02/28/12 Work Session - Laserfiche WebLink

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BRIGGS AND M O R G A N the HRA is the right to suspend performance of the HRA's obligation to issue the TIF Note to F &C Ramsey or, if the HRA has already issued the TIF Note, the right to terminate and rescind the TIF Note. The Debt Subordination Agreement does not impact the HRA's ability to terminate the TIF Note based on a default under the Development Agreement. Under the terms of the Development Agreement, the HRA has agreed that if PNC forecloses the PNC Mortgage, PNC may elect to either (i) treat the PNC Mortgage as being prior to the Development Agreement in which case the foreclosure would extinguish the Development Agreement and the TIF Note (but not the Assessment Agreement); or (ii) treat the Development Agreement as being prior in which case the Development Agreement would survive a foreclosure, PNC would be subject to all the terms of the Development Agreement and if PNC complies with the terms of the Development Agreement, PNC would be eligible to receive the TIF Note payments. IV. ENFORCEMENT OF THE LOAN AGREEMENT AND THE HRA NOTES Under the terms of the HRA Loan Agreement and the HRA Notes, the HRA may sue F &C Member for money damages if F &C Member fails to make payments due to the HRA under the HRA Notes or otherwise defaults under the HRA Loan Agreement. As we advised the Board during the Board's consideration of the Development Agreement, this right is of questionable value because it is unlikely that F &C Member will have any assets other than membership interests in F &C Apartments (and those membership interests will be subject to a security interest in favor of the HRA as described in Section V below). The Debt Subordination Agreement imposes the following restrictions on F &C Member' s right to make payments to the HRA, the HRA's right to receive payments from F &C Member and the HRA's right to sue F &C Member if those payments are not made: 1. So long as F &C Apartments is not in default under the terms of the PNC Loan documents, 4509147v3 (a) F &C Apartments may make annual distributions of "Net Cash Flow," as defined in the Development Agreement, to F &C Member, and F &C Member may make payments due to the HRA under the HRA Notes. If F &C Apartments defaults under the PNC Loan documents or if a distribution to F &C Member would cause F &C Apartments to violate covenants in the PNC Loan documents, F &C Apartments may not make distributions to F &C Member and F &C Member would have funds to pay the HRA; (b) the members of F &C Member may make additional capital contributions to F &C Member and F &C Member may use those capital contributions to prepay amounts due under the HRA Notes; and 3