EXHIBIT 10.1
CWT DRAFT: 2/12/98
AMENDED AND RESTATED
CASH COLLATERAL ACCOUNT
SECURITY, PLEDGE AND ASSIGNMENT AGREEMENT
among
MID-AMERICA CAPITAL PARTNERS, L.P.
and
MID-AMERICA APARTMENTS, L.P.
and
FIRST UNION NATIONAL BANK,
as Account Bank
and
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ MORTGAGE CAPITAL INC.,
as Bridge Lender
and
LASALLE NATIONAL BANK,
as Trustee
Dated effective as of November 21, 1997
AMENDED AND RESTATED
CASH COLLATERAL ACCOUNT
SECURITY, PLEDGE AND ASSIGNMENT AGREEMENT
This AMENDED AND RESTATED CASH COLLATERAL ACCOUNT SECURITY, PLEDGE
AND ASSIGNMENT AGREEMENT (this "AGREEMENT"), dated effective as of November 21,
1997, among MID-AMERICA CAPITAL PARTNERS, L.P. (the "Partnership"), MID-AMERICA
APARTMENTS, L.P. ("MAALP"), FIRST UNION NATIONAL BANK ("ACCOUNT BANK"), ▇▇▇▇▇▇
▇▇▇▇▇▇▇ MORTGAGE CAPITAL INC. (the "BRIDGE LENDER") and LASALLE NATIONAL BANK,
as trustee under the Indenture described below for the benefit of the holders
from time to time of the Notes described below ("TRUSTEE").
W I T N E S S E T H:
WHEREAS, the Partnership is the owner of fee interests in the
properties described in EXHIBIT A attached hereto (individually, a "PROPERTY"
and, collectively, the "PREMISES");
WHEREAS, the Partnership has issued its First Mortgage Bridge Notes
to the Bridge Lender in the principal amount of $140,000,000 pursuant to an
Indenture, dated as of November 21, 1997 (the "ORIGINAL INDENTURE"), between
Issuer and Trustee, as trustee thereunder, concurrently with the execution and
delivery of that certain Cash Collateral Account Security, Pledge and Assignment
Agreement dated as of November 21, 1997 among the parties hereto (the "ORIGINAL
AGREEMENT"), and intends to issue its First Mortgage Bonds in the maximum
aggregate principal amount of $142,000,000 (said First Mortgage Bridge Notes and
First Mortgage Bonds, collectively, the "NOTES") pursuant to a Restated
Supplemental Indenture, dated effective as of the date hereof, which supplements
and restates the Original Indenture (as so supplemented and restated, and as the
same may be further amended, supplemented or restated from time to time, the
"INDENTURE");
WHEREAS, the Notes are and are to be secured by (i) Deeds of Trust,
Assignments of Rents and Leases and Security Agreements, each dated as of the
date hereof (collectively, the "MORTGAGE"), between the Partnership, as grantor,
and Trustee, as beneficiary, (ii) Assignments of Leases, Rents and Security
Deposits, dated as of the date hereof (collectively, the "ASSIGNMENT"), (iii)
the Original Agreement and this Agreement as an amendment and restatement of the
Original Agreement and (iv) the other Security Documents (as defined in the
Indenture);
WHEREAS, pursuant to the Mortgage and the Assignment, the
Partnership has granted to Trustee a security interest in the Rents (as defined
in the Mortgage) and other revenues derived from or otherwise attributable or
allocable to the Premises, and has absolutely assigned and conveyed to Trustee
all of the rents, income, revenue, issues and profits due and to become due or
to which the Partnership is now or may hereafter become entitled, arising out of
the Leases (as defined in the Mortgage) or the Premises or any part or parts
thereof; and
WHEREAS, in order further to effectuate the assignment of Rents (as
defined in the Mortgage) and profits by the Partnership to Trustee, the
Partnership has agreed to establish the Operating Account, the Interest Escrow
Account, the Mortgage Escrow Account, the Replacement Reserve Account, the
Deferred Maintenance Account and the Environmental Remediation Account (as such
terms are defined in Paragraph 3(a)) (the Operating Account, the Interest Escrow
Account, the Mortgage Escrow Account, the Replacement Reserve Account, the
Deferred Maintenance Account and the Environmental Remediation Account are
hereinafter collectively referred to as the "ACCOUNTS") with Account Bank and to
grant to Account Bank, for the benefit of Trustee, a perfected first priority
security interest therein upon the terms and subject to the conditions hereof.
NOW, THEREFORE, in consideration of the agreements and covenants
hereinafter contained and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto hereby agree
that the Original Agreement is hereby amended and restated to read in its
entirety as follows:
1. DEFINED TERMS. Capitalized terms used but not defined herein
shall have the respective meanings given thereto in the Indenture unless
otherwise expressly provided herein.
2. SECURITY FOR OBLIGATIONS. To secure the full and punctual payment
and performance of all obligations of the Partnership now or hereafter existing
with respect to the Notes, whether for principal, interest, fees, expenses or
otherwise, and all obligations of the Partnership now or hereafter existing
under the Notes, the Indenture, the Mortgage, this Agreement and all other
Security Documents (all such obligations, collectively, the "OBLIGATIONS"), the
Partnership hereby sells, assigns, conveys, pledges, grants and transfers to
Account Bank, for the benefit of Trustee, a first priority continuing security
interest in and to the following property of the Partnership, whether now owned
or existing or hereafter acquired or arising and regardless of where located
(all of the same, collectively, the "COLLATERAL"):
(a) the Accounts and all cash, checks, drafts, certificates,
instruments and other assets, if any, from time to time deposited or held in the
Accounts from time to time including, without limitation, all deposits or
transfers made to the Accounts pursuant to Paragraph 3(a) hereof;
(b) any and all Permitted Investments (as defined in
Exhibit C) held in the Accounts;
(c) all interest, dividends, cash, instruments and other
property from time to time received, receivable or otherwise payable in respect
of, or in exchange for, any or all of the foregoing (however, subsequent to a
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disbursement to the Partnership pursuant to the terms of the Mortgage and this
Agreement, such disbursed funds shall be free and clear of the security interest
created by this Agreement); and
(d) to the extent not covered by clauses (a), (b) or (c)
above, all proceeds (as defined under the Uniform Commercial Code as in effect
in the State in which the Accounts are located (the "UCC")) of any or all of the
foregoing.
The parties hereto hereby appoint Account Bank to serve as account
bank hereunder. Account Bank hereby accepts such appointment and agrees to hold
and maintain the Accounts in accordance with this Agreement. Account Bank, on
behalf of Trustee, shall have with respect to the Collateral, in addition to the
rights and remedies herein set forth, all of the rights and remedies available
to a secured party under the UCC, to be exercised at the written direction of
Trustee as if such rights and remedies were fully set forth herein.
3. CASH COLLATERAL ACCOUNTS.
(a) The Partnership hereby establishes in the name of Account
Bank, for the benefit of Trustee, as secured party, a segregated cash collateral
account (the "OPERATING ACCOUNT") with Account Bank. The Partnership has
delivered irrevocable written instructions in the form attached hereto as
EXHIBIT B to the banks listed on Schedule I hereto, which hold the operating
accounts for the Premises (the "PROPERTY ACCOUNTS"), pursuant to which such
banks have been instructed to deposit on a daily basis by transfer to the
Operating Account, upon receipt, all operating revenue from the Premises, and
other amounts received in the Property Accounts, except for daily maximum
amounts the Property Accounts are to retain as shown on Schedule 1. The
Partnership hereby represents, warrants and covenants that (w) all property
managers of the Premises have been instructed pursuant to letters of instruction
delivered to Trustee at the Closing to deposit directly, on a daily basis, all
checks and all funds and revenues received with respect to the Premises ("REAL
PROPERTY REVENUES"), including, without limitation, with respect to rental due
under the Leases, to the respective Property Account, (x) all Real Property
Revenues will be deposited into the Property Account, (y) there are no other
accounts maintained by the Partnership or any other Person with respect to the
collection of Real Property Revenues and (z) so long as any Notes shall be
Outstanding and the Permitted Merger shall not have occurred, neither it nor any
other Person shall open any other such accounts.
In addition, the Partnership hereby establishes in the name of
Account Bank, for the benefit of Trustee, as secured party, a segregated cash
collateral account (the "INTEREST ESCROW ACCOUNT") with Account Bank. The
Partnership hereby establishes in the name of Account Bank, for the benefit of
Trustee, as secured party, a segregated cash collateral account (the "MORTGAGE
ESCROW ACCOUNT") with Account Bank. The Partnership hereby establishes in the
name of Account Bank, for the benefit of Trustee, as secured party, a segregated
cash collateral account (the "REPLACEMENT RESERVE ACCOUNT") with Account Bank.
The Partnership hereby establishes in the name of Account Bank, for the benefit
of Trustee, as secured party, a segregated cash collateral account (the
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"DEFERRED MAINTENANCE ACCOUNT") with Account Bank. The Partnership hereby
establishes in the name of Account Bank, for the benefit of Trustee, as secured
party, a segregated cash collateral account (the "ENVIRONMENTAL REMEDIATION
ACCOUNT") with Account Bank.
The Collateral shall be held in the Accounts in accordance with the
terms of this Agreement. The Partnership agrees that prior to the earlier of the
Permitted Merger Date or payment in full of the Notes, this Agreement shall be
irrevocable by the Partnership without the prior written consent of each Holder
of an Outstanding Security. The Accounts shall be subject to such applicable
laws, and such applicable regulations of the Board of Governors of the Federal
Reserve System and of any other banking or governmental authority, as may now or
hereafter be in effect. Interest accruing on the Accounts shall be periodically
added to the principal amount of the Accounts and shall be held, disbursed and
applied in accordance with the provisions of this Agreement. All statements
relating to the Accounts shall be issued by Account Bank to Trustee (or
Trustee's representative) and the Partnership. The Partnership shall be the
beneficial owner of the Accounts for federal income tax purposes and shall
report all income on the Accounts. Returned items in the Property Accounts will
be charged against the Partnership in the succeeding month.
(b) Each of the Partnership and MAALP hereby agrees that all
amounts required to be deposited in the Property Accounts and received by the
Partnership, MAALP or any of their respective Affiliates shall be deposited
immediately into the Property Accounts. Until so deposited, any such amounts
held by the Partnership or MAALP shall be deemed to be Collateral and shall be
held in trust by it for the benefit, and as the property, of Account Bank, for
the benefit of Trustee, and shall not be commingled with any other funds or
property of the Partnership or MAALP.
(c) The Partnership shall deposit in the Interest Escrow
Account on the date hereof the amount of Zero Dollars ($0.00).
(d) The Partnership shall deposit in the Mortgage Escrow
Account on the date hereof the amount of Zero Dollars ($0.00).
(e) The Partnership shall deposit in the Replacement Reserve
Account on the date hereof the amount of Zero Dollars ($0.00).
(f) The Partnership has deposited in the Deferred Maintenance
Account on the date hereof the amount of Six Hundred Thirty-Six Thousand One
Hundred Thirty Dollars ($636,130.00).
(g) The Partnership shall deposit in the Environmental
Remediation Account on the date hereof the amount of zero Dollars ($0.00).
(h) Trustee shall give prompt written notice to Account Bank
of any Event of Default hereunder or under the Notes, the Indenture or any other
Security Document of which a Trust Officer of Trustee has actual knowledge and
of the making of any Advance by the Trustee (each, a "DEFAULT TRIGGER NOTICE")
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and of any claim for indemnity under the Partnership Environmental Indemnity or
the MAALP Environmental Indemnity, in each case of which a Trust Officer of
Trustee has actual knowledge, or of any failure of the Partnership to maintain a
Debt Service Coverage Ratio of at least 1.30 to 1 as set forth in Section
4.19(b) of the Indenture (each, a "FUNDING TRIGGER NOTICE"; any such Funding
Trigger Notice and any Default Trigger Notice, a "TRIGGER NOTICE") and prompt
written notice to Account Bank of the termination of any such Event of Default,
the repayment of any such Advance, the satisfaction by the Partnership or MAALP,
as the case may be, of any such claim or the cure by the Partnership of any such
failure (each, a "TERMINATION NOTICE"). The period from and after actual receipt
by Account Bank of a Default Trigger Notice to and including actual receipt by
Account Bank of a related Termination Notice is referred to herein as a "DEFAULT
PERIOD." The period from and after actual receipt by Account Bank of a Funding
Trigger Notice to and including actual receipt by Account Bank of a related
Termination Notice is referred to herein as a "FUNDING PERIOD." All Default
Periods and all Funding Periods are referred to herein, collectively, as "CASH
MANAGEMENT PERIODS" and, each, as a "CASH MANAGEMENT PERIOD."
(i) The Partnership hereby instructs Account Bank to withdraw
from the Operating Account, in the priority listed below and to the extent
available therein, by 10:00 a.m. New York time on the Business Day preceding
each Payment Date during any Cash Management Period (an "ACCOUNT FUNDING DATE"),
(i) funds in an amount equal to the Monthly Debt Service Payment Amount (as
defined below) and deposit the same into the Interest Escrow Account; (ii) funds
in an amount equal to the Monthly Tax and Insurance Payment Amount (as defined
below) and deposit the same into the Mortgage Escrow Account; and (iii) funds in
an amount equal to the Monthly Replacement Reserve Amount (as defined below) and
deposit the same into the Replacement Reserve Account. "MONTHLY DEBT SERVICE
PAYMENT AMOUNT" means an amount equal to the Debt Service Payment Amount LESS
the funds on deposit in the Interest Escrow Account at the time. "DEBT SERVICE
PAYMENT AMOUNT" means an amount equal to one-twelfth (1/12) of the annual amount
of interest on the Notes Outstanding at the time. "MONTHLY TAX AND INSURANCE
PAYMENT AMOUNT" means an amount equal to the Tax and Insurance Payment Amount
LESS the funds on deposit in the Mortgage Escrow Account at the time. "TAX AND
INSURANCE PAYMENT AMOUNT" means, with respect to each Account Funding Date, an
amount equal to the tax payments and insurance premiums required to be paid
during the six months following such Account Funding Date, as set forth in the
written instructions delivered by the Partnership pursuant to Paragraph 3(k).
"MONTHLY REPLACEMENT RESERVE AMOUNT" means an amount equal to the Replacement
Reserve Amount LESS the amount on deposit in the Replacement Reserve Account at
the time. "REPLACEMENT RESERVE AMOUNT" means an amount equal to $1,189,400.00.
The Partnership shall give written instructions to Account Bank, with a copy to
Trustee, on the Business Day preceding each Account Funding Date, which
instructions shall specify the respective amounts of the withdrawals from the
Operating Account and deposits into each other Account on such Funding Date.
(j) The Partnership hereby instructs Account Bank to withdraw
from the Interest Escrow Account by 11:00 a.m. Chicago time on each Payment Date
during any Cash Management Period and pay to Trustee or its designee amounts
necessary to pay the Debt Service Payment Amount due to Trustee on such Payment
Date. Trustee shall provide Account Bank with written instructions for the wire
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transfer of amounts pursuant to the terms of this Paragraph 3(j), specifying the
date and amount of each such transfer.
(k) On or before the first day of each calendar year during
the term of the Notes, the Partnership shall deliver to Trustee an Officers'
Certificate specifying the approximate amount, the payee, the payee's address
and the due date of each payment of taxes and insurance premiums due during the
succeeding calendar year. Account Bank shall disburse funds from the Mortgage
Escrow Account, to the extent available, to the Partnership from time to time to
pay all real estate taxes and insurance premiums in accordance with the written
instructions delivered pursuant to the immediately succeeding sentence which
instructions the Partnership warrants shall be in accordance with Section 5(a)
of each Mortgage and such Officers' Certificate. The Partnership shall give
written instructions to Account Bank, with an Officers' Certificate to the
Trustee, specifying the amount, the payee, the payee's address, and due date of
each such disbursement and payment. Neither Account Bank nor Trustee shall have
any obligation to monitor or review the Partnership's application of funds
disbursed pursuant to the preceding sentence.
(l) On or before the first day of each calendar year during
the term of the Notes, the Partnership shall deliver to Trustee an Officers'
Certificate setting forth the Replacement Reserve Amount for the succeeding
calendar year. Account Bank shall disburse funds from the Replacement Reserve
Account, to the extent available, to the Partnership from time to time to pay
replacement costs in accordance with the written instructions delivered pursuant
to the immediately succeeding sentence, which instructions the Partnership
warrants shall be in accordance with Section 5(b) of each Mortgage. The
Partnership shall give written instructions to Account Bank, with an Officers'
Certificate to the Trustee, specifying the date, the payee, the payee's address,
and amount of each such disbursement and payment. Neither Account Bank nor
Trustee shall have any obligation to monitor or review the Partnership's
application of funds disbursed pursuant to the preceding sentence.
(m) Account Bank shall disburse funds from the Deferred
Maintenance Account to the Partnership from time to time to reimburse the
Partnership for deferred maintenance costs paid by the Partnership in accordance
with the Required Repairs Agreement, as set forth in written instructions from
Trustee or the Servicer, on behalf of Trustee, specifying the date and amount of
each such disbursement and reimbursement. Neither Account Bank nor Trustee shall
have any obligation to monitor or review the Partnership's application of funds
disbursed pursuant to the preceding sentence.
(n) Account Bank shall disburse funds from the Deferred
Maintenance Account to the Partnership from time to time to reimburse the
Partnership for environmental remediation costs paid by the Partnership in
accordance with the written instructions delivered pursuant to the immediately
succeeding sentence which instructions the Partnership warrants shall be in
accordance with the Environmental Remediation Agreement, as set forth in an
Officers' Certificate delivered by the Partnership to Trustee describing the
amount, payee and payee's address and attaching and certifying invoices. The
Partnership shall give written instructions to the Account Bank describing the
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amount, payee and payee's address. Neither Account Bank nor Trustee shall have
any obligation to monitor or review the Partnership's application of funds
disbursed pursuant to the preceding sentence.
(o) (1) The Partnership shall deliver to Trustee an Officers'
Certificate, dated as of a date within three months of any transfer of funds as
provided below in this Paragraph (o), certifying that no Event of Default has
occurred and is then continuing hereunder or under the Notes, the Indenture or
any of the other Security Documents.
(2) Except during a Cash Management Period, the
Partnership hereby instructs Account Bank (which instructions the parties hereby
authorize Account Bank to follow, and Account Bank agrees to follow) to transfer
all amounts from the Operating Account on a daily basis to such account or
accounts of the Partnership as the Partnership may direct in writing, to pay
operating expenses of the Partnership, to make distributions to the partners of
the Partnership, or otherwise. The Partnership agrees to provide Account Bank
with standing written instructions for the wire transfer or debit of amounts to
be transferred pursuant to this clause (2).
(3) During any Funding Period, the Partnership
hereby instructs Account Bank (which instructions the parties hereby authorize
Account Bank to follow, and Account Bank agrees to follow) to transfer, on any
Payment Date, all amounts remaining in the Operating Account to such account or
accounts of the Partnership as the Partnership may direct in writing, to pay
operating expenses of the Partnership, to make distributions to the partners of
the Partnership, or otherwise. The Partnership agrees to provide Account Bank
with standing written instructions for the wire transfer or debit of amounts to
be transferred pursuant to the terms of this clause (3).
(4) Notwithstanding anything herein provided,
during any Default Period, Account Bank shall disburse funds from any Account
solely to or at the direction of Trustee, as Trustee or any Servicer on behalf
of Trustee may instruct Account Bank in writing (which instructions the
Partnership hereby authorizes Account Bank to follow, and Account Bank agrees to
follow), for the operating expenses of the Partnership, for the payment of the
Obligations or for any other purpose set forth in the Securities, the Indenture
or the other Security Documents.
(5) The funds released to the Partnership pursuant
to the provisions of this Agreement shall be free and clear of any security
interests. Account Bank and, subject to clause 3(o)(4), the Trustee shall have
no duty to monitor and review the application of funds disbursed pursuant to
this Paragraph 3(o).
(p) Trustee may at any time instruct Account Bank in writing,
specifying the date and amount of each such disbursement (which instructions the
Partnership hereby authorizes Account Bank to follow, and Account Bank agrees to
follow), to disburse funds on deposit in the Operating Account to or at the
direction of the Trustee in reimbursement of Advances made pursuant to Section
7.14 of the Indenture. Account Bank shall have no obligation to monitor or
review the application of funds disbursed pursuant to this Paragraph 3(p).
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(q) Upon the occurrence of an Event of Default and the
acceleration of the Notes prior to the Permitted Merger Date, Trustee shall
promptly notify Account Bank in a Trigger Notice of such Event of Default and
acceleration and, without notice to the Partnership from Account Bank or
Trustee, (x) the Partnership shall have no further right in respect of
(including, without limitation, the right to instruct Trustee or Account Bank to
transfer from) the Accounts, and (y) Trustee, in writing, may direct Account
Bank to liquidate any amounts then invested in Permitted Investments, as set
forth on EXHIBIT C hereto (the "PERMITTED INVESTMENTS") or reinvest such amounts
in Permitted Investments of the type described in clause (viii) of the
definition of Permitted Investments which investment shall be Evergreen 100%
Treasury Fund (the "FUND INVESTMENT") to enable Account Bank, for the benefit of
Trustee, or Trustee to exercise and enforce Trustee's rights and remedies
hereunder with respect to any Collateral.
(r) Any amounts held in any of the Accounts shall be invested,
liquidated and reinvested at the Partnership's written direction, in the name of
Account Bank, for the benefit of Trustee, as secured party in Permitted
Investments, except during a Default Period. During a Default Period, any
amounts held in any of the Accounts shall be invested at Trustee's written
direction, in the name of Account Bank, for the benefit of Trustee, as secured
party, in the Fund Investment. Amounts held in the Accounts may be commingled
for purposes of purchasing Permitted Investments. In no event shall Account Bank
or Trustee have any responsibility or liability for the types of investments
made hereunder, nor shall either of them have any duty or responsibility to
confirm that the same are in fact Permitted Investments.
(s) All of the Accounts established pursuant to this Agreement
shall be established and maintained as Eligible Accounts. An "ELIGIBLE ACCOUNT"
is a segregated trust account or accounts maintained with the corporate trust
department of a federal depository institution or state-chartered depository
institution subject to regulations regarding fiduciary funds on deposit similar
to Title 12 of the Code of Federal Regulations Section 9.10(b) which, in either
case, has corporate trust powers, acting in its fiduciary capacity.
(t) Account Bank may rely on any written instructions given to
it by the Partnership, Trustee or the Servicer. In case of conflict between the
instructions of the Partnership, on the one hand, and Trustee or any Servicer,
on the other, Account Bank will follow instructions of the Trustee or such
Servicer, as the case may be.
4. FINANCING STATEMENT; FURTHER ASSURANCES. Simultaneously herewith,
the Partnership shall execute and file (and deliver to the Trustee photostatic
confirmation of such filing) a financing statement or statements in connection
with the Collateral in the form required properly to perfect Account Bank's
security interest, for the benefit of Trustee, therein. Account Bank shall be
under no obligation to monitor such filing. At any time and from time to time,
at the expense of the Partnership, the Partnership shall promptly execute and
deliver all further instruments and documents, and take all further action, that
may be necessary or desirable, or that Account Bank or Trustee may reasonably
request, in order to perfect and protect any security interest granted or
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purported to be granted hereby (including, without limitation, any security
interest in and to any Permitted Investments) or to enable Account Bank or
Trustee to exercise and enforce its rights and remedies hereunder with respect
to any Collateral.
5. TRANSFERS AND OTHER LIENS. Each of the Partnership and MAALP
agrees that it will not (i) sell or otherwise dispose of any of the Collateral
except in accordance with this Agreement or (ii) create or permit to exist any
lien upon or with respect to all or any of the Collateral, except for the lien
of the Indenture, any Mortgage or any other Security Document and the lien
granted to Account Bank, for the benefit of Trustee, under this Agreement.
6. TRUSTEE'S RIGHT TO PERFORM THE PARTNERSHIP'S OBLIGATIONS; NO
LIABILITY OF TRUSTEE. If the Partnership fails to perform any of the covenants
or obligations contained herein, and such failure shall continue for a period
five (5) Business Days after the Partnership's receipt of written notice thereof
from Trustee, Trustee may itself perform, or cause performance of, such
covenants or obligations, and the reasonable expenses of Trustee and its agents,
if any, incurred in connection therewith shall be payable by the Partnership to
Trustee in accordance with Section 10 hereof. Notwithstanding Trustee's right to
perform certain obligations of the Partnership, it is acknowledged and agreed
that the Partnership retains control of the Premises and operation thereof and
notwithstanding anything contained herein or Account Bank's or Trustee's
exercise of any of its rights or remedies hereunder, under the Notes, the
Indenture or any of the other Security Documents or otherwise at law or in
equity, neither Account Bank nor Trustee shall be deemed to be a
mortgagee-in-possession nor shall Trustee or Account Bank be subject to any
liability with respect to the Premises or otherwise based upon any claim of
trustee liability, except to the extent that any loss or damage results from
Trustee's or Account Bank's gross negligence or willful misconduct.
7. REASONABLE CARE.
(a) Account Bank shall have no liability or obligation with
respect to the Accounts except for Account Bank's willful misconduct or gross
negligence. Account Bank's sole responsibility shall be for the safekeeping,
investment and disbursement of the Accounts in accordance with the terms of this
Agreement. Account Bank shall have no implied duties or obligations and shall
not be charged with knowledge or notice of any fact or circumstance except as
specifically set forth herein. Account Bank shall not be obligated to take any
legal action or commence any proceeding in connection with the Accounts or this
Agreement.
(b) Except for the exercise of reasonable care in the custody
thereof, Trustee shall have no duty as to any Collateral in its possession or
control as agent therefor or bailee thereof or any income thereon or the
preservation of rights against any person or otherwise with respect thereto.
Trustee shall be deemed to have exercised reasonable care in the custody and
preservation of the Collateral in its possession if the Collateral is accorded
treatment substantially equal to that which Trustee accords its own property, it
being understood that Trustee shall not be liable or responsible for any loss or
damage to any of the Collateral, or for any diminution in value thereof, by
reason of the act or omission of Trustee, its Affiliates, agents, employees or
bailees, except to the extent that such loss or damage results from the gross
negligence or willful misconduct of Trustee.
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8. REMEDIES. Upon the occurrence of an Event of Default prior to the
Permitted Merger Date, Account Bank, acting upon the written direction of
Trustee, may:
(a) at any time or from time to time, charge, set off and
otherwise apply all or any part of the Collateral against the Obligations
or any part thereof;
(b) at any time and from time to time, exercise any and all
rights and remedies available to it under this Agreement and/or as a
secured party under the UCC; and
(c) demand, collect, take possession of, receipt for, settle,
compromise, adjust, ▇▇▇ for, foreclose or realize upon the Collateral (or
any portion thereof) as Trustee may determine in its sole discretion.
The Partnership hereby expressly waives, to the fullest extent
permitted by law, presentment, demand, protest or any notice of any kind in
connection with this Agreement or the Collateral (except as otherwise provided
herein). The Partnership acknowledges and agrees that ten (10) days' prior
written notice of the time and place of any public sale of the Collateral or any
other intended disposition thereof shall be reasonable and sufficient notice to
the Partnership within the meaning of the UCC.
9. NO WAIVER. The rights and remedies provided in this Agreement,
the Indenture and the other Security Documents are cumulative and may be
exercised independently or concurrently, and are not exclusive of any other
right or remedy provided at law or in equity. No failure to exercise or delay by
Account Bank or Trustee in exercising any right or remedy hereunder or under the
Indenture or the other Security Documents shall impair or prohibit the exercise
of any such rights or remedies in the future or be deemed to constitute a waiver
or limitation of any such right or remedy or acquiescence therein. Every right
and remedy granted to Account Bank and/or Trustee under Paragraph 8 or by law
may be exercised by Account Bank and/or Trustee at any time and from time to
time, and as often as Account Bank and/or Trustee may deem it expedient. Any and
all of Account Bank's and/or Trustee's rights with respect to the lien and
security interest granted hereunder shall continue unimpaired, and the
Partnership shall be and remain obligated in accordance with the terms hereof,
notwithstanding (a) any proceeding of the Partnership under the Federal
Bankruptcy Code or any bankruptcy, insolvency or reorganization laws or statutes
or any state, (b) the release or substitution of Collateral at any time, or of
any rights or interests therein except for any such release as provided in
Article Nine of the Indenture or (c) any delay, extension of time, renewal,
compromise or other indulgence granted by Account Bank and/or Trustee in the
event of any default with respect to the Collateral or otherwise hereunder or
under the Indenture or the other Security Documents. No delay or extension of
time by Account Bank and/or Trustee in exercising any power of sale, option or
other right or remedy hereunder, and no notice or demand which may be given to
or made upon the Partnership by Account Bank and/or Trustee, shall constitute a
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waiver thereof, or limit, impair or prejudice Account Bank's and/or Trustee's
right, without notice or demand (except as herein provided), to take any action
against the Partnership or to exercise any other power of sale, option or any
other right or remedy.
10. FEES AND EXPENSES. The Collateral shall secure, and the
Partnership shall pay to Account Bank and Trustee, their respective agents
and/or Account Bank's and Trustee's respective counsel on demand, from time to
time, all reasonable fees, costs and expenses (including, but not limited to,
reasonable attorneys' fees and disbursements, and transfer, recording and filing
fees, taxes and other charges) of, or incidental to, the creation or perfection
of any Lien or security interest granted or intended to be granted hereby, the
custody, care, sale, transfer, administration, investment, reinvestment,
collection of or realization on the Collateral, or in any way relating to the
enforcement, protection or preservation of the rights or remedies of Account
Bank and/or Trustee under this Agreement, the Note, the Mortgage or the other
Security Documents.
11. ACCOUNT BANK APPOINTED ATTORNEY-IN-FACT. For so long as no Event
of Default hereunder or under the Indenture, the Notes or any of the other
Security Documents shall have occurred and be continuing, the Partnership hereby
irrevocably constitutes and appoints Account Bank as the Partnership's true and
lawful attorney-in-fact, with full power of substitution, to execute,
acknowledge and deliver any instruments and to exercise and enforce every right,
power, remedy, option and privilege of the Partnership with respect to the
Collateral, and do in the name, place and stead of the Partnership, all such
acts, things and deeds for and on behalf of and in the name of the Partnership,
which the Partnership could or might do or which Account Bank or Trustee may
deem necessary or desirable to vest more fully in Account Bank, the rights and
remedies provided for herein and to accomplish the purposes of this Agreement.
The foregoing powers of attorney are irrevocable and coupled with an interest.
Subject to Paragraph 12(a) below, if the Partnership fails to perform any
agreement herein contained, Account Bank, acting upon the written direction of
Trustee, may itself perform or cause performance of any such agreement, and any
reasonable expenses of Account Bank and Trustee incurred in connection therewith
shall be paid by the Partnership as provided in Paragraph 10.
12. LIABILITY OF TRUSTEE AND ACCOUNT BANK.
(a) Account Bank and Trustee shall be responsible for the
performance only of such of their respective duties as are specifically set
forth herein, and no duty shall be implied from any provision hereof or of the
Indenture or any other Security Document. Account Bank shall not be under any
obligation or duty to perform any act which would involve it in expense or
liability or to institute or defend any suit in respect hereof, or to advance
any of its own monies. The Partnership and, following the Permitted Merger Date,
MAALP, with regard to any time period on or after the Permitted Merger Date,
shall indemnify and hold Account Bank and Trustee, their respective employees,
directors, agents, officers and "control persons" within the meaning of the
Securities Act of 1933, as amended, and the Securities Exchange Act of 1934 as
amended, harmless from and against any loss, cost, liability, damage or expense
(including, without limitation, reasonable attorneys' fees and disbursements)
incurred by Account Bank or Trustee or such other persons in connection with the
transactions contemplated hereby or by the Indenture or any other Security
Document (unless a court of competent jurisdiction shall have determined,
subject to no further appeal, that such loss, cost, liability, damage or expense
-11-
has resulted solely from the gross negligence or willful misconduct of Account
Bank or Trustee, as the case may be) and shall make such indemnification
payments on a current basis.
(b) Account Bank and Trustee shall each be protected in acting
upon any Officers' Certificate, notice, resolution, request, consent, order,
certificate, report, opinion, bond or other paper, document or signature
believed by it to be genuine, and Account Bank and Trustee may assume that any
Person purporting to give any of the foregoing in connection with the provisions
hereof has been duly authorized to do so. Account Bank and Trustee may consult
with counsel, and the opinion of such counsel shall be full and complete
authorization and protection in respect of any action taken or suffered by it
hereunder and in good faith in accordance therewith. Neither Account Bank nor
Trustee shall be liable to the Partnership for any act or omission done or
omitted to be done by Account Bank or Trustee in reliance upon any instruction,
direction or certification received by Account Bank from Trustee or by the
Trustee from Securityholders or the Partnership and without gross negligence or
willful or reckless misconduct of Account Bank or the Trustee.
(c) Account Bank is hereby authorized to provide information
in writing concerning the Accounts to such persons or entities as Trustee may
designate to Account Bank in writing, including, without limitation, the Rating
Agencies.
(d) If, at any time, Account Bank shall reasonably determine
that there is any dispute between any of the parties hereto with respect to the
holding or disposition of any funds in any Accounts hereunder, or if at any time
Account Bank is unable to determine, to Account Bank's satisfaction, the proper
disposition of any funds in the Accounts or Account Bank's proper actions with
respect to its obligations hereunder, then Account Bank may suspend the
performance of any of its obligations under this Agreement until such dispute or
uncertainty shall be resolved by written instruction of Trustee acting upon
direction of the holders of the Notes as provided in the Indenture or, at any
time when the sole beneficial owner of the Notes shall be a trustee (the
"CERTIFICATE TRUSTEE") for the benefit of holders of certificates representing
beneficial interests in the Notes (the "CERTIFICATEHOLDERS"), acting upon the
direction of the Certificate Trustee, who shall seek the direction of the
Certificateholders as provided in the related agreement of trust. If no written
instruction of Trustee is delivered to Account Bank or if such written
instruction of Trustee fails to resolve such dispute or uncertainty, Account
Bank may, at its sole option, (i) resign as Account Bank pursuant to Section 14
or (ii) petition (by means of an interpleader action or any other appropriate
method) any court of competent jurisdiction in Charlotte, North Carolina, for
instructions with respect to such dispute or uncertainty, and pay into such
court all funds held by it in the Accounts for holding and disposition in
accordance with the instructions of such court. Account Bank shall have no
liability to any person with respect to any such suspension of performance,
resignation as Account Bank, reliance upon the written instructions of Trustee
or disbursement into court, specifically including any liability or claimed
liability that may arise, or be alleged to have arisen, out of or as a result of
any delay in the disbursement of funds held in the Accounts or any delay in or
with respect to any other action required or requested of Account Bank.
-12-
13. CONTINUING SECURITY INTEREST. This Agreement shall create a
continuing security interest in the Collateral and shall remain in full force
and effect until the earlier of the Permitted Merger Date or payment in full of
the Notes. Upon the earlier of payment in full of the Notes or the occurrence of
the Permitted Merger Date, this Agreement shall terminate (subject to Paragraph
15) and the Partnership shall be entitled to the return, upon its request and at
its expense, of such of the Collateral as shall not have been sold or otherwise
applied pursuant to the terms hereof and Account Bank and/or Trustee shall
execute such instruments and documents prepared by the Partnership and delivered
to Account Bank or Trustee, including UCC-3 termination statements, as may be
reasonably requested by the Partnership to evidence such termination and the
release of the lien hereof.
14. RESIGNATION OF ACCOUNT BANK. (a) Account Bank shall have the
right to resign as Account Bank hereunder upon thirty (30) days' prior written
notice to the Partnership, Trustee and the Rating Agencies, and in the event of
such resignation, the Partnership shall appoint a successor Account Bank which
may be any banking institution which has a rating on its unsecured debt by the
Rating Agencies not lower than "A" or its equivalent. No such resignation by
Account Bank shall become effective until a successor Account Bank shall have
accepted such appointment and executed an instrument by which it shall have
assumed all of the rights and obligations of Account Bank hereunder. If no such
successor Account Bank is appointed within sixty (60) days after receipt of the
resigning Account Bank's notice of resignation, the resigning Account Bank may
petition a court for the appointment of a successor Account Bank. Upon the
acceptance by the successor Account Bank of its appointment, the resigning
Account Bank shall be discharged from its duties and obligations hereunder.
(b) In connection with any resignation by Account Bank, (i)
the resigning Account Bank shall, at the sole cost of the Partnership, (A) duly
assign, transfer and deliver to the successor Account Bank this Agreement and
all cash and Permitted Investments held by it hereunder, (B) execute such
financing statements and other instruments prepared by the Partnership as may be
necessary to assign to the successor Account Bank the security interest in the
Collateral existing in favor of the retiring Account Bank hereunder and to
otherwise give effect to such succession and (C) take such other actions as may
be reasonably requested by the Partnership or the successor Account Bank in
connection with the foregoing and (ii) the successor Account Bank shall
establish in its name, as secured party, cash collateral accounts which shall
become the Accounts for purposes of this Agreement upon the succession of such
Account Bank.
15. TERMINATION OF AGREEMENT. Promptly upon the earlier to occur of
(a) the receipt by Trustee of the notice from the Partnership specified in
Section 9.02(viii) of the Indenture or (b) the satisfaction and discharge of the
Indenture pursuant to Section 6.01 thereof, Trustee shall give written notice of
such event to Account Bank, Account Bank shall disburse all Collateral held by
it, in the Accounts or otherwise, to or at the direction of the Partnership, and
this Agreement shall terminate and be of no further force and effect; PROVIDED,
-13-
HOWEVER, that the provisions for the payment of fees and expenses set forth in
Paragraph 10 and the indemnification obligations of the Partnership and MAALP
set forth in Paragraph 12(a) shall continue in full force and effect.
16. MISCELLANEOUS.
(a) This Agreement constitutes the entire and final agreement
between the parties with respect to the subject matter hereof and may not be
changed, terminated or otherwise varied, except by a writing duly executed by
the parties.
(b) No waiver of any term or condition of this Agreement,
whether by delay, omission or otherwise, shall be effective unless in writing
and signed by the party sought to be charged, and then such waiver shall be
effective only in the specific instance and for the purpose for which given.
(c) This Agreement shall be binding upon and inure to the
benefit of the parties hereto, their respective successors and permitted
assigns.
(d) All notices, demands, requests, consents, approvals and
other communications (any of the foregoing, a "NOTICE") required, permitted, or
desired to be given hereunder shall be in writing sent by telefax or by
registered or certified mail, postage prepaid, return receipt requested or
delivered by hand or reputable overnight courier addressed to the party to be so
notified at its address hereinafter set forth, or to such other address as such
party may hereafter specify in accordance with the provisions of this Paragraph
16(d). Any such Notice shall be deemed to have been received three (3) days
after the date such Notice is mailed or on the date of sending by telefax or
upon delivery by hand or courier addressed to the parties as follows:
If to Trustee: LaSalle National Bank
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attn: Asset Backed Securities Trust
Services Group - Mid-America 1997
If to the Partnership: Mid-America Capital Partners, L.P.
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: Simon ▇.▇. ▇▇▇▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: Simon ▇.▇. ▇▇▇▇▇▇▇▇▇
-14-
With a copy to: ▇▇▇▇ ▇. Good, Esq.
Baker, Donelson, Bearman & ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
If to MAALP: Mid-America Apartments, L.P.
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: Simon ▇.▇. ▇▇▇▇▇▇▇▇▇
With a copy to: ▇▇▇▇ ▇. Good, Esq.
Baker, Donelson, Bearman & ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
If to Account Bank: First Union National Bank
Corporate Trust Bond Administration
9th Floor
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
With a copy to: ▇▇▇▇▇ ▇. ▇▇▇▇▇, Esq.
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇, P.A.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
If to Bridge Lender to: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Mortgage Capital, Inc.
▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇▇▇▇▇▇▇
With a copy to: A. ▇▇▇▇▇▇ ▇▇▇▇▇, Esq.
Cadwalader, ▇▇▇▇▇▇▇▇▇▇ & ▇▇▇▇
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
(e) All captions in this Agreement are included herein for
convenience of reference only and shall not constitute part of this Agreement
for any other purpose.
(f) This Agreement shall be governed by and construed and enforced
in all respects in accordance with the laws of the State in which the Accounts
are located.
(g) This Agreement may be executed in any number of counterparts.
(h) The parties hereby acknowledge that the Account Bank is acting
as independent contractor under this agreement and not as agent for any of the
parties.
-15-
IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement as of the day and year first above written.
ISSUER:
MID-AMERICA CAPITAL PARTNERS, L.P.,
By: MAACP, Inc., its general partner
By _____________________________________
Name:
Title:
MID-AMERICA APARTMENTS, L.P.
By: Mid-America Apartment Communities,
Inc.,
its general partner
By _____________________________________
Name:
Title:
BRIDGE LENDER:
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ MORTGAGE CAPITAL INC.
By _____________________________________
Name:
Title:
TRUSTEE:
LASALLE NATIONAL BANK, as trustee
By ______________________________
Name:
Title:
-16-
ACCOUNT BANK:
FIRST UNION NATIONAL BANK
By ____________________________
Name:
Title:
-17-
SCHEDULE I
LIST OF PROPERTY ACCOUNT BANKS
BANK ADDRESS ACCOUNT TITLE AND NUMBER
EXHIBIT A
to Cash Collateral Agreement
LEGAL DESCRIPTIONS
OF
MORTGAGED PROPERTIES
EXHIBIT B
to Cash Collateral Agreement
LETTER OF INSTRUCTION
[_______ __], 1997
[Name of Property Account Bank]
[Street Address]
[City, State, ZIP Code]
Re: Account Nos. [___________] and [___________]
(COLLECTIVELY, THE "PROPERTY ACCOUNT")
Ladies and Gentlemen:
This letter shall constitute notice to you that the undersigned has
granted a security interest in the above referenced Property Account in favor of
LaSalle National Bank, as Trustee ("TRUSTEE") under an Indenture, dated November
21, 1997, between the undersigned and the Trustee, to secure certain of the
undersigned's obligations under such Indenture. The undersigned hereby
irrevocably instructs and authorizes you to disregard any and all orders for
withdrawal from the Property Account made by or at the direction of the
undersigned or [Name of property manager] other than directions to disburse on a
daily basis all amounts that have been collected that are in the Property
Account (except to retain a maximum of $5,000 collected funds for returned
checks) by transfer of immediately available funds by automatic clearing house
("ACH") to:
Account No. 2020000176886
First Union National Bank
9th Floor
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: Corporate Trust Bond Administration
ABA #▇▇▇▇▇▇▇▇▇
You hereby agree that you have no right of offset against the
Property Account and shall not exercise or attempt to exercise any such right
against the Property Account.
The instructions set forth herein are irrevocable and are not
subject to modification in any manner, except that Trustee under the Indenture,
or any successor Trustee under the Indenture, may by written notice to you
rescind the instructions contained herein.
Sincerely,
MID-AMERICA CAPITAL PARTNERS, L.P.
By: MAACP, Inc., its general partner
By _____________________________
Name:
Title:
ACKNOWLEDGMENT AND AGREEMENT
The undersigned acknowledges notice of the security interest of Trustee and
hereby confirms that the undersigned is not the holder of any pledge or
assignment of the Property Account and has received no notice of any other
pledge or assignment of the Property Account. All payments made by the
undersigned to Trustee or First Union National Bank shall be made irrespective
of, and without deduction for, any counterclaim, defense, recoupment or set-off.
[NAME OF PROPERTY ACCOUNT BANK]
By: _____________________________
Name:
Its:
Dated as of: November [__], 1997
2
EXHIBIT C
to Cash Collateral Agreement
"PERMITTED INVESTMENTS" shall mean any one or more of the following
obligations or securities acquired at a purchase price of not greater than par,
including without limitation those issued by the Trustee under the Indenture or
any of its Affiliates, payable on demand or having a maturity date not later
than the Business Day immediately prior to the first Payment Date following the
date of acquiring such investment, and meeting one of the appropriate standards
set forth below:
(i) obligations of, or obligations fully guaranteed
as to payment of principal and interest by, the United States of
America or any agency or instrumentality thereof provided such
obligations are backed by the full faith and credit of the United
States of America including, without limitation, obligations of: the
U.S. Treasury (all direct or fully guaranteed obligations), the Farmers
Home Administration (certificates of beneficial ownership), the General
Services Administration (participation certificates), the U.S. Maritime
Administration (guaranteed Title XI financing), the Small Business
Administration (guaranteed participation certificates and guaranteed
pool certificates), the U.S. Department of Housing and Urban
Development (local authority bonds) and the Washington Metropolitan
Area Transit Authority (guaranteed transit bonds); PROVIDED, HOWEVER,
that the investments described in this clause (A) must have a
predetermined fixed dollar of principal due at maturity that cannot
vary or change, (B) if rated by Standard & Poor's Rating Services, must
not have an "r" highlighter affixed to their rating, (C) if such
investments have a variable rate of interest, such interest rate must
be tied to a single interest rate index plus a fixed spread (if any)
and must move proportionately with that index, and (D) such investments
must not be subject to liquidation prior to their maturity;
(ii) Federal Housing Administration debentures;
(iii) obligations of the following United States
government sponsored agencies: Federal Home Loan Mortgage Corp. (debt
obligations), the Farm Credit System (consolidated systemwide bonds and
notes), the Federal Home Loan Banks (consolidated debt obligations),
the Federal National Mortgage Association (debt obligations), the
Student Loan Marketing Association (debt obligations), the Financing
Corp. (debt obligations), and the Resolution Funding Corp. (debt
obligations); PROVIDED, HOWEVER, that the investments described in this
clause (A) must have a predetermined fixed dollar of principal due at
maturity that cannot vary or change, (B) if rated by Standard & Poor's
Rating Services, must not have an "r" highlighter affixed to their
rating, (C) if such investments have a variable rate of interest, such
interest rate must be tied to a single interest rate index plus a fixed
spread (if any) and must move proportionately with that index, and (D)
such investments must not be subject to liquidation prior to their
maturity;
(iv) federal funds, unsecured certificates of deposit, time
deposits, bankers' acceptances and repurchase agreements with maturities of not
more than 365 days of any bank, the short term obligations of which at all times
are rated in the highest short term rating category by each Rating Agency;
PROVIDED, HOWEVER, that the investments described in this clause (A) must have a
predetermined fixed dollar of principal due at maturity that cannot vary or
change, (B) if rated by Standard & Poor's Rating Services, must not have an "r"
highlighter affixed to their rating, (C) if such investments have a variable
rate of interest, such interest rate must be tied to a single interest rate
index plus a fixed spread (if any) and must move proportionately with that
index, and (D) such investments must not be subject to liquidation prior to
their maturity;
(v) fully Federal Deposit Insurance Corporation-insured demand
and time deposits in, or certificates of deposit of, or bankers' acceptances
issued by, any bank or trust company, savings and loan association or savings
bank, the short term obligations of which at all times are rated in the highest
short term rating category by each Rating Agency; PROVIDED, HOWEVER, that the
investments described in this clause (A) must have a predetermined fixed dollar
of principal due at maturity that cannot vary or change, (B) if rated by
Standard & Poor's Rating Services, must not have an "r" highlighter affixed to
their rating, (C) if such investments have a variable rate of interest, such
interest rate must be tied to a single interest rate index plus a fixed spread
(if any) and must move proportionately with that index, and (D) such investments
must not be subject to liquidation prior to their maturity;
(vi) debt obligations with maturities of not more than 365
days and at all times rated by each Rating Agency; in its highest long-term
unsecured rating category; PROVIDED, HOWEVER, that the investments described in
this clause (A) must have a predetermined fixed dollar of principal due at
maturity that cannot vary or change, (B) if rated by Standard & Poor's Rating
Services, must not have an "r" highlighter affixed to their rating, (C) if such
investments have a variable rate of interest, such interest rate must be tied to
a single interest rate index plus a fixed spread (if any) and must move
proportionately with that index, and (D) such investments must not be subject to
liquidation prior to their maturity;
(vii) commercial paper (including both non-interest-bearing
discount obligations and interest-bearing obligations payable on demand or on a
specified date not more than one year after the date of issuance thereof) with
maturities of not more than 365 days and that at all times is rated by each
Rating Agency; in its highest short-term unsecured debt rating; PROVIDED,
HOWEVER, that the investments described in this clause (A) must have a
predetermined fixed dollar of principal due at maturity that cannot vary or
change, (B) if rated by Standard & Poor's Rating Services, must not have an "r"
highlighter affixed to their rating, (C) if such investments have a variable
rate of interest, such interest rate must be tied to a single interest rate
index plus a fixed spread (if any) and must move proportionately with that
index, and (D) such investments must not be subject to liquidation prior to
their maturity; and
(viii) units of taxable money market funds or mutual funds
(which may be funds that are managed by Account Bank, Trustee or their
respective corporate affiliates), which funds are regulated investment
companies, seek to maintain a constant net asset value per share and invest
solely in obligations backed by the full faith and credit of the United States,
and which funds have the highest rating available from each Rating Agency for
money market funds or mutual funds (which rating, if from Standard & Poor's
Rating Services, shall be "AAAm" or "AAAmg", as applicable); PROVIDED, HOWEVER,
that such obligation or security continues to qualify as a "cash flow
investment" pursuant to Section 860G(a)(6) of the Internal Revenue Code of 1986,
as amended, earning a passive return in the nature of interest and that no
obligation or security shall be a Permitted Investment if (A) such obligation or
security evidences a right to receive only interest payments or (B) the rights
to receive principal and interest payments on such obligation or security are
derived from an underlying investment that provides a yield to maturity in
excess of 120% of the yield to maturity at par of such underlying investment.
