COVER
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AMENDED AND RESTATED
LOAN AGREEMENT
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PAYLESS CASHWAYS, INC.
as Borrower
and
UBS MORTGAGE FINANCE, INC.
as Lender
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$100,809,000
As of December 2, 1997
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1
AMENDED AND RESTATED LOAN AGREEMENT
AMENDED AND RESTATED LOAN AGREEMENT dated as of the 2nd day of December,
1997, by and between PAYLESS CASHWAYS, INC., an Delaware corporation (herein
called "Borrower"), and UBS MORTGAGE FINANCE, INC., (herein called "Lender").
WHEREAS, Borrower previously entered into a loan agreement dated as of June
20, 1989, with The Prudential Insurance Company of America ("Prudential") under
which Borrower executed and delivered to Prudential certain promissory notes in
the original aggregate principal amount of $230,242,500 (the "Prior Notes")
evidencing the amount of the loan (the "Loan") made by Prudential to Borrower,
which loan agreement has been modified and amended by that certain (a) First
Modification Agreement dated October 18, 1991, (b) Second Modification Agreement
dated December 17, 1991, (c) Third Modification Agreement dated as of December
31, 1991, (d) Fourth Modification Agreement dated as of March 8, 1993, (e) Fifth
Modification Agreement dated as of May 25, 1995, and (f) Sixth Modification
Agreement dated as of November 22, 1995, (the loan agreement and all subsequent
modifications thereto being hereafter referred to collectively as the "Prior
Loan Agreement");
WHEREAS, Borrower filed on July 21, 1997, a voluntary petition with the
United States Bankruptcy Court for the Western District of Missouri and has
continued in the possession of its assets and in the management of its business
pursuant to Sections 1107 and 1108 of the Bankruptcy Code;
WHEREAS, UBS Mortgage Finance, Inc. has purchased all interest of
Prudential under the Prior Loan Agreement and the Prior Notes;
WHEREAS, Borrower has now requested certain additional modifications to the
Prior Loan Agreement to, among other things, (1) consolidate the Prior Notes
into a single note; (2) modify the rate of interest on the Loan; and (3) extend
the maturity and change the amortization of the Loan; and
WHEREAS, Lender has agreed to Borrower's request pursuant to the terms and
conditions of this Amended and Restated Loan Agreement, which amends and
restates the Prior Loan Agreement in its entirety.
NOW, THEREFORE, in consideration of the premises and the mutual agreements,
covenants and conditions hereinafter set forth, Borrower and Lender agree as
follows:
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ARTICLE I
Definitions and References
Section 1.1 Defined Terms. As used in this Agreement, each of the following
terms has the meaning given it in this Section 1.1 or in the sections and
subsections referred to below:
"ACM" means asbestos-containing materials.
"Affiliate" means, as to any Person, each other Person that directly or
indirectly (through one or more intermediaries or otherwise) controls, is
controlled by or is under common control with, such Person.
"Agreement" means this Amended and Restated Loan Agreement.
"Allocated Loan Amount" means with respect to each Individual Property the
amount designated as such on Exhibit C hereto. Each payment of principal that is
not made in connection with the release of an Individual Property from the Lien
of the Mortgage shall reduce the Allocated Loan Amount of each Individual
Property on a proportionate basis, by an amount equal to the amount of such
principal payment multiplied by a fraction, the numerator of which is the
Allocated Loan Amount of the Individual Property and the denominator of which is
the total Allocated Loan Amounts for the Property. The Allocated Loan Amount of
a Substitution Property shall be the Allocated Loan Amount of the Individual
Property for which it was substituted.
"Applicable Environmental Laws" has the meaning given it in subsection
4.1(k).
"Applicable Laws" has the meaning given it in subsection 4.1(j).
"Authorized Officer" means, with respect to any act to be performed or duty
to be discharged by or on behalf of any Person who is not an individual, any
officer, agent or representative thereof who is at the time in question
authorized to perform such act or discharge such duty on behalf of such Person.
"Bank Debt" means the Secured Obligations as defined in the Credit
Agreement.
"Bankruptcy Code" means The Bankruptcy Reform Act of 1978, as amended and
codified as 11 U.S.C. Section 101 et seq.
Bankruptcy Court" means the United States Bankruptcy Court for the Western
District of Missouri or any other court having jurisdiction over the Chapter 11
case of Borrower.
"Borrower" means Payless Cashways, Inc., a Delaware corporation.
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"Business Day" means any day on which (a) commercial banks are not
authorized or required to close in New York, New York and (b) dealings in Dollar
deposits are carried out in the London interbank market and banks are open for
business in London.
"CERCLA" has the meaning given it in subsection 4.1(k).
"Collateral" has the meaning given it in the Mortgage.
"Consolidated" refers to the consolidation of any Person, in accordance
with GAAP, with its properly consolidated subsidiaries. References herein to a
Person's Consolidated financial statements, financial position, financial
condition, liabilities, or other financial matters refer to the consolidated
financial statements, financial position, financial condition, liabilities, or
other financial matters of such Person and its properly consolidated
subsidiaries.
"Credit Agreement" means the Amended and Restated Credit Agreement, dated
as of December 1, 1997, among Payless Cashways, Inc., Canadian Imperial Bank of
Commerce, as coordinating and collateral agent, the underwriters, the fronting
banks and the other secured parties party thereto, as amended, amended and
restated, extended, supplemented or otherwise modified from time to time.
"Debt" means, as to any Person, all indebtedness, liabilities and
obligations of such Person, whether primary or secondary, direct or indirect,
absolute or contingent.
"Default" means any Event of Default and any default, event or condition
which would, with the giving of any requisite notices and the passage of any
requisite periods of time, constitute an Event of Default.
"Default Rate" means at any particular time the annual rate equal to the
LIBOR Interest Rate then in effect plus 2%.
"Depository" has the meaning given it in subsection 5.1(g).
"Disclosure Schedule" means Schedule 1 attached hereto.
"Domestic Business Day" is any day except a Saturday, Sunday or other day
on which commercial banks are required or permitted by law to close in New York
City.
"Effective Date" shall mean the first Business Day after which the Order of
the Bankruptcy Court confirming the Plan of Reorganization shall have become
final and on which each of the conditions set forth in Sections 3.1 and 3.2
shall have been satisfied or waived in accordance with the terms hereof.
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"Environmental Costs" means incurred and potential damages, losses,
liabilities, costs and expenses of remediation work, and any other incurred or
potential obligations, penalties, fines, impositions, fees, levies, lien,
removal or bonding costs, claims, litigation, demands, causes of action,
liabilities, losses (including, without limitation, any reduction in the value
of the Property), damage, defenses, judgments, suits, proceedings, costs,
disbursements or expenses (including, without limitation, attorneys' and
experts' or other consultants' reasonable fees and disbursements) of any kind
and nature whatsoever, including interest thereon.
"Environmental Laws" means CERCLA; The Resource Conservation and Recovery
Act, 42 U.S.C. ss. 1601, et seq.; The Hazardous Substances Transportation Act,
49 U.S.C. ss. 1801, et seq.; The Emergency Planning & Community Right-to-Know
Act of 1986, 42 U.S.C. ss. 11001, et seq.; The Toxic Substances Control Act, 15
U.S.C. ss. 2601 et seq.; The Clean Air Act, 42 U.S.C. ss. 7401 et seq., The
Clean Water Act, 33 U.S.C. ss. 1251 et seq.; The Safe Drinking Water Act, 42
U.S.C. ss. 300 et seq.; as any of the foregoing may be amended form time to
time; and any other federal state and local laws or regulations, codes,
statutes, orders, decrees, guidance documents, judgments or injunctions, now or
hereafter issued, promulgated, approved or entered thereunder, relating to
pollution, contamination or protection of the environment, including, without
limitation, laws relating to emissions, discharges, releases or threatened
releases of pollutants, contaminants, chemicals or industrial, toxic or
hazardous substances or wastes into the environment (including, without
limitation, ambient air, surface water, ground water, land surface or subsurface
strata, buildings or facilities) or otherwise relating to the manufacture,
processing, distribution, use, treatment, storage, disposal, transport or
handling of pollutants, contaminants, chemicals or industrial, toxic or
hazardous substances or wastes.
"Environmental Matter" means any matter arising out of, relating to, or
resulting from pollution, contamination or protection of the environment
(including natural resources), and any matters relating to emission, discharge,
release or threatened release, of Hazardous Substances into the air (indoor and
outdoor), surface water, groundwater, soil, land surface or subsurface,
buildings or facilities or otherwise arising out of, relating to, or resulting
from the manufacture, processing distribution, use, treatment, storage,
disposal, transport, handling, release or threatened release of Hazardous
Substances.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended from time to time, together with all rules and regulations promulgated
with respect thereto, including without limitation, all such rules and
regulations promulgated by the Department of Labor, the Pension Benefit Guaranty
Corporation and the Internal Revenue Service.
"ERISA Plan" means any pension benefit plan subject to Title IV of ERISA
maintained by Borrower or any Affiliate thereof to which Borrower is required to
contribute or with respect to which Borrower has any liability.
"Eurodollar Business Day" is any Domestic Business Day on which commercial
banks are open for international business (including dealings in dollar
deposits) in London, England.
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"Event of Default" has the meaning given it in section 7.1.
"Federal Funds Rate" means for any period, a fluctuating interest rate per
annum equal for each day during such period to the overnight "Federal Funds"
rate reported in the Wall Street Journal on such day (or the most recent day so
reported) or if not published, such rate (or its equivalent) as reported in an
alternate publication selected by Lender.
"FIFRA" has the meaning given to it in Section 4.1(k).
"Funded Debt" means Debt for borrowed money.
"Funding Losses" shall have the meaning ascribed to such term in Section
2.4(a) hereof.
"GAAP" means those generally accepted accounting principles and practices
which are recognized as such by the Financial Accounting Standards Board (or any
generally recognized successor) and which, in the case of Borrower and its
Consolidated Subsidiaries, (i) are applied for all periods after the date hereof
in a manner consistent with the manner in which such principles and practices
were applied to the most recent audited financial statements, and (ii) are
consistently applied for all periods after the date hereof so as to properly
reflect the financial condition, and the results of operations and changes in
financial position, of Borrower and its Consolidated Subsidiaries. If any change
in any accounting principle or practice is required by the Financial Accounting
Standards Board (or any such successor) in order for such principle or practice
to continue as a generally accepted accounting principle or practice, all
reports and financial statements required hereunder with respect to Borrower or
with respect to Borrower and its Consolidated Subsidiaries may be prepared in
accordance with such change.
"Governmental Authority" means the United States, any State in which an
Individual Property is located and any political subdivision of any of the
foregoing, and any agency, department, commission, board, court, bureau or
instrumentality of any of them.
"Grace Period" has the meaning given it in Section 7.2.
"Hazardous Substances" means Asbestos, ACM, PCBs, urea-formaldehyde and
unreaformaldehyde foam insulation, nuclear fuel or waste, petroleum products and
any hazardous waste, toxic substance, related components, related constituents,
pollutant or contaminant, including without limitation, any substance defined or
treated as a "hazardous substance", "extremely hazardous substance" or "toxic
substance" (or comparable term) in any applicable Environmental Law and any
other material, which may give rise to Environmental Costs.
"Individual Property" means an individual tract included in the Property,
each such individual tract being identified by a separate Store or Distribution
Center number on Exhibit C hereto.
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"Interest Accrual Period" means (i) initially, the period commencing on the
Effective Date and ending one month thereafter, and (ii) thereafter, each period
commencing on the last day of the next preceding Interest Accrual Period and
ending one month thereafter; provided, that:
(a) any Interest Accrual Period which would otherwise end on a day
which is not a Business Day shall be extended to the next succeeding
Business Day unless such Business Day falls in another calendar month, in
which case such Interest Accrual Period shall end on the next preceding
Business Day;
(b) any Interest Accrual Period which begins on the last Business Day
of a calendar month (or on a day for which there is no numerically
corresponding day in the calendar month at the end of such Interest Accrual
Period) shall, subject to clause (c) below, end on the last Business Day of
a calendar month;
(c) if any Interest Accrual Period would otherwise include a date on
which a scheduled payment of principal of any of the Loans as provided in
Section 2.5 is required to be made under this Agreement but does not end on
such date, then, subject to Section 2.5, (i) the Interest Accrual Period
for the principal amount (if any) of the Loan required to be repaid on such
date shall end on such date and (ii) the remainder (if any) shall have an
Interest Accrual Period determined in accordance with the other provisions
of this definition; and
(d) any Interest Accrual Period that would otherwise extend beyond the
Maturity Date shall end on the Maturity Date.
"Interest Determination Date" means the date that is the first day of each
Interest Accrual Period.
"Lender" means UBS Mortgage Finance, Inc., its successors and assigns.
"LIBOR" means the rate of interest per annum determined as follows:
(i) On each Interest Determination Date, LIBOR will be determined on
the basis of the offered rate for deposits of not less than U.S. $1,000,000
for a period of one month, commencing on such Interest Determination Date,
as the opening quote on Bloomberg under the ticker "US0001M" on the
Marquet Quote ("Q") Page (or such other page as may replace the Bloomberg
Page on that service for the purposes of displaying the London interbank
offered rates of major banks). If no such opening offered rate appears,
LIBOR with respect to the relevant Interest Accrual Period will be
determined as described in (ii) below.
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(ii) With respect to an Interest Determination Date on which no such
opening offered rate appears on Bloomberg as described in (i) above, LIBOR
shall be determined as the opening offered rate appearing on Telerate Page
3750 on such date.
(iii) If, on any Interest Determination Date, Lender is required but
unable to determine LIBOR in the manner provided in paragraphs (i) and (ii)
above, LIBOR for the next Interest Accrual Period shall be LIBOR as
determined on the previous Interest Determination Date.
"LIBOR Interest Rate" shall have the meaning ascribed to such term in
Section 2.3 hereof.
"Lien" means, with respect to any property or assets, any right or interest
therein of a creditor to secure Debt owed to it or any other arrangement with
such creditor which provides for the payment of such Debt out of such property
or assets or which allows such creditor to have such Debt satisfied out of such
property or assets prior to the general creditors of any owner thereof,
including without limitation any lien, mortgage, security interest, pledge,
deposit, production payment, rights of a vendor under any title retention or
conditional sale agreement or lease substantially equivalent thereto, or any
other charge or encumbrance for security purposes, whether arising by law or
agreement or otherwise, but excluding any right of offset which arises without
agreement in the ordinary course of business.
"Loan" has the meaning given it in the first paragraph of the preamble.
"Loan Documents" means this Agreement, the Note, the Security Documents,
and all other agreements, certificates, affidavits or other documents executed
by Borrower or any officer of Borrower and delivered pursuant to Section 3.1.
"Loan Interest" has the meaning given to it in Section 4.2.
"Loan Pool" has the meaning given to it in Section 4.2.
"Materially Adverse Effect" means (i) with respect to an Individual
Property, any matter which would materially and adversely affect the value of
such Individual Property, (ii) with respect to Borrower, any materially adverse
change in the business, operations, condition (financial or otherwise), assets
or prospects of Borrower, or (iii) any fact or circumstance as to which singly
or in the aggregate, based upon which, Borrower has reason to believe there is a
reasonable possibility of the occurrence of (a) a materially adverse change
described in clause (i) or (ii), or (b) the inability of Borrower to perform its
material obligations hereunder or under any other Loan Document.
"Maturity Date" means the date seven years after the Effective Date.
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"Mortgage" means collectively, all of the mortgages and deeds of trust
included in the Security Documents and executed by Borrower.
"Mortgaged Property" has the meaning given it in the Mortgage.
"Net Cash Proceeds" shall mean with respect to any sale, transfer or other
disposition of property or other assets: (a) the cash proceeds received by the
Borrower (including, without limitation, all cash proceeds received by way of
(i) deferred payment of principal pursuant to a note or installment receivable
or otherwise, but only as and when received and (ii) receivables and other
assets retained by the Borrower as part of the sales consideration), minus (b)
reasonable and customary brokerage commissions and other reasonable and
customary fees and expenses actually paid (including reasonable and customary
fees and expenses of counsel) related to such sale, transfer or other
disposition.
"Note" has the meaning given it in Section 2.2.
"Payment Date" means the last day of any Interest Accrual Period.
"PCBs" means polychlorinated biphenyls.
"Person" means an individual, corporation, partnership, association, joint
stock company, trust or trustee thereof, estate or executor thereof,
unincorporated organization or joint venture, court or governmental unit or any
agency or subdivision thereof, or any other legally recognizable entity.
"Permitted Encumbrances" has the meaning given it in subsection 4.1(g).
"Permitted Second Lien" has the meaning given it in Section 2.10.
"Plan of Reorganization" shall mean that certain First Amended Plan of
Reorganization, filed by the Debtor in the Case on September 5, 1997, as amended
on October 9, 1997, as the same may be amended, supplemented or otherwise
modified from time to time in accordance with the terms thereof as in effect on
the date hereof.
"Prepayment Premium" has the meaning given it in Section 2.6.
"Prime Rate" means for any period, an interest rate per annum equal for
each day during such period to the "Prime Rate" reported in The Wall Street
Journal on such day (or the most recent day so reported).
"Prior Notes" has the meaning given it in the first paragraph of the
preamble.
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"Prohibited Transaction" is a prohibited transaction as described under
Section 406 of ERISA or Section 4975 of the Internal Revenue Code which is not
the subject of a statutory exemption under Section 408(b) of ERISA or an
administrative exemption granted pursuant to Section 408(a) of ERISA.
"Property" has the meaning given it in the Mortgage.
"RCRA" has the meaning given it in subsection 4.1(k).
"Release Date" has the meaning given it in Section 2.7.
"Release Fee" has the meaning given it in Section 2.7.
"Release Notice" has the meaning given it in Section 2.7.
"Secured Indebtedness" means collectively any principal and accrued
interest which is outstanding under, and all other amounts which may be
otherwise payable under the Note and the other Loan Documents and described in
the Mortgage as being secured thereby.
"Securitization" has the meaning given to it in Section 4.2.
"Security Documents" means the instruments listed in the Security Schedule
attached as Schedule 2 hereto and all other security agreements, deeds of trust,
mortgages, chattel mortgages, pledges, guaranties, financing statements,
continuation statements, extension agreements and other agreements or
instruments now, heretofore, or hereafter delivered by Borrower to Lender in
connection with this Agreement or any transaction contemplated hereby to secure
or guarantee the payment of any part of the Secured Indebtedness or the
performance of Borrower's other duties and obligations under the Loan Documents.
"Store" means an Individual Property designated as a store on Exhibit C
hereto.
"Subsidiary" means, with respect to any Person, any corporation,
association, partnership, joint venture, or other business or corporate entity,
enterprise or organization which is directly or indirectly (through one or more
intermediaries) controlled by or owned fifty percent (50%) or more by such
Person.
"Substitution Date" has the meaning given it in Section 2.7.
"Substitution Notice" has the meaning given it in Section 2.7.
"Substitution Property" has the meaning given it in Section 2.7.
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"Termination Event" means with respect to Borrower or any Affiliate of
Borrower (a) the occurrence with respect to any ERISA Plan of (i) a reportable
event described in Sections 4043(b)(5) or (6) of ERISA or (ii) any other
reportable event described in Section 4043(b) of ERISA other than a reportable
event not subject to the provision for 30-day notice to the Pension Benefit
Guaranty Corporation pursuant to a waiver by such corporation under Section
4043(a) of ERISA, or (b) the withdrawal of Borrower or of any Affiliate of
Borrower from an ERISA Plan during a plan year in which it was a "substantial
employer" as defined in Section 4001(a)(2) of ERISA, or (c) the filing of a
notice of intent to terminate any ERISA Plan or the treatment of any ERISA Plan
amendment as a termination under Section 4041 of ERISA, or (d) the institution
of proceedings to terminate any ERISA Plan by the Pension Benefit Guaranty
Corporation under Section 4042 of ERISA, or (e) any other event or condition
which might constitute grounds under Section 4042 of ERISA for the termination
of, or the appointment of a trustee to administer, any ERISA Plan.
"Trustee" means any trustee named under a Security Document.
"U.S. Person" is any person that is (i) a citizen or resident of the United
States, (ii) a corporation, partnership or other entity created or organized
under the laws of the United States or any State thereof or (iii) any estate or
trust that is subject to U.S. federal income taxation regardless of the source
of its income.
Section 1.2 Exhibits and Schedules. All Exhibits and Schedules attached to
this Agreement are a part hereof for all purposes.
Section 1.3 Amendment of Defined Instruments. Unless the context otherwise
requires or unless otherwise provided herein the terms defined in this Agreement
which refer to a particular agreement, instrument or document also refer to and
include all renewals, extensions, modifications, amendments, and restatements of
such agreement, instrument or document, provided that nothing contained in this
section shall be construed to authorize any such renewal, extension,
modification, amendment or restatement.
Section 1.4 References and Titles. All references in this Agreement to
Exhibits, Schedules, articles, sections, subsections and other subdivisions
refer to the Exhibits, Schedules, articles, sections, subsections and other
subdivisions of this Agreement unless expressly provided otherwise. Titles
appearing at the beginning of any subdivisions are for convenience only and do
not constitute any part of such subdivisions and shall be disregarded in
construing the language contained in such subdivisions. The words "this
Agreement", "this instrument", "herein", "hereof", "hereby", "hereunder" and
words of similar import refer to this Agreement as a whole and not to any
particular subdivision unless expressly so limited. The phrases "this section"
and "this subsection" and similar phrases refer only to the sections or
subsections hereof in which such phrases occur. Pronouns in masculine, feminine
and neuter genders shall be construed to include any other gender, and words in
the singular form shall be construed to include the plural and vice versa,
unless the context otherwise requires.
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Section 1.5 Calculations and Determinations. Unless otherwise expressly
provided herein or unless Lender otherwise consents, all financial statements
and reports furnished to Lender hereunder shall be prepared and all financial
computations and determinations pursuant hereto shall be made in accordance with
GAAP.
ARTICLE II
The Loan
Section 2.1 Acknowledgment of Existing Obligations. It is hereby expressly
understood and agreed by the parties hereto that the Note amends, restates,
supplements, supersedes and replaces the Prior Notes in their entirety and that
the indebtedness outstanding under and evidenced by the Prior Notes as of the
date hereof has not been repaid, satisfied or discharged, but for all purposes
has been replaced, substituted and restructured as provided herein and
constitutes the indebtedness outstanding under the Note.
Section 2.2 Exchange of Notes. The Lender agrees on the terms and
conditions set forth in this Agreement to restructure the Loan to Borrower as of
the Effective Date. Borrower acknowledges that the current unpaid principal
amount of the Prior Notes is $97,359,451.26. The Loan, as restructured, shall be
evidenced by one or more promissory notes (collectively, the "Note")
substantially in the form of Exhibit A. Upon the Effective Date, Borrower shall
deliver the duly executed Note to Lender and Lender shall ▇▇▇▇ each of the Prior
Notes held by it to indicate that the Prior Note has been replaced and
superseded by the Note. The Note shall be delivered in replacement for, but not
in payment of, such superseded Prior Notes.
Section 2.3 Interest. (a) Prior to the Effective Date, interest on the
Prior Notes shall accrue and be added to the principal amount of the Loan. Such
interest shall be calculated at the rates of interest stated in the Prior Notes
without regard to the late payment rate and any other penalties provided for
therein and in the Prior Loan Agreement. If the Effective Date shall not have
occurred prior to January 1, 1998, then Borrower shall commence making payments
of interest at the rates stated in the Prior Notes on the sum of the principal
amount of the Prior Notes and all accrued interest thereon through December 31,
1997, beginning on the first scheduled payment date thereafter.
(b) The principal amount outstanding hereunder shall bear interest at
a rate per annum (the "LIBOR Interest Rate") equal to four percent (4%) in
excess of LIBOR for the relevant Interest Accrual Period.
(c) On and after the Effective Date, prior to the Maturity Date (or
the date the unpaid principal balance otherwise becomes due, whether by
acceleration or otherwise), interest accruing during each Interest Accrual
Period shall be payable monthly in arrears on each Payment
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Date. The entire unpaid principal balance of the Secured Indebtedness together
with all accrued and unpaid interest, if not sooner paid, shall be payable in
full on the Maturity Date.
(d) All interest payable shall be computed on the basis of a 360-day
year for the actual number of days elapsed. In computing the number of days
during which interest accrues, the day on which funds are initially advanced
shall be included regardless of the time of day such advance is made, and the
day on which funds are repaid shall, subject to Section 2.8 below, be excluded.
Section 2.4 Funding Losses; Change in Law, Etc.
(a) Borrower hereby agrees to pay to Lender any amount necessary to
compensate Lender for any losses or costs (including, without limitation,
the costs of breaking any "LIBOR" contract, if applicable, or funding
losses determined on the basis of Lender's reinvestment rate and the
interest rate hereon) (Collectively, "Funding Losses") sustained by Lender:
(i) if this Note, or any portion hereof, is repaid for any reason
whatsoever on any date other than a Payment Date (including, without
limitation, from condemnation or insurance proceeds), (ii) upon the
conversion of the interest rate on the Loan to the Prime Rate in accordance
with subsection (b) below, (iii) as a consequence of (x) any increased
costs that Lender may sustain in maintaining the borrowing evidenced hereby
or (y) the reduction of any amounts received or receivable from Borrower,
in either case, due to the introduction of, or any change in, law or
applicable regulation or treaty (including the administration or
interpretation thereof), whether or not having the force of law, or due to
the compliance by Lender, as the case may be, with any directive, whether
or not having the force of law, or request from any central bank or
domestic or foreign governmental authority, agency or instrumentality
having jurisdiction and/or (iv) any other set of circumstances not
attributable to Lender's acts. Payment of Funding Losses hereunder shall be
in addition to any obligation to pay a Prepayment Premium in circumstances
where such Prepayment Premium would be due and owing.
b) If Lender determines (which determination shall be conclusive and
binding upon Borrower, absent manifest error( (i) that Dollar deposits in
an amount approximately equal to the principal balance outstanding
hereunder are not generally available at such time in the London Interbank
Market for deposits in Eurodollars, (ii) that the rate at which such
deposits are being offered will not adequately and fairly reflect the cost
to Lender of maintaining a LIBOR Interest Rate on the Loan or of funding
the same in such market for such Interest Accrual period due to
circumstances affecting the London Interbank Market generally, (iii) that
reasonable means do not exist for ascertaining LIBOR, or (iv) that a LIBOR
Interest Rate would be in excess of the maximum interest rate which
Borrower may by law pay, then, in any such event, Lender shall so notify
Borrower and as of the date of such notification with respect to an event
described in clause (ii) or (iv) above, or as of the expiration of the
applicable Interest Accrual Period with respect to an event
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described in clause (i) or (iii) above, interest shall accrue at the
Prime Rate until such time as the situations described above are no longer
in effect or as otherwise provided in Section 7.1 hereof; provided,
however, if the situation described in clause (ii) above occurs, (x)
Borrower shall have the option, to be exercised by written notice to
Lender, to pay Lender (in the manner reasonably required by Lender) for
such increased cost of maintaining a LIBOR Interest Rate and (y) if the
same only affects a portion of the Loan, then only such portion shall have
interest accrue at the Prime Rate (provided the remaining portion is at
least $1,000,000) and interest shall continue to accrue on the remaining
portion at the LIBOR Interest Rate.
(c) If the introduction of, or any change in, any law, regulation or
treaty, or in the interpretation thereof by any governmental authority
charged with the administration or interpretation thereof, shall make it
unlawful for Lender to maintain the LIBOR Interest Rate with respect to the
Loan, or any portion thereof, or to fund the Loan, or any portion thereof,
in Eurodollars in the London Interbank Market, then the Loan (or such
portion of the Loan) shall thereafter bear interest at the Prime Rate
(unless the Default Rate shall be applicable) and Borrower shall pay to
Lender the amount of Funding Losses (if any) incurred in connection with
such conversion. The accrual of interest at the Prime Rate shall continue
until such Payment Date, if any, as the situation described in this
subsection (c) is no longer in effect.
(d) If Lender shall have determined that the applicability of any law,
rule, regulation or guideline adopted pursuant to or arising out of the
July 1988 report of the Basle Committee on Banking Regulations and
Supervisory Practices entitled "International Convergence of Capital
Measurement and Capital Standards", or the adoption of any other law, rule,
regulation or guideline (including but not limited to any United States
law, rule, regulation or guideline) regarding capital adequacy, or any
change becoming effective in any of the foregoing or in the enforcement or
interpretation or administration of any of the foregoing by any court or
any domestic or foreign governmental authority, central bank or comparable
agency charged with the enforcement or interpretation or administration
thereof, or compliance by Lender or its holding company, as the case may
be, with any request or directive regarding capital adequacy (whether or
not having the force of law) of any such authority, central bank or
comparable agency, has or would have the effect of reducing the rate of
return on the capital of Lender or its holding company, as the case may be,
to a level below that which Lender or its holding company, as the case may
be, could have achieved but for such applicability, adoption, change or
compliance (taking into consideration Lender's or its holding company's, as
the case may be, policies with respect to capital adequacy) (the foregoing
being hereinafter referred to as "Capital Adequacy Events"), then, upon
demand by Lender, Borrower shall, pay to Lender, from time to time, such
additional amount or amounts as will compensate Lender for any such
reduction suffered.
14
(e) Any amount payable by Borrower under subsection (a) or subsection
(d) of this Section 2.4 shall be paid to Lender within five (5) days of
receipt by Borrower of a certificate signed by an officer of Lender setting
forth the amount due and the basis for the determination of such amount,
which statement shall be conclusive and binding upon Borrower, absent
manifest error. Failure on the part of Lender to demand payment from
Borrower for any such amount attributable to any particular period shall
not constitute a waiver of Lender's right to demand payment of such amount
for any subsequent or prior period. Lender shall use reasonable efforts to
deliver to Borrower prompt notice of any event described in subsection (a)
or (d) above and of the amount to be paid under this Section 2.4 as a
result thereof; provided, however, any failure by Lender to so notify
Borrower shall not affect Borrower's obligation to make the payments to be
made under this Section 2.4 as a result thereof. All amounts which may
become due and payable by Borrower in accordance with the provisions of
this Section 2.4 shall constitute additional interest hereunder and shall
be secured by the Mortgage and the other Loan Documents.
(f) If Lender requests compensation for any losses or costs to be
reimbursed pursuant to any one or more of the provisions of subsections
(a)(iii) or (iv) or subsection(d) of this Section 2.4, of if any event
occurs as described in subsections (b) or (c) above which would cause the
Note no longer to bear interest at the LIBOR Interest Rate then, upon
request of Borrower, Lender shall use reasonable efforts in a manner
consistent with such institution's practice in connection with loans like
the Loan to designate a different lending office for funding or booking the
Secured Indebtedness or assign its rights and obligations under the Note to
another of its offices, branches or affiliates if such designation or
assignment in Lender's sole but good faith judgment (i) would eliminate,
mitigate or reduce amounts payable by Borrower in connection with Funding
Losses or Capital Adequacy Events or, with respect to an event described in
subsection (b) or (c) above would allow the Note to continue to bear
interest at the LIBOR Interest Rate without additional cost to Lender and
(ii) would not be otherwise prejudicial to Lender; Borrower hereby agreeing
to pay all reasonably incurred costs and expenses incurred by Lender in
connection with any such designation or assignment.
Section 2.5 Mandatory Payments.
(a) Borrower shall make annual repayments of principal on the Loan
(without premium) in installments of $4,000,000 on each anniversary of the
Effective Date, beginning in 1998. Any prepayments of principal made by the
Borrower pursuant to Section 2.7 and subsections 5.1(g) and (h) shall be
credited against Borrower's obligation under this Section 2.5, with the
amount of any such prepayment to be applied to the scheduled mandatory
repayments in the order of their maturity without Prepayment Premium.
Borrower shall not be entitled to release one or more Individual Properties
in connection with any payment made pursuant to this Section 2.5.
15
(b) Notwithstanding any other provisions of this Agreement, the
outstanding unpaid principal amount of the Note, together with all accrued
interest thereon, shall become due and payable on the Maturity Date.
Section 2.6 Optional Prepayment.
(a) Borrower shall have no right to prepay all or any part of the
principal of or interest on the Loan except as expressly provided in this
Agreement. Subject to the terms and conditions of the Loan Documents and
payment of the prepayment premium set forth below (the "Prepayment
Premium") and all accrued interest thereon and other sums due under the
Loan, if any, Borrower shall have the right to prepay all or any part of
the outstanding principal balance of the Loan for the periods beginning on
the second anniversary of the Effective Date as shown below. The Prepayment
Premium for each such period shall be as follows:
Prepayment Premium (as a
percentage of principal
Year being prepaid)
Beginning the 2nd anniversary of the
Effective Date 3%
Beginning the 3rd anniversary of the
Effective Date 2%
Beginning the 4th anniversary of the
Effective Date
Beginning the 5th anniversary of the
Effective Date and thereafter 0%
Prepayments may be made on a Payment Date upon the giving of not less than
twenty (20) days prior written notice to Lender. Lender shall not be obligated
to accept any prepayment unless accompanied by the applicable Prepayment
Premium, if any. Except as expressly set forth therein, no Prepayment Premium
shall be required with respect to prepayments of the Loan made pursuant to any
other provisions of this Agreement provided however that Lender shall be
entitled to receive the applicable Prepayment Premium (if any) set forth above
upon acceleration of the Loan upon an Event of Default pursuant to Section 7.2.
Borrower shall not be entitled to release one or more Individual Properties in
connection with any optional partial prepayment of the Loan pursuant to this
section.
(b) At any time after the date hereof until the Maturity Date, prior
to seeking any financing and any commitment for financing from a third
party relating to the refinancing of the Loan, Borrower shall first notify
Lender in writing of its intention to
16
obtain such financing, and offer to Lender the opportunity to consider
whether or not Lender will provide the financing. As and when Borrower
determines that it will seek to obtain financing, Borrower shall promptly
send to Lender such notice thereof. If Lender is willing to consider
providing the financing, Lender shall, prior to the expiration of the
period ending fifteen (15) days after Lender's receipt of the notice,
deliver to Borrower an initial term sheet describing the proposed basic
business terms and conditions regarding the financing, it being understood
that such initial term sheet shall not be binding upon Lender and shall in
no event be deemed a commitment by Lender to lend. After the receipt by
Borrower of the initial term sheet, Borrower and Lender shall have fifteen
(15) days within which to agree in writing on the terms and conditions of a
final term sheet, describing the basic terms and conditions upon which
Lender is prepared to seek internal approvals to extend the financing, it
being understood that such final term sheet shall not be binding upon
Lender and shall in no event be deemed a commitment by Lender to lend.
Borrower agrees to cooperate with Lender and negotiate in good faith in an
effort to arrive at a final term sheet, without, however, being obligated
to reach such an agreement.
Section 2.7 Partial Releases.
(a) Partial Releases of Individual Properties. In connection with its
proposed sale, upon Borrower's written request, Lender shall release that
portion of an Individual Property not required for the operation of the
Store or other facility located thereon from the Lien of the Mortgage,
provided each and every one of the following terms and conditions of this
subsection 2.7(a) is satisfied, in Lender's sole opinion:
(i) Borrower shall give notice (hereinafter called a "Release
Notice") to Lender of its intent to have a portion of an Individual
Property released from the Lien of the Mortgage at least thirty (30)
days prior to the date set forth in the Release Notice for the
granting of such release (hereinafter called the "Release Date") and
describing the terms of the proposed sale.
(ii) At the time of the Release Notice and on the Release Date,
there shall not have occurred and be continuing under any of the Loan
Documents either (A) a Default that is capable of being cured by the
payment of money or (B) an Event of Default.
(iii) Borrower shall furnish Lender with evidence satisfactory to
Lender that the Mortgage remains a valid first Lien on the remaining
Property covered by the Mortgage or deed of trust that included such
released Individual Property and not so released, including without
limitation an endorsement to existing title insurance policies or
equivalent assurance in form, of substance and within policy limits
satisfactory to Lender. All costs of the foregoing shall be paid by
Borrower.
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(iv) In order to obtain the partial release, Borrower shall pay
the following amounts:
(A) an amount equal to the Net Cash Proceeds arising from
the sale of the Property being released to be applied
to the outstanding principal amount of the Loan;
(B) other amounts, if any, advanced by Lender under the
Loan Documents and relating to the Individual Property
to be released; and
(C) all costs incurred by Lender relating to the proposed
partial release, including but not limited to
reasonable legal fees and expenses of outside counsel,
appraisal costs, survey costs, and title costs.
(b) Partial Releases upon Closure of Store. When a Store is closed,
Borrower must give Lender written notice of closure at least thirty (30)
days prior to closure, other than the Stores listed on Schedule 2.7(b),
which stores were closed prior to the Effective Date. At any time after the
date of such Store closure, in connection with a proposed sale, Borrower
may obtain a partial release of the lien of the Mortgage with respect to
the Individual Property on which such closed Store is located on the
following terms and conditions:
(i) Borrower shall give the notice described in Section
2.7(a)(i).
(ii) At the time of the Release Notice and on the Release Date,
there shall not have occurred and be continuing under any of
the Loan Documents either (A) a Default that is capable of
being cured by the payment of money or (B) an Event of
Default.
(iii) Borrower shall pay to Lender the following amounts:
(A) an amount equal to the Net Cash Proceeds arising from
the sale of the Property being released to be applied
to the outstanding principal amount of the Loan;
(B) other amounts, if any, advanced by Lender under the
Loan Documents and relating to the Individual Property
to be released ; and
18
(C) all costs incurred by Lender relating to the proposed
partial release, including but not limited to
reasonable legal fees and expenses of outside counsel.
(c) Partial Release Upon Substitution of an Individual Property. Upon
Borrower's written request, Lender shall permit the release of the Lien on,
and substitution for, certain Individual Properties provided the following
terms and conditions are satisfied, in Lender's sole opinion:
(i) Borrower shall give notice (hereinafter called the
"Substitution Notice") to Lender of its intent to release and
substitute Individual Properties at least sixty (60) days prior to the
date set forth in the Substitution Notice for such release and
substitution (hereinafter called the "Substitution Date"). The
Substitution Notice shall describe the Individual Property to be
released and the property to be substituted (the "Substitution
Property").
(ii) At the time of the Substitution Notice and on the
Substitution Date, there shall not have occurred and be continuing
under any of the Loan Documents either (A) a Default that is capable
of being cured by the payment of money or (B) an Event of Default.
(iii) Each Substitution Property shall be similar by type,
remaining economic life, land value, and desirability of location and
shall have a value equal to or greater, as determined by Lender, than
the value of the Individual Property being released; provided,
however, in all events the Substitution Property must be fully
operational and operating. Notwithstanding the preceding, a
Substitution Property may only be substituted for an Individual
Property on a one-for-one basis, and the Substitution Property must be
acceptable to Lender in all respects, including title, zoning,
appraisal, engineering and environmental respects.
(iv) Borrower shall pay all costs incurred by Lender relating to
the proposed partial release and substitution, even if the proposed
transaction is not completed, including but not limited to reasonable
legal fees and expenses of outside counsel, title costs and, with
respect to the Substitution Property, appraisal, engineering,
environmental, and survey costs.
(v) Borrower shall furnish Lender with evidence satisfactory to
Lender that (a) the Lender has a valid first Lien on the Substitution
Property. Lender recognizes that if an Individual Property is
substituted, the Substitution Property will also be encumbered by the
Permitted Second Lien, but only to the extent permitted by Section
2.10 and (b) the Mortgage remains a valid first lien on any remaining
Property covered by the mortgage or deed of trust that included the
released Individual Property and not so released, including without
limitation an
19
endorsement to existing title policies or equivalent assurance in
form, substance and within policy limits reasonably satisfactory to
Lender.
(vi) only properties to which the Borrower holds fee simple title
may be Substitution Properties. No Individual Properties in which
Borrower holds only a leasehold estate may be used as a substitute
either for another ground-leased property or for a fee-owned property.
(vii) No more than ten (10) Individual Properties may be released
during the term of the Loan pursuant to this subsection 2.7(c).
(d) Sales at Arm's Length. Lender shall not be obligated to release
any Individual Property pursuant to subsection 2.7(a) or 2.7(b) above
unless the sale (i) has been negotiated on an arm's length basis, (ii) is
to a bona fide third party purchaser, (iii) is for cash consideration only,
and (iv) is at a price in conformity with market values for similar
properties in the area in which the Individual Property is located.
Section 2.8 Payments to Lender. Borrower will make each payment which it
owes under the Loan Documents not later than 12:00 p.m., Eastern Standard Time
or Eastern Daylight Time, whichever is applicable, on the date such payment
becomes due and payable, in lawful money of the United States of America and by
wire transfer of immediately available funds to such bank or place, or in such
other manner, as Lender may from time to time designate. Payments shall be made
without any setoff, deduction or counterclaim whatsoever. Until otherwise
designated in writing by Lender, payments shall be made by wire transfer to [UBS
Mortgage Finance, ▇/▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ #021 000021
Account #▇▇▇-▇-▇▇▇▇▇]. Any payment received by Lender after such time will be
deemed to have been made on the next following Business Day. Should any such
payment become due and payable on a day other than a Business Day, the maturity
of such payment shall be extended to the next succeeding Business Day. Each
payment under a Loan Document shall be due and payable at the place provided
therein and, if no specific place of payment is provided, shall be due and
payable at the place of payment of the Note. If on any date on which payments of
principal and interest are due or past due on the Note, Borrower pays less than
the full amount due thereunder, Lender may, in addition to any other rights or
remedies provided herein, apply such money as it elects to the Secured
Indebtedness then due and payable. In the event any payment of principal or
interest under this Agreement or the other Loan Documents is made directly by
the holder of the Permitted Second Lien on behalf of Borrower (pursuant to
Section 7.2 hereof) and not by way of an advance by the holder of the Permitted
Second Lien under the Credit Agreement, evidence detailing such payment shall be
simultaneously delivered by the holder of the Permitted Second Lien to Lender
with each payment.
Section 2.9 Limitation on Liability. Lender shall not seek or enforce any
money judgment or deficiency judgment, or otherwise assert personal liability or
responsibility, against Borrower with respect to any and all obligations secured
by the Mortgage or other obligations
20
arising out of the Loan Documents in excess of the amount realized upon
foreclosure against (or sale, pursuant to power of sale, of) all or, at Lender's
option, a portion of the security therefor, it being agreed that, except as
hereinafter provided, the sole remedy of Lender shall be to proceed against the
security for the Loan under the Loan Documents; provided, however, that nothing
contained herein or in any other Loan Document shall (a) limit Lender's rights
and remedies (other than its right to seek a money judgment or deficiency
judgment which is limited as provided above) against the Borrower hereunder or
under any other Loan Document, either at law or in equity, or (b) relieve
Borrower from personal liability and responsibility:
(a) for damages suffered by Lender by reason of a violation of
subsections 4.1(k) and (q) and 5.1(p) and (aa) hereof and for any amounts
required to be paid by Borrower under Sections 5.2 and 7.4 hereof;
(b) for waste resulting in a material diminution in value to any of
the Property committed or permitted by Borrower with respect to the
Property, including without limitation any waste resulting from Borrower's
failure to restore the Property after removal of trade fixtures as required
by this Agreement, to the extent and only to the extent that the Property
affected thereby has suffered a diminution in value as a result thereof;
(c) for insurance proceeds and condemnation awards in respect of the
Property received by Borrower and not turned over to Lender or used by
Borrower with Lender's consent for restoration or repair of the Property as
provided in the Mortgage;
(d) for unpaid real estate taxes and assessments or other governmental
or other impositions (including without limitation utility charges) that
create a Lien on any of the Property that would not be extinguished by a
foreclosure of the Mortgage, prorated to date of foreclosure, with respect
to the Property;
(e) regarding leases affecting the Property, (a) for any sums expended
by Lender in fulfilling the obligations of Borrower for which Lender is
personally liable, including without limitation the return of security
deposits to tenants if not delivered to Lender upon foreclosure or sale
pursuant to power of sale, or (b) for any rents or other income from leases
either (i) after the occurrence of an Event of Default, not applied to the
fixed and operating expenses of the Property, including without limitation,
payments on the Loan or (ii) under future leases that do not comply with
the requirement of the Mortgage that such leases be designated as superior
or subordinate to the Mortgage at Lender's option;
(f) for the Net Cash Proceeds attributable to any Individual
Properties sold in violation of the provisions contained in subsection
7.1(d) hereof;
21
(g) for the Allocated Loan Amount attributable to any Individual
Property covered by the Lien of the Mortgage with respect to which such
Lien ceases to be enforceable by reason of avoidance under bankruptcy or
other fraudulent transfer laws;
(h) for any damages incurred by Lender by reason of any fraud or
material misrepresentation with intent to deceive by Borrower in connection
with the Property, the Loan Documents, the application for the Loan or any
other aspect of the Loan;
(i) for costs and expenses incurred by Lender with respect to the
Property at any time after six (6) months after the date on which the Loan
becomes due and payable in full, by acceleration or otherwise, or after any
event described in subsection 7.1(f); and
(j) for interest accruing on the Loan from the date six (6) months
after the date on which the Loan becomes due and payable in full, by
acceleration or otherwise, or after any event described in subsection
7.1(f) until title to all of the Property passes from the Borrower pursuant
to enforcement of the Mortgage.
Nothing contained herein shall impair Lender's rights under Applicable Laws,
including without limitation applicable bankruptcy law; nor shall anything
contained herein impair Lender's status and rights as a holder of senior
indebtedness pursuant to any instrument under which Lender would be granted
senior status or a derivative recourse claim.
Section 2.10 Permitted Second Lien. Borrower shall have the right to
encumber the Property with a second Lien (hereinafter called the "Permitted
Second Lien") which Permitted Second Lien shall be substantially in the form of
Exhibit B hereto. The Permitted Second Lien shall secure only the Bank Debt and
any refinancing thereof. The Permitted Second Lien documents shall provide,
among other things, that the Permitted Second Lien is not forecloseable until
Lender accelerates the maturity of the Note. The Permitted Second Lien documents
shall further provide that in the event Lender accelerates the maturity of the
Note, the sole remedy of the holder of the Permitted Second Lien is to cooperate
and join Lender in the simultaneous foreclosure of both Liens in accordance with
Lender's schedule for foreclosure, time being of the essence. The Permitted
Second Lien documents shall contain such additional provisions as may be
required by state and local law to accomplish the foregoing objectives. During
the term of any such Permitted Second Lien, Borrower shall provide Lender,
without cost to Lender, with annual estoppel certificates, stating the then
correct balance of Bank Debt, the current interest rate on the Bank Debt, and
the remaining amortization schedule for the Bank Debt of the then current year.
ARTICLE III
Conditions Precedent
22
Section 3.1 Documents to be Delivered. As a condition to the effectiveness
of this Agreement, Lender shall have received all of the following, at Lender's
office in New York, New York, duly executed and delivered and in form, substance
and date satisfactory to Lender:
(a) The Note.
(b) A certificate of the chief financial officer of Borrower in form
and substance satisfactory to Lender.
(c) Favorable opinion(s) of counsel to Borrower, substantially in the
form set forth in Exhibit D.
(d) Each Security Document listed in the Security Schedule, together
with appropriate UCC Financing Statements.
(e) Each additional closing item described in Schedule 3.
Section 3.2 Additional Conditions Precedent. In addition the following
conditions precedent have been satisfied:
(a) All representations and warranties made by Borrower in any Loan
Document shall be true on and as of the date made and on the Effective Date
(except where such representations expressly relate to an earlier date).
(b) Borrower shall have performed and complied with all agreements and
conditions required in the Loan Documents to be performed or complied with
by it on or prior to the date of the Loan.
(c) Borrower shall have obtained confirmation by the Bankruptcy Court
of its Plan of Reorganization.
(d) No Default under this Agreement shall exist and be continuing.
(e) Each additional condition described in Schedule 4.
ARTICLE IV
Representations and Warranties
Section 4.1 Borrower's Representations and Warranties. To induce Lender to
enter into this Agreement and to restructure the Loan, the Borrower represents
and warrants to Lender that:
23
(a) No Default. Borrower is not in Default in the performance of any
of the covenants and agreements contained herein. No event has occurred and
is continuing which constitutes a Default.
(b) Organization and Good Standing. Borrower is a corporation duly
organized, validly existing and in good standing under the laws of its
state of organization, having all corporate powers required to carry on its
business and enter into and carry out the transactions contemplated hereby.
Borrower has all requisite power and all governmental certificates of
authority, licenses, permits, qualifications, and other documentation to
own, lease and operate its properties and to carry on its business as now
conducted and as contemplated to be conducted except where failure to
obtain any such governmental certificate of authority, license, permit,
qualification or other documentation would not have a Materially Adverse
Effect. Borrower is duly qualified, in good standing, and authorized to do
business in all other jurisdictions within the United States wherein the
character of the properties owned or held by it or the nature of the
business transacted by it makes such qualification necessary.
(c) Authorization. Borrower has duly taken all corporate action
necessary to authorize the execution and delivery by it of the Loan
Documents to which it is a party and to authorize the consummation of the
transactions contemplated thereby and the performance of its obligations
thereunder.
(d) No Conflicts or Consents. The execution and delivery the Loan
Documents to which Borrower is a party, the performance by Borrower of its
obligations under such Loan Documents, and the consummation of the
transactions contemplated by the various Loan Documents, do not and will
not (i) conflict with any provision of (A) any applicable domestic or
foreign law, statute, decree, rule or regulation, except where failure to
comply therewith would not have a Materially Adverse Effect (B) the
certificate of incorporation or bylaws, of Borrower, or (C) any judgment,
license, order or permit applicable to or binding upon Borrower, (ii)
result in the acceleration of any Debt of Borrower, (iii) result in or
require the creation of any Lien upon any assets or properties of Borrower
except as expressly contemplated in the Loan Documents, or (iv) contravene,
result in a breach of or constitute a default under any mortgage, deed of
trust, lease, promissory note, loan agreement or other material contract or
material agreement entered into as of the Effective Date to which Borrower
is a party or any of its properties may currently be bound or affected.
Except as expressly contemplated in the Loan Documents, no consent,
approval, authorization or order of, and no notice to or filing with, any
court or governmental authority or third party is required in connection
with the execution, delivery or performance by Borrower of any Loan
Document or to consummate any transactions contemplated by the Loan
Documents.
(e) Enforceable Obligations. This Agreement is, and the other Loan
Documents are or, when duly executed and delivered, will be, legal and
binding
24
obligations of Borrower enforceable in accordance with their respective
terms, except as limited by bankruptcy, insolvency or similar laws of
general application relating to the enforcement of creditors' rights.
(f) Title and Authority. Borrower is the lawful owner of good and
marketable title to the Property and has good right and authority to grant,
bargain, sell, transfer, assign and mortgage the Mortgaged Property and to
grant a security interest in the Collateral. Borrower does not do business
with respect to the Property under any trade name other than as set forth
on the Disclosure Schedule attached hereto as Schedule 1.
(g) Permitted Encumbrances. The Property is free and clear from all
Liens, security interests and encumbrances except the Lien and security
interest evidenced by the Security Documents and the encumbrances set forth
in the Security Documents, including without limitation the Permitted
Second Lien, and the mechanic's or materialmen's Liens, lienable bills or
other claims constituting or that may constitute a Lien on the Property, or
any part thereof that are set forth on the Disclosure Schedule (hereinafter
called the "Permitted Encumbrances").
(h) No Financing Statement. There is no financing statement covering
all or any part of the Property or its proceeds on file in any public
office except with respect to the Permitted Second Lien or as described in
the Disclosure Schedule
(i) Location of Collateral. All tangible Collateral is located on the
Property.
(j) Compliance with Covenants and Laws. To the best of knowledge of
Borrower, the Property and the intended use thereof by Borrower comply with
all applicable restrictive covenants, zoning ordinances and building codes,
flood disaster laws, applicable health and environmental laws and
regulations and all other applicable laws, statutes, ordinances, rules,
regulations, orders, determinations and court decisions (all of the
foregoing hereinafter sometimes collectively called "Applicable Laws"),
except where failure to comply therewith would not have a Materially
Adverse Effect, which compliance is, except with respect to parking,
without reliance on adjacent or other properties not covered by the Lien of
the Mortgage. Borrower has obtained all requisite zoning, utility,
building, health and operating permits from each governmental authority or
municipality having jurisdiction over the Property except where failure to
obtain any such permit would not have a Materially Adverse Effect. Borrower
has not been notified by any Governmental Authority of or is otherwise
aware of any material violation of parking or zoning requirements that
Borrower believes cannot be corrected by providing additional surface
parking on portions of the Property suitable for parking purposes except as
previously disclosed to Lender. The existing parking provided on each
Individual Property is adequate to meet the business requirements of the
operations conducted thereon.
25
(k) Environmental. To the best of Borrower's knowledge after due
inquiry, except as set forth on Schedule 1, Borrower covenants and
represents to Lender that, (i) no Hazardous Substances are now or have ever
been located, produced, used, stored, treated, transported, incorporated,
discharged, emitted, released, deposited or disposed of in, upon, under,
over or from the Property in a manner that may give rise to any actual or
potential liability to pay response costs or other damages, losses or
expenses or otherwise violate any Environmental Laws which could reasonably
be expected to result in a Materially Adverse Effect; (ii) no Hazardous
Substances are currently located, stored, or used at the Property, except
with respect to such Hazardous Substances which are (x) customarily
located, stored or used in retail stores similar to the Property or (y)
unique and necessary to a Borrower's business located at the Property,
provided that such Hazardous Substances described in (x) or (y) are at all
times stored, located and used in compliance with all Environmental Laws;
(iii) no Hazardous Substances have been discharged, released or emitted,
upon or from the Property into the environment and no threat exists of a
discharge, release or emission of a Hazardous Substance upon or from the
Property into the environment, which discharge, release or emission, in
either case, would subject the owner of the Property to any damages,
penalties or liabilities under any applicable Environmental Laws which
could reasonably be expected to result in a Materially Adverse Effect; (iv)
the Property has not ever been used as or for a mine, a landfill, a dump or
other disposal facility or a gasoline service station; (v) no underground
storage tank is now located on or at the Property or if previously located
therein has been removed therefrom in compliance with all applicable
Environmental Laws and any clean-up of the surrounding soil in connection
therewith has been completed or is such that, in each case, it could not
reasonably result in a Materially Adverse Effect; (vi) no asbestos, ACM,
materials containing urea-formaldehyde, or transformers, capacitors,
ballasts or other equipment that contain PCBs are located on at or under
the Property which could reasonably be expected to result in a Materially
Adverse Effect; (vii) the Property has never been used by Borrower or any
Affiliate or, to the best of Borrower's knowledge, after reasonable
investigation, any other person or entity (including any prior owner of the
Property) as a permanent or temporary treatment, storage or disposal site
for any Hazardous Substance; (viii) no violation of any Environmental Law
now exists or has ever existed in, upon, under, over or from the Property,
no notice of any such violation or any alleged violation thereof has been
issued or given by any governmental entity or agency, and there is not now
nor has there ever been any investigation or report involving the Property
by any governmental entity or agency which in any way relates to Hazardous
Substances which could reasonably be expected to result in a Materially
Adverse Effect; (ix) no Person has given any notice of or asserted any
claim, cause of action, penalty, cost or demand for payment or
compensation, whether or not involving any injury or threatened injury to
human health, the environment or natural resources, resulting or allegedly
resulting from any activity or event described in clauses (i)-(viii) above
and to the knowledge of Borrower, no basis for such a claim exists which,
in each case, could be expected to result in a Materially Adverse Effect;
(x) there are not now, nor to Borrower's best knowledge have there ever
been, any actions, suits, proceedings or
26
damage settlements relating in any way to Hazardous Substances, in, upon,
under, over or from the Property which could reasonably be expected to
result in a Materially Adverse Effect; (xi) no oral or written notification
of a Release (as such term is defined in 42 U.S.C. ss. 9601(22)) of any
Hazardous Substances has been filed by or on behalf of Borrower through
authorized employees or agents and the Property are not listed in the
United States Environmental Protection Agency's List of Hazardous Waste
Sites or any other list of Hazardous Substance sites maintained by any
federal, state or local governmental agency which could reasonably be
expected to result in a Materially Adverse Effect; (xii) there are no
environmental liens on the Property, and, to the best knowledge of
Borrower, no governmental actions have been taken or are in process which
could subject the Property to such liens; and (xiii) Borrower has not
transported or arranged for the transportation of any Hazardous Substances
to any location which is listed or proposed for listing under CERCLA or on
any similar state list or which is the subject of federal, sate or local
enforcement actions or other investigations.
(l) No Suits. There are no judicial or administrative actions, suits,
judgments or any other proceedings pending or, to the best of knowledge of
Borrower, threatened against or affecting Borrower, any other person
liable, directly or indirectly, for the Secured Indebtedness, or the
Property, which do or may have a Materially Adverse Effect on Borrower or
on the Property, or involving the validity, enforceability or priority of
any of the Loan Documents except as set forth in the Disclosure Schedule.
(m) Financial Statements. The financial statements identified in the
Disclosure Schedule fairly present Borrower's Consolidated financial
position at the respective dates thereof and the Consolidated results of
Borrower's operations and the changes in Borrower's Consolidated financial
position for the respective periods thereof. Except as noted therein, the
financial statements were prepared in accordance with GAAP.
(n) Names and Places of Business. Borrower has not, during the
preceding five years, been known by or used or had any other corporate,
trade, or fictitious name, except as disclosed in the Disclosure Schedule.
Except as otherwise indicated in the Disclosure Schedule, the chief
executive office and principal place of business of the Borrower are (and
for the preceding five years have been) located at the address set out in
Section 8.3.
(o) Condition of Property. To the best of knowledge of Borrower and
except in the Disclosures Schedule (a) the Property is served by electric,
gas, storm and sanitary sewers or septic sewer systems, sanitary water
supply, telephone and other utilities required for the use thereof at or
within the boundary lines of the Property; (b) all streets, alleys and
easements necessary to serve the Property for the use represented by the
Borrower have been completed and are serviceable and such streets have been
dedicated and accepted by applicable governmental entities; (c) the
Property is in good condition and repair, and is free from damage caused by
fire or other casualty except as set forth in the Disclosure Schedule; (d)
there is no latent or patent structural or other significant defect
27
or deficiency in the Property; (e) Design and as-built conditions of the
Property are such that no drainage or surface or other water will drain
across or rest upon either the Property or land of others so as to have a
Materially Adverse Effect; (f) none of the Property is within a flood plain
except as indicated on the surveys of the Property delivered to Lender; (g)
none of the improvements on the Property create an encroachment over,
across or upon any of the Property boundary lines, rights of way or
easements, and no buildings or other improvements on adjoining land create
such an encroachment except as indicated on the surveys of the Property
delivered to Lender.
(p) Not a Foreign Person. Borrower is not a "foreign person" within
the meaning of the Internal Revenue Code of 1986, as amended (hereinafter
called the "Code"), Sections 1445 and 7701 (i.e., no Related Person is a
non-resident alien, foreign corporation, foreign partnership, foreign trust
or foreign estate as those terms are defined in the Code and regulations
promulgated thereunder).
(q) ERISA. As of the date hereof and throughout the term of the Loan,
(i) Borrower is not an "employee benefit plan" as defined in Section 3(3)
of ERISA, which is subject to Title I of ERISA, (ii) the assets of the
Borrower do not constitute "plan assets" of one or more such plans within
the meaning of 29 C.F.R. ss. 2510.3-101, (iii) Borrower is not a
"governmental plan" within the meaning of Section 3(32) of ERISA, and (iv)
Borrower is not subject to state statutes regulating investments and
fiduciary obligations with respect to governmental plans. Except as
disclosed in the Disclosure Schedule, no Termination Event has occurred
with respect to any ERISA Plan.
(r) Investment Company Act, etc. Borrower is not (i) an "investment
company" or a company "controlled" by an "investment company" within the
meaning of the Investment Company Act of 1940, as amended, or (ii) subject
to regulation under the Public Utility Holding Company Act of 1935.
Section 4.2 Placement of Loan.
(a) Borrower acknowledges that Lender or its assignee (each a
"Placement Party") may elect to place the Loan, in a pool of loans, and/or
notes secured by or dependent on the cash flow of mortgage loans, which
will constitute security for a rated securities offering (such pool is
called a "Loan Pool"; such rated securities offering, a "Securitization").
(b) At the request of Lender, Borrower will, at Lender's sole cost and
expense, use its best efforts to assist Lender to satisfy the market
standards to which Lender customarily adheres or which may be required in
the marketplace or by the rating agencies in order to enable a Placement
Party to place the Loan in a Loan Pool, including, without limitation, to
cooperate with Lender's preparation of a private placement memorandum or
registration statement and amendments and supplements thereto to privately
place or
28
publicly distribute the Note or the Loan or securities issued in connection
therewith in a manner that satisfies the requirements of the Securities Act
of 1933, as amended and applicable state law requirements, provided
Borrower shall not be required to disclose individual store sales or other
nonpublic information which would, in Borrower's judgment, adversely affect
its business prospects or competitive position. Notwithstanding the
foregoing proviso, Borrower shall disclose individual store sales to Lender
to provide to rating agencies and will provide Lender with total sales
information for the Property on an aggregate basis, for fiscal year 1996
and annually thereafter.
(c) Lender shall be permitted to share any information provided by
Borrower pursuant to this Section 4.2 in connection with the placement of a
Loan Interest in a Loan Pool with the investment banking firms, rating
agencies, accounting firms, law firms and other third-party advisory firms
involved with any transfer of the Loan, the Loan Documents or the
applicable Securitization. It is understood that the information provided
by Borrower to Lender may ultimately be incorporated into the offering
documents for the Securitization and thus various investors may also see
some or all of the information.
(d) Borrower acknowledges that any transfer of the Loan or the
placement of the Loan Interest in a Loan Pool may occur at any time during
the term of this Agreement and the provisions of this Section 4.2 shall be
applicable throughout the term of the Loan.
ARTICLE V
Covenants of Borrower
Section 5.1 Covenants. Borrower warrants, covenants and agrees that, until
the full and final payment of the Secured Indebtedness and the termination of
this Agreement (unless Lender has previously agreed otherwise):
(a) Payment and Performance. Borrower will pay all amounts due under
the Loan Documents in accordance with the terms thereof and will observe,
perform and comply with every covenant, term and condition expressed or
implied in the Loan Documents.
(b) Existence. Borrower will continuously maintain its existence and
its right to do business in each state in which it owns Property together
with its franchises and trade names to the extent required by Applicable
Laws.
(c) Operation of Property. Borrower will operate the Property in a
good and workmanlike manner and in accordance with all Applicable Laws
except where failure to comply therewith will not have a Materially Adverse
Effect and will pay all fees or charges of any kind in connection
therewith. Borrower will keep the Property occupied so as not to impair the
insurance carried thereon except where an Individual Property is
29
closed if appropriate insurance is maintained thereon. Borrower will not
use or occupy, or allow the use or occupancy of, the Property in any manner
which (i) violates any Applicable Laws except where failure to comply
therewith will not have a Materially Adverse Effect or (ii) constitutes a
public or private nuisance or (iii) makes void, voidable or cancelable, any
insurance then in force with respect thereto. Borrower will not initiate
any zoning reclassification of the Property or seek any variance under
existing zoning ordinances applicable to the Property or use or, to the
extent controllable by Borrower, permit the use of any Property in such a
manner which would result in such use becoming a nonconforming use under
applicable zoning ordinances or other Applicable Laws. Borrower will not
impose any restrictive covenants or encumbrances upon the Property (other
than Permitted Encumbrances), execute or file any subdivision plat
affecting the Property or consent to the annexation of the Property to any
municipality, without the prior written consent of Lender. Borrower shall
not cause or, to the extent controllable by Borrower, permit any drilling
or exploration for, or extraction, removal or production of, minerals from
the surface or subsurface of the Property. Borrower will not knowingly do
or suffer to be done any act whereby the value of any part of the Property
will be lessened. Borrower will not operate or permit the Property to be
operated as a cooperative or condominium building or buildings in which the
tenants or occupants participate in the ownership, control or management of
the Property or any part thereof, as tenant stockholders or otherwise.
Borrower will allow Lender or its authorized representative to enter the
Property at any reasonable time to inspect the Property and Borrower's
books and records pertaining thereto and Borrower will assist Lender or
said representative in whatever reasonable way necessary to make such
inspection. If Borrower receives a notice of claim from any federal, state
or other governmental entity pertaining to the Property, regarding a matter
which could have a Materially Adverse Effect or a notice that the Property
is not in compliance with any Applicable Laws except where failure to
comply therewith would not have a Materially Adverse Effect, Borrower will
promptly furnish a copy of such notice or claim to Lender.
(d) Debts for Construction. Borrower will cause all debts and
liabilities relating to utilities servicing the Property to be promptly
paid. Borrower will cause all debts and liabilities of any character,
including without limitation all debts and liabilities for labor, material,
fixtures and equipment which are subject to the Security Documents,
incurred in the construction, maintenance, operation and development of the
Property to be promptly paid except where failure to make such payments
would not result in a Materially Adverse Effect. Notwithstanding the
foregoing, Borrower may in good faith, by appropriate proceedings, contest
the validity, applicability or amount of any debt or liability and pending
such contest Borrower shall not be deemed in default hereunder if Borrower
provide Lender with security satisfactory to Lender in its reasonable
discretion and if the Borrower promptly causes to be paid any amount
adjudged by a court of competent jurisdiction to be due, with all costs and
interest thereon, promptly after such judgment becomes final; provided,
however, that in any event each such contest shall be concluded and any
debt, liability, lien, interest and costs shall be paid, bonded around or
30
otherwise removed prior to the date any writ or order is issued under which
the Property may be sold.
(e) Ad Valorem Taxes. The Borrower will cause to be paid prior to
delinquency all taxes and assessments heretofore or hereafter levied or
assessed against the Property, or any part thereof, or against the Trustee
or Lender for or on account of the Note or the other Secured Indebtedness
or the interest created by the Security Documents; except that Borrower may
in good faith, by appropriate proceedings, contest the validity,
applicability, or amount of any asserted tax or assessment, provided that
appropriate reserves consistent with GAAP are established at the time of
any such contest and Borrower provides Lender with satisfactory evidence
thereof.
(f) Repair and Maintenance. Borrower will keep and maintain the
Property, including the parking, recreational and landscaped portions
thereof, in good order, repair, operating condition and appearance, causing
all necessary structural and non-structural repairs, renewals,
replacements, additions and improvements to be promptly made, and will not
allow any of the property to be misused, abused or wasted or to
deteriorate. Borrower shall provide Lender with written notice of any
material damage to or destruction of the Property or any portion thereof
within five (5) Business Days of such occurrence. Borrower will promptly
replace all worn-out or obsolete fixtures or personal property covered by
the Security Documents with fixtures or personal property comparable to the
replaced fixtures or personal property when new, and will repaint the
Property when needed. Notwithstanding the foregoing, Borrower will not
without the prior written consent of Lender, (i) remove from the Property
any fixtures or personal property covered by the Security Documents except
(A) such as is replaced by Borrower by an article of equal suitability and
value owned by Borrower, free and clear of any Lien or security interest
(except that created by the Security Documents or the Permitted Second
Lien) or (B) such fixtures or personal property (other than heating and air
conditioning equipment) having a value of less than $100,000, the removal
of which would not have a Materially Adverse Effect on the Individual
Property to which it relates, or (ii) make any structural alterations which
diminish the value of the improvements on the Property, or (iii) expend
more than $150,000 in the aggregate in any twelve (12) calendar monthly
period on structural alterations on any Individual Property, or (iv) erect
any new buildings, structures, or building additions on any Individual
Property (except such new buildings, structures or building additions that
do not diminish the value of such Individual Property and the cost of
construction of which is not in excess of $200,000 in the aggregate in any
twelve (12) calendar month period). Notwithstanding the above, Borrower may
repair or replace the roof and/or the asphalt parking lot at any Individual
Property provided such repairs or replacement shall meet all applicable
building codes and requirements and shall result in the roof and/or parking
lot being of equal or grater quality as the roofs and/or parking lots of
comparable retail establishments.
(g) Insurance and Casualty.
31
(i) Application of Proceeds. Borrower will keep the Property
insured against loss or damage by fire, explosion, windstorm, hail,
flood (if the Property shall at any time be located in the 100-year
flood plain in which flood insurance has been made available pursuant
to the Flood Disaster protection Act of 1973), tornado and such other
hazards as may be reasonably required by Lender by policies of fire,
extended coverage and other insurance in such company or companies, in
such amounts as are sufficient to prevent the application of any
co-insurance contributions on loss and not less than the full
replacement cost of the improvements located on the Property and all
personal property included in the Collateral, upon such terms and
provisions, in such forms, and with such loss payees, insureds and
endorsements (including without limitation the "replacement cost"
endorsement with a waiver of depreciation), all as may be acceptable
to Lender. Such insurance shall include boiler and machinery
insurance, if applicable, covering boilers and other high pressure
vessels, the air conditioning system and high pressure piping,
machinery and equipment. Such insurance shall also include earthquake
insurance for that portion of the Property located outside California,
New Mexico and Nevada to the extent and in the amounts maintained by
the Borrower as of the date of this Agreement and in the amount of at
least $15,000,000 for that portion of the Property located within
California, New Mexico and Nevada, to the extent that such coverage is
available at commercially reasonable rates and, in the event the
Property is leased at aggregate annual rentals in excess of $250,000,
rental loss insurance in at least the aggregate annual amount of all
rent and additional rents payable by tenants under leases of the
Property. The Borrower will also provide such other insurance as
Lender may from time to time reasonably require, in such companies,
upon such terms and provisions, in such amounts, and with such
endorsements, all as are approved by Lender. Borrower will deliver to
Lender certified copies of the original policies evidencing such
insurance and any additional insurance which shall be taken out upon
any part of the Property and receipts evidencing the payment of all
premiums, and will deliver certificates evidencing renewals of all
such policies of insurance to Lender at least fifteen (15) days before
any such insurance shall expire. Without limiting the discretion of
Lender with respect to required endorsements to insurance policies,
Borrower further agrees that all such policies shall provide that
proceeds thereunder will be payable to Lender as its interest may
appear pursuant and subject to a mortgage clause (without
contribution) of standard form attached to or otherwise made a part of
the applicable policy. In the event of foreclosure of any Security
Document, or other transfer of title to the Property in extinguishment
in whole or in part of the Secured Indebtedness, all right, title and
interest of Borrower in and to such policies then in force concerning
the Property covered by such Security Document and all proceeds
payable thereunder shall thereupon vest in the purchaser at such
foreclosure or Lender or other transferee in the event of such other
transfer of title. In the event any of the Property covered by such
32
insurance is destroyed or damaged by fire, explosion, windstorm, hail
or by any other casualty against which insurance shall have been
required hereunder, (A) Lender may, but shall not be obligated to,
make proof of loss if not made promptly by Borrower, (B) each
insurance company concerned is hereby authorized and directed to make
payment for such loss directly to Lender instead of to Borrower and
(C) Lender shall apply the insurance proceeds as follows:
(A) first, to reimburse Lender or the Trustee for all costs
and expenses, including reasonable attorney's fees,
incurred in connection with the collection of such
proceeds; and
(B) second, if (a) the amount of the loss is more than
$250,000, (b) there is then existing a Default that is
capable of being cured by the payment of money or an
Event of Default, (c) in Lender's judgment, restoration
cannot be completed within twelve (12) months after
such destruction, or (d) the insurer denies liability
to any named insured, then in any such event, the
remainder of said proceeds shall be applied to the
Secured Indebtedness (without premium or penalty); and
(C) third, if none of the facts described in (a) through
(d) of subsection (B) above exists (or if Lender waives
the matters described in subsection (B)), the remainder
of such proceeds shall be applied to the repair,
restoration or replacement of the Individual Property
so destroyed or damaged to as good or better condition
as existed prior to such destruction or damage in
accordance with plans and specifications approved in
writing by Lender in its reasonable discretion and any
amounts not so applied shall, at Lender's option, be
applied to the payment (without premium or penalty) of
the Secured Indebtedness.
Notwithstanding the foregoing, Lender shall have the option to apply
any such insurance proceeds, in whole or in part, to the repair,
restoration or replacement of the Property rather than applying such
proceeds to the payment of the Secured Indebtedness, without regard to
the extent of the damage to the Property or the existence of a Default
hereunder. If Lender elects or is required to apply insurance proceeds
to restoration, (i) the proceeds may, at Lender's election, be held in
a mutually acceptable interest bearing account to be disbursed in
installments by Lender or by a disbursing agent (hereinafter called
the "Depository") selected by Lender at Borrower's expense and whose
fees and expenses shall be paid by Borrower, (ii) Borrower shall, upon
demand by Lender, from time to time, deposit
33
with Lender or the Depository in an interest bearing account selected
by Lender in its sole discretion, the amount of any deductible under
such insurance coverage and such amounts in excess of the amount, from
time to time, on deposit as may be necessary to complete such
restoration and (iii) the insurance proceeds and such other amounts
deposited pursuant to (ii) above shall be disbursed from time to time
as restoration progresses satisfactorily in Lender's reasonable
judgment, based upon receipt of appropriate lien waivers and a
certificate of the architect or engineer in charge of the work, the
form and content of such certificate to be reasonably satisfactory to
Lender, and title insurance protection against mechanic's and
materialmen's liens. If an Event of Default occurs and is continuing
prior to full disbursement of the insurance proceeds, any undisbursed
portion may, at Lender's option, be applied to the payment of the
Secured Indebtedness, whether or not then due and in any order of
priority, and such application shall be deemed to be a prepayment of
the outstanding principal balance of the Loan and shall be subject to
a Prepayment Premium computed in accordance with Section 2.6 hereof
and subject to the limitations thereunder.
(ii) Partial Release. If Lender elects to apply insurance
proceeds to the Secured Indebtedness and the insurance proceeds are
greater than or equal to the sum of the then current Allocated Loan
Amount of the Individual Property to which such proceeds relate,
together with accrued interest thereon, other amounts advanced by
Lender with respect thereto and all costs incurred by Lender with
respect thereto, then Lender shall release from the Lien of the
Mortgage such Individual Property. If Lender elects to apply insurance
proceeds to the Secured Indebtedness and the insurance proceeds are
less than the then current Allocated Loan Amount of the Individual
Property to which such proceeds relate plus accrued interest thereon,
other amounts advanced by Lender with respect thereto and all costs
incurred by Lender relating to the proposed release, then at
Borrower's option, upon thirty (30) days' prior written notice to
Lender, Borrower may obtain a release of such Individual Property from
the Lien of the Mortgage upon payment to Lender of such amount as is
necessary, when added to such insurance proceeds, to pay the then
current Allocated Loan Amount plus accrued interest thereon, other
amounts advanced by Lender with respect thereto and all costs incurred
by Lender relating to the proposed release.
(iii) Notice and Restoration. In any event, the unpaid portion of
the Secured Indebtedness shall remain in full force and effect and the
Borrower shall not be excused in the payment thereof. If any act or
occurrence of any kind or nature (including any casualty on which
insurance was not obtained or obtainable) shall result in damage to or
loss or destruction of any of the Property, Borrower shall give
immediate notice thereof to Lender and, unless otherwise so instructed
by Lender or in the event Lender has applied the insurance proceeds to
the Note, shall promptly, at Borrower's sole cost and expense and
regardless of whether the
34
insurance proceeds, if any, shall be sufficient for the purpose,
diligently restore, repair, replace and rebuild the Individual
Property so damaged or destroyed as nearly as possible to its value,
condition and character immediately prior to such damage, loss or
destruction in accordance with plans and specifications submitted to
and approved by Lender in writing.
(h) Condemnation.
(i) Application of Proceeds. Immediately upon obtaining knowledge
of the institution or threat of institution of any proceedings for the
condemnation of the Property or any portion thereof, or any other
proceedings arising out of injury or damage to the Property, or any
portion thereof, Borrower will notify Lender of the pendency of such
proceedings. Lender may participate in any such proceedings, and
Borrower shall from time to time deliver to Lender all instruments
requested by it to permit such participation. Borrower shall, at its
expense, diligently prosecute any such proceedings, and shall consult
with Lender, its attorneys and experts, and cooperate with them in the
carrying on or defense of any such proceedings. All proceeds of
condemnation awards or proceeds of sale in lieu of condemnation with
respect to the Property and all judgments, decrees and awards for
injury or damage to the Property shall be paid to Lender and shall be
applied as follows:
(A) first, to reimburse Lender or the Trustee for all costs
and expenses, including reasonable attorney's fees,
incurred in connection with collection of such
proceeds; and
(B) second, if (i) if the cost of the repair, restoration
or replacement is more than $250,000 or (ii) there is
then existing a Default that is capable of being cured
by the payment of money or an Event of Default, or
(iii) in Lender's judgment, restoration, repair or
replacement cannot be completed within twelve (12)
months after such taking occurs or (iv) the Individual
Property that is the subject of such proceedings is
partially taken or diminished in value and, in the
reasonable judgment of Borrower, need not be rebuilt,
restored or repaired in any manner, or (v) all of the
Property is taken pursuant to such proceedings, then in
any such event, the remainder of said proceeds shall be
applied to the payment of the Note; and
(C) third, if none of the facts described in (i) through
(v) of subsection (B) above exists (or if Lender waives
the matters described in (ii) of subsection (B)), the
remainder of such
35
proceeds shall be applied to the repair, restoration or
replacement of the Individual Property that is the
subject of such proceeding and any amounts not thus
paid over shall be applied to the Note; provided, that
any such proceeds held by Lender to be applied to the
repair, restoration or replacement of the Property as
provided above shall be held and disbursed in the same
manner as provided in subsection (g) of this Section
5.1.
Notwithstanding the foregoing, Lender shall have the option to apply any
proceeds of condemnation awards or proceeds of sale in lieu of condemnation
with respect to the Property or any judgments, decrees and awards for
injury or damage to the Property, in whole or in part, to the repair,
restoration or replacement of the Property rather than applying such
proceeds to the payment of the Secured Indebtedness, without regard to the
extent of the taking or the damage to the Property or the existence of a
Default hereunder.
(ii) Partial Release. If Lender elects to apply condemnation
proceeds to the Secured Indebtedness and the condemnation proceeds are
greater than or equal to the sum of the then current Allocated Loan
Amount of the Individual Property to which such proceeds relate plus
accrued interest thereon, other amounts advanced by Lender with
respect thereto and all costs incurred by Lender relating to the
proposed release then Lender shall release from the Lien of the
Mortgage such Individual Property. If Lender elects to apply
condemnation proceeds to the Secured Indebtedness and the condemnation
proceeds are less than the then current Allocated Loan Amount of the
Individual Property to which such proceeds relate, then at Borrower's
option upon thirty (30) days' prior written notice to Lender, Borrower
may obtain a release of such Individual Property from the Lien of the
Mortgage upon payment to Lender of such amount as is necessary when
added to such condemnation proceeds to pay the then current Allocated
Loan Amount plus accrued interest thereon, other amounts advanced with
respect to such Individual Property, and all costs incurred by Lender
relating to the proposed release. Notwithstanding the foregoing,
Lender shall have the option to apply any proceeds of condemnation
awards or proceeds of sale in lieu of condemnation with respect to the
Property or any judgments, decrees and awards for injury or damage to
the Property, in whole or in part, to the repair, restoration or
replacement of the Property rather than applying such proceeds to the
payment of the Secured Indebtedness, without regard to the extent of
the taking or the damage to the Property or the existence of a Default
hereunder.
(iii) Notice and Restoration. In any event the unpaid portion of
the Secured Indebtedness shall remain in full force and effect and
shall not be excused in the payment thereof. In the event any of the
foregoing proceeds are applied to the repair, restoration or
replacement of the Property, the Borrower shall promptly
36
commence and complete such repair, restoration or replacement of the
Property as nearly as possible to its value, condition and character
immediately prior to such damage or taking in accordance with plans
and specification submitted to and approved by the Lender.
(iv) Assignment to Lender. Borrower hereby assigns and transfers
all such proceeds, judgments, decrees and awards to Lender and agrees
to execute such further assignments of all such proceeds, judgments,
decrees and awards as Lender may request. Lender is hereby authorized,
in the name of Borrower, to execute and deliver valid aquittances for,
and to appeal from, any such judgment, decree or award. Lender shall
not be, in any event or circumstances, liable or responsible for
failure to collect, or exercise diligence in the collection of, any
such proceeds, judgments, decrees and/or awards.
(i) Protection and Defense of Lien. If the validity or priority of any
Security Document or of any rights, titles, Liens or security interests
created or evidenced hereby with respect to the Property or any part
thereof shall be endangered or questioned or shall be attacked directly or
indirectly or if any legal proceedings are instituted against Borrower with
respect thereto, Borrower will give prompt written notice thereof to Lender
and at Borrower's own cost and expense will diligently endeavor to cure any
defect that may be developed or claimed, and will take all necessary and
proper steps for the defense of such legal proceedings, including but not
limited to the employment of counsel, the prosecution or defense of
litigation and the release or discharge of all adverse claims, and the
Trustee and Lender, or either of them (whether or not named as parties to
legal proceedings with respect thereto) are hereby authorized and empowered
to take such additional steps as in its or their judgment and discretion
may be necessary or proper for the defense of any such legal proceedings or
the protection of the validity or priority of the Security Documents and
the rights, titles, Liens and security interests created or evidenced
hereby and shall be reimbursed for any expenses so incurred pursuant to
subsection (r).
(j) No Other Liens. Borrower will not, without the prior written
consent of Lender, create, place or permit to be created or placed, or
through any act or failure to act, acquiesce in the placing of, or allow to
remain, any deed of trust, mortgage, voluntary or involuntary Lien, whether
statutory, constitutional or contractual (except for the Permitted Second
Lien and the Lien for ad valorem taxes on the Property which are not
delinquent), security interest (except for the security interests included
in the Permitted Second Lien), encumbrance or charge, or conditional sale
or other title retention document, against or covering the Property, or any
part thereof, other than the Permitted Encumbrances, regardless of whether
the same are expressly or otherwise subordinate to the Lien or security
interest created in the Security Documents, and should any of the foregoing
become attached hereafter in any manner to any part of the Property without
the prior written consent of Lender, Borrower will cause the same to be
promptly discharged
37
and released. Borrower will own all parts of the Property and will not
acquire any fixtures, equipment or other property forming a part of the
Property pursuant to a lease, license or similar agreement, without the
prior written consent of Lender.
(k) Books and Records. Borrower will keep accurate books and records
in accordance with GAAP in which full, true and correct entries shall be
promptly made as to all operations on the Property, and will permit all
such books and records (including without limitation all contracts,
statements, invoices, bills and claims for labor, materials and services
supplied for the construction and operation of the improvements forming a
part of the Property) to be inspected and copied by Lender and its duly
accredited representatives at all times during reasonable business hours.
(l) Financial Information.
(i) Annual Consolidated Financial Statements. Within ninety (90)
days after the close of each fiscal year, Borrower shall furnish
Lender with audited Consolidated financial statements, including
balance sheets, income statements and statements of cash flows for the
Borrower, prepared in accordance with GAAP and such other available
information as the Lender shall request.
(ii) Annual Reports Regarding Stores. Within ninety (90) days
after the close of each fiscal year, Borrower shall furnish Lender
with a report providing an analysis for each Store included in the
Property of operating income and expenses. Lender agrees that such
information is confidential and shall not be disclosed to any third
party (except as required by law following prior notice to Borrower)
without Borrower's written consent.
(iii) Other Financial Information. Promptly upon their becoming
available, copies of all financial statements, and proxy statements
sent by Borrower to its stockholders and all registration statements,
periodic reports, press releases, monthly sales reports (if publicly
released), and other statements and schedules filed by Borrower with
any securities exchange, the Securities and Exchange Commission or any
similar governmental authority, including without limitation copies of
all reports on Forms 10-K, 10-Q and 8-K (or their equivalents) which
Borrower shall have filed with the Securities and Exchange Commission.
(m) Liability Insurance. Borrower shall maintain commercial general
public liability insurance against claims for bodily injury or death and
property damage occurring in or upon or resulting from the Property, in
standard form and with such insurance company or companies as may be
acceptable to Lender, such insurance to afford immediate protection, to the
limit of not less than $5,000,000 in respect of any one accident or
occurrence, and to the limit of not less than $5,000,000 for property
damage, with not more than $500,000 deductible. Such Commercial General
Public Liability
38
insurance shall include Blanket Contractual Liability coverage which
insures contractual liability under the indemnifications of Lender and the
Trustee by Borrower set forth in this Agreement (but such coverage or the
amount thereof shall in no way limit such indemnifications). Borrower shall
maintain with respect to each policy or agreement evidencing such
Commercial General Public Liability insurance such endorsements as may be
required by Lender and shall at all times deliver and maintain with Lender
a certificate with respect to such insurance in form satisfactory to
Lender. Not less than fifteen (15) days prior to the expiration date of
each policy of insurance required of Borrower pursuant to this Section
5.1(m), Borrower shall deliver to Lender certificates or other evidence of
payment satisfactory to Lender. In the event of a foreclosure of any
Security Document, the purchaser of the Property covered thereby shall
succeed to all the rights of Borrower, including any right to unearned
premiums, in and to all policies of insurance assigned pursuant to the
provisions of this subsection, and Borrower hereby authorize Lender to
notify any or all insurance carriers of this assignment.
(n) Proceeds of Collateral. Borrower shall account fully and
faithfully for and, if Lender so elects, shall promptly pay or turn over to
Lender the proceeds in whatever form received from disposition in any
manner of any of the Collateral, except as otherwise specifically
authorized herein. In the event Lender so elects and the proceeds from the
disposition of such Collateral are paid over to Lender, Lender shall apply
such proceeds to the Secured Indebtedness without prepayment penalty.
Borrower shall at all times keep the Collateral and its proceeds separate
and distinct from other property of Borrower and shall keep accurate and
complete records of the Collateral and its proceeds.
(o) Permitted Encumbrances. Borrower will comply with and will perform
all of the covenants, agreements and obligations imposed upon them or the
Property in the Permitted Encumbrances in accordance with their respective
terms and provisions. Borrower will not modify or agree to any modification
of any Permitted Encumbrance, which modification would adversely affect the
interest of Lender in the Property, without the prior written consent of
Lender which consent may be withheld by Lender in its sole discretion.
(p) Environmental.
(A) Borrower shall not (and it shall not permit any tenant,
subtenant, contractor, agent or manager to) locate, produce, use,
store, treat, transport, incorporate, discharge, emit, release,
deposit or dispose of any Hazardous Substance in, upon, under, at,
over or from the Property except that Borrower (its tenants,
subtenants, manager, contractors or agents) may store, locate and use
on the Property Hazardous Substances which are (1) customarily located
or stored in retail or operations buildings similar to the Property or
used in connection with Borrower's operations, or (2) unique to a
tenant's business located at the Property, provided that such
Hazardous Substances described in clauses (1) or (2) above are
39
at all times stored, located and used in compliance with all
Environmental Laws other than any noncompliance which Borrower or
tenant takes reasonably prompt action to address. Borrower shall not
permit any Hazardous Substances to be located, produced, used, stored,
treated, transported, incorporated, discharged, emitted, released,
deposited, disposed of or to escape therein, thereupon, thereunder,
thereover or therefrom in violation of any Environmental Law, and
shall comply with all Environmental Laws which are applicable to the
Property in each case, other than any violation or noncompliance which
Borrower or tenant takes reasonably prompt action to address. Borrower
shall not engage in any conduct in connection with the Property that
may subject Borrower to Environmental Costs, or contribute to or
aggravate a release of Hazardous Substances where such action or
failure to act could reasonably be expected to result in a Materially
Adverse Effect. In addition to the foregoing restrictions, Borrower
agrees that no asbestos, ACM, materials containing urea-formaldehyde,
or transformers, capacitors, ballasts or other equipment that contain
PCBs are, or will at any time be, located about the Property in a
manner that could reasonably be expected to result in a violation of
applicable Environmental Laws.
(B) Borrower shall promptly within the time permitted by
Environmental Laws, initiate and diligently pursue to completion, any
and all remedial action required pursuant to any applicable
Environmental Laws in response to the presence of any Hazardous
Substances at, on, under or affecting, or emanating from, the Property
and shall take such remedial action as is required to minimize any
impairment of Lender's Lien on, and security interest in, the
Property. If Borrower undertakes any remedial action with respect to
any Hazardous Substance affecting the Property, Borrower shall conduct
and complete such remedial action in compliance with all applicable
Environmental Laws. If any Hazardous Substance is removed or caused to
be removed from the Property by Borrower, the generator number
assigned by the Environmental Protection Agency to such Hazardous
Substance shall not be in the name of Lender and Borrower shall assume
any and all liability for such removed Hazardous Substance.
(C) The representations and warranties contained in Section
4.1(k) and the covenants contained in this Section 5.1(p) shall be
deemed continuing covenants for the benefit of Lender, and any
successors and assigns of Lender including but not limited to any
purchasers at a foreclosure sale, any transferee of the title of
Lender and any subsequent owner of the Property, shall survive the
termination of this Agreement, or the satisfaction or release of the
Mortgage, any foreclosure of the Mortgage and/or any acquisition of
title to the Property or any part thereof by Lender, or anyone
claiming by, through or under Lender, by deed in lieu of foreclosure
or otherwise. The rights and remedies of Lender under this Agreement
shall not inure to the benefit of (i) any purchaser of the Property at
a foreclosure sale, (ii) any Person taking title to the Property by
deed in lieu of foreclosure or
40
(iii) any successor or assign of any Person described in clauses (i)
and (ii) above, except that Lender's rights shall inure to the benefit
of the parties in clauses (i), (ii) and (iii) hereof if such parties
are Lender (including, for these purposes, Lender's successors and
assigns as holder of the Loan Documents), any beneficiaries of any
Loan Pool, any Participant of any of Lender's (or such successors',
assigns', beneficiaries' or Participant's) Affiliates or nominees.
(D) Borrower shall give prompt written notice to Lender of:
(i) any proceeding or inquiry known to Borrower by any
Governmental Authority with respect to the presence of any
Hazardous Substance on the Property or the migration thereof from
or to other property;
(ii) all claims made or threatened by any third party
against Borrower or the Property in each case known to Borrower
relating to any loss or injury resulting from any Hazardous
Substance;
(iii) the storage, production, release, discharge or
disposal of any Hazardous Substances on the Property other than
in accordance with all applicable Environmental Laws; and
(iv) Borrower's discovery of any occurrence or condition on
any real property adjoining or in the vicinity of the Property
which could reasonably be expected to cause the Property or any
part thereof to be subject to any restrictions on the ownership,
occupancy, transferability or use of the Property under any
Environmental Law or to be otherwise subject to any restrictions
on the ownership, occupancy, transferability or use of the
Property under any Environmental Law.
(E) Borrower shall keep Lender apprised of the status of, and any
material developments in, any governmental investigation relating to
Environmental Matters at or about the Property, any and all
enforcement, clean-up, removal or other governmental or regulatory
actions instituted, completed or threatened pursuant to any
Environmental Law with respect to the Property and any other claims,
actions or proceedings with respect to the Property relating to
Environmental Matters. Borrower shall provide Lender with copies of
such communications with all Governmental Authorities relating to
Hazardous Substances Claims as Lender may request. Without Lender's
prior written consent, Borrower shall not enter into any settlement
agreement, consent decree or other compromise with respect to any such
governmental investigation or action, or other claim, action or
proceeding relating to Hazardous Substances which
41
Borrower does not have the funds available to pay or which may
materially adversely effect Lender's lien on, or the value of, the
Property.
(F) The foregoing rights and remedies in this Section 5.1(p) are
cumulative with, and in addition to, any rights and remedies Lender
may have against Borrower or any Significant Party under the other
terms and provisions of this Agreement, under any other Loan Document
or under any Environmental Law, including, without limitation, CERCLA.
(q) Notice of Material Events and Change of Address. Borrower will
promptly notify Lender (i) of any Material Adverse Change in Borrower's
financial condition or Borrower's Consolidated financial condition, (ii) of
the occurrence of any Default, (iii) of the acceleration of the maturity of
any Debt owed by Borrower or of any default by Borrower under any
indenture, mortgage, agreement, contract or other instrument to which it is
a party or by which it or its properties is bound, if such acceleration or
default might have a Material Adverse Effect upon Borrower's Consolidated
financial condition, (iv) of any claim asserted which could result in a
decline of $500,000 or more in the value of any Individual Property, (v) of
the occurrence of any Termination Event, and (vi) of the filing of any suit
or proceeding against Borrower in which there is a reasonable likelihood
that an adverse decision would be rendered and if so rendered would have a
Material Adverse Effect upon Borrower's financial condition, business or
operations.
(r) Payment of Expenses. Borrower will promptly upon written demand
pay all expenses and reimburse Lender for any expenditures, including
reasonable attorneys' fees, legal expenses, incurred or expended in
connection with (i) the negotiation, preparation, execution and delivery of
the Loan Documents, and any and all other documents or instruments relating
thereto, including without limitation, fees and expenses incurred after the
date of this Agreement, (ii) the filing, recording, refiling and
re-recording of any Loan Documents and any other documents or instruments
or further assurances required to be filed or recorded or refiled or
re-recorded by the terms of any Loan Document, (iii) the breach by Borrower
of any covenant in the Loan Documents, (iv) Lender's exercise of any of its
rights and remedies under the Loan Documents or Lender's protection of the
Property and its Lien on and security interest therein, (v) any amendments
to the Mortgage, the Note or any other Loan Document or any matter
requested by Borrower or any approval required under the Loan Documents,
and (vi) any matter which requires the waiver, consent or approval of
Lender.
(s) Interest. Borrower hereby promises to pay interest to Lender at
the Default Rate on all Secured Indebtedness which Borrower has in this
Agreement promised to pay (including without limitation obligations to pay
fees or to reimburse or indemnify Lender) and which is not paid when due.
42
(t) Taxes on Note and Other Taxes. Borrower will promptly pay all
franchise, and other taxes owing by it if failure to pay would result in a
Materially Adverse Effect and any stamp or other documentary taxes which
may be required to be paid by it with respect to the Note or any other Loan
Document.
(u) Further Assurances. Borrower will, on request of Lender, (i)
promptly correct any defect, error or omission which may be discovered in
the execution or acknowledgment of this Agreement or any Loan Document or
any other instrument now or hereafter executed in connection herewith; (ii)
execute, acknowledge, deliver and record or file such further instruments
(including without limitation further deeds of trust, security agreements,
financing statements, continuation statements and assignments of rents or
leases) and do such further acts as may be necessary, desirable or proper
to carry out more effectively the purposes and intentions of the parties to
this Agreement, the Security Documents and such other instruments and to
subject to the Liens and security interests of the Security Documents and
thereof any property intended by the terms hereof and thereof to be covered
hereby and thereby including specifically, but without limitation, any
renewals, additions, substitutions, replacements, or appurtenances to the
Property; (iii) execute, acknowledge, deliver, procure and record or file
any document or instrument (including specifically any financing statement)
deemed advisable by Lender to protect the Lien or the security interest
hereunder against the rights or interests of third persons; and (iv)
provide such certificates, documents, reports, information, affidavits and
other instruments and do such further acts as may be necessary, desirable
or proper in the reasonable determination of Lender to enable Lender to
comply with the requirements or requests of any agency having jurisdiction
over Lender or any examiners of such agencies with respect to the Secured
Indebtedness, Borrower or the Property; and the Borrower will pay all costs
connected with any of the foregoing except such matters provided pursuant
to (iv) hereof which shall be at the cost of Lender.
(v) Fees and Expenses; Indemnification. Borrower will pay all
appraisal fees, Mortgage filing and recording fees, inspection fees, survey
fees, taxes, brokerage fees and commissions, abstract fees, title policy
fees, uniform commercial code search fees, escrow fees, reasonable
attorney's fees, and all other costs and expenses of every character
incurred by the Borrower or Lender in connection with the Loan, either at
the closing thereof or otherwise required by this Agreement or any other
Loan Document, and will reimburse Lender for all such costs and expenses
incurred by it. Borrower shall pay all expenses and reimburse Lender for
any expenditures, including reasonable attorney's fees and legal expenses,
incurred or expended in connection with (i) the breach by Borrower of any
covenant herein or in any other Loan Document, (ii) Lender's exercise of
any of its rights and remedies hereunder or under the Note or any other
Loan Document or Lender's protection of the Property and its Lien and
security interest therein, or (iii) any amendments to this Agreement, the
Note or any other Loan Document or any matter requested by Borrower or any
approval required hereunder. Borrower will indemnify and hold harmless the
Trustee and Lender (for purposes of this paragraph, the terms "the
43
Trustee" and "Lender" shall include the directors, officers, partners,
employees and agents of the Trustee and Lender, respectively, and any
persons or entities owned or controlled by, owning or controlling, or under
common control or affiliated with the Trustee and Lender, respectively)
from and against, and reimburse them for, all claims, demands, liabilities,
losses, damages, causes of action, judgments, penalties, costs and expenses
(including, without limitation, reasonable attorney's fees) which may be
imposed upon, asserted against or incurred or paid by them by reason of, on
account of or in connection with any bodily injury or death or property
damage occurring in or upon or in the vicinity of the Property through any
cause whatsoever or asserted against them on account of any act performed
or omitted to be performed hereunder or on account of any transaction
arising out of or in any way connected with the Property or with this
Agreement, the Note or any other Loan Document. Without limitation, it is
the intention of Borrower and Borrower agrees that the foregoing
indemnities shall apply to each indemnified party with respect to claims,
demands, liabilities, losses, damages, causes of action, judgments,
penalties, costs and expenses (including without limitation, reasonable
attorneys' fees and disbursements) which in whole or in part are caused by
or arise out of the negligence of such (and/or any other) indemnified
party. However, such indemnities shall not apply to any indemnified party
to the extent the subject of the indemnification is caused by or arises out
of the gross negligence or willful misconduct of such indemnified party.
The foregoing indemnities shall not terminate upon release, foreclosure or
other termination of the Security Documents but will survive foreclosure of
the Security Documents or conveyance in lieu of foreclosure and the
repayment of the Secured Indebtedness and the discharge and release of the
Security Documents and the other documents evidencing and/or securing the
Secured Indebtedness. Any amount to be paid hereunder by Borrower to Lender
and/or the Trustee shall be a demand obligation owing by Borrower to Lender
and/or the Trustee and shall be subject to and governed by the provisions
of Section 6.2 hereof.
(w) Tax on Lien. In the event of the enactment after this date of any
law of any state in which the Property is located or of any other
governmental entity deducting from the value of property for the purpose of
taxation any Lien or security interest thereon, or imposing upon Lender the
payment of the whole or any part of the taxes or assessments or charges or
Liens herein required to be paid by Borrower, or changing in any way the
laws relating to the taxation of deeds of trust or mortgages or security
agreements or debts secured by deeds of trust or mortgages or security
agreements or the interest of the mortgagee or secured party in the
property covered thereby, or the manner of collection of such taxes, so as
to affect the Security Documents or the Secured Indebtedness or Lender,
then, and in any such event, Borrower, upon demand by Lender, shall pay
such taxes, assessments, charges or Liens, or reimburse Lender therefor;
provided, however, that if in the opinion of counsel for Lender (i) it
might be unlawful to require Borrower to make such payment or (ii) the
making of such payment might result in the imposition of interest beyond
the maximum amount permitted by law, then and in such event, Lender may
elect, by notice in writing given to Borrower, to declare all of the
Secured
44
Indebtedness to be and become due and payable sixty (60) days from the
giving of such notice without prepayment penalty.
(x) Change of Name, Identity or Structure. Borrower will not change
its name, identity (including its trade name or names) or, if not an
individual, its corporate, partnership or other structure without notifying
Lender of such change in writing at least thirty (30) days prior to the
effective date of such change. Borrower will execute and deliver to Lender,
prior to or contemporaneously with the effective date of any such change by
it, any financing statement or financing statement change required by
Lender to establish or maintain the validity, perfection and priority of
the security interest granted in the Security Documents. At the request of
Lender, Borrower shall execute a certificate in form satisfactory to Lender
listing the trade names under which the Borrower intend to operate the
Property, and representing and warranting that the Borrower do business
under no other trade name with respect to the Property.
(y) Location and Use of Collateral. All tangible Collateral will be
used in the business of Borrower and shall remain in Borrower's possession
or control at all times at Borrower's risk of loss and shall be located on
the real property described in the Security Document covering such
Collateral save and except offsite repairs.
(z) Estoppel Certificate. Borrower shall at any time and from time to
time at its sole cost and expense furnish promptly upon request by Lender a
written statement in such form as may be required by Lender stating that
the Note and the other Loan Documents are valid and binding obligations of
Borrower, enforceable against Borrower in accordance with their terms; the
unpaid principal balance of the Note; the date to which interest on the
Note is paid; that the Note and the other Loan Documents have not been
released, subordinated or modified; and that there are no offsets or
defenses against the enforcement of the Note or any other Loan Document, or
if any of the foregoing statements are untrue, specifying the reasons
therefor.
(aa) Compliance with ERISA. Borrower will deliver to Lender such
certifications or other evidence from time to time throughout the term of
the Loan, as requested by Lender in its sole discretion, that (a) Borrower
is not an "employee benefit plan" or a "governmental plan" under ERISA; (b)
it is not subject to state statutes regulating investments and fiduciary
obligations with respect to governmental plans; and (c) one or more of the
following circumstances is true:
(i) Equity interests in Borrower are publicly offered securities,
within the meaning of 29 C.F.R.ss.2510.3-101(b)(2); or
(ii) Less than twenty-five percent (25%) of all equity interests
in Borrower are held by "benefit plan investors" within the meaning of
29 C.F.R.ss.2510.3-101(f)(2); or
45
(iii) Borrower qualifies as an "operating Company" or a "real
estate operating company" within the meaning of 29
C.F.R.ss.2510.3-101(c) or (e).
Borrower agrees to indemnify, defend and hold Lender free and harmless from
and against any and all loss, costs (including reasonable attorney's fees
and expenses) taxes, penalties, damages and expenses that Lender may suffer
by reason of the investigation, defense and settlement of claims based upon
a breach of the foregoing provisions. The foregoing indemnification shall
survive repayment of the Note.
(bb) Amendment of Contracts. Borrower will not amend or permit any
amendment to any contract assigned to Lender which materially and adversely
affects the rights and benefits of Lender under or acquired pursuant to any
Security Documents.
Section 5.2 Indemnification Regarding Environmental Matters, Etc. Borrower
will defend, indemnify and hold harmless Lender and the Trustee and their
respective employees, agents, officers and directors from and against any
claims, demands, penalties, fines, liabilities, settlements, damages, costs and
expenses of whatever kind or nature known or unknown, contingent or otherwise,
arising out of, or in any way relating to the presence of any Hazardous
Materials in, on at, under or affecting the Property, the violation of,
noncompliance with or liability under any Environmental Law relating to the
operations of Borrower or the Property, or any orders, requirements or demands
of any federal, state, local or other governmental or administrative body,
department or agency related thereto, including, without limitation, reasonable
attorneys and consultants fees, investigations and laboratory fees, response
costs, court costs and litigation expenses, except to the extent that any of the
foregoing arise out of the gross negligence or willful misconduct of the party
seeking indemnification therefor. This indemnity shall continue in full force
and effect regardless of the termination of this Agreement.
ARTICLE VI
Security
Section 6.1 Security. The Secured Indebtedness will be secured by the
Security Documents listed in the Security Schedule and any additional Security
Documents hereafter delivered by Borrower and accepted by Lender.
Section 6.2 Right of Lender to Perform. Borrower agrees that, if Borrower
fails to perform any act or to take any action which hereunder Borrower is
required to perform or take, or to pay any money which hereunder Borrower is
required to pay, or take any action prohibited hereby, Lender, in Borrower's
name or in its own name, may, but shall not be obligated to, perform or cause to
be performed such act or take such action or pay such money or remedy any action
so taken, and any expenses so incurred by Lender, and any money paid by Lender
in
46
connection therewith, shall be a demand obligation owing by Borrower to Lender
and Lender, upon making such payment, shall be subrogated to all of the rights
of the person, corporation or body politic receiving such payment. Any amounts
due and owing by Borrower to Lender pursuant to this Agreement shall bear
interest from the date such amount becomes due until paid at the Default Rate
and shall be a part of the Secured Indebtedness and shall be secured by the
Mortgage and by any other Security Document.
ARTICLE VII
Events of Default and Remedies
Section 7.1 Events of Default. Each of the following events constitutes an
Event of Default under this Agreement:
(a) Borrower fails to pay any principal, interest or premium on the
Loan when due and payable. whether at a date for the payment of a fixed
installment or contingent or other payment to Lender or as a result of
acceleration or otherwise.
(b) Borrower fails to pay any Secured Indebtedness (other than the
payment obligations described in paragraph (a) of this Section) or Borrower
fails to observe any covenant set forth herein and does not cure such
failure within the applicable Grace Period provided, or any representation
or warranty previously, presently or hereafter made in writing by or on
behalf of Borrower in connection with any Loan Document shall prove to have
been false or incorrect in any material respect on any date on or as of
which made, and the represented or warranted state of affairs does not
become true within the applicable Grace Period provided, however, any
representation or warranty previously or presently or hereafter made in
writing on behalf of Borrower shall be an Event of Default under this
subsection 7.1(b) to the extent and only to the extent such representation
or warranty was based on information provided by Borrower or made by an
officer of Borrower in writing.
(c) If Borrower shall fail to pay any Funded Debt (other than the
payment obligations described in paragraphs (a) and (b) of this Section)
when due (whether by scheduled maturity, required prepayment, acceleration,
demand, or otherwise) after the expiration of any applicable grace period.
(d) Without the prior written consent of Lender, Borrower sells,
leases, exchanges, assigns, transfers, conveys or otherwise disposes of all
or any part of the Property or any interest therein or shall be divested of
its title or any interest therein in any manner or way, whether voluntary
or involuntary (except for the disposition of worn-out or obsolete personal
property or fixtures or other disposition permitted under the circumstances
described in subsection 5.1(f) hereof), or legal or equitable title to the
Property, or any interest therein, is vested in any other party, in any
manner whatsoever, by operation of law or otherwise.
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(e) Any "default" or "event of default" occurs under any Loan Document
which defines either such term, and the same is not remedied within the
applicable period of grace (if any) provided in such Loan Document,
provided that the foregoing shall not impair the Grace Period provided for
in Section 7.2 hereof and provided further, that all applicable periods of
grace (if any) and the Grace Period provided in Section 7.2 hereof shall
run concurrently, it being specifically acknowledged by the parties hereto
that, notwithstanding anything to the contrary contained herein or in any
Loan Document, no provision or provisions shall be construed to permit a
tacking, doubling up or consecutive running of any Grace Period or periods
of grace (if any).
(f) Borrower:
(i) suffers the entry against it of a judgment, decree or order
for relief by a court of competent jurisdiction in an involuntary
proceeding commenced under any applicable bankruptcy, insolvency or
other similar law of any jurisdiction now or hereafter in effect,
including the Federal Bankruptcy Code, as from time to time amended,
or has any such proceeding commenced against it which remains
undismissed for a period of ninety (90) days; or
(ii) suffers the appointment of a receiver, liquidator, assignee,
custodian, trustee, sequestrator or similar official for a substantial
part of its assets or for any material part of the Property in a
proceeding brought against or initiated by it, and such appointment is
neither made ineffective nor discharged within ninety (90) days after
the making thereof, or such appointment is consented to, requested by,
or acquiesced to by it; or
(iii) commences a voluntary case under any applicable bankruptcy,
insolvency or similar law now or hereafter in effect, including the
Federal Bankruptcy Code, as from time to time amended; or applies for
or consents to the entry of an order for relief in an involuntary case
under any such law or to the appointment of or taking possession by a
receiver, liquidator, assignee, custodian, trustee, sequestrator or
other similar official of any substantial part of its assets or any
material part of the Property; or makes a general assignment for the
benefit of creditors; or fails generally to pay (or admits in writing
its inability to pay) its debts as such debts become due; or makes a
transfer in fraud of creditors; or takes corporate or other action in
furtherance of any of the foregoing.
Section 7.2 Acceleration. Upon the occurrence of an Event of Default
described in subsection (f)(i), (f)(ii) or (f)(iii) of Section 7.1 with respect
to Borrower which shall result in the entry of an order for relief under the
Federal Bankruptcy Code, all of the Secured Indebtedness shall thereupon be
immediately due and payable, without presentment, demand, protest, notice of
protest, declaration or notice of acceleration or intention to accelerate, or
any other notice or declaration of any kind, all of which are hereby expressly
waived by Borrower. Upon the
48
occurrence of any other Event of Default, Lender at any time and from time to
time may without notice to Borrower declare any or all of the Secured
Indebtedness immediately due and payable, and all such Secured Indebtedness
shall thereupon be immediately due and payable, without presentment, demand,
protest, notice of protest, notice of acceleration or of intention to
accelerate, or any other notice or declaration of any kind, all of which are
hereby expressly waived by Borrower. The term "Grace Period", as used herein
with respect to an Event of Default under subsection (b) of Section 7.1 or an
Event of Default for which a Grace Period is expressly provided under Section
7.1, means the period beginning on the date of the related Default and ending
twenty (20) days after written notice to Borrower and the holder of the
Permitted Second Lien of such Default and demand by the Lender for the
performance of such covenant, agreement, warranty or condition, provided that in
the event the Default in question is capable of cure but not reasonably capable
of cure within said twenty (20) day period, Borrower shall not have committed an
Event of Default hereunder if Borrower or the holder of the Permitted Second
Lien commences such cure within said twenty (20) day period and diligently
prosecute such cure to completion thereafter, provided that no more than one
such notice to Borrower and to the holder of the Permitted Second Lien shall be
required for any particular event or occurrence which results in a Default and
provided further that in any event Borrower shall have committed an Event of
Default hereunder if such failure is not cured on or before six (6) months after
notice to Borrower and the holder of the Permitted Second Lien of the above
described written demand for performance. Notwithstanding anything to the
contrary stated herein or in any Loan Document, it is the intent of the parties
hereto that all periods of grace (if any) and any Grace Periods provided for
herein or in any Loan Document shall be deemed to run concurrently, it being the
intent of the parties hereto that no tacking, doubling up or consecutive running
of any periods of grace (if any) and any Grace Periods shall be permitted. If
Borrower or the holder of the Permitted Second Lien diligently prosecute the
cure of a Default pursuant to the foregoing provision (and are not otherwise in
default under the Loan Documents) but are unable to complete such cure within
the time periods specified above, Borrower or the holder of the Permitted Second
Lien, as the case may be, shall have the right at any time within ten (10) days
prior to the expiration of such six (6) months to elect (subject to Lender's
right to waive such Default as hereinafter provided) to obtain a partial release
of the Lien of the Mortgage with respect to the Individual Property or
Properties that are the subject of such Default by delivering to Lender at any
time within such ten (10) day period a written notice of their intent to obtain
such partial release accompanied by the then current Allocated Loan Amount
allocable to such Individual Property or Properties together with accrued
interest thereon through the date of payment and the Prepayment Premium thereon,
plus the other costs incurred by Lender or advances made by Lender with respect
to such Individual Property or Properties. Unless Lender notifies Borrower and
the holder of the Permitted Second Lien in writing within ten (10) days after
such notice is received that it has waived the Default in question and returns
to Borrower therewith the amounts so paid, Lender shall then release such
Individual Property or Properties from the Lien of the Mortgage. Borrower shall
pay all costs incurred by Lender in connection with such release, even if same
is not completed, including without limitation, legal fees and expenses of
outside counsel and title costs.
49
Section 7.4 Remedies. If any Event of Default shall occur and be
continuing, Lender shall have the right but not the obligation to protect and
enforce its rights under the Loan Documents by any appropriate proceedings,
including, without limitation, proceedings for specific performance of any
covenant or agreement contained in any Loan Document for which Lender has
recourse, pursuant to Section 2.9, and Lender may enforce the payment of any
Secured Indebtedness due or enforce any other legal or equitable right. All
rights, remedies and powers conferred upon Lender under the Loan Documents shall
be deemed cumulative and not exclusive of any other rights, remedies or powers
available under the Loan Documents or at law or in equity.
Section 7.4 Indemnity. Subject to the provisions of Section 2.9 hereof,
Borrower promises to indemnify Lender, upon demand, from and against any and all
liabilities, obligations, claims, losses, damages, penalties, actions,
judgments, suits, costs, expenses or disbursements of any kind or nature
whatsoever which may be imposed on, incurred by, or asserted against Lender
(whether or not caused by Lender's negligence) growing out of or resulting from
the Loan Documents and the transactions and events at any time associated
therewith (including without limitation the enforcement of the Loan Documents
and the defense of Lender's actions and inactions in connection with the Loan),
except to the limited extent such liabilities, obligations, claims, losses,
damages, penalties, actions, judgments, suits, costs, expenses or disbursements
are proximately caused by Lender's gross negligence or willful misconduct. If
any Person (including without limitation Borrower or any of its Affiliates) ever
alleges such gross negligence or willful misconduct by Lender, the
indemnification provided for in this section shall nonetheless be paid upon
demand, subject to later adjustment or reimbursement, until such time as a court
of competent jurisdiction enters a final judgment as to the extent and effect of
the alleged gross negligence or willful misconduct.
ARTICLE VIII
Miscellaneous
Section 8.1 Waiver and Amendment. No failure or delay by Lender in
exercising any right, power or remedy which Lender may have under any of the
Loan Documents shall operate as a waiver thereof or of any other right, power or
remedy, nor shall any single or partial exercise by Lender of any such right,
power or remedy preclude any other or further exercise thereof or of any other
right, power or remedy. No waiver of any provision of any Loan Document and no
consent to any departure therefrom shall ever be effective unless it is in
writing and signed by Lender, and then such waiver or consent shall be effective
only in the specific instances and for the purposes for which given and to the
extent specified in such writing. No notice to or demand on Borrower shall in
any case of itself entitle Borrower to any other or further notice or demand in
similar or other circumstances. This Agreement and the other Loan Documents set
forth the entire understanding and agreement of the parties hereto and thereto
with respect to the transactions contemplated herein and therein, and no
modification amendment of or supplement
50
to this Agreement or the other Loan Documents shall be valid or effective unless
the same is in writing and signed by the party against whom it is sought to be
enforced.
Section 8.2 Survival of Agreements: Cumulative Nature. All of Borrower's
various representations, warranties, covenants and agreements in the Loan
Documents shall survive the execution and delivery of this Agreement and the
other Loan Documents and the performance hereof and thereof, including without
limitation the making or granting of the Loan and the delivery of the Note and
the other Loan Documents, and shall further survive until all of the Secured
Indebtedness are paid in full to Lender and all of Lender's obligations to
Borrower are terminated. The representations, warranties, and covenants made by
Borrower in the Loan Documents, and the rights, powers, and privileges granted
to Lender in the Loan Documents, are cumulative, and no Loan Document shall be
construed in the context of another to implicitly diminish, nullify, or
otherwise reduce the benefit to Lender of any such representation, warranty,
covenant, right, power or privilege. In particular and without limitation, no
exception set out in this Agreement to any representation, warranty or covenant
herein contained shall be deemed to apply implicitly to any similar
representation, warranty or covenant contained in any other Loan Document, and
each such similar representation, warranty or covenant shall be subject only to
those exceptions which are expressly made applicable to it by the terms of the
various Loan Documents.
Section 8.3 Notices. All notices, requests, consents, demands and other
communications required or permitted under any Loan Document shall be in writing
and, unless otherwise specifically provided in such Loan Document, shall be
deemed sufficiently given or furnished if delivered by personal delivery, by
telegram, telex or telecopy (provided such telegram, telex or telecopy is
confirmed within 48 hours thereafter by expedited delivery service in the manner
herein described), by expedited delivery service with proof of delivery, or by
registered or certified United States mail, postage prepaid, at the addresses
specified below (unless changed by similar notice in writing given by the
particular Person whose address is to be changed). Any such notice or
communication shall be deemed to have been given either at the time of personal
delivery or, in the case of delivery service or mail, as of the date of first
attempted delivery at the address and in the manner provided herein, or, in the
case of telegram, telex or telecopy, upon receipt:
Borrower's address:
Payless Cashways, Inc.
▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
Telecopy Number: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
51
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Weary
& ▇▇▇▇▇▇▇▇ LLP
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Telecopy Number: (▇▇▇) ▇▇▇-▇▇▇▇
Lender's address:
UBS Mortgage Finance, Inc.
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇▇▇▇▇▇
Telecopy Number: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
Fried ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ &
▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇, Esq.
Telecopy Number: (▇▇▇) ▇▇▇-▇▇▇▇
Permitted Second ▇▇▇▇ ▇▇▇▇▇▇'▇ address:
Canadian Imperial Bank of Commerce
as Coordinating and Collateral Agent
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Telecopy Number: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
▇▇▇▇▇▇ ▇▇▇▇▇ & ▇▇▇▇▇▇▇ LLP
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇, Esq.
Telecopy Number: (▇▇▇) ▇▇▇-▇▇▇▇
Section 8.4 GOVERNING LAW. THE LOAN DOCUMENTS SHALL BE DEEMED CONTRACTS AND
INSTRUMENTS MADE UNDER THE LAWS OF THE STATE OF NEW
52
YORK AND SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH AND GOVERNED BY THE
LAWS OF THE STATE OF NEW YORK AND THE LAWS OF THE UNITED STATES OF AMERICA,
EXCEPT (A) TO THE EXTENT THAT THE LAW OF ANOTHER JURISDICTION IS EXPRESSLY
ELECTED IN A LOAN DOCUMENT, AND (B) WITH RESPECT TO SPECIFIC LIENS, OR THE
PERFECTION THEREOF, EVIDENCED BY SECURITY DOCUMENTS COVERING REAL OR PERSONAL
PROPERTY WHICH BY THE LAWS APPLICABLE THERETO ARE REQUIRED TO BE CONSTRUED UNDER
THE LAWS OF ANOTHER JURISDICTION. EACH RELATED PERSON HEREBY SUBMITS ITSELF TO
THE NON-EXCLUSIVE JURISDICTION OF THE STATE AND FEDERAL COURTS OF THE STATE OF
NEW YORK AND AGREES AND CONSENTS THAT SERVICE OF PROCESS MAY BE MADE UPON IT AND
THE RELATED PERSONS IN ANY LEGAL PROCEEDING RELATING TO THE LOAN DOCUMENTS OR
THE OBLIGATIONS BY ANY MEANS ALLOWED UNDER NEW YORK OR FEDERAL LAW.
Section 8.5 Severability. If any term or provision of any Loan Document
shall be determined to be illegal or unenforceable all other terms and
provisions of the Loan Documents shall nevertheless remain effective and shall
be enforced to the fullest extent permitted by Applicable Laws.
Section 8.6 Counterparts. This Agreement may be separately executed in any
number of counterparts and by .different parties hereto in separate
counterparts, each of which when so executed shall be deemed to constitute one
and the same Agreement.
Section 8.7 NO ORAL AGREEMENTS. THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS
CONSTITUTE THE COMPLETE AND FINAL EXPRESSION OF AGREEMENT AMONG THE PARTIES
HERETO RELATING TO THE LOAN. THE TERMS AND PROVISIONS HEREOF HAVE NOT BEEN NOR
MAY THEY BE MODIFIED BY ANY ORAL AGREEMENT AMONG THE PARTIES, BUT ONLY BY AN
INSTRUMENT IN WRITING EXECUTED BY BOTH BORROWER AND LENDER AND, ACCORDINGLY,
SAID TERMS AND PROVISIONS MAY NOT BE CONTRADICTED BY EVIDENCE OF ANY PRIOR OR
CONTEMPORANEOUS ORAL.
Section 8.8 Effect of Amendment and Restatement of the Prior Loan
Agreement; Confirmation of Security Documents. On the Effective Date, the Prior
Loan Agreement shall be amended and restated to read as set forth . herein.
Borrower acknowledges and agrees that (i) the liens and security interests
securing payment of the Prior Notes are in all respects continuing and in full
force and effect and secure the payment of the Prior Notes and that the Prior
Notes are replaced by the Note issued hereunder, and (ii) the term "Loan
Agreement" as used in the Security Documents shall hereafter mean this
Agreement.
Section 8.9 Usury. In the event that Lender, in enforcing its rights
hereunder, determines that charges and fees incurred in connection with the
Secured Indebtedness may, under the applicable usury laws, cause the interest
rate herein to exceed the maximum allowed by law,
53
then such interest shall be recalculated and any excess over the maximum
interest permitted by said laws shall be credited to the then principal
outstanding balance to reduce said balance by that amount. It is the intent of
the parties hereto that Borrower under no circumstances shall be required to
pay, nor shall Lender be entitled to collect, any interest which is in excess of
the maximum legal rate permitted under the applicable usury laws.
IN WITNESS WHEREOF, the parties have caused this Agreement to be duly
executed as of the day and year first above written.
PAYLESS CASHWAYS, INC.
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
----------------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
Title: Senior Vice-President-Finance
UBS MORTGAGE FINANCE, INC.
By: /s/ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
----------------------------------------
Name: ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
Title: Vice President
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇
-----------------------------------------
Name: ▇▇▇▇▇ ▇▇▇▇▇▇▇
Title: Managing Director
i
TABLE OF CONTENTS
ARTICLE I Definitions and References...... ................................2
Section 1.1 Defined Terms. .....................................2
Section 1.2 Exhibits and Schedules. ...........................10
Section 1.3 Amendment of Defined Instruments. .................10
Section 1.4 References and Titles. ............................10
Section 1.5 Calculations and Determinations. ..................11
ARTICLE II The Loan........................................................11
Section 2.1 Acknowledgment of Existing Obligations.............11
Section 2.2 Exchange of Notes. ...............................11
Section 2.3 Interest. ........................................11
Section 2.4 Funding Losses; Change in Law, Etc.................12
Section 2.5 Mandatory Payments.................................14
Section 2.6 Optional Prepayment................................15
Section 2.7 Partial Releases...................................15
Section 2.8 Payments to Lender. ..............................18
Section 2.9 Limitation on Liability. .........................19
Section 2.10 Permitted Second Lien. ...........................20
ARTICLE III Conditions Precedent............................................21
Section 3.1 Documents to be Delivered..........................21
Section 3.2 Additional Conditions Precedent....................21
ARTICLE IV Representations and Warranties..................................22
Section 4.1 Borrower's Representations and Warranties..........22
Section 4.2 Placement of Loan..................................26
ARTICLE V Covenants of Borrower...........................................27
Section 5.1 Covenants..........................................27
Section 5.2 Indemnification Regarding
Environmental Matters, Etc.......................44
ARTICLE VI Security........................................................44
Section 6.1 Security. ........................................44
Section 6.2 Right of Lender to Perform.........................44
ARTICLE VII Events of Default and Remedies..................................45
Section 7.1 Events of Default..................................45
Section 7.2 Acceleration.......................................46
Section 7.3 Remedies. ........................................48
Section 7.4 Indemnity. .......................................48
ii
ARTICLE VIII Miscellaneous...................................................48
Section 8.1 Waiver and Amendment...............................48
Section 8.2 Survival of Agreements; Cumulative Nature..........49
Section 8.3 Notices............................................49
Section 8.4 GOVERNING LAW......................................51
Section 8.5 Severability.......................................51
Section 8.6 Counterparts.......................................51
Section 8.7 NO ORAL AGREEMENTS.................................51
Section 8.8 Effect of Amendment and Restatement of the
Prior Loan Agreement; Confirmation of
Security Documents...............................51
Section 8.9 Usury..............................................52
LIST OF EXHIBITS AND SCHEDULES
Schedule 1 -- Disclosure Schedule
Schedule 2 -- Security Schedule
Schedule 3 -- Closing Item Schedule
Schedule 4 -- Closing Condition Schedule
Exhibit A -- Form of Promissory Note
Exhibit B -- Form of Permitted Second Lien
Exhibit C -- Individual Properties and Allocated Amounts
Exhibit D -- Opinions
