LOAN AGREEMENT
Dated as of June 29, 1998
Between
EPT DOWNREIT II, INC.
as Borrower
and
ARCHON FINANCIAL, L.P.
as Lender
Secured by:
Grand 24 (Dallas, Texas)
Promenade 16 (Los Angeles, California)
Studio 30 (Houston, Texas)
Ontario Mills 30 (Los Angeles, California)
West Olive 16 (St. Louis, Missouri)
Huebner Oaks 24 (San Antonio, Texas)
Lennox 24 (Columbus, Ohio)
Mission Valley 20 (San Diego, California)
TABLE OF CONTENTS
Page
I. DEFINITIONS; PRINCIPLES OF CONSTRUCTION . . . . . . . . . .1
Section 1.1 Definitions. . . . . . . . . . . . . . . . .1
Section 1.2 Principles of Construction . . . . . . . . 24
II. GENERAL . . . . . . . . . . . . . . . . . . . . . . . . . 25
Section 2.1 The Loan . . . . . . . . . . . . . . . . . 25
2.1.1 Commitment . . . . . . . . . . . . . . . . 25
2.1.2 Disbursement to Borrower . . . . . . . . . 25
2.1.3 The Note . . . . . . . . . . . . . . . . . 25
2.1.4 Use of Proceeds of Loan. . . . . . . . . . 25
Section 2.2 Principal and Interest . . . . . . . . . . 26
2.2.1 Principal and Interest . . . . . . . . . . 26
2.2.2 Default Rate . . . . . . . . . . . . . . . 28
Section 2.3 Loan Repayment and Defeasance. . . . . . . 28
2.3.1 Repayment. . . . . . . . . . . . . . . . . 28
2.3.2 Voluntary Defeasance of the Note . . . . . 28
2.3.3 Repayment After Anticipated Prepayment Date31
2.3.4 Repayment Upon Default . . . . . . . . . . 31
2.3.5 Repayment After Casualty or Condemnation . 31
Section 2.4 Release of the Mortgaged Properties. . . . 32
2.4.1 Release of the Mortgaged Property. . . . . 32
2.4.2 Further Assurances . . . . . . . . . . . . 32
2.4.3 Release on Payment in Full . . . . . . . . 32
Section 2.5 Payments and Computations. . . . . . . . . 33
2.5.1 Making of Payments . . . . . . . . . . . . 33
2.5.2 Computations . . . . . . . . . . . . . . . 33
2.5.3 Loan Account . . . . . . . . . . . . . . . 33
III. CONDITIONS PRECEDENT. . . . . . . . . . . . . . . . . . . 34
Section 3.1 Conditions Precedent to the Loan . . . . . 34
IV. REPRESENTATIONS AND WARRANTIES. . . . . . . . . . . . . . 38
Section 4.1 Borrower Representations . . . . . . . . . 38
Section 4.2 Survival of Representations. . . . . . . . 50
V. AFFIRMATIVE COVENANTS . . . . . . . . . . . . . . . . . . 51
Section 5.1 Borrower Covenants . . . . . . . . . . . . 51
VI. NEGATIVE COVENANTS. . . . . . . . . . . . . . . . . . . . 63
Section 6.1 Borrower's Negative Covenants. . . . . . . 63
VII. ALTERATIONS AND EXPANSIONS; LEASING . . . . . . . . . . . 68
Section 7.1 Alterations. . . . . . . . . . . . . . . . 68
Section 7.2 Leasing. . . . . . . . . . . . . . . . . . 72
VIII. CASUALTY AND CONDEMNATION. . . . . . . . . . . . . . 72
Section 8.1 Insurance; Casualty and Condemnation . . . 72
8.1.1 Insurance. . . . . . . . . . . . . . . . . 72
8.1.2 Casualty; Application of Proceeds. . . . . 77
8.1.3 Condemnation . . . . . . . . . . . . . . . 81
IX. ACCOUNTS AND RESERVES . . . . . . . . . . . . . . . . . . 82
Section 9.1 Establishment and Maintenance of Lock-Box
Deposit Account. . . . . . . . . . . . . . 82
Section 9.2 Reserve Accounts . . . . . . . . . . . . . 83
9.2.1 Establishment and Maintenance of Reserve
Accounts . . . . . . . . . . . . . . . . . 83
9.2.2 Disbursements from the Reserve Accounts. . 84
9.2.3 Disbursements from Deferred Maintenance
Account Upon Completion or Determination . 85
9.2.4 Release of Reserve Accounts Upon Repayment 85
9.2.5 Obligations Unaffected . . . . . . . . . . 85
9.2.6 Disbursements from the Reserve Accounts. . 85
Section 9.3 Tax, Insurance and Ground Lease Escrow
Account. . . . . . . . . . . . . . . . . . 86
9.3.1 Establishment. . . . . . . . . . . . . . . 86
9.3.2 Application Generally. . . . . . . . . . . 86
Section 9.4 Disbursements from the Deposit Account;
Borrower's Obligation to Fund Deposit
Account. . . . . . . . . . . . . . . . . . 87
9.4.1 Disbursements. . . . . . . . . . . . . . . 87
9.4.2 Obligation to Fund; Deemed Payment . . . . 88
9.4.3 Borrower to provide for Reconciliation of
Excess Disbursements . . . . . . . . . . . 89
Section 9.5 No Release if Event of Default Exists. . . 89
Section 9.6 Grant of Security Interest; Rights upon
Default. . . . . . . . . . . . . . . . . . 89
Section 9.7 Lender Not Responsible . . . . . . . . . . 90
Section 9.8 Inspections; Undertaking of Work . . . . . 90
X. DEFAULTS. . . . . . . . . . . . . . . . . . . . . . . . . 91
Section 10.1 Event of Default . . . . . . . . . . . . . 91
Section 10.2 Remedies . . . . . . . . . . . . . . . . . 93
Section 10.3 Remedies Cumulative. . . . . . . . . . . . 94
XI. PROPERTY MANAGEMENT . . . . . . . . . . . . . . . . . . . 94
Section 11.1 Termination of Property Manager. . . . . . 94
XII. MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . 95
Section 12.1 Survival . . . . . . . . . . . . . . . . . 95
Section 12.2 Permitted Investments; Eligible Accounts;
Eligible Institutions. . . . . . . . . . . 95
Section 12.3 Governing Law; Consent to Jurisdiction . . 96
Section 12.4 Modification, Waiver in Writing. . . . . . 98
Section 12.5 Delay Not a Waiver . . . . . . . . . . . . 98
Section 12.6 Notices. . . . . . . . . . . . . . . . . . 98
Section 12.7 Trial by Jury. . . . . . . . . . . . . . . 99
Section 12.8 Headings . . . . . . . . . . . . . . . . .100
Section 12.9 Severability . . . . . . . . . . . . . . .100
Section 12.10 Preferences. . . . . . . . . . . . . . . .100
Section 12.11 Waiver of Notice . . . . . . . . . . . . .100
Section 12.12 Remedies of Borrower . . . . . . . . . . .101
Section 12.13 Expenses; Indemnity. . . . . . . . . . . .101
Section 12.14 Exhibits and Schedules Incorporated. . . .102
Section 12.15 Offsets, Counterclaims and Defenses. . . .102
Section 12.16 No Joint Venture or Partnership. . . . . .102
Section 12.17 Publicity. . . . . . . . . . . . . . . . .103
Section 12.18 Cross-Collateralization Waiver of Marshalling
of Assets. . . . . . . . . . . . . . . . .103
Section 12.19 Waiver of Counterclaim . . . . . . . . . .104
Section 12.20 Conflict; Construction of Documents. . . .104
Section 12.21 Brokers and Financial Advisors . . . . . .104
Section 12.22 No Third Party Beneficiaries . . . . . . .104
Section 12.23 Prior Agreements . . . . . . . . . . . . .105
Section 12.24 Exculpation. . . . . . . . . . . . . . . .105
Section 12.25 Loan Assignability by Lender.. . . . . . .106
SCHEDULES
Schedule 1 - Deferred Maintenance Conditions
Schedule 2 - Legal Descriptions of Mortgaged Properties
Schedule 3 - Historical Capital Expenditures - 1995, 1996,
1997 and year-to-date 1998
Schedule 4 - Unfunded Obligations
Schedule 5 - Exceptions to Representations and Warranties
Schedule 6 - Engineering Reports
Schedule 7 - Security Deposits
Schedule 8 - Allocated Loan Amounts
EXHIBITS
Exhibit A - Deposit Account Agreement
Exhibit B - Subordination, Non-disturbance and Attornment
Agreement
Exhibit C - Disbursement Request Form
LOAN AGREEMENT, dated as of June 29, 1998 (as amended,
restated, replaced, supplemented or otherwise modified from time
to time, this "AGREEMENT"), between EPT DOWNREIT II, INC., a
Missouri corporation, and ARCHON FINANCIAL, L.P., a Delaware
limited partnership.
All capitalized terms used herein shall have the
respective meanings set forth in Section 1.1.
W I T N E S S E T H:
WHEREAS, Borrower desires to obtain the Loan from
Lender and secure the same by, among other things, the Borrower's
interest in the real property commonly known as Grand 24 (Dallas,
Texas), Promenade 16 (Los Angeles, California), Ontario Mills
(Los Angeles, California), Mission Valley 20 (San Diego,
California), Studio 30 (Houston, Texas), Huebner Oaks 24 (San
Antonio, Texas), West Olive 16 (St. Louis, Missouri) and
Lennox 24 (Columbus, Ohio); and
WHEREAS, Lender is willing to make the Loan to
Borrower, subject to and in accordance with the terms of this
Agreement and the other Loan Documents.
NOW, THEREFORE, in consideration of the making of the
Loan by Lender and the covenants, agreements, representations and
warranties set forth in this Agreement, the parties hereto hereby
covenant, agree, represent and warrant as follows:
I. DEFINITIONS; PRINCIPLES OF CONSTRUCTION
Section 1.1 Definitions.
For all purposes of this Agreement, except as otherwise
expressly provided herein:
"ACCEPTABLE PROPERTY MANAGER" shall mean any property
manager retained by Borrower to manage one or more of the
Mortgaged Properties, (i) which property manager has been
approved by Lender and (ii) as to which Borrower shall have
obtained a Rating Confirmation.
"ADDITIONAL INTEREST" shall mean the excess of the
amount payable as interest under the Note at the Revised Interest
Rate over the amount that would have been payable as interest
under the Note at the Initial Interest Rate.
"AEN" shall mean AMC Entertainment Inc., a Delaware
corporation.
"AFFILIATE" shall mean a Person or Persons directly or
indirectly, through one or more intermediaries, controlling,
controlled by or under common control with the Person or Persons
in question. The term "control", as used in the immediately
preceding sentence, shall mean, with respect to a Person that is
a corporation, the right to exercise, directly or indirectly,
more than fifty percent (50%) of the voting rights attributable
to the shares of the controlled corporation and, with respect to
a Person that is not a corporation, the possession, directly or
indirectly, of the power to direct or cause the direction of the
management or policies of the controlled Person.
"ALTA" shall mean American Land Title Association, or
any successor thereto.
"ALTERATION" shall have the meaning set forth in
Section 7.1.
"ANNUAL BUDGET" shall mean Borrower's annual operating
budget and, if required pursuant to this Agreement for the
applicable period, the capital expenditures budget for any Fiscal
Year setting forth, in reasonable detail, Borrower's good faith
estimates of the anticipated results of operations of the
Mortgaged Properties, including revenues from all sources, all
Operating Expenses, management fees and, if required pursuant to
this Agreement for the applicable period, Capital Expenditures
and setting forth Borrower's leasing strategy, as applicable, for
the Mortgaged Properties.
"ANTICIPATED PREPAYMENT DATE" shall mean the Payment
Date occurring on July 11, 2008 (or, if such date is not a
Business Day, the immediately preceding Business Day).
"APPROVED ASSIGNEE" shall mean a "first-run" movie
theater operator with a minimum net worth of One Hundred Million
and No/100 Dollars ($100,000,000).
"APPROVED BANKS" shall mean banks or other financial
institutions which have (i) (a) a minimum net worth of Five
Hundred Million and No/100 Dollars ($500,000,000) or (b) total
assets of at least Five Billion and No/100 Dollars
($5,000,000,000) and (ii) a minimum long-term unsecured debt
rating from the applicable Rating Agencies at least equivalent to
the Required Rating.
"ASSIGNMENT OF LEASES" shall mean, with respect to each
Mortgaged Property, that certain first priority Assignment of
Leases and Rents, dated as of the date hereof, from Borrower, as
assignor, to Lender, as assignee, as the same may be amended,
restated, replaced, supplemented or otherwise modified from time
to time.
"BASIC CARRYING COSTS" shall mean the sum of the
following costs associated with the Mortgaged Properties:
(i) Taxes, (ii) Insurance Premiums and (iii) ground rent, as
applicable.
"BORROWER" shall mean EPT DownREIT II, Inc., a Missouri
corporation, together with its successors and assigns as
permitted hereunder.
"BUSINESS DAY" shall mean any day other than a
Saturday, Sunday or any other day on which national banks in New
York are not open for business.
"CAPITAL EXPENDITURES" shall mean those expenditures by
or on behalf of Borrower with respect to the Mortgaged Properties
that are required or permitted to be capitalized and amortized or
depreciated in accordance with GAAP.
"CAPITAL RESERVE ACCOUNT" shall have the meaning set
forth in Section 9.2.1.
"CASH" shall mean coin or currency of the United States
of America or immediately available federal funds, including such
funds delivered by wire transfer.
"CASH AND CASH EQUIVALENTS" shall mean (i) Cash,
(ii) U.S. Government Securities, (iii) interest bearing or
discounted obligations of federal agencies and government
sponsored entities or pools of such instruments offered by
Approved Banks and dealers, including, without limitation,
Federal Home Loan Mortgage Corporation participation sale
certificates, Government National Mortgage Association modified
pass-through certificates, Federal National Mortgage Association
bonds and notes, Federal Farm Credit System securities (provided
all of the obligations described in this clause (iii) shall be
rated "AAA" or backed by the full faith and credit of the United
States government for full and timely payment), (iv) time
deposits, domestic and Eurodollar certificates of deposit,
bankers acceptances or commercial paper rated at least F-1+ (or
its equivalent, as determined by Lender) by the applicable Rating
Agencies, and/or guaranteed by an entity having a long-term
rating at least equal to the Required Rating, floating rate
notes, other money market instruments and letters of credit each
issued by Approved Banks (provided that if the scheduled maturity
of any such note, instrument or letter of credit is more than six
(6) months after the date of purchase of such obligation by
Borrower or Lender, the note, instrument or letter of credit must
be issued by a bank having a long-term unsecured debt rating from
the applicable Rating Agencies at least equal to the Required
Rating), (v) obligations issued by state and local governments or
their agencies, carrying a rating at least equal to the Required
Rating and/or guaranteed by an irrevocable letter of credit of an
Approved Bank (provided that if the scheduled maturity of any
such obligation is more than six (6) months after the date of
purchase by Borrower or Lender and such obligation is guaranteed
by a letter of credit, the letter of credit guaranteeing such
obligation must be issued by an Approved Bank having a long-term
unsecured debt rating from each of the applicable Rating Agencies
at least equal to the Required Rating), (vi) repurchase
agreements with major banks and primary government securities
dealers fully secured by U.S. government or agency collateral
with a value equal to or exceeding the principal amount on a
daily basis and held in safekeeping (provided that at the time of
purchase the counterparty to such repurchase agreement must have
a long-term unsecured debt rating at least equal to the Required
Rating), (vii) investments in money market funds and money market
mutual funds, all the assets of which are comprised of
investments described in clauses (i) through (vi) above, and
(viii) any other investment with respect to which a Rating
Confirmation is obtained. Except as otherwise provided in this
definition, Cash and Cash Equivalents shall not include any
investments commonly known as "derivatives", any investments
requiring a payment above par for an obligation, and under no
circumstances shall Cash and Cash Equivalents include interest-
only strips. Any investment in Cash and Cash Equivalents shall
have a maturity date not later than one Business Day prior to the
date that the proceeds therefrom are required hereunder.
"CASUALTY" shall have the meaning specified in
Section 8.1.2(a).
"CERTIFICATES" shall have the meaning specified in the
Cooperation Agreement.
"CLOSE AFFILIATE" of a Person shall mean that such
Person (i) satisfies the definition of "Affiliate" with respect
to the other Person in question and (ii) owns one hundred percent
(100%), is owned one hundred percent (100%) by, or is under one
hundred percent (100%) common ownership with, the other Person in
question.
"CLOSING" or "CLOSING DATE" shall mean the date of the
funding of the Loan.
"CLOSING DATE NOI" shall mean Net Operating Income for
the twelve (12) full-month period ending June 30, 1998. Closing
Date NOI for all of the Mortgaged Properties shall mean Seventeen
Million and No/100 Dollars ($17,000,000).
"CODE" shall mean the Internal Revenue Code of 1986, as
amended, and as it may be further amended from time to time, any
successor statutes thereto, and applicable U.S. Department of
Treasury regulations issued pursuant thereto in temporary or
final form.
"COMMITMENT FEE" shall mean a fee payable to Lender in
an amount equal to 0.50% of the original principal amount of the
Loan.
"CONDEMNATION" shall have the meaning set forth in
Section 8.1.3.
"COOPERATION AGREEMENT" shall mean that certain
Mortgage Loan Cooperation Agreement, dated as of the date hereof,
among Borrower, Sponsor, as indemnitor, and Lender.
"CPI INCREASE" shall mean, when used to qualify a fixed
dollar amount set forth herein at the date in question, such
fixed dollar amount, as increased by the percentage by which the
Consumer Price Index for All Urban Consumers published by the
United States Department of Labor, applicable to the Index Area
that includes the applicable Mortgaged Property or Mortgaged
Properties (all items) (base year 1982-84 = 100) (the "CONSUMER
PRICE INDEX"), or any successor index thereof as such successor
index may be appropriately adjusted to establish substantial
equivalence with the Consumer Price Index, shall have increased
over such Consumer Price Index (or successor, equivalent or
comparable index, as applicable) for the month in 1998 in which
the Closing Date occurs. If the Consumer Price Index is
converted to a different standard reference base or otherwise
revised, then whenever the determination of a CPI Increase figure
is called for herein, the Consumer Price Index shall be converted
in accordance with the conversion factors published by the United
States Department of Labor, Bureau of Labor Statistics, or, if
said Bureau shall not publish the same, as the same may be
published by Prentiss-Hall, Inc. or any other nationally
recognized publisher of similar statistical information selected
by Lender (in its reasonable discretion). If the Consumer Price
Index ceases to be published and there is no successor thereto,
such other index as Lender shall reasonably select shall be
substituted for the Consumer Price Index.
"CREDIT FACILITY" shall mean a clean, irrevocable,
unconditional transferable letter of credit, payable on sight
draft only, in respect of which Borrower has no reimbursement
obligation and such reimbursement obligation is not secured by
any Mortgaged Property or any other property pledged to secure
the Loan, in favor of Lender and entitling Lender to draw thereon
in New York, New York or in such other city as Lender's corporate
trust office may be located at the time of the issuance of such
letter of credit, issued by a domestic bank or the U.S. agency or
branch of a foreign bank the long-term unsecured debt rating of
which at the time such letter of credit is delivered and
throughout the term of such letter of credit is not less than the
then Required Rating, or, if there are no domestic banks or U.S.
agencies or branches of a foreign bank having such long-term
unsecured debt rating then issuing letters of credit, then such
letter of credit may be issued by a domestic bank the long-term
unsecured debt rating of which is not lower than "AA" by the
applicable Rating Agencies. Such Credit Facility shall provide
that it will automatically renew unless the issuer of such Credit
Facility delivers written notice to Lender, as beneficiary, and
Borrower, as account party, at least thirty (30) days prior to
its expiration that such Credit Facility will not be renewed,
and, in such case, shall provide that Lender, as beneficiary,
shall be entitled to draw upon the full amount of such Credit
Facility. Without in any way limiting the generality of the
foregoing, if any Credit Facility is not renewed or replaced with
another Credit Facility prior to the date that is thirty
(30) days prior to its expiration, Lender shall be entitled to
draw upon the full amount of such Credit Facility.
"DEBT" shall mean the outstanding principal amount set
forth in, and evidenced by, the Note, together with all interest
accrued and unpaid thereon and all other sums due to Lender in
respect of the Loan, including the Yield Maintenance Payments, if
any, and any sums due under the Note, this Agreement, the
Mortgage or in any other Loan Document.
"DEBT SECURITIES" shall mean debt obligations, other
than U.S. Government Securities, of any Person, whether evidenced
by bonds, notes, debentures, certificates, book entry deposits,
certificates of deposit, commercial paper, bankers acceptances,
reinvestment letters, funding agreements or other instruments,
which (x) are not subject to prepayment or redemption prior to
maturity and (y) are rated not less than the then Required
Rating; or any combination of the foregoing.
"DEBT SERVICE" shall mean, with respect to any
specified date or a particular period of time, scheduled
principal (which shall not include any payments applied to
principal after the Anticipated Prepayment Date pursuant to the
terms of Section 9.4.1(8)) and interest payments under the Note
due as of such date or payable during such period (including the
last day thereof), as applicable.
"DEBT SERVICE ACCOUNT" shall have the meaning set forth
in Section 9.2.1(d).
"DEBT SERVICE COVERAGE RATIO" shall mean, as of any
date, a ratio expressed as a fraction in which (a) the numerator
is the Net Operating Income for the 12-month period ending on the
last day of the month immediately preceding such date, and
(b) the denominator is the greater of (i) the aggregate Debt
Service actually due and payable on the Note for such 12-month
period and (ii) payments of interest only for such period based
upon the original principal amount of the Loan and assuming a
loan constant equal to 10.48% per annum, which ratio shall be
calculated by Lender, pursuant to audits conducted by Lender, at
Borrower's sole cost and expense, in accordance with Lender's
customary audit policies and procedures, subject to the
limitations set forth in Section 12.13(a)(i).
"DEFAULT" shall mean the occurrence of any event
hereunder or under any other Loan Document which, but for the
giving of notice or passage of time, or both, would be an Event
of Default.
"DEFAULT RATE" shall mean a rate per annum equal to the
lesser of (a) the maximum rate permitted by applicable law and
(b) the greater of (x) the applicable Interest Rate plus five
percent (5%) and (y) the rate from time to time publicly
announced by The Wall Street Journal as the prime rate plus one
percent (1%).
"DEFEASANCE" shall have the meaning set forth in
Section 2.3.2(a).
"DEFEASANCE DATE" shall have the meaning set forth in
Section 2.3.2(a).
"DEFEASANCEDEPOSIT" shall mean an amount equal to the
sum of (i) any costs and expenses incurred or to be incurred in
the purchase of U.S. Government Securities including, without
limitation, the purchase price thereof necessary to meet the
Scheduled Defeasance Payments and (ii) any revenue, documentary
stamp or intangible taxes or any other tax or charge due in
connection with any transfer of the Note, or otherwise required
to accomplish the agreements of Section 2.3.
"DEFERRED MAINTENANCE CONDITIONS" shall mean the
conditions at the applicable Mortgaged Properties described on
Schedule 1 hereto which Borrower shall have two (2) years from
the Closing Date to correct.
"DEFERRED MAINTENANCE RESERVE ACCOUNT" shall have the
meaning set forth in Section 9.2.1.
"DEPOSIT ACCOUNT" shall have the meaning given such
term in Section 9.1.
"DEPOSIT ACCOUNT AGREEMENT" shall mean an agreement
among Borrower, Lender and the depositary bank, if any, for the
Deposit Account, relating to the collection and application of
all the Rents from the Mortgaged Properties, which agreement
shall be in substantially the form attached hereto as Exhibit A,
with such changes therein as shall be mutually agreeable to the
parties thereto.
"DISBURSING AGENT" shall mean Stewart Title Guaranty
Company or, if Stewart Title Guaranty Company is unable or
unwilling to act in such capacity, such other escrow agent as
shall be acceptable to Master Tenant, Borrower and Lender.
"ELIGIBLE ACCOUNT" shall have the meaning given such
term in Section 12.2.
"ELIGIBLE COLLATERAL" shall mean U.S. Government
Securities, Debt Securities, Credit Facility or Cash and Cash
Equivalents, or any combination thereof.
"ELIGIBLE INSTITUTION" shall have the meaning given
such term in Section 12.2.
"ENVIRONMENTAL INDEMNITY" shall mean that certain
Environmental Indemnification Agreement with respect to the
Mortgaged Properties, dated as of the date hereof, executed by
Borrower in connection with the Loan for the benefit of Lender.
"EVENT OF DEFAULT" shall have the meaning set forth in
Section 10.1(a).
"EXPANSION" shall have the meaning set forth in
Section 7.1.
"FINAL COMPLETION" shall mean, with respect to any
specified work, the final completion of all such work, including
the performance of all "punch list" items, as confirmed by an
Officer's Certificate and, with respect to any Material
Alteration or Material Expansion, a certificate of the
Independent Architect.
"FISCAL YEAR" shall mean the period commencing on the
Closing Date and ending on and including December 31 of the
calendar year in which the Closing occurs and thereafter each
twelve month period commencing on January 1 and ending on
December 31 until the Debt is repaid in full.
"GAAP" shall mean generally accepted accounting
principles in the United States of America as of the relevant
date in question.
"GOVERNMENTAL AUTHORITY" shall mean any court, board,
agency, commission, office or authority of any nature whatsoever
of or for any federal, state, county, district, municipal, city
or other governmental unit, whether now or hereafter in
existence.
"GROUND LEASE PROPERTY" shall mean the real property
demised by the Ground Leases.
"GROUND LEASES" shall mean, collectively, (a) with
respect to that certain Mortgaged Property known as Mission
Valley 20, that certain Lease between Mission Valley Partnership,
as landlord, and American Multi-Cinema, Inc., as tenant, dated as
of March 27, 1994, as evidenced by that certain Memorandum of
Lease Terms dated as of March 27, 1994, between Mission Valley
Partnership and American Multi-Cinema, Inc., as amended pursuant
to that certain First Amendment to Lease dated as of December 5,
1994 between Mission Valley Partnership and American
Multi-Cinema, Inc., as evidenced by that certain Memorandum of
Lease dated January 6, 1995, as further amended pursuant to that
certain Second Amendment to Lease dated as of January 1, 1997
between Mission Valley Partnership and American Multi-Cinema,
Inc., as assigned by American Multi-Cinema, Inc. to Sponsor
pursuant to that certain Assignment and Assumption Agreement
dated as of November 21, 1997, as further assigned from Sponsor
to Borrower pursuant to that certain Assignment and Assumption
Agreement dated as of the date hereof and (b) with respect to
that certain Mortgaged Property known as Lennox 24, that certain
Lease between Continental Acquisitions, Inc., as landlord, and
American Multi-Cinema, Inc., as tenant, dated as of August 9,
1995, as evidenced by that certain Memorandum of Lease dated as
of January 10, 1996 between Continental Acquisitions, Inc. and
American Multi-Cinema, Inc., as amended pursuant to that certain
First Lease Amendment dated as of August 30, 1995 between
Continental Acquisitions, Inc. and American Multi-Cinema, Inc.,
as assigned by Continental Acquisitions, Inc. to Lennox Town
Center Limited pursuant to that certain Assignment and Assumption
Agreement dated September 14, 1995, as further amended pursuant
to that certain Second Lease Amendment dated as of January 4,
1996 between Lennox Town Center Limited and American
Multi-Cinema, Inc., as further amended pursuant to that certain
Third Lease Amendment dated as of January 16, 1997 between Lennox
Town Center Limited and American Multi-Cinema, Inc., as assigned
by American Multi-Cinema, Inc. to Sponsor pursuant to that
certain Assignment and Assumption Agreement as of November 21,
1997, as further assigned by Sponsor to Borrower pursuant to that
certain Assignment and Assumption Agreement dated as of the date
hereof.
"IMPROVEMENTS" shall have the meaning set forth in the
Mortgage.
"INDEPENDENT ARCHITECT" shall mean any reputable
architecture or construction management firm selected by Lender
that is licensed or registered in the jurisdiction where the
applicable Mortgaged Property is located, as required by the laws
of such jurisdiction, and is not affiliated with Borrower.
"INDEPENDENT DIRECTOR" shall have the meaning set forth
in Section 4.1(cc).
"INITIAL INTEREST RATE" means a rate per annum equal to
six and seven hundred seventy two thousandths percent (6.772%).
"INSURANCE PREMIUMS" shall have the meaning set forth
in Section 8.1.1(d).
"INSURANCE REQUIREMENTS" shall mean all terms of any
insurance policy required hereunder covering or applicable to the
Mortgaged Properties or any part thereof, all requirements of the
issuer of any such policy, and all orders, rules, regulations and
other requirements of the National Board of Fire Underwriters or
of any other body exercising similar functions applicable to or
affecting the Mortgaged Properties or any part thereof or any use
of the Mortgaged Properties or any part thereof.
"INTEREST ACCRUAL PERIOD" shall mean, with respect to
any Payment Date, the period beginning on and including the
eleventh (11th) day of the month preceding such Payment Date,
provided, however, that with respect to the first Interest
Accrual Period following the Closing Date, such Interest Accrual
Period shall commence on, and include the Closing Date and shall
end on, but exclude the eleventh (11th) day of the month in which
such Payment Date occurs.
"INTEREST RATE" shall mean the Initial Interest Rate or
the Revised Interest Rate, as applicable.
"INVESTMENT GRADE" shall mean having a long term
unsecured debt rating not lower than BBB- (or the equivalent) by
the applicable Rating Agencies.
"LEASE" shall mean any lease, sublease or subsublease,
letting, license, concession, occupancy agreement or other
agreement (whether written or oral and whether now or hereafter
in effect), existing as of the date hereof or hereafter entered
into by Borrower, pursuant to which any Person is granted a
possessory interest in, or right to use or occupy all or any
portion of any space in any Mortgaged Property including, without
limitation, the Master Leases, and every modification, amendment
or other agreement relating to such lease, sublease, subsublease,
or other agreement entered into in connection with such lease,
sublease, subsublease, or other agreement and all agreements
related thereto and every guarantee of the performance and
observance of the covenants, conditions and agreements to be
performed and observed by the other party thereto.
"LEASE FORM" shall have the meaning set forth in
Section 5.1(s)(v).
"LEASING GUIDELINES" shall have the meaning set forth
in Section 5.1(s)(v).
"LEGAL REQUIREMENTS" shall mean, with respect to
Borrower and each Mortgaged Property, all federal, state, county,
municipal and other governmental statutes, laws, rules, orders,
regulations, ordinances, judgments, decrees and injunctions of
Governmental Authorities affecting Borrower or any Mortgaged
Property or any part thereof or the construction, use, alteration
or operation thereof, or any part thereof, whether now or
hereafter enacted and in force, and all permits, licenses and
authorizations 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 any Mortgaged Property or any part
thereof, including, without limitation, any which may (i) require
repairs, modifications or alterations in or to any Mortgaged
Property or any part thereof, or (ii) in any way limit the use
and enjoyment thereof.
"LENDER" shall mean Archon Financial, L.P., a Delaware
limited partnership, and its successors or assigns.
"LENDER EXPENSES" shall mean all reasonable out-of-
pocket expenses and costs incurred by Lender or any Affiliate of
Lender in connection with the making of the Loan, including,
without limitation, costs or expenses incurred in connection with
the preparation of audits (subject to the limitations set forth
in Section 12.13(a)(i)), travel, the preparation of environmental
and engineering reports, credit reports, appraisals, the
preparation, negotiation, execution and delivery of this
Agreement and the other Loan Documents and the consummation of
the transactions contemplated hereby and thereby (including
reasonable attorneys' fees and expenses in connection therewith
and in connection with Lender's due diligence), mortgage
recording taxes and other document filing fees and any other out-
of-pocket expenses relating to credit and collateral evaluations
(including, without limitation, preliminary evaluations prepared
by any of the Rating Agencies) and for which Lender or any of
Lender's Affiliates are customarily reimbursed.
"LICENSES" shall have the meaning set forth in
Section 4.1(v).
"LIEN" shall mean any mortgage, deed of trust, lien,
pledge, hypothecation, assignment, security interest, or any
other encumbrance, charge or transfer of, on or affecting (i) any
of the Mortgaged Properties or any portion thereof or
(ii) 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, notice or other instrument and mechanic's,
materialmen's and other similar liens and encumbrances.
"LOAN" shall mean the loan made to Borrower by Lender
pursuant hereto and the other Loan Documents in the original
principal amount of One Hundred Five Million and No/100 Dollars
($105,000,000), as evidenced by the Note, each Mortgage and the
other Loan Documents.
"LOAN DOCUMENTS" shall mean, collectively, this
Agreement, the Note, each Mortgage, each Assignment of Leases,
the Environmental Indemnity, the Deposit Account Agreement and
any other document executed in connection with the Loan (other
than the Cooperation Agreement), as well as all other documents
executed and/or delivered in connection with the Loan or
hereafter delivered by or on behalf of Borrower pursuant to the
requirements hereof or of any other Loan Document.
"LOW DEBT SERVICE APPLICATION EVENT" shall mean, any
time prior to the Anticipated Prepayment Date, that Net Operating
Income of the Mortgaged Properties (calculated by Lender) for the
twelve (12) month period prior to the applicable NOI Calculation
Date is less than seventy-five percent (75%) of the Closing Date
NOI.
"LOW DEBT SERVICE RESERVE TRIGGER EVENT" shall mean,
any time prior to the Anticipated Prepayment Date, that the Net
Operating Income of the Mortgaged Properties (calculated by
Lender) for the twelve (12) month period prior to the applicable
NOI Calculation Date is less than eighty-five percent (85%) of
the Closing Date NOI.
"LOW DEBT SERVICE RETURN EVENT" shall mean, any time
after a Low Debt Service Reserve Trigger Event and prior to the
Anticipated Prepayment Date, as calculated as of the last day of
two (2) consecutive calendar quarters, that (i) no Event of
Default has occurred and is continuing and (ii) the Net Operating
Income of the Mortgaged Properties for the twelve (12) month
period prior to the applicable NOI Calculation Date is equal to
or greater than eighty-five percent (85%) of the Closing Date NOI
as calculated by Lender.
"LOW DEBT SERVICE TRIGGER PERIOD" shall mean the period
of time after a Low Debt Service Reserve Trigger Event until the
occurrence of a Low Debt Service Return Event.
"MASTER LEASE ROLLOVER ACCOUNT" shall have the meaning
set forth in Section 9.2.1.
"MASTER LEASE TENANT" shall mean American Multi-Cinema,
Inc., and its successors and/or assigns under any of the Master
Leases.
"MASTER LEASES" shall mean, collectively, (a) that
certain Lease dated as of November 21, 1997 between Sponsor (as
Borrower's predecessor in interest), as landlord, and Master
Lease Tenant, as tenant, with respect to the Mortgaged Property
known as Grand 24 located in Dallas, Texas, as assigned by
Sponsor to Borrower pursuant to that certain Assignment of Lease
dated as of the date hereof; (b) that certain Lease dated as of
November 21, 1997 between Sponsor (as Borrower's predecessor in
interest), as landlord, and Master Lease Tenant, as tenant, with
respect to the Mortgaged Property known as Promenade 16 located
in Los Angeles, California, as assigned by Sponsor to Borrower
pursuant to that certain Assignment of Lease dated as of the date
hereof; (c) that certain Lease dated as of November 21, 1997
between Sponsor (as Borrower's predecessor in interest), as
landlord, and Master Lease Tenant, as tenant, with respect to the
Mortgaged Property known as Studio 30 located in Houston, Texas,
as assigned by Sponsor to Borrower pursuant to that certain
Assignment of Lease dated as of the date hereof; (d) that certain
Lease dated as of November 21, 1997 between Sponsor (as
Borrower's predecessor in interest), as landlord, and Master
Lease Tenant, as tenant, with respect to the Mortgaged Property
known as Ontario Mills 30 located in Los Angeles, California, as
assigned by Sponsor to Borrower pursuant to that certain
Assignment of Lease dated as of the date hereof; (e) that certain
Lease dated as of November 21, 1997 between Sponsor (as
Borrower's predecessor in interest), as landlord, and Master
Lease Tenant, as tenant, with respect to the Mortgaged Property
known as West Olive 16 located in St. Louis, Missouri, as
assigned by Sponsor to Borrower pursuant to that certain
Assignment of Lease dated as of the date hereof; (f) that certain
Lease dated as of November 21, 1997 between Sponsor (as
Borrower's predecessor in interest), as landlord, and Master
Lease Tenant, as tenant, with respect to the Mortgaged Property
known as Huebner Oaks 24 located in San Antonio, Texas, as
assigned by Sponsor to Borrower pursuant to that certain
Assignment of Lease dated as of the date hereof; (g) that certain
Lease dated as of November 21, 1997 between Sponsor (as
Borrower's predecessor in interest), as landlord, and Master
Lease Tenant, as tenant, with respect to the Mortgaged Property
known as Lennox 24 located in Columbus, Ohio, as assigned by
Sponsor to Borrower pursuant to that certain Assignment of Lease
dated as of the date hereof and (h) that certain Lease dated as
of November 21, 1997 between Sponsor (as Borrower's predecessor
in interest), as landlord, and Master Lease Tenant, as tenant,
with respect to the Mortgaged Property known as Mission Valley 20
located in San Diego, California, as any such lease may be
amended, modified, extended or renewed as assigned by Sponsor to
Borrower pursuant to that certain Assignment of Lease dated as of
the date hereof.
"MATERIAL AGREEMENTS" shall mean any Property
Management Agreement and all material agreements relating to the
ownership, development, use, operation, leasing, maintenance or
repair of the Mortgaged Properties (including those contracts
identified, for purposes of Section 4.1(k), on Schedule 5 annexed
hereto) and Operating Agreements.
"MATERIAL ALTERATION" shall mean any Alteration to be
performed by or on behalf of Borrower at any Mortgaged Property
(other than an Alteration the cost of which a Tenant is obligated
to repay or reimburse to the Borrower and which the Borrower
reasonably believes will be so reimbursed, as applicable) the
cost of which as reasonably estimated by an Independent
Architect, exceeds the Threshold Amount.
"MATERIAL CASUALTY" shall have the meaning set forth in
Section 8.1.2(c).
"MATERIAL CONDEMNATION" shall have the meaning set
forth in Section 8.1.2(c).
"MATERIAL EXPANSION" shall mean any Expansion to be
performed by or on behalf of Borrower at the Mortgaged Property,
the total cost of which, as reasonably estimated by an
Independent Architect, exceeds the Threshold Amount.
"MATURITY DATE" shall mean the date on which the Note
shall become due and payable as provided therein, whether at the
Stated Maturity Date, by declaration of acceleration, or
otherwise.
"MONTHLY DEBT SERVICE PAYMENT AMOUNT" shall have the
meaning set forth in Section 2.2.1(b).
"MOODY'S" shall mean Moody's Investors Service, Inc.
"MORTGAGE" shall mean, with respect to each Mortgaged
Property, that certain first priority Mortgage (or Deed of Trust,
Deed to Secure Debt, Leasehold Mortgage, Leasehold Deed of Trust
or Leasehold Deed to Secure Debt), dated the date hereof,
executed and delivered by Borrower as security for the Loan made
to Borrower and encumbering such Mortgaged Property, as the same
may be amended, restated, replaced, supplemented, consolidated or
otherwise modified from time to time.
"MORTGAGED PROPERTIES" shall mean, collectively, the
Borrower's fee and/or leasehold interest in the real property set
forth on Schedule 2 hereto and encumbered by the related Mortgage
and the improvements thereon, together with all rights pertaining
to such property and improvements, as more particularly described
in the Preliminary Statement of each Mortgage and referred to
therein as the "Property" or the "Security Property", as the case
may be.
"MORTGAGED PROPERTY" shall mean any one of the
Mortgaged Properties.
"NET CASH FLOW" shall mean Net Operating Income less
Capital Expenditures, leasing commissions and tenant improvement
costs payable by Borrower, as same shall be calculated by Lender
pursuant to audits conducted by Lender in accordance with
Lender's customary audit policies and procedures, subject to the
limitations set forth in Section 12.13(a)(i).
"NET OPERATING INCOME" shall mean the excess of
Operating Income over Operating Expenses for such period. In
calculating Net Operating Income for any period as aforesaid, the
most recently prepared annual audited financial statements for
the Borrower (or the supplemental data results) shall be used,
except that if any unaudited quarterly reports then available
cover quarters since the end of the years covered in such annual
audited financial statements, then the Net Operating Income
determined in accordance with the immediately preceding sentence
shall be adjusted by adding the Net Operating Income for the
quarters covered in such unaudited quarterly reports and
deducting the Net Operating Income for the corresponding quarters
in the prior fiscal year. By way of illustration, if Net
Operating Income were to be determined on May 15, 1997, Net
Operating Income would equal Net Operating Income shown in the
annual audited financial statements (or supplemental data
therefor) for 1996, plus the Net Operating Income shown in the
unaudited quarterly report for the first quarter of 1997, less
the Net Operating Income shown in the unaudited quarterly report
for the first quarter of 1996. Net Operating Income shall be
calculated by Lender pursuant to audits conducted by Lender, at
Borrower's sole cost and expense, in accordance with Lender's
customary audit and procedures, subject to the limitations set
forth in Section 12.13(a)(i).
"NOI CALCULATION DATE" shall mean the date as of which
Net Operating Income is being calculated.
"NOTE" shall mean that certain Note of even date
herewith, made by Borrower in favor of Lender in the principal
amount of One Hundred Five Million and No/100 Dollars
($105,000,000), as the same may be amended, restated, replaced,
supplemented, consolidated or otherwise modified from time to
time.
"OFFICER'S CERTIFICATE" shall mean a certificate made
by an individual authorized to act on behalf of Borrower,
including, to the extent applicable, any constituent Person with
respect to Borrower. Without limiting the foregoing, if the
individual signing the certificate is acting on behalf of a
corporation, then such individual shall hold the office of
president, vice president or chief financial officer (or the
equivalent) with respect to such corporation.
"OPERATING AGREEMENTS" shall mean reciprocal easement
or operating agreements, covenants, conditions and restrictions,
and similar agreements affecting any Mortgaged Property and
binding upon and/or benefiting Borrower and other third parties.
"OPERATING EXPENSES" shall mean, for any specified
period, on an accrual basis, all expenses paid (or due and
payable, except to the extent that the same constitute Trade
Payables that are no more than sixty (60) days outstanding) by
Borrower (or by Property Manager for the account of Borrower)
during such period in connection with the operation of the
Mortgaged Properties, including, without limitation, bookkeeping,
accounting, insurance costs, wages and other costs and expenses
incurred for the Mortgaged Property and legal expenses incurred
in connection with the operation of the Mortgaged Properties,
determined, in each case, consistently with GAAP. "Operating
Expenses" shall not include (1) depreciation or amortization or
other noncash items (other than expenses that are due and payable
but not yet paid), (2) the principal of and interest on the Note
or any other indebtedness of Borrower, (3) income taxes or other
taxes (in the nature of income taxes), (4) any expenses,
including legal, accounting and other professional fees, expenses
and disbursements, incurred in connection with and allocable to
the issuance of the Note, (5) the cost of leasehold improvements
and Tenant allowances, leasing commissions and any Capital
Expenditures, (6) distributions to the shareholders of Borrower
or any asset management fees or similar compensation payable to
any Affiliate of Borrower (to the extent the same are
subordinated to the payment of the Loan) and (7) any item of
expense which would otherwise constitute an Operating Expense but
is payable directly by any Tenant. Expenses that are accrued as
Operating Expenses during any period shall not be included in
Operating Expenses when paid during any subsequent period.
"OPERATING INCOME" shall mean, for any specified
period, all income received by Borrower or Property Manager for
the account of Borrower during such period in connection with the
operation of the Mortgaged Properties determined consistent with
GAAP, including the following:
(i) all Rent, charges received by Borrower (or by
the Property Manager for the account of Borrower) for
electricity, oil, gas, water, steam, heat, ventilation, air
conditioning and any other energy, telecommunications,
telephone, utility or similar items, including overtime
usage, HVAC equipment charges, sprinkler charges, escalation
charges, license fees, maintenance fees, charges for
improvements, Taxes and other amounts payable to Borrower
(or to the Property Manager, if any, for the account of
Borrower) under any Lease or other agreement relating to any
of the Mortgaged Properties, pursuant to which any portion
of the Mortgaged Properties, utilities, facilities,
equipment, parking facilities or other services are
furnished by Borrower (but excluding any security deposits
received by Borrower or by Property Manager for the account
of Borrower);
(ii) all amounts payable to Borrower (or to the
Property Manager for the account of Borrower) pursuant to
Operating Agreements relating to any of the Mortgaged
Properties;
(iii) condemnation awards to the extent that
such awards constitute compensation for lost rent;
(iv) business interruption and loss of "rental
value" insurance proceeds to the extent such proceeds are
allocable to such specified period;
(v) income from Cash and Cash Equivalents and
interest from notes in lieu of rent; and
(vi) all other amounts received by Borrower (or
Property Manager for the account of Borrower) during such
period in respect of items which, in accordance with GAAP,
would be included in Borrower's annual financial statements
for such period or any other period as operating income of
the Mortgaged Properties and which are reasonably expected
to recur during the next two (2) years following the NOI
Calculation Date.
Notwithstanding the foregoing clauses (i) through (vi), Operating
Income shall not include (A) any condemnation or insurance
proceeds (other than of the types described in clauses (iii) and
(iv) above), (B) any proceeds resulting from the sale, exchange,
transfer, financing or refinancing of all or any part of the
Mortgaged Properties, other than of the types described in
clause (iii) above, (C) any repayments received from Tenants of
principal loaned or advanced to Tenants by Borrower, or (D) any
type of income that would otherwise be considered Operating
Income pursuant to the provisions above but is payable directly
by any Tenant to a Person other than Borrower or its agent.
Operating Income shall be calculated by Lender at Borrower's sole
cost and expense, pursuant to audits conducted by Lender in
accordance with Lender's customary audit policies and procedures,
subject to the limitations set forth in Section 12.13(a)(i).
"OPTIONAL DEFEASANCE DATE" shall mean the earlier of
(a) the third anniversary of the Closing Date and (b) the second
anniversary of the Securitization.
"OTHER CHARGES" shall mean all ground rents,
maintenance charges, impositions other than Taxes, and any other
charges, including vault charges and license fees for the use of
vaults, chutes and similar areas adjoining any Mortgaged
Property, now or hereafter levied or assessed or imposed against
any Mortgaged Property or any part thereof and payable by
Borrower.
"PAYMENT DATE" shall mean the 11th day of each calendar
month or, if in any month the 11th day is not a Business Day,
then the Payment Date for such month shall be the immediately
prior Business Day.
"PERMITTED ENCUMBRANCES" shall mean, collectively,
(a) the Liens and security interests created by the Loan
Documents, (b) all Liens, encumbrances and other matters
disclosed in the applicable Qualified Title Policy, (c) Liens, if
any, for Taxes or Other Charges not yet payable or delinquent or
which are being diligently contested in good faith in accordance
with Section 5.1(b)(ii), (d) Liens in respect of property or
assets imposed by law which were incurred in the ordinary course
of business, such as carriers', warehousemen's, landlord's,
mechanic's, materialmen's repairmen's and other similar Liens
arising in the ordinary course of business, and Liens for
workers' compensation, unemployment insurance and similar
programs, in each case arising in the ordinary course of business
which are being diligently contested in good faith in accordance
with Section 5.1(b)(ii), (e) Leases, (f) easements, rights-of-
way, restrictions, minor defects or irregularities in title and
other similar charges or encumbrances, including any of such
matters incurred or entered into by Borrower in the ordinary
course of business, which in each case do not diminish in any
material respect the value of the applicable Mortgaged Property
or affect in any material respect the validity, enforceability or
priority of the Liens created by the Loan Documents, and (g) such
other title and survey exceptions as Lender has approved or may
approve in writing in Lender's sole discretion.
"PERMITTED INDEBTEDNESS" shall mean (a) the Debt,
(b) unsecured Trade Payables incurred in the ordinary course of
Borrower's business, which are customarily paid by Borrower
within sixty (60) days of incurrence and are in fact not more
than sixty (60) days outstanding and (c) such other unsecured
indebtedness approved by Lender in its sole discretion and, after
a Securitization, with respect to which Borrower has received a
Rating Confirmation.
"PERMITTED INVESTMENTS" shall mean the following,
subject to qualifications hereinafter set forth:
Obligations of, or obligations guaranteed as to
principal and interest by, the U.S. government or
any agency or instrumentality thereof, when such
obligations are backed by the full faith and
credit of the U.S. These obligations include, but
are not limited to:
U.S. Treasury obligations
All direct or fully guaranteed obligations
Farmers Home Administration
Certificates of beneficial ownership
General Services Administration
Participation certificates
U.S. Maritime Administration
Guaranteed Title XI financing
Small Business Administration
Guaranteed participation certificates
Guaranteed pool certificates
U.S. Department of Housing and Urban Development
Local authority bonds
Washington Metropolitan Area Transit Authority
Guaranteed transit bonds
Federal Housing Administration debentures.
Obligations of government-sponsored agencies that are not
backed by the full faith and credit of the U.S., where
the obligation is limited to those instruments that
have a predetermined fixed dollar amount of principal
due at maturity that cannot vary or change. These
obligations are limited to:
Federal Home Loan Mortgage Corp. (FHLMC)
Debt obligations
Farm Credit System (formerly: Federal land Banks, Federal
Intermediate Credit Banks, and Banks for Cooperatives)
Consolidated system wide bonds and notes
Federal Home Loan Banks (FHL Banks)
Consolidated debt obligations
Federal National Mortgage Association (FNMA)
Debt obligations
Student Loan Marketing Association (SLMA)
Debt obligations
Financing Corp. (FICO)
Debt obligations
Resolution Funding Corp. (REFCORP)
Debt obligations.
Federal funds, unsecured certificates of deposit, time
deposits, banker's acceptances, and repurchase
agreements having maturities of not more than three
hundred sixty-five (365) days of any bank, the short-
term debt obligations of which are rated "A-1+" (or the
equivalent) by the applicable Rating Agencies.
Deposits that are fully insured by the Federal Deposit
Insurance Corp. (FDIC).
Debt obligations maturing in three hundred sixty-five
(365) days or less that are rated AAA or higher (or the
equivalent) by the applicable Rating Agencies.
Commercial paper rated "A 1+" (or the equivalent) by the
applicable Rating Agencies and maturing in three
hundred sixty-five (365) days or less.
Investments in certain short-term debt of issuers rated
"A 1+" (or the equivalent) by the applicable Rating
Agencies may be permitted with certain restrictions.
The total amount of debt from "A 1+" issuers must be
limited to the investment of an amount equal to Monthly
Debt Service Payment Amount. The total amount of
"A 1+" investments should not represent more than
twenty percent (20%) of the rated issue's outstanding
principal amount and each investment should not mature
beyond thirty (30) days. Investment in "A 1+" (or the
equivalent) rated securities are not eligible for
reserve accounts, cash collateral accounts, or other
forms of credit enhancement. Short-term debt for
purposes of this definition includes: commercial paper,
federal funds, repurchase agreements, unsecured
certificates of deposit, time deposits, and banker's
acceptances.
Investment in money market funds rated "AAAm" or "AAm G" (or
the equivalent) by the applicable Rating Agencies.
Such other investments as shall be approved in writing by
means of a Rating Confirmation.
Notwithstanding the foregoing, "Permitted Investments": (i) shall
exclude any security with the Standard & Poor's "r" symbol (or
any other Rating Agency's corresponding symbol) attached to the
rating (indicating high volatility or dramatic fluctuations in
their expected returns because of market risk), as well as any
mortgage-backed securities and any security of the type commonly
known as "strips"; (ii) shall not have maturities in excess of
one year; (iii) as to the investments described in (1), (3), (4),
(5), (6), (7) and (8): the obligations shall be limited to those
instruments that have a predetermined fixed dollar of principal
due at maturity that cannot vary or change; interest may either
be fixed or variable; and any variable interest should be tied to
a single interest rate index plus a single fixed spread (if any),
and move proportionately with that index; and (iv) shall exclude
any investment where the right to receive principal and interest
derived from the underlying investment provide a yield to
maturity in excess of one hundred twenty percent (120%) of the
yield to maturity at par of such underlying investment. No
investment shall be made which requires a payment above par for
an obligation if the obligation may be prepaid at the option of
the issuer thereof prior to its maturity. All investments shall
mature or be redeemable upon the option of the holder thereof on
or prior to the earlier of (x) three (3) months from the date of
their purchase or (y) the Business Day preceding the day before
the date such amounts are required to be applied hereunder.
"PERSON" shall mean any individual, sole
proprietorship, corporation, general partnership, limited
partnership, limited liability company or partnership, joint
venture, association, joint stock company, bank, trust, estate,
unincorporated organization, any federal, state, county or
municipal government (or any agency or political subdivision
thereof), endowment fund or any other form of entity.
"POLICIES" shall have the meaning specified in
Section 8.1.1(c).
"PROBABLE MAXIMUM LOSS" shall mean the estimated loss
from earthquake or ground shaking, expressed as a percentage of
the replacement cost of the applicable Mortgaged Property, that
has a ninety-eight percent (98%) confidence of nonexceedance in a
five hundred (500) year period.
"PROCEEDS" shall mean any amounts, awards or payments
payable to Borrower, Master Tenant or Lender in respect of all or
any part of the Mortgaged Properties in connection with a
Casualty or Condemnation thereof after the deduction therefrom
and payment to Borrower, Master Tenant and Lender, respectively,
of any and all reasonable expenses incurred by Borrower, Master
Tenant and Lender in the recovery thereof, including all
attorneys' fees and expenses, the fees of insurance experts and
adjusters and the costs incurred in any litigation or arbitration
with respect to such Casualty or Condemnation).
"PROPERTY MANAGEMENT AGREEMENT" shall mean any property
management agreement entered into by Borrower and Property
Manager, pursuant to which the Property Manager is to provide
property management and other services with respect to the
Mortgaged Properties.
"PROPERTY MANAGER" shall mean any property manager
retained by Borrower to manage one or more of the Mortgaged
Properties that constitutes an Acceptable Property Manager, or
any replacement Property Manager appointed in accordance with
Section 11.1.
"QUALIFIED SURVEY" shall mean a title survey of a
Mortgaged Property that (A) is in form and content satisfactory
to Lender, (B) is prepared by a professional and properly
licensed land surveyor satisfactory to Lender in accordance with
the 1992 Minimum Standard Detail Requirements for ALTA/ACSM Land
Title Surveys, (or such other substantially equivalent standards
as are prevalent in the state in which the applicable Mortgaged
Property is located), (C) reflects the same legal description
contained in the Qualified Title Policy relating to the
applicable Mortgaged Property, (D) includes, among other things,
a metes and bounds description of the real property comprising
part of the applicable Mortgaged Property reasonably satisfactory
to Lender and (E) satisfies the requirements of the title
insurance company issuing the Qualified Title Policy with respect
to the applicable Mortgaged Property for the omission of any
survey exception to coverage thereunder.
"QUALIFIED TITLE POLICY" shall mean an ALTA title
insurance policy (1970 unmodified form, where issuable) issued by
a title company reasonably acceptable to Lender, with reinsurance
and direct access agreements reasonably acceptable to Lender,
which title insurance policy shall (A) provide coverage in the
Loan Amount, or such portion thereof as shall be acceptable to
Lender, if "tie-in" endorsements are available, (B) insure Lender
that the applicable Mortgage creates a valid first mortgage lien
on the related Mortgaged Property, free and clear of all
exceptions from coverage other than Permitted Encumbrances and
such standard exceptions and exclusions from coverage as Lender
shall approve, (C) contain such endorsements and affirmative
coverages as Lender may reasonably request, (D) name Lender as
the insured and (E) be assignable by its terms with a transfer of
the Loan.
"RATING AGENCY" shall mean each of Standard & Poor's
Ratings Group, a division of McGraw-Hill, Inc., Moody's Investors
Service, Inc., Duff & Phelps Credit Rating Co. and Fitch IBCA,
Inc. or any other nationally-recognized statistical rating agency
selected by Lender.
"RATING CONFIRMATION" with respect to the matter in
question, shall mean that as a condition thereto the Rating
Agencies shall have confirmed in writing that (i) such
investment, replacement or action shall not result, in and of
itself, in a reduction, withdrawal or qualification of any rating
then assigned to any outstanding Certificates (if the
Securitization has occurred), or (ii) such investment,
replacement or action would not result, in and of itself, in a
reduction, withdrawal or qualification of any rating for proposed
Certificates then under consideration by the Rating Agencies (if
the Securitization has not yet occurred); provided that if the
Securitization has not taken (or as certified by Lender, will not
take) the form of a transaction rated by the Rating Agencies,
then "Rating Confirmation" shall instead mean that the matter in
question shall be subject to the prior approval of the Lender
which approval shall not be unreasonably withheld or delayed.
"RELEASE INSTRUMENTS" shall have the meaning set forth
in Section 2.4.1(c).
"REMIC" shall mean a "real estate mortgage investment
conduit" within the meaning of Section 860D of the Code.
"REMIC TRUST" shall mean a REMIC which holds the Note.
"RENTS" shall mean all rents, rent equivalents, moneys
payable as damages pursuant to a Lease or in lieu of rent or rent
equivalents, royalties (including all oil and gas or other
mineral royalties and bonuses), income, receivables, receipts,
revenues, deposits (including security, utility and other
deposits), accounts, cash, issues, profits, charges for services
rendered, and other consideration of whatever form or nature
received by or paid to or for the account of or benefit of
Borrower or its agents or employees from any and all sources
arising from or attributable to any of the Mortgaged Properties,
including, without limitation, any obligations now existing or
hereafter arising or created out of the sale, lease, sublease,
license, concession or other grant of the right of the use and
occupancy of property or rendering of services by Borrower and
proceeds, if any, from business interruption or other loss of
income insurance.
"REQUIRED RATING" shall mean the higher of (i) the
highest rating then assigned by the applicable Rating Agencies to
any of the Certificates and (ii) "A" (or its equivalent) by
Standard & Poor's Ratings Group and Moody's Investors Service,
Inc.
"REQUIRED RECORDS" shall have the meaning set forth in
Section 5.1(j)(viii).
"RESERVE ACCOUNT" shall have the meaning set forth in
Section 9.2.1.
"RESTORATION" shall have the meaning set forth in
Section 8.1.2(b).
"REVISED INTEREST RATE" shall mean the greater of
(i) the Initial Interest Rate plus two percent (2%) and (ii) the
Treasury Rate on the Anticipated Prepayment Date plus two percent
(2%).
"SCHEDULED DEFEASANCE PAYMENTS" shall have the meaning
set forth in Section 2.3.2(b).
"SECURITIES ACT" shall have the meaning set forth in
Section 5.1(j)(vii).
"SECURITIZATION" shall have the meaning set forth in
the Cooperation Agreement.
"SECURITY AGREEMENT" shall have the meaning set forth
in Section 2.3.2(a).
"SERVICER" shall mean the entity appointed by Lender to
service the Loan or its successor in interest, or if any
successor servicer is appointed pursuant to the Servicing
Agreement, such successor servicer. If at any time no entity
shall be so appointed, Servicer shall be deemed to refer to
Lender.
"SERVICING AGREEMENT" shall mean any trust, pooling and
servicing agreement or trust and servicing agreement that may be
entered into from time to time in connection with any
Securitization of the Loan.
"SINGLE PURPOSE ENTITY" shall mean a Person, other than
an individual, which is formed or organized solely for the
purpose of holding, directly, an ownership interest in the
Mortgaged Properties, does not engage in any business unrelated
to the Mortgaged Properties and the financing thereof, does not
have any assets other than the Mortgaged Properties or the
financing thereof, or any indebtedness other than as permitted by
this Agreement or the other Loan Documents, has its own separate
books and records and its own accounts, in each case which are
separate and apart from the books and records and accounts of any
other Person, and holds itself out as being a Person, separate
and apart from any other Person. If the foregoing entity is a
partnership or limited liability company, (i) its partnership
agreement or operating agreement (as applicable) must provide
that the partnership or limited liability company will dissolve
upon the withdrawal or dissolution of the last remaining general
partner or managing member (if there is a managing member), but
the partnership or limited liability company will not be
dissolved if the remaining partners or members, within ninety
(90) days, by majority vote elect to continue the partnership or
limited liability company and appoint a new general partner or
new managing member, (ii) (unless waived by the Rating Agencies)
there must be at all times at least one general partner or
managing member (as applicable) that is a Single Purpose Entity
formed solely for the purpose of acting as such general partner
or managing member, as applicable, and (iii) the partnership
agreement or operating agreement (as applicable) must provide
that the dissolution and winding up or insolvency filing of such
partnership or limited liability company requires the unanimous
consent of all general partners or members, respectively. If the
foregoing entity is a corporation, the entity's certificate of
incorporation must include provisions substantially similar to
those contained in the certificate of incorporation of the
general partner hereto and that otherwise limit its business to a
single purpose as described above in the first sentence of this
definition. Any other entity seeking to qualify as a Single
Purpose Entity shall have adopted provisions in its governing
documents that are substantively similar to the provisions
contained in the certificate of incorporation of the general
partner of the Borrower as of the date hereof and described above
for partnerships and corporations.
"SPECIAL SERVICER" shall mean the entity appointed by
Lender to specially service the Loan or its successor in
interest, or if any successor special servicer is appointed
pursuant to the Servicing Agreement, such successor servicer. If
at any time no entity shall be so appointed, Special Servicer
shall be deemed to refer to Lender.
"SPONSOR" shall mean Entertainment Properties Trust.
"STATED MATURITY DATE" shall mean July 11, 2028 (or, if
such date is not a Business Day, the immediately preceding
Business Day).
"SUCCESSOR BORROWER" shall have the meaning set forth
in Section 2.3.2(c).
"TAX, INSURANCE AND GROUND LEASE ESCROW ACCOUNT" shall
have the meaning set forth in Section 9.3.1.
"TAX, INSURANCE AND GROUND LEASE ESCROW PERIOD" shall
mean any of the following (i) any time following the occurrence
of the Anticipated Prepayment Date; (ii) any time following the
occurrence of a Default; (iii) any time following the occurrence
of a default by any Tenant under any of the Master Leases;
(iv) any time following an assignment by Master Lease Tenant of
any of the Master Leases to a Person with an unsecured credit
rating lower than "B2" by Moody's (or its equivalent by another
Rating Agency) unless the obligations of such assignee under such
Master Lease are guaranteed, pursuant to a lease guaranty
satisfactory in form and substance to Lender, by a guarantor
having an unsecured credit rating of no lower than "B2" by
Moody's (or its equivalent by another Rating Agency); (v) any
period during which the current unsecured credit rating of AEN or
any assignee of Master Tenant under any Master Lease (or, if
applicable, any guarantor of such assignee's obligations under
such Master Lease) is below "B2" by Moody's (or its equivalent by
another Rating Agency); or (vi) the occurrence of a Low Debt
Service Trigger Period.
"TAXES" shall mean all real estate and personal
property taxes, assessments, fees, taxes on rents or rentals,
water rates or sewer rents, and other governmental charges now or
hereafter levied or assessed or imposed against Borrower or any
Mortgaged Property or rents therefrom or which may become Liens.
"TENANT" shall mean any Person liable by contract or
otherwise to pay monies (including a percentage of gross income,
revenue or profits) pursuant to a Lease including, without
limitation, the Master Lease Tenant.
"TERM SHEET" shall mean that certain Term Sheet between
Sponsor and Goldman Sachs Mortgage Company dated May 4, 1998.
"TERMINATION FEE" shall have the meaning set forth in
Section 7.2(c).
"TERMINATION PAYMENT ACCOUNT" shall have the meaning
set forth in Section 7.2(c).
"THRESHOLD AMOUNT" shall mean an amount equal to or
greater than five percent (5.0%) of the allocated loan amount for
the applicable Mortgaged Property as set forth on Schedule 8
hereto.
"TRADE PAYABLES" shall mean amounts payable by Borrower
for or in respect of the operation of any portion of the
Mortgaged Property in the ordinary course and which would under
GAAP be regarded as ordinary expenses, as well as leasing
commissions and tenant improvements, including amounts payable to
suppliers, vendors, contractors, mechanics, materialmen or other
Persons providing property or services to any Mortgaged Property
or Borrower, but only to the extent payable by or on behalf of
Borrower and not by or on behalf of a Tenant.
"TREASURY CONSTANT YIELD" shall mean the arithmetic
mean of the rates published as "Treasury Constant Maturities" as
of 5:00 p.m., New York time, for the five Business Days preceding
the date on which acceleration has been declared, as shown on the
USD screen of the Telerate service, or if such service is not
available, the Bloomberg service, or if neither the Telerate nor
the Bloomberg service is available, under Section 504 in the
weekly statistical release designated H.15519) (or any successor
publication) published by the Board of Governors of the Federal
Reserve System, for "On the Run" U.S. Treasury obligations
corresponding to the Payment Date occurring on the Anticipated
Prepayment Date; if no such maturity shall so exactly correspond,
yields for the two most closely corresponding published
maturities shall be calculated pursuant to the foregoing sentence
and the Treasury Constant Yield shall be interpolated or
extrapolated (as applicable) from such yields on a straight-line
basis (rounding, in the case of relevant periods, to the nearest
month).
"TREASURY RATE" shall mean, as of the Anticipated
Prepayment Date, the linear interpolation of the bond equivalent
yields as reported in Federal Reserve Statistical Release H.15
Selected Interest Rates under the heading "U.S. Government
Securities/Treasury Constant Maturities" for the week ending
prior to the Anticipated Prepayment Date of U.S. Treasury
constant maturities with terms (one longer and one shorter) most
nearly approximating the period from such date of determination
to the Stated Maturity Date.
"UNFUNDED OBLIGATIONS" shall mean, collectively, all
unfunded obligations of Borrower with respect to the Master
Leases including, without limitation, rent, tenant improvements
and leasing commissions, as set forth on Schedule 4.
"UNFUNDED OBLIGATIONS RESERVE ACCOUNT" shall have the
meaning set forth in Section 9.2.1(b).
"UNIFORM COMMERCIAL CODE" or "UCC" shall mean the
Uniform Commercial Code as in effect in the state in which the
applicable Mortgaged Property is located.
"U.s. government securities" shall mean securities
evidencing an obligation to pay principal and interest in a full
and timely manner that are (x) direct obligations of the United
States of America for the payment of which its full faith and
credit is pledged or (y) obligations of a Person controlled or
supervised by and acting as an agency or instrumentality of and
guaranteed as a full faith and credit obligation by the United
States of America, which in either case are not callable or
redeemable at the option of the issuer thereof (including a
depository receipt issued by a bank (as defined in
Section 3(a)(2) of the Securities Act) as custodian with respect
to any such securities or a specific payment of principal of or
interest on any such securities held by such custodian for the
account of the holder of such depository receipt; provided that
(except as required by law) such custodian is not authorized to
make any deduction from the amount payable to the holder of such
depository receipt from any amount received by the custodian in
respect of the securities or the specific payment of principal of
or interest on the securities evidenced by such depository
receipt).
"YIELD MAINTENANCE PAYMENTS" shall have the meaning set
forth in Section 2.3.4.
SECTION 1.2 PRINCIPLES OF CONSTRUCTION.
All references to sections, schedules and exhibits are
to sections, schedules and exhibits in or to this Agreement
unless otherwise specified. Unless otherwise specified, the
words "hereof", "herein" and "hereunder" and words of similar
import when used in this Agreement shall refer to this Agreement
as a whole and not to any particular provision of this Agreement.
The words "includes", "including" and similar terms shall be
construed as if followed by the words "without limitation". The
terms "Mortgaged Properties" and "Mortgaged Property" shall be
construed to be followed the phrase "or any part or portion
thereof". Unless otherwise specified, all meanings attributed to
defined terms herein shall be equally applicable to both the
singular and plural forms of the terms so defined. All
accounting terms not specifically defined herein shall be
construed in accordance with GAAP, as may be modified herein. As
a matter of convenience herein, rating categories are generally
stated in the Standard & Poor's Ratings Group nomenclature, it
being understood that unless otherwise expressly stated to the
contrary, the category indicated will instead be deemed to be the
actual category of the applicable Rating Agencies; provided that
if a specified rating (or its equivalent) from the applicable
Rating Agencies is required hereunder with respect to an issuer
or a security (other than the Certificates), and Fitch IBCA,
Inc., as one of the applicable Rating Agencies in connection with
a Securitization, does not rate the issuer or security in
question, then such requirement hereunder shall nevertheless be
deemed satisfied so long as Standard & Poor's Ratings Group and
Moody's Investors Service, Inc. rate such issuer or security at
or greater than the required rating level.
II. GENERAL
SECTION 2.1 THE LOAN.
2.1.1 COMMITMENT. Subject to and upon the terms
and conditions set forth herein, including the conditions
precedent set forth in Section 3.1, Lender hereby agrees to make
the Loan to Borrower on the Closing Date, which Loan shall mature
on the Stated Maturity Date. Borrower hereby agrees to accept
the Loan on the Closing Date, subject to and upon the terms and
conditions set forth herein.
2.1.2 DISBURSEMENT TO BORROWER. Borrower may
request and receive only one disbursement hereunder in respect of
the Loan. Borrower shall receive the proceeds of the Loan on the
Closing Date, subject to the direction given by Borrower as to
the application of Loan proceeds to pay the Lender Expenses and
the Commitment Fee and to fund (i) the Unfunded Obligations
Reserve Account, (ii) the Capital Reserve Account, (iii) the
Deferred Maintenance Reserve Account and (iv) the initial Monthly
Debt Service Payment Amount, which will be escrowed with Lender
and applied on the initial Payment Date, all in accordance with
the provisions of this Agreement. Any amount borrowed and repaid
hereunder in respect of the Loan may not be reborrowed.
2.1.3 THE NOTE. The Loan shall be evidenced by the
Note, in the aggregate original principal amount of the Loan.
The Note shall bear interest at the Interest Rate. The Note shall
be subject to repayment as provided in Section 2.3, shall be
entitled to the benefits of this Agreement and shall be secured
by a Mortgage granting a first mortgage lien on each Mortgaged
Property and by certain of the other Loan Documents.
2.1.4 USE OF PROCEEDS OF LOAN. Borrower shall use
the proceeds of the Loan to (i) repay, discharge or refinance the
existing loan or loans relating to the Mortgaged Properties and
retire or refinance the existing indebtedness with respect to the
Mortgaged Properties, (ii) pay all past-due Basic Carrying Costs,
if any, in respect of the Mortgaged Properties and to pay
Operating Expenses and other budgeted and approved expenses
relating to the Mortgaged Properties, (iii) fund the Deferred
Maintenance Reserve Account, the Unfunded Obligations Reserve
Account and the Capital Reserve Account, (iv) fund the initial
payment of interest on the Loan pursuant to Section 2.2.1(a), pay
costs and expenses actually incurred in connection with the
Closing of the Loan, (v) pay Lender Expenses, (vi) pay the
Commitment Fee, (vii) pay related costs or expenses in connection
with any of the foregoing and establish escrows and reserves for
future expenses and any transaction contemplated by any Loan
Document, (viii) pay any unpaid purchase price due to Sponsor in
connection with the acquisition by Borrower of any Mortgaged
Property and (ix) pay any remaining proceeds to Sponsor by
dividend or other distribution, subject to compliance by Borrower
with the representations, warranties and covenants set forth in
Section 4.1(cc).
SECTION 2.2 PRINCIPAL AND INTEREST.
2.2.1 PRINCIPAL AND INTEREST.
(a) Subject to Section 2.2.1(d), from the date hereof
to but excluding the Maturity Date, Borrower shall pay interest
on the outstanding principal balance of the Loan at the
applicable Interest Rate computed in accordance with
Section 2.5.2 (it being acknowledged that from and after the
Anticipated Prepayment Date, interest on the Note shall accrue at
the Revised Interest Rate). On the date hereof, Borrower shall
make a payment of interest on the Loan at the Initial Interest
Rate for the period from and including the date hereof to but
excluding the Payment Date on July 11, 1998, which payment of
interest shall be deposited in the Deposit Account and applied on
the initial Payment Date.
(b) Commencing with the Payment Date on August 11,
1998 and on each and every Payment Date thereafter through and
including the Maturity Date, the principal amount of the Loan and
interest thereon at the Initial Interest Rate shall be payable in
arrears in monthly installments of (i) principal based on a
thirty (30) year amortization schedule and (ii) interest at such
rate as computed in accordance with Section 2.5.2 (the "MONTHLY
DEBT SERVICE PAYMENT AMOUNT"). Unless otherwise elected by
Lender, such payments shall be applied first to the payment of
interest with the remainder of such payment being applied to the
reduction of the outstanding principal balance of the Note.
(c) From and after the Anticipated Prepayment Date, in
addition to the principal to be repaid pursuant to
Section 2.2.1(b), Borrower shall repay on each Payment Date the
principal of the Loan to the extent provided for under
Section 2.2.1(e)(7).
(d) From and after the Anticipated Prepayment Date,
Additional Interest shall be due and payable in accordance with
the terms of Section 2.2.1(e)(8) and, to the extent unpaid by
reason of insufficient Receipts, shall be deferred, be added to
the Debt and, to the extent permitted by applicable law, accrue
interest at the Revised Interest Rate.
(e) Commencing on the Anticipated Prepayment Date and
continuing on each Payment Date thereafter until the entire Debt
has been paid in full, any and all cash receipts with respect to
the Mortgaged Properties from whatever source (including the
items referred to in the definition of Operating Income)
(collectively, "RECEIPTS"), whether the same are deposited into
the Deposit Account or otherwise received by a Borrower, the
Property Manager or Lender during the immediately preceding
calendar month, shall be applied as follows in the following
order of priority:
(1) First, payments to the Tax, Insurance and
Ground Lease Escrow Account in the amount, if any, required
to be reserved pursuant to Section 9.3;
(2) Second, payments to Lender to pay the Monthly
Debt Service Payment Amount, which amount shall immediately
be available and payable to Lender;
(3) Third, to Borrower in an amount equal to the
Operating Expenses, approved by Lender, if applicable, in
the Annual Budget for the month immediately prior to the
month in which such Payment Date occurs; provided that
Borrower shall have delivered to Lender an Officer's
Certificate, dated no less than five (5) days prior to such
Payment Date, that there is not outstanding for more than
sixty (60) days any amounts claimed by any creditor to be
due and owing from Borrower (except for claims Borrower is
in good faith contesting and the payment for which Borrower
has escrowed with Lender), and that the amounts disbursed to
Borrower pursuant to this clause (3) shall be used by
Borrower solely to pay its creditors; provided further that
Borrower shall have the right, by notice given to Lender not
later than the sixth (6th) Business Day prior to the Payment
Date, to request an additional amount to pay Operating
Expenses in excess of the budgeted amount with respect to
the Mortgaged Property, up to one hundred five percent
(105%) of the budgeted amount on a cumulative year-to-date
basis (less any amounts previously received by Borrower
pursuant to this proviso in any prior month during such
year), but in no event shall such additional amount exceed
more than fifteen percent (15%) of such month's budgeted
amount for Operating Expenses; such notice by Borrower shall
be accompanied by an Officer's Certificate certifying that
the additional amount requested is required to pay Operating
Expenses in excess of those budgeted;
(4) Fourth, to the Capital Reserve Account, in
accordance with the provisions of Section 9.4.1(5);
(5) Fifth, payments for extraordinary Capital
Expenditures approved in writing by Lender;
(6) Sixth, payments to Lender to prepay the
outstanding principal of the Note until such principal
amount is paid in full;
(7) Seventh, payments to Lender to be applied to
the payment of accrued and unpaid Additional Interest;
(8) Eighth, payments to Lender to pay any
interest at the Default Rate due and owing under the Loan
Documents and any other amounts due and owing under the Loan
Documents; and
(9) Ninth, payments to the Borrower or any Person
lawfully entitled thereto.
(f) Notwithstanding anything herein to the contrary,
the failure of Borrower to make all of the payments required
under clauses (1) through (4) above in full from and after the
Anticipated Prepayment Date shall constitute an Event of Default.
However, the failure of Borrower to pay any amounts required to
be paid under clauses (5) through (9) above, including Additional
Interest on a Payment Date, as a result of insufficient Receipts
for such payment shall not in itself constitute a Default or
Event of Default hereunder. All accrued and unpaid Additional
Interest shall nonetheless be due and payable on the Maturity
Date.
(g) Except as provided in clause (e) above and unless
otherwise expressly provided herein or elected by Lender,
payments made by Borrower in respect of the principal and
interest of the Loan shall be applied first to the payment of
interest with the remainder of such payment being applied to the
reduction of the outstanding principal balance of the Note.
2.2.2 DEFAULT RATE. If an Event of Default shall
have occurred and is continuing (including the failure of
Borrower to make a payment of principal or interest on the
Payment Date therefor, regardless of the grace period provided
under Section 10.1(c) but subject to Section 2.21(f), Borrower
shall pay interest at the Default Rate on the outstanding amount
of the Loan together with any due but unpaid interest thereon,
upon demand from time to time (which interest is payable both
before and after Lender has obtained a judgment with respect to
the Loan), to the extent permitted by applicable law. Payment or
acceptance of the increased rates provided for in this subsection
is not a permitted alternative to timely payment or full
performance by Borrower and shall not constitute a waiver of any
Default or Event of Default or an amendment to this Agreement or
any other Loan Document and shall not otherwise prejudice or
limit any rights or remedies of Lender.
SECTION 2.3 LOAN REPAYMENT AND DEFEASANCE.
2.3.1 REPAYMENT. Borrower shall repay any
outstanding principal indebtedness of the Loan in full on the
Maturity Date of the Loan, together with all accrued and unpaid
interest thereon to (but excluding) the date of repayment and all
other amounts due to Lender in connection with the Loan. Other
than as set forth in Section 2.3.3 below, or as required or
permitted pursuant hereto in connection with a Casualty or
Condemnation, Borrower shall have no right to prepay all or any
portion of Loan.
2.3.2 VOLUNTARY DEFEASANCE OF THE NOTE.
(a) After the Optional Defeasance Date and subject to
the terms and conditions set forth in this Section 2.3.2,
Borrower may defease all (but not less than all) of the Loan
evidenced by the Note with U.S. Government Securities (a
"DEFEASANCE"). Defeasance shall be subject, in each case, to the
satisfaction of the following conditions precedent:
(i) Borrower shall provide not less than thirty
(30) days' prior written notice to Lender specifying the
date (the "DEFEASANCE DATE") on which the Defeasance Deposit
is to be made and on which the Defeasance is to occur, as
well as the anticipated outstanding principal balance of the
Note as of the Defeasance Date.
(ii) Borrower shall pay to Lender all accrued and
unpaid interest on the principal balance of the Note to but
not including the Defeasance Date (and if the Defeasance
Date is not a Payment Date, the Defeasance Deposit shall
take into account the interest that would have accrued on
the Note to but not including the next Payment Date).
(iii) Borrower shall pay to Lender all other
sums, not including scheduled interest or principal
payments, then due under the Note, this Agreement, each
Mortgage and the other Loan Documents.
(iv) No Event of Default shall exist on the
Defeasance Date.
(v) Borrower shall pay to Lender the required
Defeasance Deposit for the Defeasance.
(vi) Borrower shall execute and deliver a security
agreement, in form and substance satisfactory to Lender (in
its reasonable judgment), creating a first priority lien on
the Defeasance Deposit and the U.S. Government Securities
purchased with the Defeasance Deposit in accordance with the
provisions of this Section 2.3.2 (the "SECURITY AGREEMENT").
(vii) Borrower shall deliver to Lender an
opinion of counsel for Borrower in form and substance
satisfactory to Lender in its sole discretion stating, among
other things, that Lender has a perfected first priority
security interest in the U.S. Government Securities
purchased with the Defeasance Deposit.
(viii) If a Securitization has occurred,
Borrower shall deliver to Lender an opinion of counsel for
Borrower in form and substance satisfactory to Lender and
the applicable Rating Agencies that the transfer of the
Defeasance Deposit in exchange for a release of the Liens on
the Mortgaged Properties (a) will not result in a deemed
exchange of the Certificates pursuant to Section 1001 of the
Code, (b) will not, by itself, adversely affect the status
of the Certificates as indebtedness for federal income tax
purposes and (c) will not adversely affect the status of the
entity holding the Note as a REMIC (assuming for such
purposes that such entity otherwise qualifies as a REMIC and
that the Note was transferred to such REMIC not later than
two years prior to the Defeasance Date);
(ix) If required by the applicable Rating
Agencies, Borrower shall also deliver or cause to be
delivered a non-consolidation opinion with respect to the
Successor Borrower, if any, in form and substance
satisfactory to Lender and the applicable Rating Agencies.
(x) Borrower shall deliver to Lender an Officer's
Certificate certifying that the requirements set forth in
this Section 2.3.2(a) have been satisfied.
(xi) Borrower shall deliver such other
certificates, documents or instruments as Lender may
reasonably request.
(xii) Borrower shall pay all reasonable costs
and expenses of Lender incurred in connection with the
Defeasance, including any costs and expenses associated with
the release of the Lien of each Mortgage as provided in
Section 2.4 and reasonable attorneys' fees and expenses.
(xiii) Borrower shall deliver to Lender a
confirmation, in form and substance reasonably satisfactory
to Lender, by a nationally recognized independent certified
public accounting firm, that the Defeasance Deposit is
sufficient to pay all Scheduled Defeasance Payments and
other amounts required to be paid by Borrower hereunder in
connection with the proposed Defeasance.
(xiv) Borrower shall deliver to Lender a
Ratings Confirmation with respect to such Defeasance.
(b) In connection with the conditions set forth above
in Section 2.3.2(a), Lender shall use the Defeasance Deposit in
accordance with Borrower's express instructions to purchase U.S.
Government Securities which provide payments on or prior to, but
as close as possible to, all successive Payment Dates after the
Defeasance Date and in amounts equal to the Debt Service due on
such dates under the Note (the "SCHEDULED DEFEASANCE PAYMENTS"),
provided that for purposes of the foregoing, the principal
portion of the Scheduled Defeasance Payment on the Anticipated
Prepayment Date shall be deemed to include the entire scheduled
outstanding principal of the Loan as of such Payment Date.
Borrower, pursuant to the Security Agreement or other appropriate
document, shall irrevocably authorize and direct that the
payments received from the U.S. Government Securities may be made
directly to Lender and applied to satisfy the obligations of
Borrower under the Note. Any portion of the Defeasance Deposit in
excess of the amount necessary to purchase the U.S. Government
Securities required by this Section 2.3.2 and satisfy Borrower's
obligations under Section 2.3 shall be remitted to Borrower.
(c) Upon compliance with the requirements of this
Section 2.3.2:
(i) the pledged U.S. Government Securities shall
be the sole source of collateral securing the Note;
(ii) if requested by Borrower, Lender shall
designate a successor entity (the "SUCCESSOR BORROWER") to
which Borrower shall transfer and assign all obligations,
rights and duties under and to the Note and the pledged U.S.
Government Securities (and the obligation of the Lender
named herein to designate a Successor Borrower shall be
retained by such Person notwithstanding the sale or transfer
of the Loan unless such obligation is specifically assumed
by a transferee of the Loan). Successor Borrower shall
assume the obligations under the Note and the Security
Agreement and Borrower shall be relieved of all of its
obligations thereunder and released from all of its
obligations in respect of the Loan other than (i) Article IV
of this Agreement, (ii) Sections 12.3 through 12.13 and
12.15 through 12.23 of this Agreement, (iii) the
Environmental Indemnity and (iv) the Cooperation Agreement.
Borrower shall pay One Thousand and No/100 Dollars ($1,000)
to any such Successor Borrower as consideration for assuming
the obligations under the Note and the Security Agreement.
Notwithstanding anything herein or in the Loan Documents
that may be construed to the contrary, no other assumption
fee shall be payable to the Successor Borrower upon or in
consideration for its assumption of the Note and the
Security Agreement in accordance with this
Section 2.3.2.(c), but Borrower shall pay all out-of-pocket
costs and expenses incurred by Lender, including Lender's
reasonable attorneys' fees and expenses, incurred in
connection therewith.
2.3.3 REPAYMENT AFTER ANTICIPATED PREPAYMENT DATE.
Borrower shall have the right, on not less than twenty (20) days'
notice, to prepay the Loan on any Payment Date, in whole or in
part, at any time and from time to time, from and after the
Anticipated Prepayment Date without penalty or premium.
2.3.4 REPAYMENT UPON DEFAULT. If all or any part
of the principal amount of the Loan is prepaid upon acceleration
of the Loan following the occurrence of an Event of Default at
any time prior to the Anticipated Prepayment Date, Borrower shall
be required to make such payments (the "YIELD MAINTENANCE
PAYMENTS") in an amount equal to the greater of (a) one percent
(1%) of the outstanding principal balance of the Loan immediately
prior to such prepayment or (b) the excess, if any, of (i) the
sum of (A) the aggregate respective present values of all
scheduled interest payments in respect of the Loan (or the
portion of all such interest payments corresponding to the
portion of the principal of the Loan to be prepaid upon
acceleration) for the period from the date of such prepayment
upon acceleration to (and including) the Anticipated Prepayment
Date, discounted monthly at a rate equal to the Treasury Constant
Yield and based on a 360-day year of twelve 30-day months and
(B) the aggregate respective present values of all scheduled
principal payments in respect of the Loan (or the then unpaid
portion thereof to be prepaid upon acceleration), assuming for
these purposes that the entire outstanding scheduled principal
amount of the Loan as of the Anticipated Prepayment Date were to
be paid in full on such Payment Date (rather than over the period
ending on the Stated Maturity Date), discounted monthly at a rate
equal to the Treasury Constant Yield and based on a 360-day year
of twelve 30-day months over (ii) the then current outstanding
principal amount of the Loan (or the then unpaid portion thereof
to be prepaid upon acceleration). If the Yield Maintenance
Payments as calculated pursuant to this Section 2.3.4 would not
be a positive number, the Yield Maintenance Payments are zero.
For purposes of this Section 2.3.4, the amount of the Loan on the
date of prepayment shall be determined after giving effect to any
payment of scheduled amortization made on such date. The
determination of the Yield Maintenance Premium by Lender shall be
conclusive and binding on Borrower in the absence of manifest
error.
2.3.5 REPAYMENT AFTER CASUALTY OR CONDEMNATION.
Borrower shall have the right to prepay any outstanding principal
balance of the Loan in whole or in part as required or permitted
in connection with a Casualty or Condemnation pursuant to this
Agreement without penalty or premium.
SECTION 2.4 RELEASE OF THE MORTGAGED PROPERTIES.
Except as set forth in this Section 2.4, no repayment,
prepayment or Defeasance of all or any portion of the Note shall
cause, give rise to a right to require, or otherwise result in,
the release of the Liens of the Mortgages on the Mortgaged
Properties.
2.4.1 RELEASE OF THE MORTGAGED PROPERTIES.
(a) If Borrower has elected Defeasance, and the
requirements of Section 2.3.2 have been satisfied, the Mortgaged
Properties shall be released from the Liens of the Mortgages and
the U.S. Government Securities, pledged pursuant to the Security
Agreement, shall be the sole source of collateral securing the
Note and Borrower shall be released from its obligations under
the Loan Documents (other than the Environmental Indemnity and
the Cooperation Agreement, which shall terminate in accordance
with their terms and other than as specified in
Section 2.3.2(c)(ii)) to the extent such obligations relate to
the Mortgaged Properties; provided, however, that Borrower shall
not be released from any indemnification obligations that relate
to the Mortgaged Properties and all such indemnification
obligations shall survive.
(b) In connection with the release of the Lien
contemplated in Section 2.4.1(a), Borrower shall submit to
Lender, not less than twenty (20) days prior to the Defeasance
Date, a release of Liens (and related Loan Documents) for the
Mortgaged Properties (for execution by Lender) in a form
appropriate in the applicable state and otherwise satisfactory to
Lender in its reasonable discretion and all other documentation
Lender reasonably requires to be delivered by Borrower in
connection with such release (collectively, "RELEASE
INSTRUMENTS"), together with an Officer's Certificate certifying
that such documentation (i) is in compliance with all Legal
Requirements, and (ii) will effect such releases in accordance
with the terms of this Agreement. Lender shall execute such
Release Instruments on or prior to the Defeasance Date if all of
the conditions herein to such release of Lien have been
satisfied.
2.4.2 FURTHER ASSURANCES. To the extent any
Release Instrument executed and delivered under Section 2.4.1(b)
is insufficient to effect the release to be effected in
accordance with the terms hereof, Lender shall remain obligated
to execute and deliver, at Borrower's expense, such further
Release Instruments as Borrower may reasonably request and submit
to Lender.
2.4.3 RELEASE ON PAYMENT IN FULL. Lender shall,
upon the written request and at the expense of Borrower, upon
payment in full of all of the Debt in accordance with the terms
of the Loan Documents, release the Lien of each Mortgage and
other Loan Documents not theretofore released.
SECTION 2.5 PAYMENTS AND COMPUTATIONS.
2.5.1 MAKING OF PAYMENTS. Each payment by Borrower
hereunder or under the Note shall be made in funds settled
through the New York Clearing House Interbank Payments System or
other funds immediately available to Lender by 12:30 p.m. New
York City time, on the date such payment is due, to Lender by
deposit to such account as Lender may designate by written notice
to Borrower. Except as otherwise provided herein, whenever any
payment hereunder or under the Note shall be stated to be due on
a day which is not a Business Day, such payment shall be made on
the immediately preceding Business Day.
2.5.2 COMPUTATIONS. Interest with respect to each
Payment Date, will be computed based on the actual number of days
in the related Interest Accrual Period and a 360-day year.
2.5.3 LOAN ACCOUNT. Lender shall maintain a loan
account on its books in the name of Borrower in which will be
recorded the Loan and all payments and prepayments of principal
of and interest on the Loan (provided that any error in such loan
account shall not in any manner affect the obligations of
Borrower to repay the Loan in accordance with the terms of this
Agreement, the Note and the other Loan Documents). In addition
to the rights of Borrower to have informational computer access
to the Deposit Account, the Tax, Insurance and Ground Lease
Escrow Account and any Reserve Account, Lender shall, upon the
written request of Borrower, not more often than monthly, provide
such information as it has in its possession regarding the
records maintained in accordance with the first sentence hereof
and information regarding funds on deposit in the Deposit
Account. In addition, Lender shall, or shall direct Servicer, if
any, to provide to Borrower, within five (5) Business Days of the
end of each month, monthly reports showing deposits into and
disbursements, transfers or credits, as the case may be, from the
Tax, Insurance and Ground Lease Escrow Account and each Reserve
Account, and setting forth, as of the end of each month, a
schedule of the Permitted Investments contained in each such
account and schedules of all transactions involving Permitted
Investments during the month. On the third Business Day
preceding each Payment Date, Lender or Servicer, if any, shall
notify Borrower (by telephone with confirmation by facsimile) if
there is any insufficiency in the Deposit Account of funds
required to make all of the transfers described in Sections
9.4.1(1) through (5) on such Payment Date, and the amount of such
insufficiency, in each case as of the opening of business as of
such third Business Day, provided that the failure to provide
such notice shall not excuse Borrower's performance of any of its
obligations hereunder or under any other Loan Document.
III. CONDITIONS PRECEDENT
SECTION 3.1 CONDITIONS PRECEDENT TO THE LOAN.
The obligation of Lender to make the Loan is subject to
the fulfillment by Borrower or waiver by Lender of the following
conditions precedent no later than the Closing Date:
(a) Representation and Warranties; Compliance with Conditions.
The representations and warranties of Borrower contained in this
Agreement or any other Loan Document shall be true and correct in
all material respects on and as of the Closing Date, and no
Default or Event of Default shall have occurred and be
continuing; and Borrower shall be in compliance in all material
respects with all terms and conditions set forth in this
Agreement and in each other Loan Document on its part to be
observed or performed.
(b) Loan Agreement and Note. Lender shall have
received a copy of this Agreement and the Note, in each case,
duly executed and delivered on behalf of Borrower.
(c) Delivery of Loan Documents; Title Insurance; Reports; Leases.
(i) Mortgages, Assignments of Agreements. Lender
shall have received from Borrower fully executed and
acknowledged counterparts of each Mortgage and each
Assignment of Leases relating to each Mortgaged Property and
evidence that a counterpart of each such Mortgage and
Assignment of Leases has been delivered to the title company
for recording, in the reasonable judgment of Lender, so as
to effectively create upon such recording a valid and
enforceable Lien upon the applicable Mortgaged Property, of
first lien priority, in favor of Lender (or a deed trustee
if required or desired under local law), subject only to the
Permitted Encumbrances and such other Liens as are permitted
pursuant to the Loan Documents. Lender shall have also
received from Borrower fully executed counterparts of the
Environmental Indemnity, the other Loan Documents and
appropriate UCC-1 financing statements.
(ii) Title Insurance. Lender shall have received
a Qualified Title Policy with respect to each Mortgaged
Property and evidence that all premiums in respect thereof
have been paid.
(iii) Survey. Lender shall have received a
Qualified Survey for each Mortgaged Property.
(iv) Insurance. Lender shall have received valid
ACCORD 27 certificates of insurance, or their equivalent,
for the Policies of insurance required hereunder,
satisfactory to Lender in its reasonable discretion, and
evidence of the payment of all premiums then due and payable
for the existing policy period.
(v) Environmental Reports. Lender shall have
received a Phase I environmental report (and, if
recommended, a Phase II environmental report) in respect of
each Mortgaged Property that is satisfactory to Lender.
(vi) Zoning. Lender shall have received, at
Lender's option, letters or other evidence with respect to
each Mortgaged Property from the appropriate authorities (or
other Persons) concerning applicable zoning and building
laws, or zoning endorsements in the applicable Qualified
Title Policy, if available.
(vii) Encumbrances. Borrower shall have taken
or caused to be taken such actions in such a manner so that
Lender has a valid and perfected first priority Lien as of
the Closing Date with respect to the Mortgage on the
applicable Mortgaged Property, subject only to the Permitted
Encumbrances and such other Liens as are permitted pursuant
to the Loan Documents, and Lender shall have received
satisfactory evidence thereof.
(viii) Engineering and Seismic Reports. Lender
shall have received an engineering report satisfactory to
Lender (including a report with respect to compliance with
all Legal Requirements (including, without limitation, the
Americans with Disabilities Act)) in respect of each
Mortgaged Property. Lender shall have received a seismic
report with respect to each Mortgaged Property located in an
area having seismic activity, which seismic report shall
include the Probable Maximum Loss calculation and shall be
satisfactory to Lender.
(ix) Material Agreements. Lender shall have
received true and complete copies of all Material
Agreements.
(x) Leases and Operating Agreements. Lender
shall have received true and complete copies of any other
Leases. Lender shall have received true and complete copies
of all Operating Agreements and all Ground Leases.
(xi) Capital Expenditures. Lender shall have
received Schedule 3 detailing (a) any Capital Expenditures
by Sponsor or Borrower at the Mortgaged Properties for 1995,
1996, 1997 and the year-to-date period ended June 15, 1998
satisfactory to Lender and (b) to the extent available to
Borrower under the Master Leases, all capital expenditures
by Tenant at the Mortgaged Properties for 1995, 1996, 1997
and the year-to-date period ended June 15, 1998.
(d) Related Documents. Each additional document not
specifically referenced herein, but relating to the transactions
contemplated herein, shall have been duly authorized, executed
and delivered by all parties thereto and Lender shall have
received and approved certified copies thereof.
(e) Delivery of Organizational Documents and Qualifications.
On or before the Closing Date, Borrower shall deliver or cause to be
delivered to Lender (i) copies certified by an officer of the
members of Borrower of all organizational documentation related
to Borrower and/or the formation, structure, existence, good
standing and/or qualification to do business as Lender may
request in its sole discretion, including good standing
certificates, qualifications to do business in the appropriate
jurisdictions, resolutions authorizing the entering into of the
Loan and incumbency certificates as may be requested by Lender.
(f) Opinions of Borrower's Counsel. Lender shall have
received legal opinions of Borrower's counsel (i) with respect to
the non-consolidation of Borrower in the event of an insolvency
proceeding being brought against, or the bankruptcy of certain
beneficial owners of Borrower including Sponsor and (ii) with
respect to due execution, delivery, authority, enforceability of
the Loan Documents and such other matters as Lender may require,
all such opinions in form, scope and substance satisfactory to
Lender and Lender's counsel in their sole discretion.
(g) Budgets. Borrower shall have delivered the Annual
Budget for the Mortgaged Properties for the balance of the
current Fiscal Year.
(h) Completion of Proceedings. All corporate and
other proceedings taken or to be taken in connection with the
transactions contemplated by this Agreement and other Loan
Documents and all documents incidental thereto shall be
satisfactory in form and substance to Lender, and Lender shall
have received all such counterpart originals or certified copies
of such documents as Lender may reasonably request.
(i) Estoppels. Lender shall have received estoppel
letters from the Master Lease Tenant with respect to each of the
Master Leases and from any other Tenants, in each case in form
and substance satisfactory to Lender.
(j) Photographs. If Lender shall have so requested,
Lender shall have received photographs of the interior and
exterior of each Mortgaged Property.
(k) No Material Adverse Change. Lender shall be
satisfied that as of the Closing Date, there shall be no material
adverse change or development since the date of the Term Sheet in
the financial condition or operations of the Borrower, the
Mortgaged Properties or any Property Manager.
(l) Ground Lessor Estoppel. Lender shall have
received an executed estoppel letter from the lessor under each
Ground Lease, which shall be in form and substance satisfactory
to Lender.
(m) Operating Agreement Estoppels. Lender shall have
received an executed estoppel letter from each party to an
Operating Agreement which is required to deliver an estoppel
pursuant to such Operating Agreement, which shall be in form and
substance satisfactory to Lender.
(n) Appraisals. Lender shall have received an
appraisal for the Mortgaged Properties satisfactory to Lender
evidencing that the aggregate principal amount of the Loan is not
more than sixty-five percent (65%) of the appraised value of the
Mortgaged Properties as of the date hereof.
(o) Financial Statements. Borrower shall provide,
with respect to the Mortgaged Properties, unaudited financial
statements for 1995 and 1996 (if available) and 1997 and
unaudited operating statements for the year-to-date period ended
May 30, 1998, which statements (i) shall not be required to
include footnotes, (ii) shall be subject to customary year-end
adjustments, (iii) shall be otherwise satisfactory to Lender and
(iv) shall be accompanied by an Officer's Certificate certifying
that each such financial statement presents fairly the financial
condition or operating results, as applicable, of the Mortgaged
Property in question and has been prepared in accordance with
GAAP, as applicable. Borrower also shall provide a comparison of
such year-to-date operating statements to the Annual Budgets for
the year-to-date period ended May 30, 1998. The operating
statements for the year-to-date period ended May 30, 1998 shall
reflect a Net Operating Income for the twelve (12) month period
ending on the last day of the month immediately preceding the
date of such operating statements that results in a Debt Service
Coverage Ratio (as calculated by Lender) for such period of not
less than 1.45:1.0, assuming a loan constant equal to 10.48%.
(p) Deposit Account Agreement. Lender shall have
received the Deposit Account Agreement duly executed by Borrower
and the depository institutions party thereto and (ii) evidence
that the Tenant Direction Letter (as defined in the Deposit
Account Agreement) has been delivered to the Master Lease Tenant
with respect to each Master Lease or that the Tenant Direction
Letter will be so delivered simultaneously with the closing of
the Loan.
(q) Cooperation Agreement. Lender shall have received
the Cooperation Agreement duly executed by Borrower and Sponsor.
(r) Subordination and Attornment Agreements. Lender
shall have received Subordination and Attornment Agreements from
each Master Lease Tenant, in form and substance satisfactory to
Lender.
(s) Conversion Analysis. Lender shall have received
Borrower's written analysis of the conversion of the Mortgaged
Properties from "megaplex" movie theaters to alternate uses for
conversion costs of approximately Thirty and No/100 Dollars
($30) per square foot, which analysis shall be in form and
substance satisfactory to Lender.
IV. REPRESENTATIONS AND WARRANTIES
SECTION 4.1 BORROWER REPRESENTATIONS.
Borrower represents and warrants (except as may be set
forth on Schedule 5 with specific reference to the subsection in
this Section 4.1 in question) that, as of the Closing Date:
(a) Organization. It has been duly organized and is
validly existing and in good standing with requisite corporate
power and authority to own its properties and to transact the
businesses in which it is now engaged. It is duly qualified to
do business and is in good standing in each jurisdiction where it
is required to be so qualified in connection with its properties,
businesses and operations. It possesses all rights, licenses,
permits and authorizations, governmental or otherwise, necessary
to entitle it to own its properties and to transact the
businesses in which it is now engaged, and its sole business has
been and is the ownership, management and operation of the
Mortgaged Properties.
(b) Proceedings. It has taken all necessary action to
authorize the execution, delivery and performance of this
Agreement and the other Loan Documents to which it is a party.
This Agreement and such other Loan Documents have been duly
executed and delivered by it and constitute legal, valid and
binding obligations of Borrower enforceable against Borrower in
accordance with their respective terms, subject to applicable
bankruptcy, insolvency and similar laws affecting rights of
creditors generally and general principles of equity (regardless
of whether enforcement is sought in a proceeding in equity or at
law) without offset, defense or counterclaim.
(c) No Conflicts. The execution, delivery and
performance of this Agreement and the other Loan Documents by it
will not conflict with or result in a material breach of any of
the terms or provisions of, or constitute a default under, or
result in the creation or imposition of any lien, charge or
encumbrance (other than pursuant to the Loan Documents) upon any
of its properties or assets pursuant to the terms of any
indenture, mortgage, deed of trust, loan agreement, partnership
agreement or other Material Agreement to which it is a party or
to which any of its properties or assets is subject, nor will
such action result in any violation of the provisions of any
statute or any order, rule or regulation of any court or
governmental agency or body having jurisdiction over it or any of
its properties or assets, and any consent, approval,
authorization, order, registration or qualification of or with
any court or any such regulatory authority or other governmental
agency or body required for the execution, delivery and
performance by it of this Agreement or any other Loan Documents
to which it is a party has been obtained and is in full force and
effect in all material respects.
(d) Litigation. There are no actions, suits or
proceedings at law or in equity by or before any Governmental
Authority or other agency now pending and to the best of its
knowledge there are no such actions, suits or proceedings
threatened against or affecting it or any Mortgaged Property,
which actions, suits or proceedings, alone or in the aggregate,
if determined against it or any Mortgaged Property, are likely to
materially adversely affect the condition (financial or
otherwise) or business of Borrower or the condition or ownership
of the Mortgaged Property or performance of its obligations under
the Loan Documents.
(e) Agreements. It is not a party to any Material
Agreement which is likely to materially adversely affect it or
any Mortgaged Property, or its business, properties or assets,
operations or condition, financial or otherwise. It is not in
default in any material respect in the performance, observance or
fulfillment of any of the obligations, covenants or conditions
contained in any Permitted Encumbrance or any other Material
Agreement or instrument to which it is a party or by which it or
any Mortgaged Property is bound.
(f) Title. It has good, marketable and indefeasible
title in fee to the real property comprising part of any
Mortgaged Property (except for each of the Mortgaged Properties
that are subject to the Ground Leases, as to which Borrower has
good and marketable title to the leasehold estate therein), and
good and marketable title to the balance of the Mortgaged
Properties, in each case free and clear of all Liens whatsoever
except the Permitted Encumbrances, such other Liens as are
permitted pursuant to the Loan Documents and the Liens created by
the Loan Documents. Each Mortgage, when properly recorded in the
appropriate records, together with any Uniform Commercial Code
financing statements required to be filed in connection
therewith, will create (i) a valid, perfected first priority lien
on the applicable Mortgaged Property or Borrower's leasehold
interest therein, as the case may be, subject only to Permitted
Encumbrances and the Liens created by the Loan Documents and
(ii) perfected security interests in and to, and perfected
collateral assignments of, all personalty (including the Leases),
all in accordance with the terms thereof, in each case subject
only to any applicable Permitted Encumbrances, such other Liens
as are permitted pursuant to the Loan Documents and the Liens
created or permitted by the Loan Documents. The Permitted
Encumbrances do not materially adversely affect or interfere with
the value, or current use or operation, of any Mortgaged
Property, or the security intended to be provided by the Mortgage
or Borrower's ability to repay the Note or any other Loan
Document in accordance with the terms of the Loan Documents.
Except as indicated in and insured over by a Qualified Title
Insurance Policy, there are no claims for payment for work, labor
or materials affecting any Mortgaged Property which are or may
become a lien prior to, or of equal priority with, the Liens
created by the Loan Document (other than mechanics or
materialmen's liens for work or materials performed or supplied
the costs for which are not yet past due or which are being
contested in accordance with Section 5.1(b)(ii)). Nothing in
this paragraph may be relied on by the title insurance company
issuing a policy covering any Mortgaged Property. Each
Assignment of Leases, when properly recorded in the appropriate
records, creates a valid first priority assignment of, or a valid
first priority security interest in, certain rights under the
related Leases, subject only to a license granted to Borrower to
exercise certain rights and to perform certain obligations of the
lessor under such Leases, including the right to operate the
Mortgaged Properties. No Person other than Borrower owns any
interest in any payments due under such Leases that is superior
to or of equal priority with the Lender's interest therein.
(g) 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 its assets or property, and it has no knowledge of any Person
contemplating the filing of any such petition against it.
(h) Full and Accurate Disclosure. No information
contained in this Agreement, the other Loan Documents, or any
written statement furnished by or on behalf of the Borrower
(other than information provided by or on behalf of AEN or the
Master Lease Tenant) pursuant to the terms of this Agreement
contains any untrue statement of a material fact or omits to
state a material fact necessary to make the statements contained
herein or therein not misleading in light of the circumstances
under which they were made. There is no material fact or
circumstance presently known to it which has not been disclosed
to Lender and which materially adversely affects, or is likely to
materially adversely affect, any of the Mortgaged Properties or
its business, operations or condition (financial or otherwise).
To the best knowledge of Borrower, no written information
provided by or on behalf of AEN or the Master Lease Tenant
pursuant to the terms of this Agreement contains any untrue
statement of a material fact or omits to state a material fact
necessary to make the statements contained herein or therein not
misleading in light of the circumstances under which they were
made.
(i) No Plan Assets. Borrower is not an "employee
benefit plan," as defined in Section 3(3) of the Employee
Retirement Income Security Act of 1974, as amended ("ERISA"),
subject to Title I of ERISA (an "EMPLOYEE BENEFIT PLAN"), and
none of its assets constitutes or will constitute "plan assets"
of one or more such plans within the meaning of 29 C.F.R.
Section 2510.3-101.
(j) Compliance. Borrower and each Mortgaged Property
and the use thereof comply in all material respects with all
applicable Legal Requirements, including building and zoning
ordinances and codes. None of the Mortgaged Properties is a non-
conforming use or legal non-conforming use (except to the extent
that the same would not affect in any material respect the
operation, maintenance, value or use of the Mortgaged Properties
or the ability to reconstruct the Mortgaged Properties).
Borrower is not in default or violation of any order, writ,
injunction, decree or demand of any Governmental Authority, the
violation of which could materially adversely affect any
Mortgaged Property or the condition (financial or otherwise) or
business of Borrower. There has not been committed by or on
behalf of it or, to the best of its knowledge, any other person
in occupancy of or involved with the operation or use of any
Mortgaged Property any act or omission affording the federal
government or any state or local government the right of
forfeiture as against any Mortgaged Property or any part thereof
or any monies paid in performance of its obligations under any of
the Loan Documents. It hereby covenants and agrees not to
commit, and to use all reasonable efforts not to permit or suffer
to exist any act or omission affording such right of forfeiture.
(k) Contracts. Except for the Permitted Encumbrances
and except as set forth on Schedule 5, there are no contracts
with terms exceeding one year and requiring payments by Borrower
per annum in excess of Fifty Thousand and No/100 Dollars
($50,000) affecting any Mortgaged Property which are not
terminable on one month's notice or less without cause and
without material penalty or premium. Each contract affecting the
Mortgaged Properties has been entered into at arm's length in the
ordinary course of business by or on behalf of Borrower and
provides for the payment of fees in amounts and upon terms not
less favorable to Borrower than market rates and terms.
(l) Financial Information. All financial data
(including the financial statements delivered pursuant to
Section 3.1) prepared by or on behalf of Sponsor and/or Borrower
and delivered to Lender prior to the date hereof (i) are true,
complete and correct in all material respects, to the extent not
subsequently corrected in a written document delivered to Lender,
(ii) in the case of such audited financial statements and
unaudited operating statements, accurately represent in all
material respects the financial condition or operating results,
as applicable, of the Mortgaged Properties as of the date of such
reports, and (iii) in the case of such audited financial
statements and unaudited operating statements, have been prepared
in accordance with GAAP consistently applied (as applicable)
throughout the periods covered, except as disclosed therein and
except that such financial statements may be prepared without
footnotes and shall be subject to normal year-end adjustments.
It does not have any material contingent liabilities, liabilities
for taxes, unusual forward or long-term commitments or unrealized
or anticipated losses from any unfavorable commitments, that are
known to it and reasonably likely to have a materially adverse
effect on the Mortgaged Property or the operation thereof, except
as referred to or reflected in said financial statements and
operating statements. Except as set forth in the information
listed on Schedule 15 and in the certified information delivered
to Lender pursuant to Section 3.1(o), (p) and (q), since the date
of the 1997 audited financial statements, there has been no
materially adverse change in the financial condition, operations
or business of such Borrower from that set forth in said
financial statements.
(m) Condemnation. No Condemnation or other proceeding
has been commenced or, to the best of its knowledge, is
contemplated with respect to all or any portion of any Mortgaged
Property or for the relocation of roadways providing access to
any Mortgaged Property.
(n) Federal Reserve Regulations. No part of the
proceeds of the Loan will be used for the purpose of purchasing
or acquiring any "margin stock" within the meaning of Regulation
U of the Board of Governors of the Federal Reserve System or for
any other purpose which would be inconsistent with such
Regulation U or any other Regulations of such Board of Governors,
or for any purposes prohibited by Legal Requirements or by the
terms and conditions of this Agreement or the other Loan
Documents.
(o) Utilities and Public Access. Each Mortgaged
Property has rights of access to dedicated public ways (and makes
no material use of any means of access or egress that is not
pursuant to such dedicated public ways or recorded, irrevocable
rights-of-way or easements) and is served by water, sewer,
sanitary sewer and storm drain facilities adequate to service
such Mortgaged Property for its current uses. All public
utilities necessary for the full use and enjoyment of each
Mortgaged Property are located in the public right-of-way
abutting such Mortgaged Property or in or through a recorded
irrevocable easement in favor of such Mortgaged Property, and all
such utilities are connected so as to serve such Mortgaged
Property without passing over other property, except to the
extent that such utilities are accessible to such Mortgaged
Property by virtue of a recorded irrevocable easement or similar
agreement or right. All roads necessary for the use of each
Mortgaged Property for their current respective purposes have
been completed and are either part of the applicable Mortgaged
Property (by way of deed, easement or ground lease) or dedicated
to public use and accepted by all Governmental Authorities.
Nothing in this paragraph may be relied upon by the title company
issuing a policy covering any Mortgaged Property.
(p) Not a Foreign Person. Borrower is not a "foreign
person" within the meaning of Section 1445(f)(3) of the Code.
(q) Separate Lots. Each Mortgaged Property is
comprised of one (1) or more parcels which constitute one or more
separate tax lots which do not include any property not a part of
the applicable Mortgaged Property.
(r) Basic Carrying Costs; Assessments. Borrower has
paid (or caused to be paid) all Basic Carrying Costs due and
payable as of the date hereof. To the best of its knowledge there
are no pending or proposed special or other assessments for
public improvements or other matters affecting any Mortgaged
Property (except as shown in the financial statements described
in clause (l) above), nor, to the best of its knowledge, are
there any contemplated improvements to any Mortgaged Property
that are likely to result in such special or other assessments.
(s) Enforceability. The Loan Documents are not
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.
(t) No Prior Assignment. There are no prior
assignments of the Leases or any portion of the Rents due and
payable or to become due and payable which are presently
outstanding, except in connection with indebtedness to be repaid
in full from the proceeds of the Loan concurrently with the
Closing.
(u) Insurance. It has obtained and has delivered to
Lender ACCORD 27 certificates of insurance, or their equivalent,
policies reflecting the insurance coverages, amounts and other
requirements set forth in this Agreement. All premiums on such
insurance policies required to be paid as of the date hereof have
been paid for the current policy period.
(v) Certificate of Occupancy; Licenses. All
certifications, permits, licenses and approvals, including
certificates of completion and occupancy permits (or other local
equivalent), required for the legal use, occupancy and operation
of each Mortgaged Property (collectively, the "LICENSES"), have
been obtained and are in full force and effect in all material
respects. Borrower shall keep and maintain all licenses
necessary for the use and operation of each Mortgaged Property
owned by it for its respective intended uses. Each Mortgaged
Property has a certificate of occupancy or other local equivalent
(where required by applicable Legal Requirements) and the use
being made of such Mortgaged Property is in conformity with such
certificate of occupancy.
(w) Flood Zone. Except as set forth on Schedule 5,
none of the Improvements on any Mortgaged Property are located in
an area as identified by the Federal Emergency Management Agency
or the Federal Insurance Administration as an area having special
flood hazards (Zone A), and the applicable Mortgaged Property is
covered by flood insurance.
(x) Physical Condition. Except as disclosed in the
engineering reports listed on Schedule 6 or otherwise disclosed
on Schedule 5, each Mortgaged Property, including all buildings,
improvements, parking facilities, sidewalks, storm drainage
systems, roofs, plumbing systems, HVAC systems, fire protection
systems, electrical systems, equipment, elevators, exterior
sidings and doors, landscaping, irrigation systems and all
structural components, are in good condition, order and repair in
all respects material to the use, operation or value of such
Mortgaged Property. There exists no structural or other material
defects or damages in any Mortgaged Property, whether latent or
otherwise (except as may be described in Section 9.2, in respect
of which reserves are being established), that will materially
impair the value of or the Net Operating Income from such
Mortgaged Property after taking into account in making such
determination remedial efforts being taken by Borrower to correct
such defect or damages following discovery thereof. It has not
received written notice and is not otherwise aware from any
insurance company or bonding company of any defects or
inadequacies in any Mortgaged Property, or any part thereof,
which would, alone or in the aggregate, adversely affect in any
material respect the insurability of the same or cause the
imposition of extraordinary premiums or charges thereon or of any
termination or threatened termination of any policy of insurance
or bond.
(y) Leases. No person has any possessory interest in
any Mortgaged Property or right to occupy the same except under
and pursuant to the provisions of the Leases, and true and
complete copies of all Leases have been delivered to Lender. The
Leases are in full force and effect and there are no material
defaults thereunder by either party thereto and to the best of
its knowledge there are no conditions that, with the passage of
time or the giving of notice, or both, would constitute a
material default thereunder. As to all present Leases and (upon
execution thereof) all future Leases relating to the Mortgaged
Properties, Borrower will be the sole owner of the lessor's
interest. No Tenant has the right to terminate a Lease, except
as set forth in Schedule 5. Except as may be set forth on
Schedule 4 or 5 hereto:
(i) Borrower has no notice of any insolvency or
bankruptcy proceeding pending or threatened involving any
Tenant;
(ii) there are no outstanding landlord obligations
with respect to tenant allowances or free rent periods or
tenant improvement work; all of the obligations (other than
Unfunded Obligations with respect to which amounts have been
reserved in the Unfunded Obligations Reserve Account) and
duties of landlord under the Leases that are due or are to
be performed (as applicable) on or prior to the date hereof
have been fulfilled, and there are no pending claims
asserted by any Tenant for offsets or abatements against
rent or any other monetary claim;
(iii) all of the Leases are free and clear of
any right or interest of any real estate broker or any other
person (whether or not such brokers or other persons have
negotiated the Leases or have contracted with Borrower for
the collection of the rents thereunder), and no brokerage or
leasing commission or other compensation is or will be due
or payable to any person, firm, corporation or other entity
with respect to or on account of any of the Leases;
(iv) Schedule 7 sets forth all security deposits
and letters of credit held by or on behalf of the lessor
under the Leases. All security deposits have been held in
accordance with law and the terms of the applicable Leases,
and no security deposits have been applied, or letters of
credit drawn upon, following a default by a Tenant still in
possession.
(v) Borrower is the sole owner of the lessor's
interest in all of the Leases and Borrower has not given or
suffered any other assignment, pledge or encumbrance in
respect of any of the Leases or its interests thereunder,
and Borrower has the sole right to collect rents and other
amounts due under the Leases; and
(vi) Except as set forth on Schedule 5, no Tenant
is more than thirty (30) days in arrears on its rent or
other amounts due to the landlord under its Lease.
(z) Ground Leased Property. With respect to each of
the Mortgaged Properties that are subject to the Ground Leases:
(i) A memorandum of each of the Ground Leases has
been duly recorded. The Ground Leases each permit the
interest of Borrower to be encumbered by a mortgage or the
respective ground lessors have each approved and consented
to the encumbrance of the applicable Mortgaged Property by
the respective Mortgage. The Ground Leases may not be
canceled, terminated, surrendered or amended without the
prior written consent of Lender.
(ii) Except for the Permitted Encumbrances,
Borrower's interests in the Ground Leases are not subject to
any Liens or encumbrances superior to, or of equal priority
with, the applicable Mortgage, other than the ground
lessor's related fee interest.
(iii) Borrower's interests in the Ground
Leases are assignable to Lender upon notice to, but without
the consent of, the ground lessors thereunder (or, if any
such consent is required, it has been obtained prior to the
Closing Date). The Ground Leases are further assignable by
Lender, its successors and assigns without the consent of
the ground lessor.
(iv) As of the date hereof, the Ground Leases are
in full force and effect and no default has occurred under
the Ground Leases and there is no existing condition which,
but for the passage of time or the giving of notice, would
result in a default under the terms of any of the Ground
Leases.
(v) Each of the Ground Leases requires the ground
lessor thereunder to give notice of any default by Borrower
to Lender. Each of the Ground Leases, or the estoppel
letters received by Lender from the ground lessor
thereunder, further provides that notice of termination
given under such Ground Lease is not effective against
Lender unless a copy of the notice has been delivered to
Lender in the manner described in such Ground Lease.
(vi) Lender is permitted the opportunity
(including, where necessary, sufficient time to gain
possession of the interest of Borrower under the respective
Ground Lease) to cure any default under any of the Ground
Leases, which is curable after the receipt of notice of any
of the default before the ground lessor thereunder may
terminate such Ground Lease.
(vii) Each of the Ground Leases has a term
which, together with the renewal terms thereunder, extend
not less than ten (10) years beyond the Maturity Date.
(viii) Each of the Ground Leases (or the
estoppel letters received by Lender from the ground lessor
thereunder) requires the ground lessor to enter into a new
lease upon termination of such Ground Lease for any reason,
including rejection of such Ground Lease in a bankruptcy
proceeding.
(ix) Under the terms of each of the Ground Leases
and the related Mortgage, taken together, any related
insurance and condemnation proceeds will be applied either
to the repair or restoration of all or part of the
applicable Mortgaged Property, with Lender or a trustee to
hold and disburse the proceeds as the repair or restoration
progresses, or to the payment of the outstanding principal
balance of the Loan together with any accrued interest
thereon.
(x) If any Ground Lease imposes any restrictions
on subleasing, the ground lessor thereunder has consented to
any Lease (including, without limitation, the related Master
Lease) in effect with respect to the related Mortgaged
Property.
(aa) Survey. The survey for each Mortgaged Property
delivered to Lender in connection with this Agreement has been
performed by a duly licensed surveyor or registered professional
engineer in the state where the applicable Mortgaged Property is
located and was prepared in accordance with the 1992 Minimum
Standard Detail Requirements for ALTA/ASCM Land Title Surveys (or
such other substantially equivalent standards as are prevalent in
the state in which the applicable Mortgaged Property is located).
Except for minor encroachments as depicted on the surveys of the
Mortgaged Properties delivered to Lender in connection with the
closing of the Loan with respect to which affirmative title
insurance coverage has been obtained, all of the improvements
relating to the applicable Mortgaged Property lie wholly within
the boundaries and building restriction lines of such Mortgaged
Property, and no improvements on adjoining properties encroach
upon such Mortgaged Property, and no easements or other
encumbrances upon such Mortgaged Property encroach upon any of
the improvements, so as to materially adversely affect the value
or marketability of such Mortgaged Property except those which
are insured against by a Qualified Title Insurance Policy.
(bb) Filing and Recording Taxes. All transfer taxes,
deed stamps, intangible taxes or other amounts in the nature of
transfer taxes required to be paid by any Person under applicable
Legal Requirements currently in effect in connection with the
transfer of any Mortgaged Property to Borrower have been paid in
full or deposited with the issuer of a Qualified Title Insurance
Policy for payment upon recordation of the deeds effecting such
transfer. All mortgage, mortgage recording, stamp, intangible or
other similar tax required to be paid by any Person under
applicable Legal Requirements currently in effect in connection
with the execution, delivery, recordation, filing, registration,
perfection or enforcement of any of the Loan Documents, including
the Mortgages, and the Liens intended to be created thereby, have
been paid or deposited with a title company for payment upon
recordation of the Mortgages.
(cc) Single-Purpose. Borrower hereby represents and
warrants to, and covenants with, Lender that, as of the date
hereof and until such time as the Debt shall be paid in full:
(i) It has not owned and will not own any
property or any other assets other than (A) the Mortgaged
Properties currently owned by it, and (B) incidental
personal and intangible property relating to the ownership
or operation of the Mortgaged Properties.
(ii) It has not engaged and will not engage in any
business other than the ownership, management, financing and
operation of the Mortgaged Properties.
(iii) It has not entered and will not enter
into any contract or agreement with any of its Affiliates,
any of its constituent parties or any Affiliate of any
constituent party, except upon terms and conditions that are
substantially similar to those that would be available on an
arm's-length basis with third parties.
(iv) It has not incurred and will not incur any
indebtedness, secured or unsecured, direct or indirect,
absolute or contingent (including guaranteeing any
obligation), other than the Permitted Indebtedness. Except
as set forth in the immediately preceding sentence, no
indebtedness other than the Debt may be secured (subordinate
or pari passu) by any Mortgaged Property.
(v) It has not made and will not make any loans
or advances to any other Person (including any Affiliate or
constituent party or any Affiliate of any constituent
party).
(vi) It is and will remain solvent and it will pay
its debts and liabilities (including employment and overhead
expenses) from its assets as the same shall become due.
(vii) It has done or caused to be done and
will do all things necessary to observe corporate
formalities and preserve its existence, and it will not, nor
will it permit or suffer any constituent party to amend,
modify or otherwise change its articles of incorporation and
bylaws or other organizational documents, or those of such
constituent party in a manner which would adversely affect
its existence as a Single Purpose Entity.
(viii) It will maintain books and records and
bank accounts separate from those of its Affiliates and any
constituent party and it will file its own tax returns
(except to the extent consolidation is required as a matter
of law).
(ix) It will be, and at all times will hold itself
out to the public as, a legal entity separate and distinct
from any other entity (including any of its Affiliates, any
of its constituent parties or any Affiliate of any
constituent party), shall conduct business in its own name
and shall maintain and utilize separate stationery, invoices
and checks and it will pay to any Affiliate that incurs
costs for office space and administrative services that it
uses, the amount of such costs allocable to its use of such
office space and administrative services.
(x) It will maintain adequate capital for the
normal obligations reasonably foreseeable in a business of
its size and character and in light of its contemplated
business operations.
(xi) Neither it nor any constituent party will
seek its dissolution or winding up, in whole or in part.
(xii) It will not commingle its funds and
other assets with those of any Affiliate or constituent
party or any Affiliate of any constituent party or any other
Person.
(xiii) It has and will maintain its assets in
such a manner that it will not be costly or difficult to
segregate, ascertain or identify its individual assets from
those of any Affiliate or constituent party or any Affiliate
of any constituent party or any other Person.
(xiv) It has not held and will not hold itself
out to be responsible for the debts or obligations of any
other Person.
(xv) It shall at all times cause there to be at
least one duly appointed member of its board of directors
(or if such Borrower is a limited partnership, the board of
directors of its general partner) (an "INDEPENDENT
DIRECTOR") reasonably satisfactory to Lender who shall not
have been at the time of such individual's appointment, and
may not have been at any time during the preceding five
(5) years, nor shall be, so long as any portion of the Debt
remains outstanding, (i) a shareholder or director of, or an
officer or employee of, Borrower or of Borrower's
shareholders, subsidiaries or Affiliates, (ii) a customer
of, or supplier or service provider (including
professionals) to, Borrower or any of Borrower's
shareholders, subsidiaries or Affiliates such that such
individual's annual revenues derived from Borrower, its
shareholders or Affiliates exceeds ten percent (10%) of such
individual's annual revenues, (iii) a person or other entity
controlling any such shareholder, supplier or customer, or
(iv) a member of the immediate family of any such
shareholder, officer, employee, supplier or customer or any
other director of Borrower. As used in this
Section 4.1(cc)(xvi), the term "control" means the ownership
of ten percent (10%) or more of the voting securities of a
Person or the possession, directly or indirectly, of the
power to direct or cause the direction of the management and
policies of a Person whether through ownership of voting
securities, by contract or otherwise.
(xvi) It shall not cause or permit its board
of directors (or if Borrower is a limited partnership, the
board of directors of its general partner) to take any
action which, under applicable law or the terms of any
certificate of incorporation, by-laws or any voting trust
agreement with respect to any common stock, requires the
vote of its board of directors unless at the time of such
action there shall be at least one member who is an
Independent Director; provided, however, that subject to any
applicable Legal Requirement, it (or if Borrower is a
limited partnership, the board of directors of its general
partner) may, at its discretion, cause or permit its board
of directors to take any action without regard to the
preceding clause of this sentence other than the following
actions: (A) dissolve or liquidate, in whole or in part;
(B) consolidate or merge with or into any other entity or
convey or transfer all or substantially all of its
properties and assets to any entity; (C) engage in any
business other than the ownership, maintenance and operation
of the Mortgaged Properties (or, with respect to such
general partner, acting as the general partner of Borrower);
(D) institute any proceeding to be adjudicated as bankrupt
or insolvent, or consent to the institution of bankruptcy or
insolvency proceedings against it, or file a petition or
answer or consent seeking reorganization or relief under the
Bankruptcy Code or consent to the filing of any such
petition or to the appointment of a receiver, rehabilitator,
conservator, liquidator, assignee, trustee or sequestrator
(or other similar official) of such general partner or
Borrower or of any substantial part of its property, or
ordering the winding up or liquidation of its affairs, or
make an assignment for the benefit of creditors, or admit in
writing its inability to pay its debts generally as they
become due, or take any action in furtherance of any of the
foregoing; (E) amend Articles Third, Sixth, Eighth, Eleventh
or Thirteenth of Borrower's Certificate of Incorporation; or
(F) enter into any transaction with an Affiliate not engaged
in the ordinary course of Borrower's business.
(xvii) It has no liabilities, contingent or
otherwise, other than the Debt and those normal and
incidental to the ownership, operation and leasing of the
Mortgaged Properties.
(xviii) It shall conduct its business so that
the factual assumptions made in that certain non-
consolidation opinion dated the date hereof delivered by
Stinson, Mag and Fizzell in connection with the Loan shall
be true and correct in all respects.
(dd) Investment 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; or (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. Its
sole business is the ownership, operation, maintenance, repair,
financing, refinancing and disposition of the Mortgaged Property
and such matters as are incidental to the foregoing.
(ee) Fraudulent Transfer. Borrower (i) has not entered
into the Loan 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 by the Loan Documents, the fair saleable value of
its assets exceeds and will, immediately following the execution
and delivery of the Loan Documents, exceed its total liabilities,
including subordinated, unliquidated, disputed or contingent
liabilities. The fair saleable value of its assets is and will,
immediately following the execution and delivery of the Loan
Documents, be greater than its probable liabilities, including
the maximum amount of its contingent liabilities or its debts as
such debts become absolute and matured. Its assets do not and,
immediately following the execution and delivery of the Loan
Documents will not, constitute unreasonably small capital to
carry out its business as conducted or as proposed to be
conducted. It does not intend to, and does not believe that it
will, incur debts and liabilities (including contingent
liabilities and other commitments) beyond its ability to pay such
debts as they mature (taking into account the timing and amounts
to be payable on or in respect of its obligations).
(ff) Material Agreements. Except as may be specified
on Schedule 5, each of the Material Agreements is in full force
and effect and is valid and enforceable in all material respects,
subject in each case to bankruptcy, insolvency, fraudulent
transfer, reorganization, moratorium and similar laws of general
applicability relating to or affecting creditors' rights and to
general equity principles; there are no defaults, breaches or
violations thereunder by Borrower or, to the best of Borrower's
knowledge, any other party thereto, and to the best of Borrower's
knowledge, there are no conditions (other than payments that are
due but not yet delinquent and other non-delinquent executory
obligations) that, with the passage of time or the giving of
notice, or both, would constitute a default by any party
thereunder, where with respect to any such Material Agreement the
effect of one or more of any such defaults would have a material
adverse effect on the value, use, operation or maintenance of any
Mortgaged Property or on Borrower's ability to perform its
obligations hereunder or under any other Loan Document. Neither
the execution and delivery of the Loan Documents, Borrower's
performance thereunder, the recordation of the Mortgages, nor the
exercise of any remedies by Lender, will adversely affect
Borrower's rights under any of the Material Agreements.
(gg) Employees. Borrower either has no employees or
has no material liability which has been incurred by it and
remains unsatisfied for any taxes or penalties with respect to
(i) any employee benefit plan (within the meaning of Section 3(3)
of ERISA) established, sponsored, maintained or contributed to by
it on behalf of its employees at the Mortgaged Property or
(ii) any "multiemployer plan" (as defined in Section 4001(a)(3)
of ERISA) as to which it is making or has an obligation to make
contributions or (iii) any lien which has been imposed on its
assets pursuant to Section 412 of the Code or Sections 302 or
4068 of ERISA.
(hh) Leases. (i) the Master Leases are in full force
and effect, and are valid and enforceable in all material
respects; subject in each case to bankruptcy, insolvency,
fraudulent transfer, reorganization, moratorium and similar laws
of general applicability relating to or affecting creditors'
rights and to general equity principles; (ii) there are no
material defaults thereunder by Borrower or, to the best of
Borrower's knowledge, the Master Lease Tenant thereunder, and to
the best of Borrower's knowledge, there are no conditions (other
than payments that are due but not yet delinquent and other non-
delinquent executory obligations) that, with the passage of time
or the giving of notice, or both, would constitute a material
event of default thereunder; (iii) no Person has any possessory
interest in or right to occupy any portion of any Mortgaged
Property except under and pursuant to a Master Lease;
(iv) Borrower has not accepted Rent under any Master Lease or
Operating Agreement for more than one month in advance; and
(vi) there are no Leases in effect with respect to any portion of
the Mortgaged Properties other than the Master Leases and
Borrower holds no security deposit under any Master Lease.
(ii) Legal Compliance. To the best of Borrower's
knowledge, neither any Mortgaged Property, nor any portion
thereof, is on the date hereof in violation of any Legal
Requirement or any Insurance Requirement, in a manner that is
likely to have a material adverse effect on such Mortgaged
Property or Borrower's ability to operate such Mortgaged Property
or otherwise satisfy its obligations under this Agreement or any
other Loan Document.
SECTION 4.2 SURVIVAL OF REPRESENTATIONS.
Borrower agrees that all of the representations and
warranties of Borrower set forth in Section 4.1 and elsewhere in
this Agreement and in the other Loan Documents shall survive for
so long as any portion of the Debt is outstanding (it being
acknowledged by Lender that such representations and warranties
have been made as of the Closing Date). All representations,
warranties, covenants and agreements made in this Agreement or in
the other Loan Documents by Borrower shall be deemed to have been
relied upon by Lender notwithstanding any investigation
heretofore or hereafter made by Lender or on its behalf.
V. AFFIRMATIVE COVENANTS
SECTION 5.1 BORROWER COVENANTS.
Borrower hereby covenants and agrees with Lender that:
(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 existence,
rights, licenses, permits and franchises and comply in all
material respects with all Legal Requirements applicable to it
and the Mortgaged Properties. Borrower shall at all times
maintain and preserve (or cause to be maintained and preserved)
each Mortgaged Property and shall keep (or cause to be kept) each
Mortgaged Property in good working order and repair, reasonable
wear and tear excepted, and from time to time make, or cause to
be made, all reasonably necessary repairs, renewals,
replacements, betterments and improvements thereto. Borrower
will operate, maintain, repair and improve (or cause to be
operated, maintained, repaired and improved) each Mortgaged
Property in material compliance with all Legal Requirements, and
will not cause or allow the same to be misused or wasted or to
deteriorate.
(b) Taxes and Other Charges; Contest for Taxes and Other
Charges, Legal Requirements and Liens.
(i) Subject to the provisions of Sections
5.1(b)(ii), Borrower shall pay or cause Master Lease Tenant
to Pay all Taxes and Other Charges now or hereafter levied
or assessed or imposed against the Mortgaged Properties or
any part thereof prior to the date on which such sums become
delinquent. Borrower will deliver to Lender, upon request,
receipts for payment or other evidence satisfactory to
Lender that the Taxes and Other Charges have been so paid
(provided, however, Borrower is not required to furnish such
receipts for payment of Taxes in the event that such Taxes
have been paid by Lender pursuant to Section 9.3.2).
Subject to the provisions of Section 5.1(b)(ii) and other
than Permitted Encumbrances, Borrower shall not suffer and
shall promptly cause to be paid and discharged, or shall
cause Master Lease Tenant to pay and discharge, any lien or
charge whatsoever which may be or become a lien or charge
against any Mortgaged Property, and shall promptly pay or
cause Master Lease Tenant to Pay for all utility services
provided to the Mortgaged Properties. Subject to
Section 5.1(b)(ii), Borrower shall pay, bond or otherwise
discharge, or cause Master Lease Tenant to pay, bond or
otherwise discharge, from time to time when the same shall
become due, all claims and demands of mechanics,
materialmen, laborers and others that, if unpaid, might
result in, or permit the creation of, a lien or encumbrance
on any Mortgaged Property (as defined in the Mortgages), or
on the Rents arising therefrom.
(ii) Notwithstanding the foregoing, after prior
written notice to Lender, Borrower or Master Lease Tenant,
at their own expense, may contest by appropriate legal,
administrative or other proceeding, promptly initiated and
conducted in good faith and with due diligence, the amount
or validity or application in whole or in part of any Taxes
or Other Charges or Lien therefor or any Legal Requirement
or Insurance Requirement or the application of any
instrument of record affecting any Mortgaged Property or any
part thereof (other than the Loan Documents) or any claims
or judgments of mechanics, materialmen, suppliers, vendors
or other Persons or any Lien therefor, and may withhold
payment of the same pending such proceedings if permitted by
law; provided that (A) no Default or Event of Default has
occurred and remains uncured, except for, prior to
acceleration, a Default caused by the matter being
contested, (B) such proceeding shall suspend any collection
of the contested Taxes, Other Charges or Liens from related
Mortgaged Property, Borrower or Lender, (C) such proceeding
shall be permitted under and be conducted in accordance with
the provisions of any other instrument to which Borrower is
subject and shall not constitute a default thereunder,
(D) neither the related Mortgaged Property nor any part
thereof or interest therein will be in danger of being sold,
forfeited, terminated, cancelled or lost, (E) to the extent
not already reserved with Lender under Section 9.3 or bonded
or otherwise deposited or paid in connection with such
proceedings, Borrower or Master Lease Tenant shall have
furnished Lender with security (in an amount reasonably
approved by Lender) to insure the payment of any such Taxes
or Other Charges, or the cost of the contested Legal
Requirement or Insurance Requirement or the removal of the
Lien, in each case together with all reasonably anticipated
interest and penalties thereon, (F) in the case of an
Insurance Requirement, the failure of Borrower or Master
Lease Tenant to comply therewith shall not impair the
validity of any insurance required to be maintained
hereunder or the right to full payment of any claims
thereunder, (G) in the case of any essential or significant
service with respect to the applicable Mortgaged Property,
any contest or failure to pay will not result in a
discontinuance of any such service, (H) in the case of any
instrument of record affecting the applicable Mortgaged
Property or any part thereof, the contest or failure to
perform under any such instrument shall not result in the
placing of any Lien on the applicable Mortgaged Property or
any part thereof (except if such Lien would be removed upon
completion of such proceedings and the compliance by the
parties with the terms of the resulting order, decision or
determination and the removal costs for such Lien have been
escrowed with Lender or in the proceeding or bonded or
otherwise deposited or paid in connection with such
proceedings), (I) except to the extent Borrower or Master
Lease Tenant has provided sufficient Eligible Collateral
therefor or bonded or otherwise deposited or paid in
connection with such proceedings, neither the failure to pay
or perform any obligation which the Borrower is permitted to
contest under this Section nor an adverse determination of
any such contest shall result in a material adverse effect
on the utility, value or operation of the applicable
Mortgaged Property, and (J) Borrower or the Master Lease
Tenant shall promptly upon final determination thereof pay
the amount of any such Taxes, Other Charges or Liens,
together with all costs, interest and penalties which may be
payable in connection therewith. Lender may pay over any
such cash deposit or part thereof held by Lender to the
claimant entitled thereto at any time when, in the judgment
of Lender, the entitlement of such claimant is finally
established, and Lender shall otherwise remit any remaining
such amounts to the Borrower or the Master Lease Tenant, as
applicable. Lender shall give Borrower written notice of
any such payments promptly following the making thereof.
(iii) Notwithstanding anything to the contrary
in this Section 5.1(b), Lender and Borrower agree that, at
all times while the Master Lease is in effect with respect
to a Mortgaged Property, the rights and obligations of the
Master Lease Tenant and Borrower with respect to contests
for Taxes or Other Charges, Liens, Insurance Requirements
and Legal Requirements shall be as set forth in the Master
Lease, and Borrower shall not be in default hereunder so
long as the Master Lease Tenant is contesting Taxes or Other
Charges, Liens, Insurance Requirements or Legal Requirements
in accordance with the provisions of the Master Lease and
neither the related Mortgaged Property nor any part thereof
shall be in danger of being sold, forfeited, terminated,
cancelled or lost.
(c) Litigation. Immediately upon Borrower receiving
notice thereof, Borrower shall give prompt written notice to
Lender of any litigation or governmental proceedings pending or
threatened in writing against Borrower or against or affecting
any Mortgaged Property which, if determined adversely to Borrower
or such Mortgaged Property, might reasonably be expected to
materially adversely affect Borrower's condition (financial or
otherwise) or business or the operation or value of such
Mortgaged Property.
(d) Inspection. Borrower shall permit agents,
representatives and employees of Lender (including Servicer and
Special Servicer) to inspect each of the Mortgaged Properties on
any Business Day at reasonable hours upon reasonable advance
notice, subject to the rights of Tenants under the Master Leases.
(e) Notice of Default. Borrower shall promptly advise
Lender of any material adverse change in Borrower's condition
(financial or otherwise) that could reasonably be expected to
materially impair the ability of Borrower to comply with its
obligations hereunder, or of the occurrence of any Default or
Event of Default of which Borrower has knowledge.
(f) Cooperate in Legal Proceedings. Borrower shall
cooperate fully with Lender with respect to any proceedings
before any court, board or other Governmental Authority which may
in any way affect the rights of Lender hereunder or any rights
obtained by Lender under any of the other Loan Documents and, in
connection therewith, permit Lender, at its election, to
participate in any such proceedings.
(g) Perform Loan Documents. Borrower shall observe,
perform and satisfy all the terms, provisions, covenants and
conditions of, and shall pay when due all costs, fees and
expenses to the extent required under the Loan Documents.
(h) Insurance Benefits. Borrower shall cooperate with
Lender in obtaining for Lender the benefits of any insurance
proceeds lawfully or equitably payable in connection with any
Mortgaged Property, and Lender shall be reimbursed for any out-of-
pocket expenses reasonably incurred in connection therewith
(including reasonable attorneys' fees and disbursements, and, if
reasonably necessary to collect such proceeds, the expense of an
appraisal on behalf of Lender in case of a fire or other casualty
affecting any Mortgaged Property or any part thereof) out of such
insurance proceeds.
(i) Further Assurances. Borrower shall, at Borrower's
sole cost and expense:
(i) 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 by Borrower pursuant to the terms
of the Loan Documents or, without additional material
expense to Borrower, reasonably requested by Lender in
connection therewith;
(ii) execute and deliver to Lender such documents,
instruments, certificates, assignments and other writings,
and do such other acts necessary or desirable, to evidence,
preserve and/or protect the Lien of the Lender at any time
securing or intended to secure the obligations of Borrower
under the Loan Documents, as Lender may reasonably require;
(iii) be responsible for, and shall pay on
demand, all Lender Expenses; and
(iv) do and execute all and such further lawful
and reasonable acts, conveyances and assurances for the
better and more effective carrying out of the intents and
purposes of this Agreement and the other Loan Documents, as
Lender shall reasonably require from time to time.
(j) Financial Reporting and Other Information.
(i) Borrower will keep and maintain or will cause
to be kept and maintained on a Fiscal Year basis, in
accordance with GAAP, to the extent applicable, proper and
accurate books, records and accounts reflecting all of its
financial affairs and all items of Operating Income,
Operating Expenses and capital expenditures, tenant
improvements and leasing commissions. Lender shall have the
right at its expense from time to time at all times during
normal business hours upon reasonable notice to examine such
books, records and accounts at the office of 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 its accounting records with respect to the
Mortgaged Property, as Lender shall determine to be
necessary or appropriate.
(ii) Borrower shall furnish to Lender within
eighty (80) days following the end of each Fiscal Year, a
complete copy of its annual financial statements, audited by
a nationally recognized accounting firm or another
independent certified public accounting firm reasonably
acceptable to Lender, in accordance with GAAP, for such
Fiscal Year and containing a balance sheet for Borrower and
statements of profit and loss, all in such detail as Lender
may reasonably request. All such statements shall set forth
the financial condition and the income and expenses for the
Mortgaged Properties, on an individual and combined basis,
for the immediately preceding Fiscal Year, including
statements of annual Net Operating Income and Net Cash Flow.
Borrowers' annual financial statements shall be accompanied
by (i) an Officer's Certificate certifying that each such
annual financial statement presents fairly, in all material
respects, the financial condition and results of operation
of the Mortgaged Properties being reported upon and has been
prepared in accordance with GAAP and (ii) a management
report, in form and substance reasonably satisfactory to
Lender, discussing the reconciliation between the financial
statements for such Fiscal Year and the most recent Annual
Budget. Together with Borrower's annual financial
statements, Borrower shall furnish to Lender (A) an
Officer's Certificate certifying as of the date thereof
whether, to Borrower's knowledge, there exists a Default or
Event of Default, and if such Default or Event of Default
exists, the nature thereof, the period of time it has
existed and the action then being taken to remedy the same;
(B) then current rent rolls if there has been (x) any
amendment or modification to any Lease, (y) any material
change in the condition or status of any Tenant or (z) any
material change in any Tenant's compliance with the terms of
its respective Lease since the rent rolls last delivered to
Lender; and (C) an annual report, for the most recently
completed fiscal year, containing:
(1) to the extent Borrower receives such
information from its Tenants and is entitled to
disclose such information to Lender (it being agreed by
Borrower that it shall use reasonable efforts not to
enter into any Lease or any other agreement with any
Tenant that would provide such information to Borrower
but prohibit the disclosure of such information to
Lender), reported Tenant sales per square foot and
Tenant rent per square foot by general merchandise
categories,
(2) capital expenditures by Borrower (stated
separately with respect to any project costing in
excess of Seventy-Five Thousand and No/100 Dollars
($75,000) for (x) maintenance (i.e., roofs, parking
lots, equipment and HVAC), (y) tenant improvements and
leasing commissions, and (z) renovations, expansions
and enhancements, and
(3) occupancy levels for such period.
(iii) Borrower will furnish, or cause to be
furnished, to Lender on or before the thirtieth day after
the end of each calendar month, the following items,
accompanied by an Officer's Certificate, certifying that
such items are true, correct, accurate, and complete and
fairly present, in all material respects, the financial
condition and results of the operations of Borrower and the
Mortgaged Properties in accordance with GAAP (as applicable
and subject to normal year end adjustments), to the extent
applicable:
(A) any notice received from a Tenant
threatening non-payment of rent or other default,
alleging or acknowledging a default by landlord,
requesting a termination or modification of a Lease or
notifying Borrower of the exercise or non-exercise of
any option provided for in such Tenant's Lease, or any
other similar material correspondence received by
Borrower from Tenants during the subject month;
(B) monthly, and year to date operating
statements prepared for each calendar month, noting Net
Operating Income and other information necessary and
sufficient under GAAP, to the extent applicable, to
fairly represent the financial position and results of
operations of the Mortgaged Properties during such
calendar month, all in form reasonably satisfactory to
Lender;
(C) a statement of the actual capital
expenditures, leasing commissions and tenant
improvement costs, paid or incurred by Borrower in
respect of any Mortgaged Property, including separate
line items (stated separately with respect to any
project costing in excess of Seventy-Five Thousand and
No/100 Dollars ($75,000) for (x) maintenance (i.e.,
roofs, parking lots, equipment and HVAC),
(y) renovations, expansions and enhancements and the
status of each project; and
(D) a list of any anchor tenants that went
dark during such month.
(iv) Borrower will furnish, or cause to be
furnished, to Lender on or before the thirtieth day after
the end of each fiscal quarter, the following items,
accompanied by an Officer's Certificate, certifying that
such items are true, correct, accurate and complete and
fairly present the financial condition and results of the
operations of Borrower and the Mortgaged Properties in a
manner consistent with GAAP (as applicable and subject to
normal year-end adjustments), to the extent applicable:
(A) quarterly and year-to-date financial
statements prepared for such fiscal quarter with
respect to Borrower, including a balance sheet and
operating statement for such quarter;
(B) a comparison of the budgeted income and
expenses and the actual income and expenses for such
quarter and year to date for the Mortgaged Properties,
together with a detailed explanation of any variances
of at least the greater of five percent (5%) or Five
Thousand and No/100 Dollars ($5,000) between budgeted
and actual amounts for such period and year to date;
provided, however, that Borrower shall not be obligated
to provide such detailed explanation for line items the
actual amounts of which are less than Twenty-Five
Thousand and No/100 Dollars;
(C) intentionally omitted;
(D) calculations reflecting the Debt Service
Coverage Ratio calculated based upon the actual Debt
Service and based upon a 10.48% constant, in each case,
as of the last day of such quarter, for such quarter
and the last four quarters;
(E) a current rent roll for each Mortgaged
Property (if there has been (x) any amendment or
modification to any Lease, (y) any material change in
the condition or status of any Tenant or (z) any
material change in any Tenant's compliance with the
terms of its respective Lease since the rent rolls last
delivered to Lender) and such other reports setting
forth the term of, and any termination or cancellation
rights set forth in, each Lease;
(F) a statement that the representations and
warranties of Borrower set forth in Section 4.1(cc)(iv)
are true and correct as of the date of such
certificate;
(G) to the extent Borrower receives such
information from its Tenants and is entitled to
disclose such information to Lender (it being agreed by
Borrower that it shall use reasonable efforts not to
enter into any Lease or any other agreement with any
Tenant that would provide such information to Borrower
but prohibit the disclosure of such information to
Lender), reported Tenant sales per square foot and
Tenant rent per square foot by general merchandise
categories; and
(H) a list of Tenants that went bankrupt
during such quarter and of Leases which expired and
were not renewed during such quarter. Concurrently
with the provision of such reports, Borrower shall also
furnish a report of total revenues and total expenses,
in each case for the most recently completed quarter.
Borrowers shall provide the Lender with the reports and
shall make the payments required by Section 9.4.3.
(v) Borrower shall exercise best efforts to
obtain from Master Tenant or AEN, on a regularly occurring
basis, operating statements and statements of capital
expenditures with respect to the Mortgaged Properties, which
best efforts shall include, without limitation, the pursuit
by Borrower of any rights Borrower may have to such
statements pursuant to each Master Lease. Borrower shall
deliver to Lender copies of any such operating statements or
statements of capital expenditures within five (5) Business
Days of Borrower's receipt thereof.
(vi) Borrower shall furnish to Lender, within ten
(10) Business Days after request, such further detailed
information with respect to the operation of the Mortgaged
Properties and the financial affairs of Borrower as may be
reasonably requested by Lender (to the extent such
information with respect to the Master Lease Tenant, AEN or
any other Tenant is available to Borrower and Borrower is
entitled to disclose such information to Lender).
(vii) Borrower shall furnish to Lender,
promptly after receipt, a copy of any notice received by or
on behalf of Borrower from any Governmental Authority having
jurisdiction over any Mortgaged Property with respect to a
condition existing or alleged to exist or emanate therefrom
or thereat.
(viii) Borrower will, at any and all times,
within a reasonable time after written request by Lender,
furnish or cause to be furnished to Lender, in such manner
and in such detail as may be reasonably requested by Lender,
such information as may be necessary to permit Lender to
comply with any request for information made by an investor
or prospective investor in the Certificates and to be
furnished under Rule 144A(d) under the Securities Act of
1933, as amended (the "SECURITIES ACT").
(ix) If Borrower fails to provide Lender or its
designee with any financial statements, certificates,
reports or information required pursuant to this
Section 5.1(j) (the "REQUIRED RECORDS") as and when required
pursuant to this Section 5.1(j) and such failure continues
for five (5) or more days after written notice of such
failure with respect to any Required Record specifically
identified in this Section 5.1(j) or twenty (20) or more
days after written notice of such failure with respect to
any Required Record not specifically identified in this
Section 5.1(j), then such failure shall constitute an Event
of Default. Notwithstanding anything to the contrary
contained herein, if, following written notice from Borrower
to Lender of Lender's (or Servicer's) failure to provide any
financial information pursuant to Section 2.5.3 and the
exercise by Borrower of reasonable diligence to obtain the
same, Borrower is unable to include certain financial
information required to be included in such Required Record
or to make certain calculations required therefor, due to
the failure of Lender or Servicer or either of their agents,
representatives or employees to deliver such financial
information, Borrower shall prepare and deliver to Lender
the Required Records without such information, and
calculations to the extent feasible (and, to the extent
feasible, with good faith estimates with respect to such
missing information, clearly stated as estimates); provided,
further that Borrower shall deliver revised financial
reports or statements promptly following receipt of the
necessary financial information from Lender, Servicer or
other sources.
(x) The information required to be furnished by
Borrower to Lender under subsections (j)(ii), (iii)(B),
(iii)(C), (iii)(D), (iv) (other than subsections (iv)(D),
(F) and (G)), (vi) and (viii) above shall be provided in
both hard copy format and electronic format; provided, that
Borrower shall only be required to provide the information
required by subsections (vi) and (viii) in electronic format
if such information is so available in the ordinary course
of Borrower's operations. The information required to be
furnished by Borrower to Lender under subsection (j)(v)
above shall be provided in hard copy format and, if made
available by Master Tenant or AEN, in electronic format.
(xi) Simultaneously with the delivery of
Borrower's annual audited financial statements pursuant to
Section 5.1(j)(ii) above, Borrower shall deliver, or cause
to be delivered, to Lender a consent of Borrower's auditors
consenting to the use or incorporation by reference of their
audit report as may be required by the Securities Act or the
Securities Exchange Act of 1934 in connection with filings
required to be made by the holder of the Loan under the
Securities Act or Securities Exchange Act of 1934, together
with an original executed copy of such audit report and
Lender agrees to provide Borrower and its auditors with
copies of such filings (other than financial statements and
other financial data of other borrowers in the
Securitization) for their review in advance of the date on
which such consent is required to be filed.
(k) Business and Operations. Borrower will continue
to engage in the businesses currently conducted by it as and to
the extent the same are necessary for the ownership, maintenance,
management and operation of the Mortgaged Properties. Borrower
will qualify to do business and will remain in good standing
under the laws of each jurisdiction as and to the extent the same
are required for the ownership, maintenance, management and
operation of the Mortgaged Properties.
(l) Title to the Mortgaged Properties. Borrower will
warrant and defend against the claims of all Persons whomsoever
(i) with respect to its title to each Mortgaged Property and
every part thereof and (ii) the validity and priority of the Lien
of the Mortgage, subject only in each case to Liens permitted
under the Loan Documents (including Permitted Encumbrances).
(m) Costs of Enforcement. In the event (i) that any
Mortgage is foreclosed in whole or in part or the Note, any Loan
Document, including any Mortgage, is put into the hands of an
attorney for collection, suit, action or foreclosure, (ii) of the
foreclosure of any Lien or mortgage prior to or subsequent to any
Mortgage in which proceeding Lender is made a party, (iii) of the
bankruptcy, insolvency, rehabilitation or other similar
proceeding in respect of Borrower or an assignment by Borrower
for the benefit of its creditors, or (iv) Lender shall attempt to
remedy any Event of Default hereunder, Borrower, its successors
or assigns, shall be chargeable with and agrees to pay all costs
incurred by Lender as a result thereof, including costs of
collection and defense, including reasonable attorneys' fees (and
experts', consultants' and witnesses' fees) in connection
therewith and in connection with any appellate proceeding or
post-judgment action involved therein, which shall be due and
payable together with all required service or use taxes.
(n) Estoppel Statement.
(i) After written request by Lender, Borrower
shall within fifteen (15) days furnish Lender with a
statement, duly acknowledged and certified, setting forth
(A) the unpaid principal amount of the Note, (B) the
applicable Interest Rate, (C) the date installments of
interest and/or principal were last paid, (D) any offsets or
defenses to the payment of the Debt, (E) that the Note, this
Agreement, the Mortgages and the other Loan Documents are
valid, legal and binding obligations and have not been
modified or if modified, giving particulars of such
modification, and (F) such other matters as Lender may
reasonably request. Any prospective purchaser of any
interest in the Loan shall be permitted to rely on such
certificate.
(ii) Borrower shall request and use all reasonable
efforts to obtain for Lender, upon request, Tenant estoppel
certificates from each Tenant and the ground lessors under
the Ground Leases on forms reasonably satisfactory to
Lender, provided that Borrower shall not be required to
deliver such certificates more frequently than once in any
calendar year (including estoppel certificates obtained in
connection with the origination of the Loan); provided,
however, that there shall be no limit on the number of times
Borrower may be required to obtain such certificates if a
Default hereunder or under any of the Loan Documents has
occurred and is continuing.
(o) Loan Proceeds. Borrower shall use the proceeds of
the Loan received by it on the Closing Date only for the purposes
set forth in Section 2.1.4.
(p) Performance by Borrower. Borrower shall in a
timely manner observe, perform and fulfill each and every
covenant, term and provision of each Loan Document executed and
delivered by Borrower, and shall not enter into or otherwise
suffer or permit any amendment, waiver, supplement, termination
or other modification of any Loan Document executed and delivered
by Borrower without the prior written consent of Lender. Without
limiting the foregoing, Borrower shall cure (or cause to be
cured) the Deferred Maintenance Conditions in a diligent manner
and shall complete the same not later than the first
anniversary hereof.
(q) Annual Budget.
(i) Borrower shall prepare and deliver to Lender,
on or before the date that is eighty (80) days prior to the
end of each Fiscal Year, an Annual Budget in respect of the
Mortgaged Properties for the ensuing Fiscal Year. The
Annual Budget shall include a capital expenditures budget
(y) with respect to any Mortgaged Property in the event that
the Master Tenant is no longer responsible for all Capital
Expenditures with respect to such Mortgaged Property
pursuant to the related Master Lease and (z) with respect to
the Mortgaged Properties for any period after the
Anticipated Prepayment Date. The Annual Budget shall be
subject to Lender's approval, with respect to any period
after (A) the Anticipated Prepayment Date, (B) the
occurrence of an Low Debt Service Reserve Trigger Event or
(C) the occurrence of an Event of Default. Once approved,
such budget shall be complied with, subject to a five
percent (5%) variance on year-to-date expenses (such
variance shall be applied on a line-item basis, except that
immaterial items may be aggregated for such variance and
except for emergencies, but only to the extent necessary to
prevent personal injury or imminent material damage to any
Mortgaged Property). In addition, Borrower shall have the
right to submit proposed modifications to the approved
budget, not more than one time during any quarter, which
modifications shall be subject to Lender's approval (not to
be unreasonably withheld or delayed). Lender's failure to
approve or disapprove any Annual Budget within thirty
(30) days after Lender's receipt thereof shall be deemed to
constitute Lender's approval thereof; provided (i) Borrower
shall have delivered to Lender a second notice not earlier
than fifteen (15) days prior to expiration of such approval
period and not later than ten (10) days prior to the
expiration of such approval period and (ii) Borrower shall
have delivered the Annual Budget to Lender with a cover
letter stating that the Lender's failure to approve or
disapprove the Annual Budget within thirty days (30) days
will result in its deemed approval.
(r) No Joint Assessment. Borrower shall not suffer,
permit or initiate the joint assessment of any Mortgaged Property
(i) with any other real property constituting a tax lot separate
from such Mortgaged Property, and (ii) unless required by
applicable law, with any portion of such Mortgaged Property which
may be deemed to constitute personal property, or any other
procedure whereby the lien of any taxes which may be levied
against such personal property shall be assessed or levied or
charged to such Mortgaged Property.
(s) Leasing Matters. In addition to the terms of
Section 7.2:
(i) Borrower shall furnish Lender with an
executed copy of any Lease within thirty (30) days after
execution thereof.
(ii) All new Leases entered into from and after
the date hereof shall be the result of arms' length
negotiations, shall provide for "market" rental rates and
other market terms and shall not contain any terms which
would materially adversely affect Lender's rights under the
Loan.
(iii) All Leases other than the Master Leases
shall provide that they are subordinate to the Lien of the
related Mortgage and that the lessee agrees to attorn to
Lender at Lender's request (subject to the terms of
Section 7.2(b)).
(iv) Borrower (A) shall observe and perform the
obligations imposed upon the lessor under the Leases in a
commercially reasonable manner; (B) shall enforce the terms,
covenants and conditions contained in the Leases on the part
of the lessee thereunder to be observed or performed in a
commercially reasonable manner; (C) shall not collect any of
the base or minimum rents more than one (1) month in advance
(other than security deposits); (D) shall not execute any
assignment of lessor's interest in the Leases or the Rents
(except for the Assignment of Leases) and (E) shall not
alter, modify or change the terms of any Lease without the
prior consent of Lender and the applicable Rating Agencies.
Borrower shall not terminate, release or consent to any
assignment or subletting of any Lease (except as otherwise
permitted under any Lease) without the prior consent of
Lender and the receipt of a Rating Confirmation with respect
thereto; provided, however, that such consent shall be
required in connection with the assignment of the Master
Lease Tenant's interest under no more than two (2) of the
Master Leases to an Approved Assignee. In the event of any
such assignment of the Master Lease Tenant's interests in
more than two (2) of the Master Leases in accordance with
the terms and provisions of this clause (iv), Borrower shall
deposit into the Master Lease Rollover Account an amount
equal to Five and No/100 Dollars ($5.00) per usable square
foot (as escalated by the CPI Increase) of space at each
Mortgaged Property subject to a Master Lease that has been
so assigned by the Master Lease Tenant. Any Lease affecting
less than 2,000 usable square feet, the terms of which are
substantially equivalent to market terms and that conforms
in all material respects with a form of lease approved by
Lender will not be subject to Lender's prior written
consent.
(v) Borrower shall use good faith efforts to
obtain, within sixty (60) days after requested by Lender,
Subordination and Attornment Agreements (in commercially
reasonable form).
(t) Security Deposits. Borrower shall immediately
upon receipt deliver (and with respect to security deposits,
letters of credit or other collateral already paid or delivered
to Borrower or its predecessor in interest, Borrower is
concurrently herewith delivering) to Lender all security
deposits, letters of credit or other collateral that it receives
(or has received) from time to time from any Tenant as security
for the performance by such Tenant of its obligations under its
Lease. Lender shall deposit (or shall direct Borrower to deposit
directly) any cash to be delivered by Borrower pursuant to the
preceding sentence in an escrow account in the name of Lender
and, except to the extent required by law or the applicable
Lease, such account shall be maintained in accordance with the
terms of Section 12.2. Lender shall make such security available
to Borrower or the applicable Tenant on or prior to the tenth
(10th) Business Day after notice from Borrower to the extent
required to comply with obligations owed to such Tenant under the
terms of its Lease or to Borrower, in the event of such Tenant's
default under its Lease, subject to Lender's approval, which
approval shall not be unreasonably withheld (based on, among
other things, the intended use of such deposit and whether a
replacement Lease has been executed). Lender may commingle
Security Deposits deposited hereunder and Lender shall not be
obligated to segregate, designate or separately account for any
specific Security Deposit, except to the extent that Borrower
notifies Lender in writing at or prior to the time of any deposit
that such Security Deposit is required to be segregated by the
applicable Lease or under applicable law.
(u) Material Agreements. Borrower shall:
(i) promptly perform and/or observe all of the
material covenants and agreements required to be performed
and observed by it under any Material Agreement, and do all
things necessary to preserve and to keep unimpaired its
material rights thereunder;
(ii) promptly notify Lender of the giving of any
notice of any material default by any party under any
Material Agreement of which it is aware; and
(iii) promptly enforce the performance and
observance of all of the material covenants and agreements
required to be performed and/or observed by the other party
under each Material Agreement.
(v) Ground Leases. Borrower:
(i) shall promptly perform and/or observe (or
cause Master Tenant to perform and/or observe on behalf of
Borrower) all of the material covenants and agreements to be
performed or observed by Borrower under each of the Ground
Leases in accordance with the terms thereof;
(ii) shall promptly notify Lender of the giving or
receipt by Borrower of any notice of any default under any
Ground Lease;
(iii) shall exercise any renewal option under
each of the Ground Leases in accordance with the terms
thereof as shall be necessary to ensure that the term of
each of the Ground Leases extends to no less than ten
(10) years beyond the Stated Maturity Date; and
(iv) hereby grants Lender an irrevocable power of
attorney, coupled with an interest, to exercise, on its
behalf, any renewal options under each of the Ground Leases
as required in order to comply with the terms and provisions
of clause (iii) above.
VI. NEGATIVE COVENANTS
SECTION 6.1 BORROWER'S NEGATIVE COVENANTS.
Borrower covenants and agrees with Lender that it will
not do, directly or indirectly, any of the following:
(a) Operation of Property. Except to the extent that
the Master Lease Tenant is permitted to do so under the Master
Lease, Borrower shall not, without Lender's prior consent (except
as elsewhere herein expressly provided): (i) surrender or
terminate any Material Agreement other than the Property
Management Agreement (unless the other party thereto is in
material default and the termination of such agreement would be
commercially reasonable), (ii) surrender or terminate any
Property Management Agreement, or permit or suffer any
significant delegation or contracting of any Property Manager's
duties (unless such Property Manager is in material default and
the termination of such agreement would be commercially
reasonable or unless such Property Manager is being replaced with
an Acceptable Property Manager pursuant to a commercially
reasonable property management agreement), (iii) increase or
consent to the increase of the amount of any charges under any
Material Agreement, except as provided therein or on an arms'-
length basis and commercially reasonable terms; or (iv) otherwise
modify, change, supplement, alter or amend, or waive or release
any of its rights and remedies under any Material Agreement in
any material respect, except on an arms'-length basis and
commercially reasonable terms.
(b) Liens. Subject to Section 5.1(b)(ii), Borrower
shall not, without the prior written consent of Lender, create,
incur, assume, permit or suffer to exist any Lien on any portion
of any Mortgaged Property, except (i) Permitted Encumbrances,
(ii) Liens created by or permitted pursuant to the Loan
Documents, (iii) Liens for Taxes or Other Charges not yet
delinquent, and (iv) Liens permitted under any Master Lease.
(c) Dissolution. Borrower shall not dissolve,
terminate, liquidate, merge with or consolidate into another
Person, except a transfer permitted under Section 6.1(i).
(d) Change in Business. Borrower shall not enter into
any line of business other than the ownership, maintenance,
financing, refinancing and operation of the Mortgaged Properties,
(in each case subject to the terms hereof), or make any material
change in the scope or nature of its business objectives or
purposes, or undertake or participate in activities other than
the continuance of its present business.
(e) Debt Cancellation. Borrower shall not cancel or
otherwise forgive or release any claim or debt owed to Borrower
by any Person, including any arising under any of the Leases and
Material Agreements except (i) with respect to the Leases and
Material Agreements, in accordance with and subject to the terms
hereof and (ii) with respect to other matters, for adequate
consideration in the ordinary course of Borrower's business and
on commercially reasonable terms, subject to other restrictions
contained herein or in any other Loan Document.
(f) Affiliate Transactions. Borrower shall not enter
into, or be a party to, any transaction with an Affiliate of
Borrower or Sponsor except in the ordinary course of business and
on terms which are fully disclosed to Lender in advance and are
no less favorable to Borrower or such Affiliate than would be
obtained in a comparable arms'-length transaction with an
unrelated third party.
(g) Zoning and Uses. Except to the extent that the
Master Lease Tenant may be permitted to do so under the Master
Lease, Borrower shall not (i) initiate or support any limiting
change in the permitted uses of any Mortgaged Property (or to the
extent applicable, zoning reclassification of any Mortgaged
Property) or any portion thereof, seek any variance under
existing land use restrictions, laws, rules or regulations (or,
to the extent applicable, zoning ordinances) applicable to any
Mortgaged Property or use or permit the use of any Mortgaged
Property in a manner that would result in such use becoming a
non-conforming use under applicable land-use restrictions (and,
if any, zoning ordinances) or that would violate the terms of any
Lease, Operating Agreement, Legal Requirements or any Permitted
Encumbrance, (ii) modify, amend or supplement any of the terms of
any Permitted Encumbrance in a manner adverse in any material
respect to the interests of Lender, (iii) modify, amend or
supplement any of the terms of any Ground Lease or any other
Permitted Encumbrance in a manner adverse in any material respect
to the interest of Lender, (iv) impose or permit or suffer the
imposition of any restrictive covenants, easements or
encumbrances upon any Mortgaged Property in any manner that
adversely affects in any material respect the value or utility of
such Mortgaged Property, (v) execute or file any subdivision plat
affecting any Mortgaged Property, institute, or permit the
institution of, proceedings to alter any tax lot comprising any
Mortgaged Property or (vi) permit or suffer any Mortgaged
Property to be used by the public or any Person in such manner as
might make possible a claim of adverse usage or possession or of
any implied dedication or easement.
(h) Debt. Borrower shall not create, incur or assume
any debt (secured or unsecured) other than the Permitted
Indebtedness.
(i) Transfers.
(i) General Limitation. Unless such action is
permitted by the subsequent provisions of this
Section 6.1(i) or by the terms of Section 5.1(s), Borrower
will not, without Lender's consent (which shall not be
unreasonably withheld or delayed) and a Rating Confirmation
with respect to the transfer or other matter in question,
(A) sell, assign, convey, transfer or otherwise dispose of
or encumber (except as otherwise provided herein) legal,
beneficial or equitable interests in all or any part of any
Mortgaged Property, (B) permit or suffer any owner, directly
or indirectly, of a beneficial interest in any Mortgaged
Property to transfer such interest, whether by transfer of
stock or other beneficial interest in any entity or
otherwise, (C) mortgage, hypothecate or otherwise encumber
or grant a security interest in all or any part thereof or
(D) file a declaration of condominium with respect to any
Mortgaged Property.
(ii) Sale of the Mortgaged Properties. Except as
may be set forth in the last sentence of this clause (ii) or
elsewhere in this Section 6.1(i), Borrower may only sell,
assign, convey, transfer or otherwise dispose of legal or
equitable title to or any interest in the Mortgaged
Properties from time to time and at any time if:
(A) after giving effect to the proposed
transaction:
(1) the Mortgaged Properties will be
owned by a Single Purpose Entity which will be in
compliance with the representations, warranties
and covenants contained in Section 4.1(cc) hereof
(as if Borrower shall have remade all of such
representations, warranties and covenants as of,
and after giving effect to, the proposed
transaction), and which shall have assumed
(subject to the terms of Section 12.25) and agreed
in writing to comply with all the terms, covenants
and conditions set forth in this Agreement and the
other Loan Documents;
(2) the transferee will be at least
fifty-one percent (51%) owned and controlled
(directly or indirectly) by (i) Sponsor, (ii) any
entity with which Sponsor is merged or
consolidated or to which Sponsor sells all or
substantially all of its assets, or (iii) an
entity in which Sponsor is the sole operating
partner;
(3) an Acceptable Property Manager
shall act or continue to act as Property Manager
if, at the time such proposed transaction is
consummated, the Master Lease is not then in full
force and effect with respect to the Mortgaged
Property in question;
(4) no Event of Default shall have
occurred and be continuing; and
(B) prior to any such transaction, the
proposed transferee shall deliver to Lender an
Officer's Certificate stating that either (x) such
transferee is an Employee Benefit Plan that is
subject to Title I of ERISA and is not a "Plan"
within the meaning of Section 4975 of the Code and
the obligations under this Agreement are not, and
the exercise of rights under this Agreement will
not, constitute a non-exempt prohibited
transaction; or (y) the transferee is a
"governmental plan" (as defined in Section 3(32)
of ERISA), and the obligations under this
Agreement, and the exercise of rights under this
Agreement, do not and will not violate any
applicable state statutes regulating investments
by or fiduciary obligations with respect to
governmental plans; or (z) the proposed transferee
is neither an Employee Benefit Plan or a
"governmental plan" or a "Plan" within the meaning
of Section 4975 of the Code, and (i) such proposed
transferee is not subject to state statutes
regulating investments by or fiduciary obligations
with respect to "governmental plans" and (ii) the
underlying assets of the proposed transferee do
not, for purposes of ERISA, constitute assets of
the Employee Benefit Plans holding an equity
interest in such proposed transferee.
(iii) Transfers of Interests in Borrower. The
holder of any direct or indirect interest in Borrower may
transfer such interest to any Person if after giving effect
to such transfer:
(A) Borrower will be directly owned by a
Single Purpose Entity in compliance with the
representations, warranties and covenants in
Section 4.1(cc) (as if Borrower shall have remade all
of such representations, warranties and covenants as
of, and after giving effect to, the transfer);
(B) Borrower will be at least fifty-one
percent (51%) owned and controlled (directly or
indirectly) by (i) Sponsor, (ii) any entity with which
Sponsor is merged or consolidated or to which Sponsor
sells or transfers all or substantially all of its
assets, or (iii) an entity in which Sponsor is the sole
operating partner;
(C) if there has been a transfer of twenty-
five percent (25%) or more of the direct membership
interests, stock or other direct equity ownership
interests in Borrower or a transfer of a general
partnership interest in Borrower or managing member's
interest in Borrower, Borrower shall have first
delivered to Lender an Officer's Certificate and legal
opinion of the types described in Section 6.1(i)(iv)
below;
(D) if there has been a transfer of any
direct interest in the general partner of Borrower
which general partner is the requisite Single Purpose
Entity, such transfer will require an Officer's
Certificate and legal opinion of the types described in
Section 6.1(i)(iv) below; and
(E) if after giving effect to a transfer of
ownership interests in Sponsor, as Borrower's sole
shareholder, any one Person and its Affiliates shall
own more than forty-nine percent (49%) of the ownership
interests in Sponsor that did not own more than
forty-nine percent (49%) of the ownership interests in
Sponsor on the date hereof, Lender shall have first
received an Officer's Certificate and legal opinion,
each of the type described in Section 6.1(i)(iv) below.
(iv) Notice Required. Not less than five
(5) Business Days prior to the closing of any transaction
permitted under the provisions of this Section 6.1(i),
Borrower shall deliver or cause to be delivered to Lender
(A) an Officer's Certificate describing the proposed
transaction and stating that such transaction is permitted
hereunder and under the other Loan Documents, together with
any documents upon which such Officer's Certificate is
based, and (B) a legal opinion of counsel to Borrower or the
transferee selected by either of them (unless reasonably
disapproved by Lender or the applicable Rating Agencies), in
form and substance consistent with similar opinions then
being required by the applicable Rating Agencies,
confirming, among other things, that the assets of the
Borrower, and of its managing general partner or managing
member, as applicable, will not be substantively
consolidated with the assets of such owners or controlling
Persons of Borrower as Lender or the applicable Rating
Agencies may reasonably specify, in the event of a
bankruptcy or similar proceeding involving such owners or
controlling Persons.
(v) Expenses. Borrower shall pay, promptly after
demand therefor, all reasonable expenses incurred by Lender
and Servicer in connection with any transaction permitted
under this Section 6.1(i).
(vi) Sale of Equipment. Notwithstanding the above
provisions of this Section 6.1(i), Borrower may transfer or
dispose of Equipment (as defined in the Mortgage) that is
either being replaced or that is no longer necessary in
connection with the operation of the Mortgaged Property free
from the interest of Lender under this Agreement or any
other Loan Document, provided such transfer or disposal
(when compared to the non-transfer or non-disposal of such
Equipment) will not materially adversely affect the value of
the Mortgaged Property, will not materially impair the
utility thereof and will not result in a reduction or
abatement of, or right of offset against, the rentals or
other amounts payable under any Lease or any Operating
Agreement, in either case as a result thereof, provided that
any new Equipment acquired by Borrower (and not so disposed
of) shall be subject to the interest of Lender under this
Agreement and the other Loan Documents unless leased to
Borrower (in which event, Lender shall be made a collateral
assignee of Borrower's interest in such lease (but, unless
expressly subsequently assumed by Lender, Lender shall have
no obligations under Borrower's interest therein)).
(j) Nonexempt ERISA Transactions. Borrower shall not
engage in a nonexempt prohibited transaction described in
Section 406 of ERISA or Section 4975 of the Code, as such
sections relate to Borrower, or in any transaction that would
cause any obligation or action taken or to be taken hereunder (or
the exercise by Lender of any of its rights under the Note, this
Agreement, the Mortgage or any other Loan Document) to be a non-
exempt prohibited transaction under ERISA.
VII. ALTERATIONS AND EXPANSIONS; LEASING
SECTION 7.1 ALTERATIONS.
Except to the extent that the Master Lease Tenant may
be permitted to do so under the Master Lease, Borrower will not
make or permit any demolition, alteration, installation,
improvement or decoration (each, an "ALTERATION") of or to any
Mortgaged Property or any part thereof or the Improvements
thereon, or expand or reduce (each, an "EXPANSION") any Mortgaged
Property or any portion thereof or the Improvements thereon,
except in accordance with the following terms and conditions:
(a) The Alteration or Expansion shall be undertaken in
accordance with the applicable provisions of this Agreement, the
other Loan Documents, the Operating Agreements and the Leases,
and all Legal Requirements.
(b) No Event of Default shall have occurred and be
continuing or shall occur as a result of such action.
(c) A Material Alteration or Material Expansion shall
be conducted under the supervision of an Independent Architect or
Engineer and shall not be undertaken until ten (10) Business Days
after there shall have been filed with Lender, for information
purposes only and not for approval by Lender, detailed plans and
specifications and cost estimates therefor, prepared and approved
in writing by such Independent Architect. Such plans and
specifications may be revised at any time and from time to time,
provided that material revisions of such plans and specifications
shall be filed with Lender, for information purposes only.
(d) Other than in connection with any Restoration, the
Alteration or Expansion may not in and of itself, either during
the Alteration or Expansion or upon completion, materially
adversely affect the fair market value of the Mortgaged Property
or the Net Cash Flow, taking into account the required escrows
(or completion bond) provided under Section 7.1(i) below;
provided that if, as reasonably determined by the Lender, such
Alteration or Expansion would materially adversely affect the Net
Cash Flow, then in order to proceed with the Alteration or
Expansion the Borrower shall deliver to Lender Eligible
Collateral in the total amount of the estimated reduction in Net
Cash Flow resulting from the Alteration or Expansion as
additional security for the Debt, which Eligible Collateral shall
be returned to Borrower after completion of the Alteration or
Expansion if the reduction in Net Cash Flow has been restored and
no Event of Default has occurred and is continuing.
(e) All work done in connection with any Alteration or
Expansion shall be performed with due diligence to Final
Completion in a good and workmanlike manner, all materials used
in connection with any Alteration or Expansion shall be not less
than the standard of quality of the materials generally used at
the applicable Mortgaged Property as of the date hereof (or, if
greater, the then-current customary quality in the submarket in
which the Mortgaged Property is located) and all work shall be
performed and all materials used in accordance with all
applicable Legal Requirements and Insurance Requirements.
(f) The cost of any Alteration or Expansion shall be
promptly and fully paid for by Borrower, subject to the next
succeeding sentence. No payment made prior to the Final
Completion of an Alteration or Expansion or Restoration to any
contractor, subcontractor, materialman, supplier, engineer,
architect, project manager or other Person who renders services
or furnishes materials in connection with such Alteration shall
exceed ninety-five percent (95%) of the value of the work
performed from time to time and materials furnished and
incorporated into the Improvements.
(g) Other than in connection with any Restoration, the
Alteration or Expansion will not, (i) under any then existing
Lease, entitle one or more Tenants to terminate their respective
Leases or any operating covenant under any Material Agreements or
abate rent or otherwise give rise to any other rights of lessees
or such other parties that would have a materially adverse effect
on the value of the applicable Mortgaged Property, or
(ii) entitle any Tenants at the applicable Mortgaged Property to
terminate their respective Leases or to abate any of the rents
payable under their respective Leases.
(h) With respect to any Material Alteration or any
Material Expansion:
(i) Borrower shall have delivered to Lender
Eligible Collateral in an amount equal to at least the total
estimated remaining unpaid costs of such Material Alteration
or Material Expansion which Eligible Collateral shall be
held by Lender as security for the Debt and released to the
Borrower as such work progresses in accordance with
Section 7.1(h)(iii); provided, however, in the event that
any Material Alteration or Material Expansion shall be made
in conjunction with any Restoration with respect to which
such Borrower shall be entitled to withdraw Proceeds
pursuant to Section 8.1.2(b) (including any Proceeds
remaining after completion of such Restoration), the amount
of the Eligible Collateral to be furnished pursuant hereto
need not exceed the aggregate cost of such Restoration and
such Material Alteration or Material Expansion (in either
case, as estimated by the Independent Architect) less the
sum of the amount of any Proceeds which such Borrower is
entitled to withdraw pursuant to Section 8.1;
(ii) prior to commencement of construction of such
Material Alteration or Material Expansion, Borrower shall
deliver to Lender a schedule (which shall be concurred in by
the Independent Architect) setting forth the projected
stages of completion of such Alteration or Expansion and the
corresponding amounts expected to be due and payable by or
on behalf of Borrower in connection with such completion,
such schedule to be updated quarterly by Borrower (and
concurred with by an Independent Architect) during the
performance of such Alteration or Expansion.
(iii) Any Eligible Collateral that Borrower
delivers to Lender pursuant hereto (and the proceeds of any
such Eligible Collateral) shall be invested (to the extent
such Eligible Collateral can be invested) by Lender in
Permitted Investments for a period of time consistent with
the date on which Borrower notifies Lender that Borrower
expects to request a release of such Eligible Collateral in
accordance with the next succeeding sentence. From time to
time as the Alteration or Expansion progresses, the amount
of any Eligible Collateral so furnished may, upon the
written request of Borrower to Lender, be withdrawn by
Borrower and paid or otherwise applied by or returned to
Borrower in an amount equal to the amount Borrower would be
entitled to so withdraw if Section 8.1.2(e) were applicable,
and any Eligible Collateral so furnished which is a Credit
Facility may be reduced by Borrower in an amount equal to
the amount Borrower would be entitled to so reduce if
Section 8.1.2(e) were applicable, subject, in each case, to
the satisfaction of the conditions precedent to withdrawal
of funds or reduction of the Credit Facility set forth in
Section 8.1.2(e). In connection with the above-described
quarterly update of the projected stages of completion of
the Material Alteration or Material Expansion (as concurred
with by an Independent Architect), Borrower shall increase
(or be permitted to decrease, as applicable) the Eligible
Collateral then deposited with Lender as necessary to comply
with Section 7.1(h)(i).
(iv) At any time after Final Completion of such
Alterations or Expansions, the whole balance of any Cash
deposited with Lender pursuant to Section 7.1(h) then
remaining on deposit may be withdrawn by Borrower and shall
be paid by Lender to Borrower, and any Eligible Collateral
so deposited (and any earnings thereon) shall, to the extent
it has not been called upon, reduced or theretofore
released, be released by Lender to Borrower, within
ten (10) days after receipt by Lender of an application for
such withdrawal and/or release together with an Officer's
Certificate, and as to the following clauses (A) and (B) of
this clause also a certificate of the Independent Architect,
setting forth in substance as follows:
(A) that such Alteration(s) or Expansions
has been completed in accordance with any plans and
specifications therefor previously filed with Lender
under Section 7.1(c);
(B) that to the knowledge of the certifying
Person, (x) such Alteration(s) or Expansion(s) has been
completed in compliance with all Legal Requirements,
and (y) to the extent required for the legal use or
occupancy of the portion of the applicable Mortgaged
Property affected by such Alteration(s) or
Expansion(s), Borrower has obtained a temporary or
permanent certificate of occupancy (or similar
certificate) or, if no such certificate is required, a
statement to that effect;
(C) that to the knowledge of the certifying
Person, all amounts that Borrower is or may become
liable to pay in respect of such Alteration(s) or
Expansion(s) through the date of the certification have
been paid in full or adequately provided for and, to
the extent that such are customary and reasonably
obtainable by prudent property owners in the area where
the applicable Mortgaged Property is located, that Lien
waivers have been obtained from the general contractor
and major subcontractors performing such Alteration or
Expansion or at its sole cost and expense, Borrower
shall cause a nationally recognized title insurance
company to deliver to Lender an endorsement to the
applicable Qualified Title Policy, updating such policy
and insuring over such Liens without further exceptions
to such policy other than Permitted Encumbrances, or
shall, at its sole cost and expense, cause a reputable
title insurance company to deliver a lender's title
insurance policy, in such form, in such amounts and
with such endorsements as the applicable Qualified
Title Policy, which policy shall be dated the date of
completion of the Material Alteration and shall contain
no exceptions other than Permitted Encumbrances;
provided, however, that if, for any reason, Borrower is
unable to deliver the certification required by this
clause (C) with respect to any costs or expenses
relating to the Alteration or Expansion, then, assuming
Borrower is able to satisfy each of the other
requirements set forth in clauses (A) and (B) above,
Borrower shall be entitled to the release of the
difference between the whole balance of such Eligible
Collateral and the total of all costs and expenses to
which Borrower is unable to certify; and
(D) that to the knowledge of the certifying
Person, no Event of Default has occurred and is
continuing.
(i) Notwithstanding anything to the contrary in this
Section 7.1, Lender and Borrower agree that, at all times while
the Master Lease is in full force and effect with respect to a
Mortgaged Property, the rights and obligations of the Master
Lease Tenant and Borrower with respect to Alterations and
Expansions shall be as set forth in the Master Lease, and
Borrower shall not be in default hereunder so long as the Master
Lease Tenant is making and undertaking Alterations and Expansions
in accordance with the terms and provisions of the Master Lease.
SECTION 7.2 LEASING.
(a) Borrower shall observe the covenants set forth in
Section 5.1(s).
(b) At Borrower's request, Lender shall execute and
deliver a subordination, nondisturbance and attornment agreement
in the form of Exhibit B annexed hereto (or such other form as
Borrower may propose from time to time, subject to Lender's
approval, not to be unreasonably withheld or delayed), among
Lender, Borrower and any Tenant under a Lease permitted under
Section 5.1(s) and demising no less than 10,000 square feet,
provided that such Tenant also executes and delivers such
agreement in favor of Lender.
(c) Any Termination Fee (as hereinafter defined) shall
be deposited and maintained in a separate Eligible Account in
which Lender is hereby and shall be granted a security interest
(the "TERMINATION PAYMENT ACCOUNT"), shall be applied in the
following order of priority: (i) to any payment to a Reserve
Account, any payment of Debt Service or any other payment
required under the Loan Documents that is not paid when due, and
(ii) to the costs and expenses incurred by Borrower in connection
with that portion of the Mortgaged Property affected by the
cancellation or termination of the Lease. Any portion of a
Termination Fee remaining on deposit in the Termination Payment
Account will be released to Borrower upon the occupancy of the
premises to which such Termination Fee is related by a
replacement Tenant satisfactory to Lender and the commencement by
such Tenant of the payment of rent pursuant to the related
replacement Lease; provided, however, that if projected revenue
with respect to a replacement Lease will be less than that for
the terminated lease during the remainder of the scheduled term
of the terminated lease then the portion of the Termination Fee
equal to the amount of such difference shall be retained in the
Termination Payment Account and deposited monthly to the Deposit
Account as Operating Income in an amount equal to such difference
divided by the number of months remaining in the term of the
terminated lease at the time of such termination or cancellation.
"TERMINATION FEE" shall mean any payment, fee or penalty paid by
a Tenant in connection with the cancellation or termination of
such Tenant's Lease, whether by reason of such Tenant's default
or pursuant to the terms of such Lease.
VIII. CASUALTY AND CONDEMNATION
SECTION 8.1 INSURANCE; CASUALTY AND CONDEMNATION.
8.1.1 INSURANCE. (a) Casualty Insurance. Borrower
shall obtain and maintain policies of insurance insuring against
loss or damage by standard perils included within the
classification "All Risks of Physical Loss". Such insurance
(i) shall be in an aggregate amount equal to the then full
replacement cost of the Mortgaged Properties and the Equipment
(without deduction for physical depreciation) and (ii) shall have
deductibles no greater than Fifty Thousand and No/100 Dollars
($50,000) (as escalated by the CPI Increase) (with such higher
deductibles for wind and earthquake coverage as the applicable
issuer may require). The policies of insurance carried in
accordance with this paragraph shall be paid annually in advance
and shall contain a "Replacement Cost Endorsement" with a waiver
of depreciation. In addition, Borrower shall maintain
(A) earthquake insurance for each Mortgaged Property located in
California providing coverage equivalent to no less than 1.0
times the Probable Maximum Loss applicable to each such Mortgaged
Property and (B) hurricane coverages at the "full replacement
cost" level for each Mortgaged Property, as applicable.
(b) Additional Insurance. Borrower shall also obtain
and maintain the following policies of insurance:
(i) Flood insurance if any part of any Mortgaged
Property is located in an area identified by the Federal
Emergency Management Agency as an area federally designated
a "100 year flood plain" and (A) flood insurance is
generally available at reasonable premiums and in such
amount as generally required by institutional lenders for
similar properties or (B) if not so available from a private
carrier, from the federal government at commercially
reasonable premiums to the extent available. In either
case, the flood insurance shall be in an amount at least
equal to the Loan Amount or the maximum limit of coverage
available with respect to the Mortgaged Property under said
program, whichever is less;
(ii) Comprehensive general liability insurance,
including broad form property damage, blanket contractual
and personal injuries (including death resulting therefrom)
coverages and containing minimum limits per occurrence of
Ten Million and No/100 Dollars ($10,000,000) for any policy
year. In addition, at least Thirty Million and No/100
Dollars ($30,000,000) excess and/or umbrella liability
insurance shall be obtained and maintained for any and all
claims, including all legal liability imposed upon Borrower
and all related court costs and attorneys' fees;
(iii) Rental loss and/or business interruption
insurance in an amount sufficient to avoid any co-insurance
penalty and equal to the greater of (A) the estimated gross
revenues from the operation of the Mortgaged Properties
(including (x) the total payable under the Leases and
(y) the total amount of all other amounts to be received by
Borrower or third parties that are the legal obligation of
the Tenants), net of nonrecurring expenses, for a period of
up to the next succeeding eighteen (18) months, or (B) the
projected Operating Expenses (including debt service) for
the maintenance and operation of the Mortgaged Properties
for the next succeeding eighteen (18) months. The amount of
such insurance shall be increased from time to time as and
when the Rents increase or the estimate of (or the actual)
gross revenue, as may be applicable, increases or decreases
to the extent Rents or the estimates of gross revenue
decrease;
(iv) Insurance against loss or damage from
(A) leakage of sprinkler systems and (B) explosion of steam
boilers, air conditioning equipment, high pressure piping,
machinery and equipment, pressure vessels or similar
apparatus now or hereafter installed in any of the
Improvements (without exclusion for explosions) and
insurance against loss of occupancy or use arising from any
breakdown, in such amounts as are generally available at
reasonable premiums and are generally required by
institutional lenders for properties comparable to the
Mortgaged Properties;
(v) Worker's compensation insurance with respect
to all employees of Borrower in as and to the extent
required by any Governmental Authority or Legal Requirement;
(vi) During any period of repair or restoration,
builder's "all risk" insurance in an amount equal to not
less than the full insurable value of the applicable
Mortgaged Property against such risks (including fire and
extended coverage and collapse of the Improvements to agreed
limits) as Lender may request, in form and substance
acceptable to Lender;
(vii) Coverage to compensate for the cost of
demolition and the increased cost of construction for each
Mortgaged Property in an amount satisfactory to Lender; and
(viii) Such other insurance as may from time to
time be reasonably required by Lender in order to protect
its interests.
(c) All policies of insurance (the "POLICIES")
required pursuant to this Section 8.1.1 shall be issued by
companies approved by Lender and licensed to do business in the
state where the applicable Mortgaged Property is located.
Further, unless otherwise approved by Lender and the applicable
Rating Agencies in writing, the issuer(s) of the Policies
required under Section 8.1.1 shall have (y) a claims paying
ability rating of "AA" or better by Standard & Poor's (other than
the issuer of any Policy for earthquake insurance, which issuer
shall have a claims paying ability rating of "A" or better by
Standard & Poor's Ratings Group and Moody's Investors Services,
Inc., and if Lender so requires, by any of the other applicable
Rating Agencies and (z) a rating of A/X or better by A. M. Best
Company, Inc. The Policies (i) shall name Lender and its
successors and/or assigns as their interest may appear as an
additional insured or as a loss payee (except that in the case of
general liability insurance, Lender shall be named an additional
insured and not a loss payee); (ii) shall contain a
Non-Contributory Standard Lender Clause and, except with respect
to general liability insurance, a Lender's Loss Payable
Endorsement, or their equivalents, naming Lender as the person to
which all payments made by such insurance company shall be paid;
(iii) shall include effective waivers by the insurer of all
claims for insurance premiums against all loss payees, additional
insureds and named insureds (other than Borrower) and all rights
of subrogation against any loss payee, additional insured or
named insured; (iv) shall be assigned to Lender; (v) except as
otherwise provided above, shall be subject to a deductible, if
any, not greater in any material respect, in proportion to the
coverage maintained, than the deductible for such coverage on the
date hereof; (vi) shall contain such provisions as Lender deems
reasonably necessary or desirable to protect its interest
including endorsements providing that neither Borrower, Lender
nor any other party shall be a co-insurer under said Policies and
that no modification, reduction, cancellation or termination in
amount of, or material change (other than an increase) in,
coverage of any of the Policies shall be effective until at least
thirty (30) days after receipt by each named insured, additional
insured and loss payee of written notice thereof or ten (10) days
after receipt of such notice with respect to nonpayment of
premium; (vii) shall permit Lender to pay the premiums and
continue any insurance upon failure of Borrower to pay premiums
when due, upon the insolvency of Borrower or through foreclosure
or other transfer of title to any Mortgaged Property (it being
understood that Borrower's rights to coverage under such policies
may not be assignable without the consent of the insurer); and
(viii) shall provide that any proceeds shall be payable to
Lender( and that the insurance shall not be impaired or
invalidated by virtue of (A) any act, failure to act, negligence
of, or violation of declarations, warranties or conditions
contained in such policy by Borrower, Lender or any other named
insured, additional insured or loss payee, except for the willful
misconduct of Lender knowingly in violation of the conditions of
such policy, (B) the occupation, use, operation or maintenance of
any Mortgaged Property for purposes more hazardous than permitted
by the terms of the Policy, (C) any foreclosure or other
proceeding or notice of sale relating to any Mortgaged Property
or (D) any change in the possession of the Mortgaged Property
without a change in the identity of the holder of actual title to
any Mortgaged Property (provided that with respect to items
(C) and (D), any notice requirements of the applicable Policies
are satisfied).
(d) Insurance Premiums; Certificates of Insurance.
(i) Borrower shall pay the premiums for such
Policies (the "INSURANCE PREMIUMS") as the same become due
and payable and shall furnish to Lender the receipts for the
payment of the Insurance Premiums or other evidence of such
payment reasonably satisfactory to Lender (provided,
however, that Borrower is not required to furnish such
evidence of payment to Lender if such Insurance Premiums are
to be paid by Lender pursuant to the terms of this
Agreement). Within thirty (30) days after request by
Lender, Borrower shall obtain such increases in the amounts
of coverage required hereunder as may be reasonably
requested by Lender, taking into consideration changes in
liability laws, changes in prudent customs and practices,
and the like. In the event Borrower satisfies the
requirements under this Section 8.1.1 through the use of a
Policy covering properties in addition to the Mortgaged
Properties, then (unless such policy is provided in
substantially the same manner as it is as of the date
hereof), Borrower shall provide evidence satisfactory to
Lender that the Insurance Premiums for the Mortgaged
Properties are separately allocated under such Policy to the
Mortgaged Properties and that payment of such allocated
amount shall maintain the effectiveness of such Policy as to
the Mortgaged Properties notwithstanding the failure of
payment of any other portion of premiums. If no such
allocation is available, Lender shall have the right to
increase the Tax, Insurance and Ground Lease Escrow in an
amount sufficient to purchase a non-blanket Policy covering
the Mortgaged Properties covered by such Policy from
insurance companies which qualify under this Agreement.
(ii) Borrower shall deliver to Lender on or prior
to the Closing Date certificates setting forth in reasonable
detail the material terms (including any applicable notice
requirements) of all Policies from the respective insurance
companies (or their authorized agents) that issued the
Policies, including that such Policies may not be cancelled
or modified without thirty (30) days' prior notice to
Lender, or ten (10) days' notice with respect to nonpayment
of premium. Borrower shall deliver to Lender, concurrently
with each material change in any Policy, a certificate with
respect to such changed Policy certified by the insurance
company issuing that Policy, in substantially the same form
and containing substantially the same information as the
certificates required to be delivered by Borrower pursuant
to the first sentence of this clause (d)(ii) and stating
that all premiums then due thereon have been paid to the
applicable insurers and that the same are in full force and
effect (or if such certificate and report shall not be
obtainable by Borrower, Borrower may deliver an Officer's
Certificate to such effect in lieu thereof).
(e) Renewal and Replacement of Policies.
(i) Not less than fifteen (15) Business Days
prior to the expiration, termination or cancellation of any
Policy, Borrower shall renew such policy or obtain a
replacement policy or policies (or a binding commitment for
such replacement policy or policies), which shall be
effective no later than the date of the expiration,
termination or cancellation of the previous policy, and
shall deliver to Lender a certificate in respect of such
policy or policies (A) containing the same information as
the certificates required to be delivered by Borrower
pursuant to clause (d)(ii) above, or a copy of the binding
commitment for such policy or policies and (B) confirming
that such policy complies with all requirements hereof.
(ii) If Borrower does not furnish to Lender the
certificates as required under clause (e)(i), Lender may
procure, but shall not be obligated to procure, such
replacement policy or policies and pay the Insurance
Premiums therefor, and Borrower agrees to reimburse Lender
for the cost of such Insurance Premiums promptly on demand.
(iii) Concurrently with the delivery of each
replacement policy or a binding commitment for the same
pursuant to this clause (e), Borrower shall deliver to
Lender a report from a reputable and experienced insurance
broker or from the insurer, setting forth the particulars as
to all insurance obtained by Borrower pursuant to this
Section 8.1.1 and then in effect and stating that all
Insurance Premiums then due thereon have been paid in full
to the applicable insurers, that such insurance policies are
in full force and effect and that, in the opinion of such
insurance broker or insurer, such insurance otherwise
complies in all material respects with the requirements of
this Section 8.1.1 (or if such report shall not be available
after Borrower shall have used its reasonable efforts to
provide the same, Borrower will deliver to Lender an
Officer's Certificate containing the information to be
provided in such report).
(f) Separate Insurance. Borrower will not take out
separate insurance concurrent in form or contributing in the
event of loss with that required to be maintained pursuant to
this Article 8.1.1 unless such insurance complies with clause (c)
above.
(g) Servicers Named as Additional Insured. In the
event of a Securitization, Borrower shall name any trustee,
Servicer or Special Servicer designated by Lender as a loss
payee, and any trustee, Servicer and Special Servicer as
additional insureds, with respect to any Policy for which Lender
is to be so named hereunder.
(h) Insurance under Master Lease. Notwithstanding
anything to the contrary set forth in this Section 8.1.1, Lender
and Borrower agree that, at all times while the Master Lease is
in full force and effect with respect to a Mortgaged Property,
the terms and provisions of this Section 8.1.1 shall be deemed to
have been satisfied with respect to Borrower's obligations to
obtain and maintain insurance policies providing coverage with
respect to such Mortgaged Property, provided that (i) Master
Tenant is maintaining all insurance coverage with respect to such
Mortgaged Property required under the related Master Lease in
accordance with the terms and provisions of the related Master
Lease, (ii) Lender shall be named as a loss payee and additional
insured under such insurance policies (and, in the event of a
Securitization, any related trustee, Servicer or Special Servicer
shall be named as a loss payee and additional insured, as
designated by Lender) and (iii) Borrower shall ensure that Lender
has received (prior to the expiration, termination or
cancellation of the related insurance policy or policies)
ACCORD 27 certificates of insurance confirming that the insurance
policies described in clause (i) are in full force and effect and
that all related premiums have been paid in full and that the
requirements of clause (ii) have been satisfied. If Borrower
fails to provide, or fails to cause Master Tenant to provide
Lender with such certificates of insurance, Lender may procure,
but shall not be obligated to procure, any replacement insurance
policy necessary to ensure that the coverage to be evidenced by
such certificates of insurance is in full force and effect and
pay the premiums therefor, and Borrower agrees to reimburse
Lender for the cost of such premiums promptly upon demand.
8.1.2 CASUALTY; APPLICATION OF PROCEEDS.
(a) Right to Adjust.
(i) If any Mortgaged Property is damaged or
destroyed, in whole or in part, by fire or other casualty (a
"CASUALTY"), Borrower shall give prompt written notice
thereof to Lender, generally describing the nature and
extent of such Casualty. Following the occurrence of a
Casualty, Borrower, regardless of whether proceeds are
available, shall in a reasonably prompt manner proceed to
restore, repair, replace or rebuild the affected Mortgaged
Property to the extent practicable to be of at least equal
value and of substantially the same character as prior to
the Casualty, all in accordance with the applicable Master
Lease and terms hereof applicable to Alterations.
(ii) Subject to clause (v) below, in the event of
a Casualty that does not exceed Two Hundred Thousand and
No/100 Dollars ($200,000), Borrower may settle and adjust
such claim; provided that such adjustment is carried out in
a competent and timely manner. In such case, Borrower is
hereby authorized to collect and receipt for Lender any
Proceeds.
(iii) Subject to clause (v) below, in the
event a Casualty shall exceed Two Hundred Thousand and
No/100 Dollars ($200,000), Borrower may settle and adjust
such claim only with the consent of Lender (which consent
shall not be unreasonably withheld or delayed) and Lender
shall have the opportunity to participate, at Borrower's
cost, in any such adjustments.
(iv) The proceeds of any Policy shall be due and
payable solely to Lender and held and applied in accordance
with the terms hereof (or, if mistakenly paid to Borrower or
the Master Lease Tenant, shall be held in trust by Borrower
or the Master Lease Tenant, as the case may be, for the
benefit of Lender and shall be paid over to Lender within
one (1) Business Day of receipt).
(v) Notwithstanding the terms of clauses (ii) and
(iii) above, Lender shall have the sole authority to adjust
any claim with respect to a Casualty and to collect all
Proceeds if an Event of Default shall have occurred and is
continuing.
(b) Borrower's Right to Apply to Restoration. In the
event either of (i) a Casualty that involves a loss of less than
five percent (5%) of the outstanding principal balance of the
Loan or (ii) a Condemnation where the loss is in an aggregate
amount less than five percent (5%) of the outstanding principal
balance of the Loan, Lender shall permit the application of the
Proceeds (after reimbursement of any expenses incurred by Lender)
to reimburse Borrower for the cost of restoring, repairing,
replacing or rebuilding the applicable Mortgaged Property (the
"RESTORATION"), in the manner required hereby, provided and on
the condition that, no Event of Default shall have occurred and
be then continuing and, in the reasonable judgment of Lender:
(i) the applicable Mortgaged Property can be
restored to an economic unit not less valuable (taking into
account the effect of the termination of any Leases or
Material Agreements and the proceeds of any rental loss or
business interruption insurance which Borrower receives or
is entitled to receive, in each case, due to such Casualty
or Condemnation) and not less useful than the same was prior
to the Casualty or Condemnation,
(ii) the applicable Mortgaged Property after such
restoration will adequately secure the outstanding balance
of the Loan,
(iii) the Restoration can be completed by the
earliest to occur of:
(A) the 180th day following the receipt of
the Proceeds (or if earlier, the 365th day after the
Casualty or Condemnation, as applicable), or, with
Rating Confirmation, such longer period as may
reasonably be required,
(B) the 180th day prior to the Maturity
Date, and
(C) with respect to a Casualty, the
expiration of the payment period on the rental-loss
insurance coverage in respect of such Casualty, and
(iv) after receiving reasonably satisfactory
evidence to such effect, during the period of the
Restoration, the sum of (A) income derived from the
Mortgaged Properties, plus (B) proceeds of rent loss
insurance or business interruption insurance, if any,
payable together with such other monies as Borrower may
irrevocably make available for the restoration, will equal
or exceed one hundred five percent (105%) of the sum of
(1) Operating Expenses and (2) the Debt Service.
Notwithstanding the foregoing, if any of the conditions set forth
in the proviso in this clause (b) is not satisfied, then,
notwithstanding anything herein to the contrary, unless Lender
shall otherwise elect, at its sole option, the Proceeds shall be
applied to the prepayment of the Loan in accordance with the
terms of Section 8.1.2(d), and Borrower shall be entitled to
receive a release of the Lien of the Mortgage and the other Loan
Documents in accordance with and subject to the terms of
Section 2.4.2 if the Debt has been paid in full.
(c) Lender's Right to Apply to Repayment. In the
event of a Casualty where the loss is in an aggregate amount
equal to or greater than five percent (5%) of the outstanding
principal amount of the Loan (a "MATERIAL CASUALTY"), or a
Condemnation where the loss is in an aggregate amount equal to or
greater than five percent (5%) of the outstanding principal
amount of the Loan (a "MATERIAL CONDEMNATION"), then Lender shall
have the option (to be exercised by notice to Lender given not
later than the thirtieth (30th) day after the receipt of the
Proceeds) to apply the net Proceeds to the prepayment of the Debt
in accordance with Section 8.1.2(d) (and Borrower shall be
entitled to receive a release of the Lien of the applicable
Mortgage and the other Loan Documents in accordance with the
terms of Section 2.4.2 if the Debt has been paid in full) or,
provided the conditions set forth in the proviso in
Section 8.1.2(b) are complied with, to have such Proceeds applied
to reimburse Borrower for the cost of any Restoration in the
manner set forth below in Section 8.1.2(e) (and Lender shall be
deemed to have elected prepayment if it shall fail to have given
such notice within said 30-day period); provided, however, that
if (x) an Operating Agreement provides that such Proceeds must be
applied to restoring the applicable Mortgaged Property, (y) in
the reasonable judgment of Lender, the Mortgaged Property can be
restored within twelve (12) months and prior to the Anticipated
Prepayment Date to an economic unit not less valuable and not
less useful than the same was prior to the Casualty or
Condemnation and, after such restoration, will adequately secure
the outstanding balance of the loan and (z) no Event of Default
has occurred and is continuing, Lender shall be obligated to make
such Proceeds available for the Restoration of such Mortgaged
Property.
(d) Application of Prepayment. Any application of
Proceeds to the Debt pursuant to Section 8.1.2(b) or (c) shall be
without any prepayment premium or penalty except that if an Event
of Default has occurred and is continuing, then Borrower shall
pay to Lender an additional amount equal to the Yield Maintenance
Payments, if any, that would be required in respect of the
principal being prepaid assuming Section 2.3.4 were applicable.
Any such application to the Debt shall be applied to those
payments of principal and interest last due under the Note and
shall not postpone or reduce any payments otherwise required
pursuant to the Note other than such last due payments. At
Lender's sole discretion, the Proceeds may be applied to
reimburse the Borrower (on a monthly basis) for restoration
costs.
(e) Manner of Restoration and Reimbursement. If
Borrower is entitled pursuant to Section 8.1.2(b) or (c) to
reimbursement out of Proceeds (and the conditions specified
therein shall have been satisfied), such Proceeds shall be
disbursed on a monthly basis upon Lender being furnished with
(i) such architect's certificates, waivers of lien, contractor's
sworn statements, title insurance endorsements, bonds, plats of
survey and such other evidences of cost, payment and performance
as Lender may reasonably require and approve, and (ii) all plans
and specifications for such Restoration, such plans and
specifications to be approved by Lender prior to commencement of
any work (such approval not to be unreasonably withheld or
delayed). In addition, no payment made prior to the Final
Completion of the Restoration shall exceed ninety-five percent
(95%) of the value of the work performed from time to time; funds
other than Proceeds shall be disbursed prior to disbursement of
such Proceeds; and at all times, the undisbursed balance of such
Proceeds remaining in the hands of Lender, together with funds
deposited for that purpose or irrevocably committed to the
satisfaction of Lender by or on behalf of Borrower for that
purpose, shall be at least sufficient in the reasonable judgment
of Lender to pay for the cost of completion of the Restoration,
free and clear of all Liens or claims for Lien. Prior to any
disbursement, Lender shall have received evidence reasonably
satisfactory to it of the estimated cost of completion of the
Restoration (such estimate to be made by Borrower's architect or
contractor and approved by Lender in its reasonable discretion),
and Borrower shall have deposited with Lender Eligible Collateral
in an amount equal to the excess (if any) of such estimated cost
of completion over the net Proceeds. Any surplus which may
remain out of Proceeds received pursuant to a Casualty shall be
paid to Borrower after payment of such costs of Restoration. Any
surplus which may remain out of Proceeds received pursuant to a
Condemnation shall be escrowed with Lender as security for the
Debt after payment of such costs of Restoration.
(f) Notwithstanding anything to the contrary set forth
in this Section 8.1.2(b), Lender and Borrower agree that, at all
times while the Master Lease is in full force and effect with
respect to a Mortgaged Property, if (i) neither Master Tenant nor
Borrower shall elect to terminate the related Master Lease and
(ii) Master Tenant shall elect to restore such Mortgaged Property
after the occurrence of a Casualty or Condemnation affecting such
Mortgaged Property pursuant to the terms and provisions of the
related Master Lease, then (A) any related Proceeds shall be
deposited with the Disbursing Agent and shall be disbursed by the
Disbursing Agent to Master Tenant for application to the
Restoration of the related Mortgaged Property in accordance with
the terms and provisions of an escrow agreement among Borrower,
Master Tenant and the Disbursing Agent which escrow agreement
(1) shall provide for the disbursement of the deposited Proceeds
as the Restoration of the related Mortgaged Property is completed
in accordance with an Application and Certificate in the form of
AIA Document G702 to be properly completed and executed by the
Master Tenant's contractor (or by Master Tenant if Master Tenant
acts as its own contractor) and architect and submitted to the
Disbursing Agent in connection with each disbursement of any
portion of the deposited Proceeds, (2) shall provide for the
disbursement of the portion of the deposited Proceeds of any such
completed and executed Application and Certificate within five
(5) Business Days of Disbursing Agent's receipt thereof,
(3) shall provide for the release of the deposited Proceeds to
Borrower if Master Tenant shall fail to complete the Restoration
of the related Mortgaged Property in accordance with the related
Master Lease, (4) shall be in form and substance satisfactory to
Lender and (5) shall provide that such escrow agreement may not
be modified or amended without the prior written consent of
Lender; (B) Borrower shall immediately pay to Lender any related
Proceeds released to Borrower by the Disbursing Agent pursuant to
the escrow agreement described in clause (A) above, which
Proceeds shall be applied in accordance with the terms and
provisions of Section 8.1.2(b)-(e); and (C) the terms and
provisions of this Section 8.1.2 shall be deemed to be satisfied
so long as Master Tenant diligently pursues and completes the
Restoration of such Mortgaged Property in accordance with the
terms and provisions of the Master Lease. If Borrower shall
elect to restore any Mortgaged Property affected by a Casualty or
Condemnation pursuant to the terms and provisions of the related
Master Lease, Borrower's rights and obligations with respect to
the related Restoration and Proceeds shall be as set forth in
this Section 8.1.2.
8.1.3 CONDEMNATION. (a) Borrower shall promptly
give Lender written notice of the actual or threatened
commencement of any condemnation or eminent domain proceeding
affecting any Mortgaged Property (a "CONDEMNATION") and shall
deliver to Lender copies of any and all papers served in
connection with such Condemnation. Following the occurrence of a
Condemnation, Borrower, regardless of whether Proceeds are
available, shall promptly proceed to restore, repair, replace or
rebuild the same to the extent practicable to be of at least
equal value and of substantially the same character as prior to
such Condemnation, all to be effected in accordance with the
terms hereof applicable to Alterations.
(b) Lender is hereby irrevocably appointed as
Borrower's attorney-in-fact, coupled with an interest, with
exclusive power to collect, receive and retain any Proceeds in
respect of a Condemnation and to make any compromise or
settlement in connection with such Condemnation, subject to the
provisions of this Section. Provided no Event of Default has
occurred and is continuing, (x) in the event of a Condemnation
where the loss does not exceed Two Hundred Thousand and No/100
Dollars ($200,000), Borrower may settle and compromise such
Proceeds; provided that the same is effected in a competent and
timely manner, and (y) in the event a Condemnation, where the
loss exceeds Two Hundred Thousand and No/100 Dollars ($200,000),
Borrower may settle and compromise the Proceeds only with the
consent of Lender (which consent shall not be unreasonably
withheld or delayed) and Lender shall have the opportunity to
participate, at Borrower's cost, in any litigation and settlement
discussions in respect thereof. Notwithstanding any Condemnation
by any public or quasi-public authority (including any transfer
made in lieu of or in anticipation of such a Condemnation),
Borrower shall continue to pay the Debt at the time and in the
manner provided for in the Note, this Agreement and the other
Loan Documents, and the Debt shall not be reduced unless and
until any Proceeds shall have been actually received and applied
by Lender to expenses of collecting such Proceeds and to
discharge of the Debt. Lender shall not be limited to the
interest paid on the Proceeds by the condemning authority but
shall be entitled to receive out of the Proceeds interest at the
rate or rates provided in the Note. Borrower shall cause any
Proceeds that are payable to Borrower to be paid directly to
Lender to be held and applied in accordance with the terms
hereof.
(c) Notwithstanding anything to the contrary set forth
in Section 8.1.3(b), Lender and Borrower agree that, at all times
while a Master Lease is in full force and effect with respect to
a Mortgaged Property, Master Tenant may pursue a separate claim
against the applicable Governmental Authority in connection with
a Condemnation affecting such Mortgaged Property in accordance
with the terms and provisions of the related Master Lease without
the consent or participation of Lender, provided that (i) no
Event of Default shall have occurred and be continuing,
(ii) neither Master Tenant nor Borrower shall elect to terminate
the related Master Lease and Tenant shall have elected to restore
such Mortgaged Property in accordance with the terms and
provisions of the related Master Lease and (iii) any Proceeds
resulting from such separate claim shall be paid and applied in
accordance with Section 8.1.2(f).
IX. ACCOUNTS AND RESERVES
SECTION 9.1 ESTABLISHMENT AND MAINTENANCE OF LOCK-BOX DEPOSIT
ACCOUNT.
On or prior to the Closing Date, Borrower shall
establish with a depository institution designated by Lender, a
separate interest-bearing account (the "DEPOSIT ACCOUNT"). The
Deposit Account shall be in the name of and under the sole
dominion and control of Lender, subject only to Lender's
obligations hereunder to advance funds therefrom in accordance
with this Agreement, and Borrower shall not have the authority or
power to make withdrawals from the Deposit Account. Borrower
shall, not later than the tenth (10th) day after the Closing
Date, by notice to each Tenant and each other party to an
Operating Agreement, direct each Tenant and such other party to
make all checks in respect of all sums due to Borrower under the
Leases and Operating Agreements payable directly to the Deposit
Account and to deliver such checks and payments directly to
Lender or its agent (and the form of such notice shall be subject
to the approval of Lender, and if the Deposit Account is changed,
a comparable notice shall be sent to each Tenant). Without
limiting the foregoing, if Borrower or Property Manager shall
receive any checks in respect of sums due under any Lease or
Operating Agreement that is made payable in a manner contrary to
the foregoing requirements of this Section, or any funds in
respect of such sums by wire transfers or other means, then
Borrower shall deposit upon receipt, and shall direct Property
Manager to deposit upon receipt, such checks and funds in the
Deposit Account (and in any event not later than the close of
business on the Business Day the same is received by Borrower or
Property Manager). Funds in the Deposit Account shall not be
commingled with any other monies. Without limiting the
foregoing, all deposits into the Deposit Account will be made in
accordance with the terms and provisions of the Deposit Account
Agreement. Any Rents and other amounts deposited into the
Deposit Account shall be applied and disbursed in accordance with
the terms and provisions of Section 9.4 and the Deposit Account
Agreement. Borrower shall notify any Property Manager of the
terms of this Section 9.1. Lender shall cause the Eligible
Institution which maintains the various accounts to provide the
Borrower with access (via computer connection) during normal
business hours to account information, to be updated no less
frequently than every Business Day, regarding the Deposit
Account, the Tax, Insurance and Ground Lease Escrow Account, the
Termination Payment Account and the Reserve Accounts in
accordance with the computer access procedures of such
Eligible Institution.
SECTION 9.2 RESERVE ACCOUNTS.
9.2.1 ESTABLISHMENT AND MAINTENANCE OF RESERVE
ACCOUNTS. At the respective times set forth below in subsections
(a), (b), (c) and (d) of this Section 9.2.1, Borrower shall
establish with a depository institution designated by Lender, as
separate accounts (and the amounts therein shall be invested in
Permitted Investments), the following reserve accounts on or
prior to the Closing Date:
(a) an account in the initial amount of $0.00 for the
payment of the cost of remediating the Deferred Maintenance
Conditions (the "DEFERRED MAINTENANCE RESERVE ACCOUNT") in
accordance with Section 9.2.2.
(b) an account for the payment of Unfunded Obligations
(the "UNFUNDED OBLIGATIONS RESERVE ACCOUNT") in accordance with
Section 9.2.2.;
(c) an account in an amount equal to $0.10 per year
per usable square foot of space at the Mortgaged Properties,
based on 834,720 usable square feet, for the payment of routine
capital improvements (excluding tenant improvements and leasing
commissions and Deferred Maintenance Conditions) at the Mortgaged
Property (the "CAPITAL RESERVE ACCOUNT") in accordance with
Section 9.2.2. All subsequent deposits or transfer of funds
shall be made in accordance with Section 9.4; and
(d) an account for the deposit of all funds remaining
after the payments made pursuant to Section 9.4.1(1) through
(4) during a Low Debt Service Trigger Period (the "DEBT SERVICE
ACCOUNT").
Prior to any transfer of a Master Lease Tenant's interest in the
Master Lease, Borrower shall establish an account for the amounts
required to be deposited by Borrower pursuant to
Section 5.1(s)(4) of this Agreement (the "MASTER LEASE ROLLOVER
ACCOUNT"). Each of the Deferred Maintenance Reserve Account, the
Unfunded Obligations Reserve Account, the Capital Reserve
Account, the Debt Service Account and the Master Lease Rollover
Account (each, a "RESERVE ACCOUNT") shall be in the name of and
under the sole dominion and control of Lender, subject only to
Lender's obligations hereunder to advance funds therefrom in
accordance with this Agreement, and Borrower shall not have the
authority or power to make withdrawals from the Reserve Accounts.
The amount required in each Reserve Account as of the Closing
Date may, at Lender's election, be deposited on Borrower's behalf
by the funding of such amount by Lender from the Loan proceeds.
Funds in each Reserve Account shall not be commingled with any
other monies. Borrower shall pay the costs of establishing and
maintaining any Reserve Account.
9.2.2 DISBURSEMENTS FROM THE RESERVE ACCOUNTS.
Borrower shall have the right to obtain disbursements from time
to time: (w) with respect to the Unfunded Obligations Reserve
Account, for leasing commissions and tenant improvement costs
incurred by Borrower prior to the Closing Date, (x) with respect
to the Capital Reserve Account for routine capital improvements
made by Borrower at the Mortgaged Property in accordance with the
terms hereof (excluding tenant improvements and leasing
commissions and Deferred Maintenance Conditions), (y) with
respect to the Deferred Maintenance Reserve Account, for expenses
incurred by Borrower in remediating any Deferred Maintenance
Condition in accordance with the terms hereof, and (z) with
respect to the Master Lease Rollover Account, for leasing
commissions and tenant improvement costs incurred by Borrower in
connection with any new Lease of all or any portion of the space
subject to the related Master Lease assigned by Master Tenant in
accordance with the terms hereof, in each case on the following
terms and conditions:
(a) disbursements shall be made only to pay or to
reimburse Borrower in respect of actual costs of the work or
services, which costs were approved by Lender (such approval not
to be unreasonably withheld or delayed) or made in accordance
with Section 7.1;
(b) each request for disbursement from any Reserve
Account shall be substantially in a form attached hereto as
Exhibit C, shall specify the work or services for which the
disbursement is requested and shall include an Officer's
Certificate certifying that such funds will be applied to pay or
reimburse for materials, work or services permitted hereunder and
done in accordance herewith and copies of invoices for all items
or materials purchased and all contracted labor or services
provided;
(c) Lender shall have received from Borrower evidence
reasonably satisfactory to Lender that Borrower has incurred such
expenses and that any materials for which the request is made are
on site at the Mortgaged Property and are properly secured or
have been installed in the Mortgaged Property; with respect to
disbursements from the Deferred Maintenance Reserve Account,
funds remaining in the Deferred Maintenance Reserve Account are,
in Lender's reasonable judgment, sufficient to pay the balance of
the items contemplated to be funded therefrom when required to be
so paid, and Lender shall receive any Lien waivers or other
releases which would customarily be obtained with respect to the
work in question;
(d) Lender shall disburse the amount requested by
Borrower for such expenses from the Reserve Account in question,
or authorize such disbursement, within five (5) Business Days
after the receipt of Borrower's request for such disbursement and
the satisfaction of the other conditions set forth above in this
Section, but in no event more often than once in any 15-day
period, provided, however, with respect to the Deferred
Maintenance Reserve Account, in no event shall the amount so
disbursed exceed the amount set forth on Schedule 1 for the
remediation of the item in question.
9.2.3 DISBURSEMENTS FROM DEFERRED MAINTENANCE
ACCOUNT UPON COMPLETION OR DETERMINATION. Upon the completion of
the remediation of all of the Deferred Maintenance Conditions to
the reasonable satisfaction of Lender, Lender shall disburse to
Borrower from the Deferred Maintenance Reserve Account any
amounts remaining therein. In addition, if Lender shall
determine in its discretion, reasonably exercised, and concurred
in by a Rating Confirmation, that one or more Deferred
Maintenance Conditions do not in fact require remediation, then
Lender shall disburse from the Deferred Maintenance Reserve
Account the amount reserved for such work.
9.2.4 RELEASE OF RESERVE ACCOUNTS UPON REPAYMENT.
Lender shall pay to Borrower, on the date that the Debt shall be
paid in full by Borrower or on the Defeasance Date in the event
of a Defeasance pursuant to Section 2.3.2, all amounts remaining
in the Reserve Accounts and the Deposit Account.
9.2.5 OBLIGATIONS UNAFFECTED. The insufficiency of
any balance in any Reserve Account shall not relieve Borrower
from its obligation to fulfill all preservation and maintenance
covenants in the Loan Documents.
9.2.6 DISBURSEMENTS FROM THE DEBT SERVICE ACCOUNT.
During any Low Debt Service Trigger Period, all funds remaining
in the Deposit Account after the payments made pursuant to
Section 9.4.1(1) through (4) shall be deposited into the Debt
Service Account. Upon the occurrence of a Low Debt Service
Application Event, all amounts in the Debt Service Account shall
be applied to the Debt in such order and priority as Lender may
determine. Borrower shall have the right, upon written request
of Lender, to obtain a disbursement of all funds then in the Debt
Service Account upon the occurrence of a Low Debt Service Return
Event.
SECTION 9.3 TAX, INSURANCE AND GROUND LEASE ESCROW ACCOUNT.
9.3.1 ESTABLISHMENT. Upon the commencement and
during the continuance of a Tax, Insurance and Ground Lease
Escrow Period, Borrower shall establish and maintain with Lender
(or if Lender is not a depository institution or if Lender shall
otherwise elect, with one or more depository institutions
selected by Lender) a separate account (the "TAX, INSURANCE AND
GROUND LEASE ESCROW ACCOUNT"), and Borrower shall deposit therein
on each Payment Date:
(a) one-twelfth (1/12) of the Taxes and Other Charges
that Lender reasonably estimates will be payable during the next
ensuing twelve (12) months in order to accumulate with Lender
sufficient funds to pay all such Taxes and Other Charges at least
thirty (30) days prior to their respective delinquent dates,
(b) one-twelfth (1/12) of the Insurance Premiums that
Lender estimates will be payable for the renewal of the coverage
afforded by the Policies upon the expiration thereof in order to
accumulate with Lender sufficient funds to pay all such Insurance
Premiums at least thirty (30) days prior to the expiration of the
Policies, and
(c) one-twelfth (1/12) of the annual rents (base and
additional) and any other charges payable by Borrower under the
Ground Leases during the next ensuing twelve (12) months in order
to accumulate with Lender sufficient funds to pay all such rents
and other charges under the Ground Leases at least thirty
(30) days prior to the date on which such amounts are due.
9.3.2 APPLICATION GENERALLY. Lender will apply
amounts in the Tax, Insurance and Ground Lease Escrow Account
either: (x) to pay Taxes and Other Charges, Insurance Premiums
and rents and other charges under the Ground Leases required to
be made by Borrower hereunder and thereunder (and so long as the
Tax, Insurance and Ground Lease Escrow Account shall have a
balance at least equal to the then-payable Taxes, Other Charges,
Insurance Premiums and rents and other charges under the Ground
Leases, Borrower shall not be in default hereunder if Lender
shall have not so applied such balance to the payment of such
Taxes, Other Charges, Insurance Premiums and rents and other
charges under the Ground Leases, unless Lender shall have not so
applied such balance at the request of Borrower) or (y) to
reimburse Borrower for such amounts upon presentation of evidence
of payment and an Officer's Certificate in form and substance
reasonably satisfactory to Lender, subject, however, to
Borrower's right to contest Taxes and Other Charges in accordance
with the terms hereof. In making any payment from or to the Tax,
Insurance and Ground Lease Escrow Account, Lender may do so
according to any bill, statement or estimate procured from the
appropriate public office (with respect to Taxes and Other
Charges), insurer or agent (with respect to Insurance Premiums)
or ground lessor under any Ground Lease, without inquiry into the
accuracy of such bill, statement or estimate or into the validity
of any tax, assessment, sale, forfeiture, tax lien or title or
claim thereof unless given written notice by Borrower of such
inaccuracy, invalidity or other contest, in each case in
accordance with Section 5.1(b)(ii). If the amount in the Tax,
Insurance and Ground Lease Escrow Account shall exceed the
amounts due for Taxes and Other Charges, Insurance Premiums and
rents and other charges under the Ground Leases, Lender shall, at
its option, return any excess to Borrower or credit such excess
against future payments to be made to the Tax, Insurance and
Ground Lease Escrow Account. Provided no Event of Default has
occurred and is continuing, Borrower shall have the right to have
Lender apply amounts deposited in the Tax, Insurance and Ground
Lease Escrow Account on account of Taxes and Other Charges toward
the payment of such Taxes and Other Charges prior to their
delinquent dates for the purpose of achieving a discount on such
Taxes and Other Charges obligation. If at any time Lender
determines that the amount in the Tax, Insurance and Ground Lease
Escrow Account is not or will not be sufficient to pay the items
set forth in Sections 9.3.1(a) and 9.3.1(b) above, Lender shall
notify Borrower of such determination and Borrower shall increase
its monthly payments to Lender by the amount that Lender
estimates is sufficient to make up the deficiency at least thirty
(30) days prior to delinquency of the Taxes and Other Changes,
the expiration of the Policies or the date on which the rents and
other changes are due and payable under the Ground Leases, as the
case may be.
SECTION 9.4 DISBURSEMENTS FROM THE DEPOSIT ACCOUNT; BORROWER'S
OBLIGATION TO FUND DEPOSIT ACCOUNT.
9.4.1 DISBURSEMENTS. On each Payment Date,
provided no Event of Default has occurred and is continuing, and
subject to Section 9.4.2, Lender shall transfer from the Deposit
Account (or authorize such transfer), to the extent available
therein, payments in accordance with the following priorities:
(1) First, upon the commencement and during the
continuance of a Tax, Insurance and Ground Lease Escrow
Period, payments to the Tax, Insurance and Ground Lease
Escrow Account in the amount required to be reserved
pursuant to Section 9.3;
(2) Second, payments to Lender to pay the Monthly
Debt Service Payment Amount, which amount shall immediately
be available and payable to Lender;
(3) Third, to Borrower in an amount equal to the
Operating Expenses in accordance with the Annual Budget for
the month immediately prior to the month in which such
Payment Date occurs; provided that Borrower shall have
delivered to Lender an Officer's Certificate, dated no less
than five (5) days prior to such Payment Date, that there is
not outstanding for more than sixty (60) days any amounts
claimed by any creditor to be due and owing from Borrower
(except for claims Borrower is in good faith contesting and
the payment for which Borrower has escrowed with Lender),
and that the amounts disbursed to Borrower pursuant to this
clause (c) shall be used by Borrower solely to pay its
creditors; provided further that Borrower shall have the
right, by notice given to Lender not later than the sixth
(6th) Business Day prior to the Payment Date, to request an
additional amount to pay Operating Expenses in excess of the
budgeted amount with respect to the Mortgaged Properties, up
to one hundred five percent (105%) of the budgeted amount on
a cumulative year-to-date basis (less any amounts previously
received by Borrower pursuant to this proviso in any prior
month during such year), but in no event shall such
additional amount exceed more than fifteen percent (15%) of
such month's budgeted amount for Operating Expenses; such
notice by Borrower shall be accompanied by an Officer's
Certificate certifying that the additional amount requested
is required to pay Operating Expenses in excess of
those budgeted;
(4) Fourth, to the Capital Reserve Account, the
amount equal to one-twelfth (1/12th) of the product of $0.10
multiplied by 834,720 (the usable square footage of the
Mortgaged Properties);
(5) Fifth, during any Low Debt Service Trigger
Period, all amounts remaining after payment of the items set
forth in clauses (1) through (4) above shall be disbursed to
the Debt Service Account.
(6) Sixth, from and after the Anticipated
Prepayment Date payments for extraordinary Capital
Expenditures approved in writing by Lender;
(7) Seventh, from and after the Anticipated
Prepayment Date payments to Lender to prepay the outstanding
principal of the Note until such principal amount is paid in
full;
(8) Eighth, from and after the Anticipated
Prepayment Date payments to Lender to be applied to the
payment of accrued and unpaid Additional Interest;
(9) Ninth, payments to Lender to pay any interest
at the Default Rate due and owing under the Loan Documents
and any other amounts due under the Loan Documents; and
(10) Tenth, provided no Event of Default exists,
to Borrower or any Person designated by Borrower, or such
Person as may be lawfully entitled thereto, provided that in
Lender's sole discretion, Lender may permit a distribution
under this clause (10) notwithstanding the occurrence of an
Event of Default.
9.4.2 OBLIGATION TO FUND; DEEMED PAYMENT. In the
event that on any Payment Date the amount in the Deposit Account
shall be insufficient to make all of the transfers described in
Section 9.4.1(1) through (4) above, Borrower shall deposit into
the Deposit Account on such Payment Date the amount of such
deficiency (without the need for any notice or demand from Lender
for such amount (but subject to the terms of the Deposit Account
Agreement)), and if Borrower shall fail to make such deposit, the
same shall be an Event of Default and, in addition to all other
rights and remedies provided for hereunder, Lender may disburse
and apply the amounts in the Deposit Account in such order as
Lender may determine. Notwithstanding the foregoing, Borrower
shall not be obligated to deposit a deficiency in accordance with
the immediately preceding sentence to the extent that Borrower
shall have paid directly any amount included within the budgeted
amounts for which disbursement would otherwise be made for the
month in question in accordance with Section 9.4.1(1) or
9.4.1(4), as established to Lender's reasonable satisfaction
prior to the date that Borrower shall otherwise be obligated to
deposit such deficiency in accordance with the immediately
preceding sentence of this Section 9.4.2. If on any Payment Date
the amount in the Deposit Account shall be sufficient to make all
of the transfers described in Section 9.4.1(1) through (4) above,
Borrower shall be deemed to have paid the Monthly Debt Service
Payment Amount unless Lender is legally constrained from
transferring such amount in accordance with Section 9.4.1(1)
through (4) above by reason of any insolvency related to Borrower
or any other event.
9.4.3 BORROWER TO PROVIDE FOR RECONCILIATION OF
EXCESS DISBURSEMENTS. In the event that the quarterly reports
delivered by Borrower pursuant to Section 5.1(j)(iv)(B) shall
show that the actual Operating Expenses incurred by Borrower with
respect to the period covered by such report shall be different
than the amounts actually received by Borrower as disbursements
from the Deposit Account pursuant to Section 9.4.1(3), including
the second proviso thereof, during such period (or such
difference shall otherwise be established), and the Capital
Reserve Account has a balance less than the balance that such
Reserve Account(s) would otherwise have had, or Lender received
less than it would have received under Section 9.4.1(6), (7) or
(8), if the amounts disbursed to Borrower pursuant to
Section 9.4.1(3) equaled such actual Operating Expenses, then
Borrower shall deposit into such Reserve Account(s) the amount
that should otherwise have been deposited into such Reserve
Account(s) or paid to Lender as Default Interest, as applicable.
Such deposit or payment shall be made not later than five
(5) Business Days after the date on which Borrower's quarterly
report under Section 5.1.(j)(iv)(B) is required to be delivered
hereunder.
SECTION 9.5 NO RELEASE IF EVENT OF DEFAULT EXISTS.
Notwithstanding the terms hereof, in no event shall
Lender have any obligation to disburse funds from the Deposit
Account, Tax, Insurance and Ground Lease Escrow Account or any
Reserve Account for so long as an Event of Default shall have
occurred and be continuing.
SECTION 9.6 GRANT OF SECURITY INTEREST; RIGHTS UPON DEFAULT.
(a) Borrower hereby pledges, assigns and grants a
security interest to Lender, as security for payment of all sums
due in respect of the Loan and the performance of all other
terms, conditions and covenants of this Agreement and any other
Loan Document on Borrower's part to be paid and performed, in all
of Borrower's right, title and interest in and to the Deposit
Account, the Termination Payment Account, each Reserve Account
and the Tax, Insurance and Ground Lease Escrow Account, together
with the deposits therein, including all interest earned thereon
and Permitted Investments held therein. Borrower shall not,
without obtaining the prior written consent of Lender, further
pledge, assign or grant any security interest in the Deposit
Account, the Termination Payment Account, any Reserve Account or
the Tax, Insurance and Ground Lease Escrow Account, or permit any
Lien or encumbrance to attach thereto, or any levy to be made
thereon, or any UCC-1 Financing Statements or any other notice or
instrument as may be required under the UCC, as appropriate,
except those naming Lender as the secured party, to be filed with
respect thereto.
(b) Upon the occurrence of an Event of Default, Lender
may apply amounts in the Deposit Account, the Termination Payment
Account, any Reserve Account and the Tax, Insurance and Ground
Lease Escrow Account (or any portion thereof) for any of the
following purposes relating to the Loan or Borrower's obligations
hereunder or under any other Loan Document, and in any order, as
Lender shall elect in its sole discretion: (i) Taxes and Other
Charges; (ii) Insurance Premiums; (iii) rents, additional rents
or any other charges payable under any Ground Lease;
(iv) interest on the unpaid principal balance of the Note;
(v) amortization of the unpaid principal balance of the Note;
(vi) completion of all work required to be performed hereunder;
(vii) reimbursement of Lender for all losses and expenses
(including reasonable legal fees) suffered or incurred by Lender
as a result of such Event of Default; (viii) the cost of any
repair or replacement to any Mortgaged Property; (ix) payment of
any amount expended in exercising rights and remedies available
to Lender at law or in equity or under this Agreement or under
any of the other Loan Documents; or (x) any other portion of the
Debt, including the Yield Maintenance Payments applicable to any
full or partial prepayment; provided Yield Maintenance Payments
will not be applied to repayment of the Debt prior to payment in
full of all principal and accrued interest.
SECTION 9.7 LENDER NOT RESPONSIBLE.
Nothing in this Article IX or elsewhere in the Loan
Documents shall make Lender responsible for making or completing
any work in respect of any Mortgaged Property, or obligate Lender
to demand from Borrower additional sums to make or complete any
work.
SECTION 9.8 INSPECTIONS; UNDERTAKING OF WORK.
(a) Borrower shall permit Lender and Lender's agents
and representatives (including Servicer, Special Servicer,
Lender's engineer, architect or inspector) to enter onto any
Mortgaged Property during normal business hours after reasonable
notice (subject to the rights of Tenants under the Leases) to
inspect the progress of any work being performed by or on behalf
of Borrower, including any Alterations, and all materials being
used in connection therewith, to examine all plans and shop
drawings relating thereto and, following an Event of Default, to
undertake and complete any work required to be undertaken in
accordance with the terms hereof. Borrower shall cause all
contractors and subcontractors to cooperate with Lender or
Lender's representatives or such other persons described above in
connection with inspections described in this Section 9.8 or the
undertaking or completion of work pursuant to this Section 9.8.
(b) Lender may inspect any Mortgaged Property in
connection with any work undertaken by or on behalf of Borrower
at such Mortgaged Property (subject to the limitations set forth
in Section 9.8(a) above) prior to disbursing funds, from any
Reserve Account or otherwise, for such work. For any work (or
series of related items of work) costing in excess of the
Threshold Amount, Lender, at Borrower's expense, may require that
such inspection be conducted by an appropriate independent
qualified professional selected by Lender and/or may require a
copy of a certificate of completion by an independent qualified
professional acceptable to Lender prior to the disbursement of
any amounts therefor. Borrower shall pay a reasonable inspection
fee for each inspection conducted by a third party.
(c) Borrower shall collaterally assign to Lender, as
additional security for the Loan, all rights and claims Borrower
may have against all Persons supplying labor or materials in
connection with any Alterations; provided, however, Lender may
not pursue any such right or claim unless an Event of Default has
occurred and remains uncured.
X. DEFAULTS
SECTION 10.1 EVENT OF DEFAULT.
(a) Each of the following events shall constitute an
event of default hereunder (each, an "EVENT OF DEFAULT"):
(i) if any portion of the Debt is not paid when
due (subject to the final sentence of Section 9.4.2);
(ii) if any of the Taxes or Other Charges are not
paid prior to the date when the same become delinquent,
subject to Borrower's right to contest Taxes in accordance
with Section 5.1(b)(ii) and subject to Section 9.3.2(x);
(iii) if the Policies are not kept in full
force and effect, or if copies of ACCORD 27 certificates of
insurance, or their equivalent, for the Policies are not
delivered to Lender upon request, and in either case, such
Default is not cured within ten (10) days after written
notice thereof from Lender;
(iv) if (A) Borrower transfers or encumbers all or
any portion of any Mortgaged Property except as permitted
hereunder, or (B) any direct or indirect interest in
Borrower is transferred or assigned, other than, in each
case, for Permitted Encumbrances or as permitted pursuant to
Section 6.1(i);
(v) if any representation or warranty made by
Borrower herein or in any other Loan Document shall be false
in any material respect as of the date the representation or
warranty was made;
(vi) if Borrower shall make an assignment for the
benefit of creditors, or if Borrower shall generally not be
paying its debts as they become due or has admitted in
writing its inability to pay its debts;
(vii) if a receiver, liquidator or trustee
shall be appointed for Borrower or if Borrower shall be
adjudicated a bankrupt or insolvent, or if any petition for
bankruptcy, reorganization or arrangement pursuant to
federal bankruptcy law, or any similar federal or state law,
shall be filed by or against, consented to, or acquiesced in
by, Borrower, or if any proceeding for the dissolution or
liquidation of Borrower shall be instituted; provided,
however, if such appointment, adjudication, petition or
proceeding was involuntary and not consented to by Borrower,
upon the same not being discharged, stayed or dismissed
within sixty (60) days;
(viii) if Borrower attempts to assign its
respective rights under this Agreement or under any other
Loan Document or any interest herein or therein in
contravention of this Agreement or any of the Loan
Documents;
(ix) if Borrower breaches any of its negative
covenants contained in Section 6.1 or if Borrower breaches
any covenant contained in Section 4.1(cc), Section 5.1(j) or
(s) or Section 7.2 and, if the same is susceptible of cure
and the same is not cured within fifteen (15) days after
written notice thereof from Lender; provided, however, that
no cure of a breach of any covenant contained in
Section 4.1(cc) shall be effective unless Borrower causes to
be delivered to Lender an opinion as to non-consolidation in
form and substance and from counsel reasonably satisfactory
to Lender, which opinion takes into account such breach;
(x) if an Event of Default as defined or
described in any of the other Loan Documents occurs, a
default beyond any applicable notice or grace period occurs
under any Master Lease, a default under the Cooperation
Agreement occurs prior to Securitization, or if any other
such event shall occur or condition shall exist that results
in the acceleration of the maturity of any portion of the
Debt or permits Lender to accelerate the maturity of all or
any portion of the Debt in accordance with the terms of any
such Loan Document or the Cooperation Agreement;
(xi) subject to the final sentence of
Section 9.4.2, if Borrower shall be in default of its
obligations to make deposits into the Tax, Insurance and
Ground Lease Escrow Account, the Deferred Maintenance
Reserve Account, the Unfunded Obligations Reserve Account or
the Capital Reserve Account or in any other reserve or
escrow account required hereunder; or
(xii) if Borrower shall continue to be in
default under any of the other terms, covenants or
conditions of this Agreement not specified in
subsections (i) to (xi) above, for ten (10) days after
notice to Borrower from Lender, in the case of any Default
which can be cured by the payment of a sum of money, or for
thirty (30) days after notice from Lender in the case of any
other Default; provided, however, that if such nonmonetary
Default is susceptible of cure but cannot reasonably be
cured within such 30-day period and provided further that
Borrower shall have commenced to cure such default within
such 30-day period and thereafter diligently and
expeditiously proceeds to cure the same, such 30-day period
shall be extended for an additional period of time as is
reasonably necessary for Borrower in the exercise of due
diligence to cure such Default, but the aggregate cure
period under this subsection (xii) shall exceed ninety
(90) days.
(xii) if Borrower shall fail, beyond any
applicable notice and grace period permitted to Borrower
under any Ground Lease, in the payment of any rent,
additional rent or other charge mentioned in or made payable
under such Ground Lease when such rent or other charge is
due and payable; or if the leasehold estate created by any
Ground Lease shall be surrendered or any Ground Lease shall
be terminated or cancelled for any reason or under any
circumstances whatsoever.
(b) Upon the occurrence of an Event of Default and at
any time thereafter, Lender may, in addition to any other rights
or remedies available to it pursuant to this Agreement or any
other Loan Document, or at law or in equity, take such action,
without notice or demand, that Lender deems advisable to protect
and enforce its rights against Borrower and in and to all or any
of the Mortgaged Properties, including declaring the Debt to be
immediately due and payable (provided, however, with respect to
an Event of Default described in clauses (vi), (vii) or
(viii) above, the Debt and all other obligations of Borrower
hereunder and under the other Loan Documents shall immediately
and automatically become due and payable, without notice or
demand, and Borrower hereby expressly waives any such notice or
demand, anything contained herein or in any other Loan Document
to the contrary notwithstanding), and Lender may enforce or avail
itself of any or all rights or remedies provided in the Loan
Documents against Borrower and all or any portion of the
Mortgaged Properties, including all rights or remedies available
at law or in equity.
SECTION 10.2 REMEDIES.
Upon the occurrence of an Event of Default, all or any
one or more of the rights, powers, privileges and other remedies
available to Lender against Borrower under this Agreement or any
of the other Loan Documents executed and delivered by, or
applicable to, Borrower or at law (including, without limitation,
an action for collection) or in equity may be exercised by Lender
at any time and from time to time, whether or not all or any of
the Debt shall be declared due and payable, and whether or not
Lender shall have commenced any foreclosure proceeding or other
action for the enforcement of its rights and remedies under any
of the Loan Documents with respect to all or any portion of the
Mortgaged Properties. Any such actions taken by Lender shall be
cumulative and concurrent and may be pursued independently,
singly, successively, together or otherwise, at such time and in
such order as Lender may determine in its sole discretion, to the
fullest extent permitted by law, without impairing or otherwise
affecting the other rights and remedies of Lender permitted by
law, equity or contract or as set forth herein or in the other
Loan Documents. Without limiting the generality of the
foregoing, Borrower agrees that if an Event of Default is
continuing (i) Lender is not subject to any "one action" or
"election of remedies" law or rule, and (ii) all liens and other
rights, remedies or privileges provided to Lender shall remain in
full force and effect until Lender has exhausted all of its
remedies against the Mortgaged Properties and each Mortgage has
been foreclosed, sold and/or otherwise realized upon in
satisfaction of the Debt or the Debt has been paid in full.
SECTION 10.3 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, or
existing at law or in equity or otherwise. Lender's rights,
powers and remedies may be pursued singly, concurrently or
otherwise, at such time and in such order as Lender may determine
in Lender's sole discretion. No delay or omission to exercise
any remedy, right or power accruing upon an Event of Default
shall impair any such remedy, right or power or shall be
construed as a waiver thereof, but any such remedy, right or
power may be exercised from time to time and as often as may be
deemed expedient. A waiver of one Default or Event of Default
with respect to Borrower shall not be construed to be a waiver of
any subsequent Default or Event of Default with respect to
Borrower or to impair any remedy, right or power consequent
thereon.
XI. PROPERTY MANAGEMENT
SECTION 11.1 TERMINATION OF PROPERTY MANAGER.
Borrower represents, warrants and covenants that any
Property Management Agreement hereafter entered into shall be an
Acceptable Property Management Agreement and shall provide
Borrower with the right to terminate the Property Management
Agreement with respect to any applicable Mortgaged Property,
without any penalty or fee (other than accrued and unpaid fees
thereunder) on thirty (30) days' notice, if any of the following
shall occur:
(i) Net Operating Income for any Mortgaged
Property subject to the Property Management Agreement for
the twelve (12) full calendar month period immediately
preceding the date of such notice is less than eighty-five
percent (85%) of the Closing Date NOI for such Mortgaged
Property;
(ii) the Loan shall be outstanding after the
Anticipated Prepayment Date; or
(iii) there exists an Event of Default under
this Agreement and the Loan has been accelerated.
Unless otherwise waived by Lender, in the circumstances described
in (i), (ii) or (iii) above, Borrower shall, within five
(5) Business Days after Lender's written request, issue a notice
of termination to terminate any such Property Management
Agreement and replace the Property Manager with an Acceptable
Property Manager, on commercially reasonable terms and
conditions. All calculations of Net Operating Income shall be
calculated by Lender pursuant to audits conducted by Lender, at
Borrower's sole cost and expense, all in accordance with Lender's
customary audit policies and procedures, subject to the
limitations set forth in Section 12.13(a)(i). If Borrower fails
to issue the notice of termination to the Property Manager in the
manner required above within said five-Business Day period, then
Lender shall have the right, and Borrower hereby irrevocably
authorizes Lender, at its sole option, to terminate on behalf and
in the name of Borrower, the Property Manager in accordance with
the foregoing provisions of this Section 11.1, provided that
Lender shall not have any liability if Lender shall not exercise
such authority.
Each Property Management Agreement hereafter entered
into by Borrower shall be in form and substance satisfactory to
Lender, shall be collaterally assigned to Lender and any fees
payable to Property Manager thereunder shall be subordinated to
the Loan and this Agreement and the other Loan Documents.
XII. MISCELLANEOUS
SECTION 12.1 SURVIVAL.
This Agreement and all covenants, agreements,
representations and warranties made herein and in the
certificates delivered pursuant hereto shall survive the making
by Lender of the Loan and the execution and delivery to Lender of
the Note, and shall continue in full force and effect so long as
all or any of the Debt of Borrower is outstanding and unpaid.
Whenever in this Agreement any Person is referred to, such
reference shall be deemed to include the legal representatives,
successors and assigns of such Person (provided that the
foregoing shall not be deemed to permit any transfer of any
ownership interest that is otherwise prohibited hereunder). All
covenants, promises and agreements in this Agreement contained,
by or on behalf of Borrower, shall inure to the benefit of the
respective legal representatives, successors and assigns of
Lender.
SECTION 12.2 PERMITTED INVESTMENTS; ELIGIBLE ACCOUNTS; ELIGIBLE
INSTITUTIONS.
Lender shall invest any amounts to be held by Lender in
accordance with the terms of this Agreement or any other Loan
Document (other than amounts held in the Deposit Account, which
shall be an interest bearing account), pending the application of
such amounts to the purposes herein or therein provided, in one
of the Permitted Investments as directed by Borrower from time to
time (provided no Event of Default has occurred and is
continuing); or Lender from time to time (if any Event of Default
has occurred and is continuing). Lender shall not be responsible
for its inability to invest funds received after 1:30 p.m.
New York City time, but shall invest such sums on the following
Business Day. After application to the purposes for which any
amounts invested pursuant to this Section 12.2 are held and so
long as no Event of Default has occurred and is continuing
hereunder, any investment income earned from such investments
shall be paid to Borrower. All accounts maintained hereunder,
including the Deposit Account, the Reserve Accounts and the Tax,
Insurance and Ground Lease Escrow Account, shall, at Lender's
election, be (1) an account or account maintained with a federal
or state-chartered depository institution or trust company which
complies with the definition of Eligible Institution (as defined
below) or (2) a segregated trust account or accounts maintained
with the corporate trust department of a federal depository
institution or state-chartered depository institution subject to
regulations regarding fiduciary funds on deposit similar to Title
12 of the Code of Federal Regulations Section 9.10(b) which, in
either case, has corporate trust powers, acting in its fiduciary
capacity (such accounts, "ELIGIBLE ACCOUNTS"). "Eligible
Institutions" are institutions whose (1) commercial paper, short-
term debt obligations or other short-term deposits are rated at
least "A 1+" or the equivalent by the applicable Rating Agencies,
if the deposits are to be held in the account for less than
thirty (30) days, or (2) long-term unsecured debt obligations are
rated at least "AA" or the equivalent, if the deposits are to be
held in the account for more than thirty (30) days. Following a
rating downgrade, withdrawal, qualification or suspension of such
institution's rating, each account must promptly (and in any case
within not more than thirty (30) calendar days) be moved to a
qualifying institution or to one or more segregated trust
accounts in the trust department of such institution, if
permitted. No Eligible Account shall be evidenced by a
certificate of deposit, passbook or other instrument. Each
Eligible Account (A) shall be a separate and identifiable account
from all other funds held by the holding institution, (B) shall
be established and maintained in the name of the Lender (and
subsequent to any Securitization, shall bear a designation
clearly indicating that the funds deposited therein are held for
the benefit of the holders of the Certificates), (C) shall be
under the sole dominion and control of Lender, and should contain
only funds held for its benefit. The out-of-pocket costs
reasonably incurred in establishing and maintaining any account
or reserve held by Lender pursuant to this Agreement or any other
Loan Document shall be borne by Borrower.
SECTION 12.3 GOVERNING LAW; CONSENT TO JURISDICTION.
(a) THIS AGREEMENT WAS NEGOTIATED IN THE STATE OF NEW
YORK, AND MADE BY LENDER AND ACCEPTED BY BORROWER IN THE STATE OF
NEW YORK, AND THE PROCEEDS OF THE NOTE DELIVERED PURSUANT HERETO
WERE DISBURSED FROM THE STATE OF 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, INCLUDING 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, EXCEPT THAT AT ALL TIMES THE PROVISIONS FOR
THE CREATION, PERFECTION, AND ENFORCEMENT OF THE LIENS AND
SECURITY INTERESTS CREATED PURSUANT HERETO AND PURSUANT TO THE
OTHER LOAN DOCUMENTS SHALL BE GOVERNED BY AND CONSTRUED ACCORDING
TO THE LAW OF THE STATE IN WHICH THE APPLICABLE MORTGAGED
PROPERTY IS LOCATED, IT BEING UNDERSTOOD THAT, TO THE FULLEST
EXTENT PERMITTED BY THE LAW OF SUCH STATE, THE LAW OF THE STATE
OF NEW YORK SHALL GOVERN THE VALIDITY AND THE ENFORCEABILITY OF
ALL LOAN DOCUMENTS AND ALL OF THE INDEBTEDNESS OR OBLIGATIONS
ARISING HEREUNDER OR THEREUNDER. TO THE FULLEST EXTENT PERMITTED
BY LAW, 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 LENDER OR
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, 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 CT CORPORATION SYSTEM WITH OFFICES
AT 1633 BROADWAY, NEW YORK, NEW YORK 10019 AS ITS AUTHORIZED
AGENT TO ACCEPT AND ACKNOWLEDGE ON ITS BEHALF SERVICE OF ANY AND
ALL PROCESS WHICH MAY BE SERVED IN ANY SUCH SUIT, ACTION OR
PROCEEDING IN ANY FEDERAL OR STATE COURT IN NEW YORK, NEW YORK,
AND AGREES THAT SERVICE OF PROCESS UPON SAID AGENT AT SAID
ADDRESS 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 IN THE STATE OF
NEW YORK. BORROWER (I) SHALL GIVE PROMPT NOTICE TO LENDER OF ANY
CHANGED ADDRESS OF ITS AUTHORIZED AGENT HEREUNDER, (II) MAY AT
ANY TIME AND FROM TIME TO TIME DESIGNATE A SUBSTITUTE AUTHORIZED
AGENT WITH AN OFFICE IN NEW YORK, NEW YORK (WHICH OFFICE SHALL BE
DESIGNATED AS THE ADDRESS FOR SERVICE OF PROCESS), AND
(III) SHALL PROMPTLY DESIGNATE SUCH A SUBSTITUTE IF ITS
AUTHORIZED AGENT CEASES TO HAVE AN OFFICE IN NEW YORK, NEW YORK
OR IS DISSOLVED WITHOUT LEAVING A SUCCESSOR.
SECTION 12.4 MODIFICATION, WAIVER IN WRITING.
No modification, amendment, extension, discharge,
termination or waiver of any provision of this Agreement, or of
the Note, or of any other Loan Document, nor consent to any
departure by 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 demand on Borrower, shall entitle Borrower to
any other or future notice or demand in the same, similar or
other circumstances.
SECTION 12.5 DELAY NOT A WAIVER.
Neither any failure nor any delay on the part of Lender
in insisting upon strict performance of any term, condition,
covenant or agreement, or exercising any right, power, remedy or
privilege hereunder, or under the Note or under any other Loan
Document, or any other instrument given as security therefor,
shall operate as or constitute a waiver thereof, nor shall a
single or partial exercise thereof preclude any other future
exercise, or the exercise of any other right, power, remedy or
privilege. In particular, and not by way of limitation, by
accepting payment after the due date of any amount payable under
this Agreement, the Note or any other Loan Document, Lender shall
not be deemed to have waived any right either to require prompt
payment when due of all other amounts due under this Agreement,
the Note or the other Loan Documents, or to declare a default for
failure to effect prompt payment of any such other amount.
SECTION 12.6 NOTICES.
All notices, consents, approvals and requests required
or permitted hereunder or under any other Loan Document shall be
given in writing and shall be effective for all purposes if hand
delivered or sent by (a) certified or registered United States
mail, postage prepaid, (b) facsimile transmission with
documentation of delivery, to be followed by delivery by
certified or registered mail or expedited delivery service, or
(c) expedited prepaid delivery service, either commercial or
United States Postal Service, with proof of attempted delivery,
addressed as follows (or at such other address or facsimile
number and to the attention of such other person as shall be
designated from time to time by any party hereto, as the case may
be, in a written notice to the other parties hereto in the manner
provided for in this Section):
If to Lender: Archon Financial, L.P.
600 East Las Colinas Boulevard
Suite 800
Irving, Texas 75039
Attention: General Counsel
Facsimile No.: (972) 830-7698
and Goldman Sachs Mortgage Company
85 Broad Street
New York, New York 10004
Attention: Ms. Barbara Jozefiak
Facsimile No.: (212) 902-3684
with copies to: Cadwalader, Wickersham & Taft
100 Maiden Lane
New York, New York 10038
Attention: W. Christopher White, Esq.
Facsimile No.: (212) 504-6666
and Archon Financial, L.P.
600 East Las Colinas Boulevard
Suite 800
Irving, Texas 75039
Attention: Mr. Michael W. Forbes
Facsimile No.: (972) 831-7698
If to Borrower: EPT DownREIT II, Inc.
2029 Century Park East, Suite 422
Los Angeles, California 90067
Attention: Mr. Robert Harris
Facsimile No.: (310) 286-9599
and EPT DownREIT II, Inc.
1200 Main, Suite 3250
Kansas City, Missouri 64105
Attention: Mr. David Brain
Facsimile No.: (816) 472-5794
with copies to: Stinson, Mag & Fizzell, P.C.
1201 Walnut, Suite 2800
Kansas City, Missouri 64106
Attention: Michael G. O'Flaherty, Esq.
Facsimile No.: (816) 691-3495
A notice shall be deemed to have been given: in the case of hand
delivery, at the time of delivery; in the case of notice via
facsimile, at the time of delivery; in the case of registered or
certified mail, when delivered or the first attempted delivery on
a Business Day; or in the case of expedited prepaid delivery,
upon the first attempted delivery on a Business Day.
SECTION 12.7 TRIAL BY JURY.
LENDER AND BORROWER EACH HEREBY AGREES NOT TO ELECT A
TRIAL BY JURY OF ANY ISSUE TRIABLE OF RIGHT BY JURY, AND WAIVES
ANY RIGHT TO TRIAL BY JURY FULLY TO THE EXTENT THAT ANY SUCH
RIGHT SHALL NOW OR HEREAFTER EXIST WITH REGARD TO THE LOAN
DOCUMENTS, OR ANY CLAIM, COUNTERCLAIM OR OTHER ACTION ARISING IN
CONNECTION THEREWITH. THIS WAIVER OF RIGHT TO TRIAL BY JURY IS
GIVEN KNOWINGLY AND VOLUNTARILY BY EACH OF LENDER AND BORROWER
AND IS INTENDED TO ENCOMPASS INDIVIDUALLY EACH INSTANCE AND EACH
ISSUE AS TO WHICH THE RIGHT TO A TRIAL BY JURY WOULD OTHERWISE
ACCRUE. LENDER AND BORROWER ARE HEREBY AUTHORIZED TO FILE A COPY
OF THIS PARAGRAPH IN ANY PROCEEDING AS CONCLUSIVE EVIDENCE OF
THIS WAIVER.
SECTION 12.8 HEADINGS.
The Article and/or Section headings and the Table of
Contents in this Agreement are included herein for convenience of
reference only and shall not constitute a part of this Agreement
for any other purpose.
SECTION 12.9 SEVERABILITY.
Wherever possible, each provision of this Agreement
shall be interpreted in such manner as to be effective and valid
under applicable law, but if any provision of this Agreement
shall be prohibited by or invalid under applicable law, such
provision shall be ineffective to the extent of such prohibition
or invalidity, without invalidating the remainder of such
provision or the remaining provisions of this Agreement.
SECTION 12.10 PREFERENCES.
Subject to Article IX, 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, 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 12.11 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 do not
specifically and expressly provide for the giving of notice by
Lender to Borrower.
SECTION 12.12 REMEDIES OF BORROWER.
In the event that a claim or adjudication is made that
Lender or its agents, including Servicer or Special Servicer,
have acted unreasonably or unreasonably delayed (or refrained
from), acting in any case where by law or under this Agreement or
the other Loan Documents, Lender or such agent, as the case may
be, has an obligation to act reasonably or promptly, Borrower
agrees that neither Lender nor its agents, including Servicer and
Special Servicer, shall be liable for any monetary damages, and
Borrower's sole remedies shall be limited to commencing an action
seeking injunctive relief or declaratory judgment, except in any
instance in which it has been finally determined that Lender's
action, delay or inaction has constituted gross negligence,
fraud, willful misconduct or an illegal act. 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 12.13 EXPENSES; INDEMNITY.
(a) Borrower covenants and agrees to reimburse Lender
upon receipt of written notice from Lender for all (i) Lender
Expenses, provided, however, that so long as no Event of Default
shall have occurred and be continuing, the cost of any more than
one (1) audit during any calendar year performed by Lender to
calculate Debt Service Coverage Ratio, Net Cash Flow, Net
Operating Income, or Operating Income shall be borne by Lender,
without regard to any of Lender's customary audit policies and
procedures to the contrary; (ii) costs and expenses reasonably
incurred by Lender in connection with (A) Borrower's ongoing
performance of and compliance with Borrower's respective
agreements and covenants contained in this Agreement and the
other Loan Documents on its part to be performed or complied with
after the Closing Date, including confirming compliance with
environmental and insurance requirements; (B) the negotiation,
preparation, execution, delivery and administration of any
consents, amendments, waivers or other modifications to this
Agreement and the other Loan Documents and any other documents or
matters requested by Borrower or by Lender; (C) filing and
recording fees and expenses, title insurance and reasonable fees
and expenses of counsel for providing to Lender all required
legal opinions, and other similar expenses incurred in creating
and perfecting the Liens in favor of Lender pursuant to this
Agreement and the other Loan Documents; (D) enforcing or
preserving any rights, in response to third party claims or the
prosecuting or defending of any action or proceeding or other
litigation, in each case against, under or affecting Borrower,
this Agreement, the other Loan Documents or any other security
given for the Loan or the Mortgaged Properties; and (E) enforcing
any obligations of or collecting any payments due from Borrower
under this Agreement, the other Loan Documents or with respect to
the Mortgaged Property or in connection with any refinancing or
restructuring of the credit arrangements provided under this
Agreement in the nature of a "work-out" or of any insolvency or
bankruptcy proceedings; provided, however, Borrower shall not be
liable for the payment of any such costs and expenses to the
extent the same arise by reason of the gross negligence, illegal
acts, fraud or willful misconduct of Lender. Any costs and
expenses due and payable to Lender hereunder which are not paid
by Borrower within ten (10) days after demand may be paid from
any amounts in the Deposit Account, with notice thereof to
Borrower. Borrower shall pay any fees and expenses of any
Servicer or any Special Servicer required pursuant to Section 8
of the Cooperation Agreement.
(b) Borrower shall indemnify and hold harmless Lender
from and against any and all other liabilities, obligations,
losses, damages, penalties, actions, judgments, suits, claims,
costs, expenses and disbursements of any kind or nature
whatsoever (including the reasonable fees and disbursements of
counsel for Lender in connection with any investigative,
administrative or judicial proceeding commenced or threatened,
whether or not Lender shall be designated a party thereto), that
may be imposed on, incurred by, or asserted against Lender in any
manner relating to or arising out of any breach by Borrower of
its obligations under, or any material misrepresentation by
Borrower contained in this Agreement or the other Loan Documents;
provided, however, Borrower shall not be liable for the payment
of any such costs and expenses to the extent the same arise by
reason of the gross negligence, illegal acts, fraud or willful
misconduct of Lender. Any costs and expenses due and payable to
Lender hereunder which are not paid by Borrower within ten
(10) days after demand may be paid from any amounts in the
Deposit Account, with notice thereof to Borrower.
SECTION 12.14 EXHIBITS AND SCHEDULES INCORPORATED.
The Exhibits and Schedules annexed hereto are hereby
incorporated herein as a part of this Agreement with the same
effect as if set forth in the body hereof.
SECTION 12.15 OFFSETS, COUNTERCLAIMS AND DEFENSES.
Any assignee of Lender's interest in and to this
Agreement, the Note and the other Loan Documents shall take the
same free and clear of all offsets, counterclaims or defenses
which are unrelated to such documents which Borrower may
otherwise have against any assignor of such documents, 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 such documents and any such right to interpose
or assert any such unrelated offset, counterclaim or defense in
any such action or proceeding is hereby expressly waived by
Borrower.
SECTION 12.16 NO JOINT VENTURE OR PARTNERSHIP.
Borrower and Lender intend that the relationships
created hereunder and under the other Loan Documents be solely
that of borrower and lender. Nothing herein or therein is
intended to create a joint venture, partnership, tenancy-in-
common, or joint tenancy relationship between Borrower and Lender
nor to grant Lender any interest in the Mortgaged Properties
other than that of mortgagee or lender.
SECTION 12.17 PUBLICITY.
All news releases, publicity or advertising by Borrower
or its Affiliates through any media intended to reach the general
public which refers to the Loan Documents or the financing
evidenced by the Loan Documents, to Lender, the Loan purchaser,
the Servicer or the trustee in a Securitization shall be subject
to the prior written approval of Lender; provided, however, that
Lender's prior written approval shall not be required for any
disclosure with respect to the Loan or the Loan Documents by
Sponsor as required pursuant to the Securities Act of 1933 or the
Securities Exchange Act of 1934.
SECTION 12.18 CROSS-COLLATERALIZATION; WAIVER OF MARSHALLING OF
ASSETS.
(a) Borrower acknowledges that Lender has made the
Loan to Borrower upon the security of its collective interest in
the Mortgaged Properties and in reliance upon the aggregate of
the Mortgaged Properties taken together being of greater value as
collateral security than the sum of the Mortgaged Properties
taken separately. Borrower agrees that each Mortgage creates a
single blanket Lien encumbering all of the Mortgaged Properties
so that (i) an Event of Default under any one Mortgage with
respect to any Mortgaged Property constitutes an Event of Default
under the Mortgages with respect to all of the Mortgaged
Properties and (ii) an Event of Default under the Note or this
Agreement shall constitute an Event of Default under each
Mortgage.
(b) To the fullest extent Borrower may legally do so,
Borrower waives all rights to a marshalling of the assets of
Borrower, Borrower's partners, if any, and others with interests
in Borrower, and of the Mortgaged Properties, or to a sale in
inverse order of alienation in the event of foreclosure of the
interests hereby created, and agrees not to assert any right
under any laws pertaining to the marshalling of assets, the sale
in inverse order of alienation, homestead exemption, the
administration of estates of decedents, or any other matters
whatsoever to defeat, reduce or affect the right of Lender under
the Loan Documents to a sale of the Mortgaged Properties for the
collection of the related Debt without any prior or different
resort for collection, of the right of Lender or any deed of
trust trustee to the payment of the related Debt out of the net
proceeds of any Mortgaged Property in preference to every other
claimant whatsoever. In addition, Borrower, for itself and its
successors and assigns, waives in the event of foreclosure of any
or all of the Mortgages, any equitable right otherwise available
to the Borrower which would require the separate sale of portions
of the Mortgaged Properties.
SECTION 12.19 WAIVER OF COUNTERCLAIM.
Borrower hereby waives the right to assert a
counterclaim, other than a compulsory counterclaim, in any action
or proceeding brought against it by Lender or its agents,
including Servicer and Special Servicer.
SECTION 12.20 CONFLICT; CONSTRUCTION OF DOCUMENTS.
In the event of any conflict between the provisions of
this Agreement and any of the other Loan Documents, the
provisions of this Agreement shall control. The parties hereto
acknowledge that they were represented by counsel in connection
with the negotiation and drafting of the Loan Documents and that
such Loan Documents shall not be subject to the principle of
construing their meaning against the party which drafted same.
SECTION 12.21 BROKERS AND FINANCIAL ADVISORS.
Borrower hereby represents that it has dealt with no
financial advisors, brokers, underwriters, placement agents,
agents or finders in connection with the transactions
contemplated by this Agreement. Borrower hereby indemnifies
Lender and holds 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 that such
Person acted on behalf of Borrower in connection with the
transactions contemplated herein. The provisions of this
Section 12.21 shall survive the expiration and termination of
this Agreement and the repayment of the Debt.
SECTION 12.22 NO THIRD PARTY BENEFICIARIES.
This Agreement and the other Loan Documents are solely
for the benefit of Lender and the Borrower, and nothing contained
in this Agreement or the other Loan Documents shall be deemed to
confer upon anyone other than Lender and Borrower any right to
insist upon or to enforce the performance or observance of any of
the obligations contained herein or therein. All conditions to
the obligations of Lender to make the Loan hereunder are imposed
solely and exclusively for the benefit of Lender, and no other
Person shall have standing to require satisfaction of such
conditions in accordance with their terms or be entitled to
assume that Lender will refuse to make the Loan in the absence of
strict compliance with any or all thereof and no other Person
shall under any circumstances be deemed to be a beneficiary of
such conditions, any or all of which may be freely waived in
whole or in part by Lender if, in Lender's sole discretion,
Lender deems it advisable or desirable to do so.
SECTION 12.23 PRIOR AGREEMENTS.
This Agreement and the other Loan Documents contain the
entire agreement of the parties hereto and thereto in respect of
the transactions contemplated hereby and thereby, and all prior
agreements among or between such parties, whether oral or
written, between Borrower and Lender are superseded by the terms
of this Agreement and the other Loan Documents.
SECTION 12.24 EXCULPATION.
Subject to the qualifications below, Lender shall not
enforce the liability and obligation of Borrower to perform and
observe the obligations contained in the Note, this Agreement,
any Mortgage or the other Loan Documents by any action or
proceeding, against Borrower (or any member, shareholder, partner
or other owner of Borrower, or any director, officer, employee of
any of the foregoing), except that Lender may bring a foreclosure
action, an action for specific performance or any other
appropriate action or proceeding to enable Lender to enforce and
realize upon its interest under the Note, this Agreement, any
Mortgage and the other Loan Documents, or in any Mortgaged
Property, the Rents, or any other collateral given to Lender
pursuant to the Loan Documents; provided, however, except as
specifically provided below in this Section 12.24, any judgment
in any such action or proceeding shall be enforceable against
Borrower only to the extent of Borrower's interest in any
Mortgaged Property, the Rents and any other collateral given to
Lender, and Lender, by accepting the Note, this Agreement, the
Mortgages and the other Loan Documents, agrees that it shall not
sue for, seek or demand any deficiency judgment against Borrower
in any such action or proceeding under or by reason of or under
or in connection with the Note, this Agreement, any Mortgage or
the other Loan Documents except for any deficiency judgment that
shall be enforced solely against or collected solely from the
Mortgaged Properties, the Rents or any other collateral given to
Lender. The provisions of this Section shall not, however,
(a) constitute a waiver, release or impairment of any obligation
evidenced or secured by any of the Loan Documents; (b) impair the
right of Lender to name Borrower as a party defendant in any
action or suit for foreclosure and sale under any Mortgage;
(c) affect the validity or enforceability of or any separate
guaranty or indemnity made in connection with the Loan or any of
the rights and remedies of Lender thereunder; (d) impair the
right of Lender to obtain the appointment of a receiver;
(e) constitute a prohibition against Lender to seek a deficiency
judgment against Borrower in order to fully realize the security
granted by any Mortgage or to commence any other appropriate
action or proceeding in order for Lender to exercise its remedies
against the Mortgaged Properties; or (f) constitute a waiver of
the right of Lender to enforce the liability and obligation of
Borrower or Sponsor, by money judgment or otherwise to be entered
against Borrower and/or Sponsor, to the extent of any loss,
damage, cost, expense, liability, claim or other obligation
incurred by Lender (including attorneys' fees and costs
reasonably incurred) arising out of or in connection with (but
only to the extent of) the following:
(i) fraud or intentional misrepresentation by
Borrower in connection with the Loan or waste committed,
permitted or suffered by Borrower;
(ii) any liability under the Environmental
Indemnity;
(iii) the removal or disposal by Borrower of
any portion of any Mortgaged Property after an Event of
Default;
(iv) the application by Borrower of any Proceeds
other than in accordance with the terms of this Agreement,
or the application of any Rents or other revenues from the
Mortgaged Properties, following an Event of Default, except
to the Operating Expenses of the Mortgaged Properties or to
repay the Debt or other amounts due hereunder or under the
other Loan Documents;
(v) any security deposits collected with respect
to the Mortgaged Properties which are not delivered to
Lender in accordance with this Agreement or upon a
foreclosure of any Mortgaged Property or action in lieu
thereof, except to the extent any such security deposits
were applied in accordance with the terms and conditions of
any of the Leases prior to the occurrence of the Event of
Default that gave rise to such foreclosure or action in lieu
thereof or in accordance with applicable law after the
occurrence of such Event of Default; and
(vi) the indemnification and contribution rights
in favor of Lender set forth in the Cooperation Agreement.
Notwithstanding anything to the contrary in this Agreement or any
of the Loan Documents, Lender shall not be deemed to have waived
any right which Lender may have under Section 506(a), 506(b) or
1111(b) or any other provisions of the U.S. Bankruptcy Code to
file a claim for the full amount of the Debt secured by the
Mortgages or to require that all collateral shall continue to
secure all of the Debt owing to Lender in accordance with the
Loan Documents.
SECTION 12.25 LOAN ASSIGNABILITY BY LENDER.
The Loan, and all of Lender's rights, remedies and
privileges hereunder and the other Loan Documents, shall be
assignable by Lender at any time and from time to time.
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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.
ARCHON FINANCIAL, L.P., a Delaware
limited partnership
By: ARCHON FINANCIAL, LLC, a
Delaware limited liability company,
its general partner
By:
Name:
Title:
EPT DOWNREIT II, INC., a Missouri
corporation
By:
Name:
Title:
Schedule 1
DEFERRED MAINTENANCE CONDITIONS
None
Schedule 2
LEGAL DESCRIPTIONS
(Attached)
Schedule 3
HISTORICAL CAPITAL EXPENDITURES
None
Schedule 4
UNFUNDED OBLIGATIONS
None
Schedule 5
EXCEPTIONS TO REPRESENTATIONS AND
WARRANTIES OF BORROWER
None
Schedule 6
ENGINEERING REPORTS
(Attached)
Schedule 7
SECURITY DEPOSITS
None
Schedule 8
ALLOCATED LOAN AMOUNTS
Mortgaged Property Allocated Loan Amount
Grand 24, Dallas, Texas $12,443,986
Promenade 16, Los Angeles, California $19,192,217
Studio 30, Houston, Texas $16,096,698
Ontario Mills 30, Los Angeles, California $17,025,354
West Olive 16, St. Louis, Missouri $11,515,330
Huebner Oaks 24, San Antonio, Texas $10,772,406
Lennox 24, Columbus, Ohio $8,048,349
Mission Valley 20, San Diego, California $9,905,660
EXH A-1
EXHIBIT A
DEPOSIT ACCOUNT AGREEMENT
(Attached)
EXH B-1
EXHIBIT B
SUBORDINATION, NON-DISTURBANCE
AND ATTORNMENT AGREEMENT
(Attached)
EXH C-
EXHIBIT C
DISBURSEMENT REQUEST FORM
EPT DOWNREIT II, INC.
RESERVE DISBURSEMENT FORM
TYPE OF DISBURSEMENT:
DISBURSEMENT TO BE MADE FROM:
Unfunded Obligations Reserve Deferred Maintenance Reserve
Account Account
Capital Reserve Account Master Lease Rollover Account
AMOUNT REQUESTED: $________________________________
AMOUNT SPECIFIED IN LOAN AGREEMENT: $__________________________
DATE OF REQUEST:
DATE FUNDS NEEDED:
The undersigned hereby certifies that these funds will be applied
to pay or reimburse for materials or work permitted under the Loan
Agreement and performed in accordance therewith and copies of
invoices for all items or materials purchased and all contracted
labor or services are attached hereto.
CERTIFYING OFFICER: _______________________
DISBURSE FUNDS VIA: CHECK WIRE
WIRING INSTRUCTIONS:______________________________
(if applicable)
LENDER APPROVAL:
NOTE: SUPPORTING DOCUMENTATION (INVOICES) MUST BE SUBMITTED
WITH YOUR REQUEST.