EXHIBIT 10.3
LOAN AGREEMENT
LOAN AGREEMENT dated as of June 15, 1998 between BUCKEYE FACTORY SHOPS
LIMITED PARTNERSHIP, a Delaware limited partnership ("Buckeye Borrower"), XXXXXX
FACTORY STORES LIMITED PARTNERSHIP, a Delaware limited partnership ("Xxxxxx
Borrower"), CAROLINA FACTORY SHOPS LIMITED PARTNERSHIP, a Delaware limited
partnership ("Carolina Borrower"), SHASTA OUTLET SHASTA LIMITED PARTNERSHIP, a
Delaware limited partnership ("Shasta Borrower"), THE PRIME OUTLETS AT XXXXXXX
LIMITED PARTNERSHIP, a Delaware limited partnership ("Xxxxxxx Borrower"), and
THE PRIME OUTLETS AT XXX LIMITED PARTNERSHIP, a Delaware limited partnership
("Xxx Borrower") (collectively, the "Borrowers"), each having an address c/o
Prime Retail, L.P., 000 Xxxx Xxxxx Xxxxxx, 00xx Xxxxx, Xxxxxxxxx, Xxxxxxxx
00000, and NOMURA ASSET CAPITAL CORPORATION, a corporation organized under the
laws of the State of Delaware (together with its permitted successors and
assigns, "Lender").
All capitalized terms used herein shall have the respective meanings set
forth in Section 1 hereof.
W I T N E S S E T H :
WHEREAS, Buckeye Borrower is the owner of the Buckeye Property, Xxxxxx
Borrower is the owner of the Xxxxxx Property, Carolina Borrower is the owner of
the Carolina Property, Shasta Borrower is the owner of the Shasta Property,
Xxxxxxx Borrower is the owner of the Xxxxxxx Property and Xxx Borrower is the
owner of the Xxx Property (as such terms are hereinafter defined);
WHEREAS, the Borrowers desire to obtain a loan in the maximum principal
amount of $112,000,000.00 (the "Loan"), which Loan shall be secured by, among
other things, each of the Buckeye Property, the Xxxxxx Property, the Carolina
Property, the Shasta Property, the Xxxxxxx Property and the Xxx Property;
WHEREAS, the Loan is to be guaranteed by Prime Retail, L.P.;
WHEREAS, Lender is willing to make the Loan to Borrowers, subject to and in
accordance with the terms of this Agreement and the other Loan Documents;
NOW, THEREFORE, in consideration of the making of the Loan by Lender and
the covenants, agreements, representations and warranties set forth in this
Agreement, the parties hereto hereby covenant, agree, represent and warrant as
follows:
I0 DEFINITIONS; PRINCIPLES OF CONSTRUCTION
For all purposes of this Agreement, except as otherwise expressly required
or unless the context clearly indicates a contrary intent:
"Advance" shall mean an advance of the proceeds of the Loan hereunder.
"Affiliate" shall mean, as to any Person, any other Person that, directly
or indirectly, is in Control of, is Controlled by or is under common Control
with such Person or is a director or officer of such Person or of an Affiliate
of such Person.
"Allocated Loan Amount" shall mean, for each Property, the amount set forth
for such Property on Schedule 6.
"ALTA" shall mean American Land Title Association, or any successor
thereto.
"Annual Budget" shall have the meaning set forth in Section 5.1(r).
"Annualized Expansion NOI" shall mean, for any Expansion Space, the
difference between (i) Annualized Operating Income for such Expansion Property
and (ii) Annualized Operating Expenses for such Expansion Property. Annualized
Expansion NOI shall be determined in accordance with agreed-upon procedures
reasonably determined by Lender.
"Annualized Operating Expenses" shall mean, with respect to an Expansion
Space, the Operating Expenses for such Expansion Space for the period of time
during which such Expansion Space shall have been open for business, annualized,
with pro forma adjustments as reasonably determined by Lender.
"Annualized Operating Income" shall mean, with respect to an Expansion
Space, the Operating Income of such Expansion Space for the period of time
during which such Expansion Space shall have been open for business, except that
the amount of any basic rental for a tenant which has been in occupancy and
paying rent for at least three (3) months shall be annualized. Lender shall make
such adjustments to Annualized Operating Income as it deems reasonably necessary
to account for free rent periods, front-loaded rental or other matters that may
have a material impact on Annualized Operating Income in Lender's reasonable
opinion.
"Appraisal" shall have the meaning set forth in Section 3.1(n).
"Approved Capital Expenses" shall mean, with respect to a Property, Capital
Expenses incurred by a Borrower with respect to such Property which (i) are
included in the approved Capital Budget for the Current Month for such Property,
(ii) are not included in the approved Capital Budget for the Current Month, but
do not cause the total of the approved Capital Budget for such Property for the
Current Month and all prior months covered by such approved Capital Budget
(i.e., year to date) to be exceeded by more than 5%, (iii) have been approved by
the Lender or (iv) are emergency expenses necessary to protect life or property
or to comply with unanticipated life safety laws or requirements.
"Approved Leasing Expenses" shall mean, with respect to a Property,
expenses incurred in leasing space at such Property pursuant to Leases entered
into in accordance with the provisions of Section 5.1(u) and the applicable
provisions of the Mortgage encumbering such Property, including brokerage
commissions, tenant improvements and other inducements, which expenses are
approved by Lender which approval shall not be unreasonably withheld or delayed.
"Approved Operating Expenses" shall mean, with respect to a Property,
Operating Expenses incurred by a Borrower with respect to such Property which
(i) are included in the approved Operating Budget for such Property for the
Current Month, (ii) are not included in the approved Operating Budget for such
Property for the Current Month, but do not cause the total of such approved
Operating Budget for the Current Month to be exceeded by more than 5%, (iii) are
for electric, gas, oil, water, sewer or other utility service to such Property
or (iv) have been approved by the Lender, which approval shall not be
unreasonably withheld or delayed.
"Assignment of Agreements" shall mean, with respect to each Property, that
certain first priority Assignment of Agreements, Licenses, Permits and Contracts
dated as of the date hereof, from the applicable Borrower, as assignor, to
Lender, as assignee, assigning to Lender as security for the Loan, to the extent
assignable under law, all of such Borrower's interest in and to the Management
Agreement, if any, and all other licenses, permits and contracts necessary for
the use and operation of such Property, as the same may be amended, restated,
replaced, supplemented or otherwise modified from time to time.
"Assignment of Leases" shall mean, with respect to each Property, that
certain first priority Assignment of Leases and Rents dated as of the date
hereof, from the applicable Borrower, as assignor, to Lender, as assignee,
assigning to Lender as security for the Loan, to the extent assignable under
law, all of such Borrower's interest in and to the Rents and Leases for such
Property, as the same may be amended, restated, replaced, supplemented or
otherwise modified from time to time.
"Available Amount" shall mean, at any time of determination, the maximum
principal amount of the Loan that would not result in (i) a loan to value ratio
in excess of 75% or (ii) a Debt Service Coverage Ratio of less than 1.25.
"Award" shall have the meaning set forth in Section 7.1.3.
"Borrowers" shall mean Buckeye Borrower, Xxxxxx Borrower, Carolina
Borrower, Xxxxxxx Borrower, Xxx Borrower and any New Borrower, or any one or
more of them, as the context may require, together with their permitted
successors and assigns, but shall not include any such entity after such time as
all Properties owned or leased by such Borrower have been released from the lien
of the Mortgages.
"Borrowing Date" shall mean a date on which an Advance is made hereunder.
"Borrowing Documents" shall include, without limitation, the following:
(i) a Borrowing Notice;
(ii) an Officer's Certificate (1) reaffirming the representations and
warranties of Borrowers contained in the Loan Documents, with an updated
Schedule 1 with respect thereto, as necessary or appropriate, and (2) confirming
that no Default or Event of Default exists under the Loan Documents;
(iii) for jurisdictions in which mechanic's liens for work done on a
Property may be entitled to a priority equal to or higher than the priority of
the Mortgage encumbering such Property, either (1) an Officer's Certificate
confirming that no work costing in excess of $100,000.00 ("Material Work") that
would give rise to a mechanic's lien claim in such jurisdiction has been
performed since the Closing Date which has not been paid for, or (2) if such
Material Work has been performed and/or is currently being performed, then
Lender shall receive an endorsement to the applicable Title Insurance Policy in
form and substance reasonably satisfactory to Lender covering the applicable
Advance, showing that no unpermitted title exceptions have arisen and
affirmatively insuring over mechanics liens which have been filed or which could
arise from work completed and materials in place or, upon mutual agreement of
Borrowers and Lender, final lien waivers, releases and sworn statements properly
executed by each contractor conducting such Material Work at a Property,
together with an affidavit from such contractor addressed to Lender confirming
the names of the subcontractors involved and that such Material Work has been
fully paid for.
(iv) a statement, in form and substance reasonably satisfactory to Lender,
setting forth in detail, with appropriate backup, a computation of the Debt
Service Coverage Ratio; and
(v) such other information or documents as Lender may reasonably request.
"Bridge Note" shall mean that certain Note of even date herewith, made by
Borrowers in favor of Lender, substantially in the form of Exhibit A-1 annexed
hereto, as the same may be amended, restated, replaced, supplemented,
consolidated or otherwise modified from time to time.
"Business Day" shall mean any day other than a Saturday, Sunday or any
other day on which national banks in New York, Chicago or the state in which the
Collection Account Bank is located are not open for business.
"Capital Budget" shall have the meaning set forth in Section 5.1(r).
"Capital Expenses" shall mean capital expenditures as determined in
accordance with GAAP.
"Capital Reserve Fund" shall have the meaning set forth in Section 7.4.1.
"Carolina Pledge Agreement" shall mean the Pledge Agreement of even date
herewith from Carolina Borrower to Lender with respect to certain special source
revenue bonds issued in connection with the Carolina Property.
"Cash Collateral Account" shall mean the accounts established and
maintained pursuant to each Cash Collateral Account Agreement.
"Cash Collateral Account Agreement" shall mean, with respect to each
Property, that certain Cash Collateral Account Agreement dated as of the date
hereof among the applicable Borrower, Lender, the Manager of such Property and
the Cash Collateral Account Bank for collecting and retaining all the rents from
such Property.
"Cash Collateral Account Bank" shall mean LaSalle National Bank, or any
successor chosen by Lender at no material additional cost to Borrower.
"Cash Trap Event" shall mean the occurrence of an Event of Default.
"Casualty/Condemnation Prepayments" shall have the meaning set forth in
Section 2.3.2.
"Casualty Repayment Amount" shall mean, at any time of determination, the
difference between (i) the outstanding principal balance of the Loan and (ii)
the Available Amount.
"Collection Account" shall have the meaning set forth in Section 2.6(a).
"Collection Account Agreement" shall have the meaning set forth in
Section 2.6(a).
"Collection Account Bank" shall have the meaning set forth in Section
2.6(a).
"Closing Date" shall mean the date of the initial Advance of the Loan.
"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.
"Commitment" shall mean the obligation of Lender to make Advances not
exceeding $112,000,000.00.
"Condemnation" shall have the meaning set forth in Section 7.1.3.
"Condemnation Proceeds" shall mean all proceeds and awards in respect of
any condemnation of a Property or purchase in lieu thereof.
"Condemnation Restoration" shall have the meaning set forth in
Section 7.1.3.
"Consent and Subordination of Manager" shall mean that certain Consent and
Subordination of Manager dated the date hereof between each Manager and Lender,
if any.
"Control" shall mean with respect to any Person either (i) ownership
directly or through other entities, of more than 50% of all beneficial equity
interest in such Person, or (ii) the power to direct the management, operation
and business of such Person.
"Current Month" shall mean, as of the date of determination, the then
current calendar month.
"Debt" shall mean the outstanding principal amount set forth in, and
evidenced by, the Note, together with all interest accrued and unpaid thereon
and all other sums due to Lender in respect of the Loan, including any Exit Fee
and any sums due under the Note, this Agreement, the Mortgages or in any other
Loan Document.
"Debt Service" shall mean, with respect to any particular period of time,
scheduled principal and interest payments under the Note.
"Debt Service Coverage Ratio" shall mean, as of any date, a ratio in which
(a) the numerator is the sum of (i) the Net Operating Income for the Properties
(excluding any Expansion Space) for the 12-month period immediately preceding
such date and (ii) the Annualized Expansion NOI for any Expansion Space, and (b)
the denominator is the greater of (i) the aggregate amount of principal and
interest that would be due and payable on the Note for such period based upon a
debt service constant of 10.09 and (ii) the aggregate amount of principal and
interest that would be due and payable on the Note based upon the Treasury Rate
as of such date and an amortization term of 360 months.
"Default" shall mean the occurrence of any event hereunder or under any
other Loan Document which, but for the giving of notice or passage of time, or
both, would be an Event of Default.
"Default Rate" shall mean, with respect to the Loan, a rate per annum equal
to the lesser of (a) the maximum rate permitted by applicable law, or (b) five
percent (5%) above the Interest Rate.
"Environmental Indemnity" shall mean those certain Environmental and
Hazardous Substance Indemnification Agreements executed by Borrowers in
connection with the Loan for the benefit of Lender.
"Equipment" shall have the meaning set forth in the Mortgages.
"Event of Default" shall have the meaning set forth in Section 8.1.
"Exit Fee" shall have the meaning set forth in Section 2.7.
"Expansion Space" shall mean any portion of a Property upon which a
Borrower has constructed an expansion of a factory outlet center which has not
been occupied for twelve (12) full months but which has been at least 70%
occupied for at least three (3) full months.
"Facility Termination Date" shall mean April 11, 2001.
"Fiscal Year" shall mean each twelve month period commencing on January 1
and ending on December 31 during each year of the term of the Loan or such other
fiscal year of a Borrower as such Borrower may adopt from time to time with the
prior written consent of Lender.
"GAAP" shall mean generally accepted accounting principles in the United
States of America as of the date of the applicable financial report.
"General Partner" shall mean PRLP and PR Finance.
"Governmental Authority" shall mean any court, board, agency, commission,
office or authority of any nature whatsoever for any governmental xxxx (xxxxxxx,
xxxxx, xxxxxx, xxxxxxxx, xxxxxxxxx, xxxx or otherwise) whether now or hereafter
in existence having or asserting jurisdiction over a Person, Property or matter
at issue.
"Guarantor" shall mean Prime Retail, L.P., a Delaware limited partnership.
"Guaranty" shall mean the guaranty of the Loan executed and delivered by
Guarantor.
"Improvements" shall have the meaning set forth in the Mortgages.
"including" shall mean "including, without limitation".
"Indemnified Liabilities" shall have the meaning set forth in Section
10.13(b).
"Independent Director" shall have the meaning set forth in Section 4.1(dd).
"Initial Properties" shall mean the Xxxxxxx Property, the Carolina
Property, the Xxx Property, the Buckeye Property, the Xxxxxx Property and the
Shasta Property.
"Insurance Premiums" shall have the meaning set forth in Section 7.1.1(c)
hereof.
"Insurance Proceeds" shall mean the proceeds of the insurance policies
required to be maintained pursuant to clauses (i), (iii), (iv), (v), (vi) and
(viii) of Section 7.1.1 hereof which are received by or on behalf of a Borrower.
"Insured Casualty" shall have the meaning specified in Section 7.1.1(d).
"Interest Rate" shall mean a floating annual rate of interest equal to
LIBOR plus 1.35%.
"knowledge" shall mean, when used to modify a representation or warranty,
actual knowledge or such knowledge as a reasonable person should have under the
circumstances.
"Xxxxxx Note" shall mean that certain Note of even date herewith made by
Borrowers in favor of Lender, in substantially the form of Exhibit A-2 annexed
hereto.
"Lease" shall mean any lease or, to the extent of the interest therein of a
Borrower, any sublease or sub-sublease, letting, license, concession or other
agreement (whether written or oral and whether now or hereafter in effect)
pursuant to which any person is granted a possessory interest in, or right to
use or occupy all or any portion of, any space in the Properties, and every
modification, amendment or other agreement relating to such lease, sublease,
sub-sublease, or other agreement entered into in connection with such lease,
sublease, sub-sublease, or other agreement and every guarantee of the
performance and observance of the covenants, conditions and agreements to be
performed and observed by the other party thereto.
"Legal Requirements" shall mean, with respect to the Properties, all
federal, state, county, municipal and other governmental statutes, laws, rules,
orders, regulations, ordinances, judgments, decrees and injunctions of
Governmental Authorities affecting the Properties or any part thereof or the
construction, use, alteration or operation thereof, or any part thereof, whether
now or hereafter enacted and in force, and all permits, licenses, authorizations
and regulations relating thereto.
"Lender" shall mean Nomura Asset Capital Corporation, together with its
successors and assigns.
"LIBOR" shall have the meaning set forth in the Note.
"Licenses" shall have the meaning set forth in Section 4.1(w).
"Lien" shall mean, with respect to any Property, any mortgage, deed of
trust, lien, pledge, hypothecation, assignment, security interest, or any other
encumbrance, charge or transfer of, on or affecting such Property or any portion
thereof or a Borrower, or any interest therein, including any conditional sale
or other title retention agreement, any financing lease having substantially the
same economic effect as any of the foregoing, the filing of any financing
statement, and mechanic's, materialmen's and other similar liens and
encumbrances.
"Loan" shall mean the loan made to Borrowers by Lender pursuant hereto in
the maximum principal amount of $112,000,000.00 and evidenced by the Note and
secured by the Mortgages and the other Loan Documents.
"Loan Documents" shall mean, collectively, this Agreement, the Note, the
Mortgages, each Assignment of Leases, each Assignment of Agreements, the
Environmental Indemnities, each Consent and Subordination of Manager, if any,
the Collection Account Agreement, the Cash Collateral Account Agreement, the
Guaranty and any other document, agreement or instrument (i) executed and
delivered by a Borrower or any Affiliate of a Borrower evidencing or securing
the Loan, (ii) executed by Borrower and Lender in connection with the Loan or
(iii) which states it is a Loan Document hereunder.
"Management Agreement" shall mean, with respect to the Properties, a
management agreement, if any, entered into by and between each Borrower and the
Manager, pursuant to which the Manager is to provide management and other
services with respect to the Properties.
"Management Fee" shall mean the fee, if any, payable to Manager pursuant to
the Management Agreement.
"Manager" shall mean PRLP or any successor manager of the Properties
approved by Lender, which approval shall not be unreasonably withheld or
delayed.
"Material Adverse Effect" shall mean any event or condition that has a
material adverse effect on (a) any Property, (b) the business, prospects,
profits, operations or condition (financial or otherwise) of any Property or
Borrower, (c) the enforceability, validity, perfection or priority of the lien
of any Loan Document or (d) the ability of any Borrower to perform any
obligations under any Loan Document.
"Maturity Date" shall mean the date on which the final payment of principal
of the Note becomes due and payable as therein provided, whether at the Stated
Maturity Date, by declaration of acceleration, or otherwise.
"Monthly Debt Service Payment Amount" shall have the meaning set forth in
Section 2.2.1.
"Mortgages" shall mean each of the mortgages, deeds of trust and deeds to
secure debt described on Schedule 4 hereto, as the same may be amended,
restated, replaced, supplemented, consolidated or otherwise modified from time
to time. A "Mortgage" shall mean any one of the Mortgages, as the context may
require.
"NACC" shall mean Nomura Asset Capital Corporation, a Delaware corporation.
"Net Operating Income" shall mean, for any Property for any period, the
difference between all Operating Income of such Property during such period,
minus all Operating Expenses of such Property during such period. Net Operating
Income shall be determined in accordance with agreed-upon procedures reasonably
determined by Lender.
"Nomura" shall have the meaning set forth in Section 10.17.
"Note" shall mean, collectively, the Bridge Note and the Xxxxxx Note.
"Officer's Certificate" shall mean a certificate delivered to Lender by the
Borrowers which is signed by an authorized officer of the REIT on behalf of the
General Partner or Managing Member of each Borrower.
"Operating Budget" shall have the meaning set forth in Section 5.1(r).
"Operating Expenses" shall mean, with respect to a Property, for the
applicable period, all expenses directly attributable to the operation, repair
and/or maintenance of the Property including, without limitation, Taxes, Other
Charges, insurance premiums, management fees, marketing and promotion expenses
(to the extent not reimbursed or reimbursable by tenants under Leases), general
administration costs and costs attributable to the operation, repair and
maintenance of the systems for heating, ventilating and air conditioning the
Improvements and actually incurred by a Borrower. Operating Expenses shall not
include interest, principal and premium, if any, due under the Note or otherwise
in connection with the Debt, income taxes, capital improvement costs, or any
non-cash charge or expense such as depreciation or amortization and other costs
properly capitalizable under GAAP. Operating Expenses shall be subject to
adjustment by Lender to provide for (a) a normalized allowance for lease
rollovers including costs for downtime, tenant improvements and leasing
commissions, (b) a reserve for capital expenditures and capital replacements
equal to at least $0.15 per square foot per annum for all rentable space (or
such greater amount as shall be indicated in independent engineering reports
obtained by Lender), to the extent not reimbursable by tenants through CAM
recoveries, (c) a management fee of at least 4% of gross revenues, if actual is
less than 4% (less management expenses), and (d) any other matters related to
the Property or market conditions that may have a material impact on Operating
Expenses in Lender's reasonable opinion. Operating Expenses will not include
debt service, capital expenses (except as described in clauses (a) or (b)
above), non-cash items such as depreciation and amortization and any
extraordinary one-time expenditures not considered operating expenses under
GAAP. The applicable period for determining "Available Amount" shall be the
trailing twelve month period.
"Operating Income" shall mean, with respect to a Property, for the
applicable period, all revenue derived by a Borrower arising from the Property
including, without limitation, rental revenues (whether denominated as basic
rent, additional rent, percentage rent, escalation payments, electrical payments
or otherwise and including only that which is actually due and payable in such
period) and other fees and charges payable pursuant to Leases or otherwise in
connection with the Property, and business interruption, rent or other similar
insurance proceeds. Operating Income shall be subject to adjustment (a) for a
vacancy allowance at the greater of the market vacancy rate, the actual vacancy
rate or 5%, (b) for month-to-month tenants and for any tenants operating under
bankruptcy protection (except to the extent the lease for any such tenant has
been approved by the Bankruptcy Court), (c) if necessary, to xxxx any Leases to
market rent, (d) to address any rent adjustments or cancellation options
contained in the Leases, and (e) for any other matters related to the Property
or market conditions that may have a material impact on Operating Income in
Lender's reasonable opinion. Operating Income shall not include (a) Insurance
Proceeds (other than proceeds of rent, business interruption or other similar
insurance allocable to the applicable period) and Condemnation Proceeds (other
than Condemnation Proceeds arising from a temporary taking or the use and
occupancy of all or part of the applicable Property allocable to the applicable
period), or interest accrued on such Insurance Proceeds or Condemnation
Proceeds, (b) proceeds of any financing, (c) proceeds of any sale, exchange or
transfer of the Property or any part thereof or interest therein, (d) capital
contributions or loans to Borrower or an Affiliate of Borrower, (e) any item of
income otherwise includable in Operating Income but paid directly by any tenant
to a Person other than Borrower except for real estate taxes paid directly to
any taxing authority by any tenant and any other expense to the extent included
in Operating Expense, (f) any other extraordinary, non-recurring revenues, (g)
Rents paid by or on behalf of any lessee under a Lease in whole or in partial
consideration for the termination of any Lease which, when added to all Rents
received during the applicable period pursuant to the terminated Lease, plus any
Rents received pursuant to any Lease which replaced the Lease which was
terminated, exceeds the Rents which otherwise would be paid pursuant to the
Lease which was terminated, or (h) any tenant recoveries in excess of the actual
amount of the expense recovered plus administrative fees in connection
therewith. The applicable period for determining "Available Amount" shall be the
trailing 12 month period.
"Other Charges" shall mean all ground rents, maintenance charges,
impositions other than Taxes, and any other charges, including vault charges and
license fees for the use of vaults, chutes and similar areas adjoining the
Properties, now or hereafter levied or assessed or imposed against the
Properties or any part thereof.
"Payment Date" shall mean the eleventh (11th) day of each calendar month
or, if in any month the eleventh (11th) day is not a Business Day, then the
Payment Date for such month shall be the first Business Day thereafter.
"Permitted Encumbrances" shall mean, with respect to a Property,
collectively, (a) the Liens and security interests created by the Loan
Documents, (b) all Liens, encumbrances and other matters disclosed in the Title
Insurance Policy relating to such Property or any part thereof, (c) Liens, if
any, for Taxes or Other Charges not yet payable or delinquent or being contested
in good faith and by appropriate proceedings in accordance with Section 5.1(b),
(d) any mechanics' and materialmen's liens affirmatively insured against by the
Title Insurance Policy or being contested in good faith and by appropriate
proceedings in accordance with Section 6.1(b), (e) any and all governmental,
public or private utility and private restrictions, covenants, reservations,
easements, licenses or other agreements of an immaterial nature which may
hereafter be granted by a Borrower and which do not materially and adversely
affect (x) the marketability of title to the Property or (y) the fair market
value of the Property, (f) rights of future tenants, as tenants only, pursuant
to Leases entered into in accordance with the provisions of the Loan Documents,
(g) liens incurred in connection with the financing or leasing of equipment in
the ordinary course of business and in accordance with the Prudent Manager
Standard and (h) such other title and survey exceptions as Lender has approved
or may approve in writing in Lender's reasonable discretion.
"Permitted Indebtedness" shall mean (a) the Debt, and (b) normal and
customary unsecured trade debt incurred in the ordinary course of business in
accordance with the Prudent Manager Standard (including obligations under any
construction contracts for tenant improvements).
"Permitted Investments" shall have the meaning set forth in the Cash
Collateral Account Agreement.
"Person" shall mean any individual, corporation, partnership, joint
venture, estate, trust, unincorporated association, any federal, state, county
or municipal government or any bureau, department or agency thereof and any
fiduciary acting in such capacity on behalf of any of the foregoing.
"Policies" shall have the meaning specified in Section 7.1.1(c).
"Pooling and Servicing Agreement" shall mean the Servicing Agreement
entered into with the Servicer in connection with any Securitization of the
Loan.
"PR Finance" shall mean Prime Retail Finance IV, Inc., a Maryland
corporation.
"PRLP" shall mean Prime Retail, L.P., a Delaware limited partnership.
"Premises" shall, with respect to a Property, have the meaning set forth in
the Granting Clause of the Mortgage encumbering such Property.
"Properties" shall mean, collectively, the properties described on Schedule
5 attached hereto and each Additional Property and Spreader Property, but shall
not include any Property which is released from the lien of a Mortgage after the
date of such release. A "Property" shall mean any one of the Properties.
"Property Agreements" shall mean all material agreements, grants of
easements and/or rights-of-way, reciprocal easement agreements, permits,
declarations of covenants, conditions and restrictions, disposition and
development agreements, planned unit development agreements, management or
parking agreements, party wall agreements or other instruments to which a
Borrower is a party, bound or subject or a Property is subject, including,
without limitation, all reciprocal easement agreements, but not including any
brokerage agreements, management agreements, service contracts, Leases or the
Loan Documents.
"Property Worth" shall mean, with respect to each Borrower, the fair market
value of the Property owned by such Borrower as of the Closing Date.
"Prudent Manager Standard" shall mean that standard of property management,
business operations, practices and procedures customarily employed by prudent,
professional managers with significant experience in the operation and
management of retail shopping centers of a size and type comparable to the
Properties who are seeking to maximize the value of such shopping centers.
"Rating Agency" shall mean each of Standard & Poor's Ratings Group, a
division of XxXxxx-Xxxx, Inc., Xxxxx'x Investors Service, Inc., Duff & Xxxxxx
Credit Rating Co. and Fitch Investors Service, Inc. or, after a Securitization,
any other nationally-recognized statistical rating agency which rates the
securities in connection therewith.
"REIT" shall mean Prime Retail, Inc., a Maryland corporation.
"Remaining Realty" shall have the meaning set forth in Section 2.4.3.
"REMIC" shall mean a "real estate mortgage investment conduit" within the
meaning of Section 860D of the Code.
"REMIC Trust" shall mean a REMIC which holds the Note.
"Rents" shall mean, with respect to the Properties, all rents, rent
equivalents, moneys payable as damages or in lieu of rent or rent equivalents,
royalties (including all oil and gas or other mineral royalties and bonuses),
income, receivables, receipts, revenues, deposits (including security, utility
and other deposits), accounts, cash, issues, profits, charges for services
rendered, and other consideration of whatever form or nature received by or paid
to or for the account of or benefit of a Borrower or its agents or employees
from any and all sources arising from or attributable to the Properties,
including all receivables, customer obligations, installment payment obligations
and other obligations now existing or hereafter arising or created out of the
sale, lease, sublease, license, concession or other grant of the right of the
use and occupancy of the Properties and proceeds, if any, from business
interruption or other loss of income insurance.
"Required Repair Account" shall have the meaning set forth in
Section 7.2.1.
"Required Repair Fund" shall have the meaning set forth in Section 7.2.1.
"Required Repairs" shall have the meaning set forth in Section 7.2.1.
"Required Repairs" shall have the meaning set forth in Section 7.2.1.
"Restoration" shall have the meaning set forth in Section 7.1.2(b).
"Secondary Market Transaction" shall mean any transaction in which Lender
(i) sells the Loan, the Note and the other Loan Documents to one or more
investors as a whole loan, (ii) participates the Loan to one or more investors,
(iii) deposits the Loan, the Mortgages, the Note and other Loan Documents with a
trust, which trust may sell certificates to investors evidencing an ownership
interest in the trust assets, or (iv) otherwise sells the Loan or an interest
therein to investors.
"Securitization" shall mean the sale of the Note or participation therein
or the securitization of rated single or multi-class securities secured by or
evidencing ownership interests in the Note and the Mortgages.
"Security Agreement" shall have the meaning set forth in
Section 2.3.3(vii).
"Servicer" shall mean the entity appointed by Lender to service the Loan or
its successor in interest, or if any successor servicer is appointed pursuant to
the Pooling and Servicing Agreement, such successor servicer.
"Solvent" shall mean, as to any Person, that (a) the sum of the assets of
such Person, at a fair valuation, exceeds its liabilities, including contingent
liabilities, (b) such Person has sufficient capital with which to conduct its
business as presently conducted and as proposed to be conducted and (c) such
Person has not incurred debts, and does not intend to incur debts, beyond its
ability to pay such debts as they mature. For purposes of this definition,
"debt" means any liability on a claim, and "claim" means (a) a right to payment,
whether or not such right is reduced to judgment, liquidated, unliquidated,
fixed, contingent, matured, unmatured, disputed, undisputed, legal, equitable,
secured or unsecured, or (b) a right to an equitable remedy for breach of
performance if such breach gives rise to a payment, whether or not such right to
an equitable remedy is reduced to judgment, fixed, contingent, matured,
unmatured, disputed, undisputed, secured, or unsecured. With respect to any such
contingent liabilities, such liabilities shall be computed in accordance with
GAAP at the amount which, in light of all the facts and circumstances existing
at the time, represents the amount which can reasonably be expected to become an
actual or matured liability.
"SPE" shall have the meaning set forth in Section 4.1(dd) and shall
initially be PR Finance.
"State" shall mean the State of Illinois.
"Stated Maturity Date" shall mean June 11, 2001.
"Survey" shall mean a survey of the Property in question prepared by a
surveyor licensed in the state in which such Property is located and
satisfactory to Lender and the company or companies issuing the Title Insurance
Policies, and containing a certification of such surveyor satisfactory to
Lender.
"Tax and Insurance Escrow Fund" shall have the meaning set forth in
Section 7.3.1.
"Taxes" shall mean all real estate and personal property taxes,
assessments, fees or payments in lieu of real estate taxes, water rates or sewer
rents, now or hereafter levied or assessed or imposed against the Properties or
part thereof.
"Term" shall mean the entire term of this Agreement, which shall expire
upon repayment in full of the Debt and full performance of each and every
obligation to be performed by Borrowers pursuant to the Loan Documents.
"Title Insurance Policies" shall mean, with respect to the Properties, ALTA
mortgagee title insurance policy or policies acceptable to Lender issued with
respect to the Properties and insuring the liens of the Mortgages encumbering
the Properties.
"Transfer" shall have the meaning set forth in Section 6.1(j).
"Treasury Rate" shall mean, at any time of determination, a rate per annum
equal to 150 basis points plus the rate on the 10 year U.S. Treasury security
then being used by Lender in pricing loans with ten year terms.
"UCC" or "Uniform Commercial Code" shall mean the Uniform Commercial Code
as in effect in the State in which the applicable Property is located.
"U.S. Obligation" shall mean direct non-callable obligations of the United
States of America.
Section I.2 Principles of Construction. All references to sections,
schedules and exhibits are to sections, schedules and exhibits in or to this
Agreement unless otherwise specified. Unless otherwise specified, the words
"hereof," "herein" and "hereunder" and words of similar import when used in this
Agreement shall refer to this Agreement as a whole and not to any particular
provision of this Agreement. Unless otherwise specified, all meanings attributed
to defined terms herein shall be equally applicable to both the singular and
plural forms of the terms so defined. All accounting terms not specifically
defined herein shall be construed in accordance with GAAP, as modified herein.
II. GENERAL
Section II.1 The Loan
II.1.1 Commitment. Subject to and upon the terms and conditions set forth
herein, including the conditions precedent set forth in Section 3.1, Lender
hereby agrees to make Advances to Borrowers from time to time from the Date
hereof until the Facility Termination Date in amounts not to exceed at any one
time outstanding the lesser of (i) the amount of the Commitment and (ii) the
Available Amount.
II.1.2 Disbursement to Borrower. Subject to the terms of this Agreement,
Borrower may borrow, repay and reborrow Advances hereunder. The outstanding
amount of the Loan and all other unpaid obligations under the Loan Documents
shall be paid in full by Borrower on the Maturity Date.
II.1.3 Minimum Amount. Each Advance shall be in the minimum amount of
$1,000,000.00 (and in multiples of $500,000.00 in excess thereof), except that
any such Advance may be in an amount equal to the lesser of the then unused
Commitment and the then unused Available Amount. No more than one (1) Advance
may be requested by Borrowers during any month.
II.1.4 Requests for Advance. Borrowers shall give Lender an irrevocable
notice (a "Borrowing Notice") not later than 12:00 noon (Chicago time) at least
seven (7) Business Days before the Borrowing Date for each Advance, specifying
(i) the Borrowing Date (which shall be a Business Day) of such Advance and (ii)
the amount of such Advance. Such Borrowing Notice shall be accompanied by the
Borrowing Documents.
II.1.5 The Note. The Loan shall be evidenced by the Note, in a maximum
principal amount equal to the Commitment. The Note shall bear interest as
provided therein. The Note shall be subject to repayment as provided in
Section 2.3, shall be entitled to the benefits of this Agreement and shall be
secured by the Mortgages and the other Loan Documents. Lender shall record
Advances and principal payments thereof on the schedule attached to the Note or,
at its option, in its records, and Lender's record thereof shall be conclusive
absent manifest error. Notwithstanding the foregoing, the failure to make, or an
error in making, a notation with respect to any Advance shall not limit or
otherwise affect the obligations of Borrowers hereunder or under the Note to pay
the amount actually owed by Borrowers to Lender.
II.1.6 Use of Proceeds of Loan. Borrowers shall use the proceeds of the
Loan (i) to repay and discharge any existing loans relating to the Properties,
(ii) to pay costs and expenses incurred in connection with the Closing of the
Loan, as approved by Lender, and (iii) for any other lawful purpose.
Section II.2 Interest; Monthly Payments
II.2.1 Generally
(a) From the date hereof through but not including the Maturity Date,
Borrowers shall pay interest on the outstanding principal balance of the Loan at
the Interest Rate.
(b) Commencing with the Payment Date on July 11, 1998 and on each and every
Payment Date thereafter through and including the Maturity Date, interest only
at the Interest Rate shall be payable (the "Monthly Debt Service Payment
Amount"). The Monthly Debt Service Payment Amount due on any Payment Date shall
be applied to the payment of interest accrued from the eleventh (11th) day of
the month preceding the Payment Date through the tenth (10th) day of the month
in which the Payment Date occurs, notwithstanding that the Payment Date may have
been deferred because the eleventh (11th) day of such month is not a Business
Day.
II.2.2 Default Rate. After the occurrence and during the continuance of an
Event of Default, the entire outstanding principal balance of the Loan shall
bear interest at the Default Rate, and shall be payable upon demand from time to
time, to the extent permitted by applicable law. Payment or acceptance of the
increased rates provided for in this subsection is not a permitted alternative
to timely payment and shall not constitute a waiver of any Default or Event of
Default or an amendment to this Agreement or any other Loan Document and shall
not otherwise prejudice or limit any rights or remedies of Lender.
II.2.3 Property Cash Flow Allocation During a Cash Trap Event. Commencing
upon the occurrence of a Cash Trap Event and continuing on each Payment Date
occurring during the existence of a Cash Trap Event, any Rents deposited into
the Cash Collateral Account (or otherwise received by Borrowers) during the
immediately preceding calendar month shall be applied as follows in the
following order of priority:
(a) First, to make required payments to the Tax and Insurance Escrow Fund;
(b) Second, to Lender to pay the Monthly Debt Service Payment Amount (plus,
if applicable, interest at the Default Rate);
(c) Third, to make required payments to the Capital Reserve Fund; and
(d) Fourth, payments for Approved Operating Expenses, Approved Capital
Expenses and Approved Leasing Expenses of the Properties.
Notwithstanding anything herein to the contrary, the failure of Borrowers
to make all of the payments required under clauses (a) through (d) above in full
on each Payment Date shall constitute a Default under this Agreement.
Section II.3 Loan Repayment
II.3.1 Repayment. Borrowers may repay any outstanding principal
indebtedness of the Loan in whole or in part at any time prior to, and shall
repay the outstanding principal indebtedness of the Loan in full on, the
Maturity Date of the Loan, together with interest thereon to (but excluding) the
date of repayment. Borrower shall give Lender not less than twenty (20) days
notice of any prepayment hereunder.
II.3.2 Mandatory Prepayments. The Loan is subject to the following
mandatory prepayments:
(a) Borrowers shall prepay the Loan, in certain instances of Insured
Casualty or Condemnation (each a "Casualty/Condemnation Prepayment"), in the
manner and to the extent set forth in Sections 7.1.2 and Section 7.1.3 hereof.
Each Casualty/Condemnation Prepayment shall be made only on a Payment Date and
shall include all accrued and unpaid interest on the amount prepaid up to but
not including such Payment Date.
(b) In connection with a sale of a Property, Borrower shall repay an amount
equal to the Release Price (as defined below) for such Property.
II.4 Release of Property. Except as set forth in this Section 2.4, no
repayment or prepayment of all or any portion of the Note shall cause, give rise
to a right to require, or otherwise result in, the release of the Lien of the
Mortgages on the Properties.
II.4.1 Release of Properties
(a) Borrowers may, from time to time, provided no Default or Event of
Default exists hereunder or under any other Loan Document, request in writing a
release of any Property from the Lien of the Mortgage on such Property and
Lender shall, upon satisfaction of all of the following terms and conditions,
permit such Property to be released from the Lien of the Mortgage and the Other
Loan Documents:
(i) Borrower shall have repaid to Lender an amount sufficient to reduce the
outstanding amount of the Loan to the Available Amount (the "Release Price"), as
reasonably determined by Lender as of the date of the proposed release and in
connection therewith, Lender shall have received from Borrowers such information
as Lender may require in order to calculate the Allocated Amount, all in form
acceptable to Lender and accompanied by an Officer's Certificate stating that
all such information is true, correct and complete;
(ii) There shall exist no Default or Event of Default hereunder or under
any Loan Document; and
(iv) PR Finance shall have resigned as general partner of the Borrower
whose Property is being released or, if such Borrower owns any other Property,
such Borrower shall transfer title to the Property to be released to a person
other than such Borrower or any other Borrower.
(b) In connection with the release of the Lien of a Mortgage, Borrowers
shall submit to Lender, not less than twenty (20) days prior to the date on
which such release is sought, a release of Lien (and related Loan Documents) for
the applicable Property (for execution by Lender) in a form appropriate in the
state in which such Property is located and satisfactory to Lender in its sole
discretion and all other documentation Lender requires to be delivered by
Borrowers in connection with such release, together with an Officer's
Certificate certifying that such documentation (i) is in compliance with all
Legal Requirements, and (ii) will effect such release in accordance with the
terms of this Agreement.
(c) Simultaneously with the release of a Property from the lien of a
Mortgage pursuant to this Section, Lender shall release that portion of all cash
or other accounts maintained pursuant to this Agreement relating to such
Property.
II.4.2 Release on Payment in Full. Lender shall, upon the written request
and at the expense of Borrowers, upon (a) payment in full of all principal and
interest on the Loan and all other amounts due and payable under the Loan
Documents in accordance with the terms thereof and (b) termination of the
Commitment, release the Properties from the Liens of the Mortgages and the other
Loan Documents if not theretofore released.
II.4.3 Out-Parcel Severance. (a) A Borrower shall be permitted to transfer,
and Lender shall release from the lien of the applicable Mortgage and the other
Loan Documents, any unimproved out-parcel or unimproved expansion parcel
comprising a portion of a Property (either of which is hereinafter referred to
as the "Out-Parcel"), upon not less than thirty (30) nor more than ninety (90)
days' prior written notice to Lender, upon satisfaction of all of the following
terms and conditions:
(i) No Default or Event of Default shall have occurred and be continuing
and all amounts which are then required to be deposited into the sub-accounts of
the Cash Collateral Account pursuant to the Cash Collateral Account Agreement
shall have been so deposited.
(ii) The Out-Parcel shall be designated by a metes and bounds description
and a survey reasonably satisfactory to Lender.
(iii) The following conditions shall have been satisfied, and Lender shall
in addition have received an Officer's Certificate, not less than fifteen (15)
Business Days prior to the proposed transfer or release of the Out-Parcel,
stating that:
(A) the use to which the Out-Parcel will be put shall be consistent with
the use to which out-parcels and expansion parcels are generally put in other
first class retail shopping centers;
(B) the portion of the Property remaining subject to the lien of the
Mortgage encumbering the Out-Parcel after release of the Out-Parcel (the
"Remaining Realty") will remain in full compliance with all Legal Requirements
and with the terms of all Leases and Property Agreements affecting the Remaining
Realty;
(C) the proposed use of the Out-Parcel will not violate the provisions of
any Lease or Property Agreement affecting the Remaining Realty. To the extent
reasonably required, the permitted uses of the Out-Parcel will be restricted of
record, as reasonably agreed to by Lender, to insure that use of the Out-Parcel
will not violate the provisions of the Loan Documents or any Leases or Property
Agreements;
(D) Borrowers shall have caused the Out-Parcel to be a separate parcel of
land for all subdivision, zoning, and taxing purposes;
(E) title to the Out-Parcel shall have been or shall simultaneously be
conveyed to a Person other than a Borrower;
(F) the disposition of the Out-Parcel shall not have a Material Adverse
Effect on the Net Operating Income for the Property of which it was a part;
(G) the occupancy rate of the Remaining Realty shall be greater than 80%;
(H) the Debt Service Coverage Ratio (computed based on the Net Operating
Income of the Remaining Realty and the Allocated Loan Amount for the applicable
Property) shall not be less than 1.25; and
(I) no tenant under any Lease has executed, or is negotiating in
contemplation of executing, a lease or other occupancy agreement with respect to
a portion of such Out-Parcel unless a replacement tenant or tenants acceptable
to Lender have executed a lease for the space to be vacated, and Lender receives
satisfactory evidence thereof;
provided, however, that if the conditions set forth in clauses (G) or (H)
are not satisfied, provided that all of the other conditions required for the
release of an Out-Parcel shall have been satisfied, an Out-Parcel may be
released from the lien of the applicable Mortgage if it is sold to a bona-fide
third Person and all sums received in consideration of such sale are applied to
partially repay the Debt in accordance with the provisions of Section 2.3
hereof.
(iv) To the extent reasonably required, an appropriate Property Agreement
shall be executed and recorded (and a copy delivered to Lender) to govern the
integrated use and operation, if applicable, of the Remaining Realty and the
Out-Parcel.
(v) Lender shall receive, at Borrower's sole cost, an endorsement to
Lender's title insurance policy to the effect that the release of the Out-Parcel
will not have an adverse affect on the priority of the lien of the applicable
Mortgage with respect to the Remaining Realty encumbered by such Mortgage.
(vi) Borrowers shall, at their sole cost and expense, prepare any and all
documents and instruments necessary to effect the release of the Out-Parcel, all
of which shall be subject to the reasonable approval of Lender, and Borrowers
shall pay all costs reasonably incurred by Lender (including, but not limited
to, reasonable attorneys' fees and disbursements, title search costs and
endorsement premiums) in connection with the review, execution and delivery of
such release and any other documents, including Project Agreements, required in
connection with the release of the Out-Parcel.
(vii) All agreements and instruments to be delivered to Lender pursuant to
this Section 2.4.3 shall be in form and substance reasonably satisfactory to
Lender and its counsel, and included with the Officer's Certificate required to
be delivered pursuant to clause (iii) of this Section 2.4.3 shall be evidence in
form and substance satisfactory to Lender supporting the statements,
calculations and information required pursuant to clauses (iii)(F), (G) and (H)
of this Section 2.4.3.
(b) No Release Price or other consideration shall be payable by Borrowers
to Lender in connection with a release of an Out-Parcel made in accordance with
the provisions of this Section 2.4.3.
II.4.4 Additional Properties. Borrowers shall have the right from time to
time to add one or more factory outlet centers or other retail properties
reasonably acceptable to Lender (each, an "Additional Property") as collateral
for the Loan by executing and delivering to Lender a mortgage, deed of trust or
deed to secure debt, as applicable (an "Additional Mortgage"), encumbering such
Additional Property, in substantially the same form as the Mortgages (with such
modifications as may be required to conform with applicable law) and such other
documents (together with the Additional Mortgage, the "Additional Documents"),
as Lender may in its reasonable discretion require in order to grant Lender a
first priority, perfected lien on and security interest in such Additional
Property and all related rents, personal property, reserves and escrows on the
same terms and conditions as the liens and security interests granted to Lender
in the Properties on the Closing Date. Borrowers' right to add an Additional
Property shall also be subject to the following conditions and restrictions:
(a) No Default or Event of Default shall have occurred and be continuing;
(b) at least sixty (60) days prior to the proposed date of the addition,
Borrowers shall have delivered to Lender appraisals, prepared by Xxxxxxx &
Xxxxxxxxx, Inc., or such other third-party real estate professional as is
approved by Lender and the Rating Agencies, indicating the fair market value for
the proposed Additional Property;
(c) Borrowers shall have delivered a Phase I environmental report and, if
recommended by such Phase I report, a Phase II environmental report prepared by
Environmental Management Group, Inc., IVI Environmental, Inc., or such other
environmental consultant as is approved by Lender and the Rating Agencies,
stating that the Additional Property complies with all applicable environmental
laws, or if remedial steps are required to effect such compliance, identifying
such steps and projecting the cost thereof, in which case Lender shall have the
option to not accept such Additional Property and, if Lender agrees to accept
the Additional Property, Borrowers shall be required to deposit with Lender an
amount equal to one hundred fifty percent (150%) of such projected costs (the
"Engineering Escrow Fund");
(d) Borrowers shall have delivered an engineering report, prepared by
Xxxxxx & Xxxxxx, Inc., or such other consulting engineer as is approved by
Lender and the Rating Agencies, stating that the Additional Property complies
with all applicable building laws and do not require performance of deferred
maintenance or if remedial steps are required to effect such compliance or such
deferred maintenance, identifying such steps and projecting the cost thereof, in
which case Borrowers shall be required to deposit into the Engineering Escrow
Fund an amount equal to one hundred fifty percent (150%) of such projected
costs;
(e) Borrowers shall have caused to be delivered all leases, title
commitments, title insurance policies, surveys, hazard and liability insurance,
evidence of compliance with zoning and other laws, legal opinions and other
items of due diligence with respect to the Additional Property as Lender and/or
the Rating Agencies may require, all of which shall be in form and substance
acceptable to Lender and the Rating Agencies;
(f) the Person transferring the Additional Property to a Borrower shall be
solvent and shall be making such transfer on an arm's length basis and for fair
consideration, and such Borrower and such Person shall deliver certifications
and evidence to such effect and such other certifications as Lender shall
reasonably require to assure itself that the substitution does not constitute a
fraudulent conveyance on the part of any Person (assuming such Person was not
solvent at the time of transfer);
(g) Borrowers shall comply with such other terms and conditions as the
Rating Agencies shall require in connection with the addition of the Additional
Property;
(h) each Rating Agency shall have delivered written confirmation that any
rating issued by such Rating Agency in connection with the Securitization will
not, as a result of the addition of the Additional Property, be downgraded from
the then current ratings thereof, qualified or withdrawn; and
(i) if the Additional Property is not to be owned by an existing Borrower,
the owner of the Additional Property (a "New Borrower") and its organizational
structure shall be acceptable to Lender and the Rating Agencies, and PRLP and
SPE shall collectively own at least 50.1% of the total interest in such New
Borrower. If the Additional Property is to be owned by an existing Borrower, the
organizational documents of the applicable Borrower shall, if required, be
modified to permit the ownership and operation of the Additional Property and
shall be in form and substance reasonably acceptable to Lender.
II.4.5 Adjacent Properties. Borrowers shall have the right to add to the
Properties any real property which a Borrower acquires subsequent to the Closing
Date provided such real property is immediately adjacent to a Property and is
operated or is to be operated as a factory outlet center or for parking or other
uses complementary to a factory outlet center (a "Spreader Premises") by
executing an agreement of spreader and modification of mortgage, deed of trust
or deed to secure debt, as applicable (a "Spreader Agreement"), to spread the
lien of the applicable Mortgage to include such Spreader Premises and such other
documents (together with the Spreader Agreement, the "Spreader Documents"), as
Lender may in its reasonable discretion require in order to grant Lender a first
priority, perfected lien on and security interest in such Spreader Premises and
all related rents, personal property, reserves and escrows on the same terms and
conditions as the liens and security interests granted to Lender in the Property
on the Closing Date. Borrowers' right to add an Spreader Premises to the
Properties shall also be subject to the following conditions and restrictions:
(a) No Default or Event of Default shall have occurred and be continuing;
(b) Borrowers shall have delivered Phase I environmental report and, if
recommended by such Phase I report, a Phase II environmental report prepared by
Environmental Management Group, Inc., IVI
Environmental, Inc., or such other environmental consultant as is approved
by the Rating Agencies, stating that the Additional Premises comply with all
applicable environmental laws, or if remedial steps are required to effect such
compliance, identifying such steps and projecting the cost thereof, in which
case Lender shall have the option to not accept such Spreader Premises and, if
Lender agrees to accept the Spreader Premises, Borrowers shall be required to
deposit into the Engineering Escrow Fund an amount equal to one hundred fifty
percent (150%) of such projected costs;
(c) Borrowers shall have delivered an engineering report and prepared by
Xxxxxx & Xxxxxx, Inc., or such other consulting engineer as is approved by the
Rating Agencies, stating that the Spreader Premises comply with all applicable
building laws and do not require performance of deferred maintenance or if
remedial steps are required to effect such compliance or such deferred
maintenance, identifying such steps and projecting the cost thereof, in which
case Lender shall have the option in its reasonable discretion not to accept
such Spreader Premises and, if Lender does accept such Spreader Premises,
Borrowers shall be required to deposit into the Engineering Escrow Fund an
amount equal to one hundred twenty-five percent (125%) of such projected costs;
(d) Borrowers shall have caused to be delivered all leases, title
commitments, title insurance policies, surveys, hazard and liability insurance,
evidence of compliance with zoning and other laws, legal opinions, and other
items of due diligence with respect to Spreader Premises as the Rating Agencies
may require, all of which shall be in form and substance acceptable to the
Rating Agencies;
(e) Borrowers shall comply with such other terms and conditions as the
Rating Agencies shall require in connection with such addition;
(f) each Rating Agency shall have delivered written confirmation that any
rating issued by such Rating Agency in connection with the Securitization will
not, as a result of the proposed addition of the Spreader Premises, be
downgraded from the then current ratings thereof, qualified or withdrawn; and
(g) the organizational documents of the applicable Borrower shall, if
required, be modified to permit the ownership and operation of the Spreader
Premises and shall be in form and substance reasonably acceptable to Lender;
provided, however that prior to the date of Securitization the provisions in
clauses (b), (c) and (d) of this Section 2.4.5 which relate to the Rating
Agencies' discretion shall be deemed to be the Lender's reasonable discretion.
Section II.5 Payments and Computations
II.5.1 Making of Payments. Each payment by Borrowers hereunder or under the
Note shall be made in funds settled through the New York Clearing House
Interbank Payments System or other funds immediately available to Lender by 2:00
p.m., New York City time, on the date such payment is due, to Lender by deposit
to such account as Lender may designate by written notice to Borrowers. Whenever
any payment hereunder or under the Note shall be stated to be due on a day which
is not a Business Day, such payment shall be made on the first Business Day
thereafter.
II.5.2 Computations. Interest payable hereunder or under the Note by
Borrowers shall be computed on the basis of the actual number of days elapsed in
the related interest accrual period and a 360-day year.
II.5.3 Late Payment Charge. If any principal, interest or any other sums
due under the Loan Documents is not paid by Borrowers within five (5) days after
the date on which it is due and payable, Borrowers shall pay to Lender upon
demand an amount equal to the lesser of five percent (5%) of such unpaid sum or
the maximum amount permitted by applicable law in order to defray the expense
incurred by Lender in handling and processing such delinquent payment and to
compensate Lender for the loss of the use of such delinquent payment. Any such
amount shall be secured by the Mortgages and the other Loan Documents.
Section II.6 Cash Management Arrangements
(a) All Rents will be transmitted directly into an account or accounts (the
"Collection Account") maintained by Borrowers but controlled by Lender at
Mercantile Safe Deposit and Trust Company or at such other bank or banks
selected by Borrowers (the "Collection Account Bank"). Borrower will establish a
separate "A" Account (the "A" Account) and "B" Account (the "B" Account) with
the Collection Account Bank. Borrowers shall cause all Rents to be sent directly
to the Collection Account Bank by tenants (where practicable) for deposit into
the "A" Account. All other income or revenue received by Borrowers or Manager in
connection with the Properties will be deposited into the "A" Account within one
Business Day after the date of receipt. Until the occurrence of a Cash Trap
Event, the Collection Account Bank shall transfer property receipts that are
cleared on a daily basis from the "A" Account to the "B" Account, which shall be
an account not subject to any restrictions and under the sole control of
Borrower. Following and during the continuance of a Cash Trap Event, the
Collection Account Bank will transfer property receipts that are cleared on a
daily basis to the Cash Collateral Account Bank for deposit into the Cash
Collateral Account. The duties of the Collection Account Bank and the
application and disbursement of all funds deposited with the Collection Account
Bank shall be governed by the terms of this Agreement and the Collection Account
Agreement. Any amounts so deposited into the Cash Collateral Account shall be
applied and disbursed in accordance with the terms and provisions of this
Agreement and the Cash Collateral Account Agreement.
(b) Lender shall have a senior security interest in the aforementioned
accounts and all subaccounts established thereunder. The upfront and ongoing
expenses of maintaining such accounts and subaccounts, and any other accounts
and reserves maintained pursuant to the Loan Documents, shall be the
responsibility of Borrowers. Funds in each account shall be invested for the
benefit of Borrowers in Permitted Investments (as defined in the Cash Collateral
Account Agreement).
(c) Anything hereinabove in this Section to the contrary notwithstanding,
from and after the acceleration of the Loan, 100% of all Rents and other sums
deposited into the Collection Account in any month which remain in the
Collection Account or the Cash Collateral Account shall be applied to the
payment of Debt Service on the Loan (including, if applicable, interest at the
Default Rate), required reserves and Approved Operating Expenses and/or to the
payment of the principal amount of the Note, in such order as Lender shall
determine in its sole discretion.
II.7 Fees.
(a) Borrowers shall pay to Lender, at the time of the initial Advance
hereunder, a structuring fee in the amount of 0.5% of the total Commitment. From
and after such time as Advances in an aggregate amount equal to $95,000,000.00
have been made hereunder, Borrowers shall pay to Lender, at the time of any
additional Advance hereunder, a draw fee in the amount of 0.125% of each such
Advance.
(b) Borrowers shall pay to Lender an exit fee (the "Exit Fee") in the event
that the Loan is repaid other than with the proceeds of permanent financing
obtained from Lender. The Exit Fee shall be equal to (i) the product of (A) .013
multiplied by (B) seventy percent (70%) of the sum of (1) the Initial Maximum
Amount plus (2) the excess of the Additional Maximum Amount over $50,000,000.00
less (ii) the amount of the Loan that is repaid with the proceeds of permanent
financing obtained from Lender.
As used herein, the following terms shall have the meanings set forth
below:
"Initial Maximum Amount" shall mean the total amount of Advances made on
the basis of the portion of the Available Amount attributable to the Initial
Properties, but in no event more than $112,000,000.00.
"Additional Maximum Amount" shall mean the total amount of Advances made on
the basis of the portion of the Available Amount attributable to Properties
other than the Initial Properties (such Properties being the "Future
Properties"); provided, however, that if Advances made on the basis of the
Available Amount attributable to a particular Future Property are repaid and
reborrowed, only the maximum principal amount of Advances outstanding at any one
time with respect to such Future Property shall be included in the Additional
Maximum Amount. Such maximum principal amount of Advances outstanding shall be
calculated at the time of the making of an Advance.
In determining the Property to which an Advance shall be attributable,
Advances shall be attributed first to the Initial Properties up to the maximum
amount available hereunder based on the Net Operating Income of such Properties
and then to Future Properties on the same basis in the order in which they
became collateral for the Loan. The Exit Fee in respect of any repayment of the
Loan shall be calculated and paid at the time of such repayment (subject to
adjustment on the Maturity Date as provided below); provided, however, that once
an amount equal to $1,019,200.00 has been paid in respect of the Exit Fee, no
further payments of the Exit Fee shall be due and payable until the Maturity
Date, at which time Borrowers and Lender shall calculate the total amount of the
Exit Fee. At such time, any additional amount owed by Borrowers in respect of
the Exit Fee shall be promptly paid by Borrowers, and Lender shall have no
obligation to release any remaining collateral for the Loan until the same has
been paid. In the event that payments theretofore made by Borrowers in respect
of the Exit Fee exceed the total amount of the Exit Fee as calculated on the
Maturity Date, Lender shall refund to Borrowers the amount of such excess.
III. CONDITIONS PRECEDENT
Section III.1 Conditions Precedent to the Initial Advance of the Loan. The
obligation of Lender to make the initial advance of the Loan hereunder is
subject to the fulfillment by Borrowers or waiver by Lender of the following
conditions precedent no later than the Closing Date:
(a) Representations and Warranties: Compliance with Conditions. The
representations and warranties of Borrowers contained in this Agreement and the
other Loan Documents shall be true and correct in all material respects on and
as of the Closing Date with the same effect as if made on and as of such date,
and no Default or Event of Default shall have occurred and be continuing; and
Borrowers shall be in compliance in all material respects with all terms and
conditions set forth in this Agreement and in each other Loan Document on their
part to be observed or performed.
(b) Loan Agreement and Note. Lender shall have received a copy of this
Agreement and the Note, in each case, duly executed and delivered on behalf of
Borrowers.
(c) Delivery of Loan Documents: Title Insurance: Reports: Leases.
(i) Mortgage, Assignments of Agreements. Lender shall have received from
Borrowers fully executed and acknowledged counterparts of the Mortgage,
Assignment of Leases, the Assignment of Agreements and the Consent and
Subordination of Manager relating to each Property and evidence that
counterparts of the Mortgages have been delivered to the title company for
recording, in the reasonable judgment of Lender, so as to effectively create
upon such recording valid and enforceable Liens upon the Properties of the
requisite priority in favor of Lender (or such other trustee as may be required
or desired under local law), subject only to the Permitted Encumbrances and such
other Liens as are permitted pursuant to the Loan Documents. Lender shall have
also received from Borrowers fully executed counterparts of the Environmental
Indemnity and each Consent and Subordination of Manager.
(ii) Title Insurance. Lender shall have received a Title Insurance Policy
for each Property acceptable to Lender and evidence that the premium in respect
of such Title Insurance Policy has been paid.
(iii) Survey. Lender shall have received a Survey for each Property.
(iv) Insurance. Lender shall have received valid certificates of insurance
for the policies of insurance required hereunder, satisfactory to Lender in its
reasonable discretion, and evidence of the payment of all premiums payable for
the existing policy period, which period shall not be less than one year in
advance.
(v) Environmental Reports. Lender shall have received an environmental
report in respect of each Property satisfactory to Lender.
(vi) Zoning. With respect to each Property, Lender shall have received, at
Lender's option, (i) letters or other evidence with respect to such Property
from the appropriate municipal authorities (or other Persons) concerning
applicable zoning and building laws, in each case reasonably satisfactory to
Lender, (ii) an ALTA 3.1 zoning endorsement for the Title Insurance Policy, or
(iii) a zoning opinion letter, in substance reasonably satisfactory to Lender.
(vii) Encumbrances. Borrowers shall have taken or caused to be taken such
actions so that Lender has a valid and perfected Lien of the requisite priority
as of the Closing Date with respect to the Mortgage on each Property, subject
only to applicable Permitted Encumbrances and such other Liens as are permitted
pursuant to the Loan Documents, and Lender shall have received satisfactory
evidence thereof.
(viii) Guaranty. Lender shall have received the Guaranty, duly executed and
delivered by Guarantors.
(d) Related Documents. Each additional document not specifically referenced
herein, but relating to the transactions contemplated herein, shall have been
duly authorized, executed and delivered by all parties thereto and Lender shall
have received and approved certified copies thereof.
(e) Delivery of Organizational Documents. On or before the Closing Date,
Borrowers shall deliver or cause to be delivered to Lender (i) copies certified
by each Borrower of all organizational documentation related to such Borrower
and/or the formation, structure, existence, good standing and/or qualification
to do business of such Borrower, as Lender may request in its reasonable
discretion, including good standing certificates, qualifications to do business
in the appropriate jurisdictions, resolutions authorizing the entering into of
the Loan and incumbency certificates as may be requested by Lender.
(f) Opinions of Borrower's Counsel. Lender shall have received opinions of
Borrowers' counsel (i) with respect to non-consolidation, true sale or true
contribution, and fraudulent transfer issues, and (ii) with respect to due
execution, authority, enforceability of the Loan Documents and such other
matters as Lender may require, all such opinions in form, scope and substance
satisfactory to Lender and Lender's counsel in their reasonable discretion.
(g) Intentionally omitted.
(h) Basic Carrying Costs. Borrowers shall have paid or deposited into an
applicable reserve fund (i) the amount described in clause (b) of Section 7.3.1
and (ii) all currently due Other Charges (other than ground lease rents) which
amounts shall be funded with proceeds of the Loan.
(i) Completion of Proceedings. All corporate and other proceedings taken or
to be taken in connection with the transactions contemplated by this Agreement
and other Loan Documents and all documents incidental thereto shall be
reasonably satisfactory in form and substance to Lender, and Lender shall have
received all such counterpart originals or certified copies of such documents as
Lender may reasonably request.
(j) Financial Statements. Borrowers shall have provided financial
statements for each Property acceptable to Lender.
(k) Leases, Rent Roll and Estoppel Certificates. Borrowers shall have
provided Lender with certified copies of each of the Leases in effect as of the
date hereof and requested by Lender, a current rent roll for each Property, and
tenant estoppel certificates and subordination, attornment and non-disturbance
agreements reasonably satisfactory to Lender.
(l) REA Estoppels. Borrowers shall have provided Lender with copies of all
reciprocal easement and operating agreements affecting any of the Properties,
together with original executed estoppel certificates in form and substance
satisfactory to Lender from each of the parties (other than a Borrower) to such
agreements as is required by Lender.
(m) Debt Service Coverage Ratio. The Debt Service Coverage Ratio shall be
at least equal to 1.25.
(n) Loan to Value Ratio; Appraisals. Lender shall have received an
appraisal ("Appraisal") for each Property satisfactory to Lender indicating that
the Allocated Loan Amount for such Property is not more than seventy-five
percent (75%) of the fair market value of such Property as of the date hereof.
(o) Engineering Reports. Lender shall have received a structural
engineering report for each Property from Xxxxxx & Xxxxxx, acceptable to Lender,
identifying, among other things, (i) deferred maintenance for such Property and
the cost thereof and (ii) a three (3) year schedule of anticipated capital
expenditures and the per annum cost thereof.
(p) Declarations of Covenants. Borrowers shall have delivered to Lender
recorded declarations of covenants and cross-easements in form and substance
reasonably satisfactory to Lender covering any parcels adjoining any of the
Properties owned by Borrowers or their Affiliates which contain or are expected
to contain additional phases of the shopping centers on the Properties and are
to be operated in an integrated manner.
(q) Utility Service and Tax Assessment. Borrowers shall have delivered
evidence that all utility services required for the Properties are available and
that each Property is subject to separate tax assessment.
(r) Absence of Adverse Changes. Lender shall have determined that there
have been no material developments prior to the Closing Date which could, in
Lender's sole judgment, adversely affect the ownership or operation of any
Property or the ability of Borrowers to repay the Loan or the ability of any
Borrower to perform any of its covenants and agreements set forth in this
Agreement and the other Loan Documents.
Section III.2 Conditions Precedent to each Advance of the Loan. Lender
shall not be required to make any Advance unless on the applicable Borrowing
Date:
(a) No Default. There exists no Default or Event of Default hereunder or
under any Loan Document.
(b) Representations and Warranties. The representations and warranties of
Borrowers contained in this Agreement and the other Loan Documents shall be true
and correct in all material respects on and as of the Borrowing Date with the
same effect as if made on and as of such date (and no facts, circumstances or
information which in the opinion of Lender are reasonably likely to have a
Material Adverse Effect are disclosed in any updated Schedule 1 delivered to
Lender as part of the Borrowing Documents) and Borrowers shall be in compliance
in all material respects with all terms and conditions set forth in this
Agreement and in each other Loan Document on their part to be observed or
performed.
(c) Debt Service Coverage Ratio. The Debt Service Coverage Ratio shall be
not less than 1.25.
(d) Endorsements. For all jurisdictions in which it is necessary for the
maintenance of the priority of the Mortgages with respect to such Advance,
Lender shall have received and approved (i) an endorsement to the applicable
Title Insurance Policy covering such Advance and showing that no unpermitted
title exceptions have arisen and (ii) federal tax, judgment and lien searches
for the Borrowers performed with the state and counties in which the Properties
are located and the state(s) under which the Borrowers are organized;
(e) Borrowing Documents and Draw Fee. Lender shall have received and
approved the Borrowing Documents and any draw fee payable pursuant to Section
2.7.
(f) Permits. If applicable and if Lender so requests, Lender has received
and approved copies of all permits and governmental approvals necessary for any
renovation or tenant improvement work at the Properties to be funded from such
Advance;
(g) Leases and Agreements. If applicable and if Lender so requests, copies
of all leases, lease amendments and other Property Agreements entered into since
the date of the last Advance;
(h) Title Insurance. If the Advance would result in the outstanding amount
hereunder being greater than the aggregate amount of the Title Insurance
Policies, the amount of such Title Insurance Policies shall be increased in an
amount sufficient to cover the entire outstanding amount of the Loan, plus any
additional amount (not to exceed 25% of the Allocated Loan Amount for the
Property covered by such Title Insurance Policy) reasonably required by Lender
with respect to any Title Insurance Policy which does not include a tie-in
endorsement. Such increase shall be allocated among the Title Insurance Policies
in a manner reasonably acceptable to Borrowers and Lender.
(i) Absence of Adverse Changes. Lender shall have determined that there
have been no material developments prior to the Borrowing Date which could, in
Lender's sole judgement, adversely affect the ownership or operation of any
Property or the ability of Borrowers to repay the Loan or the ability of any
Borrower to perform any of its covenants and agreements set forth in this
Agreement and the other Loan Documents.
IV. REPRESENTATIONS AND WARRANTIES
Section IV.1 Borrower Representations. Each Borrower represents and
warrants as of the date hereof, as of the Closing Date and as of each Borrowing
Date that, except as disclosed in Schedule 1 hereto or, with respect to
representations and warranties made as of the Borrowing Date, as disclosed in
the Borrowing Documents delivered as of such date:
(a) Organization. Each Borrower and each General Partner has been duly
organized and is validly existing and in good standing with requisite power and
authority to own its properties and to transact the businesses in which it is
now engaged. Each Borrower and each General Partner is duly qualified to do
business and is in good standing in each jurisdiction where it is required to be
so qualified in connection with its properties, businesses and operations. Each
Borrower and each General Partner possesses all rights, licenses, permits and
authorizations, governmental or otherwise, necessary to entitle it to own its
properties and to transact the businesses in which it is now engaged, and the
sole business of each Borrower is the ownership, management and operation of the
Property owned by it.
(b) Proceedings. Each Borrower and each General Partner has taken all
necessary action to authorize the execution, delivery and performance of this
Agreement and the other Loan Documents to which it is a party. This Agreement
and such other Loan Documents have been duly executed and delivered by or on
behalf of each Borrower which is a party thereto and constitute legal, valid and
binding obligations of each such Borrower enforceable against such Borrower in
accordance with their respective terms, subject to applicable bankruptcy,
insolvency and similar laws affecting rights of creditors generally, and
subject, as to enforceability, to general principles of equity (regardless of
whether enforcement is sought in a proceeding in equity or at law).
(c) No Conflicts. The execution, delivery and performance by Borrowers of
this Agreement and the other Loan Documents to which Borrowers or any one of
them are a party will not conflict with or result
in a breach of any of the terms or provisions of, or constitute a default
under, or result in the creation or imposition of any lien, charge or
encumbrance (other than pursuant to the Loan Documents) upon any of the property
or assets of any Borrower or General Partner pursuant to the terms of any
indenture, mortgage, deed of trust, loan agreement, partnership agreement or
other agreement or instrument to which any Borrower or General Partner is a
party or by which any Borrower's property or assets is subject, nor will such
action result in any violation of the provisions of any statute or any order,
rule or regulation of any court or governmental agency or body having
jurisdiction over any Borrower or any of its properties or assets, and any
consent, approval, authorization, order, registration or qualification of or
with any court or any such regulatory authority or other governmental agency or
body required for the execution, delivery and performance by any Borrower of
this Agreement or any other Loan Documents has been obtained and is in full
force and effect.
(d) Litigation. There are no actions, suits or proceedings at law or in
equity by or before any Governmental Authority or other agency now pending or
threatened against or affecting any Borrower or any of the Properties, which
actions, suits or proceedings, if determined against such Borrower or Property,
either individually or collectively has or is reasonably likely to have a
Material Adverse Effect.
(e) Property Agreements.
(i) Borrowers have delivered to Lender true, correct and complete copies of
all material Property Agreements.
(ii) No Property Agreement provides any party with the right to obtain a
lien or encumbrance upon any Property superior to the lien of the Mortgage
encumbering such Property.
(iii) No Borrower nor any other party to any Property Agreement affecting a
Property is in default of its monetary or other material obligations thereunder
beyond any notice and applicable grace period and no event has occurred which,
with the giving of notice or the passage of time, or both, would constitute such
a monetary default or, to the knowledge of Borrower, any such other default, in
each case which would have a Material Adverse Effect.
(iv) Borrowers have not received or given any written communication which
alleges that a material default exists or, with the giving of notice or the
lapse of time, or both, would exist under the provisions of any Property
Agreement except for such defaults which have been cured.
(v) No condition exists whereby a Borrower or any future owner of a
Property may be required to purchase any other parcel of land which is subject
to any Property Agreement or which gives any Person a right to purchase, or
right of first refusal with respect to, such Property.
(vi) To the best knowledge of Borrowers, no offset or any right of offset
exists respecting continued contributions to be made by any party to any
Property Agreement except as expressly set forth therein. Except as previously
disclosed to Lender in writing, no material exclusions or restrictions on the
utilization, leasing or improvement of any Property (including non-compete
agreements) exists in any Property Agreement.
(vii) Except as previously disclosed to Lender in writing, all
"pre-opening" requirements contained in all Property Agreements (including, but
not limited to, all off-site and on-site construction requirements), if any,
have been fulfilled and, to the best of Borrowers' knowledge, no condition now
exists whereby any party to any such Property Agreement could refuse to honor
its obligations thereunder if such refusal is reasonably likely to have a
Material Adverse Effect.
(viii) Except as previously disclosed to Lender in writing, all work, if
any, to be performed by a Borrower under each of the Property Agreements has
been substantially performed, all contributions to be made by a Borrower to any
party to such Property Agreements have been made, and all other conditions to
such party's obligations thereunder have been satisfied if the failure to so
perform, contribute or satisfy is reasonably likely to have a Material Adverse
Effect.
(f) Title. Each Borrower has good insurable and marketable fee simple or
leasehold title (as shown on Schedule 7) to the real property comprising part of
the Property owned or leased by it, and good title to the balance of such
Property, free and clear of all Liens whatsoever except the Permitted
Encumbrances, such other Liens as are permitted pursuant to the Loan Documents
and the Liens created by the Loan Documents. Each Mortgage when properly
recorded in the appropriate records, together with any Uniform Commercial Code
financing statements required to be filed in connection therewith, will create
(i) a valid, perfected first priority lien on the Property it purports to
encumber, subject only to Permitted Encumbrances and the Liens created by the
Loan Documents and (ii) perfected security interests in and to, and perfected
collateral assignments of, all personalty (including the Leases), all in
accordance with the terms thereof, in each case subject only to any applicable
Permitted Encumbrances, such other Liens as are permitted pursuant to the Loan
Documents and the Liens created or permitted by the Loan Documents. The
Permitted Encumbrances do not materially adversely affect the value or use of
any Property, or any Borrower's ability to repay the Loan. Except for Permitted
Encumbrances there are no claims for payment for work, labor or materials
affecting any Property which are or may become a lien prior to, or of equal
priority with, the Liens created by the Loan Documents.
(g) No Bankruptcy Filing. No Borrower or General Partner is contemplating
either the filing of a petition by it under any state or federal bankruptcy or
insolvency laws or the liquidation of all or a major portion of its assets or
property, and no Borrower or General Partner has knowledge of any Person
contemplating the filing of any such petition against it.
(h) Full and Accurate Disclosure. No statement of fact made by any Borrower
in this Agreement or in any of the other Loan Documents contains any untrue
statement of a material fact or omits to state any material fact necessary to
make statements contained herein or therein not misleading.
(i) No Plan Assets. No Borrower is an "employee benefit plan," as defined
in Section 3(3) of ERISA, subject to Title I of ERISA, and none of the assets of
any Borrower constitutes or will constitute "plan assets" of one or more such
plans within the meaning of 29 C.F.R. Section 2510.3-101.
(j) Compliance. To Borrowers' knowledge, each Borrower and each Property
and the use thereof comply in all material respects with all applicable Legal
Requirements, including building and zoning ordinances and codes and Property
Agreements. No Borrower is in default or violation of any order, writ,
injunction, decree or demand of any Governmental Authority, the violation of
which is reasonably likely to have a Material Adverse Effect. There has not been
committed by Borrowers or, to Borrowers' knowledge, any other person in
occupancy of or involved with the operation or use of the Properties any act or
omission affording the federal government or any state or local government the
right of forfeiture as against any Property or any part thereof or any monies
paid in performance of Borrowers' obligations under any of the Loan Documents.
Borrowers hereby covenant and agree not to commit, permit or suffer to exist any
act or omission affording such right of forfeiture.
(k) Contracts. To Borrowers' knowledge, there are no contracts affecting
any Property which provide for payments of more than $75,000.00 in any year and
which are not terminable on one month's notice or less without cause and without
penalty or premium. All material contracts affecting the Properties have been
entered into at arms-length in the ordinary course of Borrowers' business and
provide for the payment of fees in amounts and upon terms comparable to market
rates existing at the time of execution.
(l) Financial Information. All financial data, including the statements of
cash flow and income and operating expense, that have been delivered to Lender
by or on behalf of Borrowers in respect of the Properties (i) are true, complete
and correct in all material respects, (ii) accurately represent the financial
condition of each Property as of the date of such reports, and (iii) have been
prepared in accordance with GAAP (or such other accounting basis as is
reasonably acceptable to Lender) consistently applied throughout the periods
covered, except as disclosed therein or as otherwise disclosed in writing to
Lender prior to the date hereof. No Borrower has any contingent liabilities,
liabilities for taxes, unusual forward or long-term commitments or unrealized or
anticipated losses from any unfavorable commitments that are known to Borrowers
and reasonably likely to have a material adverse effect on any Property or the
operation thereof, except as referred to or reflected in said financial
statements or as otherwise disclosed in writing to Lender prior to the date
hereof. Since the date of such financial statements, there has been no change in
the financial condition, operations or business of any Borrower from that set
forth in said financial statements which is reasonably likely to have a Material
Adverse Effect.
(m) Condemnation. No Condemnation or other proceeding has been commenced
or, to Borrowers' best knowledge, is contemplated with respect to all or any
portion of any Property or for the relocation of roadways providing access to
any Property which is reasonably likely to have a Material Adverse Effect.
(n) Federal Reserve Regulations. No part of the proceeds of the Loan will
be used for the purpose of purchasing or acquiring any "margin stock" within the
meaning of Regulation U of the Board of Governors of the Federal Reserve System
or for any other purpose which would be inconsistent with such Regulation U or
any other Regulations of such Board of Governors, or for any purposes prohibited
by Legal Requirements or by the terms and conditions of this Agreement or the
other Loan Documents.
(o) Utilities and Public Access. Each Property has rights of access to
public ways and is served by water, sewer, sanitary sewer and storm drain
facilities adequate to service such Property for its intended uses. All public
utilities necessary or convenient to the full use and enjoyment of each Property
are located in the public right-of-way abutting such Property (unless through
permanent insurable easements benefitting such Property), and all such utilities
are connected so as to serve the Property without passing over other property
(unless through permanent insurable easements benefitting such Property). All
roads necessary for the use of each Property for its current purposes have been
completed and dedicated to public use and accepted by all Governmental
Authorities (unless such roads are on private, permanent insurable easements,
benefitting such Property).
(p) Not a Foreign Person. No Borrower is a "foreign person" within the
meaning of Section 1445(f)(3) of the Code.
(q) Separate Lots. Each Property is comprised of one (1) or more parcels
which constitute a separate tax lot and does not constitute a portion of any
other tax lot not a part of such Property.
(r) Assessments. Except as disclosed in the Title Policies, there are no
pending or, to the knowledge of Borrowers, proposed special or other assessments
for public improvements or otherwise affecting any Property, nor are there any
contemplated improvements to any Property that may result in such special or
other assessments.
(s) Enforceability. Intentionally omitted.
(t) No Prior Assignment. There are no prior assignments of the Leases or
any portion of the Rents due and payable or to become due and payable which are
presently outstanding.
(u) Insurance. Borrowers have obtained and have delivered to Lender
insurance policies reflecting the insurance coverages, amounts and other
requirements set forth in this Agreement.
(v) Use of Property. Each Property is used exclusively as a retail factory
outlet shopping center and other appurtenant and related uses.
(w) Certificate of Occupancy; Licenses. To Borrowers' knowledge, all
certifications, permits, licenses and approvals, including certificates of
completion and occupancy permits and any applicable liquor licenses required for
the legal use, occupancy and operation of the Properties (collectively, the
"Licenses"), have been obtained and are in full force and effect. Borrowers
shall keep and maintain all licenses necessary for the operation of the
Properties. The use being made of each Property is in conformity with the
certificate of occupancy issued for such Property.
(x) Flood Zone. Except as otherwise disclosed on the Surveys, none of the
Improvements on the Properties is located in an area identified by the Federal
Emergency Management Agency as an area having special flood hazards or, if they
are, Borrowers have obtained the flood insurance required hereunder.
(y) Physical Condition. To Borrowers' knowledge, except as disclosed in the
engineering reports delivered to Lender in connection with the underwriting of
the Loan, each Property, including all buildings, improvements, parking
facilities, sidewalks, storm drainage systems, roofs, plumbing systems, HVAC
systems, fire protection systems, electrical systems, equipment, elevators,
exterior sidings and doors, landscaping, irrigation systems and all structural
components, is in good condition, order and repair in all material respects;
there exist no structural or other material defects or damages in any Property,
whether latent or otherwise. Borrowers have not received notice from any
insurance company or bonding company of any defects or inadequacies in the
Properties, or any part thereof, which would adversely affect the insurability
of the same or cause the imposition of extraordinary premiums or charges thereon
or of any termination or threatened termination of any policy of insurance or
bond.
(z) Appraised Value. All of the improvements which were included in
determining the appraised value of each Property lie wholly within the
boundaries and building restriction lines of such Property. Except as disclosed
in the Survey for a Property, no improvements on adjoining properties encroach
upon such Property, and no easements or other encumbrances upon any Property
encroach upon any of the improvements, so as to materially affect the value or
marketability of such Property except those which are insured against by title
insurance.
(aa) Leases. Attached hereto as Schedule 2 is a rent roll (the "Rent Roll")
for the Properties. The Rent Roll is true, correct and complete with respect to
the subject matter thereof. The only Leases affecting the Properties are those
reflected in the Rent Roll. Except as set forth in Schedule 2: (i) each Lease is
in full force and effect; (ii) the tenants under the Leases have accepted
possession of and are in occupancy of all of their respective demised premises,
have commenced the payment of rent under such Leases; (iii) all rents due and
payable under the Leases have been paid and no portion thereof has been paid for
any period more than thirty (30) days in advance; (iv) the fixed rent payable
under each Lease is the amount of fixed rent set forth in the Rent Roll; (v)
there are no defaults on the part of the landlord under any Lease and no event
has occurred which, with the giving of notice or passage of time, or both, would
constitute such default; (vi) to Borrowers' best knowledge, there is no present
material default by any tenant under any Lease; and (vii) Borrowers do not hold
any security deposits under the Leases. Except as set forth in Schedule 2 or as
disclosed in tenant estoppel certificates delivered to Lender pursuant to
Section 3.1(k): (viii) there are no offsets, claims or defenses to the
enforcement of any Lease; (ix) there is no claim or basis for a claim by the
tenant under any Lease for an adjustment to the rent; and (x) no tenant has made
any claim against the landlord under a Lease which remains outstanding. None of
the Leases contains any option to purchase or right of first refusal to purchase
any Property or any part thereof which remains in effect as of the date hereof.
The Leases have not been assigned or pledged except to Lender, and no other
person whatsoever has any interest therein except the tenants thereunder.
(bb) Survey. The survey for each Property delivered to Lender in connection
with this Agreement does not fail to reflect any material matter affecting such
Property or the title thereto that would normally be set forth in such type of
survey.
(cc) Filing and Recording Taxes. All transfer taxes, deed stamps,
intangible taxes or other amounts in the nature of transfer taxes required to be
paid by any Person under applicable Legal Requirements currently in effect in
connection with the transfer of the Properties to Borrowers have been paid. All
mortgage, mortgage recording, stamp, intangible or other similar tax required to
be paid by any Person under applicable Legal Requirements currently in effect in
connection with the execution, delivery, recordation, filing, registration,
perfection or enforcement of any of the Loan Documents, including the Mortgages,
have been paid and, under current Legal Requirements, each Mortgage is
enforceable against the Borrower party thereto in accordance with its respective
terms by Lender (or any subsequent holder thereof), except as such
enforceability may be limited by insolvency, bankruptcy, moratorium or other
laws affecting creditor's remedies in general and principles of equity.
(dd) Single-Purpose. Each Borrower hereby represents and warrants to, and
covenants with, Lender that, as of the date hereof and until such time as the
Debt shall be paid in full:
(i) Such Borrower does not and will not own any asset or property other
than (A) the Property owned by it, and (B) incidental personal property related
to or arising from the ownership or operation of such Property.
(ii) Such Borrower will not engage in any business other than the
ownership, development, management and operation of the Property owned by it and
will conduct and operate its business as presently conducted and operated.
(iii) Such Borrower will not enter into any contract or agreement with any
of its Affiliates or constituent parties, any guarantor of the Debt or any part
thereof or any Affiliate of any constituent party or Guarantor, except upon
terms and conditions that are no less favorable than those that would be
available on an arms-length basis with third parties other than any such party.
(iv) Such Borrower has not incurred, and such Borrower will not incur, any
indebtedness, secured or unsecured, direct or indirect, absolute or contingent
(including guaranteeing any obligation), other than the Permitted Indebtedness.
No indebtedness other than the Debt may be secured (subordinate or pari passu)
by the Properties.
(v) Such Borrower has not made and will not make any loans or advances to
any third party (including any Affiliate or constituent party, any Guarantor or
any Affiliate of any constituent party or Guarantor).
(vi) Such Borrower is and will remain solvent and will pay its debts and
liabilities (including employment and overhead expenses) from its assets as the
same shall become due.
(vii) Such Borrower has done or caused to be done and will do all things
necessary to observe corporate, partnership, or limited liability company
formalities, as the case may be, and preserve its existence.
(viii) Such Borrower will not, and will not permit any constituent party or
Guarantor to, amend, modify or otherwise change the partnership certificate,
partnership agreement, articles of incorporation and bylaws, operating
agreement, trust, or other organizational documents of such Borrower or such
constituent party or Guarantor in a manner which would adversely affect such
Borrower's existence as a single purpose entity.
(ix) Such Borrower will maintain books and records and bank accounts
separate from those of its Affiliates and any constituent party and such
Borrower will file its own tax returns.
(x) Such Borrower will be, and at all times will hold itself out to the
public as, a legal entity separate and distinct from any other entity (including
any Affiliate, any constituent party, any Guarantor or any Affiliate of any
constituent party or Guarantor), shall conduct business in its own name and
shall maintain and utilize separate stationery, invoices and checks.
(xi) Such Borrower will maintain adequate capital for the normal
obligations reasonably foreseeable in a business of its size and character and
in light of its contemplated business operations.
(xii) Neither such Borrower nor any constituent party will seek the
dissolution or winding up, in whole or in part, of such Borrower.
(xiii) Such Borrower will not commingle its funds and other assets with
those of any Affiliate or constituent party, any Guarantor, or any Affiliate of
any constituent party or Guarantor, or any other Person.
(xiv) Such Borrower has and will maintain its assets in such a manner that
it will not be costly or difficult to segregate, ascertain or identify its
individual assets from those of any Affiliate or constituent party, any
Guarantor, or any Affiliate of any constituent party or Guarantor, or any other
Person.
(xv) Such Borrower does not and will not hold itself out to be responsible
for the debts or obligations of any other person.
(xvi) Each Borrower which is a limited liability company shall at all times
have one member, and each Borrower which is a limited partnership shall at all
times have a general partner (the "SPE") who is a "single purpose entity" and
which shall at all times comply with each of the representations, warranties,
and covenants contained in this Section 4.1 as if such representation, warranty
or covenant was made directly by such SPE.
(xvii) The charter of each SPE shall at all times have at least one duly
appointed member of its board of directors (an "Independent Director")
reasonably satisfactory to Lender who shall not have been at the time of such
individual's appointment, and may not have been at any time during the preceding
five years (i) a shareholder of, or an officer or employee of, any Borrower or
any of its shareholders, subsidiaries or affiliates, (ii) a customer of, or
supplier to, any Borrower or any of its shareholders, subsidiaries or
affiliates, (iii) a person or other entity controlling any such shareholder,
supplier or customer, or (iv) a member of the immediate family of any such
shareholder, officer, employee, supplier or customer of any other director of
such SPE. As used herein, the term "control" means the possession, directly or
indirectly, of the power to direct or cause the direction of the management and
policies of a person or entity, whether through ownership of voting securities,
by contract or otherwise.
(xviii) The board of directors of each SPE shall not take any action which,
under the terms of any certificate of incorporation, by-laws or any voting trust
agreement with respect to any common stock, requires the vote of the board of
directors of the SPE unless at the time of such action there shall be at least
one member who is an Independent Director.
(xix) Such Borrower shall conduct its business so that the assumptions made
with respect to such Borrower in that certain opinion letter dated as of the
Closing Date delivered by Borrowers' counsel in connection with the Loan shall
be true and correct in all respects.
(ee) Investment Company Act. No Borrower is (i) an "investment company" or
a company "controlled" by an "investment company," within the meaning of the
Investment Company Act of 1940, as amended; (ii) 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 (iii) subject to any other
federal or state law or regulation which purports to restrict or regulate its
ability to borrow money.
(ff) Fraudulent Transfer. No Borrower has entered into the Loan or any Loan
Document with the actual intent to hinder, delay, or defraud any creditor. Each
Borrower and each General Partner (i) is and has at all times been Solvent and
will remain Solvent immediately upon the consummation of the transactions
contemplated by the Loan Documents, (ii) is free from bankruptcy, reorganization
or arrangement proceedings or a general assignment for the benefit of creditors
and (iii) is not contemplating the filing of a petition under any
state or federal bankruptcy or insolvency laws or the liquidation of all or
a major portion of such Person's assets or property and no Borrower has any
knowledge of any Person contemplating the filing of any such petition against it
or any General Partner. No Borrower intends to, or believes that it will, incur
debts and liabilities (including contingent liabilities and other commitments)
beyond its ability to pay such debts as they mature (taking into account the
timing and amounts to be payable on or in respect of obligations of such
Borrower).
(gg) Management Agreement. Each of the Properties is self-managed by the
Borrower which owns the same and there are no Management Agreements affecting
the Properties. If at any time a Borrower elects to retain a Manager to manage
its Property, such manager and the Management Agreement between such Borrower
and the Manager shall be subject to the consent of Lender, not to be
unreasonably withheld or delayed, and all fees due under the Management
Agreement (which shall in no event exceed 4% of gross revenues), and the terms
and provisions of the Management Agreement, shall be subordinate to the
Mortgages and the Manager shall attorn to Lender. If at any time Lender consents
to the appointment of a new Manager, such new Manager and Borrower shall, as a
condition of Lender's consent, execute a Managers Consent and Subordination of
Management Agreement in a form reasonably required by Lender.
Section IV.2 Survival of Representations. Borrowers agree that all of the
representations and warranties of Borrowers set forth in Section 4.1 and
elsewhere in this Agreement and in the other Loan Documents shall survive for so
long as the Debt or any portion thereof remains owing to Lender under this
Agreement or any of the other Loan Documents by Borrowers. All representations,
warranties, covenants and agreements made in this Agreement or in the other Loan
Documents by Borrowers shall be deemed to have been relied upon by Lender
notwithstanding any investigation heretofore or hereafter made by Lender or on
its behalf.
V. AFFIRMATIVE COVENANTS
Section V.1 Borrower Covenants. From the date hereof and until payment and
performance in full of all obligations of Borrowers under the Loan Documents or
the earlier release of the Liens of the Mortgages (and all related obligations)
in accordance with the terms of this Agreement and the other Loan Documents, or
with respect to a particular Borrower, until such Borrower's Property shall be
released pursuant to Section 2.4 hereof, Borrowers hereby covenant and agree
with Lender that:
(a) Existence; Compliance with Legal Requirements: Insurance. Each Borrower
shall (i) do or cause to be done all things necessary to preserve, renew and
keep in full force and effect its existence, rights, licenses, permits and
franchises, (ii) comply with all Legal Requirements and Property Agreements
applicable to it and the Properties, and (iii) at all times maintain, preserve
and protect all franchises and trade names, in each case to the extent failure
to do so would result in a Material Adverse Effect. Each Borrower shall preserve
all the remainder of its property used or useful in the conduct of its business
and shall keep the Properties in good working order and repair, and from time to
time make, or cause to be made, all reasonably necessary repairs, renewals,
replacements, betterments and improvements thereto, all as more fully provided
in the Mortgages. Borrowers shall keep the Properties insured at all times to
such extent and against such risks, and maintain liability and such other
insurance, as is more fully provided in this Agreement.
(b) Taxes and Other Charges. Borrowers shall pay all Taxes and Other
Charges now or hereafter levied or assessed or imposed against the Properties or
any part thereof as the same become due and payable. Borrowers will deliver to
Lender receipts for payment or other evidence satisfactory to Lender that the
Taxes and Other Charges have been so paid or are not then delinquent no later
than ten (10) days prior to the
date on which the Taxes and/or Other Charges would otherwise be delinquent
if not paid (provided, however, that Borrowers are not required to furnish such
receipts for payment of Taxes in the event that such Taxes have been paid by
Lender pursuant to Section 7.3 hereof). Borrowers shall not suffer and shall
promptly cause to be paid and discharged any lien or charge whatsoever which may
be or become a lien or charge against any Property, and shall promptly pay for
all utility services provided to the Properties. Borrowers, at their own
expense, may contest by appropriate legal proceeding, promptly initiated and
conducted in good faith and with due diligence, the amount or validity or
application in whole or in part of any Taxes or Other Charges, provided that (i)
no Event of Default has occurred and remains uncured, (ii) such proceeding shall
suspend the collection of the Taxes or Other Charges from the applicable
Property or Properties, (iii) such proceeding shall be permitted under and be
conducted in accordance with the provisions of any other instrument to which
Borrowers are subject and shall not constitute a default thereunder, (iv)
neither any Property nor any part thereof or interest therein will be in danger
of being sold, forfeited, terminated, canceled or lost, (v) Borrowers shall have
furnished such security as may be required in the proceeding, or as may be
requested by Lender, to insure the payment of any such Taxes or Other Charges,
together with all interest and penalties thereon; and (vi) Borrowers shall
promptly upon final determination thereof pay the amount of any such Taxes or
Other Charges, together with all costs, interest and penalties which may be
payable in connection therewith. Prior written notice of any such contest must
be given to Lender if the contested Taxes or Other Charges have not been paid
prior to initiation of the contest. Lender may pay over any such cash deposit or
part thereof held by Lender to the claimant entitled thereto at any time when,
in the reasonable judgment of Lender, the entitlement of such claimant is
established.
(c) Litigation. Borrowers shall give prompt written notice to Lender of any
litigation or governmental proceedings pending or threatened against any
Borrower or any Property which might have a Material Adverse Effect.
(d) Premises. Borrowers shall permit agents, representatives and employees
of Lender to inspect the Properties or any part thereof at reasonable hours upon
reasonable advance notice.
(e) Notice of Default. Borrowers shall promptly advise Lender of any
material adverse change in the condition, financial or otherwise, of any
Borrower or of the occurrence of any Default or Event of Default of which any
Borrower has knowledge.
(f) Cooperate in Legal Proceedings. Borrowers shall cooperate fully with
Lender with respect to any proceedings before any court, board or other
Governmental Authority which may in any way affect the rights of Lender
hereunder or any rights obtained by Lender under any of the other Loan Documents
and, in connection therewith, permit Lender, at its election, to participate in
any such proceedings. The foregoing shall not be construed to require Borrowers
to incur expenses in cooperating in any proceeding which arises out of the gross
negligence or wilful misconduct of Lender.
(g) Perform Loan Documents. Borrowers shall observe, perform and satisfy
all the terms, provisions, covenants and conditions of, and shall pay when due
all costs, fees and expenses to the extent required under, the Loan Documents
executed and delivered by, or applicable to, Borrowers.
(h) Insurance Benefits. Borrowers shall cooperate with Lender in obtaining
for Lender the benefits of any Insurance Proceeds lawfully or equitably payable
in connection with the Properties, and Lender shall be reimbursed for any
expenses incurred in connection therewith (including attorneys' fees and
disbursements, and the expense of an appraisal on behalf of Lender in case of a
fire or other casualty affecting any Property or any part thereof) out of such
Insurance Proceeds.
(i) Further Assurances. Borrowers shall, at Borrowers' sole cost and
expense:
(A) execute and deliver to Lender such documents, instruments,
certificates, assignments and other writings, and do such other acts, reasonably
necessary or desirable, to evidence, preserve and/or protect the collateral at
any time securing or intended to secure their obligations under the Loan
Documents, as Lender may reasonably require; and
(B) do and execute all and such further lawful and reasonable acts,
conveyances and assurances for the better and more effective carrying out of the
intents and purposes of this Agreement and the other Loan Documents, as Lender
shall reasonably require from time to time.
(j) Supplemental Mortgage Affidavits. As of the date hereof, Borrowers
represent that they have paid all state, county and municipal recording and all
other taxes imposed upon the execution and recordation of the Mortgages. If at
any time Lender determines, based on applicable law, that Lender is not being
afforded the agreed upon amount of security available from each Property as a
direct or indirect result of applicable taxes not having been paid with respect
to such Property, Borrowers agree that the appropriate Borrower or Borrowers
will on demand pay any additional taxes.
(k) Financial Reporting.
(i) Each Borrower will keep and maintain or will cause to be kept and
maintained on a Fiscal Year basis, in accordance with GAAP (or such other
accounting basis reasonably acceptable to Lender) consistently applied, proper
and accurate books, records and accounts reflecting (A) all of the financial
affairs of such Borrower and (B) all items of income and expense in connection
with the operation of the Property owned by such Borrower or in connection with
any services, equipment or furnishings provided in connection with the operation
thereof, whether such income or expense may be realized by such Borrower or by
any other Person whatsoever, excepting lessees unrelated to and unaffiliated
with such Borrower who have leased from such Borrower portions of such Property
for the purpose of occupying the same. Lender shall have the right from time to
time at all times during normal business hours upon reasonable notice to examine
such books, records and accounts at the office of such Borrower or other Person
maintaining such books, records and accounts and to make such copies or extracts
thereof as Lender shall desire. After the occurrence of an Event of Default,
Borrowers shall pay any costs and expenses incurred by Lender to examine any
Borrower's accounting records with respect to any Property, as Lender shall
determine to be necessary or appropriate in the protection of Lender's interest.
(ii) Each Borrower shall furnish Lender annually, within ninety (90) days
following the end of each Fiscal Year of such Borrower, with a complete copy of
such Borrower's financial statement audited by an independent certified public
accountant that is reasonably acceptable to Lender (in accordance with GAAP
consistently applied) for such Fiscal Year and containing a statement of
revenues and expenses, a statement of assets and liabilities and a statement of
such Borrower's equity. Such audited financial statement may be prepared on a
combined basis with the other Properties. Together with such Borrower's annual
financial statements, such Borrower shall supplement the combined financial
statement with information on a property-by-property basis that was used in the
preparation of the combined statement and shall furnish an Officer's Certificate
certifying as of the date thereof (i) that the annual financial statements
accurately represent the results of operation and financial condition of such
Borrower and the applicable Property (or, in the case of a combined financial
statement, the results of operation and financial condition of the Borrowers and
the Properties) all in accordance with GAAP consistently applied, and (ii)
whether there exists an event or circumstance which constitutes, or which upon
notice or lapse of time or both would constitute, a Default under the Note or
any other Loan Document executed and delivered by any Borrower, and if such
event or circumstance exists, the nature thereof, the period of time it has
existed and the action then being taken to remedy such event or circumstance.
(iii) Each Borrower shall furnish Lender monthly, within thirty (30) days
following the end of each month, with a true, complete and correct cash flow
statement with respect to the Property owned by such Borrower showing (i) all
cash receipts of any kind whatsoever and all cash payments and disbursements,
and (ii) year-to-date summaries of such cash receipts, payments and
disbursements together with rent rolls and occupancy reports, each dated as of
the last day of such month, and a certification of the Manager stating that such
items are true, complete and correct.
(iv) Each Borrower shall furnish Lender monthly, within thirty (30) days
following the end of each month, with a certification of the Manager stating
that all Operating Expenses with respect to the Properties which had accrued as
of the last day of the month preceding the delivery of the cash flow statement
referred to in clause (iii) above have been fully paid or otherwise reserved or
provided for by the Manager (any such certification or any certification
furnished by a Manager pursuant to clause (iii) above, a "Manager
Certification").
(v) Each Borrower shall furnish Lender quarterly, (i) within thirty (30)
days following the end of each fiscal quarter of such Borrower, with a true,
complete and correct rent roll for the Property owned by such Borrower,
including a list of which tenants are in default under their respective Leases,
dated as of the last day of the fiscal quarter of such Borrower, identifying
each tenant, the monthly rent and additional rent, if any, payable by such
tenant, the expiration date of such tenant's Lease (which shall include any
landlord termination options), the security deposit, if any, held by such
Borrower under the Lease, the space covered by the Lease, and the arrearages for
such tenant, if any, and (ii) within forty-five (45) days following the end of
each fiscal quarter of such Borrower, with a statement of the sales of tenants
under Leases to the extent that such Borrower has received such information
prior to the date of submission of the rent roll to Lender pursuant to this
paragraph (v), and such rent roll and sales statement, as applicable, shall be
accompanied by an Officer's Certificate, dated as of the date of the delivery of
such rent roll or sales statement, as applicable, certifying that such rent roll
or sales statement, as applicable, is true, correct and complete in all material
respects as of its date.
(vi) Each Borrower shall furnish to Lender, within fifteen (15) Business
Days after Lender's request therefor, such further detailed information with
respect to the operation of any Property and the financial affairs of such
Borrower as may be reasonably requested by Lender.
(vii) Each Borrower shall cause the Manager to furnish to Lender, within
thirty (30) days after the end of each month, a schedule of tenant security
deposits showing any activity in the Security Deposit Account for such month,
together with a certification of the Manager as to the balance in such Security
Deposit Account and that such tenant security deposits are being held in
accordance with all Legal Requirements.
(viii) Each Borrower shall furnish Lender annually, within ninety (90) days
after the end of each Fiscal Year, with a report setting forth (i) the Net
Operating Income for such Fiscal Year, (ii) the average occupancy rate of the
applicable Property during such Fiscal Year, (iii) the capital repairs,
replacements and improvements performed at such Property during such Fiscal Year
and the aggregate Capital Expenses made in connection therewith, together with
(iv) an Officer's Certificate containing a review of the operations of such
Property for such Fiscal Year.
(ix) Each Borrower shall furnish Lender promptly upon transmission thereof,
with copies of all financial statements, proxy statements, notices and reports
of the REIT as the REIT shall send to its public shareholders and copies of all
registration statements (without exhibits) and all reports which it files with
the Securities and Exchange Commission (or any governmental body or agency
succeeding to the functions of the Securities and Exchange Commission).
(l) Business and Operations. Each Borrower will continue to engage in the
businesses presently conducted by it as and to the extent the same are necessary
for the ownership, maintenance, management and operation of the Property owned
by it. Each Borrower will qualify to do business and will remain in good
standing under the laws of each jurisdiction as and to the extent the same are
required for the ownership, maintenance, management and operation of such
Property, in each case to the extent failure to do so would have a Material
Adverse Effect.
(m) Title to the Property. Borrowers will warrant and defend (i) the title
to the Properties and every part thereof, subject only to Liens permitted under
the Loan Documents (including Permitted Encumbrances), and (ii) the validity and
priority of the Liens of the Mortgages, subject only to Liens permitted under
the Loan Documents (including Permitted Encumbrances), in each case against the
claims of all Persons whomsoever. Borrowers shall reimburse Lender for any
losses, costs, damages or expenses (including reasonable attorneys' fees and
court costs) incurred by Lender if an interest in any Property, other than as
permitted hereunder, is claimed by another Person.
(n) Costs of Enforcement. In the event (i) that any Mortgage is foreclosed
in whole or in part or is put into the hands of an attorney for collection,
suit, action or foreclosure due to the occurrence of a Default or Event of
Default, (ii) of the foreclosure of any mortgage prior to or subsequent to the
Mortgage encumbering any Property in which proceeding Lender is made a party, or
(iii) of the bankruptcy, insolvency, rehabilitation or other similar proceeding
in respect of any Borrower or an assignment by any Borrower for the benefit of
its creditors, Borrowers, their successors or assigns, shall be chargeable with
and agree to pay all costs of collection and defense, including reasonable
attorneys' fees in connection therewith and in connection with any appellate
proceeding or post-judgment action involved therein, which shall be due and
payable together with all required service or use taxes.
(o) Estoppel Statement.
(i) After request by Lender, Borrowers shall within twenty (20) days
furnish Lender with a statement, duly acknowledged and certified, setting forth
(A) the unpaid principal amount of the Note, (B) the Interest Rate of the Note,
(C) the date installments of interest and/or principal were last paid, (D) any
offsets or defenses to the payment of the Debt, if any, and (E) that the Note,
this Agreement, the Mortgages and the other Loan Documents are valid, legal and
binding obligations and have not been modified or if modified, giving
particulars of such modification.
(ii) After request by Borrowers, Lender shall within twenty (20) days
furnish Borrowers with a statement, duly acknowledged and certified, setting
forth (A) the unpaid principal amount of the Note, (B) the Interest Rate of the
Note, (C) the date installments of interest and/or principal were last paid, and
(D) that the Note, this Agreement, the Mortgages and the other Loan Documents
have not been modified or if modified, giving particulars of such modification.
(p) Loan Proceeds. Each Borrower shall use the proceeds of the Loan
received by it on the Closing Date only for the purposes set forth in
Section 2.1.6.
(q) Performance by Borrowers. Borrowers shall in a timely manner observe,
perform and fulfill each and every covenant, term and provision of each Loan
Document executed and delivered by, or applicable to, Borrowers, and shall not
enter into or otherwise suffer or permit any amendment, waiver, supplement,
termination or other modification of any Loan Document executed and delivered
by, or applicable to, Borrowers without the prior written consent of Lender.
(r) Annual Budget. Borrowers shall prepare and submit (or shall cause
Manager to prepare and submit) to Lender, within thirty (30) days after the
occurrence of a Cash Trap Event and thereafter at least 45 days prior to the end
of each Fiscal Year during the existence of a Cash Trap Event, for approval by
Lender, which approval shall not be unreasonably withheld or delayed, a proposed
pro forma budget for each Property during the then current (in the case of the
budget first submitted after a Cash Trap Event) or succeeding Fiscal Year (the
"Annual Budget") and, promptly after preparation thereof, any subsequent
revisions to such Annual Budget. Lender's failure to approve or disapprove any
Annual Budget within thirty (30) days after Lender's receipt thereof shall be
deemed to constitute Lender's approval thereof. The Annual Budget for each
Property shall consist of (a) an operating expense budget (the "Operating
Budget") showing, on a month-by-month basis, in reasonable detail, each line
item of the Borrowers' anticipated income and Operating Expenses for such
Property (on a cash and accrual basis), including amounts required to establish,
maintain and/or increase reserves, (b) a Capital Expense Budget (the "Capital
Budget") showing, on a month-by-month basis, in reasonable detail, each line
item of anticipated Capital Expenses for such Property.
(s) Confirmation of Representations. Borrowers shall deliver to Lender
within ten (10) days of the request of Lender, which request may be given not
less than ten (10) days nor more than thirty (30) days prior to the anticipated
date of Securitization, an Officer's Certificate updating all of the
representations and warranties contained in this Agreement and the other Loan
Documents and certifying that all of the representations and warranties
contained in this Agreement and the other Loan Documents, as updated pursuant to
such Officer's Certificate, are true, accurate and complete as of the date of
such Officer's Certificate, and noting any exceptions.
(t) No Joint Assessment. Borrowers shall not suffer, permit or initiate the
joint assessment of any Property (i) with any other real property constituting a
tax lot separate from such Property, or (ii) with any portion of such Property
which may be deemed to constitute personal property, or any other procedure
whereby the lien of any taxes which may be levied against such personal property
shall be assessed or levied or charged to such Property.
(u) Leasing Matters. Borrowers shall not enter into, modify, amend or renew
any Lease except in accordance with the Prudent Manager Standard, and shall not
enter into, modify, amend or renew any one or more Leases with a tenant and/or
its affiliates if the same is effected as part of a single transaction or a
series of substantially integrated transactions related to 50,000 leasable
square feet or more in the aggregate of any or all of the Properties, in each
case without Lender's consent, not to be unreasonably withheld or delayed.
Without limiting the generality of the foregoing, it shall not be unreasonable
for Lender to withhold its consent to any such Lease, amendment or renewal which
does not provide for the payment of market rents or is not in compliance with
the Prudent Manager Standard. All Leases shall provide for rental rates, terms
and conditions which constitute good and prudent business practice and are
consistent with the Prudent Manager Standard and shall be arms-length
transactions. All Leases shall provide that they are subordinate to the
Mortgages and that the lessees thereunder attorn to Lender. Borrowers shall
deliver copies of all Leases, amendments, modifications and renewals to Lender.
Borrowers (i) shall observe and perform the obligations imposed upon the lessor
under the Leases; (ii) shall, consistent with the Prudent Manager Standard,
enforce the terms, covenants and conditions contained in the Leases upon the
part of the lessee thereunder to be observed or performed; (iii) shall not
collect any of the rents more than one (1) month in advance (other than security
deposits); (iv) shall not execute any other assignment of lessor's interest in
the Leases or the Rents (except as contemplated by the Loan Documents); and (v)
shall execute and deliver at the request of Lender all such further assurances,
confirmations and assignments in connection with the Leases as Lender shall from
time to time reasonably require.
(v) Principal Place of Business. No Borrower shall change its principal
place of business set forth on the first page of this Agreement without first
giving Lender thirty (30) days prior written notice.
(w) Management Agreement. Borrowers shall cause the Properties to be
operated in accordance with the Prudent Manager Standard. At any time when a
Management Agreement is in existence, the Properties shall be operated pursuant
to the Management Agreement and each Borrower shall:
(i) promptly perform and/or observe all of the covenants and agreements
required to be performed and observed by it under the Management Agreement and
do all things necessary to preserve and to keep unimpaired its material rights
thereunder;
(ii) promptly notify Lender of any default under the Management Agreement
of which it is aware;
(iii) promptly deliver to Lender a copy of each financial statement,
business plan, capital expenditures plan, property improvement plan and any
other notice, report and estimate received by it under the Management Agreement;
and
(iv) promptly enforce the performance and observance of all of the
covenants and agreements required to be performed and/or observed by the Manager
under the Management Agreement.
(x) Carolina Bonds. In the event that any Special Source Revenue Bonds
("Bonds") are issued by Cherokee County, South Carolina ("Cherokee County") in
connection with an expansion of the Carolina Property, Borrower shall purchase
such Bonds and shall pledge such Bonds to Lender. In connection therewith,
Borrower shall (i) execute and deliver to Lender a pledge agreement in
substantially the form of the Carolina Pledge Agreement, (ii) deliver to Lender
the original certificates or instruments evidencing the Bonds, which shall be in
suitable form for transfer by delivery or shall be accompanied by duly executed
assignments in blank, all in form and substance satisfactory to Lender, (iii)
deliver to Lender such consents, acknowledgements, estoppels or similar
documents executed by Cherokee County as may be required by Lender, including
without limitation a Confirmation of Pledge Agreement in substantially the form
of the Confirmation of Pledge Agreement executed in connection with the Carolina
Pledge Agreement, and take such other steps as may be necessary to perfect,
among other things, Lender's interest in the Bonds and (iv) deliver to Lender
such opinions of counsel as Lender may require covering due authorization,
execution and delivery of the pledge agreement, enforceability of the pledge
agreement, perfection of Lender's security interest in the Bonds and such other
matters as Lender may reasonably request, which opinion shall be in form and
substance and from counsel reasonably acceptable to Lender.
VI. NEGATIVE COVENANTS
Section VI.1 Borrowers' Negative Covenants. From the date hereof until
payment and performance in full of all obligations of Borrowers under the Loan
Documents or the earlier release of the Lien of the Mortgages in accordance with
the terms of this Agreement and the other Loan Documents or, with respect to a
particular Borrower, until such Borrower's Property shall be released pursuant
to Section 2.4 hereof, each Borrower covenants and agrees with Lender that it
will not do, directly or indirectly, any of the following:
(a) Operation of Property. No Borrower shall, without Lender's prior
consent: (i) surrender, terminate or cancel the Management Agreement or
otherwise replace the Manager of the Property owned by it or enter into any
other management agreements with respect to such Property (except pursuant to
Section 9.5), (ii) reduce or consent to the reduction of the term of the
Management Agreement; (iii) increase or consent to the increase of the amount of
any charges under the Management Agreement; or (iv) otherwise modify, change,
supplement, alter or amend, or waive or release any of its rights and remedies
under the Management Agreement in any material respect.
(b) Liens. No Borrower shall, without the prior written consent of Lender,
create, incur, assume or suffer to exist any Lien on any portion of its Property
or permit any such action to be taken, except (i) Permitted Encumbrances, (ii)
Liens created by or permitted pursuant to the Loan Documents and (iii) Liens for
Taxes or Other Charges not yet due. Without limiting the foregoing, Borrowers,
at their own expense, may contest by appropriate legal proceeding, promptly
initiated and conducted in good faith and with due diligence, any Lien (other
than a Lien relating to non-payment of Taxes or Other Charges, the contest of
which shall be governed by Section 5.1(b) hereof) provided that (i) no Event of
Default has occurred and remains uncured, (ii) such proceeding shall suspend the
collection of, or any realization upon the contested Lien or amount from the
applicable Property or Properties, (iii) neither any Property nor any part
thereof or interest therein will be in danger of being sold, forfeited,
terminated, canceled or lost, (iv) such contest shall not affect the ownership,
use or occupancy of any Property, (v) such contest shall not subject Lender or
any Borrower to the risk of civil or criminal liability (other than the civil
liability of the applicable Borrower for the amount in question), (vi) such Lien
is subordinate to the lien of the applicable Mortgage or the title insurance
policy insuring the lien of such Mortgage affirmatively insures, to Lender's
reasonable satisfaction, against any loss, cost or damage which Lender may
suffer as a result of the existence or enforcement of such Lien, (vii) Borrowers
shall have furnished such security as may be required in the proceeding to
insure the payment of any such Lien, together with all interest and penalties
thereon, and (viii) Borrowers shall promptly upon final determination thereof
pay the amount of any such Lien, together with all costs, interest and penalties
which may be payable in connection therewith. Lender agrees that it will join in
and subordinate the Liens of the Mortgages to any easement, license or
restrictive covenant (i) which arises after the date hereof and (ii) that
Lender, in Lender's reasonable discretion, deems to constitute a Permitted
Encumbrance.
(c) Dissolution. No Borrower shall dissolve, terminate, liquidate, merge
with or consolidate into another Person.
(d) Change In Business. No Borrower shall enter into any line of business
other than the ownership and operation of the Property owned by it, or make any
material change in the scope or nature of its business objectives, purposes or
operations, or undertake or participate in activities other than the continuance
of its present business.
(e) Debt Cancellation. No Borrower shall cancel or otherwise forgive or
release any claim or debt owed to such Borrower by any Person, except for
adequate consideration or in the ordinary course of such Borrower's business in
its reasonable judgment and consistent with the Prudent Manager Standard.
(f) Affiliate Transactions. No Borrower shall enter into, or be a party to,
any transaction with an Affiliate of any Borrower or any of the partners or
members of any Borrower except on terms which are no less favorable to such
Borrower than would be obtained in a comparable arm's-length transaction with an
unrelated third party.
(g) Zoning. No Borrower shall initiate or consent to any zoning
reclassification of any portion of any Property or seek any variance under any
existing zoning ordinance or use or permit the use of any portion of any
Property in any manner that could result in such use becoming a non-conforming
use under any zoning ordinance or any other applicable land use law, rule or
regulation, without the prior consent of Lender which shall not be unreasonably
withheld or delayed.
(h) Assets. No Borrower shall purchase or own any properties other than the
Property owned by it (as shown on Schedule 5), other than a Replacement Property
or Additional Premises which is encumbered by a Mortgage pursuant hereto.
(i) Debt. No Borrower shall create, incur or assume any debt (including
subordinate debt) other than the Debt and the Permitted Indebtedness. In
addition, no person owning any direct interest in any Borrower shall pledge,
transfer or otherwise dispose of its interest in such Borrower to secure any
financing for the benefit of such person, any Borrower or any Property.
(j) Transfers. No Borrower shall, without the prior written consent of
Lender, suffer or permit the sale, assignment or transfer (collectively,
"Transfer") of (i) all or any part of any Property other than (A) as otherwise
expressly permitted under Section 2.4.3 hereunder or (B) a Transfer of an
interest which constitutes a Permitted Encumbrance, (ii) any direct interest in
any Borrower or (iii) any direct or indirect interest in any partner or member
of any Borrower; provided, however, that the restrictions provided herein shall
not apply to any Transfer of any securities of the REIT or the limited
partnership interests in PRLP or, as to any Borrower that is a limited
partnership, Transfers of limited partnership interests in Borrower so long as
PRLP and SPE collectively own at least 50.1% of the total partnership interests
in such Borrower or, as to any Borrower that is a limited liability company,
Transfers of membership interests so long as PRLP and SPE collectively own at
least 50.1% of the total membership interests of such Borrower. No Transfer
requiring consent by Lender pursuant to clause (ii) or (iii) above shall be
permitted unless Lender shall have received evidence in writing from the
applicable Rating Agencies to the effect that such a Transfer will not result in
a qualification, withdrawal or downgrading of the ratings in effect immediately
prior to such Transfer for the Securities issued in connection with the
Securitization which are then outstanding. On or before the completion of any
such permitted Transfer, Borrowers will pay all reasonable expenses of Lender
incurred in connection therewith.
VII. CASUALTY; CONDEMNATION; ESCROWS
Section VII.1 Insurance; Casualty and Condemnation.
VII.1.1 Insurance.
(a) Each Borrower shall, at its expense, maintain the following insurance
coverages with respect to the Property owned by such Borrower during the Term:
(i) Insurance against loss or damage by fire, casualty and other hazards
included in an "all-risk" extended coverage endorsement or its equivalent, with
such endorsements as Lender may from time to time reasonably require and which
are customarily required by institutional lenders of similar properties
similarly situated, covering each Property in an amount not less than the
greater of (A) 100% of the insurable replacement value of the Property
(exclusive of the land and footings and foundations) and (B) such other amount
as is necessary to prevent any reduction in such policy by reason of and to
prevent any Borrower, Lender or any other insured thereunder from being deemed
to be a co-insurer. Not less frequently than once every three years, such
Borrower, at its option, shall either (A) have the Appraisal updated or obtain a
new appraisal of the Property, (B) have a valuation of the Property made by or
for its insurance carrier conducted by an appraiser experienced in valuing
properties of similar type to that of the Property which are in the geographical
area in which the Property is located or (C) provide such other evidence as
will, in Lender's sole judgment, enable Lender to determine whether there shall
have been an increase in the insurable value of the Property and such Borrower
shall deliver such updated Appraisal, new appraisal, insurance valuation or
other evidence acceptable to Lender, as the case may be and, if such updated
Appraisal, new appraisal, insurance valuation, or other evidence acceptable to
Lender reflects an increase in the insurable value of the Property, the amount
of insurance required hereunder shall be increased accordingly and such Borrower
shall deliver evidence satisfactory to Lender that such policy has been so
increased.
(ii) Commercial comprehensive general liability insurance against claims
for personal and bodily injury and/or death to one or more persons or property
damage, occurring on, in or about the Property (including the adjoining streets,
sidewalks and passageways therein) in such amounts as Lender may from time to
time reasonably require (but in no event shall Lender's requirements be
increased more frequently than once during each twelve (12) month period) and
which are customarily required by institutional lenders for similar properties
similarly situated, but not less than $10,000,000.00.
(iii) Business interruption, rent loss or other similar insurance (A) with
loss payable to Lender, (B) covering all risks required to be covered by the
insurance provided for in Section 7.1.1(a)(i), (C) containing an extended period
of indemnity endorsement which provides that after the physical loss to the
Property has been repaired, the continued loss of rental income shall be insured
until six (6) months after completion of such repairs notwithstanding that the
policy may expire prior to the end of such period, and (D) in an amount not less
than 100% of the actual fixed or base rent plus percentage rent based on the
preceding twelve (12) month period. The amount of such insurance shall be
determined upon the execution of this Agreement, and not more frequently than
once each calendar year thereafter based on such Borrower's reasonable estimate
of projected fixed or base rent plus percentage rent from the Property for the
next succeeding twelve (12) months. In the event the Property shall be damaged
or destroyed, such Borrower shall and hereby does assign to Lender all payment
of claims under the policies of such insurance, and all amounts payable
thereunder, and all net amounts, shall be collected by Lender under such
policies and shall be applied in accordance with this Agreement; provided,
however, that nothing herein contained shall be deemed to relieve such Borrower
of its obligations to timely pay all amounts due under the Loan Documents,
except to the extent such amounts are actually paid out of the proceeds of such
insurance.
(iv) War risk insurance when such insurance is obtainable from the United
States of America or any agency or instrumentality thereof at reasonable rates
(for the maximum amount of insurance obtainable) and if requested by Lender, and
such insurance is then customarily required by institutional lenders of similar
properties similarly situated.
(v) Insurance against loss or damages from (A) leakage of sprinkler systems
and (B) explosion of steam boilers, air conditioning equipment, pressure vessels
or similar apparatus now or hereafter installed at the Property, in such amounts
as Lender may from time to time reasonably require and which are then
customarily required by institutional lenders of similar properties similarly
situated.
(vi) Flood insurance in an amount equal to the full insurable value of the
Property or the maximum amount available, whichever is less, if the Improvements
are located in an area designated by the Secretary of Housing and Urban
Development as being "an area of special flood hazard" under the National Flood
Insurance Program (i.e., having a one percent or greater chance of flooding),
and if flood insurance is available under the National Flood Insurance Act and
is required by Lender.
(vii) Worker's compensation insurance or other similar insurance which may
be required by Governmental Authorities or Legal Requirements.
(viii) Insurance against loss or damage from earthquakes, together with
such other insurance as may from time to time be required by Lender and which is
then customarily required by institutional lenders for similar properties
similarly situated, against other insurable hazards, including, but not limited
to, malicious mischief, vandalism or windstorm, which at the time are commonly
insured against and generally available in the case of properties similarly
situated, due regard to be given to the size and type of the Premises,
Improvements and Equipment and their location, construction and use.
(ix) If any Borrower is a partnership, such Borrower shall cause SPE to
maintain fidelity insurance in an amount equal to or greater than the annual
Operating Income of the Property for the six (6) month period immediately
preceding the date on which the premium for such insurance is due and payable.
(x) Each Borrower shall cause any Manager of the Property to maintain
fidelity insurance in an amount equal to or greater than the annual Operating
Income of the Property for the six (6) month period immediately preceding the
date on which the premium for such insurance is due and payable or such lesser
amount as Lender shall approve.
(b) All insurance required by this Section 7.1.1 shall be in the form
(other than with respect to Sections 7.1.1(a)(vi) and (vii) above when insurance
in those two sub-sections is placed with a governmental agency or
instrumentality on such agency's forms) and amount and with deductibles as, from
time to time, shall be reasonably acceptable to Lender, under valid and
enforceable policies issued by financially responsible insurers authorized to do
business in the State where the Property is located, with a claims paying
ability rating of not less than "AA" from at least two nationally recognized
statistical rating agencies (one of which must be Standard & Poor's); provided,
however, with respect to insurance against damage or loss resulting from
earthquake damage, a claims paying ability rating of not less than "BBB" shall
be acceptable. Originals or certified copies of all insurance policies shall be
delivered to and held by Lender. All such policies (except policies for worker's
compensation) shall name Lender as an additional named insured, shall provide
for loss payable to Lender and shall contain (or have attached): (i) standard
"non-contributory mortgagee" endorsement or its equivalent relating, inter alia,
to recovery by Lender notwithstanding the negligent or willful acts or omissions
of any Borrower; (ii) a waiver of subrogation endorsement as to Lender; (iii) an
endorsement indicating that neither Lender nor any Borrower shall be or be
deemed to be a co-insurer with respect to any casualty risk insured by such
policies and shall provide for a deductible per loss of an amount not more than
that which is customarily maintained by owners of similar properties similarly
situated, and (iv) a provision that such policies shall not be canceled,
terminated, denied renewal or amended, including, without limitation, any
amendment reducing the scope or limits of coverage, without at least thirty (30)
days' prior written notice to Lender in each instance. Not less than thirty (30)
days prior to the expiration dates of the insurance policies obtained pursuant
to this Agreement, originals or certified copies of renewals of such policies
(or certificates evidencing such renewals) bearing notations evidencing the
payment of premiums or accompanied by other reasonable evidence of such payment
(which premiums shall not be paid by any Borrower through or by any financing
arrangement which would entitle an insurer to terminate a policy) shall be
delivered by Borrowers to Lender. Borrowers shall not carry separate insurance,
concurrent in kind or form or contributing in the event of loss, with any
insurance required under this Section 7.1.1.
(c) Borrowers shall notify Lender of the renewal premium of each insurance
policy (collectively, "Insurance Premiums") and, upon Borrowers' failure to pay
such premium in accordance with the terms of this Agreement, Lender shall be
entitled to pay, or upon Borrowers' written request, shall pay such amount on
behalf of Borrowers from the Tax and Insurance Escrow Fund to the extent of
funds deposited in such Fund. With respect to insurance policies which require
periodic payments (i.e., monthly or quarterly) of premiums, Lender shall be
entitled to pay such amounts fifteen (15) days (or such lesser number of days as
Lender shall determine) prior to the respective due dates of such installments.
(d) If any Property is damaged or destroyed, in whole or in part, by fire
or other (d) If any Property is damaged or destroyed, in whole or in part, by
fire or other casualty (an "Insured Casualty"), Borrowers shall give prompt
notice thereof to Lender. Following the occurrence of an Insured Casualty,
Borrowers, provided Lender does not apply any of the Insurance Proceeds
resulting therefrom to the Debt (other than Lender's expenses incurred in the
adjustment and collection of such Insurance Proceeds), shall promptly proceed to
restore, repair, replace or rebuild such Property to be of at least equal value
and of substantially the same character as prior to such damage or destruction,
all to be effected in accordance with Legal Requirements and applicable Property
Agreements. The expenses incurred by Lender in the adjustment and collection of
insurance proceeds shall become part of the Debt and be secured hereby and shall
be reimbursed by Borrowers to Lender upon demand.
VII.1.2 Casualty and Application of Proceeds
(a) In case of loss or damages covered by any of the Policies, the
following provisions shall apply:
(i) If an Insured Casualty does not exceed $100,000 and there exists no
Event of Default, Borrowers may settle and adjust any claim without the consent
of Lender; provided that such adjustment is carried out in a competent and
timely manner. In such case, Borrowers are hereby authorized to collect and
receipt for any such insurance proceeds.
(ii) If an Insured Casualty shall equal or exceed $100,000, Lender may
settle and adjust any claim (without the consent of Borrowers if there exists an
Event of Default and otherwise with the consent of Borrowers, not to be
unreasonably withheld or delayed) and agree with the insurance company or
companies on the amount to be paid on the loss and the proceeds of any such
policy shall be due and payable solely to Lender and held in escrow by Lender in
accordance with the terms hereof.
(b) In the event of an Insured Casualty where the loss is in an aggregate
amount less than 75% of the reasonably estimated aggregate value of the affected
Property, and if, in the reasonable judgment of Lender, (i) the affected
Property can be restored no later than six (6) months prior to the Stated
Maturity Date, (ii) the Debt Service Coverage Ratio after substantial completion
of the restoration shall be at least equal to 1.25, and (iii) leases covering
seventy percent (70%) or more of the total gross leasable area of the affected
Property shall remain in full force and effect (provided, however, if the
applicable Borrower shall have entered into one or more leases or letters of
intent with prospective tenants with respect to the leasing of all or a portion
of the space physically affected by such casualty which are, or, in the case of
letters of intent, which contemplate leases which will be, in form and substance
substantially similar to the Leases which are terminating and which provide for
rental and other payments thereunder, net of any rebates, credits and other
concessions granted or to be granted by the Borrower thereunder equal to or not
less than 85% of the rental and other payments due immediately prior to the
casualty under the Leases which are terminating and the Borrower shall have
delivered a copy of each such lease or letter of intent to Lender, such leases
or prospective leases shall be counted toward the 70% threshold for purposes of
this clause), then, if no Default or Event of Default shall have occurred and be
then continuing, the proceeds of insurance (after reimbursement of any expenses
incurred by Lender) shall be applied to pay or reimburse Borrowers for the cost
of restoring, repairing, replacing or rebuilding such Property or part thereof
subject to the Insured Casualty (the "Restoration"), in the manner set forth
herein. Borrowers hereby covenant and agree to commence and diligently prosecute
such Restoration; provided that (i) Borrowers shall pay all costs of such
Restoration in excess of the net proceeds of insurance
made available pursuant to the terms hereof; (B) the Restoration shall be
done in compliance with all Legal Requirements and applicable Property
Agreements; and (C) Lender shall have received evidence reasonably satisfactory
to it that, during the period of the Restoration, the sum of (I) income derived
from the affected Property, as reasonably determined by Lender, plus (II)
proceeds of rent loss insurance or business interruption insurance, if any, to
be paid, plus (III) funds otherwise readily available to Borrowers, as evidenced
to the satisfaction of Lender, will equal or exceed the sum of (y) expenses in
connection with the operation of such Property and (z) the debt service payable
with respect to the Allocated Loan Amount for such Property.
(c) The proceeds of insurance collected upon any Insured Casualty shall, at
the option of Lender in its sole discretion, except as provided above, be
applied to the payment of the Debt up to an amount equal to the Casualty
Repayment Amount for the affected Property (with the balance to Borrower), or
applied to pay or reimburse Borrowers for the cost of any Restoration, in the
manner set forth below. Any such application to the Debt shall be on a Payment
Date and without payment of any Exit Fees. Any such application to the Debt
shall be applied to those payments of principal and interest last due under the
Note but shall not postpone or reduce any payments otherwise required pursuant
to the Note other than such last due payments.
(d) If Borrowers are entitled to reimbursement out of insurance proceeds
held by Lender, such proceeds shall be deposited by Lender into the
Casualty/Condemnation Subaccount (as described in the Cash Collateral Agreement)
and disbursed from time to time from the Casualty/Condemnation Subaccount upon
Lender being furnished with (1) evidence reasonably satisfactory to it of the
estimated cost of completion of the Restoration, (2) funds or, at Lender's
option, assurances reasonably satisfactory to Lender that such funds are
available, sufficient in addition to the proceeds of insurance to complete the
proposed Restoration, (3) such architect's certificates, waivers of lien,
contractor's sworn statements, title insurance endorsements, bonds, plats of
survey and such other evidences of cost, payment and performance as Lender may
reasonably require and approve, and (4) all plans and specifications for such
Restoration, such plans and specifications to be approved by Lender prior to
commencement of any work, such approval not to be unreasonably withheld or
delayed. In addition, no payment made prior to the final completion of the
Restoration shall exceed ninety percent (90%) of the value of the work performed
from time to time; funds other than proceeds of insurance which are required to
be deposited with Lender due to a shortfall of insurance proceeds shall be
disbursed prior to disbursement of such proceeds; and at all times, the
undisbursed balance of such proceeds remaining in the hands of Lender, together
with funds deposited for that purpose or irrevocably committed to the
satisfaction of Lender by or on behalf of Borrowers for that purpose, shall be
at least sufficient in the reasonable judgment of Lender to pay for the cost of
completion of the Restoration, free and clear of all liens or claims for lien.
Any surplus which may remain out of insurance proceeds held by Lender after
payment of such costs of Restoration shall be paid to Borrowers.
VII.1.3 Condemnation
(a) Borrowers shall promptly give Lender written notice of the actual or
threatened commencement of any condemnation or eminent domain proceeding
affecting a Property (a "Condemnation") and shall deliver to Lender copies of
any and all papers served in connection with such Condemnation. Following the
occurrence of a Condemnation, Borrowers, so long as Lender makes the entire
Award (less Lender's costs incurred in connection with the Condemnation and
collection of the Award) available to Borrower pursuant to Section 7.1.3(c)
regardless of whether the amount of the Award is sufficient, shall promptly
proceed to restore, repair, replace or rebuild the affected Property to the
extent practicable to be a complete unit and of substantially the same character
as prior to such Condemnation, all to be effected in accordance with Legal
Requirements and applicable Property Agreements.
(b) Lender is hereby irrevocably appointed as Borrowers' attorney-in-fact,
coupled with an interest, with exclusive power to collect, receive and retain
any award or payment in respect of a Condemnation (an "Award") and to make any
compromise or settlement in connection with such Condemnation, subject to
Borrowers' approval (not to be unreasonably withheld or delayed) except after
the occurrence of an Event of Default, in which cash such approval shall not be
required, and the provisions of this Section; provided, however, that Borrowers
may participate in any such proceedings and shall, unless an Event of Default
exists, be authorized and entitled to compromise or settle any such proceeding
with respect to Condemnation Proceeds in an amount less than five percent (5%)
of the Allocated Loan Amount. Notwithstanding any Condemnation by any public or
quasi-public authority (including any transfer made in lieu of or in
anticipation of such a Condemnation), Borrowers shall continue to pay the Debt
at the time and in the manner provided for in the Note, in this Agreement and
the other Loan Documents and the Debt shall not be reduced unless and until any
Award shall have been actually received and applied by Lender to expenses of
collecting the Award and to discharge of the Debt. Lender shall not be limited
to the interest paid on the Award by the condemning authority but shall be
entitled to receive out of the Award interest at the rate or rates provided in
the Note. Borrowers shall cause any Award that is payable to any Borrower to be
paid directly to Lender.
(c) In the event of any Condemnation where the Award is in an aggregate
amount less than $1,000,000, and if, in the reasonable judgment of Lender, the
affected Property can be restored, under then current economic conditions,
applicable zoning laws, building regulations and other applicable Legal
Requirements and Property Agreements, no later than six (6) months prior to the
Stated Maturity Date to a complete, rentable facility of the same sort as
existed prior to the condemnation, and after such restoration the Debt Service
Coverage Ratio (determined based on the projected Net Operating Income and the
Allocated Loan Amount of the affected Property) will be at least equal to 1.25,
then, if no Default or Event of Default shall have occurred and be then
continuing, the proceeds of the Award (after reimbursement of any expenses
incurred by Lender) shall be applied to pay or reimburse Borrowers for the cost
of restoring, repairing, replacing or rebuilding the Property or part thereof
subject to Condemnation (the "Condemnation Restoration") in the manner set forth
below. Borrowers hereby covenant and agree to commence and diligently to
prosecute such Condemnation Restoration; provided that (i) Borrowers shall pay
all costs (and if required by Lender, Borrowers shall deposit the total thereof
with Lender in advance) of such Condemnation Restoration in excess of the Award
made available pursuant to the terms hereof; (ii) the Condemnation Restoration
shall be done in compliance with all Legal Requirements and Property Agreements;
and (iii) Lender shall have received evidence reasonably satisfactory to it
that, during the period of the Condemnation Restoration, the sum of (A) income
derived from the affected Property, as reasonably determined by Lender, plus (B)
proceeds of rent loss insurance or business interruption insurance, if any, to
be paid plus (c) funds otherwise readily available to Borrowers, as evidenced to
the satisfaction of Lender, will equal or exceed the sum of (I) expenses in
connection with the operation of such Property and (II) the debt service payable
with respect to the Allocated Loan Amount for such Property.
(d) The Award collected upon any Condemnation shall, at the option of
Lender in its sole discretion, except as provided above, be applied to the
payment of the Debt up to an amount equal to the Casualty Repayment Amount for
the affected Property (with the balance thereof to be paid to Borrowers) or
applied to reimburse Borrowers for the cost of the Condemnation Restoration in
the manner set forth below. Any such application to the Debt shall be on a
Payment Date and without payment of any Exit Fee. Any such application to the
Debt shall be applied to those payments of principal and interest last due under
the Note but shall not postpone or reduce any payments otherwise required
pursuant to the Note other than such last due payments. If the affected Property
is sold, through foreclosure or otherwise, prior to the receipt by Lender of
such Award, Lender shall have the right, whether or not a deficiency judgment on
the Note shall be recoverable or shall have been sought, recovered or denied, to
receive all or a portion of said Award sufficient to pay the Debt.
(e) In the event Borrowers are entitled to reimbursement out of the Award
received by Lender, such proceeds shall be disbursed from time to time upon
Lender being furnished with (1) evidence satisfactory to it of the estimated
cost of completion of the Condemnation Restoration, (2) funds or, at Lender's
option, assurances reasonably satisfactory to Lender that such funds are
available, sufficient in addition to the proceeds of the Award to complete the
Condemnation Restoration, (3) such architect's certificates, waivers of lien,
contractor's sworn statements, title insurance endorsements, bonds, plats of
survey and such other evidences of costs, payment and performance as Lender may
reasonably require and approve, and (4) all plans and specifications for such
Condemnation Restoration, such plans and specifications to be approved by Lender
prior to commencement of work, such approval not to be unreasonably withheld or
delayed. In addition, no payment made prior to the final completion of the
restoration, repair, replacement and rebuilding shall exceed ninety percent
(90%) of the value of the work performed from time to time, (5) funds other than
proceeds of the Award shall be disbursed prior to disbursement of such proceeds,
and (6) at all times, the undisbursed balance of such proceeds remaining in the
hands of Lender, together with funds deposited for that purpose or irrevocably
committed to the satisfaction of Lender by or on behalf of Borrowers for that
purpose, shall be at least sufficient in the reasonable judgment of Lender to
pay for the costs of completion of the Condemnation Restoration free and clear
of all liens or claims for lien. Any surplus which may remain out of the Award
received by Lender after payment of such costs of restoration, repair,
replacement or rebuilding shall, in the sole and absolute discretion of Lender,
be retained by Lender and applied to payment of the Debt.
Section VII.2 Required Repair; Required Repair Funds
VII.2.1 Required Repairs; Deposits. Borrowers shall perform the repairs at
the Properties set forth on Schedule 3 annexed hereto (the "Required Repairs").
Borrowers shall complete each of the Required Repairs on or before the deadline
for same set forth on Schedule 3. On the Closing Date, Borrowers shall deposit
with Lender the amount set forth on Schedule 3 hereto to perform the Required
Repairs for the Properties. Amounts so deposited with Lender (the "Required
Repair Fund") shall be held by Lender in an account (the "Required Repair
Account") in Lender's name at a financial institution selected by Lender in its
sole discretion and shall be invested in Permitted Investments. Interest earned
on the amounts in the Required Repair Fund shall be deposited in the Required
Repair Fund and treated in the same manner as other funds therein.
VII.2.2 Grant of Security Interest. Borrowers hereby pledge, assign and
grant a security interest to Lender, as security for payment of all sums due in
respect of the Loan and the performance of all other terms, conditions and
covenants of the Loan Documents and this Agreement on Borrowers' part to be paid
and performed, all of Borrowers' right, title and interest in and to the
Required Repair Fund and the Required Repair Account. Borrowers shall not,
without obtaining the prior written consent of Lender, further pledge, assign or
grant any security interest in the Required Repair Fund or the Required Repair
Account or permit any lien or encumbrance to attach thereto, or any levy to be
made thereon, or any UCC-l Financing Statements, except those naming Lender as
the secured party, to be filed with respect thereto. This Agreement is, among
other things, intended by the parties to be a security agreement for purposes of
the Illinois Uniform Commercial Code.
VII.2.3 Release of Required Repair Funds. Lender shall disburse to
Borrowers all Required Repair Funds in the Required Repair Account upon
satisfaction by Borrowers of each of the following conditions: (a) Borrowers
shall submit a written request for payment to Lender at least thirty (30) days
prior to the date on which Borrowers request such payment be made (except in the
case of an emergency repair which requires immediate attention, in which event
Borrowers may submit such payment request within ten (10) days), (b) on the date
such request is received by Lender and on the date such payment is to be made,
no Event of Default shall exist and remain uncured, (c) Lender shall have
received an Officer's Certificate from Borrowers certifying that all Required
Repairs at the Properties for which disbursement has been requested have been
completed (i) in a good and workmanlike manner, and (ii) in accordance with all
applicable Legal Requirements and applicable Property Agreements, such
certificate to be accompanied by a copy of each license, permit or other
approval required by any Governmental Authority with respect to the Required
Repair, (d) Lender shall have received an Officer's Certificate from Borrowers
(i) identifying each Person that supplied materials or labor in connection with
the Required Repairs for which disbursement has been requested and (ii) stating
that each such Person has been paid in full or will be paid in full with the
funds disbursed, such certificate to be accompanied by a copy of appropriate
lien waivers or other evidence of payment satisfactory to Lender, (e) at
Lender's option, a title search for the applicable Property indicating that such
Property is free from all liens, claims and other encumbrances arising from the
Required Repair or not previously approved by Lender, and (f) Lender shall have
received such other evidence as Lender shall reasonably request that the
Required Repairs at the Properties have been completed and paid for. Lender
shall be required to make only one disbursement from the Required Repair Account
during a month and such disbursement shall be made only upon satisfaction of
each condition contained in this Section 7.2.3. Upon completion of all Required
Repairs in accordance with the terms hereof, Lender shall disburse to Borrowers
any amounts then remaining in the Required Repair Account.
VII.2.4 Failure to Perform Required Repairs. It shall be a default under
this Agreement if Borrowers do not complete the Required Repairs at the
Properties by the required deadline for each repair as set forth on Schedule 3
(other than as a result of events or circumstances beyond Borrowers' reasonable
control). Upon acceleration of the Debt, Lender, at its option, may withdraw all
Required Repair Funds from the Required Repair Account and Lender may apply such
funds either to completion of the Required Repairs at the Properties or toward
payment of the Debt in such order, proportion and priority as Lender may
determine in its sole discretion. Lender's right to withdraw and apply Required
Repair Funds shall be in addition to all other rights and remedies provided to
Lender under this Agreement and the other Loan Documents.
Section VII.3 Tax and Insurance Escrow Fund
VII.3.1 Tax and Insurance Escrow Fund. Borrowers shall pay to Lender, with
respect to each Property, (a) on each Payment Date commencing August 11, 1998,
(i) one-twelfth of the Taxes that Lender estimates will be payable during the
next ensuing twelve (12) months in order to accumulate with Lender sufficient
funds to pay all such Taxes at least thirty (30) days prior to their respective
due dates, (ii) one-twelfth of the Insurance Premiums that Lender estimates will
be payable for the renewal of the coverage afforded by the Policies upon the
expiration thereof in order to accumulate with Lender sufficient funds to pay
all such Insurance Premiums at least thirty (30) days prior to the expiration of
the Policies and (iii) one-twelfth of the amount of rent under any ground lease
of a Property that Lender estimates will be payable during the next ensuing
twelve (12) months in order to accumulate with Lender sufficient funds to pay
all such ground rents at least thirty (30) days prior to their respective due
dates, and (b) on the Closing Date, an amount which, when combined with the
monthly deposits described in (a) above, shall be sufficient to pay the next
installment of Taxes, the next required payment of Insurance Premiums on the due
date therefor and the next required ground rent payment under each ground lease
of a Property on the due date therefor (said amounts in (a) and (b) above
hereinafter called the "Tax and Insurance Escrow Fund"). The Tax and Insurance
Escrow Fund, and the payments of interest or principal or both, payable pursuant
to the Note, shall be added together and shall be paid as an aggregate sum by
Borrowers to Lender. Lender will apply the Tax and Insurance Escrow Fund to
payments of Taxes, ground lease rents and Insurance Premiums required to be made
by Borrowers pursuant to Section 5.1 hereof, or to reimburse Borrowers for such
amounts upon presentation of evidence of payment and an Officer's Certificate in
form and substance reasonably satisfactory to Lender; subject, however, to
Borrowers' right to contest Taxes in accordance with Section 5.1(b) hereof. In
making any payment relating to the Tax and Insurance Escrow Fund, Lender may do
so according to any direction of the Borrowers or, after an Event of Default,
any xxxx, statement or estimate procured from the appropriate public office
(with respect to Taxes) or insurer or agent (with respect to Insurance
Premiums), without inquiry into the accuracy of such xxxx, statement or estimate
or into the validity of any tax, assessment, sale, forfeiture, tax lien or title
or claim thereof. If the amount of the Tax and Insurance Escrow Fund shall
exceed the amounts due for Taxes and Insurance Premiums pursuant to Section 5.1
hereof, Lender shall credit such excess against future payments to be made to
the Tax and Insurance Escrow Fund or, at Borrowers' option, provided there
exists no Event of Default, return any excess to Borrower. In allocating such
excess, Lender may deal with the Person shown on the records of Lender to be the
owner of the relevant Property. If at any time Lender determines that the Tax
and Insurance Escrow Fund is not or will not be sufficient to pay the items set
forth in (a) and (b) above, Lender shall notify Borrowers of such determination
and Borrowers shall increase their monthly payments to Lender by the amount that
Lender estimates is sufficient to make up the deficiency at least thirty (30)
days prior to delinquency of the Taxes and/or expiration of the Policies, as the
case may be.
VII.3.2 Grant of Security Interest. Borrowers hereby pledge, assign and
grant a security interest to Lender, as security for payment of all sums due
under the Loan and the performance of all other terms, conditions and provisions
of the Loan Documents and this Agreement on Borrowers' part to be paid and
performed, of all Borrowers' right, title and interest in and to the Tax and
Insurance Escrow Fund. Borrowers shall not, without obtaining the prior written
consent of Lender, further pledge, assign or grant any security interest in the
Tax and Insurance Escrow Fund, or permit any lien or encumbrance to attach
thereto, or any levy to be made thereon, or any UCC-1 Financing Statements,
except those naming Lender as the secured party, to be filed with respect
thereto. This Agreement is, among other things, intended by the parties to be a
security agreement for purposes of the Illinois Uniform Commercial Code.
VII.3.3 Application of Tax and Insurance Escrow Fund. Upon the acceleration
of the Debt, Lender may apply any sums then present in the Tax and Insurance
Escrow Fund to the payment of the following items in any order in its sole
discretion: (a) Taxes and Other Charges; (b) Insurance Premiums; (c) interest on
the unpaid principal balance of the Note; (d) the unpaid principal balance of
the Note; or (e) all other sums payable pursuant to this Agreement and the other
Loan Documents. The Tax and Insurance Escrow Fund shall not constitute a trust
fund and may be commingled with other
monies held by Lender. Sums in the Tax and Insurance Escrow Fund shall be
held by Lender in an account in Lender's name at a financial institution
selected by Lender in its sole discretion and shall be invested in Permitted
Investments. Earnings or interest, if any, thereon shall be retained as part of
such funds and refunded or applied in accordance with this Section 7.3. Lender
shall not be liable for any loss sustained on the investment of any funds
constituting the Tax and Insurance Escrow Fund.
Section VII.4 Capital Reserve Fund
VII.4.1 Capital Reserve Fund. Borrowers shall pay to Lender on each Payment
Date commencing August 11, 1998 an amount with respect to each Property equal to
one-twelfth (1/12th) of the product obtained by multiplying (i) the dollars per
square foot capital expenditure requirement for such Property (as shown on
Schedule 3 under the heading "Reserved/Underwritten Annual CapEx ($sf), NACC
Actual" by (ii) the aggregate amount of square feet of rentable space in such
Property (said amounts hereinafter called the "Capital Reserve Fund"). Lender
will apply the Capital Reserve Fund to payment of Capital Expenses pursuant to
the terms hereof. If the amount of the Capital Reserve Fund shall exceed the
amounts due for Capital Expenses pursuant to the terms hereof, Lender shall, or,
at Borrowers' option, provided there exists no Event of Default, return any
excess to Borrowers, if future Capital Reserve Fund payments are then required,
credit such excess against such future payments or, at Borrowers' option,
provided there exists no Event of Default, return any excess to Borrowers;
provided, however, if the Loan shall have been accelerated, then Lender may
credit such excess against the Debt in such priority and proportions as Lender
in its sole and absolute discretion shall deem proper.
VII.4.2 Grant of Security Interst. Borrowers hereby pledge and assign to
Lender, and grant to Lender a security interest in all Borrowers' right, title
and interest in and to the Capital Reserve Fund, as security for payment of all
sums due under the Loan and the performance of all other terms, conditions and
provisions of the Loan Documents and this Agreement on Borrowers' part to be
paid and performed. Borrowers shall not, without obtaining the prior written
consent of Lender, further pledge, assign or grant any security interest in the
Capital Reserve Fund, or permit any lien or encumbrance to attach thereto, or
any levy to be made thereon, or any UCC-1 Financing Statements, except those
naming Lender as the secured party, to be filed with respect thereto. This
Agreement is, among other things, intended by the parties to be a security
agreement for purposes of the Illinois Uniform Commercial Code.
VII.4.3 Application of Capital Reserve Fund. Upon the acceleration of the
Debt, Lender may apply any sums then present in the Capital Reserve Fund to the
payment of the following items in any order in its sole discretion: (a) Capital
Expenses; (b) interest on the unpaid principal balance of the Note; (c) the
unpaid principal balance of the Note; or (d) all other sums payable pursuant to
this Agreement and the other Loan Documents. The Capital Reserve Fund shall not
constitute a trust fund and may be commingled with other monies held by Lender.
Sums in the Capital Reserve Fund shall be held by Lender in an account in
Lender's name at a financial institution selected by Lender in its sole
discretion and shall be invested in Permitted Investments. Earnings or interest,
if any, thereon shall be retained as part of such funds and applied in
accordance with this Section 7.4. Lender shall not be liable for any loss
sustained on the investment of any funds constituting the Capital Reserve Fund
VII.4.4 Payment of Capital Expenses. Funds held in the Capital Reserve Fund
may be used for Capital Expenses. From time to time, Borrowers may send a
request for disbursement of funds in the Capital Reserve Fund, but not more than
one (1) time per month and, to the extent there are sufficient funds available
in the Capital Reserve Fund, such disbursements shall be made by Lender so long
as (A) such expenditure is for Capital Expense or, during a Cash
Trap Event, an Approved Capital Expense; and (B) the request for
disbursement is accompanied by (1) an Officer's Certificate certifying (v) the
amount of funds to be disbursed, (w) that such funds will be used to pay or
reimburse Borrowers for Capital Expenses and a description thereof, (x) that the
same has not been the subject of a previous disbursement, (y) that all
outstanding trade payables (other than those to be paid from the requested
disbursement or those otherwise permitted to be outstanding under Section 6.1(i)
hereof) have been paid in full, and (z) that all previous disbursements have
been used to pay the previously identified Capital Expenses, and (2) reasonably
detailed documentation as to the amount, necessity and purpose therefor.
Section VII.5 Payment of Approved Operating Expenses, Approved Capital
Expenses and Approved Leasing Expenses. Funds held in the Cash Collateral
Account may be used for Approved Operating Expenses, Approved Capital Expenses
and Approved Leasing Expenses (collectively, "Approved Expenses"). Borrowers may
from time to time send a request for disbursement of funds in the Cash
Collateral Account for payment of Approved Expenses but not more than one (1)
time per month. To the extent there are funds available in the Cash Collateral
Account in excess of the amounts required to fund the Tax and Insurance Escrow
Fund, the Capital Reserve Fund and to pay the Monthly Debt Service Payment
Amount due in respect of the Loan on the next Payment Date, such disbursements
for Approved Expenses shall be made by the Lender so long as (A) such
expenditure is for an Approved Expense; provided, however that Approved Capital
Expenses shall be funded from the Cash Collateral Account only to the extent
there are no funds available therefor in the Capital Reserve Fund; and (B) the
request for disbursement is accompanied by (1) an Officer's Certificate
certifying (v) the amount of funds to be disbursed, (w) that such funds will be
used to pay Approved Expenses and a description thereof, (x) that all
outstanding trade payables (other than those to be paid from the requested
disbursement or those otherwise permitted to be outstanding under Section 6.1(i)
hereof) have been paid in full, (y) that the same has not been the subject of a
previous disbursement, and (z) that all previous disbursements have been or will
be used to pay the previously identified Approved Expenses and (2) reasonably
detailed documentation as to the amount, necessity and purpose therefor. Subject
to satisfaction of the preceding conditions, if Lender receives from Borrowers a
valid request for a disbursement for payment of Approved Expenses for the then
Current Month at least five (5) Business Days prior to the Payment Date
occurring in such Current Month, then the disbursement in respect of such
Approved Expenses shall be made to Borrowers on such Payment Date. If Borrowers
shall fail to validly request a disbursement for payment of Approved Expenses,
for the then Current Month at least five (5) Business Days prior to the Payment
Date in such Current Month, then Lender shall retain in the Cash Collateral
Account an amount equal to the anticipated Approved Expenses, for the then
Current Month as set forth in the approved Operating Budget for such month, and
Lender shall, subject to satisfaction of the preceding conditions, disburse same
to Borrowers five (5) Business Days after Lender receives a valid request
therefor. Amounts disbursed to Borrowers under this Section 7.5 shall be used by
Borrowers to pay current Approved Expenses, and for no other purpose. Borrowers
shall furnish Lender with copies of bills, statements, invoices, receipts or
other evidence as Lender may reasonably request in connection with a request for
disbursement.
VIII. DEFAULTS
Section VIII.1 Events of Default
(a) Each of the following events shall constitute an event of default
hereunder (each, an "Event of Default"):
(i) if any installment of principal or interest is not paid when due under
the Note, or if any other portion of the Debt is not paid within five (5) days
after written notice from Lender;
(ii) if any of the Taxes or Other Charges are not paid prior to
delinquency, subject to Borrowers' right to contest Taxes in accordance with
Section 5.1(b) hereof;
(iii) if the Policies are not kept in full force and effect;
(iv) if, without Lender's prior written consent, (A) any Borrower transfers
or encumbers all or any portion of a Property or (B) any direct or indirect
interest in any Borrower is transferred or assigned except as expressly
permitted under Section 6.1(j) hereof;
(v) if any representation or warranty made by any Borrower herein or in any
other Loan Document, or made by any Borrower in any report, certificate,
financial statement or other instrument, agreement or document furnished by a
Borrower to Lender, its consultants, attorneys or agents in connection with this
Agreement or any other Loan Document, shall be false or misleading in any
material respect as of the date the representation or warranty was made;
(vi) if any Borrower shall make an assignment for the benefit of creditors,
or if any Borrower shall generally not be paying its debts as they become due;
(vii) if a receiver, liquidator or trustee shall be appointed for any
Borrower or if any Borrower shall be adjudicated a bankrupt or insolvent, or if
any petition for bankruptcy, reorganization or arrangement pursuant to federal
bankruptcy law, or any similar federal or state law, shall be filed by or
against, consented to, or acquiesced in by, such Borrower, or if any proceeding
for the dissolution or liquidation of a Borrower shall be instituted; and if
such appointment, adjudication, petition or proceeding was involuntary and not
consented to by such Borrower, the same is not discharged, stayed or dismissed
within sixty (60) days;
(viii) if any Borrower attempts to assign its respective rights under this
Agreement in contravention of the Loan Documents or any of the other Loan
Documents or any interest herein or therein;
(ix) if any Borrower breaches any of its covenants contained in
Sections 6.1(c), (g), (h), (i) or (j) or any covenant contained in
Section 4.1(dd) hereof;
(x) if an Event of Default as defined or described in any of the other Loan
Documents occurs, whether as to a Borrower or a Property;
(xi) if Borrowers shall be in default of their obligations to make deposits
into the Required Repair Fund or the Tax and Insurance Escrow Fund or the
Capital Reserve Fund; or
(xii) if Borrowers shall continue to be in Default under any of the other
terms, covenants or conditions of this Agreement not specified in subsections
(i) to (xi) above, for ten (10) days after notice to Borrowers from Lender, in
the case of any Default which can be cured by the payment of a sum of money, or
for thirty (30) days after notice from Lender in the case of any other Default;
provided, however, that if such non-monetary Default is susceptible of cure but
cannot reasonably be cured within such 30-day period and provided further that
Borrowers shall have commenced to cure such Default within such 30-day period
and thereafter diligently and expeditiously proceed to cure the same, such
30-day period shall be extended for an additional period of time as is
reasonably necessary for Borrowers in the exercise of due diligence to cure such
Default, such additional period not to exceed ninety (90) days.
(b) Upon the occurrence of an Event of Default (other than an Event of
Default described in clauses (vi), (vii) or (viii) above) and at any time
thereafter Lender may, in addition to any other rights or remedies available to
it pursuant to this Agreement and the other Loan Documents or at law or in
equity, take such action, without notice or demand, that Lender deems advisable
to protect and enforce its rights against Borrowers and in and to the
Properties, including declaring the Debt to be immediately due and payable, and
Lender may enforce or avail itself of any or all rights or remedies provided in
the Loan Documents against Borrowers and the Properties, including all rights or
remedies available at law or in equity; and upon any Event of Default described
in clauses (vi), (vii) or (viii) above, the Debt and all other obligations of
Borrowers hereunder and under the other Loan Documents shall immediately and
automatically become due and payable, without notice or demand, and Borrowers
hereby expressly waive any such notice or demand, anything contained herein or
in any other Loan Document to the contrary notwithstanding.
Section VIII.2 Remedies.
(a) Upon the occurrence of an Event of Default, Lender shall have no
obligation to make Advances hereunder and all or any one or more of the rights,
powers, privileges and other remedies available to Lender against Borrowers
under this Agreement or any of the other Loan Documents executed and delivered
by, or applicable to, Borrowers or at law or in equity may be exercised by
Lender at any time and from time to time, whether or not all or any of the Debt
shall be declared due and payable, and whether or not Lender shall have
commenced any foreclosure proceeding or other action for the enforcement of its
rights and remedies under any of the Loan Documents with respect to the
Properties. Any such actions taken by Lender shall be cumulative and concurrent
and may be pursued independently, singly, successively, together or otherwise,
at such time and in such order as Lender may determine in its sole discretion,
to the fullest extent permitted by law, without impairing or otherwise affecting
the other rights and remedies of Lender permitted by law, equity or contract or
as set forth herein or in the other Loan Documents. Without limiting the
generality of the foregoing, Borrowers agree that if an Event of Default is
continuing (i) Lender is not subject to any "one action" or "election of
remedies" law or rule, and (ii) all liens and other rights, remedies or
privileges provided to Lender shall remain in full force and effect until Lender
has exhausted all of its remedies against the Properties and the Mortgages have
been foreclosed, sold and/or otherwise realized upon in satisfaction of the Debt
or the Debt has been paid in full.
(b) Upon acceleration of all or a portion of the outstanding principal
balance of the Loan, Lender shall have the right from time to time to partially
foreclose any Mortgage or Mortgages in any manner and for any amounts secured by
the Mortgages then due and payable as determined by Lender in its sole
discretion including, without limitation, the following circumstances: (i) in
the event Borrowers default in the payment of one or more scheduled payments of
principal and interest, Lender may foreclose any Mortgage or Mortgages to
recover such delinquent payments, or (ii) in the event Lender elects to
accelerate less than the entire outstanding principal balance of the Loan,
Lender may foreclose any Mortgage or Mortgages to recover so much of the
principal balance of the Loan as Lender may accelerate. Notwithstanding one or
more partial foreclosures, the Properties shall remain subject to the Mortgages
to secure payment of sums secured by the Mortgages and not previously recovered.
(c) Upon acceleration of all or a portion of the outstanding principal
balance of the Loan, Lender shall have the right from time to time to sever the
Note and the other Loan Documents into one or more separate notes, mortgages and
other security documents in such denominations as Lender shall determine in its
sole discretion for purposes of evidencing and enforcing its rights and remedies
provided hereunder. Borrowers shall execute and deliver to Lender from time to
time, promptly after the request of Lender, a severance agreement and such other
documents as Lender shall request in order to effect the severance described in
the preceding sentence, all in form and substance reasonably satisfactory to
Lender. Each Borrower hereby absolutely and irrevocably appoints Lender as its
true and lawful attorney, coupled with an interest, in its name and stead to
make and execute all documents necessary or desirable to effect the aforesaid
severance, each Borrower ratifying all that its said attorney shall do by virtue
thereof.
Section VIII.3 Remedies Cumulative. The rights, powers and remedies of
Lender under this Agreement shall be cumulative and not exclusive of any other
right, power or remedy which Lender may have against Borrowers pursuant to this
Agreement or the other Loan Documents, or existing at law or in equity or
otherwise. Lender's rights, powers and remedies may be pursued singly,
concurrently or otherwise, at such time and in such order as Lender may
determine in Lender's sole discretion. No delay or omission to exercise any
remedy, right or power accruing upon an Event of Default shall impair any such
remedy, right or power or shall be construed as a waiver thereof, but any such
remedy, right or power may be exercised from time to time and as often as may be
deemed expedient. A waiver of one Default or Event of Default with respect to
Borrowers shall not be construed to be a waiver of any subsequent Default or
Event of Default by Borrowers or to impair any remedy, right or power consequent
thereon.
IX. SPECIAL PROVISIONS
Section IX.1 Sale of Notre and Securitization. Lender shall have the right
to transfer, assign or sell participations in the Note and the other Loan
Documents and any interest therein, provided, however, that no such transfer,
assignment or sale shall (i) materially increase, decrease or otherwise affect
either Borrowers' or Lender's obligations under this Loan Agreement or the other
Loan Documents, except as described in the Securitization Indemnification
Agreement or (ii) result in the holder of the Xxxxxx Note being different from
the holder of the Bridge Note.
Section IX.2 Securitization Indemnification. Borrowers and Lender have
entered into a Securitization Indemnification Agreement of even date herewith, a
copy of which is attached hereto as Exhibit D, which shall be a "Loan Document"
hereunder.
Section IX.3 Termination of Manager. If (i) Borrowers shall not achieve,
and within thirty (30) days of the end of each calendar quarter (the "DSCR
Determination Date") provide evidence to Lender of the achievement of, a Debt
Service Coverage Ratio for the Properties for such calendar quarter of at least
1.10 to 1.0 (the "Manager Termination Ratio") and Lender determines in its
reasonable discretion that a reputable independent property manager can manage
the Properties at competitive rates more efficiently and with better results
than Borrowers or Manager, or (ii) there exists an Event of Default, Lender
shall have the right to remove the Manager (or Borrowers as self-managers),
terminate the Management Agreement, if any (unless there exists no Event of
Default and Borrowers shall defease a portion of the Loan to a level such that
the Debt Service Coverage Ratio on the undefeased portion of the Loan is
restored to a level of not less than the Manager Termination Ratio), and replace
the Manager (or Borrowers as self-managers) with a manager approved by Lender on
terms and conditions satisfactory to Lender. In the event that Borrowers do not
propose a replacement manager to Lender for its approval within fifteen (15)
business days after the Lender's request that Borrowers do so, Lender may
propose two or more such property managers for Borrowers' consideration. If
Borrowers then fail to select and retain one of such property managers within
fifteen (15) business days thereafter, Lender shall have the right to select a
property manager for the Properties, and to enter into a management agreement
with such manager in the name of Borrowers. Each Borrower hereby appoints Lender
its attorney-in-fact, which appointment is coupled with an interest, for the
purpose of entering into such management agreement. The management agreement
entered into between Borrowers and any Manager shall be in form and substance
reasonably acceptable to Lender. All calculations of Debt Service Coverage Ratio
shall be subject to verification by Lender.
Section IX.4 Retention of Servicer. Lender reserves the right to retain the
Servicer to act as its agent hereunder with such powers as are specifically
delegated to the Servicer by Lender, whether pursuant to the terms of this
Agreement, the Pooling and Servicing Agreement or the Cash Collateral Account
Agreement or otherwise, together with such other powers as are reasonably
incidental thereto. Borrowers shall pay any reasonable fees and expenses of the
Servicer in connection with a release or addition of a Property, assumption or
modification of the Loan or enforcement of the Loan Documents.
X. MISCELLANEOUS
Section X.1 Survival. This Agreement and all covenants, agreements,
representations and warranties made herein and in the certificates delivered
pursuant hereto shall survive the making by Lender of the Loan and the execution
and delivery to Lender of the Note, and shall continue in full force and effect
so long as all or any of the Debt is outstanding and unpaid (but the accuracy
thereof shall be determined as of the Closing Date, each Borrowing Date and any
subsequent date on which the same are re-made). Whenever in this Agreement any
of the parties hereto is referred to, such reference shall be deemed to include
the legal representatives, successors and assigns of such party. All covenants,
promises and agreements in this Agreement contained, by or on behalf of either
party, shall inure to the benefit of the respective legal representatives,
successors and assigns of the other.
Section X.2 Lender's Discretion. Whenever pursuant to this Agreement,
Lender exercises any right given to it to approve or disapprove, or any
arrangement or term is to be satisfactory to Lender, the decision of Lender to
approve or disapprove or to decide whether arrangements or terms are
satisfactory or not satisfactory shall (except as is otherwise specifically
herein provided) be in the sole discretion of Lender and shall be final and
conclusive.
Section X.3 Governing Law
(a) THIS AGREEMENT WAS NEGOTIATED IN THE STATE OF ILLINOIS, AND MADE BY
LENDER AND ACCEPTED BY BORROWERS IN THE STATE OF ILLINOIS, AND THE PROCEEDS OF
THE NOTE DELIVERED PURSUANT HERETO WERE DISBURSED FROM THE STATE OF ILLINOIS,
WHICH STATE THE PARTIES AGREE HAS A SUBSTANTIAL RELATIONSHIP TO THE PARTIES AND
TO THE UNDERLYING TRANSACTION EMBODIED HEREBY, AND IN ALL RESPECTS, INCLUDING
MATTERS OF CONSTRUCTION, VALIDITY AND PERFORMANCE, THIS AGREEMENT AND THE
OBLIGATIONS ARISING HEREUNDER SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE
WITH, THE INTERNAL LAWS OF THE STATE OF ILLINOIS (WITHOUT REGARD TO CONFLICTS OF
LAW PROVISIONS) APPLICABLE TO CONTRACTS MADE AND PERFORMED IN SUCH STATE AND ANY
APPLICABLE LAW OF THE UNITED STATES OF AMERICA, EXCEPT THAT AT ALL TIMES THE
PROVISIONS FOR THE CREATION, PERFECTION, AND ENFORCEMENT OF THE LIENS AND
SECURITY INTERESTS CREATED PURSUANT HERETO AND PURSUANT TO THE OTHER LOAN
DOCUMENTS SHALL BE GOVERNED BY AND CONSTRUED ACCORDING TO THE LAW OF THE STATE
IN WHICH THE APPLICABLE PROPERTY IS LOCATED, IT BEING UNDERSTOOD THAT, TO THE
FULLEST EXTENT PERMITTED BY THE LAW OF SUCH STATE, THE LAW OF THE STATE OF
ILLINOIS SHALL GOVERN THE VALIDITY AND THE ENFORCEABILITY OF ALL LOAN DOCUMENTS
AND ALL OF THE INDEBTEDNESS OR OBLIGATIONS ARISING HEREUNDER OR THEREUNDER. TO
THE FULLEST EXTENT PERMITTED BY LAW, EACH BORROWER AND LENDER HEREBY
UNCONDITIONALLY AND IRREVOCABLY WAIVES ANY CLAIM TO ASSERT THAT THE LAW OF ANY
OTHER JURISDICTION GOVERNS THIS AGREEMENT AND THE NOTE.
(b) ANY LEGAL SUIT, ACTION OR PROCEEDING AGAINST LENDER OR BORROWERS
ARISING OUT OF OR RELATING TO THIS AGREEMENT SHALL BE INSTITUTED IN ANY FEDERAL
OR STATE COURT IN CHICAGO, ILLINOIS, AND EACH BORROWER WAIVES ANY OBJECTION
WHICH IT MAY NOW OR HEREAFTER HAVE TO THE LAYING OF VENUE OF ANY SUCH SUIT,
ACTION OR PROCEEDING, AND EACH BORROWER HEREBY IRREVOCABLY SUBMITS TO THE
JURISDICTION OF ANY SUCH COURT IN ANY SUIT, ACTION OR PROCEEDING. EACH BORROWER
DOES HEREBY DESIGNATE AND APPOINT MILES X. XXXXXXXX, XXXXXXX FACTORY SHOPS,
00000 XXXXXXX XXXXX XXXX., XXXXXXX, XXXXXXXX 00000 AS ITS AUTHORIZED AGENT TO
ACCEPT AND ACKNOWLEDGE ON ITS BEHALF SERVICE OF ANY AND ALL PROCESS WHICH MAY BE
SERVED IN ANY SUCH SUIT, ACTION OR PROCEEDING IN ANY FEDERAL OR STATE COURT IN
CHICAGO, ILLINOIS, AND AGREES THAT SERVICE OF PROCESS UPON SAID AGENT AT SAID
ADDRESS AND WRITTEN NOTICE OF SAID SERVICE OF SUCH BORROWER MAILED OR DELIVERED
TO SUCH BORROWER IN THE MANNER PROVIDED HEREIN SHALL BE DEEMED IN EVERY RESPECT
EFFECTIVE SERVICE OF PROCESS UPON SUCH BORROWER, IN ANY SUCH SUIT, ACTION OR
PROCEEDING IN THE STATE OF ILLINOIS. EACH BORROWER (I) SHALL GIVE PROMPT NOTICE
TO LENDER OF ANY CHANGED ADDRESS OF ITS AUTHORIZED AGENT HEREUNDER, (II) MAY AT
ANY TIME AND FROM TIME TO TIME DESIGNATE A SUBSTITUTE AUTHORIZED AGENT WITH AN
OFFICE IN CHICAGO, ILLINOIS (WHICH OFFICE SHALL BE DESIGNATED AS THE ADDRESS FOR
SERVICE OF PROCESS), AND (III) SHALL PROMPTLY DESIGNATE SUCH A SUBSTITUTE IF ITS
AUTHORIZED AGENT CEASES TO HAVE AN OFFICE IN CHICAGO, ILLINOIS OR IS DISSOLVED
WITHOUT LEAVING A SUCCESSOR.
Section X.4 Modification, Waiver in Writing. No modification, amendment,
extension, discharge, termination or waiver of any provision of this Agreement,
or of the Note, or of any other Loan Document, nor consent to any departure by
either party therefrom, shall in any event be effective unless the same shall be
in a writing signed by the party against whom enforcement is sought, and then
such waiver or consent shall be effective only in the specific instance, and for
the purpose, for which given. Except as otherwise expressly provided herein, no
notice to, or demand on Borrowers, shall entitle Borrowers to any other or
future notice or demand in the same, similar or other circumstances.
Section X.5 Delay Not a Waiver. Neither any failure nor any delay on the
part of Lender in insisting upon strict performance of any term, condition,
covenant or agreement, or exercising any right, power, remedy or privilege
hereunder, or under the Note or under any other Loan Document, or any other
instrument given as security therefor, shall operate as or constitute a waiver
thereof, nor shall a single or partial exercise thereof preclude any other
future exercise, or the exercise of any other right, power, remedy or privilege.
In particular, and not by way of limitation, by accepting payment after the due
date of any amount payable under this Agreement, the Note or any other Loan
Document, Lender shall not be deemed to have waived any right either to require
prompt payment when due of all other amounts due under this Agreement, the Note
or the other Loan Documents, or to declare a default for failure to effect
prompt payment of any such other amount.
Section X.6 Notices. All notices, consents, approvals and requests required
or permitted hereunder or under any other Loan Document shall be given in
writing and shall be effective for all purposes if hand delivered or sent by (a)
certified or registered United States mail, postage prepaid, or (b) expedited
prepaid delivery service, either commercial or United States Postal Service,
with proof of attempted delivery, addressed as follows (or at such other address
and person as shall be designated from time to time by any party hereto, as the
case may be, in a written notice to the other parties hereto in the manner
provided for in this Section):
If to Lender:
Nomura Asset Capital Corporation
Two World Xxxxxxxxx Xxxxxx
Xxxxxxxx X
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxx Xxxx
with a copy to:
Nomura Asset Capital Corporation
000 Xxxx Xxx Xxxxxxx Xxxx.
Xxxxx 000
Xxxxxx, Xxxxx 00000
Attention: Legal Department
with a copy to:
Nomura Asset Capital Corporation
000 Xxxxx Xxxxxx Xxxxx
Xxxxx 0000
Xxxxxxx, Xxxxxxxx 00000
Attention: Xxxxx Xxxxxxx
If to Borrowers:
c/o Prime Retail, L.P.
000 Xxxx Xxxxx Xxxxxx, 00xx Xxxxx
Xxxxxxxxx, Xxxxxxxx 00000
Attention: Xxxxxx X. Xxxxxxx
with copies to:
c/o Prime Retail, L.P.
000 Xxxx Xxxxx Xxxxxx, 00xx Xxxxx
Xxxxxxxxx, Xxxxxxxx 00000
Attention: C. Xxxx Xxxxxxxxx
Winston & Xxxxxx
00 Xxxx Xxxxxx Xxxxx
Xxxxxxx, Xxxxxxxx 00000
Attention: Xxxxx X. Xxxxxx
A notice shall be deemed to have been given: in the case of hand delivery,
at the time of delivery; in the case of registered or certified mail, when
delivered or the first attempted delivery on a Business Day; or in the case of
expedited prepaid delivery, upon the first attempted delivery on a Business Day.
Section X.7 Trial by Jury. EACH BORROWER AND LENDER HEREBY AGREES NOT TO
ELECT A TRIAL BY JURY OF ANY ISSUE TRIABLE OF RIGHT BY JURY, AND WAIVES ANY
RIGHT TO TRIAL BY JURY FULLY TO THE EXTENT THAT ANY SUCH RIGHT SHALL NOW OR
HEREAFTER EXIST WITH REGARD TO THE LOAN DOCUMENTS, OR ANY CLAIM, COUNTERCLAIM OR
OTHER ACTION ARISING IN CONNECTION THEREWITH. THIS WAIVER OF RIGHT TO TRIAL BY
JURY IS GIVEN KNOWINGLY AND VOLUNTARILY BY EACH BORROWER AND LENDER, AND IS
INTENDED TO ENCOMPASS INDIVIDUALLY EACH INSTANCE AND EACH ISSUE AS TO WHICH THE
RIGHT TO A TRIAL BY JURY WOULD OTHERWISE ACCRUE. EACH PARTY IS HEREBY AUTHORIZED
TO FILE A COPY OF THIS PARAGRAPH IN ANY PROCEEDING AS CONCLUSIVE EVIDENCE OF
THIS WAIVER BY THE OTHER PARTY.
Section X.8 Headings. The Article and/or Section headings and the Table of
Contents in this Agreement are included herein for convenience of reference only
and shall not constitute a part of this Agreement for any other purpose.
Section X.9 Severability. Wherever possible, each provision of this
Agreement shall be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Agreement shall be prohibited by or
invalid under applicable law, such provision shall be ineffective to the extent
of such prohibition or invalidity, without invalidating the remainder of such
provision or the remaining provisions of this Agreement.
Section X.10 Preferences. To the extent Borrowers make a payment or
payments to Lender, which payment or proceeds or any part thereof are
subsequently invalidated, declared to be fraudulent or preferential, set aside
or required to be repaid to a trustee, receiver or any other party under any
bankruptcy law, state or federal law, common law or equitable cause, then, to
the extent of such payment or proceeds received, the obligations hereunder or
part thereof intended to be satisfied shall be revived and continue in full
force and effect, as if such payment or proceeds had not been received by
Lender.
Section X.11 Waiver of Notive. Borrowers shall not be entitled to any
notices of any nature whatsoever from Lender except with respect to matters for
which this Agreement or the other Loan Documents specifically and expressly
provide for the giving of notice by Lender to Borrowers and except with respect
to matters for which Borrowers are not, pursuant to applicable Legal
Requirements, permitted to waive the giving of notice. Borrowers hereby
expressly waive the right to receive any notice from Lender with respect to any
matter for which this Agreement or the other Loan Documents do not specifically
and expressly provide for the giving of notice by Lender to Borrowers.
Section X.12 Remedies of Borrowers. In the event that a claim or
adjudication is made that Lender or its agents, including Servicer, have acted
unreasonably or unreasonably delayed acting in any case where by law or under
this Agreement or the other Loan Documents, Lender or such agent, as the case
may be, has an obligation to act reasonably or promptly, Borrowers agree that
neither Lender nor its agents, including Servicer, shall be liable for any
monetary damages, and Borrowers' sole remedies shall be limited to commencing an
action seeking injunctive relief or declaratory judgment.
Section X.13 Expenses; Indemnity
(a) Borrowers covenant and agree to reimburse Lender (or the holder of the
Loan, as applicable) upon receipt of written notice from such holder for all
reasonable costs and expenses (including reasonable attorneys' fees and
disbursements but excluding Lender's administrative overhead) incurred by Lender
in connection with (i) the preparation, negotiation, execution and delivery of
this Agreement and the other Loan Documents and the consummation of the
transactions contemplated hereby and thereby and all the costs of furnishing all
opinions by counsel for Borrowers (including any opinions requested by Lender as
to any legal matters arising under this Agreement or the other Loan Documents
with respect to the Properties); (ii) Borrowers' ongoing performance of and
compliance with Borrowers' respective agreements and covenants contained in this
Agreement and the other Loan Documents on its part to be performed or complied
with after the Closing Date, including confirming compliance with environmental
and insurance requirements; (iii) Lender's ongoing performance and compliance
with all agreements and conditions contained in this Agreement and the other
Loan Documents on its part to be performed or complied with after the Closing
Date, including the making of Advances; (iv) the negotiation, preparation,
execution, delivery and administration of any consents, amendments, waivers or
other modifications to this Agreement and the other Loan Documents and any other
documents or matters requested by Lender; (v) the filing and recording fees and
expenses, title insurance and reasonable fees and expenses of counsel for
providing to Lender all required legal opinions, and other similar expenses
incurred in creating and perfecting the Liens in favor of Lender pursuant to
this Agreement and the other Loan Documents; (vi) enforcing or preserving any
rights, in response to third party claims or the prosecuting or defending of any
action or proceeding or other litigation, in each case against, under or
affecting Borrowers, this Agreement, the other Loan Documents, the Properties,
or any other security given for the Loan; and (vii) enforcing any obligations of
or collecting any payments due from Borrowers under this Agreement, the other
Loan Documents or with respect to the Properties or in connection with any
refinancing or restructuring of the credit arrangements provided under this
Agreement in the nature of a "work-out" or of any insolvency or bankruptcy
proceedings; provided, however, that Borrowers shall not be liable for the
payment of any such costs and expenses to the extent the same arise by reason of
the gross negligence, illegal acts, fraud or willful misconduct of Lender. Any
costs and expenses due and payable to Lender hereunder which are not paid by
Borrowers within ten (10) days after demand may be paid from any amounts in the
Cash Collateral Account, with notice thereof to Borrowers. Notwithstanding the
foregoing, Borrowers shall not be obligated to reimburse Lender for expenses
incurred in connection with the Securitization of the Loan.
(b) Borrowers shall indemnify and hold harmless Lender from and against any
and all other liabilities, obligations, losses, damages, penalties, actions,
judgments, suits, claims, costs, expenses and disbursements of any kind or
nature whatsoever (including the reasonable fees and disbursements of counsel
for Lender in connection with any investigative, administrative or judicial
proceeding commenced or threatened, whether or not Lender shall be designated a
party thereto), that may be imposed on, incurred by, or asserted against Lender
in any manner relating to or arising out of (i) any breach by any Borrower of
its obligations under, or any material misrepresentation by any Borrower
contained in this Agreement or the other Loan Documents or (ii) the use or
intended use of the proceeds of the Loan, (collectively, the "Indemnified
Liabilities"); provided, however, that Borrowers shall not have any obligation
to Lender hereunder to the extent that such Indemnified Liabilities arise from
the gross negligence, illegal acts, fraud or willful misconduct of Lender. To
the extent that the undertaking to indemnify and hold harmless set forth in the
preceding sentence may be unenforceable because it violates any law or public
policy, Borrowers shall contribute the maximum portion that they are permitted
to pay and satisfy under applicable law to the payment and satisfaction of all
Indemnified Liabilities incurred by Lender.
Section X.14 Exhibits Incorporated. The Exhibits and Schedules annexed
hereto are hereby incorporated herein as a part of this Agreement with the same
effect as if set forth in the body hereof.
Section X.15 Offsets, Counterclaims and Defenses. Any assignee of Lender's
interest in and to this Agreement, the Note and the other Loan Documents shall
take the same free and clear of all offsets, counterclaims or defenses which are
unrelated to such documents which Borrowers may otherwise have against any
assignor of such documents, and no such unrelated counterclaim or defense shall
be interposed or asserted by Borrowers in any action or proceeding brought by
any such assignee upon such documents and any such right to interpose or assert
any such unrelated offset, counterclaim or defense in any such action or
proceeding is hereby expressly waived by Borrowers.
Section X.16 No Joint Venture of Partnership. Borrowers and Lender intend
that the relationships created hereunder and under the other Loan Documents be
solely that of borrower and lender. Nothing herein or therein is intended to
create a joint venture, partnership, tenancy-in-common, or joint tenancy
relationship between Borrowers and Lender nor to grant Lender any interest in
the Properties other than that of mortgagee or lender.
Section X.17 Publicity. (a) All promotional news releases, publicity or
advertising by Borrowers or their respective Affiliates through any media
intended to reach the general public shall not refer to the Loan Documents or
the financing evidenced by the Loan Documents, or to Lender or to Nomura
Securities International, Inc. ("Nomura") or to NACC without the prior written
approval of Lender or Nomura or NACC, as applicable, in each instance, such
approval not to be unreasonably withheld or delayed. Subject to Section 10.17(c)
hereof, Lender shall be authorized to provide information relating to the
Properties, the Loan and matters relating thereto to rating agencies,
underwriters, potential securities investors, auditors, regulatory authorities
and to any parties which may be entitled to such information by operation of law
and Borrowers and their Affiliates shall be authorized to provide such
information to auditors, regulatory authorities and to any parties which may be
entitled by law to such information.
(b) No promotional news releases, publicity or advertising by Lender or its
Affiliates through any media intended to reach the general public shall refer to
PRLP or any of its Affiliates without the prior written approval of PRLP, such
approval not to be unreasonably withheld or delayed.
(c) Lender shall keep, and shall use good faith efforts to cause the Rating
Agencies to keep, rent rolls, per square foot sales figures and information
provided pursuant to Section 5.1(k) which any Borrower, in its reasonable
discretion, deems in writing to be proprietary in nature (collectively, the
"Confidential Information") confidential, provided, however, that nothing herein
shall be deemed to prohibit (x) the Rating Agencies from including summary
statements, conclusions or analysis based on the Confidential Information in
reports they prepare and distribute with respect to the Loan or (y) distribution
of the Confidential Information to the Rating Agencies, underwriters, auditors,
regulatory authorities or any Parties which may be entitled by law to such
information, or (z) distribution of the Confidential Information as provided
below. Information provided by Borrowers to Lender will be available to any
holders of any certificates issued in connection with a Securitization;
provided, however, as long as the Debt Service Coverage Ratio equals or exceeds
1.10 and no Event of Default has occurred, the Confidential Information will be
available only to any private holder of such certificates that signs a
confidentiality agreement. In addition, Confidential Information provided by
Borrower to Lender will be available to potential holders of non-investment
grade certificates if such potential holders sign a confidentiality agreement.
If the Debt Service Coverage Ratio is less than 1.10 or an Event of Default has
occurred, no separate confidentiality agreement will be required with respect to
holders of certificates issued in connection with the Securitizations but the
first page of any such Confidential Information shall contain a legend stating
that the Confidential Information contains economic, commercial and financial
information which is confidential and/or proprietary in nature to Borrower and
its affiliates and that the recipients of the Confidential Information (i) shall
not disclose the contents of the Confidential Information to any third party and
(ii) shall use the Confidential Information solely in connection with their
ownership of any certificates issued in connection with a Securitization. If,
however, Borrowers deposit with Lender U.S. Obligations the payment from which
will increase the Debt Service Coverage Ratio to 1.10 when recalculated with an
adjustment to Operating Income to include as income the payments to be made from
the U.S. Obligations for the next succeeding twelve (12) month period the
requirement for a separate confidentiality agreement shall be reinstated.
Section X.18 Waiver of Marshalling of Assets. To the fullest extent
Borrowers may legally do so, Borrowers waive all rights to a marshalling of the
assets of Borrowers, Borrowers' partners and/or members, and others with
interests in Borrowers, and of Borrowers' properties, or to a sale in inverse
order of alienation in the event of foreclosure of the interests hereby created,
and agrees not to assert any right under any laws pertaining to the marshalling
of assets, the sale in inverse order of alienation, homestead exemption, the
administration of estates of decedents, or any other matters whatsoever to
defeat, reduce or affect the right of Lender under the Loan Documents to a sale
of the Properties for the collection of the related indebtedness without any
prior or different resort for collection, of the right of Lender or any deed of
trust trustee to the payment of the related indebtedness out of the net proceeds
of the Properties in preference to every other claimant whatsoever.
Section X.19 Waiver of Counterclaim. Borrowers hereby waive the right to
assert a counterclaim, other than a compulsory counterclaim, in any action or
proceeding brought against it by Lender or its agents, including Servicer.
Section X.20 Conflict; Construction of Documents. In the event of any
conflict between the provisions of this Agreement and any of the other Loan
Documents, the provisions of this Agreement shall control. The parties hereto
acknowledge that they were represented by counsel in connection with the
negotiation and drafting of the Loan Documents and that such Loan Documents
shall not be subject to the principle of construing their meaning against the
party which drafted same.
Section X.21 Brokers and Financial Advisors. Borrowers hereby represent
that they have dealt with no financial advisors, brokers, underwriters,
placement agents, agents or finders in connection with the transactions
contemplated by this Agreement. Borrowers and Lender hereby agree to indemnify
and hold the other harmless from and against any and all claims, liabilities,
costs and expenses of any kind in any way relating to or arising from a claim by
any Person that such Person acted on behalf of the indemnifying party in
connection with the transactions contemplated herein. The provisions of this
Section 10.21 shall survive the expiration and termination of this Agreement and
the repayment of the Debt.
Section X.22 No Third Party Beneficiaries. This Agreement and the other
Loan Documents are solely for the benefit of Lender and Borrowers and nothing
contained in this Agreement or the other Loan Documents shall be deemed to
confer upon anyone other than Lender and Borrowers any right to insist upon or
to enforce the performance or observance of any of the obligations contained
herein or therein. All conditions to the obligations of Lender to make the Loan
hereunder are imposed solely and exclusively for the benefit of Lender and no
other Person shall have standing to require satisfaction of such conditions in
accordance with their terms or be entitled to assume that Lender will refuse to
make the Loan in the absence of strict compliance with any or all thereof and no
other Person shall under any circumstances be deemed to be a beneficiary of such
conditions, any or all of which may be freely waived in whole or in part by
Lender if, in Lender's sole discretion, Lender deems it advisable or desirable
to do so.
Section X. 23 Prior Agreements. This Agreement and the other Loan Documents
contain the entire agreement of the parties hereto and thereto in respect of the
transactions contemplated hereby and thereby, and all prior agreements among or
between such parties, whether oral or written, are superseded by the terms of
this Agreement and the other Loan Documents.
Section 10.24 Contribution Among Borrowers.
(a) Contribution. To provide for just and equitable contribution among
Borrowers, if any payment is made by a Borrower (a "Funding Borrower") hereunder
or under the Note or any other Loan Document in respect of the Debt such Funding
Borrower shall be entitled to a contribution from other Borrowers for all
payments, damages and expenses incurred by such Funding Borrower under or in
connection with such Debt, such contributions to be made in the manner and to
the extent set forth below. Any amount payable as a contribution under this
Agreement shall be determined as of the date on which the related payment is
made by a Funding Borrower.
(b) Calculation of Contributions. Each Borrower shall be liable for
contribution to each Funding Borrower in respect of all payments, damages and
expenses incurred by such Funding Borrower hereunder or under the Note or any
other Loan Document in an aggregate amount, subject to Section 10.24(c) hereof,
equal to (i) the ratio of (x) the Property Worth of the Property owned by such
Borrower to (y) the Property Worth of the Properties owned by all Borrowers,
multiplied by (ii) the aggregate amount of such payments, damages and expenses
incurred by such Funding Borrower under or in connection with the Obligations.
(c) Rights to Contribution Subordinated. Each Borrower agrees (c) Rights to
Contribution Subordinated. Each Borrower agrees that all of its rights to
receive contribution under this Section 10.24 (whether for payments, damages,
expenses or otherwise) and all of its rights, if any, to be subrogated to any of
the rights of Lender shall be subordinated in right of payment (in liquidation
or otherwise) to the prior payment in full in cash of all of the Debt (whether
for principal, interest, premium or otherwise). If any amount shall at any time
be paid to a Borrower on account of such rights of contribution or subrogation,
or in contravention of the provisions of this Section 10.24(c) at any time, such
amount shall be held in trust, segregated from the other assets of such
Borrower, for the benefit of the Lender and shall promptly be paid to the
Lender. The foregoing shall constitute a continuing offer to, and agreement
with, all persons that from time to time may become holders of, or continue to
hold, Debt under this Agreement, and the provisions of the foregoing sentence
are made for the benefit of such holders and such holders, as third party
beneficiaries hereunder, are entitled to enforce such provisions.
(d) Joint and Several/Continuing Obligations.
(i) Notwithstanding anything to the contrary set forth in this Agreement or
any of the other Loan Documents, the Borrowers shall be jointly and severally
liable for all of the Obligations.
(ii) Each Borrower's obligations under Section 10.24(a) above shall remain
outstanding until all Debt of all Borrowers have been paid in full.
(iii) No payment or payments with respect to the obligations of any
Borrower hereunder made by any other Borrower or any other Person or received or
collected by the Lender from such other Borrower or such other Person by virtue
of any action or proceeding or any setoff or appropriation or application, at
any time or from time to time, in reduction of or in payment of the Debt or any
release of security hereunder shall be deemed to modify, reduce, release or
otherwise affect the primary liability of such Borrower in respect thereof.
(iv) If any amount shall be at any time be paid to a Borrower on account of
such rights of contribution or subrogation, in contravention of the provisions
of this Section 10.24 at any time, such amount shall be held in trust,
segregated from the other assets of such Borrower, for the benefit of the Lender
and shall promptly be paid to the Lender.
IN WITNESS WHEREOF, the parties hereto have caused this Loan Agreement to
be duly executed by their duly authorized representatives, all as of the day and
year first above written.
BORROWERS:
BUCKEYE FACTORY SHOPS LIMITED PARTNERSHIP,
a Delaware limited partnership
By: Prime Retail, L.P., a Delaware
limited partnership, its Managing
General partner
By: Prime Retail, Inc., a
Maryland corporation, its
general partner
By: /s/ Xxxxxx X. Gotehelf
Name: Xxxxxx X. Xxxxxxx
Title: Senior Vice President
XXXXXX FACTORY STORES LIMITED PARTNERSHIP,
a Delaware limited partnership
By: Prime Retail, L.P., a Delaware
limited partnership, its Managing
General Partner
By: Prime Retail, Inc., a
Maryland corporation, its
general partner
By: /s/ Xxxxxx X. Xxxxxxx
Name: Xxxxxx X. Xxxxxxx
Title: Senior Vice President
CAROLINA FACTORY SHOPS LIMITED
PARTNERSHIP, a Delaware limited partnership
By: Prime Retail, L.P., a Delaware
limited partnership, its Managing
General Partner
By: Prime Retail, Inc., a
Maryland corporation, its
general partner
By: /s/ Xxxxxx X.Xxxxxxx
Name: Xxxxxx X. Xxxxxxx
Title: Senior Vice President
SHASTA OUTLET CENTER LIMITED PARTNERSHIP,
a Delaware limited partnership
By: Prime Retail, L.P., a Delaware
limited partnership, its Managing
General Partner
By: Prime Retail, Inc., a
Maryland corporation, its
general partner
By: /s/ Xxxxxx X. Xxxxxxx
Name: Xxxxxx X. Xxxxxxx
Title: Senior Vice President
THE PRIME OUTLETS AT XXXXXXX LIMITED
PARTNERSHIP, a Delaware limited partnership
By: Prime Retail, L.P., a Delaware
limited partnership, its Managing
General Partner
By: Prime Retail, Inc., a
Maryland corporation, its
general partner
By: /s/ Xxxxxx X. Xxxxxxx
Name: Xxxxxx X. Xxxxxxx
Title: Senior Vice President
THE PRIME OUTLETS AT XXX LIMITED
PARTNERSHIP, a Delaware limited partnership
By: Prime Retail, L.P., a Delaware
limited partnership, its Managing
General Partner
By: Prime Retail, Inc., a
Maryland corporation, its
general partner
By: /s/ Xxxxxx X. Xxxxxxx
Name: Xxxxxx X. Xxxxxxx
Title: Senior Vice President
LENDER:
NOMURA ASSET CAPITAL CORPORATION
By: /s/ Xxxx X. Xxxxx
Name: Xxxx X. Xxxxx
Title: Director
Schedule 1
Matters Regarding Representations
Schedule 2
Rent Roll
See Certificate regarding Rent Roll dated as of even date herewith
delivered by Borrowers to Lender.
Schedule 3
Required Repairs
Schedule 4
Mortgages
1. The first priority Deed to Secure Debt, Assignment of Leases and Rents
and Security Agreement executed and delivered by Xxxxxxx Borrower as security
for the Loan and encumbering the Xxxxxxx Property.
2. The first priority Mortgage, Assignment of Leases and Rents and Security
Agreement executed and delivered by Xxx Borrower as security for the Loan and
encumbering the Xxx Property.
3. The first priority Leasehold Mortgage, Assignment of Leases and Rents
and Security Agreement executed and delivered by Carolina Borrower as security
for the Loan and encumbering the Carolina Property.
4. The first priority Open End Mortgage, Assignment of Leases and Rents and
Security Agreement executed and delivered by Buckeye Borrower as security for
the Loan and encumbering the Buckeye Property.
5. The first priority Mortgage, Assignment of Leases and Rents and Security
Agreement executed and delivered by Xxxxxx Borrower as security for the Xxxxxx
Note and encumbering the Xxxxxx Property.
6. The first priority Deed of Trust, Assignment of Leases and Rents and
Security Agreement executed and delivered by Shasta Borrower as security for the
Loan and encumbering the Shasta Property.
Schedule 5
Description of Properties
"Xxxxxxx Property" shall mean that certain parcel of real property and
improvements thereon owned by Xxxxxxx Borrower and encumbered by the Xxxxxxx
Mortgage, together with all rights pertaining to such property and improvements,
as more particularly described in the Granting Clauses of the Xxxxxxx Mortgage
and referred to therein as the "Property" and known as the Xxxxxxx Factory Shops
in Calhoun, Georgia.
"Xxx Property" shall mean that certain parcel of real property and
improvements thereon owned by Xxx Borrower and encumbered by the Xxx Mortgage,
together with all rights pertaining to such property and improvements, as more
particularly described in the Granting Clauses of the Xxx Mortgage and referred
to therein as the "Property" and known as the Berkshire Outlet Village in Lee,
Massachusetts.
"Carolina Property" shall mean that certain parcel of real property and
improvements thereon leased by Carolina Borrower and encumbered by the Carolina
Mortgage, together with all rights pertaining to such property and improvements,
as more particularly described in the Granting Clauses of the Carolina Mortgage
and referred to therein as the "Property" and known as the Carolina Factory
Shops in Gaffney, South Carolina.
"Buckeye Property" shall mean that certain parcel of real property and
improvements thereon owned by Buckeye Borrower and encumbered by the Buckeye
Mortgage, together with all rights pertaining to such property and improvements,
as more particularly described in the Granting Clauses of the Buckeye Mortgage
and referred to therein as the "Property" and known as the Buckeye Factory Shops
in Burbank, Ohio.
"Xxxxxx Property" shall mean that certain parcel of real property and
improvements thereon owned by Xxxxxx Borrower and encumbered by the Xxxxxx
Mortgage, together with all rights pertaining to such property and improvements,
as more particularly described in the Granting Clauses of the Latham Mortgage
and referred to therein as the "Property" and known as the Latham Factory Stores
in Colonie, New York.
"Shasta Property" shall mean that certain parcel of real property and
improvements thereon owned by Shasta Borrower and encumbered by the Shasta
Mortgage, together with all rights pertaining to such property and improvements,
as more particularly described in the Granting Clauses of the Shasta Mortgage
and referred to therein as the "Property" and known as the Shasta Factory Stores
in Anderson, California.
Schedule 6
Allocated Loan Amounts
Buckeye Property $ 20,868,416.00
Xxxxxx Property $ 1,725,526.00
Carolina Property $ 21,907,750.00
Shasta Property $ 5,808,928.00
Xxxxxxx Property $ 19,165,820.00
Xxx Property $ 25,810,220.00
Schedule 7
Prime Bridge Loan
---------------------------------------- ------------------------------------- -------------------------------------
Property Borrower Fee or Leasehold
---------------------------------------- ------------------------------------- -------------------------------------
---------------------------------------- ------------------------------------- -------------------------------------
Xxxxxxx Factory Shops The Prime Outlets at Xxxxxxx Fee
Limited Partnership
---------------------------------------- ------------------------------------- -------------------------------------
---------------------------------------- ------------------------------------- -------------------------------------
Carolina Factory Shops Carolina Factory Shops Limited Leasehold
Partnership
---------------------------------------- ------------------------------------- -------------------------------------
---------------------------------------- ------------------------------------- -------------------------------------
The Prime Outlets at Xxx The Prime Outlets at Xxx Limited Fee
Partnership
---------------------------------------- ------------------------------------- -------------------------------------
---------------------------------------- ------------------------------------- -------------------------------------
Buckeye Factory Shops Buckeye Factory Shops Limited Fee
Partnership
---------------------------------------- ------------------------------------- -------------------------------------
---------------------------------------- ------------------------------------- -------------------------------------
Xxxxxx Factory Stores Xxxxxx Factory Stores Limited Fee
Partnership
---------------------------------------- ------------------------------------- -------------------------------------
---------------------------------------- ------------------------------------- -------------------------------------
Shasta Factory Outlets Shasta Outlet Center Limited Fee
Partnership
---------------------------------------- ------------------------------------- -------------------------------------
Exhibit A-1
Form of Bridge Note
Exhibit A-2
Form of Xxxxxx Note
Exhibit B
Securitization Indemnification Agreement
