notice would constitute, noncompliance with the terms of
any Environmental Permit;
(6) there are no actions, suits, claims or proceedings pending
or, to the best of Borrower's knowledge after reasonable and
diligent inquiry, threatened that involve the Mortgaged
Property and allege, arise out of, or relate to any
Prohibited Activity or Condition; and
(7) Borrower has not received any complaint, order, notice of
violation or other communication from any Governmental
Authority with regard to air emissions, water discharges,
noise emissions or Hazardous Materials, or any other
environmental, health or safety matters affecting the
Mortgaged Property or any other property of Borrower that is
adjacent to the Mortgaged Property.
The representations and warranties in this Section 18 shall be continuing
representations and warranties that shall be deemed to be made by Borrower
throughout the term of the loan evidenced by the Note, until the
Indebtedness has been paid in full.
(f) Borrower shall promptly notify Lender in writing upon the
occurrence of any of the following events:
(1) Borrower's discovery of any Prohibited Activity or
Condition;
(2) Borrower's receipt of or knowledge of any complaint, order,
notice of violation or other communication from any
Governmental Authority or other person with regard to
present or future alleged Prohibited Activities or
Conditions or any other environmental, health or safety
matters affecting the Mortgaged Property or any other
property of Borrower that is adjacent to the Mortgaged
Property; and
(3) any representation or warranty in this Section 18 becomes
untrue after the date of this Agreement.
Any such notice given by Borrower shall not relieve Borrower of, or result
in a waiver of, any obligation under this Instrument, the Note, or any
other Loan Document.
(g) Borrower shall pay promptly the costs of any environmental
inspections, tests or audits ("Environmental Inspections") required by
Lender in connection with any foreclosure or deed in lieu of foreclosure,
or as a condition of Lender's consent to any Transfer under Section 21, or
required by Lender following a reasonable determination by Lender that
Prohibited Activities or Conditions may exist. Any such costs incurred by
Lender (including the fees and out-of-pocket costs of attorneys and
technical consultants whether incurred in connection with any judicial or
administrative process or otherwise) which Borrower fails to pay promptly
shall become an additional part of the Indebtedness as provided in
Section 12. The results of all Environmental Inspections made by Lender
shall at all times remain the property of Lender and Lender shall have no
obligation to disclose or otherwise make available to Borrower or any other
party such results or any other information obtained by Lender in
connection with its Environmental Inspections. Lender hereby reserves the
right, and Borrower hereby expressly authorizes Lender, to make available
to any party, including any prospective bidder at a foreclosure sale of the
Mortgaged Property, the results of any Environmental Inspections made by
Lender with respect to the Mortgaged Property. Borrower consents to Lender
notifying any party (either as part of a notice of sale or otherwise) of
the results of any of Lender's Environmental Inspections. Borrower
acknowledges that Lender cannot control or otherwise assure the
truthfulness or accuracy of the results of any of its Environmental
Inspections and that the release of such results to prospective bidders at
a foreclosure sale of the Mortgaged Property may have a material and
adverse effect upon the amount which a party may bid at such sale.
Borrower agrees that Lender shall have no liability whatsoever as a result
of delivering the results of any of its Environmental Inspections to any
third party, and Borrower hereby releases and forever discharges Lender
from any and all claims, damages, or causes of action, arising out of,
connected with or incidental to the results of, the delivery of any of
Lender's Environmental Inspections.
(h) If any investigation, site monitoring, containment, clean-up,
restoration or other remedial work ("Remedial Work") is necessary to comply
with any Hazardous Materials Law or order of any Governmental Authority
that has or acquires jurisdiction over the Mortgaged Property or the use,
operation or improvement of the Mortgaged Property under any Hazardous
Materials Law, Borrower shall, by the earlier of (1) the applicable
deadline required by Hazardous Materials Law or (2) 30 days after notice
from Lender demanding such action, begin performing the Remedial Work, and
thereafter diligently prosecute it to completion, and shall in any event
complete the work by the time required by applicable Hazardous Materials
Law. If Borrower fails to begin on a timely basis or diligently prosecute
any required Remedial Work, Lender may, at its option, cause the Remedial
Work to be completed, in which case Borrower shall reimburse Lender on
demand for the cost of doing so. Any reimbursement due from Borrower to
Lender shall become part of the Indebtedness as provided in Section 12.
(i) Borrower shall cooperate with any inquiry by any Governmental
Authority and shall comply with any governmental or judicial order which
arises from any alleged Prohibited Activity or Condition.
(j) Borrower shall indemnify, hold harmless and defend (i) Lender,
(ii) any prior owner or holder of the Note, (iii) the Loan Servicer, (iv)
any prior Loan Servicer, (v) the officers, directors, shareholders,
partners, employees and trustees of any of the foregoing, and (vi) the
heirs, legal representatives, successors and assigns of each of the
foregoing (collectively, the "Indemnitees") from and against all
proceedings, claims, damages, penalties and costs (whether initiated or
sought by Governmental Authorities or private parties), including fees and
out of pocket expenses of attorneys and expert witnesses, investigatory
fees, and remediation costs, whether incurred in connection with any
judicial or administrative process or otherwise, arising directly or
indirectly from any of the following:
(1) any breach of any representation or warranty of Borrower in
this Section 18;
(2) any failure by Borrower to perform any of its obligations
under this Section 18;
(3) the existence or alleged existence of any Prohibited
Activity or Condition;
(4) the presence or alleged presence of Hazardous Materials on
or under the Mortgaged Property or any property of Borrower
that is adjacent to the Mortgaged Property; and
(5) the actual or alleged violation of any Hazardous Materials
Law.
(k) Counsel selected by Borrower to defend Indemnitees shall be
subject to the approval of those Indemnitees. However, any Indemnitee may
elect to defend any claim or legal or administrative proceeding at the
Borrower's expense.
(l) Borrower shall not, without the prior written consent of those
Indemnitees who are named as parties to a claim or legal or administrative
proceeding (a "Claim"), settle or compromise the Claim if the settlement
(1) results in the entry of any judgment that does not include as an
unconditional term the delivery by the claimant or plaintiff to Lender of a
written release of those Indemnitees, satisfactory in form and substance to
Lender; or (2) may materially and adversely affect Lender, as determined by
Lender in its discretion.
(m) Borrower's obligation to indemnify the Indemnitees shall not be
limited or impaired by any of the following, or by any failure of Borrower
or any guarantor to receive notice of or consideration for any of the
following:
(1) any amendment or modification of any Loan Document;
(2) any extensions of time for performance required by any Loan
Document;
(3) any provision in any of the Loan Documents limiting Lender's
recourse to property securing the Indebtedness, or limiting
the personal liability of Borrower or any other party for
payment of all or any part of the Indebtedness;
(4) the accuracy or inaccuracy of any representations and
warranties made by Borrower under this Instrument or any
other Loan Document;
(5) the release of Borrower or any other person, by Lender or by
operation of law, from performance of any obligation under
any Loan Document;
(6) the release or substitution in whole or in part of any
security for the Indebtedness; and
(7) Lender's failure to properly perfect any lien or security
interest given as security for the Indebtedness.
(n) Borrower shall, at its own cost and expense, do all of the
following:
(1) pay or satisfy any judgment or decree that may be entered
against any Indemnitee or Indemnitees in any legal or
administrative proceeding incident to any matters against
which Indemnitees are entitled to be indemnified under this
Section 18;
(2) reimburse Indemnitees for any expenses paid or incurred in
connection with any matters against which Indemnitees are
entitled to be indemnified under this Section 18; and
(3) reimburse Indemnitees for any and all expenses, including
fees and out of pocket expenses of attorneys and expert
witnesses, paid or incurred in connection with the
enforcement by Indemnitees of their rights under this
Section 18, or in monitoring and participating in any legal
or administrative proceeding.
(o) In any circumstances in which the indemnity under this Section 18
applies, Lender may employ its own legal counsel and consultants to
prosecute, defend or negotiate any claim or legal or administrative
proceeding and Lender, with the prior written consent of Borrower (which
shall not be unreasonably withheld, delayed or conditioned) may settle or
compromise any action or legal or administrative proceeding. Borrower
shall reimburse Lender upon demand for all costs and expenses incurred by
Lender, including all costs of settlements entered into in good faith, and
the fees and out of pocket expenses of such attorneys and consultants.
(p) The provisions of this Section 18 shall be in addition to any and
all other obligations and liabilities that Borrower may have under
applicable law or under other Loan Documents, and each Indemnitee shall be
entitled to indemnification under this Section 18 without regard to whether
Lender or that Indemnitee has exercised any rights against the Mortgaged
Property or any other security, pursued any rights against any guarantor,
or pursued any other rights available under the Loan Documents or
applicable law. If Borrower consists of more than one person or entity, the
obligation of those persons or entities to indemnify the Indemnitees under
this Section 18 shall be joint and several. The obligation of Borrower to
indemnify the Indemnitees under this Section 18 shall survive any repayment
or discharge of the Indebtedness, any foreclosure proceeding, any
foreclosure sale, any delivery of any deed in lieu of foreclosure, and any
release of record of the lien of this Instrument.
19. PROPERTY AND LIABILITY INSURANCE.
(a) Borrower shall keep the Improvements insured at all times against
such hazards as Lender may from time to time require, which insurance shall
include but not be limited to coverage against loss by fire and allied
perils, general boiler and machinery coverage, and business income
coverage. Lender's insurance requirements may change from time to time
throughout the term of the Indebtedness. If Lender so requires, such
insurance shall also include sinkhole insurance, mine subsidence insurance,
earthquake insurance, and, if the Mortgaged Property does not conform to
applicable zoning or land use laws, building ordinance or law coverage. If
any of the Improvements is located in an area identified by the Federal
Emergency Management Agency (or any successor to that agency) as an area
having special flood hazards, and if flood insurance is available in that
area, Borrower shall insure such Improvements against loss by flood.
(b) All premiums on insurance policies required under Section 19(a)
shall be paid in the manner provided in Section 7, unless Lender has
designated in writing another method of payment. All such policies shall
also be in a form approved by Lender. All policies of property damage
insurance shall include a non-contributing, non-reporting mortgage clause
in favor of, and in a form approved by, Lender. Lender shall have the
right to hold the original policies or duplicate original policies of all
insurance required by Section 19(a). Borrower shall promptly deliver to
Lender a copy of all renewal and other notices received by Borrower with
respect to the policies and all receipts for paid premiums. At least 30
days prior to the expiration date of a policy, Borrower shall deliver to
Lender the original (or a duplicate original) of a renewal policy in form
satisfactory to Lender.
(c) Borrower shall maintain at all times commercial general liability
insurance, workers' compensation insurance and such other liability, errors
and omissions and fidelity insurance coverages as Lender may from time to
time require.
(d) All insurance policies and renewals of insurance policies
required by this Section 19 shall be in such amounts and for such periods
as Lender may from time to time require, and shall be issued by insurance
companies satisfactory to Lender.
(e) Borrower shall comply with all insurance requirements and shall
not permit any condition to exist on the Mortgaged Property that would
invalidate any part of any insurance coverage that this Instrument requires
Borrower to maintain.
(f) In the event of loss, Borrower shall give immediate written
notice to the insurance carrier and to Lender. Borrower hereby authorizes
and appoints Lender as attorney-in-fact for Borrower to make proof of loss,
to adjust and compromise any claims under policies of property damage
insurance, to appear in and prosecute any action arising from such property
damage insurance policies, to collect and receive the proceeds of property
damage insurance, and to deduct from such proceeds Lender's expenses
incurred in the collection of such proceeds. This power of attorney is
coupled with an interest and therefore is irrevocable. However, nothing
contained in this Section 19 shall require Lender to incur any expense or
take any action. Lender may, at Lender's option, (1) hold the balance of
such proceeds to be used to reimburse Borrower for the cost of restoring
and repairing the Mortgaged Property to the equivalent of its original
condition or to a condition approved by Lender (the "Restoration"), or (2)
apply the balance of such proceeds to the payment of the Indebtedness,
whether or not then due. To the extent Lender determines to apply insurance
proceeds to Restoration, Lender shall do so in accordance with Lender's
then-current policies relating to the restoration of casualty damage on
similar multifamily properties.
(g) Lender shall not exercise its option to apply insurance proceeds
to the payment of the Indebtedness if all of the following conditions are
met: (1) no Event of Default (or any event which, with the giving of
notice or the passage of time, or both, would constitute an Event of
Default) has occurred and is continuing; (2) Lender determines, in its
discretion, that there will be sufficient funds to complete the
Restoration; (3) Lender determines, in its discretion, that the rental
income from the Mortgaged Property after completion of the Restoration will
be sufficient to meet all operating costs and other expenses, Imposition
Deposits, deposits to reserves and loan repayment obligations relating to
the Mortgaged Property; and (4) Lender determines, in its discretion, that
the Restoration will be completed before the earlier of (A) one year before
the maturity date of the Note or (B) one year after the date of the loss or
casualty.
(h) If the Mortgaged Property is sold at a foreclosure sale or Lender
acquires title to the Mortgaged Property, Lender shall automatically
succeed to all rights of Borrower in and to any insurance policies and
unearned insurance premiums and in and to the proceeds resulting from any
damage to the Mortgaged Property prior to such sale or acquisition.
20. CONDEMNATION.
(a) Borrower shall promptly notify Lender of any action or proceeding
relating to any condemnation or other taking, or conveyance in lieu
thereof, of all or any part of the Mortgaged Property, whether direct or
indirect (a "Condemnation"). Borrower shall appear in and prosecute or
defend any action or proceeding relating to any Condemnation unless
otherwise directed by Lender in writing. Borrower authorizes and appoints
Lender as attorney-in-fact for Borrower to commence, appear in and
prosecute, in Lender's or Borrower's name, any action or proceeding
relating to any Condemnation and to settle or compromise any claim in
connection with any Condemnation. This power of attorney is coupled with
an interest and therefore is irrevocable. However, nothing contained in
this Section 20 shall require Lender to incur any expense or take any
action. Borrower hereby transfers and assigns to Lender all right, title
and interest of Borrower in and to any award or payment with respect to (i)
any Condemnation, or any conveyance in lieu of Condemnation, and (ii) any
damage to the Mortgaged Property caused by governmental action that does
not result in a Condemnation.
(b) Lender may apply such awards or proceeds, after the deduction of
Lender's expenses incurred in the collection of such amounts, at Lender's
option, to the restoration or repair of the Mortgaged Property or to the
payment of the Indebtedness, with the balance, if any, to Borrower. Unless
Lender otherwise agrees in writing, any application of any awards or
proceeds to the Indebtedness shall not extend or postpone the due date of
any monthly installments referred to in the Note, Section 7 of this
Instrument or any Collateral Agreement, or change the amount of such
installments. Borrower agrees to execute such further evidence of
assignment of any awards or proceeds as Lender may require.
21. TRANSFERS OF THE MORTGAGED PROPERTY OR INTERESTS IN BORROWER.
[RIGHT TO UNLIMITED TRANSFERS -- WITH LENDER APPROVAL]
(a) The occurrence of any of the following events shall constitute an
Event of Default under this Instrument:
(1) a Transfer of all or any part of the Mortgaged Property or
any interest in the Mortgaged Property;
(2) if Borrower is a limited partnership, a Transfer of (A) any
general partnership interest, or (B) limited partnership
interests in Borrower that would cause the Initial Owners of
Borrower to own less than 51% of all limited partnership
interests in Borrower;
(3) if Borrower is a general partnership or a joint venture, a
Transfer of any general partnership or joint venture
interest in Borrower;
(4) if Borrower is a limited liability company, a Transfer of
(A) any membership interest in Borrower which would cause
the Initial Owners to own less than 51% of all the
membership interests in Borrower, or (B) any membership or
other interest of a manager in Borrower;
(5) if Borrower is a corporation, (A) the Transfer of any voting
stock in Borrower which would cause the Initial Owners to
own less than 51% of any class of voting stock in Borrower
or (B) if the outstanding voting stock in Borrower is held
by 100 or more shareholders, one or more transfers by a
single transferor within a 12-month period affecting an
aggregate of 5% or more of that stock;
(6) if Borrower is a trust, (A) a Transfer of any beneficial
interest in Borrower which would cause the Initial Owners to
own less than 51% of all the beneficial interests in
Borrower, or (B) the termination or revocation of the trust,
or (C) the removal, appointment or substitution of a trustee
of Borrower; and
(7) a Transfer of any interest in a Controlling Entity which, if
such Controlling Entity were Borrower, would result in an
Event of Default under any of Sections 21(a)(1) through (6)
above.
Lender shall not be required to demonstrate any actual impairment of its
security or any increased risk of default in order to exercise any of its
remedies with respect to an Event of Default under this Section 21.
(b) The occurrence of any of the following events shall not
constitute an Event of Default under this Instrument, notwithstanding any
provision of Section 21(a) to the contrary:
(1) a Transfer to which Lender has consented;
(2) a Transfer that occurs by devise, descent, or by operation
of law upon the death of a natural person;
(3) the grant of a leasehold interest in an individual dwelling
unit for a term of two years or less not containing an
option to purchase;
(4) a Transfer of obsolete or worn out Personalty or Fixtures
that are contemporaneously replaced by items of equal or
better function and quality, which are free of liens,
encumbrances and security interests other than those created
by the Loan Documents or consented to by Lender;
(5) the grant of an easement, if before the grant Lender
determines that the easement will not materially affect the
operation or value of the Mortgaged Property or Lender's
interest in the Mortgaged Property, and Borrower pays to
Lender, upon demand, all costs and expenses incurred by
Lender in connection with reviewing Borrower's request; and
(6) the creation of a mechanic's, materialman's, or judgment
lien against the Mortgaged Property which is released of
record or otherwise remedied to Lender's satisfaction within
30 days of the date of creation.
(c) Lender shall consent, without any adjustment to the rate at which
the Indebtedness secured by this Instrument bears interest or to any other
economic terms of the Indebtedness, to a Transfer that would otherwise
violate this Section 21 if, prior to the Transfer, Borrower has satisfied
each of the following requirements:
(1) the submission to Lender of all information required by
Lender to make the determination required by this Section
21(c);
(2) the absence of any Event of Default;
(3) the transferee meets all of the eligibility, credit,
management and other standards (including but not limited to
any standards with respect to previous relationships between
Lender and the transferee and the organization of the
transferee) customarily applied by Lender at the time of the
proposed Transfer to the approval of borrowers in connection
with the origination or purchase of similar mortgages on
multifamily properties;
(4) the Mortgaged Property, at the time of the proposed
Transfer, meets all standards as to its physical condition
that are customarily applied by Lender at the time of the
proposed Transfer to the approval of properties in
connection with the origination or purchase of similar
mortgages on multifamily properties;
(5) in the case of a Transfer of all or any part of the
Mortgaged Property, (A) the execution by the transferee of
an assumption agreement that is acceptable to Lender and
that, among other things, requires the transferee to perform
all obligations of Borrower set forth in the Note, this
Instrument and any other Loan Documents, and may require
that the transferee comply with any provisions of this
Instrument or any other Loan Document which previously may
have been waived by Lender, and (B) if a guaranty has been
executed and delivered in connection with the Note, this
Instrument or any of the other Loan Documents, the
transferee causes one or more individuals or entities
acceptable to Lender to execute and deliver to Lender a
guaranty in a form acceptable to Lender;
(6) in the case of a Transfer of any interest in a Controlling
Entity, if a guaranty has been executed and delivered in
connection with the Note, this Instrument or any of the
other Loan Documents, the Borrower causes one or more
individuals or entities acceptable to Lender to execute and
deliver to Lender a guaranty in a form acceptable to Lender;
and
(7) Lender's receipt of all of the following:
(A) a review fee in the amount of $2,000.00;
(B) a transfer fee in an amount equal to 1.0% of the unpaid
principal balance of the Indebtedness immediately
before the applicable Transfer; and
(C) the amount of Lender's out-of-pocket costs (including
reasonable attorneys' fees) incurred in reviewing the
Transfer request.
22. EVENTS OF DEFAULT. The occurrence of any one or more of the
following shall constitute an Event of Default under this Instrument:
(a) any failure by Borrower to pay or deposit when due any amount
required by the Note, this Instrument or any other Loan Document;
(b) any failure by Borrower to maintain the insurance coverage
required by Section 19;
(c) any failure by Borrower to comply with the provisions of
Section 33;
(d) fraud or material misrepresentation or material omission by
Borrower, any of its officers, directors, trustees, general partners or
managers or any guarantor in connection with (A) the application for or
creation of the Indebtedness, (B) any financial statement, rent roll, or
other report or information provided to Lender during the term of the
Indebtedness, or (C) any request for Lender's consent to any proposed
action, including a request for disbursement of funds under any Collateral
Agreement;
(e) any Event of Default under Section 21;
(f) the commencement of a forfeiture action or proceeding, whether
civil or criminal, which, in Lender's reasonable judgment, could result in
a forfeiture of the Mortgaged Property or otherwise materially impair the
lien created by this Instrument or Lender's interest in the Mortgaged
Property;
(g) any failure by Borrower to perform any of its obligations under
this Instrument (other than those specified in Sections 22(a) through (f)),
as and when required, which continues for a period of 30 days after notice
of such failure by Lender to Borrower. However, no such notice or grace
period shall apply in the case of any such failure which could, in Lender's
judgment, absent immediate exercise by Lender of a right or remedy under
this Instrument, result in harm to Lender, impairment of the Note or this
Instrument or any other security given under any other Loan Document;
(h) any failure by Borrower to perform any of its obligations as and
when required under any Loan Document other than this Instrument which
continues beyond the applicable cure period, if any, specified in that Loan
Document;
(i) any exercise by the holder of any debt instrument secured by a
mortgage, deed of trust or deed to secure debt on the Mortgaged Property of
a right to declare all amounts due under that debt instrument immediately
due and payable; and
(j) Borrower voluntarily files for bankruptcy protection under the
United States Bankruptcy Code or voluntarily becomes subject to any
reorganization, receivership, insolvency proceeding or other similar
proceeding pursuant to any other federal or state law affecting debtor and
creditor rights, or an involuntary case is commenced against Borrower by
any creditor (other than Lender) of Borrower pursuant to the United States
Bankruptcy Code or other federal or state law affecting debtor and creditor
rights and is not dismissed or discharged within 60 days after filing.
23. REMEDIES CUMULATIVE. Each right and remedy provided in this
Instrument is distinct from all other rights or remedies under this
Instrument or any other Loan Document or afforded by applicable law, and
each shall be cumulative and may be exercised concurrently, independently,
or successively, in any order.
24. FORBEARANCE.
(a) Lender may (but shall not be obligated to) agree with Borrower,
from time to time, and without giving notice to, or obtaining the consent
of, or having any effect upon the obligations of, any guarantor or other
third party obligor, to take any of the following actions: extend the time
for payment of all or any part of the Indebtedness; reduce the payments due
under this Instrument, the Note, or any other Loan Document; release anyone
liable for the payment of any amounts under this Instrument, the Note, or
any other Loan Document; accept a renewal of the Note; modify the terms and
time of payment of the Indebtedness; join in any extension or subordination
agreement; release any Mortgaged Property; take or release other or
additional security; modify the rate of interest or period of amortization
of the Note or change the amount of the monthly installments payable under
the Note; and otherwise modify this Instrument, the Note, or any other Loan
Document.
(b) Any forbearance by Lender in exercising any right or remedy under
the Note, this Instrument, or any other Loan Document or otherwise afforded
by applicable law, shall not be a waiver of or preclude the exercise of any
right or remedy. The acceptance by Lender of payment of all or any part of
the Indebtedness after the due date of such payment, or in an amount which
is less than the required payment, shall not be a waiver of Lender's right
to require prompt payment when due of all other payments on account of the
Indebtedness or to exercise any remedies for any failure to make prompt
payment. Enforcement by Lender of any security for the Indebtedness shall
not constitute an election by Lender of remedies so as to preclude the
exercise of any other right available to Lender. Lender's receipt of any
awards or proceeds under Sections 19 and 20 shall not operate to cure or
waive any Event of Default.
25. LOAN CHARGES. If any applicable law limiting the amount of interest
or other charges permitted to be collected from Borrower is interpreted so
that any charge provided for in any Loan Document, whether considered
separately or together with other charges levied in connection with any
other Loan Document, violates that law, and Borrower is entitled to the
benefit of that law, that charge is hereby reduced to the extent necessary
to eliminate that violation. The amounts, if any, previously paid to
Lender in excess of the permitted amounts shall be applied by Lender to
reduce the principal of the Indebtedness. For the purpose of determining
whether any applicable law limiting the amount of interest or other charges
permitted to be collected from Borrower has been violated, all Indebtedness
which constitutes interest, as well as all other charges levied in
connection with the Indebtedness which constitute interest, shall be deemed
to be allocated and spread over the stated term of the Note. Unless
otherwise required by applicable law, such allocation and spreading shall
be effected in such a manner that the rate of interest so computed is
uniform throughout the stated term of the Note.
26. WAIVER OF STATUTE OF LIMITATIONS. Borrower hereby waives the right to
assert any statute of limitations as a bar to the enforcement of the lien
of this Instrument or to any action brought to enforce any Loan Document.
27. WAIVER OF MARSHALLING. Notwithstanding the existence of any other
security interests in the Mortgaged Property held by Lender or by any other
party, Lender shall have the right to determine the order in which any or
all of the Mortgaged Property shall be subjected to the remedies provided
in this Instrument, the Note, any other Loan Document or applicable law.
Lender shall have the right to determine the order in which any or all
portions of the Indebtedness are satisfied from the proceeds realized upon
the exercise of such remedies. Borrower and any party who now or in the
future acquires a security interest in the Mortgaged Property and who has
actual or constructive notice of this Instrument waives any and all right
to require the marshalling of assets or to require that any of the
Mortgaged Property be sold in the inverse order of alienation or that any
of the Mortgaged Property be sold in parcels or as an entirety in
connection with the exercise of any of the remedies permitted by applicable
law or provided in this Instrument.
28. FURTHER ASSURANCES. Borrower shall execute, acknowledge, and deliver,
at its sole cost and expense, all further acts, deeds, conveyances,
assignments, estoppel certificates, financing statements, transfers and
assurances as Lender may require from time to time in order to better
assure, grant, and convey to Lender the rights intended to be granted, now
or in the future, to Lender under this Instrument and the Loan Documents.
29. ESTOPPEL CERTIFICATE. Within 10 days after a request from Lender,
Borrower shall deliver to Lender a written statement, signed and
acknowledged by Borrower, certifying to Lender or any person designated by
Lender, as of the date of such statement, (i) that the Loan Documents are
unmodified and in full force and effect (or, if there have been
modifications, that the Loan Documents are in full force and effect as
modified and setting forth such modifications); (ii) the unpaid principal
balance of the Note; (iii) the date to which interest under the Note has
been paid; (iv) that Borrower is not in default in paying the Indebtedness
or in performing or observing any of the covenants or agreements contained
in this Instrument or any of the other Loan Documents (or, if the Borrower
is in default, describing such default in reasonable detail); (v) whether
or not there are then existing any setoffs or defenses known to Borrower
against the enforcement of any right or remedy of Lender under the Loan
Documents; and (vi) any additional facts requested by Lender.
30. GOVERNING LAW; CONSENT TO JURISDICTION AND VENUE.
(a) This Instrument, and any Loan Document which does not itself
expressly identify the law that is to apply to it, shall be governed by the
laws of the jurisdiction in which the Land is located (the "Property
Jurisdiction").
(b) Borrower agrees that any controversy arising under or in relation
to the Note, this Instrument, or any other Loan Document shall be litigated
exclusively in the Property Jurisdiction. The state and federal courts and
authorities with jurisdiction in the Property Jurisdiction shall have
exclusive jurisdiction over all controversies which shall arise under or in
relation to the Note, any security for the Indebtedness, or any other Loan
Document. Borrower irrevocably consents to service, jurisdiction, and
venue of such courts for any such litigation and waives any other venue to
which it might be entitled by virtue of domicile, habitual residence or
otherwise.
31. NOTICE.
(a) All notices, demands and other communications ("notice") under or
concerning this Instrument shall be in writing. Each notice shall be
addressed to the intended recipient at its address set forth in this
Instrument, and shall be deemed given on the earliest to occur of (1) the
date when the notice is received by the addressee; (2) the first Business
Day after the notice is delivered to a recognized overnight courier
service, with arrangements made for payment of charges for next Business
Day delivery; or (3) the third Business Day after the notice is deposited
in the United States mail with postage prepaid, certified mail, return
receipt requested. As used in this Section 31, the term "Business Day"
means any day other than a Saturday, a Sunday or any other day on which
Lender is not open for business.
(b) Any party to this Instrument may change the address to which
notices intended for it are to be directed by means of notice given to the
other party in accordance with this Section 31. Each party agrees that it
will not refuse or reject delivery of any notice given in accordance with
this Section 31, that it will acknowledge, in writing, the receipt of any
notice upon request by the other party and that any notice rejected or
refused by it shall be deemed for purposes of this Section 31 to have been
received by the rejecting party on the date so refused or rejected, as
conclusively established by the records of the U.S. Postal Service or the
courier service.
(c) Any notice under the Note and any other Loan Document which does
not specify how notices are to be given shall be given in accordance with
this Section 31.
32. SALE OF NOTE; CHANGE IN SERVICER. The Note or a partial interest in
the Note (together with this Instrument and the other Loan Documents) may
be sold one or more times without prior notice to Borrower. A sale may
result in a change of the Loan Servicer. There also may be one or more
changes of the Loan Servicer unrelated to a sale of the Note. If there is
a change of the Loan Servicer, Borrower will be given notice of the change.
33. SINGLE ASSET BORROWER. Until the Indebtedness is paid in full,
Borrower (a) shall not acquire any real or personal property other than the
Mortgaged Property and personal property related to the operation and
maintenance of the Mortgaged Property; (b) shall not operate any business
other than the management and operation of the Mortgaged Property; and (c)
shall not maintain its assets in a way difficult to segregate and identify.
34. SUCCESSORS AND ASSIGNS BOUND. This Instrument shall bind, and the
rights granted by this Instrument shall inure to, the respective successors
and assigns of Lender and Borrower. However, a Transfer not permitted by
Section 21 shall be an Event of Default.
35. JOINT AND SEVERAL LIABILITY. If more than one person or entity signs
this Instrument as Borrower, the obligations of such persons and entities
shall be joint and several.
36. RELATIONSHIP OF PARTIES; NO THIRD PARTY BENEFICIARY.
(a) The relationship between Lender and Borrower shall be solely that
of creditor and debtor, respectively, and nothing contained in this
Instrument shall create any other relationship between Lender and Borrower.
(b) No creditor of any party to this Instrument and no other person
shall be a third party beneficiary of this Instrument or any other Loan
Document. Without limiting the generality of the preceding sentence, (1)
any arrangement (a "Servicing Arrangement") between the Lender and any Loan
Servicer for loss sharing or interim advancement of funds shall constitute
a contractual obligation of such Loan Servicer that is independent of the
obligation of Borrower for the payment of the Indebtedness, (2) Borrower
shall not be a third party beneficiary of any Servicing Arrangement, and
(3) no payment by the Loan Servicer under any Servicing Arrangement will
reduce the amount of the Indebtedness.
37. SEVERABILITY; AMENDMENTS. The invalidity or unenforceability of any
provision of this Instrument shall not affect the validity or
enforceability of any other provision, and all other provisions shall
remain in full force and effect. This Instrument contains the entire
agreement among the parties as to the rights granted and the obligations
assumed in this Instrument. This Instrument may not be amended or modified
except by a writing signed by the party against whom enforcement is sought.
38. CONSTRUCTION. The captions and headings of the sections of this
Instrument are for convenience only and shall be disregarded in construing
this Instrument. Any reference in this Instrument to an "Exhibit" or a
"Section" shall, unless otherwise explicitly provided, be construed as
referring, respectively, to an Exhibit attached to this Instrument or to a
Section of this Instrument. All Exhibits attached to or referred to in
this Instrument are incorporated by reference into this Instrument. Any
reference in this Instrument to a statute or regulation shall be construed
as referring to that statute or regulation as amended from time to time.
Use of the singular in this Agreement includes the plural and use of the
plural includes the singular. As used in this Instrument, the term
"including" means "including, but not limited to."
39. LOAN SERVICING. All actions regarding the servicing of the loan
evidenced by the Note, including the collection of payments, the giving and
receipt of notice, inspections of the Property, inspections of books and
records, and the granting of consents and approvals, may be taken by the
Loan Servicer unless Borrower receives notice to the contrary. If Borrower
receives conflicting notices regarding the identity of the Loan Servicer or
any other subject, any such notice from Lender shall govern.
40. DISCLOSURE OF INFORMATION. Lender may furnish information regarding
Borrower or the Mortgaged Property to third parties with an existing or
prospective interest in the servicing, enforcement, evaluation,
performance, purchase or securitization of the Indebtedness, including but
not limited to trustees, master servicers, special servicers, rating
agencies, and organizations maintaining databases on the underwriting and
performance of multifamily mortgage loans. Borrower irrevocably waives any
and all rights it may have under applicable law to prohibit such
disclosure, including but not limited to any right of privacy.
41. NO CHANGE IN FACTS OR CIRCUMSTANCES. All information in the
application for the loan submitted to Lender (the "Loan Application") and
in all financial statements, rent rolls, reports, certificates and other
documents submitted in connection with the Loan Application are complete
and accurate in all material respects. There has been no material adverse
change in any fact or circumstance that would make any such information
incomplete or inaccurate.
42. SUBROGATION. If, and to the extent that, the proceeds of the loan
evidenced by the Note are used to pay, satisfy or discharge any obligation
of Borrower for the payment of money that is secured by a pre-existing
mortgage, deed of trust or other lien encumbering the Mortgaged Property (a
"Prior Lien"), such loan proceeds shall be deemed to have been advanced by
Lender at Borrower's request, and Lender shall automatically, and without
further action on its part, be subrogated to the rights, including lien
priority, of the owner or holder of the obligation secured by the Prior
Lien, whether or not the Prior Lien is released.
43. ACCELERATION; REMEDIES. At any time during the existence of an Event
of Default, Lender, at Lender's option, may declare the Indebtedness to be
immediately due and payable without further demand, and may invoke the
power of sale and any other remedies permitted by Colorado law or provided
in this Instrument or in any other Loan Document. Lender shall be entitled
to collect all costs and expenses incurred in pursuing such remedies,
including attorneys' fees, costs of documentary evidence, abstracts and
title reports.
If Lender invokes the power of sale, Trustee shall give notice of sale
in the manner required by Colorado law to Borrower and to all other persons
who are entitled to receive such notice under Colorado law, and shall sell
the Mortgaged Property according to Colorado law. Trustee may sell the
Mortgaged Property at the time and place and under the terms designated in
the notice of sale in one or more parcels and in such order as Trustee may
determine. Trustee may postpone the sale of all or any part of the
Mortgaged Property by public announcement at the time and place of any
previously scheduled sale. Lender or Lender's designee may purchase the
Mortgaged Property at any sale. Trustee shall deliver to the purchaser at
the sale Trustee's certificate describing the Mortgaged Property and the
time when the purchaser will be entitled to Trustee's deed to the Mortgaged
Property. The recitals in Trustee's deed shall be prima facie evidence of
the truth of the statements made in those recitals.
Trustee shall apply the proceeds of the sale in the following order:
(a) to all costs and expenses of the sale, including Trustee's fees not to
exceed 5% of the gross sales price, attorneys' fees and costs of title
evidence; (b) to the Indebtedness in such order as Lender, in Lender's
discretion, directs; and (c) the excess, if any, to the person or persons
legally entitled to the excess.
44. RELEASE. Upon payment of the Indebtedness, Lender shall request
Trustee to release this Instrument and shall deliver to Trustee the
canceled Note. Trustee shall release this Instrument without further
inquiry or liability. Borrower shall pay all costs of recordation, if any,
of the release and shall pay the statutory Trustee's fee.
45. WAIVER OF HOMESTEAD. Borrower waives all right of homestead exemption
in the Mortgaged Property.
46. WAIVER OF TRIAL BY JURY. BORROWER AND LENDER EACH (A) COVENANTS AND
AGREES NOT TO ELECT A TRIAL BY JURY WITH RESPECT TO ANY ISSUE ARISING OUT
OF THIS INSTRUMENT OR THE RELATIONSHIP BETWEEN THE PARTIES AS BORROWER AND
LENDER THAT IS TRIABLE OF RIGHT BY A JURY AND (B) WAIVES ANY RIGHT TO TRIAL
BY JURY WITH RESPECT TO SUCH ISSUE TO THE EXTENT THAT ANY SUCH RIGHT EXISTS
NOW OR IN THE FUTURE. THIS WAIVER OF RIGHT TO TRIAL BY JURY IS SEPARATELY
GIVEN BY EACH PARTY, KNOWINGLY AND VOLUNTARILY WITH THE BENEFIT OF
COMPETENT LEGAL COUNSEL.
ATTACHED EXHIBITS. The following Exhibits are attached to this
Instrument:
|X| Exhibit A Description of the Land (required).
|X| Exhibit B Modifications to Instrument
[SIGNATURE APPEARS ON FOLLOWING PAGE]
IN WITNESS WHEREOF, Borrower has signed and delivered this Instrument
or has caused this Instrument to be signed and delivered by its duly
authorized representative.
PARK AT HIGHLANDS LLC, a Colorado limited
liability company
By:/s/ Al Feld
___________________________________(SEAL)
Al Feld
Managing Member
<PAGE>
ACKNOWLEDGMENT
STATE OF CALIFORNIA
COUNTY OF _______________________ ss
On December ____, 1997 before me,
______________________________________
personally appeared Al Feld, personally known to me (or proved to me on the
basis of satisfactory evidence) to be the person whose name is subscribed
to the within instrument, and acknowledged to me that he executed the same
in his authorized capacity, and that by his signature on the instrument the
person or the entity upon behalf of which the person acted, executed the
instrument.
WITNESS my hand and official seal.
_________________________________
Signature
(This area for official notary seal)
<PAGE>
EXHIBIT A
[DESCRIPTION OF THE LAND]
<PAGE>
EXHIBIT B
MODIFICATIONS TO INSTRUMENT
The following modifications are made to the text of the Instrument that
precedes this Exhibit:
In the fourth paragraph of page one:
* at the end of the first sentence, add the phrase Aexcept for
those matters listed in a Schedule of Exceptions to Coverage in
any title insurance policy to be issued to Lender contemporaneously
with the execution and recordation of this Instrument and insuring Lender's
interest in the Mortgaged Property".
* in the second sentence, replace the phrase "easements and
restrictions" with the word "matters".
In paragraph 1(f), insert the phrase "owned by Borrower" after the word
"property".
At the end of paragraph 1(z)(C) insert after "stock": "(other than shares
in a corporation having more than 100 shareholders)". Also in paragraph
1(z) after the phrase "Bankruptcy Code" insert Aor the execution, delivery
and recording at any time after recording of this Instrument of the "Right
of First/Last Offer Agreement" as such term is defined in that certain
Restrictive Covenant Agreement dated May 30, 1997 between Wellsford Park
Highlands Corp. and ERP Operating Limited Partnership.
In paragraph 4(e), add the following sentence:
Notwithstanding the foregoing, not more than 5% of the Leases may
be for a term of less than 6 months but not less than 3 months,
and not more than 10% of the Leases may be corporate leases of
not less than one month.
In paragraph 10, add the following sentence:
Notwithstanding the foregoing, so long as there does not
otherwise exist a default under this Instrument or the
Multifamily Note secured hereby, Borrower may, upon providing
Lender with security satisfactory to Lender, proceed diligently
and in good faith to contest the validity or applicability of any
laws, ordinances, regulations and requirements of any
Governmental Authority and all recorded covenants and agreements
relating to or affecting the Mortgaged Property.
On the second line of paragraph 14(c), insert the phrase "in all material
respects" after the word "accurate".
In the next to the last line of paragraph 17, replace the word "alter" with
the phrase "materially alter as to appearance".
In paragraph 18(a)(2), insert the phrase "(except for the gas lines and
sanitary sewer lines now in place)" after the word "Property".
In the tenth line of paragraph 18(g), replace the phrase "Borrower or any
other" with the phrase "any party (other than Borrower, upon such
Borrower's written request)".
In paragraph 18(j):
* "and" is deleted from the end of subparagraph (4)
* the period at the end of subparagraph (5) is replaced with the
phrase "; and"
* a new subparagraph (6) is added, as follows:
(6) Notwithstanding anything in the above subparagraphs (1)
through (5), Borrower is not obligated to indemnify, hold
harmless or defend against Indemnitees' own gross negligence and
willful misconduct.
In the fifth and sixth lines of paragraph 19(a), strike the phrase
"sinkhole insurance, mine subsidence insurance, earthquake insurance,
and,".
At the end of paragraph 19(f), add the following sentence:
"Lender shall exercise the power described in this paragraph only
if it has determined, in its discretion, that Borrower is not
timely taking the actions described above".
At the end of paragraph 19(g)(2), add the phrase " (including any funds
that Borrower may elect to contribute to the Restoration)".
14. Paragraph 21(b) is supplemented and modified by adding the
following provisions:
(7) Any transfer or series of transfers by one or more of the Initial
Owners (each a "Transferor") of all or a portion of the
Transferor's interests in the Borrower to any one or more of
Wellsford Park Highlands Corp. or Wellsford Real Properties,
Inc., a Maryland corporation ("WRP") or ERP Operating Limited
Partnership, an Illinois limited partnership ("ERP"), or an
entity owned and controlled by Wellsford Park Highlands Corp.,
WRP or ERP (collectively, the "Transferees") under the following
conditions:
(a) Lender has received and approved the documents transferring
Transferor's interest in the Borrower to the Transferee; and
(b) Lender has reviewed and approved the documents creating and
governing the Transferee if the Transferee is an entity
other than Wellsford Park Highlands Corp., WRP or ERP; and
(c) The Initial Owners or WRP, ERP or any combination of them
retain directly or indirectly at least 51% ownership
interest in Borrower; and
(d) There exists no breach by the Borrower of any covenant or
agreement in this Instrument, the Note or any other
instruments or documents executed and delivered in
connection therewith; and
(d) Borrower pays to Lender (1) at the time it requests Lender's
consent, a review fee in the amount of $2,000 (which fee
shall not be refundable); and (2) upon demand by Lender, all
reasonable fees and out of pocket costs of Lender's legal
counsel related to the transfer; and
(8) The transfer by Al Feld of all his interest in the Borrower to
Wellsford Park Highlands Corp. as contemplated under the
Operating Agreement of the Borrower, and the resignation of Al
Feld as a Member and Manager of the Borrower in connection with
such transfer.
15. At the end of paragraph 22(f), add the phrase "(If such action or
proceeding is not dismissed within 30 days thereof)".
16. In the 3rd line of paragraph 28, insert the word "reasonably" before
the word "require".
Exhibit 21.1
Subsidiaries of the Registrant
The following is a list of subsidiaries of the registrant as of December
31, 1997:
Wellsford Sonterra L.L.C. (100% direct)
Wellsford Capital Corp. (100% direct)
Wellsford CRC Holding Corp. (100% direct)
Wellsford Park Highlands Corp. (80% direct)
Park at Highlands L.L.C (79% indirect)
Red Canyon at Palomino Park L.L.C (79% indirect)
Wellsford Park Cable L.L.C. (79% indirect)
Wellsford Commercial Properties Trust (99.9% direct)
Wellsford/Whitehall Properties, L.L.C. (50.1% indirect)
WEL/WH 1275 K Street, L.L.C. (50.1% indirect)
1275 K Street Holding, L.L.C. (50.1% indirect)
WEL/WH Convention Managers, L.L.C. (50.1% indirect)
Wellsford Ventures, Inc. (100% direct)
North American Medical Research Corp. (100% direct)
WEL/WH Berkeley, L.L.C. (50.1% indirect)
WEL/WH Lackawanna, L.L.C. (50.1% indirect)
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND> This Schedule contains summary financial information extracted
from the consolidated balance sheets and consolidated statements of
operation and is qualified in its entirety by reference to such financial
statements.
</LEGEND>
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> DEC-31-1997
<CASH> 37,541,122
<SECURITIES> 0
<RECEIVABLES> 105,631,611
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 40,821,078
<PP&E> 58,741,448
<DEPRECIATION> 0
<TOTAL-ASSETS> 249,973,700
<CURRENT-LIABILITIES> 9,763,109
<BONDS> 56,755,000
<COMMON> 169,965
0
0
<OTHER-SE> 180,988,331
<TOTAL-LIABILITY-AND-EQUITY> 249,973,700
<SALES> 0
<TOTAL-REVENUES> 9,085,510
<CGS> 0
<TOTAL-COSTS> 659,868
<OTHER-EXPENSES> 3,159,558
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 5,266,084
<INCOME-TAX> 2,213,007
<INCOME-CONTINUING> 3,053,077
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 3,053,077
<EPS-PRIMARY> 0.18
<EPS-DILUTED> 0.18
</TABLE>
