U.S. $20,000,000
SENIOR SUBORDINATED TERM LOAN AGREEMENT
DATED AS OF OCTOBER 15, 1998
BETWEEN
MERRY LAND PROPERTIES, INC.
as Borrower,
and
MERRY LAND & INVESTMENT COMPANY, INC.
as Lender
TABLE OF CONTENTS
I DEFINITIONS...................................................1
Section 1.1 Definitions......................................1
Section 1.2 Accounting Terms and Determinations.............19
II AMOUNT AND TERMS OF LOAN.....................................19
Section 2.1 Loan............................................19
Section 2.2 Interest on the Loan............................20
Section 2.3 Application of Payments.........................21
Section 2.4 Mandatory Prepayments...........................21
Section 2.5 Optional Prepayments............................21
Section 2.6 General Provisions as to Payments...............22
Section 2.7 Computation of Interest.........................22
III CONDITIONS...................................................22
Section 3.1 Closing.........................................22
IV REPRESENTATIONS AND WARRANTIES...............................24
Section 4.1 Existence and Power.............................24
Section 4.2 Power and Authority.............................24
Section 4.3 No Violation....................................24
Section 4.4 Financial Information...........................25
Section 4.5 Litigation......................................25
Section 4.6 Compliance with ERISA...........................25
Section 4.7 Environmental Matters...........................26
Section 4.8 Taxes...........................................26
Section 4.9 Full Disclosure.................................26
Section 4.10 Solvency.......................................26
Section 4.11 Governmental Approvals.........................26
Section 4.12 Investment Company Act; Public Utility
Holding Company Act...........................27
Section 4.13 Principal Offices..............................27
Section 4.14 Patents, Trademarks, etc.......................27
Section 4.15 Ownership of Property..........................27
Section 4.16 No Default.....................................27
Section 4.17 Licenses, etc..................................27
Section 4.18 Compliance With Law............................27
Section 4.19 No Burdensome Restrictions.....................27
Section 4.20 Brokers' Fees..................................28
Section 4.21 Labor Matters..................................28
Section 4.22 Insurance......................................28
Section 4.23 Organizational Documents.......................28
Section 4.24 Qualifying Unencumbered Properties.............28
Section 4.25 Investment Affiliates..........................28
V AFFIRMATIVE AND NEGATIVE COVENANTS...........................29
Section 5.1 Information.....................................29
Section 5.2 Payment of Obligations..........................32
Section 5.3 Maintenance of Property; Insurance; Leases......32
Section 5.4 Conduct of Business and Maintenance of
Existence.......................................32
Section 5.5 Compliance with Laws............................32
Section 5.6 Inspection of Property, Books and Records.......32
Section 5.7 Existence.......................................33
Section 5.8 Financial Covenants.............................33
Section 5.9 Restriction on Fundamental Changes..............33
Section 5.10 Changes in Business............................34
Section 5.11 Loans..........................................34
Section 5.12 Investment Affiliates..........................34
Section 5.13 Transactions with Affiliates...................34
Section 5.14 Guaranteed Indebtedness........................35
Section 5.15 Payments to an Affiliate.......................35
Section 5.16 Materials of Environmental Concern.............35
VI DEFAULTS.....................................................35
Section 6.1 Events of Default...............................35
Section 6.2 Rights and Remedies.............................37
VII SUBORDINATION................................................38
Section 7.1 Agreement to Subordinate........................38
Section 7.2 Liquidation, Dissolution, Bankruptcy............38
Section 7.3 Default on Senior Indebtedness and
Prepayment and Acceleration...................39
Section 7.4 When Distribution Must Be Paid Over.............39
Section 7.5 Actions With Respect to Senior Indebtedness.....39
Section 7.6 Subrogation.....................................40
Section 7.7 Relative Rights.................................40
Section 7.8 Subordination May Not Be Impaired by Borrower...40
Section 7.9 Lender Entitled to Rely.........................40
Section 7.10 Notice to, and Acknowledgment by, Lender.......40
VIII TAXES.......................................................41
IX MISCELLANEOUS................................................42
Section 9.1 Notices.........................................42
Section 9.2 No Waivers......................................42
Section 9.3 Expenses; Indemnification.......................42
Section 9.4 Set-Off.........................................43
Section 9.5 Amendments and Waivers..........................44
Section 9.6 Successors and Assigns..........................44
Section 9.7 Governing Law; Submission to Jurisdiction.......44
Section 9.8 Counterparts; Integration; Effectiveness........44
Section 9.9 WAIVER OF JURY TRIAL............................45
Section 9.10 Survival.......................................45
Section 9.11 Limitation of Liability........................45
Section 9.12 Recourse Obligation............................45
Section 9.13 Confidentiality................................45
SENIOR SUBORDINATED TERM LOAN AGREEMENT
THIS SENIOR SUBORDINATED TERM LOAN AGREEMENT (this "Agreement"), dated
as of October 15, 1998, among MERRY LAND PROPERTIES, INC. a Georgia
corporation ("Borrower"), and MERRY LAND & INVESTMENT COMPANY, INC., a
Georgia corporation ("Lender").
R E C I T A L
Borrower desires that Lender extend $20,000,000 in subordinated
financing to Borrower, and Lender is willing to extend $20,000,000 in
subordinated financing to Borrower subject to the terms and conditions set
forth herein.
ACCORDINGLY, in consideration of premises and the mutual agreements
contained herein, and subject to the terms and conditions hereof, the
parties hereto agree as follows:
ARTICLE I
DEFINITIONS
Section 0.0 DEFINITIONS. The following terms, as used herein, have
the following meanings:
"ACCOMMODATION OBLIGATIONS" as applied to any Person, means any
obligation, contingent or otherwise, of that Person in respect of
which that Person is liable for any Indebtedness or other obligation
or liability of another Person, including without limitation and
without duplication (i) any such Indebtedness, obligation or liability
directly or indirectly guaranteed, endorsed (otherwise than for
collection or deposit in the ordinary course of business), co-made or
discounted or sold with recourse by that Person, or in respect of
which that Person is otherwise directly or indirectly liable,
including Contractual Obligations (contingent or otherwise) arising
through any agreement to purchase, repurchase or otherwise acquire
such Indebtedness, obligation or liability or any security therefor,
or to provide funds for the payment or discharge thereof (whether in
the form of loans, advances, stock purchases, capital contributions or
otherwise), or to maintain solvency, assets, level of income, or other
financial condition, or to make payment other than for value received
and (ii) any obligation of such Person arising through such Person's
status as a general partner of a general or limited partnership with
respect to any Indebtedness, obligation or liability of such general
or limited partnership.
"ADJUSTED ASSET VALUE" means, with respect to any Person or
Property (exclusive of Participating Assets), (i) for any Property
(other than Unimproved Assets or Participating Assets) for which an
acquisition or disposition has not occurred in the Fiscal Quarter most
recently ended by the Borrower and its Consolidated Subsidiaries, the
product of four (4) and a fraction, the numerator of which is EBITDA
for such Fiscal Quarter attributable to any such Property owned by the
Borrower or any such Consolidated Subsidiary minus (aa) with respect
to any apartment units contained in such Property, an amount equal to
the product of the average number of apartment units in such Property
during such period and the Capital Apartment Reserve for such period,
and minus (bb) with respect to any commercial property other than
apartments units contained in such Property, an amount equal to the
product of the average number of square feet of leased space in such
commercial property other than apartments units contained in such
Property and the Capital Commercial Reserve for such period, and the
denominator of which is the FMV Cap Rate, plus (ii) for any Property
(other than Unimproved Assets or Participating Assets) which has been
acquired by the Borrower and its Consolidated Subsidiaries in the
Fiscal Quarter most recently ended, the Net Price of the Property paid
by Borrower or the Consolidated Subsidiary, plus (iii) for any
Unimproved Assets owned by the Borrower or its Consolidated
Subsidiaries on the Effective Date, the lesser of (yy) the appraised
value on the Effective Date of such Unimproved Assets owned by the
Borrower or any Consolidated Subsidiary, or (zz) the amount set forth
on Schedule 1.1A attached hereto with respect to such Unimproved
Assets, provided, however, that if Borrower has commenced the
construction of improvements on any such Unimproved Asset and a loan
facility for such construction is in place, the value thereof shall be
equal to the amount reflected on Borrower's balance sheet for
"construction in progress" with respect to such Unimproved Asset, plus
(iv) for any Unimproved Assets acquired by the Borrower and its
Consolidated Subsidiaries after the Effective Date, the Net Price of
the Unimproved Assets paid by Borrower or the Consolidated Subsidiary,
provided, however, that if Borrower has commenced the construction of
improvements on any such Unimproved Asset and a loan facility for such
construction is in place, the value thereof shall be equal to the
amount reflected on Borrower's balance sheet for "construction in
progress" with respect to such Unimproved Asset.
"AFFILIATE" shall mean with respect to any Person (i) each Person
that, directly or indirectly, owns or controls, whether beneficially,
or as a trustee, guardian or other fiduciary, 5% or more of the Stock
having ordinary voting power in the election of directors of such
Person, (ii) each Person that controls, is controlled by or is under
common control with such Person or any Affiliate of such Person, or
(iii) each of such Person's officers, directors, joint venturers and
partners. For the purpose of this definition, "control" of a Person
shall mean the possession, directly or indirectly, of the power to
direct or cause the direction of its management or policies, whether
through the ownership of voting securities, by contract or otherwise.
"AGREEMENT" shall mean this Senior Subordinated Term Loan
Agreement as the same may from time to time hereafter be modified,
supplemented or amended.
"APPLICABLE INTEREST RATE" means (i) with respect to any Fixed
Rate Indebtedness, the fixed interest rate applicable to such Fixed
Rate Indebtedness at the time in question, and (ii) with respect to
any Floating Rate Indebtedness, either (x) the rate at which the
interest rate applicable to such Floating Rate Indebtedness is
actually capped (or fixed pursuant to an interest rate hedging
device), at the time of calculation, if Borrower has entered into an
interest rate cap agreement or other interest rate hedging device with
respect thereto or (y) if Borrower has not entered into an interest
rate cap agreement or other interest rate hedging device with respect
to such Floating Rate Indebtedness, the greater of (A) the rate at
which the interest rate applicable to such Floating Rate Indebtedness
could be fixed for the remaining term of such Floating Rate
Indebtedness, at the time of calculation, by Borrower's entering into
any unsecured interest rate hedging device either not requiring an
upfront payment or if requiring an upfront payment, such upfront
payment shall be amortized over the term of such device and included
in the calculation of the interest rate (or, if such rate is incapable
of being fixed by entering into an unsecured interest rate hedging
device at the time of calculation, a fixed rate equivalent reasonably
determined by Lender) or (B) the floating rate applicable to such
Floating Rate Indebtedness at the time in question.
"APPROVED BANK" shall mean banks which have (i)(a) a minimum net
worth of $500,000,000 and/or (b) total assets of $10,000,000,000, and
(ii) a minimum long term debt rating of (a) BBB+ or higher by S&P, and
(b) Baa1 or higher by Xxxxx'x.
"ASSET EXCHANGE AGREEMENT" shall mean the Asset Exchange
Agreement, dated as of October 15, 1998, between Lender and Borrower,
including all amendments, modifications and supplements thereto and
any appendices, exhibits or schedules to any of the foregoing, and
shall refer to the Asset Exchange Agreement as the same may be in
effect at the time such reference becomes operative.
"BANKRUPTCY CODE" shall mean Title 11 of the United States Code,
entitled "Bankruptcy", as amended from time to time, and any successor
statute or statutes.
"BENEFIT ARRANGEMENT" means at any time an employee benefit plan
within the meaning of Section 3(3) of ERISA which is not a Plan or a
Multiemployer Plan and which is maintained or otherwise contributed to
by any member of the ERISA Group.
"BORROWER" means Merry Land Properties, Inc., a Georgia
corporation.
"BORROWER'S SHARE" means Borrower's share of the liabilities or
assets, as the case may be, of a Consolidated Subsidiary based upon
Borrower's percentage ownership of such Consolidated Subsidiary, as
the case may be.
"CAPITAL LEASES" as applied to any Person, means any lease of any
property (whether real, personal or mixed) by that Person as lessee
which, in conformity with GAAP, is or should be accounted for as a
capital lease on the balance sheet of that Person.
"CAPITAL APARTMENT RESERVE" shall mean, for any period, $62.50
for each Fiscal Quarter to occur during such period.
"CAPITAL COMMERCIAL RESERVE" shall mean, for any period, $1.00
for each Fiscal Quarter to occur during such period.
"CAPITAL EXPENDITURES" as applied to any Person, means all
payments, including, without limitation, payments under Capital
Leases, for any fixed assets or improvements, or replacements,
substitutions or additions thereto, that have a useful life of more
than one year and which are required to be capitalized under GAAP.
"CASH AND CASH EQUIVALENTS" shall mean (i) cash, (ii) direct
obligations of the United States Government, including without
limitation, treasury bills, notes and bonds, (iii) interest bearing or
discounted obligations of Federal agencies and Government sponsored
entities or pools of such instruments offered by Approved Banks and
dealers, including without limitation, Federal Home Loan Mortgage
Corporation participation sale certificates, Government National
Mortgage Association modified pass through certificates, Federal
National Mortgage Association bonds and notes, and Federal Farm Credit
System securities, (iv) time deposits, domestic and eurodollar
certificates of deposit, bankers acceptances, commercial paper rated
at least A-1 by S&P and P-1 by Xxxxx'x and/or guaranteed by an Aa
rating by Xxxxx'x, a AA rating by S&P or better rated credit, floating
rate notes, other money market instruments and letters of credit each
issued by Approved Banks (provided that the same shall cease to be a
"Cash or Cash Equivalent" if at any time any such bank shall cease to
be an Approved Bank), (v) obligations of domestic corporations,
including, without limitation, commercial paper, bonds, debentures and
loan participations, each of which is rated at least AA by S&P and/or
Aa2 by Xxxxx'x and/or guaranteed by an Aa rating by Xxxxx'x, a AA
rating by S&P or better rated credit, (vi) obligations issued by
states and local governments or their agencies, rated at least MIG-1
by Xxxxx'x and/or SP-1 by S&P and/or guaranteed by an irrevocable
letter of credit of an Approved Bank (provided that the same shall
cease to be a "Cash or Cash Equivalent" if at any time any such bank
shall cease to be an Approved Bank), (vii) repurchase agreements with
major banks and primary government security dealers fully secured by
the U.S. Government or agency collateral equal to or exceeding the
principal amount on a daily basis and held in safekeeping, and
(viii) real estate loan pool participations, guaranteed by an AA
rating given by S&P or Aa2 rating given by Xxxxx'x or better rated
credit.
"CHANGE OF CONTROL" shall mean one or more of the following
events:
(a) less than a majority of the members of Borrower's Board of
directors shall be persons who either (i) were serving as directors on
the Closing Date or (ii) were nominated as directors and approved by
the vote of the majority of the directors who are directors referred
to in clause (i) above or this clause (ii); or
(b) the stockholders of Borrower shall approve any plan or
proposal for the liquidation or dissolution of Borrower; or
(c) a Person or group of Persons acting in concert (other than
the direct or indirect beneficial owners of the capital stock of
Borrower as of the Closing Date) shall, as a result of a tender or
exchange offer, open market purchases, privately negotiated purchases
or otherwise, have become the direct or indirect beneficial owner
(within the meaning of Rule 13d-3 under the Exchange Act) of
securities of Borrower representing more than thirty percent (30%) of
the combined voting power of the outstanding voting securities for the
election of directors or shall have the right to elect a majority of
the Board of Directors of Borrower.
"CLOSING DATE" means the date on or after the Effective Date on
which the conditions set forth in Article III shall have been
satisfied to the satisfaction of Lender.
"CODE" shall mean the Internal Revenue Code of 1986, as amended,
and as it may be further amended from time to time, any successor
statutes thereto, and applicable U.S. Department of Treasury
regulations issued pursuant thereto in temporary or final form.
"CONSOLIDATED SUBSIDIARY" means at any date any Subsidiary or
other entity which is consolidated with Borrower in accordance with
GAAP.
"CONTINGENT OBLIGATION" as to any Person means, without
duplication, (i) any contingent obligation of such Person required to
be shown on such Person's balance sheet in accordance with GAAP, and
(ii) any obligation required to be disclosed in the footnotes to such
Person's financial statements, guaranteeing partially or in whole any
Non-Recourse Indebtedness, lease, dividend or other obligation,
exclusive of contractual indemnities (including, without limitation,
any indemnity or price-adjustment provision relating to the purchase
or sale of securities or other assets) and guarantees of non-monetary
obligations (other than guarantees of completion) which have not yet
been called on or quantified, of such Person or of any other Person.
The amount of any Contingent Obligation described in clause (ii) shall
be deemed to be (a) with respect to a guaranty of interest or interest
and principal, or operating income guaranty, the Net Present Value of
the sum of all payments required to be made thereunder (which in the
case of an operating income guaranty shall be deemed to be equal to
the debt service for the note secured thereby), calculated at the
Applicable Interest Rate, through (i) in the case of an interest or
interest and principal guaranty, the stated date of maturity of the
obligation (and commencing on the date interest could first be payable
thereunder), or (ii) in the case of an operating income guaranty, the
date through which such guaranty will remain in effect, and (b) with
respect to all guarantees not covered by the preceding clause (a), an
amount equal to the stated or determinable amount of the primary
obligation in respect of which such guaranty is made or, if not stated
or determinable, the maximum reasonably anticipated liability in
respect thereof (assuming such Person is required to perform
thereunder) as recorded on the balance sheet and on the footnotes to
the most recent financial statements of Borrower required to be
delivered pursuant to Section 4.4 hereof. Notwithstanding anything
contained herein to the contrary, guarantees of completion shall not
be deemed to be Contingent Obligations unless and until a claim for
payment or performance has been made thereunder, at which time any
such guaranty of completion shall be deemed to be a Contingent
Obligation in an amount equal to any such claim. Subject to the
preceding sentence, (i) in the case of a joint and several guaranty
given by such Person and another Person (but only to the extent such
guaranty is recourse, directly or indirectly to Borrower), the amount
of the guaranty shall be deemed to be 100% thereof unless and only to
the extent that such other Person has delivered Cash or Cash
Equivalents to secure all or any part of such Person's guaranteed
obligations and (ii) in the case of a guaranty (whether or not joint
and several) of an obligation otherwise constituting Indebtedness of
such Person, the amount of such guaranty shall be deemed to be only
that amount in excess of the amount of the obligation constituting
Indebtedness of such Person. Notwithstanding anything contained
herein to the contrary, "Contingent Obligations" shall be deemed not
to include guarantees of Unused Commitments or of construction loans
to the extent the same have not been drawn. All matters constituting
"Contingent Obligations" shall be calculated without duplication.
"CONTRACTUAL OBLIGATION," as applied to any Person, means any
provision of any Securities issued by that Person or any indenture,
mortgage, deed of trust, lease, contract, undertaking, document or
instrument to which that Person is a party or by which it or any of
its properties is bound, or to which it or any of its properties is
subject (including without limitation any restrictive covenant
affecting such Person or any of its properties).
"CONVERTIBLE SECURITIES" means evidences of shares of stock,
limited or general partnership interests or other ownership interests,
warrants, options, or other rights or securities which are convertible
into or exchangeable for, with or without payment of additional
consideration, shares of common stock of Borrower, either immediately
or upon the arrival of a specified date or the happening of a
specified event.
"DEBT RESTRUCTURING" means a restatement of, or material change
in, the amortization or other financial terms of any Indebtedness of
the Borrower or any Consolidated Subsidiary.
"DEBT SERVICE" means, for any period, Interest Expense for such
period PLUS scheduled principal amortization (excluding any individual
scheduled principal payment which exceeds 25% of the original
principal amount of an issuance of Indebtedness) for such period on
all Indebtedness of Borrower, on a consolidated basis.
"DEFAULT" means any condition or event which with the giving of
notice or lapse of time or both would, unless cured or waived, become
an Event of Default.
"DOMESTIC BUSINESS DAY" means any day except a Saturday, Sunday
or other day on which commercial banks in New York City are authorized
by law to close.
"EBITDA" means, for any period (i) Net Income for such period,
PLUS (ii) depreciation and amortization expense and other non-cash
items deducted in the calculation of Net Income for such period, PLUS
(iii) Interest Expense deducted in the calculation of Net Income for
such period, PLUS, (iv) Taxes deducted in the calculation of Net
Income for such period, MINUS (v) the gains (and PLUS the losses) from
extraordinary items or asset sales or write-ups or forgiveness of
indebtedness included in the calculation of Net Income, for such
period, MINUS (vi) earnings of Subsidiaries for such period
distributed to third parties, all of the foregoing without
duplication. In calculating EBITDA, the effect of the Participating
Assets and the Participating Loans shall be excluded.
"EFFECTIVE DATE" means the date this Agreement becomes effective
in accordance with Section 9.8.
"ENVIRONMENTAL AFFILIATE" means any partnership, joint venture,
trust or corporation in which an equity interest is owned by the
Borrower, either directly or indirectly, and, as a result of the
ownership of such equity interest, the Borrower may have recourse
liability for Environmental Claims against such partnership, joint
venture or corporation (or the property thereof).
"ENVIRONMENTAL APPROVALS" means any permit, license, approval,
ruling, variance, exemption or other authorization required under
applicable Environmental Laws.
"ENVIRONMENTAL CLAIM" means, with respect to any Person, any
notice, claim, demand or similar communication (written or oral) by
any other Person alleging potential liability of such Person for
investigatory costs, cleanup costs, governmental response costs,
natural resources damage, property damages, personal injuries, fines
or penalties arising out of, based on or resulting from (i) the
presence, or release into the environment, of any Materials of
Environmental Concern at any location, whether or not owned by such
Person or (ii) circumstances forming the basis of any violation, or
alleged violation, of any Environmental Law, in each case (with
respect to both (i) and (ii) above) as to which there is a reasonable
possibility of an adverse determination with respect thereto and
which, if adversely determined, would have a Material Adverse Effect
on the Borrower.
"ENVIRONMENTAL LAWS" means any and all federal, state, and local
statutes, laws, judicial decisions, regulations, ordinances, rules,
judgments, orders, decrees, plans, injunctions, permits, concessions,
grants, licenses, agreements and other governmental restrictions
relating to the environment, the effect of the environment on human
health or to emissions, discharges or releases of Materials of
Environmental Concern into the environment including, without
limitation, ambient air, surface water, ground water, or land, or
otherwise relating to the manufacture, processing, distribution, use,
treatment, storage, disposal, transport or handling of Materials of
Environmental Concern or the clean up or other remediation thereof.
"ERISA" means the Employee Retirement Income Security Act of
1974, as amended, or any successor statute.
"ERISA GROUP" means the Borrower, any Subsidiary and all members
of a controlled group of corporations and all trades or businesses
(whether or not incorporated) under common control which, together
with the Borrower or any Subsidiary, are treated as a single employer
under Section 414 of the Code.
"EVENT OF DEFAULT" has the meaning set forth in Section 6.1.
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as
amended.
"FEDERAL RESERVE BOARD" means the Board of Governors of the
Federal Reserve System as constituted from time to time.
"FISCAL QUARTER" means a fiscal quarter of a Fiscal Year.
"FISCAL YEAR" means the fiscal year of Borrower which shall be
the twelve (12) month period ending on the last day of December in
each year.
"FIXED CHARGES" for any Fiscal Quarter period means the sum of
(i) Debt Service for such period, (ii) the product of the average
number of apartment units owned (directly or beneficially) by Borrower
or any Subsidiary of Borrower during such period and the Capital
Apartment Reserve for such Period, (iii) the product of the average
number of square feet of commercial property other than apartment
units owned (directly or beneficially) by Borrower or any Subsidiary
of Borrower during such period and the Capital Commercial Reserve for
such Period, and (iv) dividends on preferred shares in Borrower
payable by Borrower for such period.
"FIXED RATE INDEBTEDNESS" means all Indebtedness which accrues
interest at a fixed rate.
"FLOATING RATE INDEBTEDNESS" means all Indebtedness which is not
Fixed Rate Indebtedness and which is not a Contingent Obligation or an
Unused Commitment.
"FUNDS AVAILABLE FOR DISTRIBUTION" as applied to any Person (and
without duplication) means (i) Net Income, MINUS (ii) Capital
Expenditures, PLUS (iii) depreciation and amortization, but only to
the extent deducted in the calculation of Net Income.
"FMV CAP RATE" means 9.5%.
"GAAP" means generally accepted accounting principles recognized
as such in the opinions and pronouncements of the Accounting
Principles Board and the American Institute of Certified Public
Accountants and the Financial Accounting Standards Board or in such
other statements by such other entity as may be approved by a
significant segment of the accounting profession, which are applicable
to the circumstances as of the date of determination.
"GROSS ASSET VALUE" means, with respect to any Person or
Property, Adjusted Asset Value plus, in the case of any Person, the
value of any Cash or Cash Equivalent owned by such Person and not
subject to any Lien.
"INDEBTEDNESS" as applied to any Person (without duplication and
excluding, in any event, the principal amount of any currently
outstanding Participating Loans), means (a) all indebtedness,
obligations or other liabilities of such Person for borrowed money,
(b) all indebtedness, obligations or other liabilities of such Person
evidenced by Securities or other similar instruments, (c) all
Contingent Obligations of such Person, (d) all reimbursement
obligations and other liabilities of such Person with respect to
letters of credit or banker's acceptances issued for such Person's
account or other similar instruments for which a contingent liability
exists, (e) all obligations of such Person to pay the deferred
purchase price of Property or services, (f) all obligations in respect
of Capital Leases (including ground leases) of such Person, (g) all
indebtedness obligations or other liabilities of such Person or others
secured by a Lien on any asset of such Person, whether or not such
indebtedness, obligations or liabilities are assumed by, or are a
personal liability of such Person, (h) all indebtedness, obligations
or other liabilities (other than interest expense liability) in
respect of Interest Rate Contracts and foreign currency exchange
agreements (other than Interest Rate Contracts purchased to hedge
Indebtedness), (i) ERISA obligations currently due and payable and
(j) all other items which, in accordance with GAAP, would be included
as liabilities on the liability side of the balance sheet of such
Person.
"INDEMNITEE" has the meaning set forth in Section 9.3(b).
"INTEREST EXPENSE" means, for any period and without duplication,
total interest expense, whether paid, accrued or capitalized
(including the interest component of Capital Leases but excluding
interest expense covered by an interest reserve established under a
loan facility and any interest expense with respect to a currently
outstanding Participating Loan) of Borrower, on a consolidated basis,
including without limitation all commissions, discounts and other fees
and charges owed with respect to drawn letters of credit, amortized
costs of Interest Rate Contracts incurred on or after the Closing
Date, calculated for all Fixed Rate Indebtedness, at the actual
interest rate in effect with respect to all Indebtedness outstanding
as of the last day of such Fiscal Quarter and in the case of all
Floating Rate Indebtedness, the greater of (i) (A) the Treasury Rate
plus 1.50% for taxable Indebtedness and (B) 6.0% for tax-exempt
Indebtedness, (ii) the actual rate of interest in effect with respect
to such Floating Rate Indebtedness outstanding for which no Interest
Rate Contract is in effect as of the last day of such quarter and
(iii) if an Interest Rate Contract is in effect with respect to such
Floating Rate Indebtedness, the strike rate payable under such
Interest Rate Contract, all determined on an annualized basis.
"INTEREST PAYMENT DATE" shall have the meaning assigned to such
term in Section 2.2(a) hereof.
"INTEREST RATE CONTRACTS" means, collectively, interest rate
swap, collar, cap or similar agreements providing interest rate
protection.
"INVESTMENT AFFILIATE" means any Person in whom Borrower holds an
equity interest, directly or indirectly, whose financial results are
not consolidated under GAAP with the financial results of Borrower on
the consolidated financial statements of Borrower.
"JUNIOR SUBORDINATED INDEBTEDNESS" shall mean Indebtedness of
Borrower or any of its Subsidiaries which is unsecured and which is
subordinated to the Obligations in a manner and form satisfactory to
Lender, in its sole discretion, as to right and time of payment and as
to any other rights and remedies thereunder.
"LENDER" means Merry Land & Investment Company, Inc., a Georgia
corporation, and its successors and assigns.
"LIEN" means, with respect to any asset, any mortgage, lien,
pledge, charge, security interest or encumbrance of any kind, or any
other type of preferential arrangement, in each case that has the
effect of creating a security interest, in respect of such asset. For
the purposes of this Agreement, the Borrower or any Subsidiary of
Borrower shall be deemed to own subject to a Lien any asset which it
has acquired or holds subject to the interest of a vendor or lessor
under any conditional sale agreement, capital lease or other title
retention agreement relating to such asset.
"LOAN" has the meaning set forth in Section 2.1(a).
"LOAN DOCUMENTS" means this Agreement and the Note.
"MARGIN STOCK" shall have the meaning provided such term in
Regulation U and Regulation G of the Federal Reserve Board.
"MATERIAL ADVERSE EFFECT" means an effect resulting from any
circumstance or event or series of circumstances or events, of
whatever nature (but excluding general economic conditions), which
does or could reasonably be expected to, materially and adversely
(i) affect the business, operations, properties, assets or financial
condition of the Borrower and its Consolidated Subsidiaries taken as a
whole, (ii) impair the ability of the Borrower and its Consolidated
Subsidiaries, taken as a whole, to perform their respective
obligations under the Loan Documents, or (iii) cause a Default under
Sections 5.8, 5.9 or 5.12. Circumstances or events with respect to
the Participating Assets and Participating Loans (other than
liabilities incurred with respect to the Participating Assets which in
the aggregate exceed the Adjusted Asset Value thereof and for which
the Borrower or any of its Subsidiaries would be legally responsible)
shall not be taken into consideration in the determination of a
Material Adverse Effect.
"MATERIAL PLAN" means at any time a Plan or Plans having
aggregate Unfunded Liabilities in excess of $250,000.
"MATERIALS OF ENVIRONMENTAL CONCERN" means and includes
pollutants, contaminants, hazardous wastes, toxic and hazardous
substances, asbestos, lead, petroleum and petroleum by-products.
"MATURITY DATE" shall mean the date when all of the Obligations
hereunder shall be due and payable, which shall be October 15, 2013,
unless accelerated pursuant to the terms hereof.
"XXXXX'X" means Xxxxx'x Investors Services, Inc. or any successor
thereto.
"MULTIEMPLOYER PLAN" means at any time an employee pension
benefit plan within the meaning of Section 4001(a)(3) of ERISA to
which any member of the ERISA Group is then making or accruing an
obligation to make contributions or has within the preceding five plan
years made contributions, including for these purposes any Person
which ceased to be a member of the ERISA Group during such five year
period.
"NET INCOME" means, for any period, the net earnings (or loss)
after Taxes of Borrower, on a consolidated basis, for such period
calculated in conformity with GAAP, but excluding, in any event, the
effect of any Participating Assets or Participating Loans.
"NET OPERATING INCOME" means, for any period with respect to any
Property owned (directly or beneficially) by Borrower or its
wholly-owned Subsidiaries, the net operating income of such Property
(attributed to such Property in a manner reasonably acceptable to
Lender) for such period (i) determined in accordance with GAAP,
(ii) determined in a manner which is consistent with the past
practices of Borrower, and (iii) inclusive of an allocation of
reasonable management fees and administrative costs to each Property
consistent with the past practices of Borrower, except that, for
purposes of determining Net Operating Income, income shall not
(a) include security or other deposits or (b) be reduced by
depreciation or amortization.
"NET PRICE" means, with respect to the purchase and sale of any
Property, without duplication, (i) Cash and Cash Equivalents paid as
consideration for such purchase or sale, PLUS (ii) the principal
amount of any note received or other deferred payment to be made in
connection with such purchase or sale (except as described in
clause (iv) below), PLUS (iii) the value of any other considerations
delivered in connection with such purchase or sale (including, without
limitation, shares of common stock or preferred stock in Borrower) (as
reasonably determined by Lender), MINUS (only in the case of a sale)
(iv) the value of any consideration deposited into escrow or subject
to disbursement or claim upon the occurrence of any event, MINUS (only
in the case of a sale) (v) the value of any consideration required to
be paid to any Person other than the Borrower and its Subsidiaries
owning a beneficial interest in such Property, MINUS (vi) reasonable
costs of sale and taxes paid or payable in connection with such
purchase or sale.
"NET PRESENT VALUE" shall mean, as to a specified or
ascertainable dollar amount, the present value, as of the date of
calculation of any such amount using a discount rate equal to the Base
Rate in effect as of the date of such calculation.
"NON-RECOURSE INDEBTEDNESS" means Indebtedness with respect to
which recourse for payment is limited to (i) specific assets related
to a particular Property or group of Properties encumbered by a Lien
securing such Indebtedness or (ii) any Subsidiary (provided that if a
Subsidiary is a partnership, there is no recourse to Borrower as a
general partner of such partnership); provided, however, that personal
recourse of Borrower for any such Indebtedness for fraud,
misrepresentation, misapplication of cash, waste, environmental claims
and liabilities and other circumstances customarily excluded by
institutional lenders from exculpation provisions and/or included in
separate indemnification agreements in non-recourse financing of real
estate shall not, by itself, prevent such Indebtedness from being
characterized as Non-Recourse Indebtedness.
"NOTE" has the meaning set forth in Section 2.1(a).
"NOTE INTEREST RATE" shall mean during each year following the
Closing Date the rate set forth in the following schedule opposite
such year:
YEAR RATE
---- ----
First, Second,
Third, Fourth and
Fifth 8.0%
Sixth 8.25%
Seventh 8.50%
Eighth 8.75%
Ninth 9.0%
Tenth 9.25%
Eleventh 9.75%
Twelfth 10.50%
Thirteenth 11.50%
Fourteenth 12.75%
Fifteenth and
thereafter 14.25%
"OBLIGATIONS" means all obligations, liabilities, indemnity
obligations and Indebtedness of every nature of the Borrower from time
to time owing to Lender, under or in connection with this Agreement or
any other Loan Document.
"PBGC" means the Pension Benefit Guaranty Corporation or any
entity succeeding to any or all of its functions under ERISA.
"PARTICIPATING ASSETS" means those assets more fully described on
Schedule 1.1B hereto, but only for so long as such assets are subject
to Participating Loans.
"PARTICIPATING LOANS" means certain Non-Recourse Indebtedness
held by Lender which are currently in effect with respect to and are
secured by the Participating Assets.
"PERMITTED LIENS" means:
(a) Liens for Taxes, assessments or other governmental
charges not yet due and payable or which are being contested in
good faith by appropriate proceedings promptly instituted and
diligently conducted in accordance with the terms hereof;
(b) statutory liens of carriers, warehousemen, mechanics,
materialmen and other similar liens imposed by law, which are
incurred in the ordinary course of business for sums not more
than sixty (60) days delinquent or which are being contested in
good faith in accordance with the terms hereof;
(c) deposits made in the ordinary course of business to
secure liabilities to insurance carriers;
(d) Liens for purchase money obligations for equipment;
PROVIDED that (i) the Indebtedness secured by any such Lien does
not exceed the purchase price of such equipment, (ii) any such
Lien encumbers only the asset so purchased and the proceeds upon
sale, disposition, loss or destruction thereof, and (iii) such
Lien, after giving effect to the Indebtedness secured thereby,
does not give rise to an Event of Default;
(e) easements, rights-of-way, zoning restrictions, other
similar charges or encumbrances and all other items listed on
Schedule B to the owner's title insurance policies, except in
connection with any Indebtedness, for any of the Real Property
Assets, so long as the foregoing do not interfere in any material
respect with the use or ordinary conduct of the business of the
owner and do not diminish in any material respect the value of
the Property to which it is attached or for which it is listed;
(f) Liens and judgments which have been or will be bonded or
released of record within thirty (30) days after the date such
Lien or judgment is entered or filed against Borrower, or any
Subsidiary;
(g) Liens, including Participating Liens on Assets to secure
Participating Loans, on Property of the Borrower or its
Subsidiaries (other than Qualifying Unencumbered Property)
securing Indebtedness which may be incurred or remain outstanding
without resulting in an Event of Default hereunder; and
(h) Liens in favor of the Borrower against any asset of any
wholly-owned Subsidiary of the Borrower.
"PERSON" means an individual, a corporation, a partnership, an
association, a trust or any other entity or organization, including a
government or political subdivision or an agency or instrumentality
thereof.
"PLAN" means at any time an employee pension benefit plan (other
than a Multiemployer Plan) which is covered by Title IV of ERISA or
subject to the minimum funding standards under Section 412 of the Code
and either (i) is maintained, or contributed to, by any member of the
ERISA Group for employees of any member of the ERISA Group or (ii) has
at any time within the preceding five years been maintained, or
contributed to, by any Person which was at such time a member of the
ERISA Group for employees of any Person which was at such time a
member of the ERISA Group.
"PREFERRED STOCK" shall mean Borrower's Redeemable Cumulative
Preferred Stock, bearing dividends at the rate and having the terms
and rights set forth in Borrower's Certificate of Incorporation as in
effect on the Effective Date.
"PREFERRED STOCK OBLIGATIONS" means, as of the date of
determination and without duplication, the liquidation value of the
outstanding Preferred Stock and all accumulated and unpaid dividends
thereon, together with any accrued and unpaid interest thereon.
"PROPERTY" means, with respect to any Person, any real or
personal property, building, facility, structure, equipment or unit,
or other asset owned by such Person.
"PURCHASE AND SALE AGREEMENT" shall mean the Purchase and Sale
Agreement, dated as of October 15, 1998, between ERP Operating Limited
Partnership and Borrower, including all amendments, modifications and
supplements thereto and any appendices, exhibits or schedules to any
of the foregoing, and shall refer to the Purchase and Sale Agreement
as the same may be in effect at the time such reference becomes
operative.
"QUALIFYING UNENCUMBERED PROPERTY" means any Real Property Asset
from time to time which (i) is wholly-owned (directly or beneficially)
by Borrower, (ii) is not subject (nor are any equity interests in such
Property subject) to a Lien which secures Indebtedness of any Person
other than Permitted Liens, and (iii) is not subject (nor are any
equity interests in such Property subject) to any covenant, condition,
or other restriction which prohibits or limits the creation or
assumption of any Lien upon such Property (it being understood that
covenants similar to those set forth in Section 5.8 hereof shall not
be deemed to constitute any such prohibition or limitation). In
addition, in the case of any Property that is owned by a Subsidiary of
Borrower, if such Subsidiary shall commence any proceeding under any
bankruptcy, insolvency or similar law, or any such involuntary case
shall be commenced against it and shall remain undismissed and
unstayed for a period of 60 days, then, simultaneously with the
occurrence of such conditions, such Property shall no longer
constitute a Qualifying Unencumbered Property.
"REAL PROPERTY ASSETS" means as of any time, the real property
assets (including interests in participating mortgages in which the
Borrower's interest therein is characterized as equity according to
GAAP) owned directly or indirectly by the Borrower and its
Consolidated Subsidiaries.
"RELEASE" shall mean any release, threatened release, spill,
emission, leaking, pumping, pouring, emitting, emptying, escape,
injection, deposit, discharge, dispersal, dumping, leaching or
migration of Materials of Environmental Concern in the indoor or
outdoor environment, including the movement of Materials of
Environmental Concern through or in the air, soil, surface water,
ground water or property.
"RECOURSE DEBT" shall mean Indebtedness that is not Non-Recourse
Indebtedness.
"REGULATION U" means Regulation U of the Federal Reserve Board,
as in effect from time to time.
"SALE" shall have the meaning given such term in the Purchase and
Sale Agreement.
"S&P" means Standard & Poor's Ratings Services, a division of The
XxXxxx-Xxxx Companies, Inc., or any successor thereto.
"SECURED DEBT" means Indebtedness of Borrower, on a consolidated
basis, the payment of which is secured by a Lien on any Property owned
or leased by Borrower, or any Subsidiary of Borrower, but excluding in
any event, any Participating Loans.
"SECURITIES" means any stock, partnership interests (other than
Multifamily Residential Property Partnership Interests), shares,
shares of beneficial interest, voting trust certificates, bonds,
debentures, notes or other evidences of indebtedness, secured or
unsecured, convertible, subordinated or otherwise, or in general any
instruments commonly known as "securities," or any certificates of
interest, shares, or participations in temporary or interim
certificates for the purchase or acquisition of, or any right to
subscribe to, purchase or acquire any of the foregoing, but shall not
include any evidence of the obligations.
"SENIOR INDEBTEDNESS" shall mean (i) the principal amount of all
indebtedness arising under the Senior Term Loan Agreement, together
with any interest (including any interest accruing after the
commencement of any bankruptcy proceeding, and any interest which
would have accrued but for the commencement of such proceeding,
whether or not such interest is allowed as an enforceable claim in
such bankruptcy proceeding), premium, if any, and any other amount
(including any fee or expense) due in connection with such
indebtedness under the Senior Term Loan Documents, and (ii) any other
indebtedness for borrowed money of Borrower or any of its Subsidiaries
which by the documents evidencing such indebtedness is designated as
"Senior Indebtedness" by specific reference to this Agreement and
notice of which has been given to, and acknowledged by, Lender
pursuant to Section 7.10 hereof.
"SENIOR LENDER" shall mean Merry Land & Investment Company, Inc.,
its successors and assigns, and any other holder of Senior
Indebtedness.
"SENIOR TERM LOAN AGREEMENT" shall mean the Senior Term Loan
Agreement, dated as of October 15, 1998, by and between Borrower and
Merry Land & Investment Company, Inc.
"SENIOR TERM LOAN DOCUMENTS" shall mean (i) the Senior Term Loan
Agreement, together with all exhibits thereto, all other documents,
agreements and instruments executed in connection therewith and all
amendments and supplements thereto, and (ii) the loan documents
evidencing any other Senior Indebtedness.
"SOLVENT" means, with respect to any Person, that the fair
saleable value of such Person's assets exceeds the Indebtedness of
such Person.
"SUBSIDIARY" means any corporation or other entity of which
securities or other ownership interests having ordinary voting power
to elect a majority of the board of directors or other persons
performing similar functions are at the time directly or indirectly
owned by the Borrower.
"TAXES" means all federal, state, local and foreign income and
gross receipts taxes, but excluding any of the foregoing which arise
as a result of the Participating Assets or Participating Loans.
"TERM" shall mean that period from and including the Closing Date
through the Termination Date.
"TERMINATION DATE" shall mean the date on which all Obligations
hereunder have been completely discharged.
"TERMINATION EVENT" shall mean (i) a "reportable event", as such
term is described in Section 4043 of ERISA (other than a "reportable
event" not subject to the provision for 30-day notice to the PBGC), or
an event described in Section 4062(e) of ERISA, (ii) the withdrawal by
any member of the ERISA Group from a Multiemployer Plan during a plan
year in which it is a "substantial employer" (as defined in
Section 4001(a)(2) of ERISA), or the incurrence of liability by any
member of the ERISA Group under Section 4064 of ERISA upon the
termination of a Multiemployer Plan, (iii) the filing of a notice of
intent to terminate any Plan under Section 4041 of ERISA, other than
in a standard termination within the meaning of Section 4041 of ERISA,
or the treatment of a Plan amendment as a distress termination under
Section 4041 of ERISA, (iv) the institution by the PBGC of proceedings
to terminate, impose liability (other than for premiums under
Section 4007 of ERISA) in respect of, or cause a trustee to be
appointed to administer, any Plan or (v) any other event or condition
that might reasonably constitute grounds for the termination of, or
the appointment of a trustee to administer, any Plan or the imposition
of any liability or encumbrance or Lien on the Real Property Assets or
any member of the ERISA Group under ERISA.
"TOTAL LIABILITIES" means, as of the date of determination and
without duplication, all Indebtedness of Borrower, on a consolidated
basis, PLUS accounts payable incurred in the ordinary course of
business.
"TRANSACTION COST AGREEMENT" has the meaning set forth in
Section 3.1(i).
"TRANSFER" shall have the meaning given such term in the Asset
Exchange Agreement.
"TREASURY RATE" means, as of any date, a rate equal to the annual
yield to maturity on the U.S. Treasury Constant Maturity Series with a
ten year maturity, as such yield is reported in Federal Reserve
Statistical Release H.15 -- Selected Interest Rates, published most
recently prior to the date the applicable Treasury Rate is being
determined. Such yield shall be determined by straight line linear
interpolation between the yields reported in Release H.15, if
necessary. In the event Release H.15 is no longer published, Lender
shall select, in its reasonable discretion, an alternate basis for the
determination of Treasury yield for U.S. Treasury Constant Maturity
Series with ten year maturities.
"UNENCUMBERED APARTMENT ASSET VALUE" means (i) a fraction, the
numerator of which is the product of four (4) and the aggregate
Unencumbered Net Operating Income for the most recently ended Fiscal
Quarter which is attributable (in a manner reasonably acceptable to
Lender) to Qualifying Unencumbered Properties which are primarily
multi-family residential properties, wholly-owned (directly or
beneficially) by the Borrower for the entire Fiscal Quarter, and the
denominator of which is the FMV Cap Rate, PLUS (ii) for all Qualifying
Unencumbered Properties which are primarily multi-family residential
properties, wholly-owned (directly or beneficially) by Borrower which
have been acquired (directly or indirectly) by the Borrower during the
Fiscal Quarter most recently ended, the aggregate Net Price paid by
Borrower or its affiliates for such Qualifying Unencumbered
Properties.
"UNENCUMBERED NET OPERATING INCOME" means for any period for all
Qualifying Unencumbered Properties owned (directly or beneficially) by
the Borrower and/or any wholly-owned Subsidiary of Borrower during the
applicable period, Net Operating Income from each such Qualifying
Unencumbered Property minus (i) with respect to any apartment units
contained in such Qualifying Unencumbered Property, an amount equal to
the product of the number of apartment units in such Qualifying
Unencumbered Property during such period and the Capital Apartment
Reserve for such period, and minus (ii) with respect to any commercial
property other than apartments units contained in such Qualifying
Unencumbered Property, an amount equal to the product of the number of
square feet of leased space in such commercial property other than
apartments units contained in such Qualifying Unencumbered Property
and the Capital Commercial Reserve for such period.
"UNIMPROVED ASSETS" means Real Property Assets upon which no
material improvements have been completed which completion is
evidenced by a certificate of occupancy or its equivalent.
"UNITED STATES" means the United States of America, including the
fifty states and the District of Columbia.
"UNSECURED DEBT" means Indebtedness of Borrower and any
Subsidiary of Borrower, which is not Secured Debt.
"UNSECURED INTEREST EXPENSE" means Interest Expense, other than
Interest Expense payable in respect of Secured Debt and other than
Interest Expense payable in respect of the Indebtedness of any Person
other than Borrower or any Subsidiary of Borrower.
"UNUSED COMMITMENTS" shall mean an amount equal to all unadvanced
funds (other than unadvanced funds in connection with any construction
loan) which any third party is obligated to advance to Borrower or
another Person or otherwise pursuant to any loan document, written
instrument or otherwise.
Section 0.1 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 GAAP applied on a basis consistent
(except for changes concurred in by the Borrower's independent public
accountants) with the most recent audited consolidated financial
statements of the Borrower and its Consolidated Subsidiaries delivered
to Lender; PROVIDED that, if the Borrower notifies Lender that the
Borrower wishes to amend any covenant in Article V to eliminate the
effect of any change in GAAP on the operation of such covenant (or if
Lender notifies the Borrower that Lender wishes to amend Article V for
such purpose), then the Borrower's compliance with such covenant shall
be determined on the basis of GAAP in effect immediately before the
relevant change in GAAP became effective, until either such notice is
withdrawn or such covenant is amended in a manner reasonably
satisfactory to the Borrower and Lender.
ARTICLE I
AMOUNT AND TERMS OF LOAN
Section 1.1 LOAN.
(a) Upon and subject to the terms and conditions hereof, Lender
agrees to make a senior subordinated term loan (the "Loan") to
Borrower on the Closing Date, in an aggregate principal amount of
Twenty Million Dollars ($20,000,000). The Loan shall be evidenced by
a promissory note to be executed and delivered by Borrower at the time
of such Loan, the form of which is attached hereto and made a part
hereof as Exhibit A (the "Note").
(b) $18,317,429 of the Loan shall be deemed to have been
disbursed by virtue of the consummation of the Transfer, and the
balance of the Loan shall be deemed to have been disbursed by virtue
of the consummation of the Sale.
(c) The aggregate principal amount of the Senior Subordinated
Term Note shall be payable on October 15, 2013.
Section 1.2 INTEREST ON THE LOAN.
(a) With respect to the Loan, Borrower shall pay interest to
Lender in arrears on each January 15, April 15, July 15 and October 15
of each year during the Term commencing on January 15, 1999 (each, an
"Interest Payment Date"), in an amount equal to the quotient of (i) an
amount equal to (A) the sum of the daily unpaid principal amounts of
the Loan outstanding on each day during the previous calendar quarter
multiplied by (B) a rate equal to the Note Interest Rate, divided by
(ii) 360.
(b) Upon the occurrence of and during the continuation of
Borrower's failure to make any payment of principal of, or interest
on, or any amount owing in respect of, the Loan or any of the other
Obligations when due and payable or declared due and payable, the
interest rate applicable to the Loan shall be increased by 5% per
annum above the rate otherwise applicable. Any interest not paid when
due and payable shall be added to principal.
(c) Notwithstanding anything to the contrary set forth in this
Section 2.2, if at any time until payment in full of all of the
Obligations the interest rate calculated pursuant to the foregoing
paragraphs of this Section 2.2 (the "Stated Rate") exceeds the highest
rate of interest permissible under any law which a court of competent
jurisdiction shall, in a final determination, deem applicable hereto
(the "Maximum Lawful Rate"), then in such event and so long as the
Maximum Lawful Rate would be so exceeded, the rate of interest payable
hereunder shall be equal to the Maximum Lawful Rate; PROVIDED,
HOWEVER, that if at any time thereafter the Stated Rate is less than
the Maximum Lawful Rate, Borrower shall continue to pay interest
hereunder at the Maximum Lawful Rate until such time as the total
interest received by Lender from the making of advances hereunder is
equal to the total interest which Lender would have received had the
Stated Rate been (but for the operation of this Section 2.2(c)) the
interest rate payable since the Closing Date. Thereafter, the
interest rate payable hereunder shall be the Stated Rate unless and
until the Stated Rate again exceeds the Maximum Lawful Rate, in which
event this paragraph shall again apply. In no event shall the total
interest received by Lender pursuant to the terms hereof exceed the
amount which Lender could lawfully have received had the interest due
hereunder been calculated for the full term hereof at the Maximum
Lawful Rate. In the event the Maximum Lawful Rate is calculated
pursuant to this paragraph, such interest shall be calculated at a
daily rate equal to the Maximum Lawful Rate divided by the number of
days in the year in which such calculation is made. In the event that
a court of competent jurisdiction, notwithstanding the provisions of
this Section 2.2(c), shall make a final determination that Lender has
received interest hereunder or under any of the Loan Documents in
excess of the Maximum Lawful Rate, Lender shall, to the extent
permitted by applicable law, promptly apply such excess first to any
interest due and not yet paid under the Loan, then to any due and
payable principal of the Loan, then to the remaining principal amount
of the Loan, then to other unpaid Obligations and thereafter shall
refund any excess to Borrower or as a court of competent jurisdiction
may otherwise order.
Section 1.3 APPLICATION OF PAYMENTS. All monies received by Lender
pursuant to this Agreement shall be applied to any Obligations by Lender,
as Lender shall determine in its sole discretion, and Lender shall account
to Borrower for any sum remaining. Payments of interest and principal with
respect to the Loan shall be payable by federal wire transfer, pursuant to
Lender's written instructions, on the dates and in the amounts specified in
this Agreement. All other Obligations shall be payable on demand in the
manner requested by Lender.
Section 1.4 MANDATORY PREPAYMENTS. If at any time the Borrower or
any of its Consolidated Subsidiaries sells, transfers, assigns or conveys
any multifamily Real Property Asset which shall cause the Borrower in any
fiscal year period commencing after the Closing Date, to have sold,
transferred or conveyed property or assets which constitute in the
aggregate more than 30% of the Gross Asset Value of the multifamily Real
Property Assets of Borrower and its Consolidated Subsidiaries on the date
of such transfer, then at the request of Lender, Borrower shall pay to
Lender, within thirty (30) days after the date of such request, an amount
equal to the Net Proceeds of such transfer (but in no event more than the
outstanding balance of the Loan). Borrower shall make such prepayment
together with interest accrued to the date of the prepayment on the
principal amount prepaid. Amounts prepaid pursuant to this Section 2.4 may
not be reborrowed. As used in this Section 2.4, the term "NET PROCEEDS"
shall mean all amounts received by Borrower and its Consolidated
Subsidiaries in connection with such sale, transfer, assignment or
conveyance after payment of all expenses to be made by Borrower and any
Consolidated Subsidiaries in connection with such sale, transfer,
assignment or conveyance (including, without limitation, payment of then
existing Liens or encumbrances on such Real Property Asset, brokerage
commissions, title and survey costs or transfer taxes).
Section 1.5 OPTIONAL PREPAYMENTS. The Borrower may, upon at least
one (1) Domestic Business Day's notice to Lender, prepay without penalty
the Loan, in whole at any time, or from time to time in part, by paying the
principal amount to be prepaid together with accrued interest thereon to
the date of prepayment.
Section 1.6 GENERAL PROVISIONS AS TO PAYMENTS. The Borrower shall
make each payment of interest on the Loan, not later than 10:00 a.m. New
York City time on the date when due, in Federal or other funds immediately
available in Chicago, Illinois, to Lender at its address referred to in
Section 9.1. Whenever any payment of principal of, or interest on the Loan
shall be due on a day which is not a Domestic Business Day, the date for
payment thereof shall be extended to the next succeeding Domestic Business
Day. If the date for any payment of principal is extended by operation of
law or otherwise, interest thereon shall be payable for such extended time.
Section 1.7 COMPUTATION OF INTEREST. All interest shall be computed
on the basis of a year of 360 days and paid for the actual number of days
elapsed (including the first day but excluding the last day).
ARTICLE I
CONDITIONS
Section 1.7 CLOSING. The closing hereunder shall occur on the date
when each of the following conditions is satisfied, each document to be
dated the Closing Date unless otherwise indicated:
(a) the Asset Exchange Agreement has been duly executed and
delivered by and to the respective parties, all conditions precedent
to the closing and/or effectiveness of said agreement have been fully
satisfied or waived, and the Transfer has been fully consummated.
(b) the Purchase and Sale Agreement has been duly executed and
delivered by and to the respective parties, all conditions to the
closing and/or effectiveness of said agreement have been fully
satisfied or waived, and the Sale has been fully consummated.
(c) the Borrower shall have executed and delivered to Lender a
Note dated on or before the Closing Date complying with the provisions
of Section 2.1(a);
(d) the Borrower and Lender shall have executed and delivered
to the Borrower and Lender a duly executed original of this Agreement;
(e) Lender shall have received an opinion of counsel for the
Borrower, acceptable to Lender and its counsel from a law firm
acceptable to Lender and its counsel;
(f) Lender shall have received all documents Lender may
reasonably request relating to the existence of the Borrower, the
authority for and the validity of this Agreement and the other Loan
Documents, the authority and incumbency of the officers executing this
Agreement and the other Loan Documents and any other matters relevant
hereto, all in form and substance satisfactory to Lender. Such
documentation shall include, without limitation, the certificate of
incorporation of the Borrower, as amended, modified or supplemented to
the Closing Date, certified to be true, correct and complete by the
Secretary of State of Delaware as of a date not more than ten (10)
days prior to the Closing Date, together with a certificate of good
standing as to the Borrower from the Secretaries of State of Delaware
and Georgia, to be dated not more than ten (10) days prior to the
Closing Date, as well as the by-laws of the Borrower, as amended,
modified or supplemented to the Closing Date, certified to be true,
correct and complete by a senior officer of Borrower as of a date not
more than ten (10) days prior to the Closing Date;
(g) Lender shall have received all certificates, agreements and
other documents and papers referred to in this Section 3.1;
(h) the Borrower shall have taken all actions required to
authorize the execution and delivery of this Agreement and the other
Loan Documents and the performance thereof by the Borrower;
(i) Lender shall be satisfied that neither the Borrower nor any
Consolidated Subsidiary is subject to any present or contingent
environmental liability which could have a Material Adverse Effect;
(j) Lender shall have received the fees and expenses accrued
through the Closing Date as more fully provided in the Transaction
Costs Agreement of even date (the "Transaction Costs Agreement") among
Equity Residential Properties Trust, Lender and Borrower;
(k) Lender shall have received copies of all consents, licenses
and approvals, if any, required in connection with the execution,
delivery and performance by the Borrower and the applicable
Consolidated Subsidiaries, and the validity and enforceability, of the
Loan Documents, or in connection with any of the transactions
contemplated thereby, and such consents, licenses and approvals shall
be in full force and effect;
(l) Lender shall have received a certificate based upon the
pro-forma financial information contained in Borrower's Form 10
(including the assumptions with respect to such pro forma financial
information contained therein) showing compliance with the
requirements of Section 5.8 as of the Closing Date; and
(m) no Default or Event of Default shall have occurred.
ARTICLE I
REPRESENTATIONS AND WARRANTIES
In order to induce Lender to make the Loan, the Borrower makes the
following representations and warranties as of the Closing Date. Such
representations and warranties shall survive the effectiveness of this
Agreement, the execution and delivery of the other Loan Documents and the
making of the Loan.
Section 1.7 EXISTENCE AND POWER. The Borrower is a corporation,
duly formed and validly existing and in good standing under the laws of the
State of Georgia and has all powers and all material governmental licenses,
authorizations, consents and approvals required to own its property and
assets and carry on its business as now conducted or as it presently
proposes to conduct and has been duly qualified and is in good standing in
every jurisdiction in which the failure to be so qualified and/or in good
standing is likely to have a Material Adverse Effect.
Section 1.7 POWER AND AUTHORITY. The Borrower has the corporate
power and authority to execute, deliver and carry out the terms and
provisions of each of the Loan Documents to which it is a party and has
taken all necessary corporate action, if any, to authorize the execution
and delivery on behalf of the Borrower and the performance by the Borrower
of such Loan Documents. The Borrower has duly executed and delivered each
Loan Document to which it is a party in accordance with the terms of this
Agreement, and each such Loan Document constitutes the legal, valid and
binding obligation of the Borrower, enforceable in accordance with its
terms, except as enforceability may be limited by applicable insolvency,
bankruptcy or other laws affecting creditors rights generally, or general
principles of equity, whether such enforceability is considered in a
proceeding in equity or at law.
Section 1.7 NO VIOLATION. Neither the execution, delivery or
performance by or on behalf of the Borrower of the Loan Documents to which
it is a party, nor compliance by the Borrower with the terms and provisions
thereof nor the consummation of the transactions contemplated by the Loan
Documents, (i) will materially contravene any applicable provision of any
law, statute, rule, regulation, order, writ, injunction or decree of any
court or governmental instrumentality, (ii) will materially conflict with
or result in any breach of, any of the terms, covenants, conditions or
provisions of, or constitute a default under, or result in the creation or
imposition of (or the obligation to create or impose) any Lien upon any of
the property or assets of the Borrower or any of its Consolidated
Subsidiaries pursuant to the terms of any indenture, mortgage, deed of
trust, or other agreement or other instrument to which the Borrower (or of
any partnership of which the Borrower is a partner) or any of its
Consolidated Subsidiaries is a party or by which it or any of its property
or assets is bound or to which it is subject, or (iii) will cause a
material default by the Borrower under any organizational document of any
Person in which the Borrower has an interest, or cause a material default
under the Borrower's agreement or certificate of limited partnership, the
consequences of which conflict, breach or default would have a Material
Adverse Effect, or result in or require the creation or imposition of any
Lien whatsoever upon any Property (except as contemplated herein).
Section 1.7 FINANCIAL INFORMATION.
(n) The historical combined consolidated balance sheet of
Borrower's predecessor as of December 31, 1997, and the related
historical combined statements of financial position of Borrower's
predecessor as of December 31, 1997, reported on by Xxxxxx Xxxxxxxx
LLP, a copy of which is in the Form 10 delivered to Lender, fairly
present, in conformity with GAAP, the consolidated financial position
of Borrower's predecessor as of such date and the combined results of
operations and cash flows for the fiscal year then ended, except as
may be otherwise stated therein. The historical combined consolidated
balance sheet of Borrower's predecessor as of June 30, 1998, and the
related historical combined financial statements of Borrower's
predecessor for the period from January 1, 1998 to June 30, 1998,
reported on by Xxxxxx Xxxxxxxx LLP, a copy of which is in the Form 10
delivered to Lender, fairly present, in conformity with GAAP, the
consolidated financial position of Borrower's predecessor as of such
date and the combined results of operations and cash flows for such
period, except as may be otherwise stated therein and subject in all
cases to year end adjustments.
(o) Since June 30, 1998, (i) except as may have been disclosed
in writing to Lender, nothing has occurred having a Material Adverse
Effect, and(ii) except as may have been disclosed in the Form 10, the
Borrower has not incurred any material indebtedness or guaranty on or
before the Closing Date.
Section 1.7 LITIGATION. Except as previously disclosed by the
Borrower in writing to Lender, there is no action, suit or proceeding
pending against, or to the knowledge of the Borrower threatened against or
affecting, (i) the Borrower or any of its Consolidated Subsidiaries,
(ii) the Loan Documents or any of the transactions contemplated by the Loan
Documents or (iii) any of their assets, before any court or arbitrator or
any governmental body, agency or official in which there is a reasonable
possibility of an adverse decision which could, individually, or in the
aggregate have a Material Adverse Effect or which in any manner draws into
question the validity of this Agreement or the other Loan Documents.
Section 1.7 COMPLIANCE WITH ERISA.
(p) Except as set forth on SCHEDULE 4.6 attached hereto,
Borrower is not a member of any Plan or Multiemployer Plan or, as of
the Closing Date, any other Benefit Arrangement. After the Closing
Date, Borrower may establish or assume any Benefit Arrangement, so
long as any such event would not result in a Material Adverse Effect.
(q) The transactions contemplated by the Loan Documents will not
constitute a nonexempt prohibited transaction (as such term is defined
in Section 4975 of the Code or Section 406 of ERISA) that could
subject Lender to any tax or penalty or prohibited transactions
imposed under Section 4975 of the Code or Section 502(i) of ERISA.
Section 1.7 ENVIRONMENTAL MATTERS. After the Closing Date, Borrower
will conduct reviews of the effect of Environmental Laws on the business,
operations and properties of the Borrower and Consolidated Subsidiaries of
either or both when necessary in the course of which it identifies and
evaluates associated liabilities and costs (including, without limitation,
any capital or operating expenditures required for clean-up or closure of
properties presently owned, any capital or operating expenditures required
to achieve or maintain compliance with environmental protection standards
imposed by law or as a condition of any license, permit or contract, any
related constraints on operating activities, and any actual or potential
liabilities to third parties, including employees, and any related costs
and expenses). On the basis of the reviews, the Borrower will ascertain
the likelihood of such associated liabilities and costs, including the
costs of compliance with Environmental Laws, having a Material Adverse
Effect on the Borrower and its Consolidated Subsidiaries.
Section 1.7 TAXES. After the Closing Date, Borrower and its
Consolidated Subsidiaries will file all United States Federal income tax
returns and all other material tax returns which are required to be filed
by them and will pay all taxes due pursuant to such returns or pursuant to
any assessment received by the Borrower or any Consolidated Subsidiary,
except such taxes, if any, as are reserved against in accordance with GAAP,
such taxes as may be contested in good faith by appropriate proceedings or
such taxes, the failure to make payment of which when due and payable will
not have, in the aggregate, a Material Adverse Effect.
Section 1.7 FULL DISCLOSURE. All information heretofore furnished
by the Borrower to Lender for purposes of or in connection with this
Agreement or any transaction contemplated hereby or thereby is true and
accurate in all material respects on the date as of which such information
is stated or certified. The Borrower has disclosed to Lender, in writing
any and all facts which have or may have (to the extent the Borrower can
now reasonably foresee) a Material Adverse Effect.
Section 1.7 SOLVENCY. On the Closing Date and after giving effect
to the transactions contemplated by the Loan Documents occurring on the
Closing Date, the Borrower will be Solvent.
Section 1.7 GOVERNMENTAL APPROVALS. No order, consent, approval,
license, authorization, or validation of, or filing, recording or
registration with, or exemption by, any governmental or public body or
authority, or any subdivision thereof, is required to authorize, or is
required in connection with the execution, delivery and performance of any
Loan Document or the consummation of any of the transactions contemplated
thereby other than those that have already been duly made or obtained and
remain in full force and effect or those which, if not made or obtained,
would not have a Material Adverse Effect;
Section 1.7 INVESTMENT COMPANY ACT; PUBLIC UTILITY HOLDING COMPANY
ACT. Neither the Borrower nor any Consolidated Subsidiary is (x) an
"INVESTMENT COMPANY" or a company "CONTROLLED" by an "INVESTMENT COMPANY",
within the meaning of the Investment Company Act of 1940, as amended, (y) a
"HOLDING COMPANY" or a "SUBSIDIARY COMPANY" of a "HOLDING COMPANY" or an
"AFFILIATE" of either a "HOLDING COMPANY" or a "SUBSIDIARY COMPANY" within
the meaning of the Public Utility Holding Company Act of 1935, as amended,
or (z) subject to any other federal or state law or regulation which
purports to restrict or regulate its ability to borrow money.
Section 1.7 PRINCIPAL OFFICES. As of the Closing Date, the
principal office, chief executive office and principal place of business of
the Borrower is 000 Xxxxx Xxxxxx, Xxxxxxx, Xxxxxxx 00000.
Section 1.7 PATENTS, TRADEMARKS, ETC. The Borrower has obtained
and holds in full force and effect all patents, trademarks, servicemarks,
trade names, copyrights and other such rights, free from burdensome
restrictions, which are necessary for the operation of its business as
presently conducted, the impairment of which is likely to have a Material
Adverse Effect.
Section 1.7 OWNERSHIP OF PROPERTY. SCHEDULE 4.15 attached hereto
and made a part hereof sets forth all the real property owned or ground
leased by the Borrower and Persons in which the Borrower, directly or
indirectly, owns an interest as of the Closing Date.
Section 1.7 NO DEFAULT. No Event of Default or, to the best of the
Borrower's knowledge, Default exists under or with respect to any Loan
Document and the Borrower is not in default in any material respect beyond
any applicable grace period under or with respect to any other material
agreement, instrument or undertaking to which it is a party or by which it
or any of its property is bound in any respect, the existence of which
default is likely to result in a Material Adverse Effect.
Section 1.7 LICENSES, ETC. The Borrower has obtained and does hold
in full force and effect, all franchises, licenses, permits, certificates,
authorizations, qualifications, accreditation, easements, rights of way and
other consents and approvals which are necessary for the operation of its
businesses as presently conducted, the absence of which is likely to have a
Material Adverse Effect.
Section 1.7 COMPLIANCE WITH LAW. To the Borrower's knowledge, the
Borrower and each of the Real Property Assets are in compliance with all
laws, rules, regulations, orders, judgments, writs and decrees, including,
without limitation, all building and zoning ordinances and codes, the
failure to comply with which is likely to have a Material Adverse Effect.
Section 1.7 NO BURDENSOME RESTRICTIONS. Except as may have been
disclosed by the Borrower in writing to Lender, Borrower is not a party to
any agreement or instrument or subject to any other obligation or any
charter or corporate or partnership restriction, as the case may be, which,
individually or in the aggregate, is likely to have a Material Adverse
Effect.
Section 1.7 BROKERS' FEES. The Borrower has not dealt with any
broker or finder with respect to the transactions contemplated by this
Agreement or otherwise in connection with this Agreement, and the Borrower
has not done any act, had any negotiations or conversation, or made any
agreements or promises which will in any way create or give rise to any
obligation or liability for the payment by the Borrower of any brokerage
fee, charge, commission or other compensation to any party with respect to
the transactions contemplated by the Loan Documents.
Section 1.7 LABOR MATTERS. There are no collective bargaining
agreements or Multiemployer Plans covering the employees of the Borrower
and the Borrower has not suffered any strikes, walkouts, work stoppages or
other material labor difficulty within the last five years.
Section 1.7 INSURANCE. The Borrower currently maintains insurance
at 100% replacement cost insurance coverage (subject to customary
deductibles) in respect of each of the Real Property Assets, as well as
commercial general liability insurance (including "builders' risk" where
applicable) against claims for personal, and bodily injury and/or death, to
one or more persons, or property damage, as well as workers' compensation
insurance, in each case with respect to liability and casualty insurance
with insurers having an A.M. Best policyholders' rating of not less than
A-VII in amounts that prudent owner of assets such as the Real Property
Assets would maintain.
Section 1.7 ORGANIZATIONAL DOCUMENTS. The documents delivered
pursuant to Section 3.1(e) constitute, as of the Closing Date, all of the
organizational documents (together with all amendments and modifications
thereof) of the Borrower. The Borrower represents that it has delivered to
Lender true, correct and complete copies of each of the documents set forth
in this Section 4.23.
Section 1.7 QUALIFYING UNENCUMBERED PROPERTIES. As of the date
hereof, each Property listed on SCHEDULE 4.24 as a Qualifying Unencumbered
Property (i) is a Real Estate Asset wholly-owned (directly or beneficially)
by Borrower or a wholly-owned Subsidiary of Borrower, (ii) is not subject
(nor are any equity interests in such Property subject) to a Lien which
secures Indebtedness of any Person, other than Permitted Liens, and
(iii) is not subject (nor are any equity interests in such Property
subject) to any covenant, condition, or other restriction which prohibits
or limits the creation or assumption of any Lien upon such Property. All
of the information set forth on SCHEDULE 4.24 is true and correct in all
material respects.
Section 1.8 INVESTMENT AFFILIATES. As of the date hereof, Borrower
has no Investment Affiliates.
ARTICLE I
AFFIRMATIVE AND NEGATIVE COVENANTS
The Borrower covenants and agrees that so long as any Obligations
remain unpaid:
Section 1.8 INFORMATION. The Borrower will deliver to Lender:
(a) as soon as available and in any event within five (5)
Domestic Business Days after the same is required to be filed with the
Securities and Exchange Commission (but in no event later than 125
days after the end of each fiscal year of the Borrower) a consolidated
balance sheet of the Borrower and its Consolidated Subsidiaries as of
the end of such fiscal year and the related consolidated statements of
Borrower's operations and consolidated statements of Borrower's cash
flow for such fiscal year, setting forth in each case in comparative
form the figures for the previous fiscal year, all reported on in a
manner acceptable to the Securities and Exchange Commission on
Borrower's Form 10K and reported on by Xxxxxx Xxxxxxxx LLP or other
independent public accountants of nationally recognized standing;
(b) as soon as available and in any event within five (5)
Domestic Business Days after the same is required to be filed with the
Securities and Exchange Commission (but in no event later than 80 days
after the end of each of the first three quarters of each fiscal year
of the Borrower), (i) a consolidated balance sheet of the Borrower and
its Consolidated Subsidiaries as of the end of such quarter and the
related consolidated statements of Borrower's operations and
consolidated statements of Borrower's cash flow for such quarter and
for the portion of the Borrower's fiscal year ended at the end of such
quarter, all reported on in the form provided to the Securities and
Exchange Commission on Borrower's Form 10Q, and (ii) and such other
information reasonably requested by Lender;
(c) simultaneously with the delivery of each set of financial
statements referred to in clauses (a) and (b) above, a certificate of
the chief financial officer or the chief accounting officer of the
Borrower (i) setting forth in reasonable detail the calculations
required to establish whether the Borrower was in compliance with the
requirements of Section 5.8 on the date of such financial statements;
(ii) certifying (x) that such financial statements fairly present the
financial condition and the results of operations of the Borrower on
the dates and for the periods indicated, on the basis of GAAP, with
respect to the Borrower subject, in the case of interim financial
statements, to normally recurring year-end adjustments, and (y) that
such officer has reviewed the terms of the Loan Documents and has
made, or caused to be made under his or her supervision, a review in
reasonable detail of the business and condition of the Borrower during
the period beginning on the date through which the last such review
was made pursuant to this Section 5.1(c) (or, in the case of the first
certification pursuant to this Section 5.1(c), the Closing Date) and
ending on a date not more than ten (10) Domestic Business Days prior
to the date of such delivery and that (1) on the basis of such
financial statements and such review of the Loan Documents, no Event
of Default existed under Section 6.1(b) with respect to Sections 5.8
and 5.9 at or as of the date of said financial statements, and (2) on
the basis of such review of the Loan Documents and the business and
condition of the Borrower, to the best knowledge of such officer, as
of the last day of the period covered by such certificate no Default
or Event of Default under any other provision of Section 6.1 occurred
and is continuing or, if any such Default or Event of Default has
occurred and is continuing, specifying the nature and extent thereof
and, the action the Borrower proposes to take in respect thereof and
(3) no event has occurred and is continuing which would give rise to a
mandatory prepayment pursuant to Section 2.4 hereof. Such certificate
shall set forth the calculations required to establish the matters
described in clauses (1) and (3) above;
(d) (i) within five (5) Domestic Business Days after any officer
of the Borrower obtains knowledge of any Default, if such Default is
then continuing, a certificate of the chief financial officer, the
chief accounting officer, controller, or other executive officer of
the Borrower setting forth the details thereof and the action which
the Borrower is taking or proposes to take with respect thereto; and
(ii) promptly and in any event within five (5) Domestic Business Days
after the Borrower obtains knowledge thereof, notice of (x) any
litigation or governmental proceeding pending or threatened against
the Borrower or the Real Property Assets as to which there is a
reasonable possibility of an adverse determination and which, if
adversely determined, is likely to individually or in the aggregate,
result in a Material Adverse Effect, (y) any other event, act or
condition which is likely to result in a Material Adverse Effect, and
(z) any event giving rise to a mandatory prepayment pursuant to
Section 2.4;
(e) promptly upon the mailing thereof to the shareholders of
Borrower generally, copies of all financial statements, reports and
proxy statements so mailed;
(f) promptly upon the filing thereof, copies of all registration
statements (other than the exhibits thereto and any registration
statements on Form S-8 or its equivalent) and reports on Forms 10-K,
10-Q and 8-K (or their equivalents) (other than the exhibits thereto,
which exhibits will be provided upon request therefor by Lender) which
Borrower shall have filed with the Securities and Exchange Commission;
(g) promptly and in any event within thirty (30) days, if and
when any member of the ERISA Group (i) gives or is required to give
notice to the PBGC of any "reportable event" (as defined in
Section 4043 of ERISA) with respect to any Plan which might constitute
grounds for a termination of such Plan under Title IV of ERISA, or
knows that the plan administrator of any Plan has given or is required
to give notice of any such reportable event, a copy of the notice of
such reportable event given or required to be given to the PBGC;
(ii) receives notice of complete or partial withdrawal liability under
Title IV of ERISA or notice that any Multiemployer Plan is in
reorganization, is insolvent or has been terminated, a copy of such
notice; (iii) receives notice from the PBGC under Title IV of ERISA of
an intent to terminate, impose liability (other than for premiums
under Section 4007 of ERISA) in respect of, or appoint a trustee to
administer any Plan, a copy of such notice; (iv) applies for a waiver
of the minimum funding standard under Section 412 of the Code, a copy
of such application; (v) gives notice of intent to terminate any Plan
under Section 4041(c) of ERISA, a copy of such notice and other
information filed with the PBGC; (vi) gives notice of withdrawal from
any Plan pursuant to Section 4063 of ERISA, a copy of such notice; or
(vii) fails to make any payment or contribution to any Plan or
Multiemployer Plan or in respect of any Benefit Arrangement or makes
any amendment to any Plan or Benefit Arrangement which has resulted or
could result in the imposition of a Lien or the posting of a bond or
other security, and in the case of clauses (i) through (vii) above,
which event could result in a Material Adverse Effect, a certificate
of the chief financial officer or the chief accounting officer of the
Borrower setting forth details as to such occurrence and action, if
any, which the Borrower or applicable member of the ERISA Group is
required or proposes to take;
(h) promptly and in any event within ten (10) days after the
Borrower obtains actual knowledge of any of the following events, a
certificate of the Borrower, executed by an officer of the Borrower,
specifying the nature of such condition, and the Borrower's or, if the
Borrower has actual knowledge thereof, the Environmental Affiliate's
proposed initial response thereto: (i) the receipt by the Borrower,
or, if the Borrower has actual knowledge thereof, any of the
Environmental Affiliates of any communication (written or oral),
whether from a governmental authority, citizens group, employee or
otherwise, that alleges that the Borrower, or, if the Borrower has
actual knowledge thereof, any of the Environmental Affiliates, is not
in compliance with applicable Environmental Laws, and such
noncompliance is likely to have a Material Adverse Effect, (ii) the
Borrower shall obtain actual knowledge that there exists any
Environmental Claim pending against the Borrower or any Environmental
Affiliate and such Environmental Claim is likely to have a Material
Adverse Effect or (iii) the Borrower obtains actual knowledge of any
release, emission, discharge or disposal of any Material of
Environmental Concern that is likely to form the basis of any
Environmental Claim against the Borrower or any Environmental
Affiliate which in any such event is likely to have a Material Adverse
Effect;
(i) promptly and in any event within five (5) Domestic Business
Days after receipt of any material notices or correspondence from any
company or agent for any company providing insurance coverage to the
Borrower relating to any loss which is likely to result in a Material
Adverse Effect, copies of such notices and correspondence; and
(j) from time to time such additional information regarding the
financial position or business of the Borrower and its Subsidiaries as
Lender may reasonably request in writing.
Section 1.8 PAYMENT OF OBLIGATIONS. The Borrower and each Subsidiary
will pay and discharge, at or before maturity, all its respective material
obligations and liabilities including, without limitation, any obligation
pursuant to any agreement by which it or any of its properties is bound, in
each case where the failure to so pay or discharge such obligations or
liabilities is likely to result in a Material Adverse Effect, and will
maintain in accordance with GAAP, appropriate reserves for the accrual of
any of the same.
Section 1.8 MAINTENANCE OF PROPERTY; INSURANCE; LEASES.
(k) The Borrower will keep, and will cause each Subsidiary to
keep, all property useful and necessary in its business, including
without limitation the Real Property Assets (for so long as it
constitutes Real Property Assets), in good repair, working order and
condition, ordinary wear and tear excepted, in each case where the
failure to so maintain and repair will have a Material Adverse Effect.
(l) The Borrower shall maintain, or cause to be maintained,
insurance comparable to that described in Section 4.23 hereof with
insurers meeting the qualifications described therein, which insurance
shall in any event not provide for less coverage than insurance
customarily carried by owners of properties similar to, and in the
same locations as, the Real Property Assets. The Borrower will
deliver to Lender upon the reasonable request of Lender from time to
time (i) full information as to the insurance carried, (ii) within
five (5) days of receipt of notice from any insurer a copy of any
notice of cancellation or material change in coverage from that
existing on the date of this Agreement and (iii) forthwith, notice of
any cancellation or nonrenewal of coverage by the Borrower.
Section 1.8 CONDUCT OF BUSINESS AND MAINTENANCE OF EXISTENCE. The
Borrower will continue to engage in business of the same general type as
now conducted by the Borrower, and each will preserve, renew and keep in
full force and effect, its partnership and trust existence and its
respective rights, privileges and franchises necessary for the normal
conduct of business unless the failure to maintain such rights and
franchises does not have a Material Adverse Effect.
Section 1.8 COMPLIANCE WITH LAWS. The Borrower will and will cause
its Subsidiaries to comply in all material respects with all applicable
laws, ordinances, rules, regulations, and requirements of governmental
authorities (including, without limitation, Environmental Laws, and all
zoning and building codes with respect to the Real Property Assets and
ERISA and the rules and regulations thereunder and all federal securities
laws) except where the necessity of compliance therewith is contested in
good faith by appropriate proceedings or where the failure to do so will
not have a Material Adverse Effect or expose Lender to any material
liability therefor.
Section 1.8 INSPECTION OF PROPERTY, BOOKS AND RECORDS. The Borrower
each will keep proper books of record and account in which full, true and
correct entries shall be made of all dealings and transactions in relation
to its business and activities in conformity with GAAP, modified as
required by this Agreement and applicable law; and will permit
representatives of Lender at such Lender's expense to visit and inspect any
of its properties, including without limitation the Real Property Assets,
to examine and make abstracts from any of its books and records and to
discuss its affairs, finances and accounts with its officers and
independent public accountants, all at such reasonable times during normal
business hours, upon reasonable prior notice and as often as may reasonably
be desired.
Section 1.8 EXISTENCE. The Borrower shall do or cause to be done,
all things necessary to preserve and keep in full force and effect its, and
its Subsidiaries', existence and its patents, trademarks, servicemarks,
tradenames, copyrights, franchises, licenses, permits, certificates,
authorizations, qualifications, accreditation, easements, rights of way and
other rights, consents and approvals the nonexistence of which is likely to
have a Material Adverse Effect.
Section 1.8 FINANCIAL COVENANTS.
(m) TOTAL LIABILITIES TO GROSS ASSET VALUE. Borrower shall not
permit the ratio of (x) the sum of Total Liabilities plus the
Preferred Stock Obligations, to (y) Gross Asset Value, each determined
on a consolidated basis for Borrower and its Consolidated
Subsidiaries, to exceed 0.80:1 at any time.
(n) UNENCUMBERED POOL. Borrower shall not permit the ratio of
(x) the remainder of Unencumbered Apartment Asset Value minus
outstanding Senior Indebtedness to (y) the sum of the outstanding
Obligations plus the Preferred Stock Obligations, each determined on a
consolidated basis for Borrower and its Consolidated Subsidiaries, to
be 0.30:1 or less at any time.
(o) EBITDA TO FIXED CHARGES RATIO. Borrower shall not permit the
ratio of EBITDA for the then most recently completed Fiscal Quarter to
Fixed Charges for the then most recently completed Fiscal Quarter,
each determined on a consolidated basis for Borrower and its
Consolidated Subsidiaries, to be less than 1.15:1.
(p) DIVIDENDS. The Borrower shall not, as determined on an
aggregate annual basis, pay any dividends in excess of 90% of the
Borrower's Funds Available for Distribution for such Fiscal Year.
Section 1.8 RESTRICTION ON FUNDAMENTAL CHANGES.
(q) The Borrower shall not enter into any merger or
consolidation, unless (i) the Borrower is the surviving entity,
(ii) the entity which is merged into Borrower is predominantly in the
commercial real estate business, (iii) the creditworthiness of the
surviving entity's long term unsecured debt or implied senior debt, as
applicable, is not lower than Borrower's creditworthiness two months
immediately preceding such merger as determined by Lender in its
reasonable discretion , and (iv) in the case of any merger where the
then fair market value of the assets of the entity which is merged
into the Borrower is twenty-five percent (25%) or more of the
Borrower's then Gross Asset Value following such merger, Lender
consents thereto in writing, which consent shall not be unreasonably
withheld, conditioned or delayed. The Borrower shall not liquidate,
wind-up or dissolve (or suffer any liquidation or dissolution),
discontinue its business or convey, lease, sell, transfer or otherwise
dispose of, in one transaction or series of transactions, all or
substantially all of its business or property, whether now or
hereafter acquired. Nothing in this Section shall be deemed to
prohibit the sale or leasing of portions of the Real Property Assets
in the ordinary course of business.
(r) The Borrower shall not amend organizational documents in any
manner that would have a Material Adverse Effect without Lender's
consent, which shall not be unreasonably withheld.
(s) The Borrower shall deliver to Lender copies of all amendments
to its organizational documents no less than ten (10) days after the
effective date of any such amendment.
Section 1.8 CHANGES IN BUSINESS. The Borrower shall not enter into
any business which is substantially different from that conducted by the
Borrower on the Closing Date after giving effect to the transactions
contemplated by the Loan Documents. The Borrower shall carry on its
business operations through the Borrower and its Subsidiaries.
Section 1.9 LOANS. The Borrower shall not, and shall not permit any
of its Subsidiaries to, directly or indirectly, make any loans or advances
to any Person.
Section 1.10 INVESTMENT AFFILIATES. The Borrower shall not, and shall
not permit any of its Subsidiaries to, directly or indirectly, acquire or
create any Investment Affiliate.
Section 1.11 TRANSACTIONS WITH AFFILIATES.
(a) Borrower shall not and shall not permit any Subsidiary of
Borrower to enter into or be a party to any transaction with any
Affiliate of Borrower or such Subsidiary, except as otherwise provided
herein or in the ordinary course of and pursuant to the reasonable
requirements of Borrower's or such Subsidiary's business and upon fair
and reasonable terms that are fully disclosed to Lender and are no
less favorable to Borrower or such Subsidiary than would obtain in a
comparable arm's length transaction with a Person not an Affiliate of
Borrower or such Subsidiary.
(b) Borrower shall not and shall not permit any Subsidiary of
Borrower to enter into any agreement or transaction to pay to any
Person any management or similar fee based on or related to Borrower's
or any of its Subsidiaries' operating performance or income or any
percentage thereof, nor pay any management or similar fee to an
Affiliate.
Section 1.12 GUARANTEED INDEBTEDNESS. Borrower shall not and shall
not permit any Subsidiary of Borrower to incur any Guaranteed Indebtedness
except (i) by endorsement of instruments of items of payment for deposit to
the general account of Borrower or such Subsidiary, and (ii) for Guaranteed
Indebtedness incurred for the benefit of Borrower or any Subsidiary of
Borrower if the primary obligation is permitted by this Agreement.
Section 1.13 PAYMENTS TO AN AFFILIATE. Borrower shall not make, or
permit any Subsidiary to make any payment to any Affiliate if a Default or
Event of Default has occurred and is continuing or if a Default or Event of
Default would occur as a result of such payment.
Section 1.14 MATERIALS OF ENVIRONMENTAL CONCERN. Borrower shall not
and shall not permit any Subsidiary to cause or permit a Release of any
Material of Environmental Concern on, at, in, under, above, to, from or
about any of the Real Estate Assets where such Release would (a) violate in
any respect, or form the basis for any Environmental Claim under, any
Environmental Laws or (b) otherwise adversely impact the value or
marketability of any of the Real Estate Assets, other than such violations
or Environmental Claims or other adverse impacts which could not reasonably
be expected to have a Material Adverse Effect.
ARTICLE I
DEFAULTS
Section 1.14 EVENTS OF DEFAULT. If one or more of the following
events ("EVENTS OF DEFAULT") shall have occurred and be continuing:
(a) the Borrower shall fail to pay when due any principal of the
Loan, or the Borrower shall fail to pay when due interest on the Loan
or any other amount payable hereunder and the same shall continue for
a period of five (5) days after the same becomes due;
(b) the Borrower shall fail to observe or perform any covenant
contained in Section 5.8, Section 5.9(a) or (b), or Section 5.10.
(c) the Borrower shall fail to observe or perform any covenant
or agreement contained in this Agreement (other than those covered by
clause (a), (b), (e), (f), (g), (h), (j), (n) or (o) of this
Section 6.1) for 30 days after written notice thereof has been given
to the Borrower by Lender, or if such default is of such a nature that
it cannot with reasonable effort be completely remedied within said
period of thirty (30) days such additional period of time as may be
reasonably necessary to cure same, provided Borrower commences such
cure within said thirty (30) day period and diligently prosecutes same
until completion, but in no event shall such extended period exceed
ninety (90) days;
(d) any representation, warranty, certification or statement
made by the Borrower in this Agreement or in any certificate,
financial statement or other document delivered pursuant to this
Agreement shall prove to have been incorrect in any material respect
when made (or deemed made) and the defect causing such representation
or warranty to be incorrect when made (or deemed made) is not removed
within thirty (30) days after written notice thereof from Lender to
Borrower;
(e) the Borrower, or any Subsidiary shall default in the payment
when due (whether by scheduled maturity, required prepayment,
acceleration, demand or otherwise) of any amount owing in respect of
any Recourse Debt (other than the Obligations) for which the aggregate
outstanding principal amount exceeds $250,000 and such default shall
continue beyond the giving of any required notice and the expiration
of any applicable grace period and such default has not been waived,
in writing, by the holder of any such Debt; or the Borrower, or any
Subsidiary shall default in the performance or observance of any
obligation or condition with respect to any such Recourse Debt or any
other event shall occur or condition exist beyond the giving of any
required notice and the expiration of any applicable grace period, if
the effect of such default, event or condition is to accelerate the
maturity of any such indebtedness or to permit (without any further
requirement of notice or lapse of time) the holder or holders thereof,
or any trustee or agent for such holders, to accelerate the maturity
of any such indebtedness. Under no circumstances will defaults with
respect to Participating Loans constitute an Event of Default under
this subsection (e);
(f) the Borrower shall commence a voluntary case or other
proceeding seeking liquidation, reorganization or other relief with
respect to itself or its debts under any bankruptcy, insolvency or
other similar law now or hereafter in effect or seeking the
appointment of a trustee, receiver, liquidator, custodian or other
similar official of it or any substantial part of its property, or
shall consent to any such relief or to the appointment of or taking
possession by any such official in an involuntary case or other
proceeding commenced against it, or shall make a general assignment
for the benefit of creditors, or shall fail generally to pay its debts
as they become due, or shall take any action to authorize any of the
foregoing;
(g) an involuntary case or other proceeding shall be commenced
against the Borrower seeking liquidation, reorganization or other
relief with respect to it or its debts under any bankruptcy,
insolvency or other similar law now or hereafter in effect or seeking
the appointment of a trustee, receiver, liquidator, custodian or other
similar official of it or any substantial part of its property, and
such involuntary case or other proceeding shall remain undismissed and
unstayed for a period of 90 days; or an order for relief shall be
entered against the Borrower under the federal bankruptcy laws as now
or hereafter in effect;
(h) one or more final, non-appealable judgments or decrees in an
aggregate amount of $250,000 or more shall be entered by a court or
courts of competent jurisdiction against the Borrower or its
Consolidated Subsidiaries (other than any judgment as to which, and
only to the extent, a reputable insurance company has acknowledged
coverage of such claim in writing) and (i) any such judgments or
decrees shall not be stayed, discharged, paid, bonded or vacated
within thirty (30) days or (ii) enforcement proceedings shall be
commenced by any creditor on any such judgments or decrees;
(i) a Change of Control;
(j) Borrower shall cease at any time to qualify to be a publicly
traded, registered reporting company under the Securities Exchange Act
of 1934;
(k) if any Termination Event with respect to a Plan shall occur
as a result of which Termination Event or Events any member of the
ERISA Group has incurred or may incur any liability to the PBGC or any
other Person and the sum (determined as of the date of occurrence of
such Termination Event) of the insufficiency of such Plan and the
insufficiency of any and all other Plans with respect to which such a
Termination Event shall occur and be continuing (or, in the case of a
Multiple Employer Plan with respect to which a Termination Event
described in clause (ii) of the definition of Termination Event shall
occur and be continuing, the liability of the Borrower) is equal to or
greater than $250,000 and which Lender reasonably determines will have
a Material Adverse Effect;
(l) if, any member of the ERISA Group shall commit a failure
described in Section 402(f)(1) of ERISA or Section 412(n)(1) of the
Code and the amount of the lien determined under Section 402(f)(3) of
ERISA or Section 412(n)(3) of the Code that could reasonably be
expected to be imposed on any member of the ERISA Group or their
assets in respect of such failure shall be equal to or greater than
$250,000 and which Lender reasonably determines will have a Material
Adverse Effect;
(m) at any time, for any reason the Borrower seeks to repudiate
its obligations under any Loan Document;
(n) a default beyond any applicable notice or grace period under
any of the other Loan Documents; or
(o) An event of default shall occur pursuant to the terms of the
Preferred Stock Agreement, or the Senior Term Loan Agreement, each
dated October 15, 1998, and between Borrower and Merry Land &
Investment Company, Inc.
Section 1.14 RIGHTS AND REMEDIES. Upon the occurrence of any Event
of Default described in Sections 6.1(f) or (g), the Loan and any and all
other Obligations hereunder shall automatically become immediately due and
payable, with all additional interest from time to time accrued thereon and
without presentation, demand, or protest or other requirements of any kind
(including, without limitation, valuation and appraisement, diligence,
presentment, notice of intent to demand or accelerate and notice of
acceleration), all of which are hereby expressly waived by the Borrower;
and upon the occurrence and during the continuance of any other Event of
Default, Lender may, by written notice to the Borrower, declare the unpaid
principal amount of and any and all accrued and unpaid interest on the Loan
and any and all other Obligations hereunder to be, and the same shall
thereupon be, immediately due and payable with all additional interest from
time to time accrued thereon and (except as otherwise as provided in the
Loan Documents) without presentation, demand, or protest or other
requirements of any kind (including, without limitation, valuation and
appraisement, diligence, presentment, notice of intent to demand or
accelerate and notice of acceleration), all of which are hereby expressly
waived by the Borrower.
ARTICLE I
SUBORDINATION
Section 1.15 AGREEMENT TO SUBORDINATE. Lender by accepting the
Note agrees that the indebtedness evidenced by the Note is subordinated in
right of payment and exercise of certain remedies, to the extent and in the
manner provided in this Article VII to the prior payment in full of all
Senior Indebtedness and that the subordination is for the benefit of Senior
Lenders.
Section 1.16 LIQUIDATION, DISSOLUTION, BANKRUPTCY. Upon any
distribution to creditors of Borrower in liquidation or a total or partial
dissolution or winding up of Borrower, whether voluntary or involuntary, or
in a bankruptcy, reorganization, insolvency, receivership or similar
proceeding relating to Borrower or its property, all indebtedness evidenced
by the Note shall become due and payable, and:
(a) Senior Lenders shall receive payment in full of the Senior
Indebtedness before Lender shall be entitled to receive any payment or
distribution (including, without limitation, payments or distributions
received by set-off, counterclaim or other similar means) in respect
of the Note in cash, securities or other property whether such payment
or distribution is made to Lender by or on behalf of Borrower or from
its assets or any other source; and
(b) until the Senior Indebtedness is paid in full, any payment
or distribution to which Lender would be entitled but for this
Agreement shall be made to Senior Lenders.
For purposes of this Section 9, "paid in full" or "payment in full",
as used with respect to Senior Indebtedness, means the receipt of Cash or
Cash Equivalents of the principal amount of the Senior Indebtedness and
premium or prepayment fees, if any, and interest thereon to the date of
such payment and all fees or expenses due to Senior Lenders pursuant to the
Senior Loan Documents and the termination of any obligation of Senior
Lenders to make any further loans or advances to Borrower pursuant to the
Senior Loan Documents.
Section 1.17 DEFAULT ON SENIOR INDEBTEDNESS AND PREPAYMENT AND
ACCELERATION. No direct or indirect payment or distribution by or on
behalf of Borrower in respect of the Note, whether pursuant to the terms of
the Note or upon acceleration or otherwise, shall be made if, at the time
of such payment or distribution there exists a default in the payment of
any obligations owing to Senior Lenders with respect to Senior Indebtedness
or, prior to the payment in full of the Senior Indebtedness, any Event of
Default under Sections 6.1(f) or 6.1(g) of this Agreement (collectively a
"Payment or Bankruptcy Default"). In addition, during the continuance of
any other event of default with respect to any Senior Indebtedness pursuant
to which the maturity thereof may be accelerated (a "Covenant Default"),
upon (i) receipt by Lenders of written notice of such default and
commencement of a "Payment Blockage Period" (as defined below) from any
Senior Lender, or (ii) if such event of default results from the failure to
make any payment due with respect to the Note, the date of such failure, no
such payment or distribution may be made by or on behalf of Borrower upon
or in respect of the Note for a period ("Payment Blockage Period")
commencing on the earlier of the date of receipt of such notice or the date
of such failure and ending 90 days thereafter (unless such Payment Blockage
Period shall be terminated by written notice to Lender from Senior
Lenders). For all purposes of this Section 7.3, a Payment Blockage Period
may not be commenced by any Senior Lender, unless 364 days has passed since
the expiration or termination of any previous Payment Blockage Period, and
no facts or circumstances constituting a Covenant Default on the date a
Payment Blockage Period is commenced may be used or shall be effective as a
basis for any other Payment Blockage Period unless such Covenant Default
was waived by Senior Lenders for not less than 90 days.
Section 1.18 WHEN DISTRIBUTION MUST BE PAID OVER. If any payment or
other distribution is made by or on behalf of Borrower, or from any of its
assets or any other source (including, without limitation, any judgment to
Lender that because of this Article VII (including, without limitation,
Sections 7.2 and 7.3) should not have been made to it), Lender shall hold
such payment in trust for Senior Lenders and (whether in cash, securities
or otherwise) pay it over to Senior Lenders, for their benefit. The
forgoing notwithstanding, however, (i) Lender shall not be required to pay
any such distribution or payment to Senior Lenders, if Lender notifies
Senior Lenders that it has received such a distribution or payment and
Senior Lenders do not demand that such distribution or payment be paid to
Senior Lenders within 30 days after receipt of such notice, or (ii) if,
with respect to payments or distributions received by Lender during a
Monetary Default or Bankruptcy Period, Lender had no actual knowledge of
such applicable Payment or Bankruptcy Default and Senior Lenders do not
notify Lender of such Payment or Bankruptcy Default within 10 Business Days
after Senior Lenders obtain knowledge of such Payment or Bankruptcy
Default.
Section 1.19 ACTIONS WITH RESPECT TO SENIOR INDEBTEDNESS. The
subordination of the indebtedness evidenced by the Note pursuant to this
Article VII shall not be impaired, effected or diminished by (i) any
extension of time for payment or the performance of any obligations granted
to Borrower by Senior Lenders, (ii) any action taken under the Senior Loan
Documents by any Senior Lender in the exercise of any right thereby
conferred, or (iii) any delay, failure or omission on the part of any
Senior Lender to enforce any such right.
Section 1.20 SUBROGATION. After all Senior Indebtedness is paid in
full and until the Note is paid in full, Lender shall be subrogated to the
rights of Senior Lenders to receive distributions applicable to Senior
Indebtedness. A distribution made under this Article VII to any Senior
Lender which otherwise would have been made to Lender is not, as between
Borrower and such Senior Lender, a payment by Borrower on Senior
Indebtedness.
Section 1.21 RELATIVE RIGHTS. This Article VII defines the relative
rights of Lender and Senior Lenders. Nothing in this Agreement shall:
(a) impair, as between Borrower and Lender, the obligation of
Borrower, which is absolute and unconditional, to pay principal of and
interest on the Note in accordance with its terms, or
(b) prevent Lender from exercising its available remedies upon
an Event of Default,
subject to the terms and provisions of Section 7.3. and to the
rights of Senior Lenders to receive, pursuant to this Article VII,
amounts otherwise payable to Lender.
Section 1.22 SUBORDINATION MAY NOT BE IMPAIRED BY BORROWER. No
right of any Senior Lender to enforce the subordination of the indebtedness
evidenced by the Note shall be impaired pursuant to this Article VII by any
act or failure to act by Borrower or by Borrower's failure to comply with
this Article VII (other than Borrower's failure to comply with
Section 7.10).
Section 1.23 LENDER ENTITLED TO RELY. Upon any payment or
distribution pursuant to Section 7.2, Lender shall be entitled to rely
(i) upon any order or decree of a court of competent jurisdiction in which
any proceedings of the nature referred to in Section 7.2 are pending,
(ii) upon a certificate of the liquidating trustee or agent or other person
making such payment or distribution to Lender or (iii) upon any Senior
Lender for the purpose of ascertaining the persons entitled to participate
in such payment or distribution, the holders of the Senior Indebtedness and
other indebtedness of Borrower, the amount thereof or payable thereon, the
amount or amounts paid or distributed thereon and all other facts pertinent
thereto or to this Article VII.
Section 1.24 NOTICE TO, AND ACKNOWLEDGMENT BY, LENDER. At least 15
days prior to incurring any additional Senior Indebtedness Borrower shall
notify Lender in writing of Borrower's intention to incur such Senior
Indebtedness and, at least 5 days prior to incurring such additional Senior
Indebtedness Borrower shall deliver to Lender drafts of the Senior Loan
Documents with respect to such Senior Indebtedness which Borrower proposes
to execute, and Lender, upon Borrower's request, PROVIDED THAT a Default or
Event of Default does not then exist and would not exist after giving
effect to the incurrence of such Senior Indebtedness, and that the Senior
Loan Documents with respect to such additional Senior Indebtedness are
substantially the same as the drafts delivered to Lender, shall acknowledge
that such Senior Indebtedness is Senior Indebtedness within the meaning of
this Agreement. Within ten days after incurring additional Senior
Indebtedness, Borrower shall deliver to Lender copies of the Senior Loan
Documents with respect to such Senior Indebtedness, as executed.
ARTICLE I
TAXES
(a) Any and all payments by the Borrower to or for the account
of Lender hereunder or under any other Loan Document shall be made
free and clear of and without deduction for any and all present or
future taxes, duties, levies, imposts, deductions, charges or
withholdings, and all liabilities with respect thereto, EXCLUDING,
taxes imposed on its income, and franchise taxes imposed on it, by the
jurisdiction under the laws of which Lender is organized or any
political subdivision thereof or by any other jurisdiction (or any
political subdivision thereof) as a result of a present or former
connection between Lender and such other jurisdiction or by the United
States (all such non-excluded taxes, duties, levies, imposts,
deductions, charges, withholdings and liabilities being hereinafter
referred to as "NON-EXCLUDED TAXES"). If the Borrower shall be
required by law to deduct any Non-Excluded Taxes from or in respect of
any sum payable hereunder or under any Note, (i) the sum payable shall
be increased as necessary so that after making all required deductions
(including deductions applicable to additional sums payable under this
Article VIII) Lender receives an amount equal to the sum it would have
received had no such deductions been made, (ii) the Borrower shall
make such deductions, (iii) the Borrower shall pay the full amount
deducted to the relevant taxation authority or other authority in
accordance with applicable law and (iv) the Borrower shall furnish to
Lender, at its address referred to in Section 9.1, the original or a
certified copy of a receipt evidencing payment thereof.
(b) In addition, the Borrower agrees to pay any present or
future stamp or documentary taxes and any other excise or property
taxes, or charges or similar levies which arise from any payment made
hereunder or under the Note or from the execution or delivery of, or
otherwise with respect to, this Agreement or the Note (hereinafter
referred to as "OTHER TAXES").
(c) The Borrower agrees to indemnify Lender for the full
amount of Non-Excluded Taxes or Other Taxes (including, without
limitation, any Non-Excluded Taxes or Other Taxes imposed or asserted
by any jurisdiction on amounts payable under this Article VIII) paid
by Lender and, so long as Lender has promptly paid any such
Non-Excluded Taxes or Other Taxes, any liability for penalties and
interest arising therefrom or with respect thereto. This
indemnification shall be made within 15 days from the date Lender
makes demand therefor.
ARTICLE I
MISCELLANEOUS
Section 1.24 NOTICES. All notices, requests and other communications
to any party hereunder shall be in writing (including bank wire, telex,
facsimile transmission followed by telephonic confirmation or similar
writing) and shall be given to such party: (x) in the case of the
Borrower, or Lender, at its address, telex number or facsimile number set
forth on the signature pages hereof with a duplicate copy thereof, in the
case of Lender, to Lender, at 000 Xxxxx Xxxxxx, Xxxxxxx, XX 00000, (y) in
the case of Borrower, to 000 Xxxxx Xxxxxx, Xxxxxxx, XX 00000, or (z) in the
case of any party, such other address, telex number or facsimile number as
such party may hereafter specify for the purpose by notice to the other
party. Each such notice, request or other communication shall be effective
(i) if given by telex or facsimile transmission, when such telex or
facsimile is transmitted to the telex number or facsimile number specified
in this Section and the appropriate answerback or facsimile confirmation is
received, (ii) if given by certified registered mail, return receipt
requested, with first class postage prepaid, addressed as aforesaid, upon
receipt or refusal to accept delivery, (iii) if given by a nationally
recognized overnight carrier, 24 hours after such communication is
deposited with such carrier with postage prepaid for next day delivery, or
(iv) if given by any other means, when delivered at the address specified
in this Section; PROVIDED that notices to Lender under Article VII shall
not be effective until received.
Section 1.24 NO WAIVERS. No failure or delay by Lender in exercising
any right, power or privilege hereunder or under the Note shall operate as
a waiver thereof nor shall any single or partial exercise thereof preclude
any other or further exercise thereof or the exercise of any other right,
power or privilege. The rights and remedies herein provided shall be
cumulative and not exclusive of any rights or remedies provided by law.
Section 1.24 EXPENSES; INDEMNIFICATION.
(d) Subject to the terms of the Transaction Cost Agreement, the
Borrower shall pay within thirty (30) days after written notice from
Lender, (i) all reasonable out-of-pocket costs and expenses of Lender
(including reasonable fees and disbursements of its counsel) in
connection with the preparation of this Agreement, the Loan Documents
and the documents and instruments referred to therein, and any waiver
or consent hereunder or any amendment hereof or any Default or alleged
Default hereunder, (ii) if an Event of Default occurs, all reasonable
out-of-pocket expenses incurred by Lender, including fees and
disbursements of counsel for Lender, in connection with the
enforcement of the Loan Documents and the instruments referred to
therein and such Event of Default and collection, bankruptcy,
insolvency and other enforcement proceedings resulting therefrom;
(e) The Borrower agrees to indemnify Lender, their respective
affiliates and the respective directors, officers, agents and
employees of the foregoing (each an "INDEMNITEE") and hold each
Indemnitee harmless from and against any and all liabilities, losses,
damages, costs and expenses of any kind, including, without
limitation, the reasonable fees and disbursements of counsel, which
may be incurred by such Indemnitee in connection with any
investigative, administrative or judicial proceeding that may at any
time (including, without limitation, at any time following the payment
of the Obligations) be asserted against any Indemnitee, as a result
of, or arising out of, or in any way related to or by reason of,
(i) any of the transactions contemplated by the Loan Documents or the
execution, delivery or performance of any Loan Document, (ii) any
violation by the Borrower or the Environmental Affiliates of any
applicable Environmental Law, (iii) any Environmental Claim arising
out of the management, use, control, ownership or operation of
property or assets by the Borrower or any of the Environmental
Affiliates, including, without limitation, all on-site and off-site
activities of Borrower or any Environmental Affiliate involving
Materials of Environmental Concern, (iv) the breach of any
environmental representation or warranty set forth herein, but
excluding those liabilities, losses, damages, costs and expenses
(a) for which such Indemnitee has been compensated pursuant to the
terms of this Agreement, (b) incurred solely by reason of the gross
negligence, willful misconduct bad faith or fraud of any Indemnitee as
finally determined by a court of competent jurisdiction,
(c) violations of Environmental Laws relating to a Property which are
caused by the act or omission of such Indemnitee after such Indemnitee
takes possession of such Property or (d) any liability of such
Indemnitee to any third party based upon contractual obligations of
such Indemnitee owing to such third party which are not expressly set
forth in the Loan Documents. In addition, the indemnification set
forth in this Section 9.3(b) in favor of any director, officer, agent
or employee of Lender shall be solely in their respective capacities
as such director, officer, agent or employee. The Borrower's
obligations under this Section shall survive the termination of this
Agreement and the payment of the Obligations.
Section 1.24 SET-OFF. In addition to any rights now or hereafter
granted under applicable law or otherwise, and not by way of limitation of
any such rights, upon the occurrence and during the continuance of any
Event of Default, Lender is hereby authorized at any time or from time to
time, without presentment, demand, protest or other notice of any kind to
the Borrower or to any other Person, any such notice being hereby expressly
waived, to set off and to appropriate and apply any and all deposits
(general or special, time or demand, provisional or final) and any other
indebtedness at any time held or owing by Lender to or for the credit or
the account of the Borrower against and on account of the Obligations of
the Borrower then due and payable to Lender under this Agreement or under
any of the other Loan Documents.
Section 1.24 AMENDMENTS AND WAIVERS. Any provision of this Agreement
or the Note or other Loan Documents may be amended or waived if, but only
if, such amendment or waiver is in writing and is signed by the Borrower
and Lender.
Section 1.24 SUCCESSORS AND ASSIGNS. The provisions of this
Agreement shall be binding upon and inure to the benefit of the parties
hereto and their respective successors and assigns, except that the
Borrower may not assign or otherwise transfer any of its rights under this
Agreement or the other Loan Documents without the prior written consent of
Lender.
Section 1.24 GOVERNING LAW; SUBMISSION TO JURISDICTION.
(f) THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS AND THE RIGHTS
AND OBLIGATIONS OF THE PARTIES HEREUNDER AND THEREUNDER SHALL BE
CONSTRUED IN ACCORDANCE WITH AND BE GOVERNED BY THE LAWS OF THE STATE
OF ILLINOIS (WITHOUT GIVING EFFECT TO THE PRINCIPLES THEREOF RELATING
TO CONFLICTS OF LAW).
(g) Any legal action or proceeding with respect to this
Agreement or any other Loan Document and any action for enforcement of
any judgment in respect thereof may be brought in the courts of the
State of Illinois or of the United States of America for the Northern
District of Illinois, and, by execution and delivery of this
Agreement, the Borrower hereby accepts for itself and in respect of
its property, generally and unconditionally, the non-exclusive
jurisdiction of the aforesaid courts and appellate courts from any
thereof. The Borrower irrevocably consents to the service of process
out of any of the aforementioned courts in any such action or
proceeding by the hand delivery, or mailing of copies thereof by
registered or certified mail, postage prepaid, to the Borrower at its
address set forth below. The Borrower hereby irrevocably waives any
objection which it may now or hereafter have to the laying of venue of
any of the aforesaid actions or proceedings arising out of or in
connection with this Agreement or any other Loan Document brought in
the courts referred to above and hereby further irrevocably waives and
agrees not to plead or claim in any such court that any such action or
proceeding brought in any such court has been brought in an
inconvenient forum. Nothing herein shall affect the right of Lender
to serve process in any other manner permitted by law or to commence
legal proceedings or otherwise proceed against the Borrower in any
other jurisdiction.
Section 1.24 COUNTERPARTS; INTEGRATION; EFFECTIVENESS. This
Agreement may be signed in any number of counterparts, each of which shall
be an original, with the same effect as if the signatures thereto and
hereto were upon the same instrument. This Agreement constitutes the
entire agreement and understanding among the parties hereto and supersedes
any and all prior agreements and understandings, oral or written, relating
to the subject matter hereof. This Agreement shall become effective upon
receipt by Lender and the Borrower of counterparts hereof signed by each
of the parties hereto.
Section 1.24 WAIVER OF JURY TRIAL. EACH OF THE BORROWER AND LENDER
HEREBY IRREVOCABLY WAIVE ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL
PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS
CONTEMPLATED HEREBY.
Section 1.24 SURVIVAL. All indemnities set forth herein shall
survive the execution and delivery of this Agreement and the other Loan
Documents and the making and repayment of the Loans hereunder.
Section 1.24 LIMITATION OF LIABILITY. No claim may be made by the
Borrower or any other Person acting by or through Borrower against Lender
or the affiliates, directors, officers, employees, attorneys, agent,
successors or assigns of any of them for any consequential or punitive
damages in respect of any claim for breach of contract or any other theory
of liability arising out of or related to the transactions contemplated by
this Agreement or by the other Loan Documents, or any act, omission or
event occurring in connection therewith; and the Borrower hereby waives,
releases and agrees not to xxx upon any claim for any such damages, whether
or not accrued and whether or not known or suspected to exist in its favor.
Section 1.24 RECOURSE OBLIGATION. This Agreement and the
Obligations hereunder are fully recourse to the Borrower. Notwithstanding
the foregoing, no recourse under or upon any obligation, covenant, or
agreement contained in this Agreement shall be had against any officer,
director, shareholder or employee of the Borrower, except in the event of
fraud or misappropriation of funds on the part of such officer, director,
shareholder or employee.
Section 1.24 CONFIDENTIALITY. Lender shall use reasonable efforts
to assure that information about Borrower and its Subsidiaries and the
Properties thereof and their operations, affairs and financial condition,
not generally disclosed to the public, which is furnished to Lender
pursuant to the provisions hereof or any other Loan Document is used only
for the purposes of this Agreement and shall not be divulged to any Person
other than Lender, and their affiliates and respective officers, directors,
employees and agents who are actively and directly participating in the
evaluation, administration or enforcement of the Loan, except: (a) to
their attorneys and accountants, (b) in connection with the enforcement of
the rights and exercise of any remedies of Lender hereunder and under the
other Loan Documents, (c) in connection with assignments and participations
and the solicitation of prospective assignees and participants, who have
agreed in writing to be bound by a confidentiality agreement substantially
equivalent to the terms of this Section 9.13, and (d) as may otherwise be
required or requested by any regulatory authority having jurisdiction over
Lender or by any applicable law, rule, regulation or judicial process.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed by their respective authorized officers as of the day and
year first above written.
BORROWER:
MERRY LAND PROPERTIES INC.
By:
Name:
Title:
Fascimile number: (000) 000-0000
Address: 000 Xxxxx Xxxxxx
Xxxxxxx, XX 00000
LENDER:
MERRY LAND & INVESTMENT COMPANY, INC.
By:
Name:
Title:
Fascimile number: (000) 000-0000
Address: 000 Xxxxx Xxxxxx
Xxxxxxx, XX 00000
