1
EXHIBIT 10.2
LOAN AGREEMENT
Dated as of January 30, 1997
by and between
BPP/VALLEY CENTRAL, L.P.
(as Borrower)
and
NOMURA ASSET CAPITAL CORPORATION
(as Lender)
2
TABLE OF CONTENTS
Page
ARTICLE I. CERTAIN DEFINITIONS..................................................................... 1
Section 1.1. Definitions................................................................. 1
ARTICLE II. GENERAL TERMS.......................................................................... 25
Section 2.1. Amount of the Loan.......................................................... 25
Section 2.2. Use of Proceeds............................................................. 25
Section 2.3. Security for the Loan....................................................... 25
Section 2.4. Borrower's Note............................................................. 25
Section 2.5. Principal and Interest Payments............................................. 25
Section 2.6. Voluntary Defeasance........................................................ 27
Section 2.7. Prepayment.................................................................. 27
Section 2.8. Application of Payments..................................................... 28
Section 2.9. Payment of Debt Service, Method and Place of Payment........................ 28
Section 2.10. Taxes...................................................................... 28
Section 2.11. Defeasance Requirements.................................................... 28
Section 2.12. Central Cash Management.................................................... 30
Section 2.13. Security Agreement......................................................... 37
Section 2.14. Securitization............................................................. 39
Section 2.15. Supplemental Mortgage Affidavits........................................... 40
Section 2.16. Transfer of Mortgaged Property............................................. 40
ARTICLE III. CONDITIONS PRECEDENT.................................................................. 43
Section 3.1. Conditions Precedent to the Making of the Loan.............................. 43
Section 3.2. Form of Loan Documents and Related Matters.................................. 48
i
3
Page
ARTICLE IV. REPRESENTATIONS AND WARRANTIES......................................................... 48
Section 4.1. Representations and Warranties of Borrower.................................. 48
Section 4.2. Survival of Representations and Warranties.................................. 56
ARTICLE V. AFFIRMATIVE COVENANTS................................................................... 56
Section 5.1. Borrower Covenants.......................................................... 56
ARTICLE VI. NEGATIVE COVENANTS..................................................................... 68
Section 6.1. Borrower Negative Covenants................................................. 68
ARTICLE VII. DEFAULTS.............................................................................. 70
Section 7.1. Event of Default............................................................ 70
Section 7.2. Remedies.................................................................... 73
Section 7.3. Remedies Cumulative......................................................... 74
Section 7.4. Lender's Right to Perform................................................... 74
ARTICLE VIII. MISCELLANEOUS........................................................................ 74
Section 8.1. Survival.................................................................... 74
Section 8.2. Lender's Discretion......................................................... 75
Section 8.3. Governing Law............................................................... 75
Section 8.4. Modification, Waiver in Writing............................................. 76
Section 8.5. Delay Not a Waiver.......................................................... 76
Section 8.6. Notices..................................................................... 76
Section 8.7. Trial By Jury............................................................... 77
Section 8.8. Headings.................................................................... 77
Section 8.9. Assignment.................................................................. 77
Section 8.10. Severability............................................................... 77
Section 8.11. Preferences................................................................ 77
ii
4
Page
Section 8.12. Waiver of Notice........................................................... 78
Section 8.13. Remedies of Borrower....................................................... 78
Section 8.14. Exculpation................................................................ 78
Section 8.15. Exhibits Incorporated...................................................... 79
Section 8.16. Offsets, Counterclaims and Defenses........................................ 79
Section 8.17. No Joint Venture or Partnership............................................ 80
Section 8.18. Waiver of Marshalling of Assets Defense.................................... 80
Section 8.19. Waiver of Counterclaim..................................................... 80
Section 8.20. Conflict: Construction of Documents........................................ 80
Section 8.21. Brokers and Financial Advisors............................................. 78
Section 8.22. Counterparts............................................................... 79
Section 8.23. Estoppel Certificates...................................................... 79
Section 8.24. Payment of Expenses........................................................ 81
Section 8.25. Bankruptcy Waiver.......................................................... 79
Section 8.26. Entire Agreement........................................................... 80
Section 8.27. Dissemination of Information............................................... 82
Section 8.28. Limitation of Interest..................................................... 82
Section 8.29. Indemnification............................................................ 81
Section 8.30. Borrower Acknowledgments................................................... 83
Section 8.31. Publicity.................................................................. 81
iii
5
LOAN AGREEMENT
THIS LOAN AGREEMENT, made as of January 30, 1997, is by and
between NOMURA ASSET CAPITAL CORPORATION, a Delaware corporation, having an
address at 2 World Xxxxxxxxx Xxxxxx, Xxxxxxxx X, Xxx Xxxx, Xxx Xxxx 00000-0000,
Attention: Xxxxxx XxXxxx, Telefax Number (000) 000-0000 (together, with its
successors and assigns, "Lender"), and BPP/VALLEY CENTRAL, L.P., a California
limited partnership, with an address of c/x Xxxxxxx Pacific Properties, Inc.,
000 Xxxx Xxx Xxxxxx, Xxx Xxxxx, Xxxxxxxxxx 00000, Attention: Xxxxxx Xxxxx,
Telefax Number: (000) 000-0000 (the "Borrower").
RECITALS
WHEREAS, Borrower desires to obtain a loan (the "Loan") from
Lender in the principal amount of Twenty-Five Million Four Hundred Thousand
Dollars ($25,400,000.00) (the "Loan Amount") to pay the acquisition costs for
the Facility to be acquired by Borrower;
WHEREAS, Lender is willing to make the Loan on the condition
that Borrower joins in the execution and delivery of this Agreement which shall
establish the terms and conditions of the Loan; and
WHEREAS, Lender and Borrower contemplate that all or any
portion of Lender's interest in the Loan and to the Loan Documents may be
assigned, in whole or in part, by Lender to another Person, including, without
limitation, to a trustee on behalf of security holders in connection with a
Securitization.
NOW, THEREFORE, in consideration of the making of the Loan by
Lender and the covenants, agreements, representations and warranties set forth
in this Agreement, the parties hereby covenant, agree, represent and warrant as
follows:
ARTICLE I
CERTAIN DEFINITIONS
Section 1.1. Definitions. For all purposes of this Agreement:
(a) the capitalized terms defined in this Article I have the
meanings assigned to them in this Article I, and include the plural as well as
the singular;
(b) all accounting terms have the meanings assigned to them in
accordance with GAAP;
(c) the words "herein", "hereof", and "hereunder" and other
words of similar import refer to this Agreement as a whole and not to any
particular Article, Section , or other subdivision; and
(d) the following terms have the following meanings:
6
"Account Collateral" has the meaning provided in Section
2.13(a).
"Accounts" means any of Borrower's rights to payment for goods
sold or leased or for services rendered arising from the ownership or operation
of the Facility and not evidenced by an Instrument, including, without
limitation, all accounts and accounts receivable arising from the ownership or
operation of the Facility, now existing or hereafter coming into existence, and
all proceeds thereof (whether cash or non-cash, moveable or immovable, tangible
or intangible), received from the sale, exchange, transfer, collection or other
disposition or substitution thereof. In addition to the foregoing, the term
"Accounts" shall include the meaning as such term has in the UCC.
"Accrued Interest" has the meaning provided in Section 2.5(e).
"Adjusted Net Operating Income" means, for any applicable
period, the Net Operating Income for such period subject to the following
adjustments and assumptions: (i) Operating Income shall not be considered for
tenants who, as of the date of such calculation, are not in occupancy and paying
rent; (ii) reimbursements from tenants will be included only to the extent
Lender determines, in its sole discretion, that such reimbursements are
stabilized and recurring, but reimbursements in excess of the corresponding
expense items shall not be included; (iii) percentage rent will be included only
to the extent Lender determines that such percentage rent is stabilized and
recurring, up to a maximum of 50-75% of percentage rent collected in the
preceding 12 months; (iv) income from month-to-month tenants and temporary
tenants will be included only to the extent Lender determines that such
month-to-month income and temporary income are stabilized and recurring, up to a
maximum of 50% of such rent collected in the preceding 12 months; (v) other
income may be included on a case-by-case basis in Lender's sole discretion, and
in any event only to the extent such income is determined by Lender to be
stabilized and recurring and of an operating nature for a period of at least
three years; (vi) a vacancy and credit loss allowance will be applied, in an
amount equal to the greatest of (a) actual historical vacancy and/or credit
loss, (b) 5% of the non-anchor revenues (to the extent not accounted for), and
(c) market vacancy allowances; (vii) expenses will be equal to the actual
expenses for the trailing 12 months ended in the most recently completed fiscal
quarter (except for real estate taxes and insurance, which will be included at
their stabilized, recurring levels), and will exclude any non-recurring items
and the costs of capital improvements; (viii) management fees will be assumed to
be the greater of (a) actual management fees and (b) 5% of effective gross
income for the Facility (provided, that the amount of the management fees so
determined will be reduced by those costs which are incurred by the Facility and
were deducted under other sections hereof, but would ordinarily be paid by the
manager from its management fee; (ix) capital expenditures will be deemed to be
the greater of (a) $0.15 per square foot and (b) the amount recommended by the
structural engineering/property condition reports approved by Lender prior to
the Closing; (x) a deduction will be made for the pro-rated amount of tenant
improvement costs and leasing commissions, based on a 60% retention rate
assumption and other assumptions based on market information, for tenants that
are scheduled to roll over during the amortization period of the Loan, without
duplication for costs deducted under other sections, subject to a minimum of
$1.00 per occupied square foot for non-anchor space; and (xi) such other
adjustments as determined by Lender in its reasonable discretion
2
7
consistent with its due diligence findings and prevailing market conditions.
Notwithstanding the foregoing, Adjusted Net Operating Income shall be determined
in a manner consistent with and using the same underwriting standards and
methodology as used in calculating Base Net Operating Income.
"Advisor" means Nomura Securities International, Inc.
"Affiliate" of any specified Person means any other Person
controlling, controlled by or under common control with such specified Person.
For the purposes of this Agreement, "control" when used with respect to any
specified Person means the power to direct the management and policies of such
Person, directly or indirectly, whether through the ownership of voting
securities or other beneficial interests, by contract or otherwise; and the
terms "controls", "controlling" and "controlled" have the meanings correlative
to the foregoing.
"Agreement" means this Loan Agreement, as the same may from
time to time hereafter be modified, supplemented or amended.
"Annual Operating Budget" means an annual budget for the
operations of the Facility (broken down on a month-by-month basis) prepared, and
submitted by Borrower to Lender on or prior to December 1, 2003 for the calendar
year commencing January 1, 2004 and thereafter on each December 1 for each
succeeding calendar year, all in form and substance reasonably satisfactory to
Lender and as reasonably approved by Lender, as the same shall be amended by
Borrower from time to time, with Lender's written consent, not be unreasonably
withheld or delayed. Lender's approval shall be deemed given if Lender does not
respond to Borrower's proposed budget within thirty (30) days of Lender's
receipt thereof.
"Appraisals" means the appraisals, if any, with respect to the
Facility delivered to Lender in connection with the Loan and any more recent
appraisal of the Facility delivered to Lender or Lender's servicer, as
applicable, each made by an Appraiser at the request of Borrower or Lender, as
any of the same may be updated by recertification from time to time (and
pursuant to the terms of this Agreement) by the Appraiser performing such
Appraisal.
"Appraiser" means any Independent appraiser selected by
Borrower (and reasonably satisfactory to Lender) who is (i) a member of the
Appraisal Institute with a national practice and who has at least ten years
experience with real estate of the same type and in the geographic area of the
Facility to be appraised or (ii) otherwise reasonably acceptable to Lender.
"Appurtenant Rights" has the meaning set forth in the
Mortgage.
"Assignment of Agreements" means, with respect to the
Facility, a first priority Assignment of Agreements Affecting Real Estate, in
form and substance satisfactory to Lender in its sole discretion, dated as of
the Closing Date from Borrower, as assignor, to Lender, as assignee, as the same
may thereafter from time to time be supplemented, amended, modified or extended
by one or more written agreements supplemental thereto.
3
8
"Assignment of Leases" means, with respect to the Facility, a
first priority Assignment of Leases and Rents, in form and substance
satisfactory to Lender in Lender's sole discretion, dated as of the Closing Date
from Borrower, as assignor, to Lender, as assignee, assigning to Lender
Borrower's interest in and to the Leases and the Rents with respect to the
Facility as security for the Loan, as the same may thereafter from time to time
be supplemented, amended, modified or extended by one or more written agreements
supplemental thereto.
"Base Payment" has the meaning provided in Section 2.5(c).
"Base Net Operating Income" means the amount shown on Exhibit
B.
"Basic Carrying Costs" means the following costs with respect
to the Facility: (i) real property taxes, assessments and Impositions applicable
to the Facility, and (ii) insurance premiums for policies of insurance required
or permitted to be maintained by Borrower pursuant to this Agreement or the
other Loan Documents.
"Basic Carrying Costs Monthly Installment" means, with respect
to the Facility, Lender's reasonable and good faith estimate of one-twelfth
(1/12th) of the annual amount of the Basic Carrying Costs (provided, that Lender
may calculate reasonably and in good faith the monthly amount to assure that
funds are reserved in sufficient amounts to enable the payment of all
Impositions, including, without limitation, taxes and insurance premiums thirty
(30) days prior to their respective due dates). Should the Basic Carrying Costs
for the then current Fiscal Year or payment period not be ascertainable by
Lender at the time a monthly deposit is required to be made, the Basic Carrying
Costs Monthly Installment shall be Lender's reasonable and good faith estimate
based on one-twelfth (1/12th) of the aggregate Basic Carrying Costs for the
prior Fiscal Year or payment period, with reasonable adjustments as reasonably
determined by Lender. As soon as the Basic Carrying Costs are fixed for the then
current Fiscal Year or period, the next ensuing Basic Carrying Costs Monthly
Installment shall be reasonably adjusted to reflect any deficiency or surplus in
prior Basic Carrying Costs Monthly Installments.
"Basic Carrying Costs Sub-Account" means the Sub-Account of
the Cash Collateral Account established and maintained pursuant to Section 2.12
relating to the payment of Basic Carrying Costs.
"Borrower" has the meaning provided in the first paragraph of
this Agreement.
"Business Day" means any day other than (i) a Saturday or a
Sunday, and (ii) a day on which federally insured depository institutions in Xxx
Xxxx, Xxx Xxxx, Xxxxxxx, Xxxxxxxx and any state in which the Collection Account
or the Cash Collateral Account is located are authorized or obligated by law,
regulation, governmental decree or executive order to be closed.
"Capital Improvement Costs" means costs incurred by Borrower
in connection with capital improvements to the Facility.
"Capital Reserve Amount" means with respect to the Facility,
an amount equal to the greater of (i) $0.15 multiplied by the number of square
feet of gross rentable area (as
4
9
approved by Lender) for the Facility per annum and (ii) the amount indicated in
the Engineering Report(s) as the annual amount required to maintain the
Facility.
"Capital Reserve Monthly Installment" means, with respect to
the Facility, an amount equal to one-twelfth (1/12th) of the Capital Reserve
Amount.
"Capital Reserve Sub-Account" means the Sub-Account of the
Cash Collateral Account established and maintained pursuant to Section 2.12
relating to the payment of Capital Improvement Costs.
"Cash Collateral Account" has the meaning provided in Section
2.12(b).
"Cash Collateral Account Agreement" has the meaning provided
in Section 2.13(c).
"Cash Collateral Account Bank" means the bank chosen by Lender
to hold the Cash Collateral Account, or any successor bank hereafter selected by
Lender upon prior written notice to Borrower and otherwise in accordance with
the terms hereof.
"Closing Date" means the date of this Agreement.
"Code" means the Internal Revenue Code of 1986, as amended,
and as it may be further amended from time to time, any successor statutes
thereto, and applicable U.S. Department of Treasury regulations issued pursuant
thereto in temporary or final form.
"Collateral" means, collectively, the Land, Appurtenant
Rights, Improvements, Equipment, Rents, Leases, Accounts, Account Collateral,
General Intangibles, goods, Instruments, Inventory, Money, Permitted Investments
and (to the full extent assignable) Permits and all Proceeds and products of the
foregoing, all whether now owned or hereafter acquired and all other property
which is or hereafter may become subject to a Lien in favor of Lender as
security for the Loan.
"Collateral Security Instrument" means any right, document or
instrument, other than a Mortgage, given as security for the Loan (including,
without limitation, the Assignment of Leases, the Assignment of Agreements, and
the Manager's Subordination (if any)), as the same may hereafter from time to
time be supplemented, amended, extended or modified.
"Collection Account" has the meaning provided in Section
2.12(a).
"Collection Account Agreement" has the meaning set forth in
Section 2.12(b).
"Collection Account Bank" means, with respect to the Facility,
the applicable collection bank for the Facility and any successor bank hereafter
selected by Borrower and reasonably approved by Lender.
"Combined Debt Service Coverage Ratio" shall mean, for any
period, the quotient obtained by dividing (x) the sum of Adjusted Net Operating
5
10
Income and Adjusted Net Operating Income (as defined in the Xxxxxx Loan
Agreement) for the specified period, by (y) the sum of the aggregate amount of
Base Payments due for such period plus the aggregate amount of Base Payments (as
defined in the Xxxxxx Loan Agreement) due for such period.
"Condemnation Proceeds" has the meaning provided in Section
2.12(h).
"Contingent Obligation" means, without duplication, any
obligation of Borrower guaranteeing any indebtedness, leases, dividends or other
obligations ("primary obligations") of any other Person (the "primary obligor")
in any manner, whether directly or indirectly, including, without limitation,
any obligation of Borrower, whether or not contingent, (i) to purchase any such
primary obligation or any property constituting direct or indirect security
therefor, (ii) to advance or supply funds (x) for the purchase or payment of any
such primary obligation or (y) to maintain working capital or equity capital of
the primary obligor, (iii) to purchase property, securities or services
primarily for the purpose of assuring the owner of any such primary obligation
of the ability of the primary obligor to make payment of such primary obligation
or (iv) otherwise to assure or hold harmless the owner of such primary
obligation against loss in respect thereof. The amount of any Contingent
Obligation shall be deemed to be an amount equal to the Borrower's maximum
anticipated liability in respect thereof (assuming that Borrower is required to
perform thereunder) as determined by Lender in good faith (taking into account
the non-recourse or limited recourse nature of such Contingent Obligation, if
applicable).
"Cross-Collateralization" means the consummation, upon terms
and conditions satisfactory to Lender in its sole discretion, pursuant to that
certain Commitment of Lender dated January 28, 1997, in favor of the SPE Equity
Owner of a secured loan transaction (the "Xxxxxx Hills Loan") between Lender, as
lender, and a Single-Purpose Entity (the "Xxxxxx Hills Entity") which is or
becomes the fee owner of The Plaza at Xxxxxx Hills, located in the City of
Industry, California, subject to satisfaction of each and all of the following
terms and conditions on or prior to February 28, 1997: (i) the Xxxxxx Hills Loan
shall be in an amount not less than $33,100,000.00 and shall have the same
Optional Prepayment Date and Maturity Date, respectively, as are applicable to
the Loan; (ii) Borrower shall execute a guaranty of the repayment in full of the
Xxxxxx Hills Loan in form and substance satisfactory to Lender in its sole
discretion (the "Guaranty"); (iii) the Mortgage and, if required by Lender, the
other Loan Documents shall be amended to provide that the Guaranty is secured by
the Mortgage, such amendments to be in form and substance satisfactory to Lender
in its sole discretion; (iv) Lender shall receive endorsements to the Title
Insurance Policy satisfactory to Lender in its sole discretion confirming the
priority of the lien of the Mortgage upon consummation of the conditions
described herein and, if it so requests, reinsurance of liability under the
Title Insurance Policy and the title insurance policy insuring the mortgage
executed by the Xxxxxx Hills Entity; (v) there shall be no Default or Event of
Default under any of the Loan Documents; (vi) Lender shall have received an
opinion of counsel satisfactory to Lender in its sole discretion that the
Guaranty and the Loan Documents, as amended, have been duly authorized, executed
and delivered by Borrower and constitute the legal, valid and binding obligation
of Borrower enforceable against Borrower in accordance with its terms; (vii)
Lender shall have received a substantive non-consolidation opinion satisfactory
to Lender in its sole discretion that Borrower and the Xxxxxx Hills Entity taken
together would not be consolidated with any other entity in a
6
11
Federal Bankruptcy case; and (viii) all of the costs and expenses of Lender in
connection with the Cross-Collateralization, including without limitation the
fees and expenses of Lender's counsel and the cost of endorsements to the Title
Insurance Policy, shall have been paid by Borrower and/or the Xxxxxx Hills
Entity.
"Current Interest Accrual Period" has the meaning provided in
Section 2.12(g).
"Debt Service" means, for any period, the principal, interest
payments, Default Rate interest, Late Charges and Yield Maintenance Premium that
accrue or are due and payable in accordance with the Loan Documents during such
period.
"Debt Service Coverage Ratio" means, for any period, the
quotient obtained by dividing Net Operating Income for the specified period by
the aggregate amount of the Base Payments due for such period.
"Debt Service Payment Sub-Account" means the Sub-Account of
the Cash Collateral Account established and maintained pursuant to Section 2.12
relating to the payment of Debt Service.
"Deed of Trust Trustee" means the trustee, if any, under the
Mortgage.
"Default" means the occurrence of any event which, but for the
giving of notice or the passage of time, or both, would be an Event of Default.
"Default Collateral" has the meaning provided in Section 8.14.
"Default Rate" means the per annum, interest rate equal to the
lesser of (i) the Maximum Amount or (ii) the Interest Rate plus five percent
(5%).
"Defeasance Deposit" means the following in each of the
following circumstances:
(i) in the case of a total defeasance of the Loan and Facility
pursuant to Section 2.11, "Defeasance Deposit" means an amount equal to
125% of the amount that will be sufficient to purchase U.S. Obligations
(A) having maturity dates on or prior to, but as close as possible to,
successive scheduled Payment Dates (after the Defeasance Release Date)
upon which Payment Dates interest and principal payments would be
required under the Note as though the Maturity Date of the Note were
the Optional Prepayment Date and (B) in amounts sufficient to pay all
scheduled principal and interest payments on the Note as if the
Maturity Date of the Note were the Optional Prepayment Date (but
without any adjustment of the monthly amortization schedule); provided,
that if (x) the Cross-Collateralization shall not have been
consummated, or (y) a Transfer of the Facility shall have occurred
pursuant to Section 2.16 below, or (z) there shall occur concurrently
with the total defeasance of the Loan the total defeasance of the
Xxxxxx Hills Loan in accordance with the Xxxxxx Loan Agreement,
7
12
then in any such case the Defeasance Deposit shall mean an amount equal
to 100% of the foregoing amount; and
(ii) in the case of a partial defeasance of the Loan pursuant
to Section 5.1(P) or Section 2.16(c), "Defeasance Deposit" means the
amount that will be sufficient to purchase U.S. Obligations (A) having
maturity dates on or prior to, but as close as possible to, the
successive scheduled Payment Dates (after the date of such voluntary
defeasance) upon which Payment Dates interest and principal payments
would be required under the Note as though the Maturity Date of the
Note were the Optional Prepayment Date and (B) in amounts sufficient to
pay all scheduled principal and interest payments on the Note (1) as if
the Maturity Date of the Note were the Optional Prepayment Date (but
without any adjustment of the monthly amortization schedule) and (2) as
if the outstanding principal indebtedness due under the Note were an
amount equal to the amount required to be defeased pursuant to Section
5.1(P) or Section 2.16(c) in connection with such partial defeasance.
"Defeasance Release Date" has the meaning provided in Section
2.11(a).
"Deferred Maintenance Amount" means with respect to the
Facility, or any portion thereof, the amount shown on Exhibit B.
"Deferred Maintenance Costs" means the costs incurred by
Borrower in connection with completion of the repairs to (including, but not
limited to, work in connection with causing the Facility to comply with the
Americans with Disabilities Act) and environmental remediation of the Facility
itemized on Exhibit C hereto.
"Deferred Maintenance Sub-Account" means the Sub-Account of
the Cash Collateral Account established and maintained pursuant to Section 2.12
relating to the payment of Deferred Maintenance Costs.
"Eighteen Year Treasury Rate" means the yield, calculated by
linear interpolation (rounded to three decimal places) of the yields of United
States Treasury Constant Maturities with terms (one longer and one shorter) most
nearly approximating that of noncallable United States Treasury obligations
having maturities as close as possible to eighteen (18) years from the Optional
Prepayment Date, as determined by Lender on the basis of Federal Reserve
Statistical Release H.15-Selected Interest Rates under the heading U.S.
Governmental Security/Treasury Constant Maturities, or other recognized source
of financial market information selected by Lender for the week prior to the
Optional Prepayment Date.
"Eligible Account" means (i) an account maintained with a
federal or state chartered depository institution or trust company whose (x)
commercial paper, short-term debt obligations or other short-term deposits are
rated at least A-1 by each Rating Agency if the deposits in such account are to
be held in such account for thirty (30) days or less or (y) long-term unsecured
debt obligations are rated at least AA- by each Rating Agency if the deposits in
such account are to be held in such account for more than thirty (30) days; or
(ii) a segregated
8
13
trust account maintained with the trust department of a federal or state
chartered depository institution or trust company acting in its fiduciary
capacity which institution or trust company is subject to regulations regarding
fiduciary funds on deposit substantially similar to 12 C.F.R. Section 9.10(b);
or (iii) an account otherwise acceptable to each Rating Agency, as confirmed in
writing that such account would not, in and of itself, result in a downgrade,
qualification or withdrawal of the then current ratings assigned to any security
issued in connection with a Securitization.
"Engineer" means any reputable Independent engineer, properly
licensed in the relevant jurisdiction and approved by Lender in Lender's
reasonable discretion.
"Engineering Reports" means the structural engineering reports
with respect to the Facility prepared by an Engineer and delivered to Lender in
connection with the Loan and any amendments or supplements thereto delivered to
Lender.
"Entity" means (a) limited partnership, if Borrower is listed
as a limited partnership in the first paragraph of this Agreement or (b) limited
liability company, if Borrower is listed as a limited liability company in the
first paragraph of this Agreement.
"Environmental Claim" means any written request for
information by a Governmental Authority, or any written notice, notification,
claim, administrative, regulatory or judicial action, suit, judgment, demand or
other written communication by any Person or Governmental Authority requiring,
alleging or asserting liability with respect to Borrower, or the Facility,
whether for damages, contribution, indemnification, cost recovery, compensation,
injunctive relief, investigatory, response, remedial or cleanup costs, damages
to natural resources, personal injuries, fines or penalties arising out of,
based on or resulting from (i) the presence, Use, Release or threatened Release
into the environment of any Hazardous Substance originating at or from, or
otherwise affecting the Facility, (ii) any fact, circumstance, condition or
occurrence forming the basis of any violation, or alleged violation, of any
Environmental Law by Borrower or otherwise affecting the Facility or (iii) any
alleged injury or threat of injury to health, safety or the environment by
Borrower or otherwise affecting the Facility.
"Environmental Laws" means any and all applicable federal,
state, local and foreign laws, rules, regulations or municipal ordinances, each
as amended from time to time, any judicial or administrative orders, decrees,
settlement agreements or judgments thereunder, and any Permits, approvals,
licenses, registrations, filings and authorizations, in each case as in effect
as of the relevant date, relating to the environment, health or safety, or the
Release or threatened Release of Hazardous Substances into the indoor or outdoor
environment including, without limitation, ambient air, soil, surface water,
ground water, wetlands, land or subsurface strata, or otherwise relating to the
presence or Use of Hazardous Substances.
"Environmental Reports" means, with respect to the Facility,
the environmental audit reports delivered to Lender in connection with the Loan
and any amendments or supplements thereto delivered to Lender.
9
14
"Equipment" means all fixtures, appliances, machinery,
furniture, furnishings, decorations, tools and supplies, now owned or hereafter
acquired by Borrower, including but not limited to, all beds, linens, radios,
televisions, carpeting, telephones, cash registers, computers, lamps, glassware,
restaurant and kitchen equipment, and building equipment, including but not
limited to, all heating, lighting, incinerating, waste removal and power
equipment, engines, pipes, tanks, motors, conduits, switchboards, security and
alarm systems, plumbing, lifting, cleaning, fire prevention, fire extinguishing,
refrigeration, washing machines, dryers, stoves, refrigerators, ventilating, and
communications apparatus, air cooling and air conditioning apparatus,
escalators, elevators, ducts, and compressors, materials and supplies, and all
other machinery, apparatus, equipment, fixtures and fittings now owned or
hereafter acquired by Borrower wherever located, any portion thereof or any
appurtenances thereto, together with all additions, replacements, parts,
fittings, accessions, attachments, accessories, modifications and alterations of
any of the foregoing. In addition to the foregoing, the term "Equipment" shall
include the meaning as such term has in the UCC.
"Equity Interests" means (a) if Borrower is a limited
partnership, limited partnership interests in Borrower or (b) if Borrower is a
limited liability company, membership interests in Borrower; provided, however,
that Equity Interests shall not include any direct or indirect legal or
beneficial ownership interest, or any other interest of any nature or kind
whatsoever, of the SPE Equity Owner in Borrower.
"ERISA" means the Employee Retirement Income Security Act of
1974, as amended from time to time, and the regulations promulgated thereunder.
Section references to ERISA are to ERISA, as in effect at the date of this
Agreement and, as of the relevant date, any subsequent provisions of ERISA,
amendatory thereof, supplemental thereto or substituted therefore.
"ERISA Affiliate" means any corporation or trade or business
that is a member of any group of organizations (i) described in Section 414(b)
or (c) of the Code of which Borrower is a member, and (ii) solely for purposes
of potential liability under Section 302(c)(11) of ERISA and Section 412(c)(11)
of the Code and the lien created under Section 302(f) of ERISA and Section
412(n) of the Code, described in Section 414(m) or (o) of the Code of which
Borrower is a member.
"Event of Default" has the meaning set forth in Section 7.1.
"Excess Cash Flow" has the meaning set forth in Section 2.12.
"Extra Funds" has the meaning set forth in Section 2.12.
"Facility" means each "Real Property" (as defined in the
Mortgage), and the Collateral with respect thereto, for so long as such Real
Property and related Collateral is encumbered by a Mortgage.
10
15
"Fiscal Year" means the 12-month period ending on December 31
of each year or such other fiscal year of Borrower as Borrower may select from
time to time with the prior written consent of Lender not to be unreasonably
withheld or delayed.
"GAAP" means generally accepted accounting principles
consistently applied in the United States of America as of the date of the
applicable financial report.
"General Intangibles" means all intangible personal property
of Borrower (other than Accounts, Rents, Instruments, Inventory, Money and
Permits), including, without limitation, things in action, settlements,
judgments, contract rights, rights to performance (including, without
limitation, rights under warranties), refunds of real estate taxes and
assessments and other rights to payment of Money, copyrights, trademarks, trade
names and patents now existing or hereafter in existence. In addition to the
foregoing, the term "General Intangibles" shall include the meaning as such term
has in the UCC.
"Governmental Authority" means any national or federal
government, any state, regional, local or other political subdivision thereof
with jurisdiction and any Person with jurisdiction exercising executive,
legislative, judicial, regulatory or administrative functions of or pertaining
to government.
"Gross Revenue" means, with respect to the Facility, the total
dollar amount of all income and receipts of any kind whatsoever received by
Borrower in the ordinary course of its business with respect to the Facility,
including, without limitation, all Rents (but excluding security deposits until
forfeited or otherwise entitled to be retained by Borrower) and Money.
"Guaranty" shall have the meaning set forth under the
definition of "Cross-Collateralization."
"Hazardous Substance" means, collectively, (i) any petroleum
or petroleum products or waste oils, explosives, radioactive materials,
asbestos, urea formaldehyde foam insulation, polychlorinated biphenyls ("PCBs"),
lead in drinking water, and lead-based paint, the presence, generation, use,
transportation, storage or disposal of or exposure to which (x) is regulated or
could lead to liability under any Environmental Law or (y) is subject to notice
or reporting requirements under any Environmental Law, (ii) any chemicals or
other materials or substances which are now or hereafter become defined as or
included in the definition of "hazardous substances," "hazardous wastes,"
"hazardous materials," "extremely hazardous wastes," "restricted hazardous
wastes," "toxic substances," "toxic pollutants," "contaminants," "pollutants" or
words of similar import under any Environmental Law and (iii) any other chemical
or any other material or substance, exposure to which is now or hereafter
prohibited, limited or regulated under any Environmental Law.
"Impositions" means all taxes (including, without limitation,
all real estate, ad valorem, sales (including those imposed on lease rentals),
use, single business, gross receipts, value added, intangible transaction
privilege, privilege, license or similar taxes), assessments (including, without
limitation, to the extent not discharged prior to the Closing Date, all
assessments for public improvements or benefits, whether or not commenced or
completed
11
16
within the term of the Mortgage), ground rents, water, sewer or other rents and
charges, excises, levies, fees (including, without limitation, license, permit,
inspection, authorization and similar fees), and all other governmental charges,
in each case whether general or special, ordinary or extraordinary, foreseen or
unforeseen, of every character in respect of the Facility, (including all
interest and penalties thereon), which at any time prior to, during or in
respect of the term hereof may be assessed or imposed on or in respect of or be
a Lien upon (i) Borrower (including, without limitation, all income, franchise,
single business or other taxes imposed on Borrower for the privilege of doing
business in the jurisdiction in which the Facility, or any other Collateral is
located) or Lender, (ii) the Facility, or any other Collateral or any part
thereof or (iii) any occupancy, operation, use or possession of, or sales from,
or activity conducted on, or in connection with the Facility or the leasing or
use of the Facility or any part thereof or the acquisition or financing of the
acquisition of the Facility by Borrower. Nothing contained in this Agreement
shall be construed to require Borrower to pay any tax, assessment levy or charge
imposed on Lender, in the nature of a franchise, capital levy, estate,
inheritance, succession, income or net revenue tax.
"Improvements" means, with respect to the Facility, all
buildings, structures and improvements of every nature whatsoever situated on
the Land on the Closing Date or thereafter, including, but not limited to, to
the extent (if any) of Borrower's right, title or interest therein or thereto,
all gas and electric fixtures, radiators, heaters, washing machines, dryers,
refrigerators, ovens, engines and machinery, boilers, ranges, elevators and
motors, plumbing and heating fixtures, antennas, carpeting and other floor
coverings, water heaters, awnings and storm sashes, and cleaning apparatus which
are or shall be attached to the Land or said buildings, structures or
improvements.
"Indebtedness" means, at any given time, the Principal
Indebtedness, together with all accrued and unpaid interest thereon and all
other obligations and liabilities due or to become due to Lender pursuant
hereto, under the Note or in accordance with any of the other Loan Documents,
and all other amounts, sums and expenses paid by or payable to Lender hereunder
or pursuant to the Note or any of the other Loan Documents.
"Indemnified Party" shall have the meaning set forth in
Section 8.29.
"Independent" means, when used with respect to any Person, a
Person who (i) does not have any direct financial interest or any material
indirect financial interest in Borrower or in any Affiliate of Borrower, and
(ii) is not connected with Borrower or any Affiliate of Borrower as an officer,
employee, promoter, underwriter, trustee, partner, member, manager, creditor,
director or person performing similar functions.
"Independent Director" means a duly appointed member of the
board of directors of the relevant entity who shall not have been, at the time
of such appointment or at any time in the preceding five (5) years, (a) a direct
or indirect legal or beneficial owner in such entity or any of its affiliates,
(b) a creditor, supplier, employee, officer, director, manager or contractor of
such entity or any of its affiliates, (c) a person who controls such entity or
any of its affiliates, or (d) a member of the immediate family of a person
defined in (a), (b) or (c) above.
12
17
"Initial Basic Carrying Cost Amount" means, for Borrower and
its Facility, the amount shown on Exhibit B.
"Initial Interest Rate" means 7.975% per annum; provided,
however, that if the Cross-Collateralization is not consummated on or before
February 28, 1997, then from and after such date the Initial Interest Rate shall
be 8.125%.
"Instruments" means all instruments, chattel paper, documents
or other writings obtained by Borrower from or in connection with the ownership
or operation of the Facility evidencing a right to the payment of Money,
including, without limitation, all notes, drafts, acceptances, documents of
title, and policies and certificates of insurance, including but not limited to,
liability, hazard, rental and credit insurance, guarantees and securities, now
or hereafter received by Borrower or in which Borrower has or acquires an
interest pertaining to the foregoing. In addition to the foregoing,
"Instruments" shall include the meaning such term has in the UCC.
"Insurance Proceeds" has the meaning provided in Section
2.12(h).
"Insurance Requirements" means all material terms of any
insurance policy required pursuant to the Loan Documents and all material
regulations and then current standards applicable to or affecting the Facility
or any part thereof or any use or condition thereof, which may, at any time, be
recommended in writing by the Board of Fire Underwriters, if any, having
jurisdiction over the Facility, or such other body exercising similar functions.
"Interest Accrual Period" means each period of time running
from and including the eleventh (11th) day of a calendar month to and including
the tenth (10th) day of the following calendar month during the term of the
Loan. If the Closing Date shall occur prior to the tenth (10th) day of a
calendar month, the first Interest Accrual Period shall commence on and include
the Closing Date and end on and include the tenth (10th) day of the calendar
month in which the Closing Date occurs. If the Closing Date shall occur after
the tenth (10th) day of a calendar month, the first Interest Accrual Period
shall commence on the Closing Date and end on and include the tenth (10th) day
of the calendar month following the month in which the Closing Date occurs. If
the Closing Date shall occur on the tenth (10th) day of a calendar month, the
first Interest Accrual Period shall consist of a one (1) day period consisting
of the Closing Date.
"Interest Rate" means, as applicable, before the Optional
Prepayment Date, the Initial Interest Rate and, on and after the Optional
Prepayment Date, the Revised Interest Rate.
"Inventory" means all goods now owned or hereafter acquired by
Borrower intended for sale or lease, or to be furnished under contracts of
service by Borrower in connection with the Facility, including without
limitation, all inventories held by Borrower for sale or use at or from the
Facility, and all other such goods, wares, merchandise, and materials and
supplies of every nature owned by Borrower and all such other goods returned to
or repossessed by Borrower. In addition to the foregoing, the term "Inventory"
shall include the meaning as such term has in the UCC.
13
18
"Investor" has the meaning provided in Section 8.27.
"Issuer" means any issuer of securities issued in connection
with a Securitization.
"Land" has the meaning provided in the Mortgage.
"Late Charge" means the lesser of (i) five percent (5%) of any
unpaid amount and (ii) the maximum late charge permitted to be charged under the
laws of the State of New York.
"Leases" means all leases and other agreements or arrangements
affecting the use or occupancy of all or any portion of the Facility now in
effect or hereafter entered into (including, without limitation, all lettings,
subleases, licenses, concessions, tenancies and other occupancy agreements
covering or encumbering all or any portion of the Facility), together with any
guarantees, supplements, amendments, modifications, extensions and renewals of
the same, and all additional remainders, reversions, and other rights and
estates appurtenant thereto.
"Legal Requirements" means all statutes, laws, rules, orders,
regulations, ordinances, judgments, decrees and injunctions of Governmental
Authorities affecting Borrower, the Loan Documents, the Facility or any part
thereof, or the ownership, construction, use, alteration or operation thereof or
any part thereof enacted and in force as of the relevant date, and all Permits
and regulations relating thereto, and all covenants, agreements, restrictions
and encumbrances contained in any instruments, either of record or known to
Borrower, at any time in force affecting the Facility or any part thereof,
including, without limitation, any which (i) may require repairs, modifications,
or alterations in or to the Facility or any part thereof, or (ii) in any way
limit the use and enjoyment thereof.
"Lender" has the meaning provided in the first paragraph of
this Agreement.
"Liabilities" has the meaning set forth in Section 2.14.
"Lien" means any mortgage, deed of trust, lien (statutory or
other), pledge, easement, restrictive covenant, hypothecation, assignment,
preference, priority, security interest, or any other encumbrance or charge on
or affecting the Facility or any portion thereof or any Collateral or Borrower,
or any interest therein, including, without limitation, any conditional sale or
other title retention agreement, any financing lease having substantially the
same economic effect as any of the foregoing, the filing of any financing
statement or similar instrument under the UCC or comparable law of any other
jurisdiction, domestic or foreign, and mechanic's, materialmen's and other
similar liens and encumbrances.
"Loan" has the meaning provided in the Recitals hereto.
"Loan Amount" has the meaning provided in the Recitals hereto.
"Loan Documents" means, collectively, this Agreement, the
Note, the Mortgage, the Assignment of Leases, the Assignment of Agreements, the
Manager's Subordination (if any), the Cash Collateral Account Agreement, the
Guaranty (if the Cross-Collateralization
14
19
is consummated) and all other agreements, instruments, certificates and
documents delivered by or on behalf of Borrower or any Affiliate to evidence or
secure the Loan or otherwise in satisfaction of the requirements of this
Agreement, the Mortgage or the other documents listed above.
"Losses" has the meaning provided in Section 5.1(I).
"Management Agreement" means, with respect to the Facility,
the management agreement, if any, entered into between Manager and Borrower
pertaining to the management of the Facility.
"Manager" means any manager of the Facility acceptable to
Lender in Lender's discretion.
"Manager's Subordination" means, with respect to the Facility,
the Manager's Consent and Subordination of Management Agreement, if any, in form
and substance satisfactory to Lender in Lender's sole discretion, executed by
Manager, Borrower and Lender, as the same may thereafter from time to time be
supplemented, amended, modified or extended by one or more written agreements
supplemental thereto.
"Material Adverse Effect" means a material adverse effect upon
(i) the business or the financial position or results of operation of Borrower,
(ii) the ability of Borrower to perform, or of Lender to enforce, any of the
Loan Documents or (iii) the value of (x) the Collateral taken as a whole or (y)
the Facility.
"Material Lease" has the meaning set forth in the Mortgage.
"Maturity Date" means February 11, 2022, or such earlier date
resulting from acceleration of the Indebtedness by Lender.
"Maximum Amount" means the maximum rate of interest designated
by applicable laws relating to payment of interest and usury.
"Money" means all moneys, cash, rights to deposit or savings
accounts, credit card receipts, rents or other items of legal tender obtained
from or for use in connection with the ownership or operation of the Facility.
"Mortgage" means, with respect to the Facility, a first
priority Deed of Trust, Assignment of Rents, Security Agreement and Fixture
Filing or such other comparable document which is customarily used by prudent
lenders in the jurisdiction in which the Collateral is located, in form and
substance satisfactory to Lender in Lender's sole discretion, dated as of the
Closing Date, granted by Borrower to Lender (or, in the case of a Deed of Trust,
to Deed of Trust Trustee for the benefit of Lender) with respect to the Facility
as security for the Loan, as the same may thereafter from time to time be
supplemented, amended, modified or extended by one or more written agreements
supplemental thereto.
15
20
"Mortgaged Property" means, at any time, the real property,
improvements and other property rights and interests encumbered by the Mortgage.
"Multiemployer Plan" means a multiemployer plan defined as
such in Section 3(37) of ERISA to which contributions have been made by Borrower
or any ERISA Affiliate and which is covered by Title IV of ERISA.
"Net Operating Income" means for any period the excess, if
any, of Operating Income for such period over Operating Expenses for such
period. Notwithstanding the foregoing part of this definition of "Net Operating
Income" to the contrary, if the period for which Net Operating Income is being
calculated includes periods prior to the Closing Date, Net Operating Income
shall be calculated for such period based on the applicable pro rata portion of
Base Net Operating Income.
"Note" means and refers to the promissory note, in form and
substance satisfactory to Lender in Lender's sole discretion, dated the Closing
Date, made by Borrower to Lender pursuant to this Agreement as such note may be
modified, amended, supplemented, extended or consolidated in writing, and any
note(s) issued in exchange therefor or in replacement thereof.
"Officer's Certificate" means a certificate of the Borrower
which is signed by the managing equity owner of the Borrower.
"Operating Expense Certificate" means a certificate of the
Borrower in the form attached hereto as Exhibit A.
"Operating Expense Monthly Installment" means, with respect to
each Interest Accrual Period commencing on or after the Optional Prepayment
Date, the amount shown on the Annual Operating Budget for such period.
"Operating Expense Sub-Account" means the Sub-Account of the
Cash Collateral Account established and maintained pursuant to Section 2.12
relating to the payment of operating expenses, as reasonably approved by Lender.
"Operating Expenses" means, for any period, for Borrower, all
expenditures by Borrower as and to the extent required to be expensed under GAAP
during such period in connection with the ownership, operation, maintenance,
repair or leasing of the Facility, including, without limitation or duplication:
(i) expenses in connection with cleaning, repair,
replacement, painting and maintenance;
(ii) wages, benefits, payroll taxes, uniforms,
insurance costs and all other related expenses for employees
of Borrower or any Affiliate engaged in repair, operation,
maintenance of the Facility or service to tenants;
16
21
(iii) any management fees and expenses;
(iv) the cost of all electricity, oil, gas, water,
steam, heat, ventilation, air conditioning and any other
energy, utility or similar item and overtime services;
(v) the cost of cleaning supplies;
(vi) Impositions;
(vii) business interruption, liability, casualty and
fidelity insurance premiums;
(viii) legal, accounting and other professional fees
and expenses incurred in connection with the ownership,
leasing or operation of the Facility, including, without
limitation, collection costs and expenses;
(ix) costs and expenses of security and security
systems;
(x) trash removal and exterminating costs and
expenses;
(xi) advertising and marketing costs;
(xii) costs of environmental audits and monitoring,
environmental, investigation, remediation, or other response
actions or any other expenses incurred with respect to
compliance with Environmental Laws; and
(xiii) all other ongoing expenses which in accordance
with GAAP are required to be or are included in Borrower's
annual financial statements as operating expenses of the
Facility.
Notwithstanding the foregoing, Operating Expenses shall not include (1) Capital
Improvement Costs, (2) any taxes imposed on Borrower's net income, (3)
depreciation or (4) Debt Service and other payments in connection with the
Indebtedness. Operating Expenses shall be calculated in accordance with GAAP.
"Operating Income" means, for any period, for Borrower, all
income of Borrower during such period from the operation of the Facility,
including, without limitation:
(i) all amounts payable as Rents (other than security
deposits, unless forfeited or entitled to be retained by
Borrower) and all other amounts payable under Leases or other
third party agreements relating to the ownership and operation
of the Facility;
(ii) business interruption proceeds; and
17
22
(iii) all other amounts which in accordance with GAAP
are required to be or are included in Borrower's annual
financial statements as operating income of the Facility.
"Optional Prepayment Date" means February 11, 2004.
"Other Borrowings" means, without duplication (but not
including the Indebtedness or any Transaction Costs payable in connection with
the Transactions), (i) all indebtedness of Borrower for borrowed money or for
the deferred purchase price of property or services, (ii) all indebtedness of
Borrower evidenced by a note, bond, debenture or similar instrument, (iii) the
face amount of all letters of credit issued for the account of Borrower and,
without duplication, all unreimbursed amounts drawn thereunder, (iv) all
indebtedness of Borrower secured by a Lien on any property owned by Borrower
whether or not such indebtedness has been assumed, (v) all Contingent
Obligations of Borrower, and (vi) all payment obligations of Borrower under any
interest rate protection agreement (including, without limitation, any interest
rate swaps, caps, floors, collars or similar agreements) and similar agreements,
excluding unsecured trade debt incurred in the ordinary course of business up to
an aggregate amount of $250,000.
"Payment Date" means the eleventh (11th) day of each calendar
month during the term of the Loan, provided, however, that for purposes of
making payments hereunder, but not for purposes of calculating interest accrual
periods, if the eleventh (11th) day of a given month shall not be a Business
Day, then the Payment Date for such month shall be the next succeeding Business
Day.
"PBGC" means the Pension Benefit Guaranty Corporation
established under ERISA, or any successor thereto.
"PCBs" has the meaning provided in the definition of
"Hazardous Substance."
"Permits" means, with respect to the Facility, all licenses,
registrations, permits, allocations, filings, authorizations, approvals and
certificates used in connection with the ownership, operation, construction,
renovation, use or occupancy of the Facility, including, without limitation,
building permits, business licenses, state health department licenses, food
service licenses, liquor licenses, licenses to conduct business, and all such
other permits, licenses and rights, obtained from any Governmental Authority or
private Person concerning ownership, operation, construction, renovation, use or
occupancy of the Facility, the failure of which to maintain or possess could
have a Material Adverse Effect.
"Permitted Encumbrances" means, with respect to the Facility,
collectively, (i) the Lien created by the Mortgage or the other Loan Documents,
of record, (ii) all Liens and other matters disclosed in the Title Insurance
Policy concerning the Facility, or any part thereof which have been approved by
Lender in Lender's sole discretion, (iii) Liens, if any, for Impositions imposed
by any Governmental Authority not yet delinquent or being contested in good
faith and by appropriate proceedings in accordance with the Mortgage, (iv)
without limiting the foregoing, any and all governmental, public utility and
private restrictions, covenants, reservations,
18
23
easements, licenses or other agreements of an immaterial nature which may be
granted by Borrower after the Closing Date and which do not materially and
adversely affect (A) the ability of Borrower to pay any of its obligations to
any Person as and when due, (B) the marketability of title to the Facility, (C)
the fair market value of the Facility, or (D) the use or operation of the
Facility as of the Closing Date and thereafter.
"Permitted Investments" shall have the meaning ascribed to
such term in the Cash Collateral Account Agreement.
"Permitted Transfers" shall mean, provided that no Event of
Default has occurred and is continuing, (i) Permitted Encumbrances; (ii) all
transfers of worn out or obsolete furnishings, fixtures or equipment; (iii) all
Leases which are not Material Leases; and (iv) all Material Leases which have
been approved by Lender in writing in Lender's reasonable discretion.
"Person" means any individual, corporation, limited liability
company, partnership, joint venture, estate, trust, unincorporated association,
or any other entity, any federal, state, county or municipal government or any
bureau, department or agency thereof and any fiduciary acting in such capacity
on behalf of any of the foregoing.
"Plan" means an employee benefit or other plan established or
maintained by Borrower or any ERISA Affiliate and that is covered by Title IV of
ERISA, other than a Multiemployer Plan.
"Principal Indebtedness" means the principal amount of the
entire Loan outstanding as the same may be increased or decreased, as a result
of prepayment or otherwise, from time to time.
"Pro Forma Debt Service Coverage Ratio" means, for any period
and any Facility, the quotient obtained by dividing Net Operating Income for
such Facility by the aggregate amount of the Base Payments due for such period
(adjusted to exclude principal and interest payments associated with the
portion, if any, of the Loan being defeased).
"Proceeds" means all proceeds whether cash or non-cash,
movable or immovable, tangible or intangible (including Insurance Proceeds and
Condemnation Proceeds), from the Collateral, including, without limitation,
those from the sale, exchange, transfer, collection, loss, damage, disposition,
substitution or replacement of any of the Collateral and all income, gain,
credit, distributions and similar items from or with respect to the Collateral.
In addition to the foregoing, the term "Proceeds" shall also include the meaning
as such term has in the UCC.
"Xxxxxx Hills Entity" shall have the meaning set forth under
the definition of "Cross-Collateralization."
"Xxxxxx Hills Loan" shall have the meaning set forth under the
definition of "Cross-Collateralization."
19
24
"Xxxxxx Loan Agreement" shall mean the loan agreement executed
in connection with the Xxxxxx Hills Loan.
"Rating Agencies" means Fitch Investors Service, Inc., Xxxxx'x
Investors Service, Inc., Duff & Xxxxxx Credit Rating Co. and S&P or any
successor thereto, and any other nationally recognized statistical rating
organization to the extent that any of the foregoing have been or will be
engaged by Lender or its designees in connection with a Securitization (each,
individually a "Rating Agency").
"Recourse Distributions" has the meaning provided in
Section 8.14.
"Release" means any release, threatened release, spill,
emission, leaking, pumping, injection, deposit, disposal, discharge, dispersal,
leaching or migration into the indoor or outdoor environment including, without
limitation, the movement of Hazardous Substances through ambient air, soil,
surface water, ground water, wetlands, land or subsurface strata.
"Remedial Work" has the meaning provided in Section 5.1(D)(i).
"REMIC" means a real estate mortgage investment conduit as
defined under Section 860 D(a) of the Code.
"Rents" means all receipts, rents (whether denoted as advance
rent, minimum rent, percentage rent, additional rent or otherwise), issues,
income, royalties, profits, revenues, proceeds, bonuses, deposits (whether
denoted as security deposits or otherwise), lease termination fees or payments,
rejection damages, buy-out fees and any other fees made or to be made in lieu of
rent, any award made hereafter to Borrower in any court proceeding involving any
tenant, lessee, licensee or concessionaire under any of the Leases in any
bankruptcy, insolvency or reorganization proceedings in any state or federal
court, and all other payments, rights and benefits of whatever nature from time
to time due under any of the Leases, including, without limitation, (i) rights
to payment earned under the Leases for space in the Improvements for the
operation of ongoing businesses, such as restaurants, news stands, xxxxxx shops,
beauty shops and pharmacies, and (ii) all other income, consideration, issues,
accounts, profits or benefits of any nature arising from the ownership,
possession, use or operation of the Facility.
"Required Base Debt Service Payment" means all of the Required
Debt Service Payment except for that portion of the Required Debt Service
Payment which consists of payments of Excess Cash Flow which may be due and
payable after the Optional Prepayment Date.
"Required Debt Service Payment" means, on any Payment Date,
the Debt Service then due and payable by Borrower.
"Revised Interest Rate" means a rate equal to five hundred
(500) basis points plus the greater of (x) the Initial Interest Rate, and (y)
the sum of the (i) the Eighteen Year Treasury Rate as of the Optional Prepayment
Date, and (ii) one hundred fifty (150) basis points (or, if the
20
25
Cross-Collateralization has not been consummated on or before February 28, 1997,
one hundred sixty-five (165) basis points), such Revised Interest Rate not to
exceed the Maximum Amount
"S&P" means Standard & Poor's Ratings Services, a division of
The McGraw Hill Companies, Inc.
"Secretary's Certificate" means, with respect to Borrower, the
certificate in form and substance satisfactory to Lender in Lender's sole
discretion dated as of the Closing Date.
"Securitization" shall have the meaning provided in
Section 2.14.
"Securitization Closing Date" means the date on which a
Securitization is effected.
"Security Agreement" has the meaning provided in Section 2.11.
"Single-Purpose Entity" means a corporation, limited
partnership, or limited liability company which, at all times, since its
formation and thereafter (i) was organized solely for the purpose of (x) owning
the Facility or (y) acting as the managing member of the limited liability
company which owns the Facility or (z) acting as the general partner of a
limited partnership which owns the Facility, (ii) has not and will not engage in
any business unrelated to the (x) the ownership of the Facility or (y) acting as
a member of a limited liability company which owns the Facility or (z) acting as
a general partner of a limited partnership which owns the Facility, (iii) has
not and will not have any assets other than (x) those related to the Facility or
(y) its member interest in the limited liability company which owns the Facility
or (z) its general partnership interest in the limited partnership which owns
the Facility, as applicable, (iv) except as otherwise expressly permitted by
this Agreement, has not and will not engage in, seek or consent to any
dissolution, winding up, liquidation, consolidation, merger, asset sale,
transfer of partnership or membership interests, or amendment of its limited
partnership agreement, articles of incorporation, articles of organization,
certificate of formation or operating agreement (as applicable), (v) if such
entity is a limited partnership, has as its only general partners, general
partners which are Single-Purpose Entities which are corporations, (vi) if such
entity is a corporation, at all relevant times will have at least one
Independent Director, (vii) the board of directors of such entity may not take
any action requiring the unanimous affirmative vote of 100% of the members of
the board of directors unless all of the directors, including an Independent
Director shall have participated in such vote, (viii) has not and will not fail
to correct any known misunderstanding regarding the separate identity of such
entity, (ix) if such entity is a limited liability company, has at least one
member that is a Single-Purpose Entity which is a corporation, and such
corporation is the managing member of such limited liability company, (x)
without the unanimous consent of all of the partners, directors or members, as
applicable, has not and will not with respect to itself or to any other entity
in which it has a direct or indirect legal or beneficial ownership interest (a)
file a bankruptcy, insolvency or reorganization petition or otherwise institute
insolvency proceedings or otherwise seek any relief under any laws relating to
the relief from debts or the protection of debtors generally, (b) seek or
consent to the appointment of a receiver, liquidator, assignee, trustee,
sequestrator, custodian or any similar official for such entity or all or any
portion of such entity's properties; (c) make any
21
26
assignment for the benefit of such entity's creditors; or (d) take any action
that might cause such entity to become insolvent, (xi) has maintained and will
maintain its accounts, books and records separate from any other person or
entity, (xii) has maintained and will maintain its books, records, resolutions
and agreements as official records, (xiii) has not and will not commingle its
funds or assets with those of any other entity, (xiv) has held and will hold its
assets in its own name, (xv) has conducted and will conduct its business in its
name, (xvi) has maintained and will maintain its financial statements,
accounting records and other entity documents separate from any other person or
entity, (xvii) has paid and will pay its own liabilities out of its own funds
and assets, (xviii) has observed and will observe all partnership, corporate or
limited liability company formalities as applicable, (xix) has maintained and
will maintain an arms-length relationship with its Affiliates, (xx) (a) if such
entity owns the Facility, has no indebtedness other than the Indebtedness and
unsecured trade payables in the ordinary course of business relating to the
ownership and operation of the Facility which (1) do not exceed, at any time, a
maximum amount of $250,000 and (2) are paid within sixty (60) days of the date
incurred, or (b) if such entity acts as the general partner of a limited
partnership which owns the Facility, has no indebtedness other than unsecured
trade payables in the ordinary course of business relating to acting as general
partner of the limited partnership which owns the Facility which (1) do not
exceed, at any time, $10,000 and (2) are paid within sixty (60) days of the date
incurred, or (c) if such entity acts as a member of a limited liability company
which owns the Facility, has no indebtedness other than unsecured trade payables
in the ordinary course of business relating to acting as a member of the limited
liability company which owns the Facility which (1) do not exceed, at any time,
$10,000 and (2) are paid within sixty (60) days of the date incurred, (xxi) has
not and will not assume or guarantee or become obligated for the debts of any
other entity or hold out its credit as being available to satisfy the
obligations of any other entity except for the Indebtedness, (xxii) will not
acquire obligations or securities of its partners, members or shareholders,
(xxiii) has allocated and will allocate fairly and reasonably shared expenses,
including, without limitation, shared office space and uses separate stationary,
invoices and checks, (xxiv) except pursuant hereto, has not and will not pledge
its assets for the benefit of any other person or entity, (xxv) has held and
identified itself and will hold itself out and identify itself as a separate and
distinct entity under its own name and not as a division or part of any other
person or entity, (xxvi) has not made and will not make loans to any person or
entity, (xxvii) has not and will not identify its partners, members or
shareholders, or any affiliates of any of them as a division or part of it,
(xxviii) if such entity is a limited liability company, its articles of
organization, certificate of formation and/or operating agreement, as
applicable, shall provide that such entity will dissolve only upon the
bankruptcy of the managing member, (xxix) has not entered and will not enter
into or be a party to, any transaction with its partners, members, shareholders
or its affiliates except in the ordinary course of its business and on terms
which are intrinsically fair and are no less favorable to it than would be
obtained in a comparable arms-length transaction with an unrelated third party,
(xxx) has paid and will pay the salaries of its own employees from its own
funds, (xxxi) has maintained and will maintain adequate capital in light of its
contemplated business operations and (xxxii) if such entity is a limited
liability company or limited partnership, and such entity has one or more
managing members or general partners, as applicable, then such entity's
organizational documents shall provide that such entity shall continue (and not
dissolve) for so long as a solvent managing member or general partner, as
applicable, exists. Notwithstanding the foregoing, Borrower shall be entitled in
connection with
22
27
the Cross-Collateralization to guaranty certain indebtedness of the Xxxxxx Hills
Entity to Lender, which indebtedness shall be secured by, inter alia, Liens upon
the Facility.
"SPE Equity Owner" means Xxxxxxx Pacific Properties, Inc.
"SPE Equity Owner's Certificate" means the SPE Equity Owner's
Certificate in form and substance satisfactory to Lender in Lender's sole
discretion dated as of the Closing Date.
"Start-Up Day" means the "start-up day," within the meaning of
Section 860G(a)(9) of the Code, of any "real estate mortgage investment
conduit," within the meaning of Section 860D of the Code, that holds the Note.
"Sub-Account" shall have the meaning provided in
Section 2.12(c).
"Survey" means, with respect to the Facility, a survey of the
Facility satisfactory to Lender, prepared by a registered Independent surveyor
reasonably satisfactory to Lender and Title Insurer, together with a metes and
bounds legal description of the land corresponding with the survey and
containing the Surveyor's Certification.
"Surveyor's Certification" means a surveyor's certification in
form and substance satisfactory to Lender in Lender's sole discretion.
"Taking" means a taking or voluntary conveyance during the
term hereof of all or part of the Facility, or any interest therein or right
accruing thereto or use thereof, as the result of or in settlement of any
condemnation or other eminent domain proceeding by any Governmental Authority
affecting the Facility or any portion thereof whether or not the same shall have
actually been commenced.
"Tax Fair Market Value" means, with respect to the Facility,
the fair market value of the Facility, and (x) shall not include the value of
any personal property or other property that is not an "interest in real
property" within the meaning of Treasury Regulation Sections 1.860G-2 and
1.856-3(c), or is not "qualifying real property" within the meaning of Treasury
Regulation Section 1.593-11(b)(iv), and (y) shall be reduced by the "adjusted
issue price" (within the meaning of Code Section 1272(a)(4)) (the "Tax Adjusted
Issue Price") of any indebtedness, other than the Loan, secured by a Lien
affecting the Facility, which Lien is prior to or on a parity with the Lien
created under the Mortgage.
"Title Instruction Letter" means an instruction letter in form
and substance satisfactory to Lender in Lender's sole discretion.
"Title Insurance Policy" means, with respect to the Facility,
the loan policy of title insurance for the Facility issued by Title Insurer with
respect to the Facility in an amount acceptable to Lender and insuring the first
priority Lien in favor of Lender created by the Mortgage and acceptable to
Lender in Lender's discretion, and "Title Insurance Policies" means all such
loan policies of title insurance collectively.
23
28
"Title Insurer" means Commonwealth Land Title Insurance
Company and any reinsurer reasonably required by Lender and/or any other
nationally recognized title insurance company acceptable to Lender in Lender's
reasonable discretion, provided, however, that the reinsurer of any Title
Insurance Policy may include, in amounts reasonably acceptable to Lender,
Chicago Title Insurance Company, First American Title Insurance Company and
Xxxxxxx Title Insurance Company.
"Transaction Costs" means all fees, costs, expenses and
disbursements paid or payable by Borrower relating to the Transactions,
including, without limitation, all appraisal fees, legal fees, accounting fees
and the costs and expenses described in Section 8.24.
"Transactions" means the transactions contemplated by the Loan
Documents.
"Transfer" means any conveyance, transfer (including, without
limitation, any transfer of any direct legal or beneficial interest in
Borrower), sale, Lease (including, without limitation, any amendment, extension,
modification, waiver or renewal thereof), or Lien, whether by law or otherwise,
of, on or affecting any Collateral or Borrower (other than a Permitted
Transfer). In addition to the foregoing, a "Transfer" shall be deemed to have
occurred if during any 24 month period, persons who were directors of the SPE
Equity Owner at the beginning of such period and persons who were nominated to
be directors of the SPE Equity Owner by persons who were directors of the SPE
Equity Owner at the beginning of such period, cease to constitute a majority of
the Board of Directors of the SPE Equity Owner.
"Transfer Fee" means all reasonable expenses of Lender
incurred in connection with a Transfer, including, but not limited to,
attorneys' fees and expenses, up to a maximum for any one Transfer of one
percent (1%) of the outstanding principal amount of the Loan.
"UCC" means, with respect to any Collateral, the Uniform
Commercial Code in effect in the jurisdiction in which the relevant Collateral
is located.
"UCC Searches" has the meaning specified in Section 3.1.
"U.S. Obligations" means obligations or securities not subject
to prepayment call or early redemption which are direct obligations of, or
obligations fully guaranteed as to timely payment by, the United States of
America or any agency or instrumentality of the United States of America, the
obligations of which are backed by the full faith and credit of the United
States of America.
"Use" means, with respect to any Hazardous Substance, the
generation, manufacture, processing, distribution, handling, use, treatment,
recycling or storage of such Hazardous Substance or transportation to or from
the property of any Person of such Hazardous Substance.
"Yield Maintenance Premium" means, in the event that all or
any portion of the Note is accelerated, the amount that, when added to the
amount otherwise due as a result of such acceleration, would be sufficient to
purchase U.S. Obligations (A) having maturity dates on or
24
29
prior to, but as close as possible to, successive scheduled Payment Dates (after
the date of such acceleration of the Note) upon which Payment Dates interest and
principal payments would be required under the Note as though the Maturity Date
of the Note was the Optional Prepayment Date and (B) in amounts sufficient to
pay all scheduled principal and interest payments on the Note as if the Maturity
Date of the Note was the Optional Prepayment Date (but without any adjustment of
the monthly amortization schedule); provided, however, that under no
circumstances shall the Yield Maintenance Premium be less than zero.
ARTICLE II
GENERAL TERMS
Section 2.1. Amount of the Loan. Lender shall lend to Borrower
a total aggregate amount equal to the Loan Amount.
Section 2.2. Use of Proceeds. Proceeds of the Loan shall be
used to pay the acquisition costs for the Facility owned by Borrower. Any excess
will be available to Borrower and may be used for any lawful purpose.
Section 2.3. Security for the Loan. The Note and Borrower's
obligations hereunder and under the other Loan Documents shall be secured by the
Mortgage, the Assignment of Leases, the Assignment of Agreements, the Manager's
Subordination (if any), and the security interest and liens granted in this
Agreement and in the other Loan Documents.
Section 2.4. Borrower's Note. (a) Borrower's obligation to pay
the principal of and interest on the Loan (including Late Charges, Default Rate
interest, and the Yield Maintenance Premium, if any), shall be evidenced by this
Agreement and by the Note, duly executed and delivered by Borrower. The Note
shall be payable as to principal, interest, Late Charges, Default Rate interest
and Yield Maintenance Premium, if any, as specified in this Agreement, with a
final maturity on the Maturity Date. Borrower shall pay all outstanding
Indebtedness on the Maturity Date.
(b) Lender is hereby authorized, at its sole option, to
endorse on a schedule attached to the Note (or on a continuation of such
schedule attached to the Note and made a part thereof) an appropriate notation
evidencing the date and amount of each payment of principal, interest, Late
Charges, Default Rate interest and Yield Maintenance Premium, if any, in respect
thereof, which books and records shall be made available to Borrower, at
Borrower's sole cost and expense on reasonable advance notice, for examination
at Lender's offices.
Section 2.5. Principal and Interest Payments.
(a) Accrual of Interest before the Optional Prepayment Date.
Before the Optional Prepayment Date, interest shall accrue on the outstanding
principal balance of the Note and all other amounts due to Lender under the Loan
Documents at the Initial Interest Rate.
25
30
(b) Accrual of Interest on or after the Optional Prepayment
Date. On and after the Optional Prepayment Date, interest shall accrue on the
outstanding principal balance of the Note and all other amounts due to Lender
under the Loan Documents at the Revised Interest Rate.
(c) Monthly Base Payments, of Principal and Interest at the
Initial Interest Rate. On each Payment Date, Borrower shall pay to Lender a
monthly constant payment as indicated on Exhibit B, which payment is based on
the Initial Interest Rate and an amortization schedule of 360 months. Each
payment required to be made by Borrower pursuant to this Section 2.5(c) is
hereinafter sometimes referred to as a "Base Payment."
(d) Payments of Excess Cash Flow. On and after the earlier to
occur of (i) the Optional Prepayment Date or (ii) at Lender's sole election,
upon the occurrence and during the continuation of an Event of Default
hereunder, any date on or after the occurrence and during the continuation of
such Event of Default, in addition to the Base Payment, Borrower shall pay to
Lender all Excess Cash Flow to be applied as described in Section 2.8.
(e) Payments of Excess of Revised Interest Rate Over Initial
Interest Rate. To the extent, for any period, that accrued interest at the
Revised Interest Rate exceeds interest required to be paid hereunder for such
period at the Initial Interest Rate (such amount, the "Accrued Interest"),
Borrower shall only be required to pay such Accrued Interest after the
outstanding principal balance of the Note has been paid in full. Unpaid Accrued
Interest shall accrue and compound on a monthly basis at the Revised Interest
Rate.
(f) Payment Dates. All payments required to be made pursuant
to Paragraphs (a) through (e) above shall be made beginning on the first Payment
Date immediately after the end of the second Interest Accrual Period; provided,
however, that Borrower shall pay interest for the first Interest Accrual Period
on the Closing Date.
(g) Calculation of Interest. Interest shall accrue on the
outstanding principal balance of the Loan and all other amounts due to Lender
under the Loan Documents commencing upon the Closing Date. Interest shall accrue
on Accrued Interest commencing on the first Payment Date following the Optional
Prepayment Date. Interest shall be computed on the actual number of days
elapsed, based on a 360 day year.
(h) Default Rate Interest. If an Event of Default has occurred
and is continuing the entire unpaid amount outstanding hereunder and under the
Note will bear interest at the Default Rate.
(i) Late Charge. If Borrower fails to make any payment of any
sums due under the Loan Documents after the same is due, Borrower shall, at
Lender's option evidenced by written notice of Lender to Borrower, pay a Late
Charge.
(j) Maturity Date. On the Maturity Date Borrower shall pay to
Lender all amounts owing under the Loan Documents, including without limitation,
interest, principal, Late Charges, Default Rate interest, Accrued Interest and
any Yield Maintenance Premium. The
26
31
Yield Maintenance Premium shall only be due and payable on the date of
acceleration of the Note.
Section 2.6. Voluntary Defeasance.
(a) Provided that no Event of Default has occurred and is then
continuing then after two years after the Start-Up Day (but only before the
Optional Prepayment Date), Borrower may voluntarily defease (A) all of the Loan
or (B) a portion of the Loan, but only pursuant to Section 5.1(P) or Section
2.16(c); provided, that for any defeasance, Borrower must comply with Section
2.11.
(b) In the event of any such voluntary defeasance Borrower
shall give Lender written notice of its intent to defease, which notice shall be
given at least thirty (30) days prior to the date upon which defeasance is to be
made and shall specify the Payment Date and the amount of such defeasance. If
any such notice of defeasance is given, Borrower shall be required to defease
the Loan or a portion thereof pursuant to Section 5.1(P) or Section 2.16(c) on
the specified Payment Date (unless such notice is revoked by Borrower prior to
the date specified therein in which event Borrower shall immediately reimburse
Lender for any reasonable costs incurred by Lender in connection with Borrower's
giving of such notice and revocation).
(c) Any voluntary defeasance of the Loan by Borrower is
required to be made on a Payment Date.
(d) Borrower shall not be permitted at any time to defease all
or any part of the Loan except as expressly provided in this Section 2.6.
Section 2.7. Prepayment. (a) On and after the earlier to occur
of (i) the Optional Prepayment Date or (ii) at Lender's sole election, upon the
occurrence and during the continuation of an Event of Default hereunder, any
date on or after and during the continuation of such Event of Default, in
addition to all other payments required hereunder, Borrower shall pay and use
all Excess Cash Flow to prepay the Loan on each Payment Date in accordance with
Section 2.12(g) and Section 2.8 and, after payment in full of the Principal
Indebtedness (but not Accrued Interest or interest thereon) to pay Accrued
Interest and interest thereon and all other amounts then owing.
(b) If Borrower is required by Lender under the provisions of
the Mortgage to prepay the Loan or any portion thereof in the event of damage,
destruction or a Taking of the Facility, Borrower shall prepay the Loan to the
full extent of the Insurance Proceeds or the Condemnation Proceeds, and there
shall be no Yield Maintenance Premium or penalty assessed against Borrower by
reason thereof.
(c) On any Payment Date occurring on and after the third
Payment Date preceding the Optional Prepayment Date (provided no Event of
Default has occurred and is continuing), Borrower may voluntarily prepay the
Loan in whole or in part, and there shall be no Yield Maintenance Premium or
penalty assessed against Borrower by reason thereof.
27
32
(d) All prepayments made pursuant to this Section 2.7 shall be
applied in accordance with the provisions of Section 2.8
(e) Any prepayment of the Loan by Borrower is required to be
made on a Payment Date.
(f) Borrower shall not be permitted at any time to prepay all
or any part of the Loan except as expressly provided in this Section 2.7.
Section 2.8. Application of Payments. Except during the
continuation of an Event of Default, all proceeds of any repayment, including
prepayments, of the Loan shall be applied to pay: first, any costs and expenses
of Lender, including, without limitation, the Lender's reasonable attorney's
fees and disbursements actually arising as a result of such repayment or
reasonably expended by Lender to protect the Collateral; second, accrued and
unpaid interest at the Initial Interest Rate; third, to the Principal
Indebtedness (but not to Accrued Interest or interest thereon); fourth, to
Accrued Interest and interest accrued thereon; and fifth, any other amounts then
due and owing under the Loan Documents. After the occurrence and during the
continuation of an Event of Default, all proceeds of repayment, including any
payment or recovery on the Collateral shall, unless otherwise provided in the
Mortgage, be applied in such order and in such manner as Lender shall elect in
its sole discretion.
Section 2.9. Payment of Debt Service, Method and Place of
Payment. (a) Except as otherwise specifically provided herein, all payments and
prepayments under this Agreement and the Note shall be made to Lender not later
than 12:00 noon, New York City time, on the date when due and shall be made in
lawful money of the United States of America in federal or other immediately
available funds to an account specified to Borrower by Lender in writing, and
any funds received by Lender after such time, for all purposes hereof, shall be
deemed to have been paid on the next succeeding Business Day.
(b) All payments made by Borrower hereunder or by Borrower
under the other Loan Documents, shall be made irrespective of, and without any
deduction for, any set-offs or counterclaims.
Section 2.10. Taxes. All payments made by Borrower under this
Agreement and under the other Loan Documents shall be made free and clear of,
and without deduction or withholding for or on account of, any present or future
income, stamp or other taxes, levies, imposts, duties, charges, fees, deductions
or withholdings, now or hereafter imposed, levied, collected, withheld or
assessed by any Governmental Authority (other than taxes imposed on the income
of Lender).
Section 2.11. Defeasance Requirements. (a) Subject to Section
2.6, the Loan may be defeased (A) in whole, or (B) in part, but only pursuant to
Section 5.1(P) or Section 2.16(c); provided, that Borrower: (i) provides not
less than thirty (30) days prior written notice to the Lender specifying a
Payment Date (the "Defeasance Release Date") on which the payments provided in
clauses (ii) and (iii) below are to be made and the deposits provided in clause
(iv) below are to be made, (ii) pays all interest accrued and unpaid on the
Principal Indebtedness to
28
33
and including the Defeasance Release Date, (iii) pays all other sums then due
and payable under the Loan Documents, (iv) deposits with the Lender an amount
equal to the Defeasance Deposit, (v) intentionally omitted, (vi) intentionally
omitted, and (vii) delivers to the Lender (A) a security agreement, in form and
substance reasonably satisfactory to Lender, creating a first priority perfected
Lien on the deposits required pursuant to this Section and the U.S. Obligations
purchased on behalf of Borrower in accordance with this Section (the "Security
Agreement") securing Borrower's obligations under the Loan Documents, (B)
intentionally omitted, (C) an Officer's Certificate of Borrower certifying that
the requirements set forth in this Section have been satisfied, (D) an opinion
of counsel from Borrower's counsel in form and substance reasonably satisfactory
to the Lender stating, among other things, (x) that, without qualification, the
U.S. Obligations have been duly and validly assigned and delivered to Lender and
Lender has a first priority perfected security interest on the deposits required
pursuant to this Section and a first priority perfected lien on the U.S.
Obligations and the proceeds thereof purchased hereunder and (y) that the
defeasance will not adversely affect the status of any REMIC formed in
connection with a Securitization, and (E) such other certificates, documents or
instruments as the Lender may reasonably request including, without limitation,
(x) written confirmation from the relevant Rating Agencies that such defeasance
will not cause any Rating Agency to withdraw, qualify or downgrade the then
applicable rating on any security issued in connection with any Securitization
and (y) a certificate from an Independent certified public accountant certifying
that the amounts of the U.S. Obligations comply with all of the requirements of
this Loan Agreement. The U.S. Obligations shall mature on or be redeemable, or
provide for payment thereon, on or prior to the Business Day preceding the date
on which payments under the Note are due and payable and the proceeds thereof
shall be payable directly to the Cash Collateral Account. In connection with the
foregoing, Borrower appoints the Lender as its agent for the purpose of applying
the amounts delivered pursuant to clause (iv) above to purchase U.S.
Obligations. Notwithstanding anything in this Agreement to the contrary, in the
event the Yield Maintenance Premium is due as a result of the acceleration of
the Indebtedness after the occurrence of an Event of Default, Lender shall have
the right to receive and collect the Yield Maintenance Premium but shall have no
obligation to purchase U.S. Obligations or otherwise comply with this Section
2.11.
(b) Upon compliance with the requirements of this Section 2.11
in the event of a total defeasance of the Loan, the Facility shall be released
from the Lien of the Mortgage. In connection with a defeasance of the Loan,
Borrower may be required by Lender to assign its obligations under the Note, the
other Loan Documents and the Security Agreements together with the pledged U.S.
Obligations to such other entity or entities established or designated by Lender
(the "Successor Mortgagor"). Such Successor Mortgagor shall assume the
obligations under the Note, the other Loan Documents and the Security Agreements
and, upon such assignment Borrower shall be relieved of its obligations
thereunder.
(c) Nothing in this Section 2.11 shall release Borrower from
any liability or obligation relating to any environmental matters arising under
Sections 4.1(b)(U) or 5.1(D)-(I), inclusive, hereof.
29
34
Section 2.12. Central Cash Management. (a) Collection Account.
Borrower shall open and maintain at the Collection Account Bank a trust account
(the "Collection Account"), and the Collection Account Bank shall not commingle
the amounts in such account with any other amounts held on behalf of Lender or
any other Person. The Collection Account shall be assigned an identification
number by the Collection Account Bank and shall be opened and maintained in the
name "Nomura Asset Capital Corporation as Mortgagee of BPP/Valley Central, L.P."
Neither Borrower nor Manager, if any, shall have any right of withdrawal from
the Collection Account. Borrower shall cause all tenants of the Facility to pay
all Rents, Money or other items of Gross Revenue (other than security deposits)
received by Borrower in violation of the preceding sentence directly into the
Collection Account for the Facility. Without in any way limiting Borrower's
obligations pursuant to the preceding sentence, Borrower shall deposit all
Rents, Money or other items of Gross Revenue (other than security deposits)
within two (2) Business Days after receipt thereof directly into the Collection
Account for the Facility. Borrower may designate a new financial institution to
serve as a Collection Account Bank hereunder as provided in Section 2.13(i). Any
breach of this Section 2.12(a) by Borrower shall be an Event of Default.
(b) Cash Collateral Account. Pursuant to the Collection
Account Agreement between the Collection Account Bank, Borrower and Lender (the
"Collection Account Agreement") Borrower will authorize and direct the
Collection Account Bank to transfer on a daily basis all funds deposited in the
Collection Account for Borrower's Facility to the cash collateral account. The
cash collateral account shall be an Eligible Account established by Lender in
Lender's name. Lender may elect to change the financial institution at which the
cash collateral account shall be maintained. Lender shall give Borrower not
fewer than thirty (30) days prior notice of each change. The cash collateral
account shall be under the sole dominion and control of Lender. Borrower shall
have no right of withdrawal in respect to the cash collateral account. The cash
collateral account referred to in this Section 2.12(b) is referred to herein as
the "Cash Collateral Account." Notwithstanding the foregoing, provided that (i)
no Event of Default shall have ever occurred and (ii) Borrower has deposited
with the Cash Collateral Account Bank for deposit into the Cash Collateral
Account as of the Closing Date the amount agreed to by Borrower and Lender for
allocation therein, and thereafter on the first Business Day prior to the
eleventh day of each month deposits into the Cash Collateral Account an amount
equal to the sum of the Required Base Debt Service Payment and the Capital
Reserve Monthly Installment, and annually deposits into the Cash Collateral
Account within ten (10) days after notice from Lender an amount equal to the
applicable percentage of any increase in the Basic Carrying Costs as reasonably
determined by Lender, then Lender shall direct the Collection Account Bank not
to transfer funds in the Collection Account to the Cash Collateral Account, and
shall further direct the Collection Account Bank to remit all such funds in the
Collection Account to the Borrower. Upon the earliest to occur of an Event of
Default or the Optional Prepayment Date, Lender may revoke such instructions and
require the Collection Account Bank to transfer funds daily to the Cash
Collateral Account as aforesaid.
(c) Establishment of Sub-Accounts. The Cash Collateral Account
shall contain a Debt Service Payment Sub-Account, a Basic Carrying Costs
Sub-Account, a Capital Reserve Sub-Account, a Deferred Maintenance Sub-Account
and an Operating Expense Sub-
30
35
Account, each of which accounts (individually, a "Sub-Account" and collectively,
the "Sub-Accounts") shall be an Eligible Account to which certain funds shall be
allocated and from which disbursements shall be made pursuant to the terms of
this Loan Agreement.
(d) Permitted Investments. Upon the written request of
Borrower, which request may be made once per Interest Accrual Period, Lender
shall direct the Cash Collateral Account Bank to invest and reinvest any balance
in the Cash Collateral Account from time to time in Permitted Investments as
instructed by Borrower; provided, however, that (i) if Borrower fails, to so
instruct Lender, or an Event of Default shall have occurred and is continuing,
Lender may direct the Cash Collateral Account Bank to invest and reinvest such
balance in Permitted Investments as Lender shall determine in Lender's sole
discretion, (ii) the maturities of the Permitted Investments on deposit in the
Cash Collateral Account shall, to the extent such dates are ascertainable, be
selected and coordinated to become due not later than the day before any
disbursements from the Sub-Accounts must be made, (iii) all such Permitted
Investments shall be held in the name and be under the sole dominion and control
of Lender; (iv) no Permitted Investment shall be made unless Lender shall retain
a perfected first priority Lien in such Permitted Investment securing the
Indebtedness and all filings and other actions necessary to ensure the validity,
perfection, and priority of such Lien have been taken; (v) Lender shall only be
required to follow the investment instructions which were most recently received
by Lender and Borrower shall be bound by such last received investment
instructions; and (vi) any written request from Borrower continuing investment
instructions shall contain an Officer's Certificate from Borrower (which may be
conclusively relied upon by Lender and its agents) that any such investments
constitute Permitted Investments. It is the intention of the parties hereto that
all amounts deposited in the Cash Collateral Account (or as much thereof as
Lender may arrange to invest) shall at all times be invested in Permitted
Investments. All funds in the Cash Collateral Account that are invested in a
Permitted Investment are deemed to be held in such Cash Collateral Account for
all purposes of this Agreement and the other Loan Documents. All gain in
investments of funds in the Cash Collateral Account shall be allocated in the
same manner as any other funds in the Cash Collateral Account. Lender shall have
no liability for any loss in investments of funds in the Cash Collateral Account
that are invested in Permitted Investments (unless invested contrary to
Borrower's request other than after the occurrence of a Default or an Event of
Default) and no such loss shall affect Borrower's obligation to fund, or
liability for funding, the Cash Collateral Account and each Sub-Account, as the
case may be. Borrower and Lender agree that Borrower shall include all such
earnings and losses (other than those for Lender's account in accordance with
the immediately preceding sentence) on the Cash Collateral Account as income of
Borrower for federal and applicable state tax purposes. Borrower shall be
responsible for any and all fees, costs and expenses associated with Permitted
Investments.
(e) Interest on Accounts. All interest paid or other earnings
on the Permitted Investments made hereunder shall be deposited into the Cash
Collateral Account and shall be subject to allocation and distribution like any
other monies deposited therein.
(f) Payment of Basic Carrying Costs, Debt Service, Capital
Improvement Costs, Deferred Maintenance Costs and Operating Expenses.
31
36
(i) Payment of Basic Carrying Costs. At least five
(5) Business Days prior to the due date of any Basic Carrying
Cost, and not more frequently than once each Interest Accrual
Period, Borrower shall notify, Lender in writing and request
that Lender pay such Basic Carrying Cost on behalf of Borrower
on or prior to the due date thereof. Together with each such
request, Borrower shall furnish Lender with copies of bills
and other documentation as may be reasonably required by
Lender to establish that such Basic Carrying Cost is then due.
Lender shall make such payments out of the Basic Carrying Cost
Sub-Account before the same shall be delinquent to the extent
that there are funds available in the Basic Carrying Cost
Sub-Account and Lender has received appropriate documentation
to establish the amount(s) due and the due date(s) as and when
provided above.
(ii) Payment of Debt Service. At or before 12:00
noon, New York City time, on each Payment Date during the term
of the Loan, Lender shall transfer to Lender's own account
from the Debt Service Payment Sub-Account an amount equal to
the Required Debt Service Payment for the Payment Date.
Borrower shall be deemed to have timely made the Required Debt
Service Payment pursuant to Section 2.9 regardless of the time
Lender makes such transfer as long as sufficient funds are on
deposit in the Debt Service Payment Sub-Account at 12:00 noon,
New York City time on the applicable Payment Date.
(iii) Payment of Capital Improvement Costs. Not more
frequently than once each Interest Accrual Period and provided
that no Event of Default has occurred and is continuing,
Borrower may notify Lender in writing and request that Lender
release to Borrower or its designee funds out of the Capital
Reserve Sub-Account to the extent funds are available therein
for payment of Capital Improvement Costs. Together with each
such request, Borrower shall furnish Lender with copies of
bills and other documentation as may be reasonably required by
Lender to establish that such Capital Improvement Costs are
reasonable, including, but not limited to, an Officer's
Certificate stating that (i) the work relating thereto has
been completed and that such amounts are then due (or have
been paid) and (ii) the released funds shall be used solely
for the purpose of payment of such Capital Improvement Costs.
Upon Lender's approval (which shall not be unreasonably
withheld), which approval, if granted by Lender, shall be
delivered within ten (10) Business Days of Lender's receipt of
such request, Lender shall release the funds to Borrower or
its designee within ten (10) days of Lender's approval.
Lender's failure to approve or disapprove such request within
such ten (10) day period shall be deemed to be the approval of
Lender.
32
37
(iv) Payment of Deferred Maintenance Costs. Not more
frequently than once each Interest Accrual Period and provided
that no Event of Default has occurred and is continuing,
Borrower may notify Lender in writing and request that Lender
release to Borrower or its designee funds out of the Deferred
Maintenance Sub-Account to the extent funds are available
therein for payment of Deferred Maintenance Costs. Together
with each such request, Borrower shall furnish Lender with a
certificate stating that an item of deferred maintenance
listed on Exhibit C has been completed and stating the cost to
complete such item. If Lender's approval is granted, Lender
shall release the funds to Borrower or its designee within ten
(10) days of Lender's approval. Upon satisfactory completion
of the repairs identified on Exhibit C attached hereto, as
determined by Lender in its reasonable discretion, and
provided no Event of Default has occurred and is continuing,
Lender shall release to Borrower all amounts remaining in the
Deferred Maintenance Sub-Account.
(v) Intentionally omitted.
(vi) Intentionally omitted.
(vii) Intentionally omitted.
(viii) Payment of Operating Expenses. On and after
the Optional Prepayment Date, not more frequently than once
each Interest Accrual Period and provided that no Default or
Event of Default has occurred and is continuing Lender shall
direct the Cash Collateral Account Bank to, within five (5)
Business Days of Lender's receipt of an Operating Expense
Certificate from Borrower, such Operating Expense Certificate
to be delivered by Borrower not more frequently than once each
Interest Accrual Period, transfer funds to Borrower or its
designee out of the Operating Expense Sub-Account to the
extent that there are funds available therein in an amount not
to exceed the amount stated in the Operating Expense
Certificate up to the Operating Expense Monthly Installment.
Together with each such Operating Expense Certificate,
Borrower shall furnish Lender with an Officer's Certificate
stating that all operating expenses from previous periods have
been paid in full and that such amounts are then due or have
been paid.
(ix) Extra Funds for Operating Expenses. On and after
the Optional Prepayment Date, not more frequently than once
each Interest Accrual Period and provided that no Default or
Event of Default has occurred and is continuing if in a given
Interest Accrual Period, the Borrower requires amounts in
excess of the Operating Expense Monthly Installment ("Extra
Funds"), Borrower, at the time it delivers the
33
38
Operating Expense Certificate, may deliver a written request
to Lender for a disbursement of Extra Funds stating the amount
of such Extra Funds and the purpose for which such amount is
intended with attachments of copies of bills and other
documentation as may be required by Lender to establish that
such Operating Expenses are reasonable and that such amounts
are then due or expected to become due in that month. Within
ten (10) days after Lender's approval, which approval, if
granted by Lender (such approval not to be unreasonably
withheld or delayed), shall be delivered within ten (10)
Business Days of Lender's receipt of such request, Lender
shall release the funds to Borrower or its designee.
(x) Reconciliation. On and after the Optional
Prepayment Date, Borrower shall furnish Lender monthly, on
each Payment Date, a budget variance report reconciling the
Operating Expenses shown on the Annual Operating Budget with
requested disbursements for payment of Operating Expenses
pursuant to Section 2.12(f).
(xi) Remaining Amounts. All remaining amounts shall
be remitted to Borrower for Borrower's account on each Payment
Date.
(g) Monthly Funding of Sub-Accounts. During each Interest
Accrual Period and except as provided below, during the term of the Loan
commencing with the Interest Accrual Period in which the Closing Date occurs
(each, the "Current Interest Accrual Period"), Lender shall allocate all funds
then on deposit in the Cash Collateral Account among the Sub-Accounts as follows
and in the following priority:
(i) first, to the Basic Carrying Costs Sub-Account,
until an amount equal to the Basic Carrying Costs Monthly
Installment for the Current Interest Accrual Period has been
allocated to the Basic Carrying Costs Sub-Account, provided,
that as of the Closing Date Borrower shall deposit into the
Cash Collateral Account for funding of the Basic Carrying
Costs Sub-Account an amount agreed to by Lender and Borrower;
(ii) second, to the Debt Service Payment Sub-Account,
until an amount equal to the Required Base Debt Service
Payment for the Payment Date immediately after the Current
Interest Accrual Period has been allocated to the Debt Service
Payment Sub-Account;
(iii) third, to the Capital Reserve Sub-Account, until
an amount equal to the Capital Reserve Monthly Installment for
the Current Interest Accrual Period has been allocated to the
Capital Reserve Sub-Account;
(iv) fourth, during each of the following periods: on
and after the Optional Prepayment Date, or at Lender's sole
election, upon the occurrence and during the continuation of
an Event of Default to the Operating Expense Sub-Account,
until an amount equal to the Operating
34
39
Expense Monthly Installment for the Current Interest Accrual
Period has been allocated to the Operating Expense
Sub-Account;
(v) fifth, during each of the following two periods:
(i) on and after the Optional Prepayment Date and (ii) at
Lender's sole election, upon the occurrence of a Default or an
Event of Default hereunder which is continuing, any amounts
deposited into or remaining in the Cash Collateral Account
after (A) the minimum amounts set forth in clauses (i), (ii),
(iii) and (iv) above have been satisfied with respect to the
Current Interest Accrual Period and any periods prior thereto
and (B) the funding of additional reserves at levels
determined by Borrower to be prudent for working capital,
Capital Improvement Costs and other Borrower costs, which
levels shall be satisfactory to Lender, in Lender's sole
discretion (the "Excess Cash Flow"), shall be allocated to the
Debt Service Sub-Account and be applied by Lender on each
Payment Date in accordance with Section 2.8 and shall not be
disbursed to Borrower; and further provided, however, that if
an Event of Default has occurred and is continuing any amounts
deposited into or remaining in the Cash Collateral Account
shall be for the account of Lender and may be withdrawn by
Lender to be applied in any manner as Lender may elect in
Lender's sole discretion; and
(vi) sixth, provided that (i) no Default or Event of
Default has occurred and is continuing and Lender has received
all financial information described in Section 5.1(Q) for the
most recent periods for which the same are due, Lender agrees
that in each Current Interest Accrual Period any amounts
deposited into or remaining in the Cash Collateral Account
after (A) the minimum amounts set forth in clauses (i), (ii),
(iii), (iv), and (v) (if applicable) above have been satisfied
with respect to the Current Interest Accrual Period and any
periods prior thereto and (B) the funding of additional
reserves at levels determined by Borrower to be prudent for
working capital, Capital Improvement Costs and other Borrower
costs, which levels shall be satisfactory to Lender, in
Lender's sole discretion, shall be disbursed by Lender on the
first Payment Date after the end of the then Current Interest
Accrual Period, at Borrower's expense, to such account that
Borrower may request in writing. Lender and its agents shall
not be responsible for monitoring Borrower's use of any funds
disbursed from the Cash Collateral Account or any of the
Sub-Accounts.
If an Event of Default has occurred and is continuing or if on
any Payment Date the balance in any Sub-Account is insufficient to make the
required payment due from such Sub-Account, Lender may, in its sole discretion,
in addition to any other rights and remedies available hereunder, withdraw funds
from any other Sub-Account to pay such deficiency. In the event that Lender
elects to apply funds of any such Sub-Account to pay any Required Base Debt
Service
35
40
Payment, Borrower shall, upon demand, repay to Lender the amount of such
withdrawn funds to replenish such Sub-Account, and if Borrower shall fail to
repay such amounts within three (3) Business Days after notice of such
withdrawal, an Event of Default shall exist hereunder. Notwithstanding the
foregoing, on the Closing Date Borrower shall deposit (i) the Initial Basic
Carrying Costs Amount into the Basic Carrying Costs Sub-Account and (ii) the
Deferred Maintenance Amount into the Deferred Maintenance Sub-Account.
(h) Condemnation Proceeds and Insurance Proceeds. In the event
of a Taking with respect to the Facility, Borrower shall cause all the proceeds
in respect of any Taking ("Condemnation Proceeds") to be paid to the Lender who
shall, except as otherwise provided in the second succeeding sentence or in
Section 2.12(c) of the Mortgage, apply such Condemnation Proceeds to reduce the
Indebtedness in accordance with Section 2.7 and Section 2.8. In the event of a
casualty with respect to the Facility, except as otherwise provided in the next
sentence or in Section 2.5 of the Mortgage, Borrower shall cause all Proceeds of
any insurance policy ("Insurance Proceeds") to be paid to the Lender who shall
apply such Insurance Proceeds to reduce the Indebtedness in accordance with
Section 2.7 and Section 2.8. All Insurance Proceeds received by Borrower or
Lender in respect of business interruption coverage and all Condemnation
Proceeds received in respect of a temporary Taking shall be maintained in the
Cash Collateral Account, to be applied by Lender in the same manner as Rents
(other than security deposits) received from Borrower with respect to the
operation of the Facility; provided, further, that in the event that the
Insurance Proceeds of any such business interruption insurance policy or
Condemnation Proceeds of such temporary Taking are paid in a lump sum in
advance, Lender shall hold such Insurance Proceeds or Condemnation Proceeds in a
segregated interest-bearing escrow account at the Cash Collateral Account Bank,
and Lender shall estimate the number of months required for Borrower to restore
the damage caused by the casualty to the Facility or that the Facility will be
affected by such temporary Taking, as the case may be, shall divide the
aggregate business interruption Insurance Proceeds or Condemnation Proceeds in
connection with such casualty or temporary Taking by such number of months, and
shall disburse from such escrow account into the Cash Collateral Account each
month during the performance of such restoration or pendency of such temporary
Taking such monthly installment of said Insurance Proceeds or Condemnation
Proceeds. Any Insurance Proceeds or Condemnation Proceeds made available to
Borrower for restoration or repair in accordance with the Mortgage, to the
extent not used by Borrower in connection with, or to the extent they exceed the
cost of, such restoration, shall be paid to Borrower.
(i) Payment of Basic Carrying Costs. Except to the extent that
Lender is obligated to pay Basic Carrying Costs from the Basic Carrying Costs
Sub-Account pursuant to the terms of Section 2.12(f), Borrower shall pay all
Basic Carrying Costs with respect to itself and the Facility in accordance with
the provisions of the Mortgage, subject, however, to Borrower's rights to
contest payment of same in accordance with the Mortgage. Borrower's obligation
to pay (or cause Lender to pay) Basic Carrying Costs pursuant to this Agreement
shall include, to the extent permitted by applicable law, Impositions resulting
from future changes in law which impose upon Lender or any Deed of Trust Trustee
an obligation to pay any property taxes or other Impositions or which otherwise
adversely affect Lender's or the Deed of Trust Trustee's interests. (In the
event such a change in law prohibits Borrower from assuming liability
36
41
for payment of any such Imposition, the outstanding Indebtedness shall, at the
sole option of Lender, become due and payable on the date that is 120 days after
such change in law (and failure to pay such amounts on the date due shall be an
Event of Default)). Should an Event of Default have occurred and be continuing,
the proceeds on deposit in the Basic Carrying Costs Sub-Account may be applied
by Lender in any manner as Lender in its sole discretion may determine.
Section 2.13. Security Agreement. (a) Pledge of Accounts. To
secure the full and punctual payment and performance of all of the Indebtedness,
Borrower hereby sells, assigns, conveys, pledges and transfers to Lender and
grants to Lender a first and continuing security interest in and to, the
following property, whether now owned or existing or hereafter acquired or
arising and regardless of where located (collectively, the "Account
Collateral"):
(i) all of Borrower's right, title and interest in
the Cash Collateral Account (including all Sub-Accounts) and
all Money and Permitted Investments, if any, from time to time
deposited or held in the Cash Collateral Account;
(ii) all of Borrower's right, title and interest in
the Collection Account and all Money, if any, from time to
time deposited or held in the Collection Account;
(iii) all interest, dividends, Money, Instruments and
other property from time to time received, receivable or
otherwise payable in respect of, or in exchange for, any of
the foregoing; and
(iv) to the extent not covered by clauses (i), (ii),
or (iii) above, all Proceeds and products of any or all of the
foregoing.
(b) Covenants. Borrower covenants that (i) all Rents, Money
and other items of Gross Revenue shall be deposited directly into the Collection
Account as applicable, in accordance with Section 2.12(a) and (ii) so long as
any portion of the Indebtedness is outstanding, Borrower shall not open (nor
permit Manager or any Person to open) any other account for the collection of
Rents, Money or other items of Gross Revenue, other than such replacement
Collection Accounts as may be approved by Lender in Lender's sole discretion.
(c) Instructions and Agreements. On or before the Closing
Date, Borrower will submit to the Collection Account Bank for the Facility a
Collection Account Agreement to be executed by the Collection Account Bank. On
or before the Closing Date, Borrower and the Cash Collateral Account Bank will
execute and deliver a Cash Collateral Account Agreement in form and substance
satisfactory to Lender in Lender's sole discretion (the "Cash Collateral Account
Agreement"). Borrower agrees that prior to the payment in full of the
Indebtedness, the Cash Collateral Account Agreement shall be irrevocable by
Borrower without the prior written consent of Lender.
37
42
(d) Financing Statements: Further Assurances. Borrower will
execute and deliver to Lender for filing a financing statement or statements in
connection with the Account Collateral in the form required to properly perfect
Lender's security interest in the Account Collateral to the extent that it may
be perfected by such a filing. Borrower agrees that at any time and from time to
time, at the expense of Borrower, Borrower shall promptly execute and deliver
all further instruments, and take all further action, that Lender may request,
in order to perfect and protect the pledge and security interest granted or
purported to be granted hereby, or to enable Lender to exercise and enforce
Lender's rights and remedies hereunder with respect to, the Account Collateral.
(e) Transfers and Other Liens. Borrower agrees that it will
not sell or otherwise dispose of any of the Account Collateral other than
pursuant to the terms hereof and of the other Loan Documents, or create or
permit to exist any Lien upon or with respect to all or any of the Account
Collateral, except for the Lien granted to Lender under this Agreement.
(f) Lender's Reasonable Care. Beyond the exercise of
reasonable care in the custody thereof, Lender shall not have any duty as to any
Account Collateral or any income thereon in its possession or control or in the
possession or control of any agents for, or of Lender, or the preservation of
rights against any Person or otherwise with respect thereto. Lender shall be
deemed to have exercised reasonable care in the custody of the Account
Collateral in its possession if the Account Collateral is accorded treatment
substantially equal to that which Lender accords its own property, it being
understood that Lender shall not be liable or responsible for (i) any loss or
damage to any of the Account Collateral, or for any diminution in value thereof
from a loss of, or delay in Lender's acknowledging receipt of, any wire transfer
from the Collection Account Bank or (ii) any loss, damage or diminution in value
by reason of the act or omission of Lender, or Lender's agents, employees or
bailees.
(g) Lender Appointed Attorney-In-Fact. Borrower hereby
irrevocably constitutes and appoints Lender as Borrower's true and lawful
attorney-in-fact, with full power of substitution, at any time after the
occurrence and during the continuation of an Event of Default to execute,
acknowledge and deliver any instruments and to exercise and enforce every right,
power, remedy, option and privilege of Borrower with respect to the Account
Collateral, and do in the name, place and stead of Borrower, all such acts,
things and deeds for and on behalf of and in the name of Borrower with respect
to the Account Collateral, which Borrower could or might do or which Lender may
deem necessary or desirable to more fully vest in Lender the rights and remedies
provided for herein with respect to the Account Collateral and to accomplish the
purposes of this Agreement. The foregoing powers of attorney are irrevocable and
coupled with an interest.
(h) Continuing Security Interest: Termination. This Section
2.13 shall create a continuing pledge of and security interest in the Account
Collateral and shall remain in full force and effect until payment in full of
the Indebtedness. Upon payment in full of the Indebtedness, Borrower shall be
entitled to the return, at its expense, of such of the Account Collateral as
shall not have been sold or otherwise applied pursuant to the terms hereof, and
Lender shall execute such instruments and documents as may be reasonably
requested by
38
43
Borrower to evidence such termination and the release of the pledge and Lien
hereof, provided, however, that Borrower shall pay on demand all of Lender's
reasonable expenses in connection therewith.
(i) Replacement of Collection Account Bank. So long as no Default or
Event of Default shall have occurred and be continuing, Borrower shall have the
right at any time to designate a successor Collection Account Bank to hold the
Collection Account upon thirty (30) days prior written notice to Lender, and
Lender's reasonable approval of the successor. No such designation shall become
effective until Borrower has delivered to Lender an executed collection account
agreement substantially equivalent to Collection Account Agreement and financing
statements as may be necessary or appropriate have been prepared, executed and
delivered to a filing agency.
Section 2.14. Securitization. Borrower hereby acknowledges that
Lender, its successors or assigns, may sell or securitize the Loan or portions
thereof in one or more transactions through the issuance of securities, which
may be rated by the Rating Agencies (each, a "Securitization"; collectively, the
"Securitizations"). Borrower agrees that at its sole cost and expense, it shall
reasonably cooperate with Lender and use its best efforts to facilitate the
consummation of each Securitization including, but not limited to, by (a)
amending or causing the amendment of this Agreement and the other Loan
Documents, and executing such additional documents including amendments to
Borrower's organizational documents and preparing financial statements as
reasonably requested by the Rating Agencies to conform the terms of the Loan to
the terms of similar loans underlying completed or pending securitized
transactions having or seeking ratings the same as those then being sought in
connection with the relevant Securitization, provided, however, that any such
amendment or additional documents shall not change the economic terms of the
Loan; (b) promptly and reasonably providing such information as may be
reasonably requested in connection with the preparation of a private placement
memorandum or a registration statement required to privately place or publicly
distribute the securities in a manner which does not conflict with federal or
state securities laws; (c) providing in connection with each of (i) a
preliminary and a private placement memorandum or (ii) a preliminary and final
prospectus, as applicable, an indemnification certificate (x) certifying that
Borrower has carefully examined such memorandum or prospectus, as applicable,
including, without limitation, the sections entitled "Special Considerations",
"Description of the Mortgage Loan and "The Underlying Mortgaged Property", "The
Manager", "Borrower" and "Certain Legal Aspects of the Mortgage Loan", and such
sections (and any other sections reasonably requested) insofar as they relate to
Borrower, its Affiliates, the Loan or the Facility do not contain any untrue
statement of a material fact or omit to state a material fact necessary in order
to make the statements made, in the light of the circumstances under which they
were made, not misleading, provided, however, that Borrower shall not be
required to indemnify Lender for any losses relating to untrue statements or
omissions which Borrower identified to Lender in writing at the time of
Borrower's examination of such memorandum or prospectus as applicable, and (y)
indemnifying Lender (and its officers, directors, partners, employees,
affiliates and agents and each other person, if any, controlling Lender or any
of its affiliates within the meaning of either Section 15 of the Securities Act
of 1933, as amended, or Section 20 of the Securities Exchange Act of 1934, as
amended), the Issuer and the Advisor for any losses, claims, damages, expenses
39
44
or liabilities (including, without limitation, all liabilities under all
applicable federal and state securities laws) (collectively, the "Liabilities")
to which any of them may become subject (i) insofar as the Liabilities arise out
of or are based upon any untrue statement or alleged untrue statement of any
material fact relating to Borrower, its Affiliates, the Loan, the Facility, the
Manager or any aspect of the subject financing or the parties directly involved
therein contained in such sections or arise out of or are based upon the
omission or alleged omission to state therein a material fact required to be
stated in such sections or necessary in order to make the statements in such
sections, in light of the circumstances under which they were made, not
misleading or (ii) as a result of any untrue statement of material fact in any
of the financial statements of Borrower incorporated into any placement
memorandum, prospectus, registration statement or other document connected with
the issuance of securities or the failure to include in such financial
statements or in any placement memorandum, prospectus, registration statement or
other document connected with the issuance of securities any material fact
relating to Borrower, its Affiliates, the Facility, the Loan, the Manager and
any aspect of the subject financing necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading; provided that Borrower shall have had an opportunity to review and
comment upon the relevant portions of such documents; and (z) agreeing to
reimburse Lender, the Issuer and the Advisor for any legal or other expenses
reasonably incurred by Lender, the Issuer and the Advisor in connection with
investigating or defending the Liabilities; (d) causing to be rendered such
customary opinion letters as shall be reasonably requested by the Rating
Agencies for other securitizations having or seeking ratings comparable to that
then being sought for the relevant Securitization; (e) making such
representations, warranties and covenants, as may be reasonably requested by the
Rating Agencies and comparable to those required in other securitized
transactions having or seeking the same rating as is then being sought for the
Securitization; (f) providing such information regarding the Collateral as may
be reasonably requested by the Rating Agencies or otherwise required in
connection with the formation of a REMIC and (g) providing any other information
and materials required in the Securitization process. Borrower acknowledges and
agrees that the Lender may, at any time on or after the Closing Date, assign its
duties, rights or obligations hereunder or under any Loan Document in whole, or
in part, to a servicer and/or a trustee in Lender's discretion. Nothing herein
shall in any way limit Lender's right to sell all or a portion of the Loan in a
transaction which is not a Securitization.
Section 2.15. Supplemental Mortgage Affidavits. The Liens to be
created by the Mortgage are intended to encumber the Facility described therein
to the full extent of Borrower's obligations under the Loan Documents. As of the
Closing Date, Borrower shall have paid all state, county and municipal recording
and all other taxes imposed upon the execution and recordation of the Mortgage.
Section 2.16. Transfer of Mortgaged Property.
(a) Borrower acknowledges that Lender has examined and relied on the
creditworthiness and experience of Borrower, its partners and their principals
in owning and operating properties such as the Facility in agreeing to make the
Loan, and that Lender will continue to rely on Borrower's ownership of the
Facility as a means of maintaining the value of
40
45
the Facility as security for repayment of the Indebtedness. Borrower
acknowledges that Lender has a valid interest in maintaining the value of the
Facility so as to ensure that, should Borrower default in the repayment of the
Indebtedness, Lender can recover the Indebtedness by a sale of the Facility.
Borrower shall not, without the prior written consent of Lender, which consent
may be granted or withheld in the sole and absolute discretion of Lender, sell,
convey, alienate, mortgage, encumber, pledge or otherwise transfer the Facility
or any part thereof, or permit the Facility or any part thereof to be sold,
conveyed, mortgaged, encumbered, pledged or otherwise transferred except as
permitted by this Agreement.
(b) Notwithstanding the prohibition contained in Section 2.16(a),
Lender's consent to the sale or transfer of the Mortgaged Property will not be
unreasonably withheld after consideration of the relevant factors, provided that
the following conditions are satisfied in Lender's sole determination:
(i) no Event of Default or event which with the giving of
notice or the passage of time would constitute an Event of Default
shall have occurred and remain uncured;
(ii) the proposed transferee ("Transferee") and its principals
shall be at least as creditworthy and shall have substantially
similar experience operating retail properties as Borrower and its
principals, as evidenced by financial statements and other
information reasonably requested by Lender;
(iii) the property manager selected by the Transferee shall
have sufficient experience in the ownership and management of
properties similar to the Facility, Lender shall be provided with
evidence thereof satisfactory to Lender, and such manager shall
execute and deliver a Manager's Subordination;
(iv) Lender shall have received a Non-Consolidation Opinion
reasonably satisfactory to Lender in form and substance and counsel
reasonably satisfactory to Lender and containing assumptions,
limitation and qualifications customary for opinions of such type;
(v) if a Securitization has occurred, written confirmation
from the Rating Agencies rating the Securities that such sale or
transfer will not result in a qualification, downgrade or withdrawal
of the ratings then applicable to such Securities together with
evidence reasonably satisfactory to Lender that the single purpose
nature and bankruptcy remoteness of Borrower and its shareholders or
partners following such sale or transfer are in accordance with the
standards of such Rating Agencies; or if a Securitization has not
occurred, evidence reasonably satisfactory to Lender that the single
purpose nature and bankruptcy remoteness of Borrower and its
shareholders or partners following such
41
46
transfer are in accordance with the standards of the Rating Agencies
selected by Lender;
(vi) Borrower and the Transferee shall have executed and
delivered to Lender an assumption agreement and such other documents
as Lender may request (collectively, the "Assumption Agreement")
under which the Transferee shall be obligated to Lender for the
entire Loan Amount then outstanding; such Assumption Agreement shall
(A) release Borrower (but not the Facility) from the Lien of the
Mortgage, and (B) release Borrower from the Indebtedness and the
obligations under the Loan Documents thereafter arising with respect
to the Mortgaged Property. The Assumption Agreement shall be in form
and substance acceptable to Lender in its sole discretion;
(vii) the Assumption Agreement shall state the Transferee's
agreement to abide by and be bound by the terms in the Note, the
Mortgage, this Agreement and the other Loan Documents, and Borrower
and/or the Transferee shall deliver such legal opinions and title
insurance endorsements as may be reasonably requested by Lender;
(viii) upon execution of a contract for the sale of the
Facility and not less than thirty (30) days prior to the date of
such sale Borrower shall submit notice of such sale to Lender.
Borrower shall submit to Lender, not less than twenty (20) days
prior to the date of such sale, the Assumption Agreement for the
Facility for execution by Lender. Such documents shall be in a form
appropriate in the jurisdiction in which the Facility is located and
satisfactory to Lender in its sole discretion. In addition, Borrower
shall provide all other documentation Lender reasonably requires to
be delivered by Borrower in connection with such assumption,
together with an Officer's Certificate certifying that such
documentation (i) is in compliance with all Legal Requirements, (ii)
will effect such assumption in accordance with the terms of this
Agreement, and (iii) will not impair or otherwise adversely affect
the validity or priority of the Lien of the Mortgage;
(ix) Borrower shall have paid to Lender the Transfer Fee; and
(xii) the Transferee shall not be an Affiliate of Borrower.
(c) Without limitation of the conditions set forth in
Section 2.16(b) hereof, if the Cross-Collateralization has occurred, the
following additional conditions shall be satisfied, as determined by Lender in
its reasonable discretion, prior to a sale or transfer of the Mortgaged
Property:
(i) There shall be no continuing "Default" or "Event of
Default" as defined in the Xxxxxx Loan Agreement.
42
47
(ii) Borrower shall have defeased the Loan in accordance with
the terms of Sections 2.6 and 2.11 hereof in an amount (if any)
sufficient to cause the Debt Service Coverage Ratio (calculated on
the basis of Adjusted Net Operating Income and calculated as if such
amount were actually applied to reduce the Principal Indebtedness
upon which Debt Service was paid and calculated as if the Principal
Indebtedness were reamortized on a straight-line basis (as if the
reduction had occurred) over the remaining number of months until
the Maturity Date) of the Facility, computed on the basis of the
twelve (12) calendar months most recently concluded, to be at least
equal to the greater of (x) 1.70 and (y) the Combined Debt Service
Coverage Ratio for the twelve (12) calendar months most recently
concluded.
(iii) The Xxxxxx Hills Entity shall have satisfied the
requirements of Section 2.16(c) of the Xxxxxx Loan Agreement.
(iv) Lender shall have received, at Borrower's sole cost and
expense, such endorsements to the Title Insurance Policy reflecting
the termination of the Guaranty and the elimination of the
effectiveness of Section 7.1(xviii) hereof as Lender shall
reasonably require.
Upon satisfaction of the conditions precedent to a transfer of the Mortgaged
Property set forth in this Section 2.16, Lender agrees that it shall release the
Guaranty and all of Lender's claims thereunder, and Section 7.1(xviii) hereof
shall be deemed deleted from this Agreement.
(d) Borrower hereby agrees to indemnify and defend and hold Lender
harmless against documentary stamp and intangible taxes, if any, imposed on
Lender by virtue of its execution or recordation of the Assumption Agreement,
including any penalties, interest and attorneys' fees incurred by Lender in
connection therewith, and all such charges shall be secured by the Lien of the
Mortgage and bear interest at the Default Rate until paid.
ARTICLE III
CONDITIONS PRECEDENT
Section 3.1. Conditions Precedent to the Making of the Loan. (a) As
a condition precedent to the making of the Loan, Borrower shall have satisfied
the following conditions (unless waived by Lender in accordance with Section
8.4) with respect to the Facility on or before the Closing Date:
(A) Loan Documents.
(i) Loan Agreement. Borrower shall have executed and delivered
this Agreement to Lender.
(ii) Note. Borrower shall have executed and delivered to
Lender the Note.
43
48
(iii) Mortgage. Borrower shall have executed and delivered to
Lender the Mortgage and such Mortgage shall have been filed of
record in the appropriate filing offices in the jurisdiction in
which the Facility is located or irrevocably delivered to a title
agent for such recordation.
(iv) Assignment of Leases. Borrower shall have executed and
delivered to Lender the Assignment of Leases and the Assignment of
Leases shall have been filed of record in the appropriate filing
offices in the jurisdiction in which the Facility is located or
irrevocably delivered to a title agent for such recordation.
(v) Assignment of Agreements. Borrower shall have executed and
delivered to Lender the Assignment of Agreements and the Assignment
of Agreements shall, to the extent prudent pursuant to local
practice, have been filed of record in the appropriate filing
offices in the jurisdiction in which the Facility is located or
irrevocably delivered to a title agent for such recordation.
(vi) Financing Statements. Borrower and its partners or
members (and their shareholders), as applicable, shall have executed
and delivered to Lender all financing statements required by Lender
and such financing statements shall have been filed of record in the
appropriate filing offices in each of the appropriate jurisdictions
or irrevocably delivered to a title agent for such recordation.
(vii) Intentionally omitted.
(viii) Cash Collateral Account Agreement. Borrower and Cash
Collateral Account Bank shall have executed and delivered the Cash
Collateral Account Agreement and shall have delivered an executed
copy of such agreement to Lender.
(ix) Intentionally omitted.
(x) Intentionally omitted.
(xi) Collection Account Agreement. Borrower and the Collection
Account Bank shall have executed and delivered the Collection
Account Agreement and shall have delivered an executed copy of such
agreement to Lender.
(B) Opinions of Counsel. Lender shall have received from counsel
satisfactory to Lender, legal opinions in form and substance satisfactory to
Lender in Lender's sole discretion (including without limitation, a bankruptcy
opinion). All such legal opinions will be addressed to Lender and the Rating
Agencies, dated as of the Closing Date, and in form and substance satisfactory
to Lender, the Rating Agencies and their counsel. Borrower hereby
44
49
instructs any of the foregoing counsel, to the extent that such counsel
represents Borrower, to deliver to Lender such opinions addressed to Lender and
the Rating Agencies.
(C) Secretary's Certificates and SPE Equity Owner's Certificate.
Lender shall have received a Secretary's Certificate with respect to Borrower's
managing equity owner and the SPE Equity Owner's Certificate with respect to
Borrower.
(D) Insurance. Lender shall have received certificates of insurance
demonstrating insurance coverage in respect of the Facility of types, in
amounts, with insurers and otherwise in compliance with the terms, provisions
and conditions set forth in the Mortgage. Such certificates shall indicate that
Lender is an additional insured as its interests may appear and shall contain a
loss payee endorsement in favor of Lender with respect to the property policies
required to be maintained under the Mortgage. All insurance policies required to
be maintained hereunder shall be maintained from the Closing Date throughout the
term of this Agreement in the types and amounts required under the Mortgage.
(E) Lien Search Reports. Lender shall have received satisfactory
reports of UCC (collectively, the "UCC Searches"), federal tax Lien, bankruptcy,
state tax lien, judgment and pending litigation searches conducted by a search
firm reasonably acceptable to Lender. Such searches shall have been received in
relation to Borrower and each equity owner in Borrower. Such searches shall have
been conducted in each of the locations designated by Lender in Lender's
reasonable discretion and shall have been dated not more than fifteen (15) days
prior to the Closing Date.
(F) Title Insurance Policy. Lender shall have received (i) a Title
Insurance Policy or a marked up commitment (in form and substance reasonably
satisfactory to Lender in Lender's reasonable discretion) from Title Insurer to
issue the Title Insurance Policy and (ii) a fully executed copy of the Title
Instruction Letter from the Title Insurer.
(G) Environmental Matters. Lender shall have received an
Environmental Report with respect to the Facility, addressed to Lender, which
Environmental Report shall be (i) prepared by a firm approved by Lender in
Lender's sole discretion, (ii) prepared based on a scope of work determined by
Lender in Lender's sole discretion and (iii) in form and content acceptable to
Lender in Lender's sole discretion, such Environmental Report to be conducted by
an Independent environmental Engineer.
(H) Consents, Licenses, Approvals. Lender shall have received copies
of all consents, licenses and approvals, if any, required in connection with the
execution, delivery and performance by Borrower under, and the validity and
enforceability of the Loan Documents, and such consents, licenses and approvals
shall be in full force and effect.
(I) Additional Matters. Lender shall have received such other
Permits, certificates (including certificates of occupancy reflecting the use of
the Facility as of the Closing Date), opinions, documents and instruments
(including without limitation, written proof from the appropriate Governmental
Authority regarding the zoning of the Facility in form and substance
satisfactory to Lender in Lender's sole discretion) relating to the Loan as may
have been
45
50
requested by Lender and all other documents and all legal matters in connection
with the Loan shall be satisfactory in form and substance to Lender. Borrower
shall provide Lender with information reasonably satisfactory to Lender
regarding the Basic Carrying Costs on or before the Closing Date.
(J) Representations and Warranties. The representations and
warranties herein and in the other Loan Documents shall be true and correct in
all material respects.
(K) Accounting and Regulatory Review. Lender shall have received an
accounting and regulatory review satisfactory to Lender in Lender's sole
discretion showing no anticipated decrease in cash flow. Such review shall be
(i) prepared by a firm approved by Lender in Lender's sole discretion, (ii)
prepared based on a scope of work determined by Lender in Lender's sole
discretion and (iii) in form and content acceptable to Lender in Lender's sole
discretion.
(L) No Injunction. No law or regulation shall have been adopted, no
order, judgment or decree of any Governmental Authority shall have been issued,
and no litigation shall be pending or threatened, which in the good faith
judgment of Lender would enjoin, prohibit or restrain, or impose or result in an
adverse effect upon the making or repayment of the Loan or the consummation of
the Transactions.
(M) Survey. Lender shall have received a Survey with respect to the
Facility which Survey shall be (i) prepared by a firm approved by Lender in
Lender's sole discretion, (ii) prepared based on a scope of work determined by
Lender in Lender's sole discretion and (iii) in form and content acceptable to
Lender in Lender's sole discretion.
(N) Engineering Report. Lender shall have received an Engineering
Report (which shall include, among other things, a seismic study) with respect
to the Facility prepared by an Engineer (addressed to Lender) and which reports
shall be (i) prepared by a firm approved by Lender in Lender's sole discretion,
(ii) prepared based on a scope of work determined by Lender in Lender's sole
discretion and (iii) in form and content acceptable to Lender in Lender's sole
discretion.
(O) Appraisal. Lender shall have received an Appraisal satisfactory
to Lender with respect to the Facility which shall be (i) prepared by a firm
approved by Lender in Lender's sole discretion, (ii) prepared based on a scope
of work determined by Lender in Lender's sole discretion and (iii) in form and
content acceptable to Lender in Lender's sole discretion.
(P) Security Deposits. Borrower shall be in compliance with all
applicable Legal Requirements relating to all security deposits with respect to
Facility.
(Q) Service Contracts and Permits. Borrower shall have delivered to
Lender a copy of all material contracts and Permits relating to the Facility.
(R) Site Inspection. Unless waived by Lender in accordance with
Section 8.4, Lender shall have performed, or caused to be performed on its
behalf, an on-site due diligence
46
51
review of the Facility to be acquired with the Loan satisfactory to Lender in
Lender's sole discretion.
(S) Use. The Facility shall be operating only as an anchored
shopping center.
(T) Financial Information. Lender shall have received all financial
information (which financial information shall be satisfactory to Lender in
Lender's sole discretion) relating to the Facility including, without
limitation, audited financial statements of Borrower and other financial reports
requested by Lender in Lender's sole discretion. Such financial information
shall be (i) prepared by a firm approved by Lender in Lender's sole discretion,
(ii) prepared based on a scope of work determined by Lender in Lender's sole
discretion and (iii) in form and content acceptable to Lender in Lender's sole
discretion.
(U) Intentionally omitted.
(V) Leases: Tenant Estoppels; Subordination, Nondisturbance and
Attornment Agreements. With respect to the Facility, Borrower shall have
delivered a true, complete and correct rent roll and a copy of each of the
Leases identified in such rent roll, and each Lease shall be satisfactory to
Lender in Lender's sole discretion. Borrower shall, among other things and
without limitation, provide (i) evidence that each Lease is in full force and
effect and (ii) originally executed tenant estoppel certificates and
subordination, nondisturbance and attornment agreements from tenants with leases
which in the aggregate account for at least 100% of the total square footage of
the Facility in form and substance satisfactory to Lender in Lender's sole
discretion.
(W) Subdivision. Evidence satisfactory to Lender (including title
endorsements) that the Land with respect to the Facility constitutes a separate
lot for real estate tax and assessment purposes.
(X) Transaction Costs and Fees. Borrower shall have paid or caused
to be paid all Transaction Costs. Borrower shall also pay on the Closing Date
all of Lender's structuring expenses with respect to the Transactions, which
expenses shall be in amount equal to one percent (1.0%) of the Loan Amount. Such
expenses may be deducted by Lender from the proceeds of the Loan.
(Y) Intentionally omitted.
(Z) Utilities. Evidence that all utility services required for the
Facility are available.
(b) Lender shall not make the Loan unless and until each of the
applicable conditions precedent set forth in Section 3.1 is satisfied and until
Borrower provides any other information reasonably required by Lender.
(c) In connection with the Loan, Borrower shall execute and/or
deliver to Lender all additions, amendments, modifications and supplements to
the items set forth in this
47
52
Article III, including without limitation, amendments, modifications and
supplements to the Note, Mortgage, Assignment of Leases, and Assignment of
Agreements, if reasonably requested by Lender to effectuate the provisions
hereof, and to provide Lender with the full benefit of the security intended to
be provided under the Loan Documents. Without in any way limiting the foregoing,
such additions, modifications and supplements shall include those deemed
reasonably desirable by Lender's counsel in the jurisdiction in which the
Facility is located.
(d) The making of the Loan shall constitute, without the necessity
of specifically containing a written statement to such effect, a confirmation,
representation and warranty by Borrower to Lender that all of the applicable
conditions to be satisfied in connection with the making of the Loan have been
satisfied (unless waived by Lender in accordance with Section 8.4,) and that all
of the representations and warranties of Borrower set forth in the Loan
Documents are true and correct in all material respects as of the date of the
making of the Loan.
Section 3.2. Form of Loan Documents and Related Matters. The Loan
Documents and all of the certificates, agreements, legal opinions and other
documents and papers referred to in this Article III, unless otherwise
specified, shall be delivered to Lender, and shall be reasonably satisfactory in
form and substance to Lender.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
Section 4.1. Representations and Warranties of Borrower. (a) Closing
Date Representations and Warranties of Borrower. Borrower represents and
warrants that, as of the Closing Date:
(A) Organization. Borrower (i) is a duly organized and validly
existing Entity in good standing under the laws of the State of its formation,
(ii) has the requisite Entity power and authority to carry on its business as
now being conducted, and (iii) has the requisite Entity power to execute and
deliver, and perform its obligations under, the Loan Documents.
(B) Authorization. The execution and delivery by Borrower of the
Loan Documents, Borrower's performance of its obligations thereunder and the
creation of the security interests and Liens provided for in the Loan Documents
(i) have been duly authorized by all requisite Entity action on the part of
Borrower, (ii) will not violate any provision of any applicable Legal
Requirements, any order of any court or other Governmental Authority, any
organizational document of Borrower or any indenture or agreement or other
instrument to which Borrower is a party or by which Borrower is bound, (iii)
will not be in conflict with, result in a breach of, or constitute (with due
notice or lapse of time or both) a default under, or result in the creation or
imposition of any Lien of any nature whatsoever upon any of the property or
assets of Borrower pursuant to, any such indenture or agreement or instrument
and (iv) have been duly executed and delivered by Borrower. Other than those
obtained or filed on or prior to the Closing Date Borrower is not required to
obtain any consent, approval or authorization from, or to file any declaration
or statement with, any Governmental Authority or other agency in
48
53
connection with or as a condition to the execution, delivery or performance of
the Loan Documents.
(C) Single-Purpose Entity.
(i) Borrower has been, and will continue to be, a duly formed
and existing Entity, and a Single-Purpose Entity.
(ii) The SPE Equity Owner at all times since its formation has
been, and will continue to be, a duly formed and existing
corporation in good standing and a Single-Purpose Entity, and
Borrower will take no action to cause such SPE Equity Owner not to
be a duly formed and existing corporation in good standing and a
Single-Purpose Entity.
(iii) Borrower at all times since its formation has complied,
and will continue to comply, with the provisions of all of its
organizational documents, and the laws of the state in which
Borrower was formed relating to the Entity.
(iv) All customary formalities regarding the Entity existence
of Borrower have been observed at all times since its formation and
will continue to be observed.
(v) Borrower has been at all times since its formation and
will continue to be adequately capitalized in light of the nature of
its business.
(b) Additional Closing Date Borrower Representations and Warranties.
Borrower represents and warrants that, as of the Closing Date:
(A) Litigation. There are no actions, suits or proceedings at law or
in equity by or before any Governmental Authority or other agency now pending
and served or, to the knowledge of Borrower, threatened against Borrower or the
Facility.
(B) Agreements. Borrower is not a party to any agreement or
instrument or subject to any restriction which is likely to have a Material
Adverse Effect. Borrower is not in material default in any respect in the
performance, observance or fulfillment of any of the obligations, covenants or
conditions contained in any material agreement or instrument to which it is a
party or by which Borrower or the Facility is bound.
(C) No Bankruptcy Filing. Borrower is not contemplating either the
filing of a petition by it under any state or federal bankruptcy or insolvency
laws or the liquidation of all or a major portion of Borrower's assets or
property, and Borrower has no knowledge of any Person contemplating the filing
of any such petition against it.
(D) Full and Accurate Disclosure. No statement of fact made by or on
behalf of Borrower in the Loan Documents or in any other document or certificate
delivered to Lender
49
54
by Borrower contains any untrue statement of a material fact or omits to state
any material fact necessary to make statements contained herein or therein not
misleading. There is no fact presently known to Borrower which has not been
disclosed to Lender which materially adversely affects, nor as far as Borrower
can foresee, might materially adversely affect the business, operations or
condition (financial or otherwise) of Borrower.
(E) Location of Chief Executive Offices. The location of Borrower's
principal place of business and the location of Borrower's chief executive
office is: c/x Xxxxxxx Pacific Properties, Inc., 000 Xxxx Xxx Xxxxxx, Xxx Xxxxx,
XX 00000.
(F) Compliance. Borrower, the Facility and Borrower's use thereof
and operations thereat comply in all material respects with all applicable Legal
Requirements, including without limitation, building and zoning ordinances and
codes. Borrower is not in default or violation of any order, writ, injunction,
decree or demand of any Governmental Authority, the default or violation of
which is reasonably likely to have a Material Adverse Effect.
(G) Other Debt and Obligations. Borrower has no financial obligation
under any indenture, mortgage, deed of trust, loan agreement or other agreement
or instrument to which Borrower is a party, or by which Borrower or its Facility
is bound, and other than unsecured trade payables incurred in the ordinary
course of business relating to the ownership and operation of its Facility which
do not exceed, at any time, a maximum amount of $250,000 and are paid within
sixty (60) days of the date incurred, and other than obligations under the
Mortgage and the other Loan Documents, and other than the Permitted
Encumbrances. Borrower has not borrowed or received other debt financing that
has not been heretofore repaid in full and Borrower has no known material
contingent liabilities.
(H) ERISA. Each Plan and, to the knowledge of Borrower, each
Multiemployer Plan, is in compliance in all material respects with, and has been
administered in all material respects in compliance with, its terms and the
applicable provisions of ERISA, the Code and any other federal or state law, and
no event or condition has occurred as to which Borrower would be under an
obligation to furnish a report to Lender under Section 5.1(T).
(I) Solvency. Borrower (i) has not entered into this Loan Agreement
or any Loan Document with the actual intent to hinder, delay, or defraud any
creditor, and (ii) has received reasonably equivalent value in exchange for its
obligations under the Loan Documents. Giving effect to the transactions
contemplated hereby, the fair saleable value of Borrower's assets exceeds and
will, immediately following the execution and delivery of this Agreement, exceed
Borrower's total liabilities, including, without limitation, subordinated,
unliquidated, or disputed liabilities or Contingent Obligations. The fair
saleable value of Borrower's assets is and will, immediately following the
execution and delivery of this Agreement, be greater than Borrower's probable
liabilities, including the maximum amount of its Contingent Obligations or its
debts as such debts become absolute and matured. Borrower's assets do not and,
immediately following the execution and delivery of this Agreement, will not,
constitute unreasonably small capital to carry out its business as conducted or
as proposed to be conducted. Borrower does not intend to,
50
55
and does not believe that it will, incur debts and liabilities (including,
without limitation, Contingent Obligations and other commitments) beyond its
ability to pay such debts as they mature (taking into account the timing and
amounts to be payable on or in respect of obligations of Borrower).
(J) Not Foreign Person. Borrower is not a "foreign person" within
the meaning of Section 1445(f)(3) of the Code.
(K) Enforceability. The Loan Documents are the legal, valid and
binding obligation of Borrower, enforceable against Borrower in accordance with
their terms, subject to bankruptcy, insolvency and other limitations on
creditors' rights generally and to equitable principles.
(L) Investment Company Act, Public Utility Holding Company Act.
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, (ii) a "holding company" or a "subsidiary company" of a "holding
company" or an "affiliate" of either a "holding company or a "subsidiary
company" within the meaning of the Public Utility Holding Company Act of 1935,
as amended, or (iii) subject to any other federal or state law or regulation
which purports to restrict or regulate its ability to borrow money.
(M) No Defaults. No Default or Event of Default exists under or with
respect to any Loan Document.
(N) Labor Matters. Borrower is not a party to any collective
bargaining agreements.
(O) Title to the Mortgaged Property. Borrower owns good,
indefeasible, marketable and insurable fee simple title to the Facility free and
clear of all Liens, other than the Permitted Encumbrances applicable to the
Facility. There are no outstanding options to purchase or rights of first
refusal affecting the Facility. The Permitted Encumbrances do not and will not
materially and adversely affect (i) the ability of Borrower to pay in full all
sums due under the Note or any of its other obligations in a timely manner or
(ii) the use of Borrower's Facility for the use currently being made thereof,
the operation of the Facility as currently being operated or the value of the
Facility.
(P) Use of Proceeds: Margin Regulations. Borrower will use the
proceeds of the Loan for the purposes described in Section 2.2. No part of the
proceeds of the Loan will be used for the purpose of purchasing or acquiring any
"margin stock" within the meaning of Regulation U of the Board of Governors of
the Federal Reserve System or for any other purpose which would be inconsistent
with such Regulation U or any other Regulations of such Board of Governors, or
for any purposes prohibited by applicable Legal Requirements.
(Q) Financial Information. All historical financial data concerning
Borrower and its Facility that has been delivered by Borrower to Lender is true,
complete and correct in all material respects. Since the delivery of such data,
except as otherwise disclosed in writing to
51
56
Lender, there has been no material adverse change in the financial position of
Borrower or the Facility, or in the results of operations of Borrower. Borrower
has not incurred any obligation or liability, contingent or otherwise, not
reflected in such financial data which might materially adversely affect its
business operations or the Facility.
(R) Condemnation. No Taking has been commenced or, to Borrower's
knowledge, is contemplated with respect to all or any portion of the Facility or
for the relocation of roadways providing access to the Facility.
(S) Intentionally omitted.
(T) Utilities and Public Access. The Facility has adequate rights of
access to public ways and are served by adequate water, sewer, sanitary sewer
and storm drain facilities as are adequate for full utilization of the Facility
for their current purposes. Except as otherwise disclosed by the Surveys, all
public utilities necessary to the continued use and enjoyment of the Facility as
presently used and enjoyed are located in the public right-of-way abutting the
premises, and all such utilities are connected so as to serve the Facility
either (i) without passing over other property or, (ii) if such utilities pass
over other property, pursuant to valid easements. All roads necessary for the
utilization of the Facility for their current purposes have been completed and
dedicated to public use and accepted by all Governmental Authorities or are the
subject of access easements for the benefit of the Facility.
(U) Environmental Compliance. Borrower represents, warrants and
covenants, as to itself and its Facility:
(i) Borrower and the Facility is in compliance with all
applicable Environmental Laws, which compliance includes, but is not
limited to, the possession by Borrower of and compliance with all
environmental, health and safety Permits, licenses and other
governmental authorizations required in connection with the
ownership and operation of the Facility under all Environmental
Laws, except where the failure to comply with such laws is not
reasonably likely to result in a Material Adverse Effect.
(ii) There is no Environmental Claim pending or, to Borrower's
knowledge, threatened, and no penalties arising under Environmental
Laws have been assessed, against Borrower, the Facility or against
any Person whose liability for any Environmental Claim Borrower has
or may have retained or assumed either contractually or by operation
of law, and no investigation or review is pending or, to the
knowledge of Borrower, threatened by any Governmental Authority,
citizens group, employee or other Person with respect to any alleged
failure by Borrower, or the Facility to have any environmental,
health or safety permit, license or other authorization required
under, or to otherwise comply with, any Environmental Law or with
respect to any alleged liability of Borrower for any Use or Release
of any Hazardous Substances or the presence, Use, or
52
57
Release of any Hazardous Substances at, on, in, under, or from the
Facility.
(iii) To the knowledge of Borrower after due inquiry, there have
been and are no past or present Releases or threats of Release of
any Hazardous Substance that are likely to form the basis of any
Environmental Claim against Borrower, the Facility or, to Borrower's
knowledge, against any Person whose liability for any Environmental
Claim Borrower has or may have retained or assumed either
contractually or by operation of law.
(iv) To the knowledge of Borrower after due inquiry and except
as disclosed in the Environmental Reports, without limiting the
generality of the foregoing, there is not present at, on, in or
under the Facility, PCB-containing equipment, asbestos or asbestos
containing materials, underground or aboveground storage tanks or
surface impoundments for Hazardous Substances, lead in drinking
water (except in concentrations that comply with all Environmental
Laws), or lead-based paint (nor have there been any underground
storage tanks present at, on, in, or under the Facility).
(v) No Liens are presently recorded with the appropriate land
records under or pursuant to any Environmental Law with respect to
Borrower's Facility and, to Borrower's knowledge, no Governmental
Authority has been taking or is in the process of taking any action
that could subject the Facility to liens under any Environmental
Law.
(vi) There have been no environmental investigations, studies,
audits, reviews or other analyses conducted by or on behalf of
Borrower that are in the possession or control of Borrower in
relation to the Facility which have not been provided to Lender.
(vii) No conditions exist which would require Borrower under any
Environmental Laws to place a notice on any deed to the Facility
with respect to the presence, Use or Release of Hazardous Substances
at, on, in, under or from the Facility and the Facility has no such
notices in their deeds.
(V) No Joint Assessment, Separate Lots. Borrower has not and shall
not suffer, permit or initiate the joint assessment of the Facility (i) with any
other real property constituting a separate tax lot, and (ii) with any portion
of the Facility which may be deemed to constitute personal property, or any
other procedure whereby the lien of any taxes which may be levied against such
personal property shall be assessed or levied or charged to the Facility as a
single Lien. The Facility is comprised of one or more parcels, each of which
constitutes a separate tax lot and none of which constitutes a portion of any
other tax lot.
53
58
(W) Assessments. Except as disclosed in the Title Insurance Policy,
there are no pending or, to the knowledge of Borrower, proposed special or other
assessments for public improvements or otherwise affecting the Facility, nor, to
the knowledge of Borrower, are there any contemplated improvements to the
Facility that may result in such special or other assessments.
(X) Mortgage and Other Liens. The Mortgage creates a valid and
enforceable first mortgage lien on the Facility as security for the repayment of
the Indebtedness, subject only to the Permitted Encumbrances applicable to the
Facility. Each Collateral Security Instrument establishes and creates a valid,
subsisting and enforceable Lien on and a security interest in, or claim to, the
rights and property described therein. All property covered by such Collateral
Security Instrument is subject to a UCC financing statement filed and/or
recorded, as appropriate, (or irrevocably delivered to an agent for such
recordation or filing) in all places necessary to perfect a valid first priority
Lien with respect to the rights and property that are the subject of such
Collateral Security Instrument to the extent governed by the UCC. All
continuations and any assignments of any such financing statements have been or
will be timely filed or refiled, as appropriate, in the appropriate recording
offices.
(Y) Enforceability. The Loan Documents executed by Borrower in
connection with the Loan, including, without limitation, any Collateral Security
Instrument, are the legal, valid and binding obligations of Borrower,
enforceable against Borrower in accordance with their terms, subject to
bankruptcy, insolvency and other limitations on creditors' rights generally and
to equitable principles. Such Loan Documents are, as of the Closing Date, not
subject to any right of rescission, set-off, counterclaim or defense by
Borrower, including the defense of usury, nor will the operation of any of the
terms of the Note, the Mortgage, or such other Loan Documents, or the exercise
of any right thereunder, render the Mortgage unenforceable against Borrower, in
whole or in part, or subject to any right of rescission, set-off, counterclaim
or defense by Borrower, including the defense of usury, and Borrower has not
asserted any right of rescission, set-off, counterclaim or defense with respect
thereto.
(Z) No Liabilities. Borrower has no liabilities or obligations
including without limitation Contingent Obligations, (and including, without
limitation, liabilities or obligations in tort, in contract, at law, in equity,
pursuant to a statute or regulation, or otherwise) other than those liabilities
and obligations expressly permitted by this Agreement.
(AA) No Prior Assignment. As of the Closing Date, (i) Lender is the
assignee of Borrower's interest under the Leases, and (ii) there are no prior
assignments of the Leases or any portion of the Rent due and payable or to
become due and payable which are presently outstanding.
(AB) Certificate of Occupancy. Borrower has obtained all Permits
necessary to use and operate Borrower's Facility for the use described in
Section 3.1(S), and all such Permits are in full force and effect. The use being
made of the Facility is in conformity in all respects with the certificates of
occupancy and/or Permits for the Facility and any other restrictions, covenants
or conditions affecting the Facility.
54
59
(AC) Flood Zone. Except as shown on the Survey, the Facility is not
located in a flood hazard area as defined by the Federal Insurance
Administration.
(AD) Physical Condition. Except as disclosed in the Engineering
Reports, the Facility is free of material structural defects and all building
systems contained therein are in good working order in all material respects
subject to ordinary wear and tear.
(AE) Intellectual Property. All trademarks, trade names and service
marks that Borrower owns or has pending, or under which it is licensed, are in
good standing and uncontested. There is no right under any trademark, trade name
or service xxxx necessary to the business of Borrower as presently conducted or
as Borrower contemplates conducting its business. Borrower has not infringed, is
not infringing, and has not received notice of infringement with respect to
asserted trademarks, trade names and service marks of others. To Borrower's
knowledge, there is no infringement by others of trademarks, trade names and
service marks of Borrower.
(AF) Security Deposits. Borrower is in compliance with all
applicable Legal Requirements relating to all security deposits with respect to
Facility.
(AG) Conduct of Business. Borrower does not conduct its business
"also known as", "doing business as" or under any other name.
(AI) Title Insurance. The Facility is covered by either an American
Land Title Association (ALTA) mortgagee's title insurance policy, or a
commitment to issue such a title insurance policy, insuring a valid first lien
on the Facility, which is in full force and effect and is freely assignable to
and will inure to the benefit of Lender and any successor or assignee of Lender,
including but not limited to the trustee in a Securitization, subject only to
the Permitted Encumbrances.
(AK) Tax Fair Market Value. The Loan Amount with respect to the
Facility does not exceed the Tax Fair Market Value of the Facility. If a Note
with respect to the Facility is significantly modified prior to the closing date
of a Securitization so as to result in a taxable exchange under Code Section
1001, Borrower will, if requested by Lender, represent that the amount of such
Note does not exceed the Tax Fair Market Value of the Facility as of the date of
such significant modification.
(AL) Leases. Except as disclosed in the tenant estoppel certificates
or in the rent roll statement delivered to Lender prior to the Closing Date, (a)
Borrower is the sole owner of the entire lessor's interest in the Leases; (b)
the Leases are valid and enforceable, subject to bankruptcy, insolvency,
moratium and other laws limiting or affecting the rights of creditors generally;
(c) the material terms of all alterations, modifications and amendments to the
Leases are reflected in the certified rent roll statement delivered to and
approved by Lender; (d) none of the Rents reserved in the Leases have been
assigned or otherwise pledged or hypothecated; (e) none of the Rents have been
collected for more than one (1) month in advance; (f) the premises demised under
the Leases have been completed and the tenants under the Leases have accepted
the same and have taken possession of the same on a rent-paying basis; (g) to
Borrower's
55
60
knowledge, there exist no offsets or defenses to the payment of any portion of
the Rents; (h) no Lease contains an option to purchase, right of first refusal
to purchase, or any other similar provision; (i) no Person has any possessory
interest in, or right to occupy, the Facility except under and pursuant to a
Lease; (j) each Lease is subordinate to the Loan Documents, either pursuant to
its terms or a recorded subordination agreement; and (k) no Lease has the
benefit of a non-disturbance agreement that would be considered unacceptable to
prudent institutional lenders.
Section 4.2. Survival of Representations and Warranties. Borrower
agrees that (i) all of the representations and warranties of Borrower set forth
in this Agreement and in the other Loan Documents delivered on the Closing Date
are made as of the Closing Date (except as expressly otherwise provided) and
(ii) all representations and warranties made by Borrower shall survive the
delivery of the Note and continue for so long as any amount remains owing to
Lender under this Agreement, the Note or any of the other Loan Documents;
provided, however, that the representations, warranties and covenants set forth
in Section 4.1(b)(U) and Sections 5.1(D) through 5.1(I) inclusive shall survive
in perpetuity and shall not be subject to the exculpation provisions of Section
8.14. All representations, warranties, covenants and agreements made in this
Agreement or in the other Loan Documents shall be deemed to have been relied
upon by Lender notwithstanding any investigation heretofore or hereafter made by
Lender or on its behalf.
ARTICLE V
AFFIRMATIVE COVENANTS
Section 5.1. Borrower Covenants. Borrower covenants and agrees that,
from the date hereof and until payment in full of the Indebtedness:
(A) Existence; Compliance with Legal Requirements; Insurance.
Borrower shall do or cause to be done all things necessary to preserve, renew
and keep in full force and effect its Entity existence, rights, licenses,
Permits and franchises necessary for the conduct of its business and comply in
all respects with all applicable Legal Requirements and Insurance Requirements
applicable to it and the Facility. Borrower shall notify Lender promptly of any
written notice or order that Borrower receives from any Governmental Authority
relating to Borrower's failure to comply with such applicable Legal Requirements
relating to Borrower's Facility and promptly take any and all actions necessary
to bring its operations at the Facility into compliance with such applicable
Legal Requirements (and shall fully comply with the requirements of such Legal
Requirements that at any time are applicable to its operations at the Facility)
provided, that Borrower at its expense may, after prior notice to the Lender,
contest by appropriate legal, administrative or other proceedings conducted in
good faith and with due diligence, the validity or application, in whole or in
part, of any such applicable Legal Requirements as long as (i) neither the
applicable Collateral nor any part thereof or any interest therein, will be
sold, forfeited or lost if Borrower pays the amount or satisfies the condition
being contested, and Borrower would have the opportunity to do so, in the event
of Borrower's failure
56
61
to prevail in the contest, (ii) Lender would not, by virtue of such permitted
contest, be exposed to any risk of any civil liability for which Borrower has
not furnished additional security as provided in clause (iii) below, or to any
risk of criminal liability, and neither the applicable Collateral nor any
interest therein would be subject to the imposition of any lien as a result of
the failure to comply with such Legal Requirement or of such proceeding and
(iii) Borrower shall have furnished to the Lender additional security in respect
of the claim being contested or the loss or damage that may result from
Borrower's failure to prevail in such contest in an amount equal to 125 percent
of the amount of such claim. Borrower shall at all times maintain, preserve and
protect all franchises and trade names and preserve all the remainder of its
property necessary for the continued conduct of its business and keep the
Facility in good repair, working order and condition, except for reasonable wear
and use, and from time to time make, or cause to be made, all necessary repairs,
renewals, replacements, betterments and improvements thereto, all as more fully
provided in the Mortgage. Borrower shall keep the Facility insured at all times,
by financially sound and reputable insurers, to such extent and against such
risks, and maintain liability and such other insurance, as is more fully
provided herein and in the Mortgage.
(B) Impositions, and Other Claims. Borrower shall pay and discharge
or cause to be paid and discharged all Impositions, as well as all lawful claims
for labor, materials and supplies or otherwise, which could become a Lien, all
as more fully provided in, and subject to any rights to contest contained in,
the Mortgage.
(C) Litigation. Borrower shall give prompt written notice to Lender
of any litigation or governmental proceedings pending or threatened (in writing)
against Borrower which is reasonably likely to have a Material Adverse Effect.
(D) Environmental Remediation.
(i) If any investigation, site monitoring, cleanup, removal,
abatement, restoration remedial work or other response action of any
kind or nature is required pursuant to an order or directive of any
Governmental Authority or under any applicable Environmental Law
(collectively, the "Remedial Work"), because of or in connection
with the (x) past, present or future presence, suspected presence,
Release or threatened Release of a Hazardous Substance at, on, in,
under or from the Facility or any portion thereof or (y) violation
of or compliance with applicable Environmental Laws, Borrower shall
promptly commence and diligently prosecute to completion all such
Remedial Work. In all events, such Remedial Work shall be commenced
within the time period ordered or directed by such Governmental
Authority or such shorter period as may be required under any
applicable Environmental Law; provided, however, that Borrower shall
not be required to commence such Remedial Work within the above
specified time periods: (x) if prevented from doing so by any
Governmental Authority, (y) if commencing such Remedial Work within
such time periods would result in Borrower or such Remedial Work
violating any Environmental Law or (z) if Borrower, at its expense
and
57
62
after prior notice to Lender, is contesting by appropriate legal,
administrative or other proceedings, conducted in good faith and
with due diligence, the need to perform Remedial Work, as long as
(1) Borrower is permitted by the applicable Environmental Laws to
delay performance of the Remedial Work pending such proceedings, (2)
neither Borrower's Facility nor any part thereof or interest therein
win be sold, forfeited or lost if Borrower performs the Remedial
Work being contested, and Borrower would have the opportunity to do
so, in the event of Borrower's failure to prevail in the contest,
(3) Lender would not, by virtue of such permitted contest, be
exposed to any risk of any civil liability for which Borrower has
not furnished additional security as provided in clause (4) below,
or to any risk of criminal liability, and neither the Facility nor
any interest therein would be subject to the imposition of any Lien
for which Borrower has not furnished additional security as provided
in clause (4) below, as a result of the failure to perform such
Remedial Work and (4) Borrower shall have furnished to Lender
additional security in respect of the Remedial Work being contested
and the loss or damage that may result from Borrower's failure to
prevail in such contest in an amount equal to 125 percent of the
cost of such Remedial Work and any loss or damage that may result
from Borrower's failure to prevail in such contest.
(ii) All Remedial Work under clause (i) above shall be
performed by contractors, and under the supervision of a consulting
environmental Engineer, each approved in advance by Lender which
approval will not be unreasonably withheld or delayed. All costs and
expenses incurred in connection with such Remedial Work shall be
paid by Borrower. If Borrower does not timely commence and
diligently prosecute to completion the Remedial Work, Lender may
(but shall not be obligated to), upon sixty (60) days prior written
notice to Borrower of its intention to do so, cause such Remedial
Work to be performed. Borrower shall pay or reimburse Lender on
demand for all Advances (as defined in the Mortgage) and expenses
(including reasonable attorneys' fees and disbursements) relating to
or incurred by Lender in connection with monitoring, reviewing or
performing any Remedial Work in accordance herewith.
(iii) Unless otherwise required by law, Environmental Laws or
any Governmental Authority, Borrower shall not commence any Remedial
Work under clause (i) above, nor enter into any settlement
agreement, consent decree or other compromise relating to any
Hazardous Substances or Environmental Laws which is reasonably
likely to have a Material Adverse Effect. Notwithstanding the
foregoing, if the presence or threatened presence or Release of
Hazardous Substances at, on, in, under, from or about Borrower's
Facility poses an immediate threat to the health, safety or welfare
of any Person or the environment, or is of such a nature
58
63
that an immediate response is necessary, Borrower may complete all
necessary Remedial Work. In such events, Borrower shall notify
Lender as soon as practicable and, in any event, within three
Business Days, of any action taken.
(E) Environmental Matters: Inspection.
(i) Borrower shall not cause, allow or authorize a Hazardous
Substance to be present at, on, in, under or to emanate from the
Facility, or migrate from adjoining property controlled by Borrower
onto or into the Facility, except under conditions permitted by
applicable Environmental Laws and, in the event that such Hazardous
Substances are present at, on, in, under or emanate from the
Facility, or migrate onto or into the Facility, Borrower shall cause
the performance of Remedial Work, removal or remediation of such
Hazardous Substances, in accordance with this Agreement and
Environmental Laws. Borrower shall use best efforts to prevent, and
to seek the remediation of, any migration of Hazardous Substances
onto or into Borrower's Facility from any adjoining property.
(ii) Upon prior written notice to Borrower, Lender shall have
the right at all reasonable times to enter upon and inspect all or
any portion of the Facility. If Lender has reason to believe that
Remedial Work may be required, Lender may select or may require
Borrower to select a consulting environmental Engineer reasonably
satisfactory to Lender to conduct and prepare environmental reports
assessing the environmental condition of the Facility. Lender shall
be given a reasonable opportunity to review any reports, data and
other documents or materials reviewed or prepared by the
environmental Engineer. The inspection rights granted to Lender in
this Section 5.1(E) shall be in addition to, and not in limitation
of any other inspection rights granted to Lender in the Loan
Documents, and shall expressly include the right (if Lender suspects
that Remedial Work may be required) to conduct or require Borrower
to conduct soil borings, establish ground water monitoring xxxxx and
conduct other customary environmental tests, assessments and audits.
(iii) Borrower agrees to bear and shall pay or reimburse
Lender promptly on demand for all sums advanced and expenses
incurred (including reasonable attorneys' fees and disbursements,
but excluding internal overhead, administrative and similar costs of
Lender) relating to, or incurred by Lender in connection with, the
inspections and reports described in this Section 5.1(E) in the
following situations:
(x) If Lender has grounds to believe, at the time any such
inspection is ordered, that there exists an occurrence or condition that could
lead to an Environmental Claim;
59
64
(y) If any such inspection reveals an occurrence or condition that
could lead to an Environmental Claim; or
(z) If an Event of Default with respect to the Facility exists at
the time any such inspection is ordered, and such Event of Default relates to
any representation, covenant or other obligation pertaining to Hazardous
Substances, Environmental Laws or any other environmental matter.
(F) Environmental Notices,. Borrower shall promptly provide notice
to Lender of:
(i) any Environmental Claim asserted or threatened (in
writing) by any Governmental Authority or other Person with respect
to any Hazardous Substance at, on, in, under or emanating from
Borrower's Facility, which could reasonably be expected to impair
the value of Lender's interests hereunder or have a Material Adverse
Effect;
(ii) any Environmental Claim or proceeding, investigation or
inquiry commenced or threatened in writing by any Person or
Governmental Authority, against Borrower, with respect to the
presence, suspected presence, Release or threatened Release of
Hazardous Substances from or onto, in or under any property not
owned by Borrower, including, without limitation, proceedings under
the Comprehensive Environmental Response, Compensation, and
Liability Act, as amended, 42 U.S.C. Section 9601, et seq., which
could reasonably be expected to impair the value of Lender's
security interests hereunder or have a Material Adverse Effect;
(iii) all Environmental Claims asserted or threatened (in
writing) against Borrower, against any other party occupying the
Facility or any portion thereof which become known to Borrower, or
against the Facility, which could reasonably be expected to impair
the value of Lender's security interests hereunder or have a
Material Adverse Effect;
(iv) the discovery by Borrower of any occurrence or condition
on the Facility or on any real property adjoining or in the vicinity
of the Facility which could reasonably be expected to lead to an
Environmental Claim against Borrower or Lender which such
Environmental Claim is reasonably likely to have a Material Adverse
Effect; and
(v) the commencement or completion of any Remedial Work.
(G) Copies of Notices. Borrower shall immediately transmit to Lender
copies of any citations, orders, notices or other written communications
received from any Person or any Governmental Authority and any notices, reports
or other written communications submitted to any Governmental Authority with
respect to the matters described in Section 5.1(F).
60
65
(H) Environmental Claims. Lender and/or, to the extent authorized by
Lender if applicable, the Deed of Trust Trustee may join and participate in, as
a party if Lender so determines, any legal or administrative proceeding or
action concerning the Facility or any portion thereof under any Environmental
Law, if, in Lender's reasonable judgment, the interests of Lender or the Deed of
Trust Trustee, will not be adequately protected by Borrower. Borrower agrees to
bear and shall pay or reimburse Lender and the Deed of Trust Trustee on demand
for all reasonable sums advanced and reasonable expenses incurred (including
reasonable attorneys' fees and disbursements) and the Deed of Trust Trustee,
incurred by Lender and the Deed of Trust Trustee in connection with any such
action or proceeding.
(I) Indemnification. Borrower agrees to indemnify, reimburse, defend
(with counsel satisfactory to Lender, at Lender's election) and hold harmless
Lender and any Deed of Trust Trustee, for, from, and against all demands,
claims, actions or causes of action, assessments, losses, damages, liabilities,
costs and expenses, including, without limitation, interest, penalties,
consequential damages, attorneys' fees, disbursements and expenses, and
consultants' fees, disbursements and expenses, including costs of Remedial Work
(collectively, "Losses") asserted against, resulting to, imposed on, or incurred
by Lender or any Deed of Trust Trustee, directly or indirectly, in connection
with any of the following:
(i) events, circumstances, or conditions which are alleged to,
or do, form the basis for an Environmental Claim;
(ii) the presence, Use or Release of Hazardous Substances at,
on, in, under or from the Facility, which presence, Use or Release
requires or could require Remedial Work;
(iii) any Environmental Claim against Borrower, Lender, Deed
of Trust Trustee or any Person whose liability for such
Environmental Claim Borrower has or may have assumed or retained
either contractually or by operation of law; or
(iv) the breach of any representation, warranty or covenant
set forth in Section 4.1(b)(U) and Sections 5.1(D) through 5.1(I),
inclusive.
The indemnity provided in this Loan Agreement shall not be included
in any exculpation of Borrower from personal liability provided in this Loan
Agreement or in any of the other Loan Documents. Nothing in this Section 5.1(I)
shall be deemed to deprive Lender of any rights or remedies provided to it
elsewhere in this Agreement or the other Loan Documents or otherwise available
to it under law. Borrower waives and releases Lender and any Deed of Trust
Trustee from any rights or defenses Borrower may have under common law or
Environmental Laws for liability arising from or resulting from the presence,
Use or Release of Hazardous Substances except to the extent directly and solely
caused by the fraud or willful misconduct of Lender or Deed of Trust Trustee.
61
66
(J) Access to Facility. Borrower shall permit agents,
representatives and employees of Lender to inspect the Facility or any part
thereof at such reasonable times as may be requested by Lender upon advance
notice.
(K) Notice of Default. Borrower shall promptly, upon learning of
such occurrence, advise Lender of any material adverse change in Borrower's
condition, financial or otherwise, or of the occurrence of any Default or Event
of Default.
(L) Cooperate in Legal Proceedings. Except with respect to any claim
by Borrower against Lender, Borrower shall cooperate with Lender with respect to
any proceedings before any Governmental Authority which may in any way affect
the rights of Lender hereunder or any rights obtained by Lender under any of the
Loan Documents and, in connection therewith, not prohibit Lender, at its
election, from participating in any such proceedings.
(M) Perform Loan Documents. Borrower shall observe, perform and
satisfy all the terms, provisions, covenants and conditions required to be
observed, performed or satisfied by it, and shall pay when due all costs, fees
and expenses required to be paid by it, under the Loan Documents executed and
delivered by Borrower.
(N) Insurance Benefits. Borrower shall cooperate with Lender in
obtaining for Lender the benefits of any Insurance Proceeds lawfully or
equitably payable to Lender in connection with the Facility, and Lender shall be
reimbursed for any expenses incurred in connection therewith (including
reasonable attorneys' fees and disbursements and the payment by Borrower of the
expense of an Appraisal on behalf of Lender in case of a fire or other casualty
affecting the Facility or any part thereof out of such Insurance Proceeds, all
as more specifically provided in the Mortgage.
(O) Further Assurances. Borrower shall, at Borrower's sole cost and
expense:
(i) upon Lender's request therefor given from time to time
after the occurrence of any Event of Default pay for (a) reports of
UCC, federal tax lien, state tax lien, judgment and pending
litigation searches with respect to Borrower and (b) searches of
title to the Facility, each such search to be conducted by search
firms reasonably designated by Lender in each of the locations
reasonably designated by Lender.
(ii) furnish to Lender all instruments, documents, boundary
surveys, footing or foundation surveys, certificates, plans and
specifications, Appraisals, title and other insurance reports and
agreements, and each and every other document, certificate,
agreement and instrument required to be furnished pursuant to the
terms of the Loan Documents;
(iii) execute and deliver to Lender such documents, instruments,
certificates, assignments and other writings, and do such other acts
necessary, to evidence, preserve and/or protect the Collateral at
any time
62
67
securing or intended to secure the Note, as Lender may require in
Lender's discretion; and
(iv) do and execute all and such further lawful acts,
conveyances and assurances for the better and more effective
carrying out of the intents and purposes of this Agreement and the
other Loan Documents, as Lender shall require from time to time in
its discretion.
(P) Management of Mortgaged Property. At Lender's request upon
thirty (30) days prior written notice to Borrower, Borrower will be required to
appoint a manager, acceptable to Lender at its sole discretion, to manage the
Facility: (i) upon the occurrence of an Event of Default, (ii) intentionally
omitted, (iii) in the event that, as of the last day of a calendar quarter, the
Debt Service Coverage Ratio for the Facility, computed on the basis of the prior
twelve (12) calendar months, is less than 1.15, (iv) intentionally omitted,
provided, however, that from and after two years after the Start-Up Day (but
only before the Optional Prepayment Date), Lender shall not have the right to
require Borrower to appoint a manager pursuant to clause (iii) above, if on the
first Payment Date after Lender made the determination that Lender had the right
to require Borrower to appoint a manager pursuant to clause (iii) above,
Borrower defeases the Loan in accordance with the terms of Sections 2.6 and 2.11
in an amount sufficient to cause the Debt Service Coverage Ratio (calculated as
if such amount was actually applied to reduce the Principal Indebtedness upon
which Debt Service was paid and calculated as if the Principal Indebtedness was
reamortized on a straight-line basis (as if the reduction had occurred) over the
remaining number of months until the Maturity Date) for the Facility, computed
on the basis of the prior twelve (12) calendar months, to be at least equal to
1.25. Pursuant to this Section 5.1(P), Borrower's failure to appoint such an
acceptable manager within thirty (30) days of Lender's request shall constitute
an immediate Event of Default. If such a manager is appointed by Borrower,
Borrower may from time to time appoint a successor manager to manage the
Facility, which successor manager shall be approved in writing by Lender in
Lender's sole discretion. Notwithstanding the foregoing, any successor manager
selected hereunder by Lender or Borrower to serve as manager shall be a
reputable management company having at least seven years' experience in the
management of commercial properties with similar uses as the Facility and in the
jurisdiction in which the Facility is located.
(Q) Financial Reporting.
(i) Borrower shall keep and maintain or shall cause to be kept
and maintained on a Fiscal Year basis, in accordance with GAAP,
books, records and accounts reflecting in reasonable detail all of
the financial affairs of Borrower and all items of income and
expense in connection with the operation of the Facility and in
connection with any services, equipment or furnishings provided in
connection with the operation of the Facility. Lender, at Lender's
cost and expense, whether such income or expense may be realized by
Borrower or by any other Person whatsoever, shall have the right
from time to time and at all times during normal business hours upon
reasonable prior written notice to Borrower to
63
68
examine such books, records and accounts at the office of Borrower
or other Person maintaining such books, records and accounts and to
make such copies or extracts thereof as Lender shall desire. After
the occurrence of an Event of Default, Borrower shall pay any costs
and expenses incurred by Lender to examine any and all of Borrower's
books, records and accounts as Lender shall determine in Lender's
sole discretion to be necessary or appropriate in the protection of
Lender's interest.
(ii) Borrower shall furnish to Lender annually within ninety
(90) days following the end of each Fiscal Year, a true, complete
and correct copy of Borrower's financial statement (a) be in form
and substance acceptable to Lender in Lender's sole discretion, (b)
be prepared in accordance with GAAP, (c) include, without
limitation, a statement of operations (profit and loss), a statement
of cash flows, a calculation of Net Operating Income, a consolidated
balance sheet, an aged accounts receivable report and such other
information or reports as shall be reasonably requested by Lender or
any applicable Rating Agency, (d) be accompanied by an Officer's
Certificate from a senior executive of Borrower certifying as of the
date thereof (x) that such statement is true, correct, complete and
accurate and fairly reflects the results of operations and financial
condition of Borrower for the relevant period, and (y) notice of
whether there exists an Event of Default or Default, and if such
Event of Default or Default exists, the nature thereof the period of
time it has existed and the action then being taken to remedy same
and (e) be accompanied by an opinion from an Independent certified
public accountant acceptable to Lender in Lender's sole discretion.
(iii) Borrower shall furnish to Lender annually within forty
(40) days following the end of each Fiscal Year, a true, complete
and correct copy of Borrower's unaudited financial statement which
shall (a) be in form and substance acceptable to Lender in Lender's
sole discretion, (b) be prepared in accordance with GAAP, (c)
include, without limitation, a statement of operations (profit and
loss), a statement of cash flows, a calculation of Net Operating
Income, a consolidated balance sheet, an aged accounts receivable
report and such other information or reports as shall be reasonably
requested by Lender or any applicable Rating Agency and (d) be
accompanied by an Officer's Certificate from a senior executive of
Borrower certifying as of the date thereof (x) that such statement
is true, correct, complete and accurate and fairly reflects the
results of operations and financial condition of Borrower for the
relevant period, and (y) notice of whether there exists an Event of
Default or Default, and if such Event of Default or Default exists,
the nature thereof, the period of time it has existed and the action
then being taken to remedy same.
64
69
(iv) Borrower shall furnish to Lender within twenty-five (25)
days following the end of each calendar month, a true, correct and
complete monthly unaudited financial statement which shall (a) be in
form and substance acceptable to Lender in Lender's sole discretion,
(b) be prepared in accordance with GAAP, (c) include, without
limitation, a statement of operations (profit and loss), a statement
of cash flows, a calculation of Net Operating Income, a consolidated
balance sheet, an aged accounts receivable report and such other
information or reports as shall be reasonably requested by Lender or
any applicable Rating Agency and (d) be accompanied by an Officer's
Certificate from a senior executive of Borrower certifying as of the
date thereof (x) that such statement is true, correct, complete and
accurate and fairly reflects the results of operations and financial
condition of Borrower for the relevant period, and (y) notice of
whether there exists an Event of Default or Default, and if such
Event of Default or Default exists, the nature thereof, the period
of time it has existed and the action then being taken to remedy
same.
(v) Borrower shall furnish to Lender, within twenty-five (25)
days following the end of each calendar month, a true, complete and
correct rent roll and occupancy report (including statistics
concerning tenant sales) and such other occupancy and rate
statistics as Lender shall request in Lender's discretion. Each such
document shall (a) be in form and substance acceptable to Lender in
Lender's sole discretion, and (b) be accompanied by an Officer's
Certificate from a senior executive of Borrower certifying as of the
date thereof (x) that such statement is true, correct, complete and
accurate and (y) notice of whether there exists an Event of Default
or Default, and if such Event of Default or Default exists, the
nature thereof, the period of time it has existed and the action
then being taken to remedy same.
(vi) Borrower shall furnish to Lender, within ten (10)
Business Days after request, such further information with respect
to the operation of the Facility and the financial affairs of
Borrower as may be requested by Lender, including without limitation
all business plans prepared for Borrower.
(vii) Borrower shall furnish to Lender, within ten (10)
Business Days after request, such further information regarding any
Plan or Multiemployer Plan and any reports or other information
required to be filed under ERISA as may be requested by Lender.
(viii) Borrower shall, concurrently with Borrower's delivery
to Lender, provide a copy of the items required to be delivered to
Lender under this Section 5.1(Q) to the Rating Agencies, the
trustee, and any servicer and/or special servicer that may be
retained in conjunction with
65
70
the Loan or any Securitization. Borrower shall furnish to Lender
written notice, within two Business Days after receipt by Borrower,
of any Rents, Money or other items of Gross Revenue that Borrower is
not required by this Agreement to deposit in the Collection Account
or Cash Collateral Account, together with such other documents and
materials relating to such Rents, Money or other items of Gross
Revenue as Lender requests in Lender's discretion.
(ix) Borrower shall provide Lender with updated information
(satisfactory to Lender in Lender's discretion) concerning the Basic
Carrying Costs for the next succeeding Fiscal Year prior to the
termination of each Fiscal Year.
(x) Borrower shall furnish to Lender, within ten (10) Business
Days after request, such other financial information with respect to
Borrower or Manager as Lender may reasonably request.
(R) Conduct of Business. Borrower shall cause the operation of the
Facility to be conducted at all times in a manner consistent with at least the
level of operation of the Facility as of the Closing Date, including, without
limitation, the following:
(i) to maintain or cause to be maintained the standard of
operations at Borrower's Facility at all times at a level necessary
to insure a level of quality for the Facility consistent with
similar facilities in the same competitive market;
(ii) to operate or cause to be operated the Facility in a
prudent manner in compliance in all respects with applicable Legal
Requirements and Insurance Requirements relating thereto and cause
all licenses, Permits, and any other agreements necessary for the
continued use and operation of the Facility to remain in effect; and
(iii) to maintain or cause to be maintained sufficient
Inventory and Equipment of types and quantities at the Facility to
enable Borrower or Manager to operate the Facility.
(S) Intentionally omitted.
(T) ERISA. Borrower shall deliver to Lender as soon as possible, and
in any event within ten days after Borrower knows or has reason to believe that
any of the events or conditions specified below with respect to any Plan or
Multiemployer Plan has occurred or exists, a statement signed by a senior
financial officer of Borrower setting forth details respecting such event or
condition and the action, if any, that Borrower or its ERISA Affiliate proposes
to take with respect thereto (and a copy of any report or notice required to be
filed with or given to PBGC by Borrower or an ERISA Affiliate with respect to
such event or condition):
66
71
(i) any reportable event, as defined in Section 4043(b) of
ERISA and the regulations issued thereunder, with respect to a Plan,
as to which PBGC has not by regulation waived the requirement of
Section 4043(a) of ERISA that it be notified within 30 days of the
occurrence of such event (provided that a failure to meet the
minimum funding standard of Section 412 of the Code or Section 302
of ERISA, including, without limitation, the failure to make on or
before its due date a required installment under Section 412(m) of
the Code or Section 302(e) of ERISA, shall be a reportable event
regardless of the issuance of any waivers in accordance with Section
412(d) of the Code); and any request for a waiver under Section
412(d) of the Code for any Plan;
(ii) the distribution under Section 4041 of ERISA of a notice
of intent to terminate any Plan or any action taken by Borrower or
an ERISA Affiliate to terminate any Plan;
(iii) the institution by PBGC of proceedings under Section
4042 of ERISA for the termination of or the appointment of a trustee
to administer, any Plan, or the receipt by Borrower or any ERISA
Affiliate of a notice from a Multiemployer Plan that such action has
been taken by PBGC with respect to such Multiemployer Plan;
(iv) the complete or partial withdrawal from a Multiemployer
Plan by Borrower or any ERISA Affiliate that results in liability
under Section 4201 or 4204 of ERISA (including the obligation to
satisfy secondary liability as a result of a purchaser default) or
the receipt by Borrower or any ERISA Affiliate of notice from a
Multiemployer Plan that it is in reorganization or insolvency
pursuant to Section 4241 or 4245 of ERISA or that it intends to
terminate or has terminated under Section 4041A of ERISA,
(v) the institution of a proceeding by a fiduciary of any
Multiemployer Plan against Borrower or any ERISA Affiliate to
enforce Section 515 of ERISA, which proceeding is not dismissed
within 30 days;
(vi) the adoption of an amendment to any Plan that, pursuant
to Section 401(a)(29) of the Code or Section 307 of ERISA, would
result in the loss of tax-exempt status of the trust of which such
Plan is a part if Borrower or an ERISA Affiliate fails to timely
provide security to the Plan in accordance with the provisions of
said Sections ; and
(vii) the imposition of a Lien or a security interest in
connection with a Plan.
(U) Purpose Entity. Borrower shall at all times be a Single Purpose
Entity.
67
72
(V) Trade Indebtedness. Borrower will pay its trade payables, within
sixty (60) days of the date incurred, unless Borrower is in good faith
contesting Borrower's obligation to pay such trade payables in a manner
satisfactory to Lender (which may include Lender's requirement that Borrower
post security with respect to the contested trade payable).
(W) Capital Improvements and Environmental Remediation. Borrower
shall, within six months of the date hereof perform the repairs and
environmental remediation to the Facility itemized on Exhibit C hereto.
(X) Annual Operating Budgets. Borrower shall submit to Lender Annual
Operating Budgets at those times and in such form and substance as set forth in
the definition of "Annual Operating Budget" in this Agreement.
(Y) SPE Equity Owner Filings. Borrower shall deliver to Lender
within fifteen (15) days after filing with the SEC copies of any filings made
with the SEC by the SPE Equity Owner.
ARTICLE VI
NEGATIVE COVENANTS
Section 6.1. Borrower Negative Covenants. Borrower covenants and
agrees that, until payment in full of the Indebtedness, it will not do, directly
or indirectly, any of the following unless Lender consents thereto in writing:
(A) Liens on the Mortgaged Property. Incur, create, assume, become
or be liable in any manner with respect to, or permit to exist, any Lien with
respect to Borrower's Facility, except: (i) Liens in favor of Lender, and (ii)
the Permitted Encumbrances.
(B) Transfer. Except as expressly permitted by or pursuant to this
Agreement or the Mortgage, or except as otherwise approved by Lender in writing
in Lender's sole discretion, allow any Transfer to occur, terminate or modify
the Management Agreement, or enter into a Management Agreement with respect to
Borrower's Facility.
(C) Other Borrowing. Incur, except for unsecured trade payables
incurred in the ordinary course of business relating to the ownership and
operation of Borrower's Facility which do not exceed, at any time, a maximum
amount of $250,000 and are paid within sixty (60) days of the date incurred,
create, assume, become or be liable in any manner with respect to Other
Borrowings.
(D) Leases. Enter into any Leases with all or any portion of the
Facility which grant the lessee thereunder any option to purchase or right of
first refusal to purchase all or any portion of the Facility.
68
73
(E) Change In Business. Cease to be a Single-Purpose Entity or make
any material change in the scope or nature of its business objectives, purposes
or operations, or undertake or participate in activities other than the
continuance of its present business.
(F) Debt Cancellation. Cancel or otherwise forgive or release any
material claim or debt owed to Borrower by any Person, except for adequate
consideration or in the ordinary course of Borrower's business.
(G) Affiliate Transactions. Enter into, or be a party to, any
transaction with an Affiliate of Borrower, except in the ordinary course of
business and on terms which are no less favorable to Borrower or such Affiliate
than would be obtained in a comparable arm's length transaction with an
unrelated third party, and, if the amount to be paid to the Affiliate pursuant
to the transaction or series of related transactions is greater than $50,000
(determined annually on an aggregate basis) fully disclosed to Lender in
advance.
(H) Creation of Easements. Create, or permit Borrower's Facility or
any part thereof to become subject to, any easement, license or restrictive
covenant, other than a Permitted Encumbrance.
(I) Misapplication of Funds. Distribute any Rents or Money received
from Accounts in violation of the provisions of Section 2.12.
(J) Certain Restrictions. Enter into any agreement which expressly
restricts the ability of Borrower to enter into amendments, modifications or
waivers of any of the Loan Documents.
(K) Issuance of Equity Interests. Issue or allow to be created any
stocks or shares or partnership or membership interests, as applicable, or other
ownership interests other than the stocks, shares, partnership or membership
interests and other ownership interests which are outstanding or exist on the
Closing Date or any security or other instrument which by its terms is
convertible into or exercisable or exchangeable for Borrower's ownership
interests in Borrower. Borrower shall not allow to be issued or created any
stock in Borrower's general partner or managing member, as applicable, other
than the stock which is outstanding or existing on the Closing Date or any
security or other instrument which by its terms is convertible into or
exercisable or exchangeable for. any stock in Borrower's general partner or
managing member, as applicable.
(L) Assignment of Licenses and Permits. Assign or transfer any of
its interest in any Permits pertaining to Borrower's Facility, or assign,
transfer or remove or permit any other Person to assign, transfer or remove any
records pertaining to the Facility without Lender's prior written consent which
consent may be granted or refused in Lender's sole discretion.
(M) Place of Business. Change its chief executive office or its
principal place of business or place where its books and records are kept
without giving Lender at least thirty (30) days prior written notice thereof and
promptly providing Lender such information as Lender may reasonably request in
connection therewith.
69
74
(N) Property Management. Borrower shall not engage any party
(whether or not such party is an Affiliate of Borrower) to manage the Facility
without the prior written consent of Lender, which consent shall not be withheld
if such Manager is an Affiliate of Borrower, except if such Manager is appointed
pursuant to Section 5.1(P) above. In determining whether to grant or withhold
such consent, Lender shall consider, among other things, the experience and
expertise of the proposed manager in managing properties similar to the
Facility, the financial capability of the proposed manager, and the reputation
of the proposed manager. Lender may condition its approval of any proposed
manager upon the review and approval by Lender of the proposed management
agreement between Borrower and such proposed manager, and upon the execution and
delivery by such proposed manager of a Manger's Subordination in form and
substance satisfactory to Lender in Lender's sole discretion.
ARTICLE VII
DEFAULTS
Section 7.1. Event of Default. The occurrence of one or more of the
following events shall be an "Event of Default" hereunder:
(i) if on any Payment Date the funds in the Debt Service
Payment Sub-Account are insufficient to pay the Required Debt
Service Payment due on such Payment Date, unless Borrower pays the
Required Debt Service Payment due on such Payment Date;
(ii) intentionally omitted;
(iii) if Borrower falls to pay the outstanding Indebtedness on
the Maturity Date;
(iv) if on any Payment Date Borrower fails to pay the Basic
Carrying Costs Monthly Installment or the Capital Reserve Monthly
Installment due on such Payment Date;
(v) if on the date any payment of a Basic Carrying Cost would
become delinquent, the funds in the Basic Carrying Costs Sub-Account
required to be reserved pursuant to Section 2.12(g) together with
any funds in the Cash Collateral Account not allocated to another
Sub-Account are insufficient to make such payment;
(vi) the occurrence of the events identified elsewhere in the
Loan Documents as constituting an "Event of Default" hereunder or
thereunder;
70
75
(vii) a Transfer, unless the prior written consent of Lender
is obtained (which consent may be withheld with or without cause in
Lender's discretion);
(viii) if Borrower fails to pay any other amount payable
pursuant to this Agreement or any other Loan Document;
(ix) if any representation or warranty made herein or in any
other Loan Document, or in any report, certificate, financial
statement or other Instrument, agreement or document furnished by
Borrower in connection with this Agreement, the Note or any other
Loan Document executed and delivered by Borrower, shall be false in
any material respect as of the date such representation or warranty
was made or remade, and such falsity or incorrectness shall not have
been cured within thirty (30) days after the date on which the
Borrower has knowledge of such falsity or incorrectness, or if the
Borrower is diligently pursuing such cure in such thirty (30) day
period and, in the Lender's judgment such falsity or incorrectness
can be cured with reasonable diligence in an additional sixty (60)
days, then such thirty (30) day limited cure period shall be
extended an additional sixty (60) days for a total of ninety (90)
days;
(x) if Borrower, any of Borrower's partners or members, as
applicable, or the SPE Equity Owner makes an assignment for the
benefit of creditors;
(xi) if a receiver, liquidator or trustee shall be appointed
for Borrower, any of Borrower's partners or members, as applicable,
or the SPE Equity Owner or if Borrower, any of Borrower's partners
or members, as applicable, or the SPE Equity Owner shall be
adjudicated as bankrupt or insolvent, or if any petition for
bankruptcy, reorganization or arrangement pursuant to federal
bankruptcy law, or any similar federal or state law, shall be filed
by or against, consented to, or acquiesced in by Borrower, any of
Borrower's partners or members, as applicable, or the SPE Equity
Owner or if any proceeding for the dissolution or liquidation of
Borrower, any of Borrower's partners or members, as applicable, or
the SPE Equity Owner shall be instituted; provided, however, that if
such appointment, adjudication, petition or proceeding was
involuntary and not consented to by Borrower, any of Borrower's
partners or members, as applicable, or the SPE Equity Owner as the
case may be, upon the same not being discharged, stayed or dismissed
within 90 days, or if Borrower, any of Borrower's partners or
members, as applicable, or the SPE Equity Owner shall generally not
be paying its debts as they become due;
71
76
(xii) if Borrower attempts to delegate its obligations or assign
its rights under this Agreement, any of the other Loan Documents or
any interest herein or therein, except as specifically permitted
herein;
(xiii) if any provision of any organizational document of
Borrower is amended or modified in any respect which may adversely
affect Lender, or if Borrower or any of its partners or members, as
applicable, fails to perform or enforce the provisions of such
organizational documents or attempts to dissolve Borrower; or if
Borrower or any of its partners or members, as applicable, breaches
any of its covenants set forth in Sections 5.1(U), or 6.1(E);
(xiv) if Borrower fails to (A) notify Lender of the occurrence
of a Default under any of the Loan Documents within ten (10) days of
the day on which Borrower first has knowledge of such Default or (B)
give any notice due to any Person under any Loan Document (a) within
two (2) days after such notice was due or (b) in accordance with the
applicable procedural requirements set forth in the Loan Documents;
(xv) if Borrower shall be in default under any of the other
obligations, agreements, undertakings, terms, covenants, provisions
or conditions of this Agreement, the Note, the Mortgage or the other
Loan Documents, not otherwise referred to in this Section 7.1, for
ten (10) days after written notice to Borrower from Lender or its
successors or assigns, in the case of any default which can be cured
by the payment of a sum of money or for thirty (30) days after
written notice from Lender or its successors or assigns, in the case
of any other default (unless otherwise provided herein or in such
other Loan Document); provided, however, that if such non-monetary
default under this subparagraph is susceptible of cure but cannot
reasonably be cured within such thirty (30) day period and provided
further that Borrower shall have commenced to cure such default
within such thirty (30) day period and thereafter diligently and
expeditiously proceeds to cure the same, such thirty (30) day period
shall be extended for such time as is reasonably necessary for
Borrower in the exercise of due diligence to cure such default, but
in no event shall such period exceed ninety (90) days after the
original notice from Lender;
(xvi) if an event or condition specified in Section 5.1(T) shall
occur or exist with respect to any Plan or Multiemployer Plan and,
as a result of such event or condition, together with all other such
events or conditions, Borrower or any ERISA Affiliate shall incur or
in the opinion of Lender shall be reasonably likely to incur a
liability to a Plan, a Multiemployer Plan or PBGC (or any
combination of the foregoing) which would constitute, in the
determination of Lender, a Material Adverse Effect;
72
77
(xvii) if without Lender's prior written consent (A) any Manager
resigns or is removed, (B) the management or control of such Manager
is transferred or (C) any Management Agreement is entered into for
the Facility or (D) there is any change in or termination of any
Management Agreement for the Facility;
(xviii) if the Cross-Collateralization has occurred and remains,
the occurrence of any "Event of Default" under any document
evidencing, securing or relating to the Xxxxxx Hills Loan.
Section 7.2. Remedies. (a) Upon the occurrence and during the
continuation of an Event of Default, all or any one or more of the rights,
powers and other remedies available to Lender against Borrower under this
Agreement, the Note, the Mortgage or any of the other Loan Documents, or at law
or in equity may be exercised by Lender at any time and from time to time
(including, without limitation, the right to accelerate and declare the
outstanding principal amount, unpaid interest, Default Rate interest, Late
Charges, Yield Maintenance Premium and any other amounts owing by Borrower to be
immediately due and payable), without notice or demand, whether or not all or
any portion of the Indebtedness shall be declared due and payable, and whether
or not Lender shall have commenced any foreclosure proceeding or other action
for the enforcement of its rights and remedies under any of the Loan Documents
with respect to the Facility or all or any portion of the Collateral. Any such
actions taken by Lender shall be cumulative and concurrent and may be pursued
independently, singly, successively, together or otherwise, at such time and in
such order as Lender may determine in its sole discretion, to the fullest extent
permitted by law, without impairing or otherwise affecting the other rights and
remedies of Lender permitted by law, equity or contract or as set forth herein
or in the other Loan Documents. Notwithstanding anything contained to the
contrary herein, the outstanding principal amount, unpaid interest, Default Rate
interest, Late Charges, Yield Maintenance Premium and any other amounts owing by
Borrower shall be accelerated and immediately due and payable, without any
election by Lender upon the occurrence of an Event of Default described in
Section 7.1(x) or Section 7.1(xi). Notwithstanding that this Agreement may refer
to a continuing Event of Default, and without limiting Borrower's right to cure
a Default which may, with the passage of time, become an Event of Default,
Borrower shall have no right pursuant to this Agreement to cure any Event of
Default unless this Agreement is amended by Borrower and Lender in writing.
Section 7.3. Remedies Cumulative. The rights, powers and remedies of
Lender under this Agreement shall be cumulative and not exclusive of any other
right, power or remedy which Lender may have against Borrower pursuant to this
Agreement or the other Loan Documents executed by or with respect to Borrower,
or existing at law or in equity or otherwise. Lender's rights, powers and
remedies may be pursued singly, concurrently or otherwise, at such time and in
such order as Lender may determine in Lender's sole discretion. No delay or
omission to exercise any remedy, right or power accruing upon an Event of
Default shall impair any such remedy, right or power or shall be construed as a
waiver thereof but any such remedy, right or power may be exercised from time to
time and as often as may be deemed expedient. A waiver of any Default or Event
of Default shall not be construed to be a waiver of any
73
78
subsequent Default or Event of Default or to impair any remedy, right or power
consequent thereon. Any and all of Lender's rights with respect to the
Collateral shall continue unimpaired, and Borrower shall be and remain obligated
in accordance with the terms hereof, notwithstanding (i) the release or
substitution of Collateral at any time, or of any rights or interest therein or
(ii) any delay, extension of time, renewal, compromise or other indulgence
granted by Lender in the event of any Default or Event of Default with respect
to the Collateral or otherwise hereunder. Notwithstanding any other provision of
this Agreement, Lender reserves the right to seek a deficiency judgment or
preserve a deficiency claim, in connection with the foreclosure of the Mortgage
on the Facility, to the extent necessary to foreclose on other parts of the
Mortgaged Property.
Section 7.4. Lender's Right to Perform. If Borrower fails to perform
any covenant or obligation contained herein and such failure shall continue for
a period of five Business Days after Borrower's receipt of written notice
thereof without in any way limiting Section 7.1 hereof, from Lender, Lender may,
but shall have no obligation to, itself perform, or cause performance of such
covenant or obligation, and the expenses of Lender incurred in connection
therewith shall be payable by Borrower to Lender upon demand. Notwithstanding
the foregoing, Lender shall have no obligation to send notice to Borrower of any
such failure.
ARTICLE VIII
MISCELLANEOUS
Section 8.1. Survival. Subject to Section 4.2, this Agreement and
all covenants, agreements, representations and warranties made herein and in the
certificates delivered pursuant hereto shall survive the execution and delivery
of this Agreement and the execution and delivery by Borrower to Lender of the
Note, and shall continue in full force and effect so long as any portion of the
Indebtedness is outstanding and unpaid. Whenever in this Agreement any of the
parties hereto is referred to, such reference shall be deemed to include the
successors and assigns of such party. All covenants, promises and agreements in
this Agreement contained, by or on behalf of Borrower, shall inure to the
benefit of the respective successors and assigns of Lender. Nothing in this
Agreement or in any other Loan Document, express or implied, shall give to any
Person other than the parties and the holder(s) of the Note, the Mortgage and
the other Loan Documents, and their legal representatives, successors and
assigns, any benefit or any legal or equitable right, remedy or claim hereunder.
Section 8.2. Lender's Discretion. Whenever pursuant to this
Agreement, Lender exercises any right given to it to approve or disapprove, or
any arrangement or term is to be satisfactory to Lender, the decision of Lender
to approve or disapprove or to decide whether arrangements or terms are
satisfactory or not satisfactory shall (except as is otherwise specifically
herein provided) be in the sole discretion of Lender.
Section 8.3. Governing Law. (a) The proceeds of the Note delivered
pursuant hereto were disbursed from New York, which State the parties agree has
a substantial relationship to the parties and to the underlying transaction
embodied hereby, and in all respects,
74
79
including, without limitation, matters of construction, validity and
performance, this Agreement and the obligations arising hereunder shall be
governed by, and construed in accordance with, the laws of the State of New York
applicable to contracts made and performed in such State and any applicable law
of the United States of America. To the fullest extent permitted by law,
Borrower hereby unconditionally and irrevocably waives any claim to assert that
the law of any other jurisdiction governs this Agreement and the Note, and this
Agreement and the Note shall be governed by and construed in accordance with the
laws of the State of New York pursuant to Section 5-1401 of the New York General
Obligations Law.
(b) ANY LEGAL SUIT, ACTION OR PROCEEDING AGAINST BORROWER ARISING
OUT OF OR RELATING TO THIS AGREEMENT SHALL BE INSTITUTED IN ANY FEDERAL OR STATE
COURT IN NEW YORK, NEW YORK, PURSUANT TO SECTION 5-1402 OF THE NEW YORK GENERAL
OBLIGATIONS LAW OR IN ANY FEDERAL OR STATE COURT IN THE JURISDICTION IN WHICH
THE COLLATERAL IS LOCATED AND BORROWER WAIVES ANY OBJECTION WHICH IT MAY NOW OR
HEREAFTER HAVE TO THE LAYING OF VENUE OF ANY SUCH SUIT, ACTION OR PROCEEDING,
AND BORROWER HEREBY IRREVOCABLY SUBMITS TO THE JURISDICTION OF ANY SUCH COURT IN
ANY SUIT, ACTION OR PROCEEDING. BORROWER DOES HEREBY DESIGNATE AND APPOINT C/O
CSC NETWORKS, 000 XXXXXXX XXXXXX, XXXXXX, XXX XXXX 00000-0000 AS ITS AUTHORIZED
AGENT TO ACCEPT AND ACKNOWLEDGE ON ITS BEHALF SERVICE OF ANY AND ALL PROCESS
WHICH MAY BE SERVED IN ANY SUCH SUIT, ACTION OR PROCEEDING IN ANY FEDERAL OR
STATE COURT AND AGREES THAT SERVICE OF PROCESS UPON SAID AGENT AT SAID ADDRESS
(OR AT SUCH OTHER OFFICE AS MAY BE DESIGNATED BY BORROWER FROM TIME TO TIME IN
ACCORDANCE WITH THE TERMS HEREOF) WITH A COPY TO BORROWER AT ITS PRINCIPAL
EXECUTIVE OFFICES, ATTENTION: GENERAL COUNSEL AND WRITTEN NOTICE OF SAID SERVICE
OF BORROWER MAILED OR DELIVERED TO BORROWER IN THE MANNER PROVIDED HEREIN SHALL
BE DEEMED IN EVERY RESPECT EFFECTIVE SERVICE OF PROCESS UPON BORROWER, IN ANY
SUCH SUIT, ACTION OR PROCEEDING. BORROWER (I) SHALL GIVE PROMPT NOTICE TO LENDER
OF ANY CHANGED ADDRESS OF ITS AUTHORIZED AGENT HEREUNDER, (II) MAY AT ANY TIME
AND FROM TIME TO TIME DESIGNATE A SUBSTITUTE AUTHORIZED AGENT (WHICH OFFICE
SHALL BE DESIGNATED AS THE ADDRESS FOR SERVICE OF PROCESS), AND (III) SHALL
PROMPTLY DESIGNATE SUCH A SUBSTITUTE IF ITS AUTHORIZED AGENT CEASES TO HAVE AN
OFFICE OR IS DISSOLVED WITHOUT LEAVING A SUCCESSOR.
Section 8.4. Modification, Waiver in Writing. No modification,
amendment, extension, discharge, termination or waiver of any provision of this
Agreement, the Note or any other Loan Document, or consent to any departure by
Borrower therefrom, shall in any event be effective unless the same shall be in
a writing signed by the party against whom enforcement is sought, and then such
waiver or consent shall be effective only in the specific instance, and for the
purpose, for which given. Except as otherwise expressly provided herein, no
notice to or
75
80
demand on Borrower shall entitle Borrower to any other or future notice or
demand in the same, similar or other circumstances.
Section 8.5. Delay Not a Waiver. Neither any failure nor any delay
on the part of Lender in insisting upon strict performance of any term,
condition, covenant or agreement, or exercising any right, power, remedy or
privilege hereunder, or under the Note, or of any other Loan Document, or any
other instrument given as security therefor, shall operate as or constitute a
waiver thereof, nor shall a single or partial exercise thereof preclude any
other future exercise, or the exercise of any other right, power, remedy or
privilege. In particular, and not by way of limitation, by accepting payment
after the due date of any amount payable under this Agreement, the Note or any
other Loan Document, Lender shall not be deemed to have waived any right either
to require prompt payment when due of all other amounts due under this
Agreement, the Note or the other Loan Documents, or to declare a default for
failure to effect prompt payment of any such other amount.
Section 8.6. Notices. All notices, consents, approvals and requests
required or permitted hereunder or under any other Loan Document shall be given
in writing and shall be effective for all purposes if hand delivered or sent by
(a) hand delivery, with proof of attempted delivery, (b) certified or registered
United States mail, postage prepaid, (c) expedited prepaid delivery service,
either commercial or United States Postal Service, with proof of attempted
delivery, or (d) by telecopier (with answerback acknowledged) provided that such
telecopied notice must also be delivered by one of the means set forth in (a),
(b) or (c) above, addressed if to Lender at its address set forth on the first
page hereof, and if to Borrower at its designated address set forth on the first
page hereof or at such other address and Person as shall be designated from time
to time by any party hereto, as the case may be, in a written notice to the
other parties hereto in the manner provided for in this Section 8.6. A copy of
all notices, consents, approvals and requests directed to Lender shall be
delivered concurrently to each of the following: Xxxxxxx Xxxxxxx, Esquire,
Xxxxxx, Xxxx & Xxxxxxxx, LLP, 000 Xxxxx Xxxxx Xxxxxx, Xxx Xxxxxxx, XX
00000-0000, Telefax Number (000) 000-0000; Two World Financial Xxxxxx, Xxxxxxxx
X, Xxx Xxxx, XX 00000-0000, Attention Xxxxxx XxXxxx, Telefax Number (212)
667-1206; and Two World Xxxxxxxxx Xxxxxx, Xxxxxxxx X, Xxx Xxxx, XX 00000-0000,
Attention: Legal Counsel, Telefax Number (000) 000-0000. A notice shall be
deemed to have been given: (a) in the case of hand delivery, at the time of
delivery; (b) in the case of registered or certified mail, when delivered or the
first attempted delivery on a Business Day; (c) in the case of expedited prepaid
delivery upon the first attempted delivery on a Business Day; or (d) in the case
of telecopier, upon receipt of answerback confirmation, provided that such
telecopied notice was also delivered as required in this Section 8.6. A party
receiving a notice which does not comply with the technical requirements for
notice under this Section 8.6 may elect to waive any deficiencies and treat the
notice as having been properly given.
SECTION 8.7. TRIAL BY JURY. BORROWER AND LENDER, TO THE FULLEST
EXTENT THAT THEY MAY LAWFULLY DO SO, HEREBY WAIVE TRIAL BY JURY IN ANY ACTION OR
PROCEEDING, INCLUDING, WITHOUT LIMITATION, ANY TORT ACTION, BROUGHT BY ANY PARTY
HERETO WITH RESPECT TO THIS AGREEMENT, THE NOTE OR THE OTHER LOAN DOCUMENTS.
76
81
Section 8.8. Headings. The Article and Section headings in this
Agreement are included herein for convenience of reference only and shall not
constitute a part of this Agreement for any other purpose.
Section 8.9. Assignment. Lender shall have the right to assign in
whole or in part this Agreement and/or any of the other Loan Documents and the
obligations hereunder or thereunder to any Person and to participate all or any
portion of the Loan evidenced hereby, including without limitation, any servicer
or trustee in connection with a Securitization. Lender shall provide Borrower
with written notice of any such assignment; provided, however, that such notice
shall not be a condition of Lender's right to assign this Agreement and/or any
of the Loan Documents and the failure to deliver such notice shall not
constitute a default under this Loan Agreement.
Section 8.10. Severability. Wherever possible, each provision of
this Agreement shall be interpreted in such manner as to be effective and valid
under applicable law, but if any provision of this Agreement shall be prohibited
by or invalid under applicable law, such provision shall be ineffective to the
extent of such prohibition or invalidity, without invalidating the remainder of
such provision or the remaining provisions of this Agreement.
Section 8.11. Preferences. Lender shall have no obligation to
marshal any assets in favor of Borrower or any other party or against or in
payment of any or all of the obligations of Borrower pursuant to this Agreement,
the Note or any other Loan Document. Lender shall have the continuing and
exclusive right to apply or reverse and reapply any and all payments by Borrower
to any portion of the obligations of Borrower hereunder. To the extent Borrower
makes a payment or payments to Lender for Borrower's benefit, which payment or
proceeds or any part thereof are subsequently invalidated, declared to be
fraudulent or preferential, set aside or required to be repaid to a trustee,
receiver or any other party under any bankruptcy law, state or federal law,
common law or equitable cause, then, to the extent of such payment or proceeds
received, the obligations hereunder or part thereof intended to be satisfied
shall be revived and continue in full force and effect, as if such payment or
proceeds had not been received by Lender.
Section 8.12. Waiver of Notice. Borrower shall not be entitled to
any notices of any nature whatsoever from Lender except with respect to matters
for which this Agreement or the other Loan Documents specifically and expressly
provide for the giving of notice by Lender to Borrower and except with respect
to matters for which Borrower is not, pursuant to applicable Legal Requirements,
permitted to waive the giving of notice. Borrower hereby expressly waives the
right to receive any notice from Lender with respect to any matter for which
this Agreement or the other Loan Documents does not specifically and expressly
provide for the giving of notice by Lender to Borrower.
Section 8.13. Remedies of Borrower. In the event that a claim or
adjudication is made that Lender or its agents, has acted unreasonably or
unreasonably delayed acting in any case where by law or under this Agreement,
the Note, the Mortgage or the other Loan Documents, Lender or such agent, as the
case may be, has an obligation to act reasonably or promptly, Borrower agrees
that neither Lender nor its agents, shall be liable for any monetary
77
82
damages, and Borrower's sole remedies shall be limited to commencing an action
seeking injunctive relief or declaratory judgment. The parties hereto agree that
any action or proceeding to determine whether Lender has acted reasonably shall
be determined by an action seeking declaratory judgment.
Section 8.14. Exculpation. Except as otherwise set forth in this
Section 8.14 and Section 4.2 to the contrary, Lender shall not enforce the
liability and obligation of Borrower to perform and observe the obligations
contained in this Agreement, the Note, the Mortgage or any of the other Loan
Documents executed and delivered by Borrower except that Lender may pursue any
power of sale, bring a foreclosure action, action for specific performance,
action for money judgment, or other appropriate action or proceeding (including,
without limitation, to obtain a deficiency judgment) against Borrower or any
other Person solely for the purpose of enabling Lender to realize upon (i) the
Collateral, and (ii) the Rents and Accounts arising from Borrower's Facility to
the extent (x) received by Borrower or the Manager (or any of their affiliates),
after and during the continuation of the occurrence of an Event of Default or
(y) distributed to Borrower or the Manager, or their respective shareholders, or
partners or members, as applicable, or affiliates during or with respect to any
period for which Lender did not receive the full amounts it was entitled to
receive as prepayments of the Loan pursuant to Section 2.7 (all Rents and
Accounts covered by clauses (x) and (y) being hereinafter referred to as the
"Recourse Distributions") and (iii) any other collateral given to Lender under
the Loan Documents ((i), (ii), and (iii) collectively, the "Default
Collateral"); provided, however, that any judgment in any such action or
proceeding shall be enforceable only to the extent of any such Default
Collateral. The provisions of this Section 8.14 shall not, however, (a) impair
the validity of the Indebtedness evidenced by the Loan Documents or in any way
affect or impair the Liens of the Mortgage or any of the other Loan Documents or
the right of Lender to foreclose the Mortgage following an Event of Default; (b)
impair the right of Lender to name any Person as a party defendant in any action
or suit for judicial foreclosure and sale under the Mortgage; (c) affect the
validity or enforceability of the Note, the Mortgage or the other Loan
Documents; (d) impair the right of Lender to obtain the appointment of a
receiver; (e) impair the right of Lender to bring suit for any damages, losses,
expenses, liabilities or costs resulting from fraud, intentional
misrepresentation, physical waste of all or any portion of the Facility, or
wrongful removal or disposal of all or any portion of the Facility by any Person
in connection with this Agreement, the Note, the Mortgage or the other Loan
Documents; (f) impair the right of Lender to obtain the Recourse Distributions
received by any Person; (g) impair the right of Lender to bring suit with
respect to any misappropriation of security deposits or Rents collected more
than one month in advance; (h) impair the right of Lender to obtain Insurance
Proceeds or Condemnation Proceeds due to Lender pursuant to the Mortgage; (i)
impair the right of Lender to enforce the provisions of Sections 4.1(b)(U) or
5.1(D)-(I) of this Agreement, Section 2.8 of the Mortgage even after repayment
in full by Borrower of the Indebtedness; (j) prevent or in any way hinder Lender
from exercising, or constitute a defense, or counterclaim, or other basis for
relief in respect of the exercise of, any other remedy against any or all of the
Collateral securing the Note as provided in the Loan Documents; (k) impair the
right of Lender to bring suit with respect to any misapplication of any funds;
or (l) impair the right of Lender to xxx for, seek or demand a deficiency
judgment against any Person solely for the purpose of foreclosing the Mortgaged
Property or any part thereof or realizing upon the Default Collateral; provided,
however, that any such deficiency judgment
78
83
referred to in this clause (l) shall be enforceable only to the extent of any of
the Default Collateral. The provisions of this Section 8.14 shall be
inapplicable to any Person if (i) any petition for bankruptcy, reorganization or
arrangement pursuant to federal or state law against Borrower shall be filed by
or against Borrower or consented to or acquiesced to by Borrower, (ii) if
Borrower shall institute any proceeding for the dissolution or liquidation of
Borrower, (iii) if Borrower shall make an assignment for the benefit of
creditors or (iv) if Borrower shall breach the representation and warranty in
Section 4.1(b)(Z).
Section 8.15. Exhibits Incorporated. The information set forth on
the cover, heading and recitals hereof, and the Exhibits attached hereto, are
hereby incorporated herein as a part of this Agreement with the same effect as
if set forth in the body hereof.
Section 8.16. Offsets, Counterclaims and Defenses. Any assignee of
Lender's interest in and to this Agreement, the Note, the Mortgage and the other
Loan Documents shall take the same free and clear of all offsets, counterclaims
or defenses which are unrelated to the Loan, this Agreement, the Note, the
Mortgage and the other Loan Documents which Borrower may otherwise have against
any assignor, and no such unrelated counterclaim or defense shall be interposed
or asserted by Borrower in any action or proceeding brought by any such assignee
upon this Agreement, the Note, the Mortgage and other Loan Documents and any
such right to interpose or assert any such unrelated offset, counterclaim or
defense in any such action or proceeding is hereby expressly waived by Borrower.
Section 8.17. No Joint Venture or Partnership. Borrower and Lender
intend that the relationship created hereunder be solely that of borrower and
lender. Nothing herein is intended to create a joint venture, partnership,
tenancy-in-common, or joint tenancy relationship between Borrower and Lender nor
to grant Lender any interest in the Mortgaged Property other than that of
mortgagee or lender.
Section 8.18. Waiver of Marshalling of Assets Defense. To the
fullest extent that Borrower may legally do so, Borrower waives all rights to a
marshalling of the assets of Borrower, and others with interests in Borrower,
and of the Mortgaged Property, or to a sale in inverse order of alienation in
the event of foreclosure of the interests hereby created, and agrees not to
assert any right under any laws pertaining to the marshalling of assets, the
sale in inverse order of alienation, homestead exemption, the administration of
estates of decedents, or any other matters whatsoever to defeat, reduce or
affect the right of Lender under the Loan Documents to a sale of the Facility
for the collection of the Indebtedness without any prior or different resort for
collection, or the right of Lender or Deed of Trust Trustee to the payment of
the Indebtedness in preference to every other claimant whatsoever.
Section 8.19. Waiver of Counterclaim. Borrower hereby waives the
right to assert a counterclaim, other than compulsory counterclaim, in any
action or proceeding brought against Borrower by Lender or Lender's agents.
Section 8.20. Conflict: Construction of Documents. In the event of
any conflict between the provisions of this Agreement and the provisions of the
Note, the Mortgage or any of the other Loan Documents, the provisions of this
Agreement shall prevail. The parties hereto
79
84
acknowledge that they were represented by counsel in connection with the
negotiation and drafting of the Loan Documents and that the Loan Documents shall
not be subject to the principle of construing their meaning against the party
which drafted same.
Section 8.21. Brokers and Financial Advisors. Borrower and Lender
hereby represent that they have dealt with no financial advisors, brokers,
underwriters, placement agents, agents or finders in connection with the
transactions contemplated by this Agreement except Advisor. Borrower hereby
agrees to indemnify and hold Lender harmless from and against any and all
claims, liabilities, costs and expenses of any kind in any way relating to or
arising from a claim by any Person (other than Advisor), that such. Person acted
on behalf of Borrower in connection with the transactions contemplated herein.
The provisions of this Section shall survive the expiration and termination of
this Agreement and the repayment of the Indebtedness.
Section 8.22. Counterparts. This Agreement may be executed in any
number of counterparts, each of which when so executed and delivered shall be an
original, but all of which shall together constitute one and the same
instrument.
Section 8.23. Estoppel Certificates. Borrower and Lender each hereby
agree at any time and from time to time upon not less than fifteen (15) days
prior written notice by Borrower or Lender to execute, acknowledge and deliver
to the party specified in such notice, a statement, in writing, certifying that
this Agreement is unmodified and in full force and effect (or if there have been
modifications, that the same, as modified, is in full force and effect and
stating the modifications hereto), and stating whether or not, to the knowledge
of such certifying party, any Default or Event of Default has occurred, and, if
so, specifying each such Default or Event of Default; provided, however, that it
shall be a condition precedent to Lender's obligation to deliver the statement
pursuant to this Section , that Lender shall have received, together with
Borrower's request for such statement, an Officer's Certificate stating that no
Default or Event of Default exists as of the date of such certificate (or
specifying such Default or Event of Default).
Section 8.24. Payment of Expenses. Borrower shall, whether or not
the Transactions are consummated, pay all Transaction Costs, which shall
include, without limitation, reasonable out-of-pocket fees, costs, expenses, and
disbursements of Lender and its attorneys, local counsel, accountants and other
contractors in connection with (i) the negotiation, preparation, execution and
delivery of the Loan Documents and the documents and instruments referred to
therein, (ii) the creation, perfection or protection of Lender's liens in the
Collateral (including, without limitation, fees and expenses for title and lien
searches and filing and recording fees, intangibles taxes, personal property
taxes, mortgage recording taxes, due diligence expenses, travel expenses,
accounting firm fees, costs of the Appraisals, Environmental Reports (and an
environmental consultant), Surveys and the Engineering Reports), (iii) the
negotiation, preparation, execution and delivery of any amendment, waiver or
consent relating to any of the Loan Documents, and (iv) the preservation of
rights under and enforcement of the Loan Documents and the documents and
instruments referred to therein, including any restructuring or rescheduling of
the Indebtedness.
80
85
Section 8.25. Bankruptcy Waiver. Borrower hereby agrees that, in
consideration of the recitals and mutual covenants contained herein, and for
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, in the event Borrower shall (i) file with any bankruptcy
court of competent jurisdiction or be the subject of any petition under Title 11
of the U.S. Code, as amended, (ii) be the subject of any order for relief issued
under Title 11 of the U.S. Code, as amended, (iii) file or be the subject of any
petition seeking any reorganization, arrangement composition, readjustment,
liquidation, dissolution or similar relief under any present or law relating to
bankruptcy, insolvency or other relief of debtors, (iv) have sought or consented
to or acquiesced in the appointment of any trustee, receiver, conservator or
liquidator or (v) be the subject of any order, judgment or decree entered by any
court of competent jurisdiction approving a petition filed against such party
for any reorganization, arrangement, composition, readjustment, liquidation,
dissolution or similar relief under any present or future federal or state act
or law relating to bankruptcy, insolvency or other relief for debtors, the
automatic stay provided by the Federal Bankruptcy Code shall be modified and
annulled as to Lender, so as to permit Lender to exercise any and all of its
remedies, upon request of Lender made on notice to Borrower and any other party
in interest but without the need of further proof or hearing. Neither Borrower
nor any Affiliate of Borrower shall contest the enforceability of this Section
8.25.
Section 8.26 Entire Agreement. This Agreement, together with the
Exhibits hereto and the other Loan Documents constitutes the entire agreement
among the parties hereto with respect to the subject matter contained in this
Agreement, the Exhibits hereto and the other Loan Documents and supersedes all
prior agreements, understandings and negotiations between the parties.
Section 8.27 Dissemination of Information. If Lender determines at
any time to sell, transfer or assign the Note, this Loan Agreement and any other
Loan Document and any or all servicing rights with respect thereto, or to grant
participations therein or issue mortgage pass-through certificates or other
securities evidencing a beneficial interest in a rated or unrated public
offering or private placement, Lender may forward to each purchaser, transferee,
assignee, servicer, participant or investor in such securities (collectively,
the "Investor") or any Rating Agency rating such securities and each prospective
Investor, all documents and information which Lender now has or may hereafter
acquire relating to the Loan, Borrower, any guarantor, any Indemnitor and the
Facility, which shall have been furnished by Borrower, any guarantor, any
Indemnitor, or any party to any Loan Document, or otherwise furnished in
connection with the Loan, as Lender in its sole discretion determines necessary
or desirable.
Section 8.28. Limitation of Interest. It is the intention of
Borrower and Lender to conform strictly to applicable usury laws. Accordingly,
if the transactions contemplated hereby would be usurious under applicable law,
then, in that event, notwithstanding anything to the contrary in any Loan
Document, it is agreed as follows: (i) the aggregate of all consideration which
constitutes interest under applicable law that is taken, reserved, contracted
for, charged or received under any Loan Document or otherwise in connection with
the Loan shall under no circumstances exceed the maximum amount of interest
allowed by applicable law, and any excess shall be credited to principal by
Lender (or if the Loan shall have been paid in full,
81
86
refunded to Borrower); and (ii) in the event that maturity of the Loan is
accelerated by reason of an election by Lender resulting from any default
hereunder or otherwise, or in the event of any required or permitted prepayment,
then such consideration that constitutes interest may never include more than
the maximum amount of interest allowed by applicable law, and any interest in
excess of the maximum amount of interest allowed by applicable law, if any,
provided for in the Loan Documents or, otherwise shall be canceled automatically
as of the date of such acceleration or prepayment and, if theretofore prepaid,
shall be credited to principal (or if the principal portion of the Loan and any
other amounts not constituting interest shall have been paid in full, refunded
to Borrower).
In determining whether or not the interest paid or payable under any
specific contingency exceeds the maximum amount allowed by applicable law,
Lender shall, to the maximum extent permitted under applicable law (a) exclude
voluntary prepayments and the effects thereof, and (b) amortize, prorate,
allocate and spread, in equal parts, the total amount of interest throughout the
entire contemplated term of the Loan so that the interest rate is uniform
throughout the entire term of the Loan; provided, that if the Loan is paid and
performed in full prior to the end of the full contemplated term hereof, and if
the interest received for the actual period of existence thereof exceeds the
maximum amount allowed by applicable law, Lender shall refund to Borrower the
amount of such excess, and in such event, Lender shall not be subject to any
penalties provided by any laws for contracting for, charging or receiving
interest in excess of the maximum amount allowed by applicable law.
Section 8.29. Indemnification. Subject to Section 8.14, Borrower
shall indemnify and hold Lender and each of its affiliates (including its
officers, directors, partners, employees and agents and each other person, if
any, controlling Lender or any of its affiliates within the meaning of either
Section 15 of the Securities Act of 1933, as amended, or Section 20 of the
Securities Exchange Act of 1934, as amended) (each, including Lender, an
"Indemnified Party") harmless against any and all losses, claims, damages,
costs, expenses (including the fees and disbursements of outside counsel
retained by any such person) or liabilities in connection with, arising out of
or as a result of the transactions and matters referred to or contemplated by
this Agreement, except to the extent that it is finally judicially determined
that any such loss, claim, damage, cost, expense or liability resulted solely
from the fraud or willful misconduct of such Indemnified Party. In the event
that any Indemnified Party becomes involved in any action, proceeding or
investigation in connection with any transaction or matter referred to or
contemplated in this Agreement, Borrower shall periodically reimburse any
Indemnified Party upon demand therefor in an amount equal to its reasonable
legal and other expenses (including the costs of any investigation and
preparation) incurred in connection therewith to the extent such legal or other
expenses are the subject of indemnification hereunder.
Section 8.30. Borrower Acknowledgments. Borrower hereby acknowledges
to and agrees with Lender that (i) the scope of Lender's business is wide and
includes, but is not limited to, financing, real estate financing, investment in
real estate and other real estate transactions which may be viewed as adverse to
or competitive with the business of Borrower or its Affiliates and (ii) Borrower
has been represented by competent legal counsel and has
82
87
consulted with such counsel prior to executing this Loan Agreement and any of
the other Loan Documents.
Section 8.31. Publicity. Lender and Borrower shall have the right,
with each other's consent (not to be unreasonably withheld), to issue press
releases, advertisements and other promotional materials describing Lender's
participation in the origination of the Loan or the Loan's inclusion in any
Securitization effectuated or to be effectuated by Lender.
[Signatures on the following pages]
83
88
IN WITNESS WHEREOF, the parties hereto have caused this Loan
Agreement to be duly executed by their duly authorized representatives, all as
of the day and year first above written.
LENDER:
NOMURA ASSET CAPITAL
CORPORATION, a Delaware corporation
By:________________________________________
Name:
Title:
BORROWER:
BPP/VALLEY CENTRAL, L.P.,
a California limited partnership
By: BPP/VALLEY CENTRAL, INC.,
a Delaware corporation,
its general partner
By:________________________________________
Name:
Title:
84
