UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 1995
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 0-14466
CONNECTICUT GENERAL REALTY INVESTORS III LIMITED PARTNERSHIP
(Exact name of registrant as specified in its charter)
Connecticut 06-1115374
(State of Organization) (I.R.S. Employer Identification No.)
900 Cottage Grove Road, South Building
Bloomfield, Connecticut 06002
(Address of principal executive offices)
Telephone Number: (203) 726-6000
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 (or for such shorter
period that the Registrant was required to
file such reports), and (2) has been subject
to such filing requirements for the past 90
days.
Yes X No
<PAGE>
<TABLE>
Part I - Financial Information
CONNECTICUT GENERAL REALTY INVESTORS III LIMITED PARTNERSHIP
(a Connecticut limited partnership)
Balance Sheets
<CAPTION>
March 31, December 31,
1995 1994
Assets (Unaudited) (Audited)
<S> <C> <C>
Property and improvements, at cost:
Land and land improvements $6,054,496 $6,029,006
Buildings 30,512,114 30,507,857
Furniture and fixtures 2,157,858 2,113,119
38,724,468 38,649,982
Less accumulated depreciation 11,913,530 11,629,808
Net property and improvements 26,810,938 27,020,174
Cash and cash equivalents 1,821,231 1,662,708
Accounts receivable (net of allowance of $12,744
in 1995 and $10,353 in 1994) 75,991 87,264
Escrow deposits 201,246 171,265
Prepaid insurance 45,704 44,265
Deferred charges 1,471,226 1,415,350
Debt service fund escrow 506,660 506,660
Other asset -- 97,371
Total $30,932,996 $31,005,057
</TABLE>
<TABLE>
<CAPTION>
Liabilities and Partners' Capital (Deficit)
Liabilities:
<S> <C> <C>
Notes and mortgages payable $29,461,600 $29,487,591
Accounts payable (including $17,075 in 1995
and $8,067 in 1994 due to affiliates) 309,306 270,002
Accrued interest payable (including
$17,000 due to affiliates
in 1995 and 1994) 72,332 72,946
Tenant security deposits 165,641 169,144
Unearned income 19,045 25,693
Total liabilities 30,027,924 30,025,376
Partners' capital (deficit):
General Partner:
Capital contributions 1,000 1,000
Cumulative net loss (101,403) (100,657)
Cumulative cash distributions (13,355) (13,355)
(113,758) (113,012)
Limited partners (24,856 Units)
Capital contributions,net of offering costs 22,408,052 22,408,052
Cumulative net loss (20,063,062) (19,989,199)
Cumulative cash distributions (1,326,160) (1,326,160)
1,018,830 1,092,693
Total partners' capital 905,072 979,681
Total $30,932,996 $31,005,057
<FN>
The Notes to Financial Statements are an integral part of these statements.
</TABLE>
<PAGE>
<TABLE>
CONNECTICUT GENERAL REALTY INVESTORS III LIMITED PARTNERSHIP
(a Connecticut limited partnership)
Statements of Operations
For the Three Months Ended March 31, 1995 and 1994
(Unaudited)
<CAPTION>
1995 1994
<S> <C> <C>
Income:
Rental income $1,318,519 $1,586,751
Other income 35,813 69,859
Interest income 31,297 11,258
1,385,629 1,667,868
Expenses:
Property operating expenses 369,983 452,682
General and administrative 191,328 205,051
Fees and reimbursements to affiliates 23,419 27,117
Interest expense (includes $17,000 for 1995 and
$15,313 for 1994 to affiliates) 548,264 710,205
Depreciation and amortization 327,244 425,072
1,460,238 1,820,127
Net loss $(74,609) $(152,259)
Net loss:
General Partner $(746) $(1,523)
Limited partners (73,863) (150,736)
$(74,609) $(152,259)
Net loss per Unit $(2.97) $(6.06)
<FN>
The Notes to Financial Statements are an integral part of these statements.
</TABLE>
<PAGE>
<TABLE>
CONNECTICUT GENERAL REALTY INVESTORS III LIMITED PARTNERSHIP
(a Connecticut limited partnership)
Statements of Cash Flows
For the Three Months Ended March 31, 1995 and 1994
(Unaudited)
<CAPTION>
1995 1994
<S> <C> <C>
Cash flows from operating activities:
Net loss $(74,609) $(152,259)
Adjustment to reconcile net loss to net cash
provided by operating activities:
Depreciation and amortization 327,244 425,072
Accounts receivable 11,273 117,985
Accounts payable 45,954 8,752
Accrued interest payable (614) (123,210)
Contribution to property maintenance fund (4,247) --
Other, net 60,047 (148,920)
Net cash provided by
operating activities 365,048 127,420
Cash flows from investing activities:
Purchase of property and improvements (81,136) (12,303)
Payment of leasing commissions -- (22,502)
Net cash used in investing activities (81,136) (34,805)
Cash flows from financing activities:
Proceeds from mortgage loan 5,300,000 4,200,000
Repayment of notes and mortgage loans (5,325,991) (4,095,225)
Payment of financing costs (99,398) (26,503)
Net cash (used in) provided by
financing activities (125,389) 78,272
Net increase in cash and cash equivalents 158,523 170,887
Cash and cash equivalents, beginning of year 1,662,708 1,150,033
Cash and cash equivalents, end of period $1,821,231 $1,320,920
Supplemental disclosures of cash information:
Interest paid during period $548,878 $833,415
<FN>
The Notes to Financial Statements are an integral part of these statements.
</TABLE>
<PAGE>
CONNECTICUT GENERAL REALTY INVESTORS III LIMITED PARTNERSHIP
(a Connecticut limited partnership)
Notes to Financial Statements
(Unaudited)
Readers of this quarterly report should refer to CONNECTICUT
GENERAL REALTY INVESTORS III LIMITED PARTNERSHIP'S (the "Partnership")
audited financial statements for the year ended December 31, 1994 which are
included in the Partnership's 1994 Annual Report, as certain footnote
disclosures which would substantially duplicate those contained in such
audited financial statements have been omitted from this report.
1. Basis of Accounting
a) Basis of Presentation: The accompanying financial statements were
prepared in accordance with generally accepted accounting
principles. It is the opinion of management that the financial
statements presented reflect all the adjustments necessary for a
fair presentation of the financial condition and results of
operations. Certain amounts in the 1994 financial statements have
been reclassified to conform to the 1995 presentation.
b) Cash and Cash Equivalents: Short term investments with a maturity
of three months or less at the time of purchase are reported as
cash equivalents.
2. Notes and Mortgages Payable
On March 31, 1995, the Partnership refinanced the Stonebridge Manor
Apartment's first mortgage note which was scheduled to mature on April 1,
1995. The new mortgage note is in the amount of $5,300,000 with a term of
three years and monthly payments at 10.15% interest and twenty year
amortization. Prepayment is closed for the first year, open at 1% during
the second year and open without penalty during the third year.
During 1994, the Partnership refinanced the debt for Stewarts Glen
III with the existing lender. The maturity date has been extended from
February 1995 to April 1996 and the interest rate was lowered to 8.55%.
The Partnership will likely sell the property in early 1996 at debt
maturity.
3. Deferred Charges
Deferred charges consist of the following:
March 31, December 31,
1995 1994
Surety fee - Waterford Apartments mortgage note $963,910 $963,910
Costs of obtaining financing 839,515 740,117
1,803,425 1,704,027
Accumulated amortization (332,199) (288,677)
$1,471,226 $1,415,350
<PAGE>
4. Transactions with Affiliates
The recourse promissory notes for Promenades Plaza Shopping Center
and Stonebridge Manor were guaranteed by an affiliate of the General
Partner for an annual fee of 2% and 1.25% on the outstanding balance,
respectively, prior to consolidation, modification and extension effective
on March 25, 1994. After consolidation, the note guarantee carries an
annual fee of 2% of the outstanding balance.
Other fees and expenses related to the General Partner or its
affiliates are as follows:
Three Months Ended Unpaid at
March 31, March 31,
1995 1994 1995
Property management fee (a) $10,509 $15,124 $7,081
Reimbursement (at cost) for
out-of-pocket expenses 12,910 11,993 9,994
$23,419 $27,117 $17,075
(a) Does not include property management fees earned by independent
property management companies of $56,253 and $57,574 for the three
months ended March 31, 1995 and 1994 respectively. Certain
property management services have been contracted by an affiliate
of the General Partner on behalf of the Partnership and are paid
directly by the Partnership to the third party companies.
<PAGE>
CONNECTICUT GENERAL REALTY INVESTORS III LIMITED PARTNERSHIP
(a Connecticut limited partnership)
Management's Discussion and Analysis of Financial
Condition and Results of Operations
Liquidity and Capital Resources
At March 31, 1995, the Partnership had $1,821,231 in cash and cash
equivalents which will be used to fund working capital requirements and the
Partnership's reserves. The portfolio generated positive adjusted cash
from operations after debt service, capital improvements and partnership
expenses for the three months ended March 31, 1995.
Each of the apartment properties has produced positive results in
the first quarter of 1995 for the Partnership. Cash generated from
property operations after Partnership expenses will supplement reserves.
Distributions to partners will not resume until the Partnership retires the
$3,400,000 recourse note obligation. For the first quarter of 1995,
adjusted cash from operations approximated $50,000 after capital
improvements, the cost of the Stonebridge refinance, and partnership level
expenses. First quarter cash flow was net of a $43,000 major club house
renovation at Waterford and $28,000 for security gates and fencing at
Stonebridge.
The first mortgage note for Stonebridge matured April 1, 1995. The
Partnership completed a refinance with Hibernia National Bank on March 31,
1995. The new loan is in the principal amount of $5,300,000 with a term of
three years and monthly payments at 10.15% interest with twenty year
amortization. Prepayment is closed for the first year, open at 1% during
the second year and open without penalty during the third year. The new
loan approximated the principal balance of the loan in which it replaced.
Origination fees and closing costs totalled approximately $105,000. The
refinance positions the property for a sale in late 1997 or early 1998
prior to debt maturity.
During 1994, the Partnership refinanced the debt for Stewarts Glen
III with the existing lender. The maturity date was extended from February
1995 to April 1996. The Partnership's current strategy assumes a sale in
early 1996 at debt maturity. The cash residual from the sale, after
payment of the property's first mortgage, will be added to Partnership
reserves for payment of the Partnership's recourse promissory note upon its
maturity.
Results of Operations
Generally, decreases in the income statement accounts are the
result of the Promenades Plaza sale on September 22, 1994. For the first
quarter of 1994, Promenades Plaza accounted for approximately $296,000 of
rental income, $38,000 of other income, $103,000 of property operating
expenses, $35,000 of general and administrative expenses, $130,000 of
interest expense and $120,000 of depreciation and amortization. The
following analytical comments have been limited to the Partnership's four
remaining properties.
Rental income increased approximately $28,000 for the three months
ended March 31, 1995, as compared with the same period of 1994. Rental
rate increases implemented at Stonebridge Manor and Stewarts Glen offset
nominal decreases in average occupancy for 1995 resulting in increased
rental income of approximately $22,000 and $4,000, respectively. Modest
rental rate increases at Versailles Village resulted in an approximately
$7,000 increase in rental income. At Waterford Apartments, a slight
decrease in average occupancy led to an approximately $5,000 decrease for
1995.
<PAGE>
The increase in interest income for the three months ended March
31, 1995, as compared with the same period of 1994, was the result of
increased interest earned on the trust accounts associated with Waterford's
bond financing and an increase in interest rates on short term investments.
Overall, property operating expenses increased for the three months
ended March 31, 1995, as compared with the same period of 1994, due to
increased painting costs and carpet and vinyl replacements at Stonebridge
and Waterford. In addition, Waterford had nonroutine expenditures for
balcony repairs and landscaping work while Stonebridge incurred costs for
dryer vent replacements and fireplace cleaning. An expense decrease at
Versailles was the result of a nonrecurring real estate tax consulting fee
in 1994 and a drop in utility usage in 1995 due to the milder winter. The
expense savings at Versailles partially offset the increases at Stonebridge
and Waterford.
The increase in general and administrative expense for the three
months ended March 31, 1995, as compared with the same period of 1994, was
the result of increased payroll related costs at Waterford, Stonebridge and
Stewarts Glen. In addition, advertising costs were increased at Waterford
in an effort to increase occupancy.
The decrease in interest expense for the three months ended March
31, 1995, as compared with 1994, was the result of the March 30, 1994
Versailles Village first mortgage refinance, lowering the interest rate
from 10% to 8% and the November 1, 1994 Stewart's Glen refinance,
decreasing the interest rate from 9.94% to 8.55%.
The increase in depreciation and amortization for the three months
ended March 31, 1995, as compared with the same period of 1994, was the
result of increased amortization of deferred charges related to Waterford's
fixed rate bond financing.
<PAGE>
Occupancy
The following is a listing of approximate physical occupancy levels
by quarter for the Partnership's investment properties:
1994 1995
At 3/31 At 6/30 At 9/30 At 12/31 At 3/31
1. Versailles Village Apartments
Forest Park, Ohio 94% 97% 99% 96% 97%
2. Promenades Plaza Shopping Ctr.
Port Charlotte, Florida (a) 82% 82% N/A N/A N/A
3. Waterford Apartments
Tulsa, Oklahoma 88% 93% 94% 83% 90%
4. Stonebridge Manor Apartments
New Orleans, Louisiana 96% 97% 95% 97% 96%
5. Stewart's Glen Apts. Phase III
Willowbrook, Illinois 100% 99% 93% 98% 96%
(a) Promenades Plaza was sold during the third quarter 1994.
Part II- Other Information
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits:
10(y) Loan Agreement between Connecticut
General Realty Investors III Limited
Partnership and Hibernia National Bank,
dated March 29, 1995 relating to
Stonebridge Manor Apartments.
27 Financial Data Schedules.
(b) No Form 8-Ks were filed during the three months ended March
31, 1995.
<PAGE>
SIGNATURES
Pursuant to the requirements 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.
CONNECTICUT GENERAL REALTY INVESTORS III
LIMITED PARTNERSHIP
By: CIGNA Realty Resources, Inc. - Fifth,
General Partner
Date: May 15, 1995 By: /s/ John D. Carey
John D. Carey, President and Controller
(Principal Executive Officer)
(Principal Accounting Officer)
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> MAR-31-1995
<PERIOD-TYPE> 3-MOS
<CASH> 1821231
<SECURITIES> 0
<RECEIVABLES> 75991
<ALLOWANCES> 12744
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 38724468
<DEPRECIATION> 11913530
<TOTAL-ASSETS> 30932996
<CURRENT-LIABILITIES> 0
<BONDS> 29461600
<COMMON> 0
0
0
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 30932996
<SALES> 0
<TOTAL-REVENUES> 1385629
<CGS> 0
<TOTAL-COSTS> 584730
<OTHER-EXPENSES> 327244
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 548264
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> (74609)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (74609)
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
Exhibit 10(y)
LOAN AGREEMENT
Between
CONNECTICUT GENERAL REALTY INVESTORS III LIMITED PARTNERSHIP,
as Borrower
and
HIBERNIA NATIONAL BANK,
as Lender
$5,300,000 LOAN
Dated March 29, 1995
52555_4<PAGE>
<PAGE>
TABLE OF CONTENTS
Page
ARTICLE 1.
GENERAL TERMS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Section 1.1 Terms Defined Above . . . . . . . . . . . . . . . . 1
Section 1.2 Certain Definitions . . . . . . . . . . . . . . . . 1
Section 1.3 Accounting Terms and Determinations . . . . . . . . 3
ARTICLE 2.
THE CREDIT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Section 2.1 Commitment to Lend . . . . . . . . . . . . . . . . 4
Section 2.2 Interest Rate . . . . . . . . . . . . . . . . . . . 4
Section 2.3 Prepayments . . . . . . . . . . . . . . . . . . . . 4
Section 2.4 Commitment Fee . . . . . . . . . . . . . . . . . . 4
Section 2.5 Business Days . . . . . . . . . . . . . . . . . . . 4
Section 2.6 Payments . . . . . . . . . . . . . . . . . . . . . 5
Section 2.7 Use of Proceeds . . . . . . . . . . . . . . . . . . 5
Section 2.8 Non-Recourse . . . . . . . . . . . . . . . . . . . 5
ARTICLE 3.
SECURITY FOR THE OBLIGATIONS . . . . . . . . . . . . . . . . . . . . . 6
Section 3.1 Security . . . . . . . . . . . . . . . . . . . . . 6
ARTICLE 4.
REPRESENTATIONS AND WARRANTIES . . . . . . . . . . . . . . . . . . . . 7
Section 4.1 Existence . . . . . . . . . . . . . . . . . . . . . 7
Section 4.2 Power and Authorization . . . . . . . . . . . . . . 7
Section 4.3 Binding Obligations . . . . . . . . . . . . . . . . 7
Section 4.4 No Legal Bar or Resultant Lien . . . . . . . . . . 7
Section 4.5 No Consent . . . . . . . . . . . . . . . . . . . . 8
Section 4.6 Financial Condition . . . . . . . . . . . . . . . . 8
Section 4.7 Solvency . . . . . . . . . . . . . . . . . . . . . 8
Section 4.8 Taxes and Governmental Charges . . . . . . . . . . 9
Section 4.9 Defaults . . . . . . . . . . . . . . . . . . . . . 9
Section 4.10 Casualties and Condemnation . . . . . . . . . . . . 9
Section 4.11 Use of Proceeds; Margin Stock . . . . . . . . . . . 9
Section 4.12 Compliance with the Law . . . . . . . . . . . . . . 10
Section 4.13 ERISA . . . . . . . . . . . . . . . . . . . . . . . 10
Section 4.14 Other Information . . . . . . . . . . . . . . . . . 10
Section 4.15 Utility or Investment Company . . . . . . . . . . . 10
52555_4 - i -
<PAGE>
Section 4.16 Title to Collateral . . . . . . . . . . . . . . . . 10
Section 4.17 Environmental Matters . . . . . . . . . . . . . . . 11
Section 4.18 Governmental Requirements . . . . . . . . . . . . . 11
Section 4.19 Continuing Accuracy . . . . . . . . . . . . . . . . 12
Section 4.20 Borrower's Debt . . . . . . . . . . . . . . . . . . 12
ARTICLE 5.
AFFIRMATIVE COVENANTS . . . . . . . . . . . . . . . . . . . . . . . . . 12
Section 5.1 Financial Statements and Reports . . . . . . . . . 12
Section 5.2 Taxes and Other Liens . . . . . . . . . . . . . . . 13
Section 5.3 Maintenance of Existence . . . . . . . . . . . . . 14
Section 5.4 Further Assurances . . . . . . . . . . . . . . . . 14
Section 5.5 Performance of Obligations . . . . . . . . . . . . 14
Section 5.6 Reimbursement of Expenses . . . . . . . . . . . . . 14
Section 5.7 Insurance . . . . . . . . . . . . . . . . . . . . . 15
Section 5.8 Accounts and Records . . . . . . . . . . . . . . . 23
Section 5.9 Right of Inspection . . . . . . . . . . . . . . . . 23
Section 5.10 Notice of Certain Events . . . . . . . . . . . . . 23
Section 5.11 Indemnification . . . . . . . . . . . . . . . . . . 24
Section 5.12 Compliance with Laws and Covenants . . . . . . . . 24
Section 5.13 Environmental Indemnity . . . . . . . . . . . . . . 24
Section 5.14 Financial Covenants . . . . . . . . . . . . . . . . 25
Section 5.15 Appraisals . . . . . . . . . . . . . . . . . . . . 26
Section 5.16 Bank Accounts . . . . . . . . . . . . . . . . . . . 26
Section 5.17 Tax and Insurance Escrow. . . . . . . . . . . . . . 26
Section 5.18 Replacement Reserve Escrow. . . . . . . . . . . . . 27
ARTICLE 6.
NEGATIVE COVENANTS . . . . . . . . . . . . . . . . . . . . . . . . . . 27
Section 6.1 Debts, Guaranties and Other Obligations . . . . . . 27
Section 6.2 Liens . . . . . . . . . . . . . . . . . . . . . . . 28
Section 6.3 Sale of Collateral . . . . . . . . . . . . . . . . 28
Section 6.4 Change in General Partner . . . . . . . . . . . . . 28
ARTICLE 7.
CONDITIONS OF LENDING . . . . . . . . . . . . . . . . . . . . . . . . . 28
Section 7.1 Conditions of Lending . . . . . . . . . . . . . . . 28
ARTICLE 8.
DEFAULT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
Section 8.1 Events of Default . . . . . . . . . . . . . . . . . 31
Section 8.2 Remedies . . . . . . . . . . . . . . . . . . . . . 33
52555_4 - ii -
<PAGE>
ARTICLE 9.
MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
Section 9.1 Notices . . . . . . . . . . . . . . . . . . . . . . 34
Section 9.2 Invalidity . . . . . . . . . . . . . . . . . . . . 35
Section 9.3 Survival of Agreements . . . . . . . . . . . . . . 35
Section 9.4 Successors and Assigns . . . . . . . . . . . . . . 35
Section 9.5 Renewal, Extension or Rearrangement . . . . . . . . 36
Section 9.6 Waivers . . . . . . . . . . . . . . . . . . . . . . 36
Section 9.7 Cumulative Rights . . . . . . . . . . . . . . . . . 36
Section 9.8 Singular and Plural . . . . . . . . . . . . . . . . 36
Section 9.9 Governing Law . . . . . . . . . . . . . . . . . . . 36
Section 9.10 Titles of Articles, Sections and
Subsections . . . . . . . . . . . . . . . . . . . 36
Section 9.11 Limitation of Liability . . . . . . . . . . . . . . 36
Section 9.12 Relationship Between the Parties . . . . . . . . . 37
Section 9.13 Amendment . . . . . . . . . . . . . . . . . . . . . 37
Section 9.14 Entire Agreement . . . . . . . . . . . . . . . . . 37
Section 9.15 Time of the Essence . . . . . . . . . . . . . . . . 37
Section 9.16 Counterparts . . . . . . . . . . . . . . . . . . . 37
Section 9.17 Submission to Jurisdiction . . . . . . . . . . . . 37
52555_4 - iii -
<PAGE>
LOAN AGREEMENT
THIS LOAN AGREEMENT ("Agreement"), dated March 29, 1995, is made
between CONNECTICUT GENERAL REALTY INVESTORS III LIMITED PARTNERSHIP, a
Connecticut limited partnership ("Borrower") and HIBERNIA NATIONAL BANK, a
national banking association ("Lender"), who agree as follows:
ARTICLE 1.
GENERAL TERMS
Section 1.1 Terms Defined Above. As used in this Agreement, the
terms "Agreement", "Borrower" and "Lender" shall have the meanings
indicated above.
Section 1.2 Certain Definitions. As used in this Agreement, the
following terms shall have the following meanings, unless the context
otherwise requires:
"Business Day" shall mean a day other than a Saturday, Sunday or
legal holiday for commercial banks in New Orleans, Louisiana.
"Closing Date" shall mean the date on which the Note is executed
and delivered by the Borrower to the Lender.
"Code" shall mean the Internal Revenue Code of 1986, as amended.
"Collateral" shall mean the properties described in the
Collateral Documents as security for the Obligations.
"Collateral Documents" shall mean collectively the documents
required by the Lender to obtain the security interests in the
Collateral, as described in Section 3.1 hereof.
"Debt" shall mean any and all amounts and/or liabilities owing
from time to time by the Borrower to any Person, including the Lender,
direct or indirect, liquidated or contingent, now existing or
hereafter arising, including, without limitation, (i) indebtedness for
money borrowed; (ii) unfunded portions of commitments for money to be
borrowed; (iii) the amounts of all standby and commercial letters of
credit and bankers acceptances, matured or unmatured, issued on behalf
of the Borrower; (iv) guaranties of the obligations of any other
Person, whether direct or indirect, whether by agreement to purchase
the indebtedness of any other Person or by agreement for the
furnishing of funds to any other Person through the purchase or lease
of goods, supplies or services (or by way of stock purchase, capital
contribution, advance or loan) for the purpose of paying or
discharging the indebtedness of any other Person, or otherwise; (v)
52555_4 - 1 -
<PAGE>
trade payables incurred in the ordinary course of business or
otherwise.
"Default" shall mean the occurrence of any of the events
specified in Article 8 hereof, whether or not any requirement for
notice or lapse of time or other condition precedent has been
satisfied.
"ERISA" shall mean the Employee Retirement Income Security Act of
1974, as amended from time to time.
"Event of Default" shall mean the occurrence of any of the events
specified in Article 8 hereof, provided that any requirement for
notice or lapse of time or any other condition precedent has been
satisfied.
"Lien" shall mean any interest in property securing an obligation
owed to, or a claim by, a Person other than the owner of the property,
whether such interest is based on jurisprudence, statute or contract,
and including, but not limited to, the lien or security interest
arising from a mortgage, encumbrance, pledge, security agreement,
conditional sale or trust receipt or a lease, consignment or bailment
for security purposes. The term "Lien" shall include reservations,
exceptions, encroachments, easements, servitudes, usufructs,
rights-of-way, covenants, conditions, restrictions, leases and other
title exceptions and encumbrances affecting property.
"Loan" shall mean the loan to be made by the Lender to the
Borrower as specified in Section 2.1 hereof.
"Mortgage" shall mean the mortgage described in Section 3.1
hereof.
"Note" shall mean the promissory note of the Borrower evidencing
the Loan as specified in Section 2.1 hereof.
"Obligations" shall mean any and all amounts and/or liabilities
owing from time to time by the Borrower to the Lender pursuant to this
Agreement, whether in connection with the Loan, and whether such
amounts or liabilities be liquidated or unliquidated, now existing or
hereafter arising.
"Person" shall mean any individual, corporation, partnership,
joint venture, association, joint stock company, trust, unincorporated
organization, government or any agency or political subdivision
thereof, or any other form of entity.
"Plan" shall mean any plan subject to Title IV of ERISA and
maintained by the Borrower, or any such plan to which the Borrower is
required to contribute on behalf of its employees.
"Prohibited Transaction" shall mean any transaction set forth in
Section 406 of ERISA or Section 4979 of the Code.
52555_4 - 2 -
<PAGE>
"Property" shall mean the immovable property (land and any
existing improvements) located at 3300 Wall Boulevard, Gretna,
Louisiana commonly known as the Stonebridge Manor Apartments and
encumbered by the Collateral Documents.
"Reportable Event" shall have the meaning set forth in Title IV
of ERISA.
"Termination Event" shall mean (i) a Reportable Event described
in Section 4043 of ERISA and the regulations issued thereunder (other
than a Reportable Event not subject to the provision for 30-day notice
to the Pension Benefit Guaranty Corporation under such regulations),
or (ii) the withdrawal of the Borrower from a Plan during a plan year
in which it was a "substantial employer" as defined in Section
4001(a)(2) of ERISA, or (iii) the filing of a notice of intent to
terminate a Plan or the treatment of a Plan amendment as a termination
under Section 4041 of ERISA, or (iv) the institution of proceedings to
terminate a Plan by the Pension Benefit Guaranty Corporation under
Section 4042 of ERISA, and in each case in clauses (i) through
(iv) above, such event or condition, together with all other events or
conditions, is likely to constitute grounds under Section 4042 of
ERISA for the termination of, or the appointment of a trustee to
administer, any Plan.
Section 1.3 Accounting Terms and Determinations. Unless otherwise
specified herein, all accounting terms used herein shall be interpreted,
all accounting determinations hereunder shall be made, and all financial
statements required to be delivered hereunder shall be prepared in
accordance with generally accepted accounting principles as in effect from
time to time, on a basis consistent (except for changes approved by
independent public accountants for the Borrower) with the most recent
financial statements of the Borrower.
ARTICLE 2.
THE CREDIT
Section 2.1 Commitment to Lend. Subject to and upon the terms and
conditions contained in this Agreement, and relying on the representations
and warranties contained in this Agreement, the Lender agrees to make a
loan available to the Borrower in the maximum aggregate principal amount at
any one time outstanding of $5,300,000. The Loan shall be represented by a
promissory note in the principal amount of $5,300,000, payable to the order
of the Lender. The Loan shall be payable based on a twenty (20) year
amortization in equal monthly installments of principal and interest in the
amount of $52,172.06 each beginning May 1, 1995, and continuing on the
first day of each succeeding month through and including March 1, 1998.
The balance of all outstanding principal and accrued but unpaid interest
will be due and payable in full at maturity on April 1, 1998.
52555_4 - 3 -
<PAGE>
Section 2.2 Interest Rate. The Loan shall bear interest at the
fixed rate of 10.15% per annum. All payments of interest shall be computed
on the per annum basis of a year of 360 days for the actual number of days
(including the first day but excluding the last day) elapsed.
Section 2.3 Prepayments. During the period from the Closing Date
through March 31, 1996, the Borrower may not prepay the Loan in whole or in
part. During the period from April 1, 1996 through March 31, 1997, the
Borrower may, at its option, prepay the Loan in whole (but not in part)
upon the payment of a prepayment premium of 1% of the outstanding principal
balance of the Loan at the time of any such prepayment. Thereafter, the
Borrower may, at its option, prepay the Loan at any time in whole (but not
in part) without payment of premium or penalty. Notwithstanding anything
above to the contrary, any prepayment by Borrower of the Loan is subject to
Lender's receipt from Borrower of written notification of such prepayment
30 days prior to the prepayment. In the event of acceleration of the Loan
following the occurrence of an Event of Default, the Borrower shall pay, as
an additional amount, the prepayment premium that would have been payable
at the time of acceleration; provided that if such acceleration occurs
prior to March 31, 1996, the Borrower shall pay a prepayment premium of 2%.
Section 2.4 Commitment Fee. On or before the Closing Date, the
Borrower shall pay a commitment fee of $53,000.
Section 2.5 Business Days. If the date for any payment, prepayment
or commitment fee payment hereunder falls on a day which is not a Business
Day, then for all purposes of this Agreement the same shall be deemed to
have fallen on the next following Business Day, and such extension of time
shall in such case be included in the computation of payments of interest
or commitment fee, as the case may be.
Section 2.6 Payments. The Borrower shall make each payment
hereunder and under the Note not later than 3:00 P.M. (Central time) on the
day when due in lawful money of the United States of America to the Lender
at its office at 313 Carondelet Street, New Orleans, Louisiana 70130 or P.
O. Box 61540, New Orleans, Louisiana 70161 in same day funds. The
Borrower hereby authorizes the Lender in the Event of Default, if and to
the extent payment is not made when due hereunder or under the Note, to
charge from time to time against the Borrower's accounts with the Lender
any amount so due.
Section 2.7 Use of Proceeds. The Borrower shall use the proceeds
of the Loan to refinance the existing indebtedness on the Stonebridge Manor
Apartments located at 3300 Wall Boulevard, Gretna, Louisiana.
Section 2.8 Non-Recourse. (a) Anything in this Agreement (but
subject to the provisions of Subsection (b) hereof), the Note or the
Collateral Documents to the contrary notwithstanding, payment of the
Obligations shall be enforced solely from the Collateral, and no
deficiency, after applying the net proceeds of any foreclosure or other
judicial sale of the Collateral, or any part or parcel or proceeds thereof,
shall ever be asserted against the Borrower, any officers, directors,
52555_4 - 4 -
<PAGE>
agents or employees of Borrower or any present or future, direct or
indirect, partners of Borrower (other than the general partner of Borrower)
or any partner of any partner thereof, or in any other manner realized upon
the Borrower's personal liability to pay the Obligations. Lender does
hereby waive any such personal liability of Borrower or any present or
future, direct or indirect, partner of Borrower (other than the general
partner of Borrower) and shall look solely to the assets of Borrower and
any mortgages, liens and security interests granted to Lender by Borrower
for payment or performance of Borrower's obligations under the Mortgage or
under any of the Collateral Documents. This covenant is not intended as
any release or discharge of the Obligations, or any portion thereof, but is
a covenant on behalf of the Lender not to sue the Borrower for a
deficiency, and the Obligations shall remain in full force and effect as
fully as though this covenant not to sue had not been given. The Borrower
acknowledges that the Lender expressly reserves all other legal rights and
remedies, including, but not limited to, the right, upon the occurrence of
an Event of Default, to foreclose the Mortgage by a sale of the Property,
in whole or in part, and to collect and receive the rents, proceeds and
profits of the Property before or during any such foreclosure proceeding;
to receive the rents and proceeds resulting from any assignment of leases
and rents executed by the Borrower in favor of the Lender relating to the
Property; to receive the proceeds of any loss under any insurance policy
maintained or carried as provided herein; and to receive the proceeds of
any condemnation proceedings as provided herein.
(b) Anything in Subsection (a) hereof to the contrary
notwithstanding, the Borrower shall be personally liable for the payment to
the Lender of the following, plus any reasonable attorneys fees and actual
out-of-pocket costs related thereto: (i) the actual losses suffered by the
Lender as a result of fraud or misrepresentation by the Borrower or any
other person in connection with this Agreement, the Note or the Collateral
Documents, (ii) the actual losses suffered by the Lender as a result of the
Borrower's failure to comply with any of the covenants or obligations of
the Borrower under this Agreement or any of the Collateral Documents
pertaining to environmental matters, (iii) the actual losses suffered by
the Lender as a result of the Borrower's misapplication of any security
deposits or other similar deposits received by the Borrower from tenants or
other occupants of the Property or insurance or condemnation proceeds
received by the Borrower, but only to the extent such rents, deposits, or
proceeds are misapplied by Borrower, (iv) the payment of taxes, assessments
and insurance premiums (including penalties and interest) which are due or
assessed with respect to the Collateral prior to the time the Lender takes
actual possession and control of the Collateral, but only to the extent
that the Borrower has failed to escrow sufficient funds for such purpose
with the Lender, and any rents and profits of the Property collected by or
on behalf of the Borrower after the occurrence of an Event of Default, (v)
all actual losses sustained by the Lender as a result of the Borrower's
failure to apply rents and other income of the Property for the necessary
maintenance and operation of the Property, or the Borrower's failure to
fulfill the obligations of the Borrower, as lessor, under any leases of the
Property and/or payment of the Obligations (provided, except for (iv)
above, there is sufficient rent or other income from the Property to apply
to such maintenance or operation or debt service or fulfillment of the
52555_4 - 5 -
<PAGE>
Borrower's obligations as lessor under such leases), (vi) any loss due to
intentional waste of the Property or any portion thereof, and all costs
incurred by the Lender to protect the Collateral, (vii) any rents that are
collected more than one month in advance, (viii) all actual losses
sustained by the Lender as a result of the Borrower's failure to maintain
the replacement reserve escrow described in Section 5.18 hereof and/or any
funds withdrawn therefrom in violation of this Agreement, (ix) all actual
losses sustained by the Lender as a result of the sale or encumbrance of
any of the Collateral in violation of any provision of this Agreement or
any of the other Collateral Documents, or (x) the fair market value of any
property or fixtures removed from the Property by or on behalf of the
Borrower, which property or fixtures are not replaced by similar property
or fixtures of equal or greater value.
Notwithstanding the foregoing and any other provisions of this Loan
Agreement and any Collateral Document to the contrary, it is understood and
agreed that (i) the liability described hereunder and under any of the
Collateral Documents shall be limited to solely to the assets of Borrower
and the general partner of Borrower (the assets of any limited partner
having been specifically excluded by agreement of the parties hereto) and
(ii) neither the negative capital account of any general or limited
partner, nor any obligation of any general partner to restore a negative
capital account or to contribute capital to Borrower, shall be deemed to be
an asset within the intent, or for the purposes, of this Loan Agreement of
any Collateral Document.
ARTICLE 3.
SECURITY FOR THE OBLIGATIONS
Section 3.1 Security. The Loan shall be secured by the following:
(a) Mortgage and Security Agreement by the Borrower granting a first
priority security interest in all of the Borrower's right, title and
interest in and to the Property and all movable property of the Borrower
located on or related to the Property.
(b) Assignment of Leases and Rentals by the Borrower granting to the
Lender a first priority security interest in the leases and rents of the
Property.
ARTICLE 4.
REPRESENTATIONS AND WARRANTIES
In order to induce the Lender to enter into this Agreement, the
Borrower represents and warrants to the Lender (which representations and
warranties will survive the extensions of credit under this Agreement)
that:
52555_4 - 6 -
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Section 4.1 Existence. (a) The Borrower is a limited partnership
duly organized and legally existing under the laws of Connecticut, and is
duly qualified as a foreign limited partnership in Louisiana. To the
actual knowledge of the Borrower, Borrower has obtained all permits,
licenses and other governmental permits necessary to conduct the business
it transacts.
(b) The chief executive office of the Borrower is at 900 Cottage
Grove Road, Hartford, Connecticut, 06152. The federal taxpayer
identification number for the Borrower is 06-1115374.
Section 4.2 Power and Authorization. The Borrower is duly
authorized and empowered to execute, deliver and perform this Agreement,
the Note and the Collateral Documents executed by it. All partnership
action on the part of the Borrower requisite for the due creation and
execution of this Agreement, the Note and Collateral Documents has been
duly and effectively taken.
Section 4.3 Binding Obligations. The Borrower has reviewed this
Agreement, the Note and the Collateral Documents with counsel for the
Borrower and has had the opportunity to discuss the provisions thereof with
the Lender prior to execution. This Agreement, the Note and the Collateral
Documents constitute valid and binding obligations of the Borrower
enforceable in accordance with their terms (except that enforcement may be
subject to the principles of equity and any applicable bankruptcy,
insolvency or similar laws generally affecting the enforcement of
creditors' rights).
Section 4.4 No Legal Bar or Resultant Lien. This Agreement, the
Note and the Collateral Documents do not and will not violate any
provisions of the Borrower's articles of partnership, and to the Borrower's
actual knowledge (i) will not violate any contract, agreement, law,
regulation, order, injunction, judgment, decree or writ to which the
Borrower is subject, and (ii) will not result in the creation or
imposition of any Lien upon any property of the Borrower, other than as
contemplated by this Agreement.
Section 4.5 No Consent. To the actual knowledge of Borrower,
Borrower's execution, delivery and performance of this Agreement, the Note
and the Collateral Documents executed by it do not require the consent or
approval of any other Person, including, without limitation, any regulatory
authority or governmental body of the United States or any state thereof or
any political subdivision of the United States or any state thereof.
Section 4.6 Financial Condition. All financial statements of the
Borrower delivered to Lender fairly and accurately present the financial
condition of the Borrower, and all such financial statements have been
prepared in accordance with generally accepted accounting principles
consistently applied throughout the periods involved, and there are no
contingent liabilities required by generally accepted accounting principles
to be disclosed in the balance sheets of the Borrower not disclosed thereby
which would materially and adversely affect the financial condition of the
52555_4 - 7 -
<PAGE>
Borrower. Since the close of the period covered by the latest financial
statements delivered to Lender with respect to the Borrower, there has been
no material adverse change in the assets, liabilities, or financial
condition of the Borrower. No event has occurred (including, without
limitation, any litigation or administrative proceedings) and no condition
exists or, to the knowledge of the Borrower, is threatened, which (i) might
render the Borrower unable to perform its obligations under this Agreement,
the Note or the Collateral Documents, or (ii) would constitute a Default
hereunder, or (iii) might adversely affect the financial condition of the
Borrower or the validity or priority of the lien of the Collateral
Documents or (iv) might adversely affect the business or the property of
the Borrower or its ability to carry on business as now conducted. The
Borrower (i) to its actual knowledge is not a defendant in any suits or
legal action, (ii) to its actual knowledge does not have any judgments,
garnishments or attachments pending against it or (iii) has never been
adjudicated a bankrupt. To Borrower's actual knowledge, all of the
materials which the Borrower has submitted to the Lender constitute a
complete and accurate presentation of all facts material to the Lender's
agreement to execute this Agreement.
Section 4.7 Solvency. The Borrower will receive a reasonably
equivalent value in exchange for the obligations of the Borrower under this
Agreement, the Note and the Collateral Documents. The execution and
performance of this Agreement, the Note and the Collateral Documents by the
Borrower (i) are not being made with any intent to hinder, delay or defraud
any entity to which the Borrower is indebted; (ii) will not result in the
Borrower becoming insolvent or having an unreasonably small capital for the
business in which it is engaged; and (iii) will not cause the Borrower to
incur debts that would be beyond the ability of the Borrower to pay as such
debts mature. For the purposes of this Section 4.7, "insolvent" shall mean
the following: the sum of the Borrower's debts is greater than all of the
Borrower's property at a fair valuation. Any property transferred,
concealed or removed with intent to hinder, delay or defraud the Borrower's
creditors and property which may be exempted from the debtor's estate under
the Federal Bankruptcy Code shall be excluded from the assets of the
Borrower for purposes of determining insolvency.
Section 4.8 Taxes and Governmental Charges. To its actual
knowledge, the Borrower has filed all tax returns and reports required to
be filed and has paid all taxes, assessments, fees and other governmental
charges levied upon it or upon its property or income which are due and
payable, including interest and penalties, or has provided adequate
reserves for the payment thereof.
Section 4.9 Defaults. To its actual knowledge, the Borrower is not
in material default under any indenture, mortgage, deed of trust,
agreement or other instrument to which the Borrower is a party or by which
it is bound.
Section 4.10 Casualties and Condemnation. Since the date of the
most recent financial statements furnished to the Lender prior to the
Closing Date, neither the business nor the property of the Borrower has
52555_4 - 8 -
<PAGE>
been materially and adversely affected as a result of any fire, explosion,
earthquake, flood, drought, windstorm, accident, strike or other labor
disturbance, embargo, requisition or taking of property or cancellation of
contracts, permits or concessions by any domestic or foreign government or
any agency thereof, riot, activities of armed forces or acts of God or of
any public enemy, except as disclosed in writing to the Lender on or prior
to the Closing Date.
Section 4.11 Use of Proceeds; Margin Stock. The proceeds of the
Loan hereunder will be used by the Borrower for the purposes listed in
Article 2 hereof. None of such proceeds will be used for the purpose of,
and the Borrower is not engaged in the business of extending credit for the
purpose of, purchasing or carrying any "margin stock" as defined in
Regulation U of the Board of Governors of the Federal Reserve System (12
C.F.R. Part 221), or for the purpose of reducing or retiring any
indebtedness which was originally incurred to purchase or carry a margin
stock or for any other purpose which might constitute this transaction a
"purpose credit" within the meaning of said Regulation U. The Borrower is
not engaged principally, or as one of the Borrower's important activities,
in the business of extending credit for the purpose of purchasing or
carrying margin stocks. Neither the Borrower nor any Person acting on
behalf of the Borrower has taken or will take any action which might cause
this Agreement to violate Regulation U or any other regulation of the Board
of Governors of the Federal Reserve System or to violate the Securities
Exchange Act of 1934 or any rule or regulation thereunder, in each case as
now in effect or as the same may hereinafter be in effect.
Section 4.12 Compliance with the Law. To its actual knowledge, the
Borrower (a) is not in violation of any law, judgment, decree, order,
ordinance, or governmental rule or regulation to which the Borrower or any
of its property is subject; and (b) has not failed to obtain any license,
permit, franchise or other governmental authorization necessary to the
ownership of any of its property or the conduct of its business; in each
case, which violation or failure could reasonably be anticipated to
materially and adversely affect the business, prospects, profits, property
or condition (financial or otherwise) of the Borrower.
Section 4.13 ERISA. Borrower does not maintain any Plan and has no
liability with respect to any former plan.
Section 4.14 Other Information. To the actual knowledge of
Borrower, all information, reports, papers and data given to the Lender by
the Borrower pursuant to this Agreement and in connection with the
Borrower's application for the Loan are accurate and correct in all
material respects. All financial projections given to the Lender were
prepared in good faith based on facts and circumstances existing at the
time of preparation and were believed by the Borrower and Guarantor to be
accurate in all material respects. To the actual knowledge of Borrower, no
information, exhibit or report furnished by the Borrower to the Lender in
connection with this Agreement or in the negotiation of this Agreement
contained any material misstatement of fact or omitted to state a material
fact necessary to make the statement contained therein not misleading.
52555_4 - 9 -
<PAGE>
Section 4.15 Utility or Investment Company. The Borrower is not
engaged in the State of Louisiana in the generation, transmission, or
distribution and sale of electric power; transportation, distribution and
sale through a local distribution system of natural or other gas for
domestic, commercial, industrial, or other use; ownership or operation of a
pipeline for the transmission or sale of natural or other gas, crude oil or
petroleum products to other pipeline companies, refineries, local
distribution systems, municipalities, or industrial consumers; provision of
telephone or telegraph service to others; production, transmission, or
distribution and sale of steam or water; operation of a railroad; or
provision of sewer service to others. The Borrower is not an "investment
company" within the meaning of the Investment Company Act of 1940, as
amended.
Section 4.16 Title to Collateral. The Borrower has good and
merchantable title to the Collateral, free of all liens and encumbrances
except those created in favor of the Lender and those permitted by this
Agreement. Furthermore, the Borrower has not heretofore conveyed or agreed
to convey or encumber any Collateral in any way, except in favor of the
Lender or as permitted by this Agreement.
Section 4.17 Environmental Matters. To the actual knowledge of
Borrower, and except as disclosed in the Phase I Environmental Assessment
Report prepared by and for the Lender, no friable asbestos, or any
substance containing asbestos deemed hazardous by federal or state
regulations on the date of this Agreement, has been installed in the
Property, except as otherwise disclosed to the Lender in writing prior to
the Closing Date. To the actual knowledge of the Borrower, the Property
and the Borrower are not in violation of or subject to any existing,
pending, or threatened investigation or inquiry by any governmental
authority or to any remedial obligations under any applicable laws
pertaining to health or the environment (hereinafter sometimes collectively
called "Applicable Environmental Laws"), including, without limitation, the
Comprehensive Environmental Response, Compensation, and Liability Act of
1980, as amended by the Superfund Amendments and Reauthorization Act of
1986 (as amended, hereinafter called "CERCLA"), the Resource Conservation
and Recovery Act of 1976, as amended by the Used Oil Recycling Act of 1980,
the Solid Waste Disposal Act Amendments of 1980, and the Hazardous and
Solid Waste Amendments of 1984 (as amended, hereinafter called "RCRA"). To
the actual knowledge of Borrower, the Borrower has not obtained and is not
required to obtain any permits, licenses or similar authorizations to
construct, occupy, operate or use any buildings, improvements, fixtures and
equipment forming a part of the Property by reason of any Applicable
Environmental Laws. To the actual knowledge of Borrower, no hazardous
substances or solid wastes have been disposed of or otherwise released on
or to the Property, and the use which the Borrower makes and intends to
make of the Property will not result in the disposal or other release of
any hazardous substance or solid waste on or to the Property. The terms
"hazardous substance" and "release" as used in this Agreement shall have
the meanings specified in CERCLA, and the terms "solid waste" and
"disposal" (or "disposed") shall have the meanings specified in RCRA;
provided, in the event that the laws of the State of Louisiana establish a
52555_4 - 10 -
<PAGE>
meaning for "hazardous substance," "release," "solid waste," or "disposal"
which is broader than that specified in either CERCLA or RCRA, such broader
meaning shall apply.
Section 4.18 Governmental Requirements. To the actual knowledge of
the Borrower the Property is in compliance with all current governmental
requirements affecting the Property, including, without limitation, all
current coastal zone protection, zoning and land use regulations, building
codes and all restrictions and requirements imposed by applicable
governmental authorities with respect to the construction of any
improvements on the Property and the contemplated use of the Property.
Section 4.19 Continuing Accuracy. All of the representations and
warranties contained in this Article or elsewhere in this Agreement shall
be materially true through and until the later of the date on which all
obligations of Borrower under this Agreement, the Note and the Collateral
Documents and any other documents executed in connection therewith are
fully satisfied.
Section 4.20 Borrower's Debt. All Debt of the Borrower for borrowed
money secured by a mortgage on real estate in existence on the Closing Date
is non-recourse as to the Borrower personally, except for the Debt of the
Borrower to Mellon Bank represented by that certain promissory note of the
Borrower in favor of Mellon Bank dated March 25, 1994, in the principal
amount of $3,400,000 and maturing on March 25, 1997, which Debt is
guaranteed by CIGNA Corporation.
ARTICLE 5.
AFFIRMATIVE COVENANTS
Unless the Lender's prior written consent to the contrary is obtained,
the Borrower will at all times comply with the covenants contained in this
Article 5, from the date hereof and for so long as any part of the
Obligations is outstanding.
Section 5.1 Financial Statements and Reports. The Borrower will
promptly furnish to the Lender such information regarding the business and
affairs and financial condition of the Borrower and the Property as the
Lender may reasonably request, and, beginning January 1, 1995, the Borrower
will furnish or cause to be furnished to the Lender:
(a) Annual Financial Statements of the Borrower - as soon as
available and in any event within 120 days after the close of each
fiscal year of the Borrower, (i) the audited balance sheet of the
Borrower as at the end of such year, the audited statement of income
of the Borrower for such year, the audited statement of reconciliation
of capital accounts of the Borrower for such year and the audited
statement of cash flow of the Borrower for such year, setting forth in
each case in comparative form the corresponding figures for the
preceding fiscal year, accompanied by the unqualified opinion of any
52555_4 - 11 -
<PAGE>
independent certified public accountant acceptable to the Lender,
certified correct by the principal financial officer of the Borrower
and in form, scope and substance satisfactory to the Lender and/or
(ii) copies of the annual financial reports of the Borrower as set
forth on Form 10-K and filed with the Securities and Exchange
Commission.
(b) Quarterly Financial Statements of the Borrower - as soon as
available and in any event within 60 days after the close of each
quarter period ending March 31, June 30, September 30 and December 31
or copies of the unaudited quarterly financial reports of the Borrower
as set forth on Form 10-Q and filed with the Securities and Exchange
Commission.
(c) Operating Statements and Rent Rolls of the Property and
Other Properties - as soon as available but in any event within 30
days after the close of each quarter period ending March 31, June 30,
September 30 and December 31, the unaudited operating statements and
rent rolls of the Property and all other real estate properties owned
by the Borrower for such quarter period, certified correct by a
principal officer of the Borrower or its authorized agent and in form,
scope and substance substantially similar to the form of the financial
statements previously submitted by Borrower to the Bank.
(d) Certificates of No Default - simultaneously with the
furnishing of the financial statements required by Item (a) hereof, a
certificate of a principal officer of Borrower (in the form of Exhibit
A hereto), certifying that to the best of his actual knowledge no
Event of Default has occurred, or if an Event of Default has occurred,
specifying the nature and extent thereof and the steps that the
Borrower proposes to take to cure such Default.
All such financial statements, reports and certificates referred to above
shall be substantially similar to the form of the financial statements
previously submitted by Borrower to the Bank and shall conform to generally
accepted accounting principles applied on a basis consistent with those of
the financial statements described in Section 4.6 hereof, except only for
such changes in accounting principles or practice with which the
independent certified public accountants concur.
Section 5.2 Taxes and Other Liens. The Borrower will file all tax
returns required by law before the due date thereof (as validly extended)
and pay and discharge promptly when due all taxes, assessments and
governmental charges or levies imposed upon it or upon its income or upon
any of its property as well as all claims of any kind (including claims for
labor, materials, supplies and rent) which, if unpaid, might become a Lien
upon any of the Collateral; provided, however, the Borrower shall not be
required to pay any such tax, assessment, charge, levy or claim if the
amount, applicability or validity thereof shall currently be contested in
good faith by appropriate proceedings diligently conducted and if the
contesting party shall have set up reserves therefor adequate under
generally accepted accounting principles. The Borrower shall furnish the
52555_4 - 12 -
<PAGE>
Lender with proof of payment of all taxes, assessments, charges, levies or
claims against the Property not later than the date on which penalties
might attach thereto, or in the event that the Borrower contests any such
taxes, assessments, charges, levies or claims in accordance with this
Section, the Borrower shall furnish Lender with a description of the
contested matter and all actions taken by Borrower in connection with such
contest.
Section 5.3 Maintenance of Existence. The Borrower will (i)
maintain its partnership existence; (ii) observe and comply (to the extent
necessary so that any failure will not materially and adversely affect the
ability of the Borrower to perform its material obligations to the Lender)
with all valid laws, statutes, codes, acts, ordinances, orders, judgments,
decrees, injunctions, rules, regulations, certificates, franchises,
permits, licenses, authorizations, directions and requirements (including,
without limitation, applicable statutes, regulations, orders and
restrictions relating to environmental standards or controls or to energy
regulations) of all federal, state, county, municipal and other
governments, departments, commissions, boards, courts, authorities,
officials and officers, domestic or foreign; (iii) maintain the Property
substantially in generally good and workable condition at all times and
make all repairs, replacements, additions, betterments and improvements to
its properties to the extent necessary so that any failure will not
materially and adversely affect the business of the Borrower; and (iv)
continue to conduct its business in the manner currently conducted.
Section 5.4 Further Assurances. The Borrower will promptly (and in
no event later than 30 days after written notice from the Lender is
received) cure any material defects in the creation, execution and delivery
of this Agreement, the Note or the Collateral Documents. The Borrower at
its expense will promptly execute and deliver to the Lender upon the
Lender's reasonable request all such other and further documents,
agreements and instruments in compliance with or accomplishment of the
covenants and agreements of the Borrower in this Agreement, the Note or the
Collateral Documents, or to further evidence and more fully describe the
Collateral, or to correct any omissions in the Collateral Documents, or to
more fully state the security obligations set out herein or in any of the
Collateral Documents, or to perfect, protect or preserve any Liens created
pursuant to any of the Collateral Documents, or to make any recordings, to
file any notices, or obtain any consents, as may be reasonably necessary or
appropriate in connection with the transactions contemplated by this
Agreement.
Section 5.5 Performance of Obligations. The Borrower will repay
the Loan according to the reading, tenor and effect of the Note and this
Agreement. The Borrower will do and perform every act required of it by
this Agreement, the Note or the Collateral Documents at the time or times
and in the manner specified.
Section 5.6 Reimbursement of Expenses. The Borrower will pay all
reasonable legal fees and actual out-of-pocket expenses of Lender's
counsel, title insurance premiums, brokerage fees, appraisal fees,
52555_4 - 13 -
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environmental survey fees, inspection fees, survey costs, travel and other
expenses incurred by the Lender in connection with the preparation of this
Agreement, the Note and the Collateral Documents (including any amendments)
and the maintenance of the Loan. The Borrower will, upon request, promptly
reimburse the Lender for all amounts actually expended, advanced or
incurred by the Lender to satisfy any obligation of the Borrower under this
Agreement, or to protect the property or business of the Borrower, or to
collect the Obligations, or to enforce the rights of the Lender under this
Agreement, the Note and/or the Collateral Documents, which amounts will
include all actual out-of-pocket court costs, reasonable attorneys' fees,
reasonable fees of auditors and accountants, and investigation expenses
reasonably incurred by the Lender in connection with any such matters,
together with interest at the interest rate set forth in the Note on each
such amount from the date that the same is expended, advanced or incurred
by the Lender until the date of reimbursement to the Lender.
Section 5.7 Insurance. (a) The Borrower shall procure and maintain
for the benefit of the Lender original paid up insurance policies from
companies licensed in the state where the Property is located and having a
Best's rating of A/IX or better, in amounts, in form and substance, and
with expiration dates acceptable to the Lender and containing a
non-contributory standard mortgagee clause or its equivalent in a form
satisfactory to the Lender, or the statutory mortgagee clause, if any,
required in the state where the Property is located, or a mortgagee's loss
payable endorsement, in favor of the Lender, providing the following types
of insurance on the Property:
(i) Multi-Peril Hazard Insurance. For the Property, multi-peril
hazard insurance affording insurance against loss or damage
by fire, lightning, explosion, collapse, theft, sprinkler
leakage, vandalism and malicious mischief and such other
perils as are included in so-called "all-risks" or "extended
coverage" and against such other insurable perils as, under
good insurance practices, from time to time are insured
against for properties of similar character and location;
such insurance to be not less than 100% of the full
replacement cost of the improvements without deduction for
depreciation.
(ii) Flood Insurance. If the Property is located in a flood zone
A or V, flood insurance in an amount not less than 100% of
the full replacement cost of the improvements or the maximum
amount available under the federal flood insurance program.
(iii) Comprehensive General Liability Insurance. Comprehensive
public liability insurance with respect to the Property and
the operations related thereto, whether conducted on or off
the Property, against liability for personal injury
(including bodily injury and death) and property damage, of
not less than $5,000,000 combined single limit bodily injury
and property damage; such comprehensive public liability
insurance to be on a per occurrence basis and, if required
52555_4 - 14 -
<PAGE>
by the Lender to specifically include, but not be limited
to, water damage liability, products liability, motor
vehicle liability for all owned and non-owned vehicles,
including rented and leased vehicles, and contractual
indemnification.
(iv) Worker's Compensation Insurance. If the Borrower has any
employees, workers compensation against loss, damage or
injury to employees of the Borrower.
(v) Business Interruption Insurance. Rental loss or business
interruption insurance in amounts satisfactory to the Lender
for at least a 6 month period.
(vi) Boiler Insurance. If the Property has a boiler, insurance
in an amount satisfactory to the Lender.
(vii) Other Insurance. Such other insurance on the Property or
any replacements or substitutions therefor and in such
amounts as may from time to time be reasonably required by
Lender against other insurable casualties which at the time
are commonly insured against in the case of premises
similarly situated, due regard being given to the height and
type of the improvements on the Property, their
construction, location, use and occupancy, or any
replacements or substitutions therefor.
Notwithstanding the foregoing, the insurance policies and endorsements
which were delivered to the Lender by the Borrower in connection with the
closing of the Loan (except for workers compensation insurance policies if
the Borrower has employees), if maintained during their respective terms
and if renewed prior to the expiration thereof, shall satisfy the
requirements imposed by this section.
(b) All of the foregoing policies shall contain an agreement by the
insurer not to cancel or amend the policies without giving the Lender at
least 30 days' prior written notice of its intention to do so.
(c) Borrower shall deliver original or certified policies to Lender,
and Borrower shall deliver original or certified renewal policies with
satisfactory evidence of payment not less than 15 days in advance of the
expiration date of the existing policy or policies. In the event Borrower
should, for any reason whatsoever, fail to keep the Property or any part
thereof so insured, or to keep said policies so payable, or fail to deliver
to Lender the original or certified policies of insurance and the renewals
thereof upon demand, then Lender, if it so elects, may itself have such
insurance effected in such amounts and in such companies as it may deem
proper and may pay the premiums therefor. The Borrower shall reimburse the
Lender upon demand for the amount of premium paid, together with interest
thereon at 15% percent per annum from date until paid.
52555_4 - 15 -
<PAGE>
(d) Borrower agrees to notify Lender immediately in writing of any
material fire or other casualty to or accident involving the Property,
whether or not such fire, casualty or accident is covered by insurance.
Borrower further agrees to notify promptly Borrower's insurance company and
to submit an appropriate claim and proof of claim to the insurance company
if the Property is damaged or destroyed by fire or other casualty.
(e) The Lender is hereby authorized and empowered, at its option, to
collect and receive the proceeds from any policy or policies of insurance,
and each insurance company is hereby authorized and directed to make
payment of all such losses directly to the Lender instead of to the
Borrower and the Lender jointly. The Lender shall apply the net proceeds
thereof in accordance with subsections (f) and (g) hereof.
(f) In the event of damage to the Property by reason of fire or other
hazard or casualty, Borrower shall give prompt written notice thereof to
Lender and Borrower shall either (i) prepay the Obligations in their
entirety at par, free of any prepayment penalty that might otherwise be
due, or (ii) subject to the terms of subsection (g) hereof, proceed with
reasonable diligence to perform repair, replacement and/or rebuilding work
(hereinafter referred to as the "Work") to restore the Property to its
condition prior to such damage in full compliance with all legal
requirements. In the event of a taking by power of eminent domain or
conveyance in lieu thereof ("condemnation"), and (i) Borrower does not
prepay Obligations and (ii) Lender reasonably determines that restoration
is feasible, then Borrower shall proceed with reasonable diligence to
perform such restoration (also referred to as the "Work"). Before
commencing the Work, Borrower shall comply with the following requirements:
(x) Borrower shall furnish to Lender complete plans and
specifications for the Work, for Lender's approval, which approval
shall not be unreasonably withheld. Said plans and specifications
shall bear the signed approval thereof by an architect satisfactory to
Lender and shall be accompanied by the architect's signed estimate,
bearing the architect's seal, of the entire cost of completing the
Work, and shall provide that upon completion of the Work, the Property
shall be at least equal in value and general utility to its value and
general utility prior to the damage or destruction or condemnation.
(y) Borrower shall furnish to Lender certified or photostatic
copies of all permits and approvals required by law in connection with
the commencement and conduct of the Work.
(z) Borrower shall furnish to Lender, prior to the commencement
of the Work, a surety bond for or guaranty of completion of and
payment for the Work, which bond or guaranty shall be in form
satisfactory to Lender and shall be signed by a surety or sureties, or
guarantor or guarantors, as the case may be, who are acceptable to
Lender, and in an amount not less than the architect's estimate of the
entire cost of completing the Work, less the amount of insurance
proceeds or condemnation award, if any, then held by Lender and which
52555_4 - 16 -
<PAGE>
Lender shall have elected or shall be required to apply toward
restoration of the Property as provided in subsection (g) hereof.
Borrower shall not commence any of the Work until Borrower shall have
complied with the above requirements, and thereafter Borrower shall perform
the Work diligently and in good faith in accordance with the plans and
specifications referred to in subsection (x) above.
If, as provided in subsection (g) hereof, Lender shall have elected or
is required to apply any insurance proceeds or condemnation awards toward
repair or restoration of the Property, then so long as the Work is being
diligently performed by Borrower in accordance with the provisions of this
Agreement, Lender shall disburse such insurance proceeds or condemnation
awards to Borrower from time to time during the course of the Work in
accordance with the following provisions:
A. The Work shall be in the charge of an experienced
construction manager satisfactory to Lender with the consultation of
an architect or engineer;
B. Each request for payment shall not be made more often than
at 30 day intervals, on 10 Business Days prior notice to Lender, and
shall be accompanied by a certificate, satisfactory to Lender, of the
architect or engineer, dated not more than 10 days prior to the
application for withdrawal of funds, stating: (i) that all of the Work
for which payment is being requested is in place and has been
completed in compliance with the approved plans and specifications and
all applicable legal requirements; (ii) that the sum then requested to
be withdrawn has been paid by Borrower and/or is justly due to
contractors, subcontractors, materialmen, engineers, architects or
other persons (whose names and addresses shall be stated) who have
rendered or furnished certain services or materials for the Work and
giving a brief description of such services and materials and the
principal subdivisions or categories thereof and the respective
amounts so paid or due to each of said persons in respect thereof and
stating the progress of the Work up to the date of said certificate;
(iii) that the sum then requested to be withdrawn, plus all sums
previously withdrawn, does not exceed the cost of the Work insofar as
actually accomplished up to the date of such certificate; (iv) that
the remainder of the moneys held by Lender will be sufficient to pay
in full for the completion of the Work; (v) that no part of the cost
of the services and materials described in the foregoing paragraph
(ii) of this Clause B has been or is being made the basis of the
withdrawal of any funds in any previous or then pending application;
and (vi) that, except for the amounts, if any, specified in the
foregoing paragraph (ii) of this Clause B to be due for services or
materials, there is no outstanding indebtedness known, after due
inquiry, which is then due and payable for work, labor, services or
materials in connection with the Work which, if unpaid, might become
the basis of a vendor's, mechanic's, laborer's or materialman's
statutory or other similar lien upon the Property or any part thereof.
52555_4 - 17 -
<PAGE>
C. Borrower shall deliver to Lender satisfactory evidence that
the Property and every part thereof, and all materials and all
property described in the certificate furnished pursuant to the
foregoing Clause B, are free and clear of all mortgages, liens,
charges or encumbrances, except (a) encumbrances, if any, securing
indebtedness due to Persons (whose names and addresses and the several
amounts due them shall be stated) specified in said certificate
furnished pursuant to the foregoing Clause B, which encumbrances will
be discharged upon disbursement of the funds then being requested, (b)
Liens permitted by Lender hereunder, and (c) the Collateral Documents.
Lender shall accept as satisfactory evidence under this Clause C a
written report or certificate of a title insurance company acceptable
to Lender or an endorsement to Lender's existing loan title policy
insuring the lien of the Mortgage, dated as of the date of the making
of the disbursement, confirming the foregoing.
D. In the event any portion of the Work involves reconstruction
or modification of existing foundations or construction of new
foundations, then Borrower shall deliver to Lender a survey of the
Property dated as of a date within 10 days prior to the making of the
final advance (or revised to a date within 10 days prior to making of
the advance) showing no encroachments other than the Liens permitted
by Lender hereunder and any additional encumbrances acceptable to
Lender.
E. There shall be no Event of Default by Borrower, or any state
of facts existing which, with the passage of time or the giving of
notice, or both, would constitute an Event of Default.
Lender at its option may waive any of the foregoing requirements.
Upon compliance by Borrower with the foregoing Clauses A, B, C, D and E
(except for such requirements, if any, as Lender at its option may have
waived), Borrower shall, to the extent of the insurance proceeds or
condemnation award, if any, which Lender shall have elected or shall be
required to apply to restoration of the Property, pay or cause to be paid
to the persons named in the certificate furnished pursuant to the foregoing
Clause B, the respective amounts stated in said certificate to be due them,
and Lender shall pay to Borrower the amounts stated in said certificate to
have been paid by Borrower.
If upon completion of the Work there shall be insurance proceeds or
condemnation awards held by Lender over and above the amounts withdrawn
pursuant to the foregoing provisions, then Lender, at Lender's option, may
either retain such proceeds or awards and apply the same in reduction of
the Obligations by the in whatever order Lender may elect, or Lender may
pay over such proceeds or awards to Borrower.
Upon completion of the Work, in addition to the requirements of the
foregoing Clauses A, B, C, D and E, Borrower shall promptly deliver to
Lender:
52555_4 - 18 -
<PAGE>
(w) A written certificate of the architect or engineer that the
Work has been fully completed in a good and workmanlike manner in
accordance with the approved plans and specifications;
(x) A written report and policy of a title insurance company
acceptable to Lender insuring the Property against mechanics' and
materialmen's liens;
(y) A certificate by Borrower in form and substance satisfactory
to Lender, listing all costs and expenses in connection with the
completion of the Work and the amount paid by Borrower with respect to
the Work;
(z) A temporary certificate of occupancy and all other
applicable certificates, licenses, consents and approvals issued by
governmental agencies or authorities with respect to the Property and
by the appropriate Board of Fire Underwriters or other similar bodies
acting in and for the locality in which the Property is situated,
provided that within 120 days after completion of the Work, Borrower
shall obtain and deliver to Lender a permanent certificate of
occupancy for the Property.
(g) Lender, in its absolute discretion, may decide whether and to
what extent, if any, proceeds of insurance or condemnation will be made
available to Borrower for repair or restoration of the Property, but
Borrower shall either (i) prepay the Obligations at par, free of any
prepayment penalty that might otherwise be due, or (ii) effect such repair
or restoration as provided above whether or not Lender makes any of such
proceeds available for such repair or restoration. Notwithstanding the
foregoing, Lender agrees to make insurance or condemnation proceeds
available to Borrower for repair or restoration provided:
(i) Not more than 30% of the Property is damaged or taken, and
in the case of a condemnation, the portion of the Property not taken
by condemnation has not, in Lender's reasonable determination, been
rendered economically nonviable by the taking;
(ii) There has been no Event of Default for the 12 months
preceding the damage or taking, and there does not then exist an Event
of Default, or any state of facts which, with the passage of time or
the giving of notice, or both, would constitute an Event of Default;
(iii) Borrower can demonstrate to Lender's satisfaction that
Borrower has the financial ability, whether from the proceeds of rent
insurance or otherwise, to make all scheduled payments when due under
the Obligations;
(iv) Such damage or taking occurs prior to the last Loan year;
(v) The repair or restoration will return the Property to
substantially the size, design, and utility as existed immediately
before the casualty;
52555_4 - 19 -
<PAGE>
(vi) The proceeds are released under escrow/construction funding
arrangements specified in subsection (f) hereof; and
(vii) The Debt Service Coverage Ratio of Borrower (as defined in
Section 5.14) is 130% or greater at the time repair or restoration
commences.
If Lender is not obligated to make the proceeds available for repair
or restoration as provided above, then such proceeds shall be applied to
reduce the Obligations, in whatever order Lender may elect.
(h) If within 120 days after the occurrence of any damage to the
Property in excess of $50,000 or the condemnation of any portion of the
Property, Borrower shall not have submitted to Lender and received Lender's
approval of plans and specifications for the repair, replacement and/or
rebuilding of the Property or shall not have obtained approval of such
plans and specifications from all governmental authorities whose approval
is required, or if, after such plans and specifications are approved by
Lender and all such governmental authorities, Borrower shall fail to
commence promptly such repair, replacement and/or rebuilding, or if
thereafter Borrower fails to perform diligently such repair, replacement
and/or rebuilding or is delinquent in the payment to mechanics, materialmen
or others of the costs incurred in connection with such work, or, in the
case of any loss or damage not in excess of $50,000, if Borrower shall fail
to repair, replace and/or rebuild promptly the Property, then, in addition
to all other rights herein set forth, and after giving Borrower 20 days
written notice of the nonfulfillment of one or more of the foregoing
conditions, Lender, or any lawfully appointed receiver or keeper of the
Property, may at its respective option, perform or cause to be performed
such repair, replacement and/or rebuilding, and may take such other steps
as it deems advisable to perform such repair, replacement and/or
rebuilding, and may enter upon the Property for any of the foregoing
purposes, and Borrower hereby waives, for Borrower and all others holding
under Borrower, any claim against Lender or such receiver arising out of
anything done by Lender or such receiver pursuant to this Section, and
Lender may apply insurance proceeds (without the need to fulfill the
requirements of subsection (f) hereof) to reimburse Lender, and/or such
receiver or keeper for all amounts expended or incurred by them,
respectively, in connection with the performance of such work, and any
excess costs shall be paid by Borrower to Lender upon demand and such
payment shall be secured by the lien of the Collateral Documents.
(i) If Borrower shall promptly and diligently commence to repair,
replace and restore any damage occurring to the Property, and there shall
be no Event of Default, then Lender shall each month pay to Borrower out of
the rent insurance proceeds held by Lender a sum equal to that amount, if
any, of the rent insurance proceeds paid by the insurer which is allocable
to the rental loss for the preceding month. Lender at its option may waive
any of the foregoing conditions to the payment of rent insurance proceeds.
If Borrower does not fulfill the foregoing conditions entitling Borrower to
monthly disbursements of rent insurance proceeds, then such rent insurance
52555_4 - 20 -
<PAGE>
proceeds may be applied by Lender, at Lender's option, to the payment of
the Obligations in whatever order Lender may elect.
Section 5.8 Accounts and Records. The Borrower will keep books of
record and accounts in which true and correct entries will be made as to
all material matters of all dealings or transactions in relation to its
business and activities, in accordance with generally accepted accounting
principles consistently applied except for changes in accounting principles
or practices with which the independent public accountants for Borrower
concur.
Section 5.9 Right of Inspection. The Borrower will permit any
officer, employee or agent of the Lender to visit and inspect any of the
property of the Borrower, examine the books of record and accounts of the
Borrower, take copies and extracts therefrom, and discuss the affairs,
finances and accounts of the Borrower with the Borrower's officers,
accountants and auditors, all at such reasonable times and on reasonable
notice and as often as the Lender may reasonably desire. The Borrower
shall pay the Lender an annual inspection fee of $500 plus all reasonable
out-of-pocket expenses incurred by the Lender in connection with an annual
inspection of the Property.
Section 5.10 Notice of Certain Events. (a) The Borrower shall
promptly notify the Lender if the Borrower learns of the occurrence of any
event which constitutes a Default under this Agreement, together with a
detailed statement by a responsible officer of the Borrower of the steps
being taken to cure the effect of such Default.
(b) The Borrower shall promptly notify the Lender of any change in
location of the Borrower's principal place of business or the office where
it keeps its records concerning accounts and contract rights.
(c) The Borrower shall promptly notify the Lender of the arising of
any litigation against the Borrower which, if adversely determined, would
have a material adverse effect upon the ability of Borrower to perform its
obligations to Lender. In the event of such litigation, the Borrower will
cause such proceedings to be vigorously contested in good faith, and, in
the event of any adverse ruling or decision, the Borrower shall prosecute
all allowable appeals. The Lender may (but shall not be obligated to),
without prior notice to the Borrower, commence, appear in, or defend any
action or proceeding purporting to affect the Loan, or the respective
rights and obligations of the Lender and the Borrower pursuant to this
Agreement. The Lender may (but shall not be obligated to) pay all
necessary expenses, including reasonable attorneys' fees and expenses,
incurred in connection with such proceedings or actions, which the Borrower
agrees to repay to the Lender upon demand.
Section 5.11 Indemnification. (a) The Borrower will indemnify the
Lender and hold the Lender harmless from claims of brokers with whom the
Borrower has dealt in the execution hereof or the consummation of the
transactions contemplated hereby. The Lender will indemnify the Borrower
52555_4 - 21 -
<PAGE>
from claims of brokers with whom the Lender has contracted in connection
with the transactions contemplated hereby.
(b) The Borrower will indemnify, defend and hold the Lender harmless
from any actual liabilities, obligations, losses, damages, penalties,
claims, actions, suits, costs and expenses of whatever kind or nature which
may be imposed on, incurred by or asserted at any time against the Lender
in any way relating to, or arising in connection with, the use or occupancy
of any of the Collateral.
(c) The Borrower agrees to indemnify, defend and fully protect the
Lender from any allegation or charge whatsoever of negligence, misfeasance,
or nonfeasance of the Lender in whole or in part, pertaining to any defect
in the Property, and particularly any failure of the Lender or any agent,
officer, employee or representative of the Lender to note any defect in
materials or workmanship or of physical conditions or failure to comply
with any plans, specifications, drawings, ordinances, statutes or other
governmental requirements, or to call to the attention of any person
whatsoever, or take any action, or to demand that any action be taken, with
regard to any such defect or failure or lack of compliance.
Notwithstanding the foregoing, Borrower shall have no obligation to
indemnify Lender against Lender's own gross negligence or willful
misconduct. This indemnification is subject to the limitations on
Borrower's liability set forth in Section 2.9 hereof.
Section 5.12 Compliance with Laws. The Borrower shall observe and
comply with all laws, statutes, codes, acts, ordinances, orders, judgments,
decrees, injunctions, rules, regulations, certificates, franchises,
permits, licenses, authorizations, directions and requirements of all
federal, state, county, municipal and other governments, departments,
commissions, boards, courts, authorities, officials and officers domestic
or foreign, applicable to the Borrower or the Property.
Section 5.13 Environmental Indemnity. (a) The Borrower shall
defend, indemnify and hold the Lender and its directors, officers, agents
and employees harmless from and against any actual claims, demands, causes
of action, liabilities, losses, costs and expenses (including, without
limitation, costs of suit, reasonable attorneys' fees and fees of expert
witnesses) arising from or in connection with (i) the presence on or under
the Property of any hazardous substances or solid wastes (as defined
elsewhere in this Agreement), or any releases or discharges of any
hazardous substances or solid wastes on, under or from the Property, (ii)
any activity carried on or undertaken on or off the Property, whether prior
to or during the term of this Agreement, and whether by the Borrower or any
predecessor in title or any officers, employees, agents, contractors or
subcontractors of the Borrower or any predecessor in title, or any third
persons at any time occupying or present on the Property, in connection
with the handling, use, generation, manufacture, treatment, removal,
storage, decontamination, clean-up, transport or disposal of any hazardous
substances or solid wastes at any time located or present on or under the
Property, or (iii) any breach of any representation, warranty or covenant
under Section 4.17 of this Agreement. The foregoing indemnity shall
52555_4 - 22 -
<PAGE>
further apply to any residual contamination on or under the Property, or
affecting any natural resources, and to any contamination of any property
or natural resources arising in connection with the generation, use,
handling, storage, transport or disposal of any such hazardous substances
or solid wastes. Without prejudice to the survival of any other
agreements of the Borrower hereunder, the provisions of this Section shall
survive the final payment of all Obligations and the termination of this
Agreement and shall continue thereafter in full force and effect.
Notwithstanding the foregoing and any other provisions of this Loan
Agreement and any Collateral Document to the contrary, it is understood and
agreed that (i) the liability described hereunder and under any of the
Collateral Documents shall be limited to solely to the assets of Borrower
(the assets of any limited partner having been specifically excluded by
agreement of the parties hereto) and (ii) neither the negative capital
account of any general or limited partner, nor any obligation of any
general partner to restore a negative capital account or to contribute
capital to borrower, shall be deemed to be an asset within the intent, or
for the purposes, of this Loan Agreement of any Collateral Document.
(b) The Borrower shall observe and materially comply with all laws,
ordinances, orders, decrees, rules and regulations of all federal and state
governments relating to environmental matters, including, without
limitation, the removal from or under the Property of any hazardous
substances or solid wastes (as defined elsewhere in this Agreement).
Section 5.14 Financial Covenants. For each fiscal year of the
Borrower ending on December 31, the Borrower shall cause the Property to
maintain a Debt Service Coverage Ratio of not less than 1.30 to 1.00. For
purposes of this Section, the following terms shall have the meanings
indicated.
(i) "Debt Service Coverage Ratio" shall mean a fraction the numerator
of which is Net Operating Income and the denominator of which is Debt
Service.
(ii) "Net Operating Income" shall mean Total Revenues less Total
Operating Expenses.
(iii) "Total Revenues" shall mean the actual revenues received from
the Property's operation for each fiscal year ending December 31, as
determined by the operating statements of the Property provided to the
Lender, and shall include, without limitation, rental income, expense
reimbursements, sub-rents, interest, miscellaneous income and the
collection of business interruption or rental loss insurance proceeds;
"Total Revenues" shall specifically exclude non-operating revenues
such as proceeds of the sale of capital assets, proceeds of litigation
(other than the collection of operating debts) and any extraordinary
revenues.
(iv) "Total Operating Expenses" shall mean the actual operating and
fixed expenses of the Property for each fiscal year ending December
31, as determined by the operating statements of the Property provided
52555_4 - 23 -
<PAGE>
to the Lender, and shall include, without limitation, actual
administrative, operating, repair, maintenance and fixed expenses;
"Total Operating Expenses" shall specifically exclude non-operating
expenses such as depreciation, amortization, interest expense, the
principal portion of long-term debt service, partnership distributions
and any other extraordinary expenses.
(v) "Debt Service" shall mean the total of the actual monthly
payments of principal and interest due on the Loan for each fiscal
year ending December 31.
Section 5.15 Appraisals. The Lender shall have the right to have
the Property appraised at the Lender's expense at any time during the term
of the Loan. If the outstanding principal balance of the Loan at the time
of any appraisal prepared during the term of the Loan exceeds 60.57% of the
value of the Property as determined by such appraisal, then the Borrower
will, within 60 days from Lender's request thereof, reduce the principal
balance of the Loan to an amount less than or equal to 60.57% of the
appraised value of the Property.
Section 5.16 Bank Accounts. The Borrower shall maintain all
operating accounts relating to the Property with the Lender.
Section 5.17 Tax and Insurance Escrow. The Borrower shall pay to
the Lender, together with, at the same time as and in addition to the
payment of principal and/or interest due on the Note, an amount equal to
1/12th of the estimated annual real estate taxes and insurance premiums
affecting the Property, as determined by the Lender. The Lender shall
retain such amounts in an interest-bearing money market account with the
Lender over which the Lender shall have sole access. The Lender shall use
such amounts to pay all real estate taxes and insurance premiums affecting
the Property that become due or, upon the occurrence of an Event of
Default, to pay any other amounts due on the Obligations.
Section 5.18 Replacement Reserve Escrow. The Borrower shall pay to
the Lender, together with, at the same time as and in addition to the
payment of principal and/or interest due on the Note and the amounts
required by Section 5.17 above, an amount equal to 1/12th of the estimated
annual replacement reserves necessary for the maintenance of the Property,
as determined by the Lender. For the period from the Closing Date through
March 31, 1996, the amount of such payments shall be $8,167 per month.
Thereafter, the amount of such payments may be adjusted annually by the
Lender based upon the annual inspections of the Property conducted by the
Lender pursuant to Section 5.9 hereof. The Lender shall retain all of such
amounts in an interest-bearing money market account with the Lender over
which the Lender shall have sole access. The use of such amounts shall be
limited to expenses incurred in the replacement of the carpet, appliances
and other maintenance items within the individual units of the Property.
Any use of such amounts for a purpose not listed above must be approved in
writing by the Lender prior to such use. Such amounts shall be disbursed
to the Borrower for the purposes permitted above only upon presentation to
the Lender of paid receipts for the items to be covered by such disbursements.
Section 5.19 Regulatory Agreement. Borrower and Lender acknowledge
that the Property is subject to a Regulatory Agreement and Declaration of
Restrictive Covenants ("Regulatory Agreement") by and among Louisiana
Public Facilities Authority, as issuer, United States Trust Company, as
trustee, and Stonebridge Manor, a Louisiana Partnership in Commendam, as
owner, dated as of December 1, 1982, pursuant to which the owner is
required to operate the Property as a "residential rental property" within
52555_4 - 24 -
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the meaning of Section 103(b)(4)(A) of the Internal Revenue Code of 1954,as
amended, or any successor statute. Borrower represents and warrants to
the Lender that the Property has been and currently is being operated as
such a "residential rental property." Borrower covenants and agrees that
it will continue to operate the Property as such a "residential rental
property" for so long as the Regulatory Agreement remains in effect.
ARTICLE 6.
NEGATIVE COVENANTS
Unless the Lender's prior written consent to the contrary is obtained,
the Borrower will at all times comply with the covenants contained in this
Article 6, from the date hereof and for so long as any part of the
Obligations is outstanding.
Section 6.1 Debts, Guaranties and Other Obligations. The Borrower
will not incur, create, assume or in any manner become or be liable in
respect of any Debt direct or contingent, except for:
(a) The Obligations to the Lender under this Agreement.
(b) Other existing Debt to the Lender.
(c) Trade payables or operating and facility leases from time to time
incurred in the ordinary course of business.
(d) Taxes, assessments or other government charges which are not yet
due or are being contested in good faith by appropriate action
promptly initiated and diligently conducted, if such reserve as
shall be required by generally accepted accounting principles
shall have been made therefor.
(e) Debt of the Borrower to Mellon Bank represented by that certain
promissory note of the Borrower in favor of Mellon Bank dated
March 25, 1994, in the principal amount of $3,400,000 and
maturing on March 25, 1997, which Debt is guaranteed by CIGNA
Corporation.
Section 6.2 Liens. The Borrower will not create, incur, assume or
permit to exist any Lien on the Property, except for:
(a) The pledge of the Collateral and any other liens in favor of the
Lender to secure the Obligations of the Borrower to the Lender
under this Agreement.
(b) Liens for taxes, assessments, or other governmental charges not
yet due or which are being contested in good faith by appropriate
action promptly initiated and diligently conducted, if such
reserve as shall be required by generally accepted accounting
principles shall have been made therefor.
(c) Liens of landlords, vendors, carriers, warehousemen, mechanics,
laborers and materialmen arising by law in the ordinary course of
business for sums either not yet due or being contested in good
52555_4 - 25 -
<PAGE>
faith by appropriate action promptly initiated and diligently
conducted, if such reserve as shall be required by generally
accepted accounting principles shall have been made therefor.
Section 6.3 Sale of Collateral. The Borrower will not sell,
exchange, assign, transfer, convey, lease (except to tenants of the
Property in the normal course of business) or dispose of the Property or
any portion thereof.
Section 6.4 Change in General Partner. During the term of the
Loan, CIGNA Realty Resources, Inc. - Fifth shall at all times remain the
sole general partner of the Borrower.
ARTICLE 7.
CONDITIONS OF LENDING
Section 7.1 Conditions of Lending. The obligation of the Lender to
make extensions of credit under this Agreement is subject to the accuracy
of each and every representation and warranty of the Borrower made or
referred to in this Agreement, or in any certificate delivered to the
Lender pursuant to or in connection with this Agreement, to the performance
by the Borrower of its obligations to be performed hereunder and under the
Note and the Collateral Documents on or before the date of such extensions
of credit, and to the receipt of the following on or before the Closing
Date:
(a) Agreement. Duly executed counterpart of this Agreement
signed by all the parties hereto.
(b) Note. The duly executed Note signed by the Borrower.
(c) Collateral Documents. Duly executed counterparts of the
Collateral Documents and receipt of the Collateral.
(d) Borrower's Organization Documents. (i) A certificate signed
by the general partner of the Borrower, in form and substance
reasonably satisfactory to the Lender, with respect to the
authorization of this Agreement, the Note and the Collateral Documents
and (ii) a copy of the articles of partnership of the Borrower.
(e) Organization Documents of the General Partner. Certificate
of the secretary of CIGNA Realty Resources, Inc. -Fifth setting forth
(i) resolutions of its board of directors in form and substance
satisfactory to the Lender with respect to the authorization of this
Agreement, the Note and the Collateral Documents; (ii) the officers
authorized to sign such instruments; and (iii) a copy of the articles
of incorporation of CIGNA Realty Resources, Inc. - Fifth.
52555_4 - 26 -
<PAGE>
(f) Certificates. Certificate of registry of the Borrower
issued by the Secretary of State of Louisiana and certificates of good
standing of CIGNA Realty Resources, Inc. - Fifth issued by the
Secretaries of State of Connecticut and Louisiana.
(g) Fees. Payment of a commitment fee of $53,000.
(h) Closing Statement. A closing statement showing all closing
costs and other initial advances under the Loan.
(i) No Adverse Change. There shall have occurred no material
adverse changes, either individually or in the aggregate, in the
assets, liabilities, financial condition, business operations, affairs
or circumstances of the Borrower from those reflected in the most
recent financial statements furnished to the Lender prior to the
Closing Date, except to the extent that such changes are permitted by
this Agreement; furthermore, no Default shall have occurred and be
continuing.
(j) Appraisal. Appraisal of the Property prepared by an
MAI-appraiser selected by Lender having an appraised value of not less
than $8,750,000.
(k) Environmental Engineering Report (Phase I). Report
acceptable to Lender, conducted by an environmental engineer. The
report shall determine whether or not toxic and hazardous waste, waste
products or substances were, are or could be present on the Property.
The report shall also indicate the location and jurisdiction of the
Property, historical ownership and use of the Property, current use of
the Property, any information available in governmental records on
previous investigations and litigation relating to the Property, any
adjacent properties which have been, are or could be potential
hazards, locations of equipment containing PCBs and a
conclusion/recommendation statement.
(l) Inspection. An inspection report on the Property in form
and substance satisfactory to the Lender and prepared by an inspector
selected by the Lender.
(m) Insurance Policies. The insurance policies or certificates
otherwise required by this Agreement or the Lender.
(n) Survey (Current As-Built). All immovable on-site and off-
site improvements shall be shown, delineating and dimensioning those
improvements with pertinent grade and floor elevations and
improvements descriptions, and containing such other information as
may be required by the Lender.
(o) Title Insurance Commitment. Commitment from a title
insurance company approved by Lender to insure the Mortgage on the
Property, subject only to liens, encumbrances and title exceptions
approved by Lender (copies of which must be attached).
52555_4 - 27 -
<PAGE>
(p) Title Insurance Policy. Policy (on ALTA Loan Policy Form -
1990) issued pursuant to the title insurance commitment insuring the
Mortgage as first lien on the Property in the full amount of the Loan,
subject only to liens, encumbrances and exceptions approved by the
Lender. The policy must provide affirmative lien protection and must
include usury and zoning endorsements. If usury coverage is not
available, the Lender shall require an opinion letter from Borrower's
counsel acceptable to the Lender that the Loan is not usurious. The
Lender shall require affirmative coverage if and when available
against any loss of lien priority as a result of any law regarding
hazardous wastes or substances affecting the Property.
(q) Payoff Letter. A letter from each lender who will be paid
off with proceeds of the Loan, stating the amount due such lender as
of a particular date, a per diem amount and wire or other payment
instructions.
(r) Release. A partial or full release of mortgage executed by
Aetna Life Insurance Company fully releasing the Property from the
mortgage executed by the Borrower in favor of Aetna Life Insurance
Company.
(s) Rent Roll/Occupancy Report. The Borrower's certified rent
roll showing names and addresses of all tenants of the Property
including date, term (including options), rents, premises, square
footage and location of all tenants.
(t) Borrower's Counsel Opinion. Favorable opinion of Locke
Purnell Rain Harrell, counsel for the Borrower, in form and substance
satisfactory to the Lender.
(u) Management Agreement. Agreement between the Borrower and
Shadowlake Management Company, Inc. to manage the Property, reviewed
and approved by the Lender.
(v) Assignment and Subordination of Management Agreement. An
assignment executed by the Borrower, Shadowlake Management Company,
Inc. and the Lender assigning the management agreement to the Lender
and subordinating the payment of any and all management fees due
thereunder to the payments of principal and interest on the Loan.
ARTICLE 8.
DEFAULT
Section 8.1 Events of Default. Any of the following events shall
be considered an "Event of Default" as that term is used herein:
(a) Principal and Interest Payments. The Borrower fails to make
payment when due of any principal or interest installment on the Loan,
52555_4 - 28 -
<PAGE>
any commitment fee or any other Obligation to the Lender, and such
nonpayment continues after 10 days;
(b) Representations and Warranties. Any representation or
warranty made by the Borrower proves to have been incorrect in any
material respect as of the date thereof; or any representation,
statement (including financial statements), certificate or data
furnished or made by the Borrower (or any partner, officer, accountant
or attorney of the Borrower) under this Agreement, proves to have been
untrue in any material respect as of the date as of which the facts
therein set forth were stated or certified;
(c) Covenants. The Borrower defaults in the observance or
performance of any of the covenants or agreements contained in this
Agreement, the Note or any of the Collateral Documents to be kept or
performed by the Borrower (other than a default under Section 8.1(a)
hereof), and such default continues unremedied (or Borrower has failed
to commence or cure) for a period of 30 days after the earlier of (i)
written notice thereof being given by the Lender to the Borrower, or
(ii) such default otherwise becoming known to the chief financial
officer of the Borrower; provided, however, that in the case of a
default under either Section 5.12 hereof (relating to compliance with
laws) or Section 10 of the mortgage securing the Loan (relating to
maintenance of the Property), if the Borrower commences steps to cure
the default within such 30-day period and diligently and continually
pursues the remedies of such default, an Event of Default shall not
occur unless such default remains uncured 90 days after the expiration
of such 30-day period;
(d) Other Debt to Lender. The Borrower defaults in the payment
of any amounts due to the Lender or in the observance or performance
of any of the covenants or agreements contained in any credit
agreements, notes, collateral or other documents relating to any Debt
of the Borrower to the Lender other than the Obligations incurred
pursuant to this Agreement and any grace period applicable to such
default has elapsed;
(e) Involuntary Bankruptcy or Receivership Proceedings. A
receiver, conservator, liquidator or trustee of the Borrower or of any
of its property is appointed by order or decree of any court or agency
or supervisory authority having jurisdiction; or an order for relief
is entered against the Borrower under the Federal Bankruptcy Code; or
the Borrower is adjudicated bankrupt or insolvent; or any material
portion of the properties of the Borrower is sequestered by court
order and such order remains in effect for more than 30 days after the
Borrower obtains knowledge thereof; or a petition is filed against the
Borrower under any state, reorganization, arrangement, insolvency,
readjustment of debt, dissolution, liquidation or receivership law of
any jurisdiction, whether now or hereafter in effect, and such
petition is not dismissed within 60 days;
52555_4 - 29 -
<PAGE>
(f) Voluntary Petitions. The Borrower files a case under the
Federal Bankruptcy Code or seeks relief under any provision of any
bankruptcy, reorganization, arrangement, insolvency, readjustment of
debt, dissolution or liquidation law of any jurisdiction, whether now
or hereafter in effect, or consents to the filing of any case or
petition against it under any such law;
(g) Assignments for Benefit of Creditors. The Borrower makes an
assignment for the benefit of its creditors, or admits in writing its
inability to pay its debts generally as they become due, or consents
to the appointment of a receiver, trustee or liquidator of the
Borrower or of all or any part of its property;
(h) Undischarged Judgments. Judgment for the payment of money
in excess of $200,000 (which is not covered by insurance) is rendered
by any court or other governmental body against the Borrower, and the
Borrower does not discharge the same or provide for its discharge in
accordance with its terms, or procure a stay of execution thereof
within 30 days from the date of entry thereof, and within said period
of 30 days from the date of entry thereof, or such longer period
during which execution of such judgment shall have been stayed, appeal
therefrom and cause the execution thereof to be stayed during such
appeal while providing such reserves therefor as may be required under
generally accepted accounting principles;
(i) Attachment. A writ or warrant of attachment, seizure or any
similar process shall be issued by any court against the Property or
all or any material portion of the property of the Borrower, and such
writ or warrant of attachment or any similar process is not released
or bonded within 30 days after its entry.
Section 8.2 Remedies. (a) Upon the happening of any Event of
Default specified in Section 8.1 (other than Sections 8.1(e) or 8.1(f)
hereof), the Lender may by written notice to the Borrower declare the
entire principal amount of all Obligations then outstanding, including
interest accrued thereon, to be immediately due and payable without
presentment, demand, protest, notice of protest or dishonor or other notice
of default of any kind, all of which are hereby expressly waived by the
Borrower.
(b) Upon the happening of any Event of Default specified in Sections
8.1(e) or 8.1(f), the entire principal amount of all Obligations then
outstanding, including interest accrued thereon, shall, without notice or
action by the Lender, be immediately due and payable without presentment,
demand, protest, notice of protest or dishonor or other notice of default
of any kind, all of which are hereby expressly waived by the Borrower.
(c) In addition to the foregoing, the Lender may exercise any of the
rights or remedies provided in the Collateral Documents or avail itself of
any other rights and remedies provided by applicable law.
52555_4 - 30 -
<PAGE>
Section 8.3 Right of Set-off. Upon the occurrence and during the
continuance of any Event of Default, the Lender is hereby authorized at any
time and from time to time, without notice to the Borrower (any such notice
being expressly waived by the Borrower), to set-off and apply any and all
deposits (general or special, time or demand, provisional or final) at any
time held and other indebtedness at any time owing by the Lender to or for
the credit or the account of the Borrower against any and all of the
Obligations of the Borrower, liquidated or unliquidated, irrespective of
whether or not the Lender shall have made any demand under this Agreement
or the Note, and although such Obligations may be unmatured. The Lender
agrees promptly to notify the Borrower after any such set-off and
application, provided that the failure to give such notice shall not affect
the validity of such set-off and application. The rights of the Lender
under this Section 8.3 are in addition to other rights and remedies
(including, without limitation, other rights of set-off) which the Lender
may have under the Collateral Documents or otherwise.
ARTICLE 9.
MISCELLANEOUS
Section 9.1 Notices. Any notice or demand which, by provision of
this Agreement, is required or permitted to be given or served by the
Lender to or on the Borrower shall be deemed to have been sufficiently
given and served for all purposes (if mailed) three calendar days after
being deposited, postage prepaid, in the United States Mail, registered or
certified mail, or (if delivered by express courier) one Business Day after
being delivered to such courier, or (if delivered in person) the same day
as delivery, in each case addressed (until another address or addresses is
given in writing by Borrower to Lender) as follows:
Connecticut General Realty Investors III
Limited Partnership
c/o CIGNA Investment Management
900 Cottage Grove Road, South Building
Hartford, Connecticut 06152-2311
Attn: Real Estate Asset Management, S-311
With copies to: CIGNA Companies Investment
Law Department
900 Cottage Grove Road, S-215 A
Hartford, CT 06152-2215
Robert W. Mouton, Esq.
Locke Purnell Rain Harrell
Pan American Life Center, Suite 2400
601 Poydras Street
New Orleans, LA 70130-6036
Any notice or demand which, by any provision of this Agreement,
is required or permitted to be given or served by the Borrower to or on
52555_4 - 31 -
<PAGE>
Lender shall be deemed to have been sufficiently given and served for all
purposes (if mailed) three calendar days after being deposited, postage
prepaid, in the United States Mail, registered or certified mail, or (if
delivered by express courier) one Business Day after being delivered to
such courier, or (if delivered in person) the same day as delivery, in each
case addressed (until another address or addresses is given in writing by
Lender to Borrower) as follows:
Hibernia National Bank
313 Carondelet Street
New Orleans, Louisiana 70130
or
P. O. Box 61540
New Orleans, Louisiana 70161
Attention: Manager, Real Estate
Section 9.2 Invalidity. In the event that any one or more of the
provisions contained in this Agreement, the Note or the Collateral
Documents shall, for any reason, be held invalid, illegal or unenforceable
in any respect, such invalidity, illegality or unenforceability shall not
affect any other provision of this Agreement, the Note or the Collateral
Documents.
Section 9.3 Survival of Agreements. All representations and
warranties of the Borrower herein, and all covenants and agreements herein
not fully performed before the effective date of this Agreement, shall
survive such date.
Section 9.4 Successors and Assigns. (a) All covenants and
agreements contained by or on behalf of the Borrower in this Agreement, the
Note and the Collateral Documents shall bind its successors and assigns and
shall inure to the benefit of the Lender and its successors and assigns.
(b) This Agreement is for the benefit of the Lender and for such
other Person or Persons as may from time to time become or be the holders
of any of the Obligations, and this Agreement shall be transferrable and
negotiable, with the same force and effect and to the same extent as the
Obligations may be transferrable, it being understood that, upon the
transfer or assignment by the Lender of any of the Obligations, the legal
holder of such Obligations shall have all of the rights granted to the
Lender under this Agreement.
(c) The Borrower hereby recognizes and agrees that the Lender may,
from time to time, one or more times, transfer all or any portion of the
Obligations to one or more third parties. Such transfers may include, but
are not limited to, sales of participation interests in such Obligations in
favor of one or more third party lenders, provided that in the case of the
sale of participation interests, Lender shall remain the lead participant
in the Loan, and Lender shall be responsible for any costs incurred by
Borrower associated with the said participation. The Borrower specifically
agrees and consents to all such transfers and assignments and the Borrower
52555_4 - 32 -
<PAGE>
further waives any subsequent notice of and right to consent to any such
transfers and assignments as may be provided under applicable Louisiana
law.
Section 9.5 Renewal, Extension or Rearrangement. All provisions of
this Agreement relating to the Note shall apply with equal force and effect
to each and all promissory notes or security instruments hereinafter
executed which in whole or in part represent a renewal, extension for any
period, increase or rearrangement of any part of the Note.
Section 9.6 Waivers. No course of dealing on the part of the
Lender, its officers, employees, consultants or agents, nor any failure or
delay by the Lender with respect to exercising any of its rights, powers or
privileges under this Agreement, the Note or the Collateral Documents shall
operate as a waiver thereof.
Section 9.7 Cumulative Rights. The rights and remedies of the
Lender under this Agreement, the Note and the Collateral Documents shall be
cumulative, and the exercise or partial exercise of any such right or
remedy shall not preclude the exercise of any other right or remedy.
Section 9.8 Singular and Plural. Words used herein in the
singular, where the context so permits, shall be deemed to include the
plural and vice versa. The definitions of words in the singular herein
shall apply to such words when used in the plural where the context so
permits and vice versa.
Section 9.9 Governing Law. This Agreement is, and the Note will
be, contracts made under and shall be construed in accordance with and
governed by the laws of the United States of America and the State of
Louisiana.
Section 9.10 Titles of Articles, Sections and Subsections. All
titles or headings to articles, sections, subsections or other divisions
of this Agreement or the exhibits hereto are only for the convenience of
the parties and shall not be construed to have any effect or meaning with
respect to the other content of such articles, sections, subsections or
other divisions, such other content being controlling as to the agreement
between the parties hereto.
Section 9.11 Limitation of Liability. This Agreement, the Note and
the Collateral Documents are executed by an officer of the Lender, and by
acceptance of the Loan, the Borrower agrees that for the payment of any
claim or the performance of any obligations hereunder resulting from any
default by the Lender, resort shall be had solely to the assets and
property of the Lender, its successors and assigns, and no shareholder,
officer, employee or agent of the Lender shall be personally liable
therefor.
Section 9.12 Relationship Between the Parties. The relationship
between the Lender and the Borrower shall be solely that of lender and
borrower, and such relationship shall not, under any circumstances
52555_4 - 33 -
<PAGE>
whatsoever, be construed to be a joint venture, joint adventure, or
partnership.
Section 9.13 Amendment. Neither this Agreement nor any provisions
hereof may be changed, waived, discharged or terminated orally or in any
manner other than by an instrument in writing signed by the party against
whom enforcement of the change, waiver, discharge or termination is sought.
Section 9.14 Entire Agreement. This Agreement sets forth the entire
agreement of the Lender and the Borrower with respect to the Loan, and
supersedes all prior written or oral understandings with respect thereto;
provided, however, that all written and oral representations, warranties
and certifications made by the Borrower to the Lender with respect to the
Loan and the security therefor shall survive the execution of this
Agreement.
Section 9.15 Time of the Essence. Time shall be deemed of the
essence with respect to the performance of all of the terms, provisions and
conditions on the part of the Borrower and the Lender to be performed
hereunder.
Section 9.16 Counterparts. This Agreement may be executed in two or
more counterparts, and it shall not be necessary that the signatures of all
parties hereto be contained on any one counterpart hereof; each counterpart
shall be deemed an original, but all of which together shall constitute one
and the same instrument.
Section 9.17 Submission to Jurisdiction. THE BORROWER HEREBY
IRREVOCABLY CONSENTS TO THE JURISDICTION OF THE STATE COURTS OF LOUISIANA
AND THE FEDERAL COURTS IN LOUISIANA, AND AGREES THAT ANY ACTION OR
PROCEEDING ARISING OUT OF OR BROUGHT TO ENFORCE THE PROVISIONS OF THE NOTE,
THIS AGREEMENT AND/OR THE COLLATERAL DOCUMENTS MAY BE BROUGHT IN ANY COURT
HAVING SUBJECT MATTER JURISDICTION.
IN WITNESS WHEREOF, the parties hereto have caused this instrument to
be duly executed as of the date first above written.
BORROWER: CONNECTICUT GENERAL REALTY
INVESTORS III LIMITED PARTNERSHIP
By: CIGNA Realty Resources, Inc. -
Fifth, General Partner
By:
Name:
Title:
LENDER: HIBERNIA NATIONAL BANK
By:
Name: Timothy P. Guillory
Title: Vice President
52555_4 - 34 -
<PAGE>
EXHIBIT A
BORROWER'S CERTIFICATE OF NO DEFAULT
The undersigned hereby certifies (i) that he is the principal
financial officer of Connecticut General Realty Investors III Limited
Partnership (the "Borrower"), (ii) that as such he is authorized to execute
this certificate on behalf of the Borrower, and (iii) that a review of the
activities of the Borrower has been made under the supervision of the
undersigned with a view to determining whether the Borrower has fulfilled
its obligations under the Loan Agreement (as amended, the "Loan Agreement")
dated March 29, 1995, between the Borrower and Hibernia National Bank (the
"Lender").
To his actual knowledge, the undersigned further certifies, represents
and warrants to the Lender on behalf of the Borrower, as follows (each
capitalized term used herein having the same meaning given to it in the
Loan Agreement unless otherwise specified):
1. The representations and warranties of the Borrower contained in
the Loan Agreement were true and correct when made, and are repeated at and
as of the time of delivery hereof and are true and correct at and as of the
time of delivery hereof, except as such representations and warranties
relate to matters that are permitted by the Loan Agreement or by the Lender
pursuant to the Loan Agreement.
2. The Borrower has performed and complied with all agreements and
conditions contained in the Loan Agreement required to be performed or
complied with by it prior to or at the time of delivery hereof.
3. The Borrower has not incurred any material liabilities, direct or
contingent, and no litigation has been filed against the Borrower, since
the last day of the fiscal year of the Borrower for which financial
statements have been furnished to the Lender pursuant to the Loan
Agreement, except those material liabilities consented to by the Lender or
others permitted by the Loan Agreement.
4. No material adverse changes have occurred, either in any case or
in the aggregate, in the assets, liabilities, financial condition,
business, operations, affairs or circumstances of the Borrower from those
reflected in the financial statements referred to in Paragraph 3 hereof.
52555_4<PAGE>
<PAGE>
5. There exists no Event of Default under the Loan Agreement or any
condition, event or act which constitutes, or with notice or lapse of time
(or both) would constitute, an event of default under any loan agreement,
note agreement, guaranty or trust indenture to which the Borrower is a
party.
DATED:
CONNECTICUT GENERAL REALTY
INVESTORS III LIMITED PARTNERSHIP
By: CIGNA Realty Resources, Inc. -
Fifth, General Partner
By:
Name:
Title:
52555_4<PAGE>
